The 2200 Westlake complex is a four-unit mixed-use condominium that has three highrise towers over a multi-level podium and five levels of underground parking. Urban Venture("UV") was the developer of this project, and the construction took place from 2004 to 2007.The condominium consists of four master Units: the Residential Unit, the Hotel Unit, the Food Unit, and the Commercial Unit. Until recently, UV was the owner of the Hotel, Food, and Commercial Units. The 2200 Residential Association ("RA") is the homeowners association that governs the 260 residences that make up the Residential Unit. The 2200 Condominium Association ("MA") governs and maintains the commercial retail space, hotel, parking garage, the shell and core of the buildings, and other major common and limited common elements. Each of the four master Units has one member on the MA Board, and each board member can cast one vote on MA decisions. Because the MA must decide all actions by unanimous consent of the Unit Owners, each Unit has veto power over any action that another Unit is pushing through the MA. Each Unit also has the ability to challenge a veto by another Unit.
The MA and RA share the expense of maintaining certain aspects of the limited common elements at the 2200 Westlake complex. The Condominium Declarations (Master Declaration and Residential Declaration) and the Public Offering Statement apportioned the financial responsibility for the limited common elements according to the market value of each unit at the time the Master Declaration was recorded, with the Hotel, Commercial, and Food Units being responsible for 22.8 percent of the common expenses and the Residential Unit being responsible for 77.2 percent.
At the outset, the 2200 Westlake complex suffered from construction defects, and UV conducted numerous warranty repairs. In November 2012, UV, the MA, and the RA entered into a Settlement Agreement regarding the construction defects.
In October 2015, Joseph Grace and Shamim Mohandessi (collectively "Plaintiffs") filed an action for breach of contract and breach of implied covenant of good faith and fair dealing against the RA and a derivative claim for breach of fiduciary duty against the RA Board of Directors. Plaintiffs also brought individual and derivative claims against UV, the MA, and the MA Board of Directors for declaratory judgment, breach of contract, breach of fiduciary duty, breach of implied covenant of good faith and fair dealing, tortious interference, unjust enrichment, and accounting. All Plaintiffs' claims stemmed from either 1) the allocation of financial responsibility for common elements at 2200 Westlake, including decisions regarding which elements are deemed "common" or 2) the Settlement Agreement in the construction defect lawsuit against UV.
In August 2016, Defendants filed summary judgment motions to dismiss Plaintiffs' derivative claims. Defendants argued that Plaintiffs lacked standing to bring derivative claims on behalf of the RA, a Washington non-profit corporation. Defendants based their summary judgment arguments on the Washington appellate case, Lundberg v. Coleman, 115 Wn. App. 172, 60 P.3d 595 (2002), which found that the legislature did not intend for the Washington Nonprofit Corporations Act to grant private individuals standing to bring derivative lawsuits against, or on behalf of, nonprofit corporations. On September 29, 2016, based on the analysis and holding of the Lundberg court, the trial court issued an order granting partial summary judgment and dismissing all derivative claims asserted against, or on behalf of, the RA, including all claims against the RA Board, UV, the MA, and the MA Board.
Following the court's dismissal of derivative claims, the parties continued to litigate this case until December 2017 when Plaintiffs voluntarily dismissed their remaining claims against Defendant RA. For the past three years, this case has been heavily litigated by the parties, as demonstrated by a docket of 538 filed pleadings, including numerous motions, discovery dispute filings, and a post-dismissal dispute regarding Defendants' entitlement to attorneys' fees. The parties (Plaintiffs and Defendants) have filed appeals and cross-appeals of various trial court orders issued between February 2016 and March 2018. The cross-appeals in this case involve at least seven separate orders by the trial court.
This request for Amicus Curiae briefing is only for issues related to Plaintiffs' appeal of the court's September 29, 2016 order granting partial summary judgment and dismissing Plaintiffs' derivative claims under Lundberg v. Coleman and the Washington Non-profit Corporations Act (RCW 24.03).
COURT OF APPEALS OF THE STATE OF WASHINGTON – Published Opinion – March 9, 2020
COURT OF APPEALS OF THE STATE OF WASHINGTON – Opinion – June 2020
Brief Author: Anthony Rafel, Esq.
CAI Amicus Review Panel: Mr. Robert Diamond, Esq., Chair of Amicus Committee, Mr. Edmund Allcock, Esq. (MA), Ms. Karyn Kennedy Branco, Esq. (NJ), Ms. Jennifer Jacobsen, Esq. (CA), and Ms. Theresa Thorgesen, Esq. (WA)COURT OF APPEALS OF THE STATE OF WASHINGTON – Published Opinion – March 9, 2020