EAGLE-AIR ESTATES HOMEOWNERS ASSOCIATION, INC., an Oregon non-profit corporation, acting by and through Charles Harp, Cyndie Harp, Michael Morgan, and Janet Morgan, Plaintiffs-Respondents,
Bruce HAPHEY, Vernon Goodsell, and John Schibel, individually, Defendants-Appellants, and EAGLE-AIR ESTATES HOMEOWNERS ASSOCIATION, INC., an Oregon non-profit corporation, Defendant
Argued and Submitted January 6, 2015
04CV0050MA. Deschutes County Circuit Court. Wells B. Ashby, Judge.
Appeal from supplemental judgment dismissed; limited judgment reversed and remanded.
Margaret Fiorino argued the cause for appellants. With her on the briefs was Matthew J. Kress.
Michael W. Peterkin argued the cause for respondents. With him on the brief was Peterkin & Associates.
Before Ortega, Presiding Judge, and Egan, Judge, and Garrett, Judge.
[272 Or.App. 653] GARRETT, J.
The subject of this appeal is the trial court's limited judgment in favor of plaintiffs, who sued defendants derivatively on behalf of the Eagle-Air Estates Homeowners Association (HOA or association), on their claims for breach of contract and conversion, and the court's supplemental judgment awarding attorney fees. The dispute is the most recent episode of longstanding litigation among members of the HOA, and we have dealt with the parties on many previous occasions. The crux of plaintiffs' allegations is that defendants, who are former directors of the association, caused harm to the HOA by imposing unauthorized member assessments to pay attorney fees in related litigation brought by plaintiffs against the HOA and some of these same defendants. In particular, defendants assert that the trial court erred in its interpretation of provisions of the HOA's covenants, codes, and restrictions (CCRs), which concerned whether the assessment was a " special assessment" and, thus, expired on December 31, 2003. We conclude that the trial court erred in its interpretation of the assessment provisions in the CCRs. Accordingly, we reverse and remand the limited judgment. We dismiss the appeal from the supplemental judgment.
In order to explain the claims and defenses at issue, we briefly recite the procedural history. Plaintiffs sued defendant Goodsell, the developer of Eagle-Air Estates, a planned [272 Or.App. 654] community subdivision, in a derivative action in 2003. See Morgan v. Goodsell, 198 Or.App. 385, 108 P.3d 612 (2005) ( Morgan I ). Plaintiffs' claims in Morgan I revolved around Goodsell having retained a reversionary interest in an airstrip adjacent to the development. Id. at 388. Plaintiffs also named the HOA as a defendant, and, accordingly, it retained counsel. At membership meetings on May 18, 2002, and February 1, 2003, the HOA members approved
assessments for attorney fees for
the HOA's defense in Morgan I. Ultimately, plaintiffs lost on all claims in that action.
The HOA then sued plaintiffs, alleging trespass as a result of their continued use of the airstrip after failing to pay required assessments. Plaintiff Morgan counterclaimed, alleging that the February 1, 2003, authorization for a membership assessment to pay attorney fees in Morgan I had expired on December 31, 2003, and that the HOA had wrongfully continued to impose the assessment after that date. The trial court ruled in favor of the HOA on the trespass claim, but ruled in favor of Morgan on the counterclaim and awarded him a judgment for the amount of attorney-fee assessments that he had paid after December 31, 2003. The basis for the trial court's ruling on that issue--which is central to the current appeal--was a provision in the CCRs that limits the duration of " special assessments" to the end of the calendar year in which the special assessment was adopted. Thus, the trial court concluded that the most recent approval for the attorney-fee assessment, effective February 1, 2003, expired on December 31 of that year and that any assessments collected beyond that date had occurred without the required approval of the members. We affirmed the trial court's judgment without opinion. Eagle-Air Estates Homeowners Assn. v. Harp, 234 Or.App. 218, 227 P.3d 1242 (2010) ( Eagle-Air ).
Having prevailed on his counterclaim against the HOA, Morgan turned his sights to the defendants in this action, who were the directors of the association at the time of Morgan I and Eagle-Air. In this case, Morgan and other plaintiffs alleged claims for breach of contract, but also negligence and conversion, contending that defendants [272 Or.App. 655] wrongfully caused the HOA to spend money and incur debt for the earlier litigation by hiring an attorney without membership approval and levying assessments to pay that attorney. Plaintiffs moved for partial summary judgment on the conversion and breach of contract claims.
In a 2007 letter opinion, the trial court ruled that defendants could be liable if plaintiffs could prove actual damages, but that the court could not determine " whether ...