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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Soules v. Ramstack (07/30/2004) sp-5827

Soules v. Ramstack (07/30/2004) sp-5827

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA

MARY ELLEN SOULES,                 )
                              )    Supreme Court No. S-11034
               Appellant,          )
                              )    Superior Court No.
     v.                       )    3AN-02-00371 PR
                              )
BETTY RAMSTACK,                         )    O P I N I O N
                              )
               Appellee.      )    [No. 5827 - July 30, 2004]
                              )


          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Mark Rindner, Judge.

          Appearances:  Robert C. Erwin, Erwin & Erwin,
          LLC,  Anchorage,  for Appellant.   Gordon  F.
          Schadt,  Schadt  Law Office,  Anchorage,  for
          Appellee.

          Before:   Bryner,  Chief  Justice,  Matthews,
          Eastaugh, Fabe, and Carpeneti, Justices.

          CARPENETI, Justice.


I.   INTRODUCTION

          Mary  Ellen  Soules,  personal  representative  of  the

Estate  of  Pauline King,  appeals the superior  courts  decision

holding  that  the  estate is contractually obligated  to  pay  a

special  assessment levied against a condominium that the  estate

sold  to  Betty Ramstack.  Soules contracted to sell the unit  to

Ramstack in March 2002 and agreed to pay any assessments  due  at

closing.    The  condominium  association  approved   a   special

assessment  in  December  2001 and notified  all  owners  of  the

assessment   in  early  January  2002.   Those  who   were   then

negotiating  to  sell their units were told that  the  assessment

would  be  due at closing.  The estate did not pay the assessment

at  closing.  Because the superior court correctly ruled that the

estate  breached  its  contract  with  Ramstack,  we  affirm  its

decision requiring the estate to pay the special assessment.

II.  FACTS AND PROCEEDINGS

          Pauline  King died in December 2001, leaving an  estate

that  included condominium 2F in Mt. Vernon Commons in Anchorage.

At  the time, the Mt. Vernon condominium community was unique  in

that it did not own the land upon which the units were built, but

instead  had a long-term leasehold interest in the property.   In

June   2001   the   Mt.  Vernon  Condominium  Association   began

negotiating with the Central Anchorage Land Company, which  owned

the  land,  to  purchase  it  for a price  of  $1.8  million.  On

September  27,  2001  the board of directors of  the  condominium

association held an informational meeting to discuss the proposed

land  acquisition,  including the amount of a special  assessment

that  would be levied against all units to finance the  purchase.

The  condominium association proposed to finance the  acquisition

through a bank loan, and each homeowner was to be responsible for

a  portion  of  the  purchase  price payable  through  a  special

assessment.   The entire transaction was subject to  approval  by

the homeowners.

          The  minutes of this meeting indicate that the proposed

land  purchase  was  controversial.  Elouise  Schmidt,  the  real

estate  agent who later represented the estate in the transaction

with  Ramstack, attended the meeting on her own behalf and  as  a

proxy  for  several homeowners.  She opposed the  land  purchase.

According to the minutes, while Schmidt was unsure how  the  land

purchase  would  affect condominium values  at  Mt.  Vernon,  she

discussed  how  an  owner  could  explain  the  assessment  to  a

potential  buyer and how an owner could work the assessment  into

the sales price if a unit were offered for sale.

          A  special  board meeting of the homeowners association

was held on December 10, 2001.  Although the land acquisition was

still being negotiated, the board anticipated that the homeowners

would  approve  the transaction and that closing would  occur  on

December  28,  2001.  The board approved a special assessment  to

pay  for  the  land  purchase.1  The amount of assessment  varied

depending  on  the  type  of condominium unit,  and  ranged  from

$11,677.54 to $13,914.60, which could be paid as a lump sum or in

installments.  The assessment due on unit 2F was $13,139.57.

          The  board notified homeowners on January 11, 2002 that

the special assessment had been levied, informing them a majority

of the homeowners had approved the land purchase, the amount they

were  required  to pay, and where and how to pay the  assessment.

This  letter  also informed homeowners that the  association  was

negotiating with the bank for better loan terms and that  if  the

transaction  was  not  completed,  any  payments  made  would  be

refunded with interest.  A second letter sent on January 16, 2002

explicitly informed homeowners who were attempting to sell  their

units that the special assessment [was] on the unit and due  upon

closing.   The  letter encouraged such homeowners  to  [i]nstruct

your  closing  agent  to  deposit those  funds  in  [the  special

assessment] account at Northrim Bank.

          The proposed land acquisition presented many challenges

because, according to Michael Olson, Vice President of the Board,

it  was  the  first  time in Alaska that an existing  condominium

association had attempted to convert leasehold land to fee simple

ownership, and in February the deal was temporarily derailed when

the  parties reached an impasse.  After further negotiations  the

deal  was  reinstated on the same financial terms.  In a  special

board  meeting on March 27, 2002 the board voted to  seek  a  new

closing  date of May 1, 2002 and to impose a deadline for payment

of  the  special  assessment, the amount of which  was  unchanged

since it was reported to homeowners in January.  The board set  a

deadline  of April 30, 2002 for partial or total payment  of  the

special  assessment and notified all homeowners of this  date  in

writing on April 3, 2002.

          Meanwhile, Kings estate had listed her condominium  for
sale  with  Schmidt  in March of 2002.  The listing  announcement
indicated  that the condominium association was still working  on
the land acquisition and specified the amount of the monthly land
lease,  but  it  did  not mention the special assessment  already
announced  by  the  association.  Ramstack submitted  an  earnest
money  agreement on March 20, which provided that assessments  on
the  property  would be paid by the seller.  The estate  accepted
the  earnest  money agreement on March 22.  A resale  certificate
obtained  by the estate on April 10, and provided to Ramstack  on
April  11,  was  accompanied  by  a  disclosure  statement2  that
indicated that there were no unpaid common expenses on the  unit.
Ramstack purchased the condominium on April 19.  The monthly land
lease  and condo fees owing on the unit were collected  from  the
estate.  However, the special assessment was not included in  the
settlement  charges due from the estate or the buyer.3   Ramstack
first  learned  of the special assessment on or about  April  25,
2002  when  she  took her monthly land lease payment  to  Michael
Olson, who informed her that she actually owed over $13,000.   On
May  29,  2002 the association claimed a lien against  all  units
that had not paid the assessment, including the unit purchased by
Ramstack.   The  association  finally  purchased  the   land   on
September 6, 2002.
          Ramstack filed a creditors claim against the estate  on

June  13,  2002, seeking to enforce the terms of the contract  by

collecting  $13,139.57 to pay the special assessment  charged  to

her unit.  Following a two-day bench trial on February 11 and 12,

2003 Superior Court Judge Mark Rindner issued a decision on March

10,  2003  holding  the  estate liable  for  the  unpaid  special

assessment.  The superior court found that the board  had  levied

the  special assessment through a duly enacted resolution at  the

December  10,  2001  special meeting and that it  remained  valid

throughout  the negotiations to purchase the land.  The  superior

court  further  found  that the estate  had  agreed  to  pay  all

assessments  owed  on the condominium at closing,  including  the

          special assessment. Finally, the superior court rejected the

estates argument that Ramstack would be unjustly enriched if  the

estate were forced to pay the assessment without the benefit of a

higher  sales  price,  noting that Ramstack  may  not  have  even

contracted  to buy the unit had she known of the assessment,  and

that requiring the estate to honor its contract would merely give

Ramstack  the  benefit  of her bargain.  The  court  ordered  the

estate to pay the special assessment.

          Soules appeals on two grounds.  First, she claims that,
because the special assessment was not due on April 19, 2002 when
the  estate sold the condominium to Ramstack, the estate bore  no
obligation  to  pay  the assessment at that  time.   Second,  she
claims  that Ramstack will be unjustly enriched if the estate  is
required to pay the assessment.
III. STANDARD OF REVIEW
          Whether  the assessment was due at the time of  closing

presents a mixed question of law and fact, which we review  using

two  different standards.4  Factual determinations  are  reviewed

under  the clearly erroneous standard.5  We will find clear error

only  if,  after a thorough review of the record, we  come  to  a

definite  and  firm  conviction that a mistake  has  been  made.6

Legal questions are reviewed de novo, and we will adopt the  rule

of law that is most persuasive in light of precedent, reason, and

policy.7  Whether there has been unjust enrichment is generally a

question   of   fact.8   But  [w]here  the  facts   are   clearly

established,  the issue becomes one of law, and  the  court  must

adopt  the  rule  of  law  that is most persuasive  in  light  of

precedent, reason, and policy. 9  Additionally, the trial  courts

findings  regarding  the credibility of  the  witnesses  will  be

reversed only if clearly erroneous.10  We can affirm the decision

of the superior court on any basis supported by the record.11

IV.  DISCUSSION

          The  primary  question  presented  by  this  appeal  is

whether  the special assessment enacted by the board on  December

10,  2001 and announced to homeowners in January 2002 was due  on

          the date of closing and thus payable by the estate by the terms

of its contract with Ramstack.  Soules argues that the estate was

not  contractually bound to pay the assessment because it was not

due  until  April  30,  2002,  eleven  days  after  it  sold  the

condominium to Ramstack.

     A.   The Special Assessment Was a Debt at Closing.
          
          The   board  of  the  Mt.  Vernon  Commons  Condominium

Association  voted to levy a special assessment on  December  10,

2001,  a  fact  reflected in the minutes  of  the  special  board

meeting,  the corporate resolution, and the testimony of  Michael

Olson, whom the superior court found to be fully credible.   This

decision was communicated to homeowners in letters dated  January

11  and  16, 2002, along with the amount due from each homeowner,

including  the interest rate applicable to installment  payments.

Although the board did not vote to impose a deadline for  payment

until  the  March  27,  2002 special board meeting,  the  January

correspondence   specifically  informed   homeowners   who   were

negotiating to sell their units that the special assessment is on

the  unit and due upon closing and encouraged them to ensure that

the closing agent deposited the funds in a special account set up

for that purpose.

          The  question is whether the assessment existed  as  an

obligation of the estate prior to the sale of the unit or whether

the  assessment became effective only on April 30, 2002  and  was

thus  payable by Ramstack.  Resolution of this question  requires

us  to  determine when a condominium assessment becomes effective

and  whether the special assessment at Mt. Vernon Commons was  an

existing  obligation when Ramstack purchased  unit  2F  from  the

estate.

          Soules  raises two arguments in support of her position

that  the  estate  is  not contractually  obligated  to  pay  the

assessment,  both  of  which rely on the April  30  deadline  for

paying the assessment.  First, she argues that, in the absence of

an  express provision in an associations bylaws, an assessment is

not   payable  until  a  condominium  association  has  statutory

authority  to attach a lien against a unit to enforce collection.

She relies upon AS 34.08.470, which provides that a lien attaches

from  the date an assessment is due, to support her argument that

the  assessment  was  only effective when it  was  due.   Second,

Soules argues that the assessment was a contingent liability when

the  estate  contracted to sell the condominium to Ramstack,  and

that  the  liability only became definite on April  30  when  the

assessment  was  due.  Under both arguments, Soules  claims  that

since the assessment was not due until after the estate sold  the

unit  on  April  22,  2002 the estate bore no  duty  to  pay  the

assessment.

          While  the  condominium  associations  bylaws  do   not

indicate  when  a special assessment is effective,  Soules  notes

that  AS  34.08.470, a provision of the Uniform  Common  Interest

Ownership Act,12 states that a condominium association has a lien

on  a unit for an assessment from the time the assessment becomes

due.13  According to Soules, if no lien could attach against  the

unit  until  after  April  30  then  no  debt  was  due  and  the

association could pursue no action for collection.  Her  argument

reduces  to  a syllogism: if no lien could attach,  no  debt  was

payable;  if  no debt was payable, the assessment  had  not  been

levied; if the assessment had not been levied, the estate did not

breach its contract.

          While  this  argument has the virtue of simplicity,  it

misses  an important point:  An assessment does not become  valid

only when it attaches as a lien.  Debts can exist before they are

due,  and  condominium assessments can be effective  before  they

must  be  paid.   Condominium associations in  most  states  have

statutory authority to attach liens as a collection mechanism  to

ensure  that  homeowners pay the fees it has assessed.14   Alaska

Statute 34.08.470 describes one way for an association to collect

assessments   from  recalcitrant  homeowners:   It   grants   the

authority  to  impose  liens to collect  unpaid  assessments,  it

          allows these liens to attach from the time an assessment is due,

and  it gives these liens priority over other types of liens  and

encumbrances.15   But it says nothing about  when  an  assessment

itself  becomes  effective.  A condominium association  also  has

other  means  available  to  encourage  the  timely  payment   of

assessments, including authority to impose late fees and  fines16

and  to  charge up to an eighteen percent interest rate on unpaid

balances.17

          Indeed  the  typical sequence by which  an  association

adopts,  announces,  and  collects assessments  implies  that  an

assessment  will  be  effective before  it  is  due,  and  almost

certainly  before the association could attach a lien  against  a

unit  to  compel  payment.  Typically an association  board  will

adopt a budget for planned expenses, enact an assessment to  meet

these expenses, set a deadline for payment and, if the assessment

remains unpaid, pursue various collection strategies ranging from

sending  a reminder letter, charging interest, attaching a  lien,

and even foreclosing on a unit.18  But the assessment exists even

though it might not be immediately payable.  Allowing a period of

months before payment is due is particularly important where,  as

here,  the association levied an assessment of more than $13,000,

greater  than ten percent of the value of the condominium,  which

sold  for  $126,900.   When  the announcement  of  an  assessment

predates  the  due  date, the assessment is  best  viewed  as  an

unmatured obligation, a debt for which the sum is certain  though

the  time for payment is deferred.19  Though the time for payment

had  not yet passed when the estate sold unit 2F to Ramstack, the

assessment existed as an obligation of the estate from  the  time

it   was   enacted.   Because  the  assessment  was  an  existing

obligation  when  the estate contracted to  sell  the  unit,  the

superior   court  correctly  found  that  the  estate  bore   the

obligation of paying the assessment.

          Soules  argues  that the assessment  was  a  contingent

liability  rather  than  an  unmatured  obligation,  because  the

          assessment would only become a debt when all events [had]

occurred which fix and determine the liability of the debtor.   A

contingent  liability  is  a  liability  that  depends  upon  the

occurrence  of  a  future  and uncertain  event.20   But  Souless

argument  would mean that the assessment was not valid until  the

association  closed on the land, because that is when  the  event

finally  occurred which fixed the liability of each  unit  owner.

That  claim is clearly wrong.21  The transaction did not  finally

close  until September 6, 2002.  If the assessment was contingent

upon  the land transaction being completed, it was not due  until

September  6,  notwithstanding the fact that the  assessment  was

voted  in December and announced in January, payment was  due  in

April, and liens attached against unpaid units in May.  But  even

Soules acknowledges that payment was due on April 30, 2002.

          The  validity of the assessment was not contingent upon

whether  the  association  purchased  the  land.   Had  the  land

transaction  irreparably  fallen apart, the  assessment  payments

would  have  been refunded with interest.  Though the  assessment

was  not  due  until April 30, when the estate sold the  unit  to

Ramstack,  payment of the assessment was contingent upon  nothing

but  the passage of time.  Thus the assessment must be viewed  as

an unmatured debt rather than a contingent liability.

          The  superior  court  found that the  board  enacted  a

special assessment on December 10, 2001, that it communicated the

amount  due  from each homeowner in January 2002,  and  that  the

assessment  remained valid even though the association  continued

to negotiate the terms of the transaction with the seller and the

bank.    These  factual  findings  are  not  clearly   erroneous.

Correspondence  from  the  association  specifically   instructed

owners  who  were  selling units to withhold  the  assessment  at

closing  and informed them that any funds paid would be  refunded

with  interest  in  the event that the land transaction  was  not

completed.  Although the association did not initially  impose  a

due  date,  Michael  Olson testified that the  board  hoped  that

          owners would pay the assessment before the association purchased

the  land  so  that these funds could be used as a down  payment.

When the transaction was renewed on March 27, 2002 the board  set

an  April  30 deadline for payment.  The amount assessed  against

each   unit   remained  unchanged  at  least  from  the   initial

communication  to  homeowners on January 11, 2002.   Under  these

circumstances,  the  superior  court  correctly  ruled  that  the

assessment was a debt of the estate at the time of closing.

          The  superior court also found that Schmidt  was  fully

aware  of  the  status of the land transaction  and  the  special

assessment,  but  that  this information  was  not  disclosed  to

Ramstack  or her agent.  Because the estate had greater knowledge

of  the  pending  assessment, the superior court correctly  ruled

that  the  estate  bore  the  burden  of  exempting  the  special

assessment  from its contractual agreement with  Ramstack  if  it

wished to avoid its obligation to pay the assessment.



     B.   Ramstack  Will Not Be Unjustly Enriched if  the  Estate
          Must Pay the Assessment.
          
          Soules  also  argues  that Ramstack  will  be  unjustly

enriched if the estate is required to pay the special assessment,

because  the  unit is now worth more with a fee interest  in  the

land and Ramstack paid a purchase price based upon the value with

only  a  leasehold  interest.  The superior court  rejected  this

argument for three reasons.  First, it noted that the estates own

agent  had  previously stated that she was unsure  how  the  land

purchase  would affect real estate values, rendering  the  unjust

enrichment  theory  problematic at best.  Second,  there  was  no

evidence  that  Ramstack would have purchased the  unit  had  she

known that the ultimate purchase price would be more than $13,000

higher   than   the   contracted  amount.   Finally,   and   most

importantly,  the court found that Ramstack was not  receiving  a

windfall,  but merely the benefit of her bargain.  We agree.   An

allegation  of  unjust  enrichment will  succeed  only  when  the

defendant has received a benefit from the plaintiff and it  would

be  inequitable  for the defendant to retain the benefit  without

compensating the plaintiff for its value. 22  But there can be no

valid  claim  of unjust enrichment where a party has  given  fair

consideration or value for the benefits obtained.23  The contract

between  Ramstack and the estate specified that the latter  would

pay  any  assessments against the unit.  But the estate  did  not

pay.   Enforcement of a valid contract does not constitute unjust

enrichment.

V.   CONCLUSION

          Because the Estate of Pauline King contractually agreed
to  pay  any assessments owed on the condominium, and  because  a
special  assessment was imposed  prior to closing, we AFFIRM  the
decision  of  the superior court that the estate is contractually
obligated to pay the special assessment.































                                   
_______________________________
     1      The  corporate  resolution  authorizing  the  special
assessment  was not actually signed by the secretary  until  July
14,  2002.  However, the resolution, the minutes of the  December
special  board  meeting, and testimony from Michael  Olson,  Vice
President  of  the  Board,  indicate  that  the  assessment   was
effective  as  of  December  10, 2001  when  the  resolution  was
adopted.   The superior court found Olsons testimony to be  fully
credible.
     2     The original disclosure statement was not available at
trial, but a statement from a similar transaction was introduced.

     3      Ramstacks real estate agent testified that the  buyer
and  seller typically do not see the others settlement statement,
thus the fact that the special assessment was not included in the
buyers  settlement statement would not have alerted  Ramstack  to
any potential problem.

     4     Carr-Gottstein Props., Ltd. Pship v. Benedict, 72 P.3d
308, 310 n.4 (Alaska 2003).

     5    Id. at 310.

     6    Rausch v. Devine, 80 P.3d 733, 737 (Alaska 2003).

     7     Carr-Gottstein,  72  P.3d at 310  (citing  Bennett  v.
Bennett, 6 P.3d 724, 726 (Alaska 2000)).

     8     State, Dept of Revenue v. Wetherelt, 931 P.2d 383, 390
n.11 (Alaska 1997).

     9     Id.,  quoting  Guin  v. Ha, 591 P.2d  1281,  1284  n.6
(Alaska 1979).

     10    Rausch, 80 P.3d at 737.

     11    Id.

     12     Ch.  95,  SLA  1985.   The  Uniform  Common  Interest
Ownership  Act  applies to condominium communities created  after
January  1986.  AS 34.08.010.  Mt. Vernon Commons was established
in  1974  and  the  bylaws  state that  it  is  governed  by  the
Horizontal  Property Regimes Act, AS 34.07.  Because the  Uniform
Common  Interest Ownership Act does not resolve the  question  of
when an assessment becomes effective, we need not address whether
it  would  apply  to  the activities of the  Mt.  Vernon  Commons
Condominium Association.

     13    AS 34.08.470(a).

     14     See Gary A. Poliakoff, Law of Condo Operations  5.15,
5.23 (1988).

     15    AS 34.08.470(a)-(b).

     16    AS 34.08.320(a)(11).

     17    AS 34.08.460(b).

     18      See   Wayne  S.  Hyatt,  Condominium  and  Homeowner
Association  Practice: Community Association Law  6.07(a)(1)  (3d
ed.   2000)   (describing  sequence  of  levying  and  collecting
assessments).

     19     See Consol. Constr. Servs., Inc. v. Simpson, 813 A.2d
260, 269 (Md. 2002) (defining unmatured debt).

     20    Blacks Law Dictionary at 926 (7th ed. 1999).

     21    The record does show that the proposed closing date was
postponed several times after the assessment was first announced.
In  December 2001 the board projected a December 28 closing date.
When the assessments were announced to homeowners on January  11,
2002 the board anticipated a late January closing date.  On April
3,  when  the  board  announced that  the  transaction  had  been
reinstated  and  set  the  April  30  deadline  for  paying   the
assessment,  it  projected  a  May 1  closing.   Closing  finally
occurred in September.

     22     Crittell  v.  Bingo, 83 P.3d 532, 538  (Alaska  2004)
(quoting Sparks v. Gustafson, 750 P.2d 338, 342 (Alaska 1988)).

     23    Alaska Sales & Serv. Inc. v. Millett, 735 P.2d 743, 746
(Alaska 1987).