Yeilding v. Council of Ass'n of Unit Owners of Pelican Cove Condo.

DALE YEILDING and SANDRA YEILDING, husband and wife, Plaintiffs, v. COUNCIL OF ASSOCIATION OF UNIT OWNERS OF PELICAN COVE CONDOMINIUM, and CATHERINE ROBINSON, Defendants.

C. A. No. 2019-0826-SG

Court of Chancery of Delaware

April 20, 2022

Submitted: January 21, 2022

Dean A. Campbell, of LAW OFFICE OF DEAN A. CAMPBELL, P.A., Milton Delaware, Attorney for Plaintiffs Dale Yeilding and Sandra Yeilding.

Richard E. Berl, Jr., of HUDSON, JONES, JAYWORK & FISHER LLC, Lewes, Delaware, Attorney for Defendants Council of Association of Unit Owners of Pelican Cove Condominium and Catherine Robinson.

MEMORANDUM OPINION

GLASSCOCK, Vice Chancellor This Court developed as a tool with which to administer equity-fairness-in cases where courts of law were unable to act.^[1] To that end, it may employ injunctive relief, but only where justice so requires. The equities in this case, I find after trial, are insufficient to such relief.

The Plaintiffs here are unit owners in a condominium in Dewey Beach, a former bayfront hotel with a marina known as Pelican Cove. Dale and Sandra Yeilding, the Plaintiffs, ^[2] are a married couple who rent out their unit in the condominium as a vacation unit, and make personal use of it, as well. The Yeildings previously were defendants in a matter brought by the unit holder association (the "HOA"), which successfully advocated that the Yeildings were bound to a maximum number of rental tenants-six-as provided in the Pelican Cove Condominium Declaration (the "Declaration") despite having the largest unit in the condominium.^[3]After that suit was resolved in favor of the Pelican Cove HOA, the Plaintiffs brought this action against the HOA and one other unit holder, Catherine Robinson, individually (the HOA and Robinson together, the "Defendants"). The Plaintiffs posit a flurry of causes, all generally based on the allegation that various actions of the HOA were ultra vires and incompatible with the Declaration, or with positive law. The action was expedited and the Plaintiffs sought relief via a temporary restraining order; nonetheless, the pace of the litigation has been desultory. Eventually, a trial seeking various applications of injunctive relief was held on November 16, 2021, and post-trial briefing followed. This is my post-trial Memorandum Opinion. I find that equity was not sufficiently invoked so that any injunctive relief is appropriate. I also find that the Plaintiffs' allegations wander the borderlands that separate merely weak claims from the country of the frivolous. My reasoning follows.

I. BACKGROUND^[4]

At bottom, this case revolves around the Plaintiffs' disagreement with various recent decisions of the HOA. As identified above, the Plaintiffs, the Yeildings, are owners of Unit #7 at Pelican Cove. They bring this action against the HOA as well as individually against the owner of Unit #2, Catherine Robinson.

The Complaint outlines four disparate bases for receipt of injunctive relief. In brief, those bases are as follows: first, Unit #2 has been altered impermissibly under the Plaintiffs' reading of the Declaration; second, various unit owners have failed to comply at all times with the Declaration and a second governing document, the Pelican Cove Code of Regulations (the "Code of Regulations"), which (per the Plaintiffs) prohibit obstruction of the decks and/or balconies at Pelican Cove; third, the depth of the marina adjoining the property is insufficient under the latest amendment to the Declaration; and fourth, the HOA has drafted common area rules purporting to regulate renters' guests, which, per the Plaintiffs, violate the Declaration.^[5] I consider the governing documents in more detail below, along with a brief background of the facts alleged with respect to each particular count of the second amended complaint (the "Complaint").^[6]

1. The Pertinent Documents

The Declaration "create[s] a plan of condominium ownership" in the subject property, and was originally recorded in 1978.^[7] Since that time, the Declaration has undergone three amendments, with the latest occurring in 2008.^[8] The amendment process requires a two-thirds vote of the membership.^[9] Property owners at Pelican Cove are entitled to a voting percentage equal to the proportion of their unit's footprint to that of the entire property.^[10] On that basis, the Plaintiffs are entitled to a vote, individually, greater than one-third; thirty-four percent.^[11] I refer to the Declaration and/or any of its amendments throughout this Memorandum Opinion as "the Declaration."

The Declaration, in accordance with Delaware statute, includes a "declaration plan" "show[ing]" the units and common elements on the property (the "Declaration Plan").^[12] The Declaration Plan is recorded.^[13]

Pelican Cove unit owners adopted a Code of Regulations in 1978.^[14] A recent HOA meeting in 2020 purported to amend the Code of Regulations, though the Plaintiffs dispute whether this amendment was valid.^[15] A recorded copy of the amendment was provided as joint exhibit 23.^[16] The Code of Regulations, by its terms, can be amended by "vote of majority of the owners at any regular or special meeting."^[17] I refer to the Code of Regulations and any of its amendments throughout this Memorandum Opinion as the "Code of Regulations."

Where any conflict exists between the Declaration and the Code of Regulations, the conflict shall, "if not otherwise reconciliable [sic], be resolved in favor of the Declaration."^[18]

The Pelican Cove Beach House Rental Rules (the "Rental Rules") are a third pertinent document.^[19] These rules do not appear to be formally recorded and are aimed at regulating the behavior of rental guests.^[20] The document lays out eight Rental Rules, which appear to be primarily focused on regulating behavior affecting common areas or common elements of the condominium, such as parking and plumbing.^[21] A somewhat abbreviated version of these rules is posted at the entrance to the common areas of Pelican Cove.^[22]

The Plaintiffs particularly take issue with rule number three ("Rule 3"), which states: "No parties or large social gatherings. People other than those in the rental party are not allowed on the property. No visitors are allowed."^[23] The Plaintiffs allege that these rules were passed in violation of the Declaration.^[24] They also allege that the Rental Rules violate the Delaware Unit Property Act (the "Unit Property Act").^[25]

2. The Allegations

a. Unit Alterations

In 2019, Robinson, the owner of Unit #2, sought to make certain renovations to her unit.^[26]

The Declaration Plan shows the layout of Unit #2 (and all other units) in a considerable amount of detail, including the dimensions of the "LR" (which I assume means living room), the "BR" (which I assume means bedroom), and identifying kitchen and bathroom elements via symbols.^[27] The Declaration Plan only shows one bedroom in connection with Unit #2.^[28]

The Declaration includes a description of the Pelican Cove building, noting: "Unit Number 2 is located on the first floor and consists of the following: a kitchen and dining area, a living room, a bedroom, a bathroom, a closet containing a laundry and three other closets."^[29] The Plaintiffs assert that this subsection of the Declaration, entitled "Description of Building," is a "required and mandated section of the Declaration pursuant to" Delaware statute.^[30] The referenced statutory provision provides that a unit property's declaration must contain "[a] description of the land and building."^[31]

The Declaration includes a broad definition of common elements, including, but not limited to,

[t]he foundation, the pilings, all supporting posts and beams, and the crossbeams located under the building. The electrical wiring system, including transformers and all other equipment used to distribute the electricity, but not including any fixture inside or on the exterior of any wall within any of the individual units . . . . The outside exterior walls of the building except for the windowglass and screens. The plumbing facilities installed for use outside the various individual units . . . . [and t]he party walls located between the various units.^[32]

Per Robinson's testimony at trial, which I found to be credible, she hired an architectural firm and a local contractor to accomplish interior-only changes to her unit.^[33] Robinson testified that she "at one point had thought about" changing windows, which would have constituted an exterior renovation; as such, she brought her renovation plans to the HOA for approval.^[34] Ultimately, however, Robinson testified that her changes did not affect the building's foundation; that each unit is separately wired and each unit is separately metered with respect to water and sewage, and neither of these common elements were affected; that no exterior walls or windows were altered; that no party walls were altered; that no walls inside the unit were moved; and that she "only added" a wall.^[35]

Robinson testified that once her daughter arrived, she and her partner "wanted to have an additional place where we could have another bed."^[36] But, she noted, the original plans changed.^[37] On cross-examination, Robinson clarified that, despite her desire to have room for an additional bed, post-renovations Unit #2 contains "an enlarged bedroom that has an adjoining office, but . . . they're not separate rooms."^[38]She also noted that the bathroom was moved in connection with the remodel, and responded affirmatively when asked whether "the kitchen was relocated to some degree," including the kitchen sink.^[39]

As noted, Robinson had taken her renovation plans to the HOA for approval.^[40]The only evidence I have on the pertinent deliberations...