Investors Limited v. Sun Mountain Condominium

Investors Limited of Sun Valley (Investors) (plaintiff) was the second developer for the Sun Mountain Condominium project in Ketchum, Idaho. Phase I of the project was platted to consist of three buildings with four individual condominium units each. The original developer built one of the planned buildings and sold the first four condominium units to individual purchasers, who became members of the Sun Mountain Condominium Homeowners Association (the association) (defendant). When Investors purchased the project, it submitted amended plans to the city showing three additional buildings instead of two. The association opposed the new plan, arguing that it would reduce each individual unit owner’s share of the common area. The original developer never attempted to control or manage the association, nor did it pay any of the association’s assessments, which were all paid by the first four individual unit owners. Neither did the original investor vote in association matters. In contrast, Investors, to get around the association’s opposition to its plans, attempted to gain control of the association by asserting its voting rights as the owner of eight unbuilt units in the original plan. When the association denied Investors’ voting-rights claim and did not allow its participation in association matters, Investors sued. The condominium declaration provided: “Every Owner shall be entitled and required to be a member of the association. No person or entity other than an Owner may be a member of the Association.” The declaration also provided for ownership in fee simple of separate interests in individual condominium units and for coownership as tenants in common with others of the common area. Additionally, the declaration indicated that all three buildings in Phase I were to be built and offered for sale at the same time. Investors contended that as the record owner of the entire unimproved and unsold portion of the project, it was an owner and, therefore, was entitled to voting membership in the association. The association contended that only owners of built individual condominium units were owners under the declaration for purposes of association membership. Idaho condominium law did not address a developer’s eligibility for association membership based on its ownership of unbuilt units. The district court granted summary judgment to Investors. The association appealed.