Business interests voicing opposition to Baldwin County condo ruling

The Alabama Attorney General’s (AG) office is aligning with prominent statewide business interests who believe a Baldwin County judge’s ruling last year in a case about condominium declarations amounted to “overkill.” 

That’s one way the Associated Builders and Contractors of Alabama described Circuit Judge Clark Stankoski’s ruling last May against Brett/Robinson, a vacation management and property development company in Gulf Shores. They also described it as “draconian” and “liberal.”

Last May, Stankoski stripped Brett/Robinson of its declared ownership of four commercial units in the Phoenix on the Bay II Condominiums, a 104-unit residential complex it developed in Orange Beach in 2007. In a case dating to 2015, Brett/Robinson sued the Phoenix Property Owners Association (POA) and its president, Pam Montgomery, seeking an injunction after the POA voted to terminate Brett/Robinson’s management contract and allegedly “changed the locks” at the Phoenix’s check-in, maintenance and housekeeping areas.  

Brett/Robinson was represented in the complaint by Daniel Blackburn, whose firm, Blackburn & Conner, also represented the Baldwin County Commission at the time of the lawsuit. 

Montgomery and POA counter-sued, alleging the commercial units Brett/Robinson declared as its check-in, maintenance and housekeeping areas were invalid. Further, Montgomery claimed she had been fraudulently induced into investing in a 104-unit residential condo, when Brett/Robinson actually considered it a 108-unit condo, with the additional four commercial units being undisclosed in marketing materials she received in 2007. 

Stankoski ruled against Brett/Robinson last May, not only declaring the four commercial units invalid, but also awarding them to the POA for use as residential common areas. In doing so, Stankoski also struck and amended several portions of the condo’s declarations, redistributing Brett/Robinson’s fractional ownership interest among the other 104 property owners. 

According to attorney Marc Ayers, who wrote a brief on behalf of the appellants, that portion of Stankoski’s ruling amounts to a “a direct, unprecedented threat to one of the most fundamental principles of the Alabama Uniform Condominium Act (AUCA) and indeed of condominium law anywhere — that ‘the declaration is the instrument which creates and defines the [condominium] units.’”

When the Alabama Association of Realtors (AAR) caught wind of the ruling, it also filed a “friend of the court” brief in favor of its reversal. 

“Under the the AUCA, condominium declarations operate as the paramount charters of the entities they establish,” attorney Hamilton Wilson Jr. wrote in the brief dated Jan. 17. “The decision is problematic for the real estate industry because provisions in the primary documents which create ownership interests for condominium declarants … are now subject to invalidation on a delayed post-hoc basis based on the lower court’s holding. This precedent could disincentivize those types of real estate development, and thereby harm the business market for AAR members who assist both the developers, purchasers and sellers of property in those developments as well.”

Attorney Forrest Latta submitted a brief to the Supreme Court on behalf of three other condominium developers — David Head, Rick Phillips and Larry Wireman — who admittedly are “direct competitors” Brett/Robinson in Gulf Shores and Orange Beach. 

Alleging the other developers share a “deep concern” about the ruling, Latta wrote if it’s upheld, it “would severely undermine [our] confidence in the ACUA, jeopardize [our] past projects and fundamentally complicate [our] ability to achieve finality on future projects, among many other potential ramifications. 

“The goal of the AUCA is to promote certainty and clarity in the creation and marketing of condominium interests. No basis exists for a unit buyer, through the courts, to nullify and rewrite the Declaration of Condominium, and such a ruling is highly detrimental to the industry,” he concluded. 

The same day those briefs were filed in January, Attorney General Steve Marshall filed one of his own, urging the court to reverse Stankoski’s ruling. 

“The state has an interest, in particular, in this appeal because the circuit court’s order creates risks for each condominium unit owner in Alabama that her property rights may be altered by court order simply because her neighbor alleges fraud against a third party,” Marshall wrote. “If a purchaser is fraudulently induced into purchasing a unit, she can seek rescission or damages, including in some circumstances punitive damages or statutory damages afforded under the ACUA. But reformation of a declaration — the title that allocates rights for all unit owners in a condo — is not an available or appropriate remedy.”

Marshall claims Stankoski “completely abolished” Brett/Robinson’s rights, and even if Montgomery and the POA is right on the facts, “her remedy should be rescission or damages.”

“But instead, the circuit court altered the rights of every unit owner in the condo by rewriting the declaration. If that result stands, no condo unit owner in the state can be confident that the rights he holds today will be the rights he holds tomorrow, for a litigious neighbor could go to court against the condo’s developer and have the rights of every unit owner in the condo altered,” Marshall wrote. 

Reached last week, Montgomery preferred to delay public statement until her attorney, Jessica McDill, had the opportunity to file an answer to the briefs, and until a settlement in a related case is finalized. But Montgomery said Stankoski’s ruling for the POA was a win for consumers.

“The [ACUA] was put in place for a reason and it must be followed to the letter of the law for a reason,” she said. “And there is a remedy in there and the remedy needs to stay intact. And if the state Supreme Court agrees with the appellants and agrees with the AG’s office and agrees with these other people’s positions, then the consumer is going to be hurt.” 

But the appellants see a looming precedent. 

“This dangerous ruling has no basis in Alabama law — or the law of any other jurisdiction, for that matter — and is directly contrary to, and threatens to undermine, both the text of, and express purposes behind, the AUCA,” Ayers wrote.