NOTE: This article was originally published in the March 25, 2020 issue of Lagniappe.
Pam Montgomery has it all wrong, says attorney Marc Ayers. He represents Baldwin County condominium developer and real estate management company Brett/Robinson, which is appealing a 2019 circuit court judgment where it was stripped of its ownership of four commercial units in the Phoenix on the Bay II (POBII) condominiums in Orange Beach.
Montgomery and the POBII Owners Association were defendants in the case, filed after Brett/Robinson was replaced as the manager for the condos and the association allegedly “changed the locks” on the facility’s check-in and sales offices.
The two areas, along with a maintenance and housekeeping area, were listed as “commercial units” on the POBII condo declaration filed in Baldwin County Probate Court in 2007, but Montgomery claimed Brett/Robinson “routinely withheld and suppressed the existence of the supposed four commercial units to other purchasers, lending institutions, mortgage brokers and real estate agents,” including when she pre-purchased one of the 104 residential units before they were constructed.
The case was detailed in Lagniappe Feb. 26 and March 11 after numerous business interests, law professors and even the Alabama attorney general filed amicus briefs with the Alabama Supreme Court seeking to overturn the judgment.
In a letter to Lagniappe fully published along with related legal documents below, Ayers claims the existence of the commercial units were “well known” since 2007 “because, in addition to accepting votes for those units, the association was also paid and accepted over $230,000 in unit owner dues and assessments as to the four commercial units … This is on top of the Baldwin County property taxes assessed against the units by name, also paid regularly since 2007,” he wrote.
Ayers claims Montgomery provided “many misleading and, at times, flatly false statements” to Lagniappe for the news reports and during the trial she “admitted that she never even read the recorded POBII declaration before she closed on her unit, even though she also admitted at trial that a condominium is created only by the recorded declaration.”
Ayers also took offense to Montgomery’s characterization of Attorney General Steve Marshall as being “OK with fraud,” after Marshall submitted a brief on behalf of Brett/Robinson stating Judge Clark Stankoski’s “reformation of a declaration” contrary to the intent of a declarant “is not an available or appropriate remedy” under state law.
“The attorney general’s brief makes clear that the state of Alabama’s interest is to preserve the numerous, proper remedies available to an aggrieved unit purchaser, while preventing courts from rewriting declarations in favor of one unit purchaser’s wishes and to the detriment of many other unit purchasers who do not feel defrauded and who may like changes that were made to a proposed declaration,” Ayers wrote. “If the Alabama Supreme Court were to adopt Montgomery’s ‘condominium unit nullification’ theory, it would be the first appellate court in the country to do so, and it would have to not only ignore the Alabama Uniform Condominium Act and its stated purposes, but would also have to overrule decades of its own precedent. Such a decision would radically destabilize condominium law and development in Alabama, and would allow a court to rewrite condominium declarations based on one unit owner’s wishes, contrary to how other unit owners might feel.”
Response on appeal from Lagniappe
Submitted by Marc James Ayers, Partner – Appellate Litigation Group, Bradley Arant Boult Cummings LLP on March 23, 2020
Imagine that, for almost a decade, you were the owner of a condominium unit – a unit clearly described in the terms and plans of the condominium’s recorded “declaration,” which is the instrument that creates condominiums and units. Imagine also that, for almost a decade, you had been paying condominium dues and assessments and county taxes, and had been voting in the condominium’s owners’ association meetings.
Now imagine that, after almost a decade of such ownership, a court stripped your ownership away, and declared that your unit was never really a unit at all, based upon a legal theory that finds no support in Alabama condominium law or in the law of any other jurisdiction.
This is the situation at issue in Brett/Robinson Gulf Corporation’s appeal to the Alabama Supreme Court concerning the existence of four commercial units owned by Brett/Robinson at the Phoenix on the Bay II condominium, which has been the subject of two recent articles in Lagniappe.
Unfortunately, the March 11, 2020, article – entitled “Condo owners seek to uphold judicial remedies for alleged fraud” – contains many misleading and, at times, flatly false statements that have been provided to Lagniappe. As a result, readers are left with the impression that the case before the Supreme Court threatens to take away judicial remedies for condominium unit purchasers who have been defrauded. Nothing could be further from the truth.
The case does not in any way impact or take away the numerous judicial remedies that a unit purchaser can and should pursue if they believe that what they purchased was not what they were promised. In fact, there was not even a claim for “fraud” in the case at all.
What actually happened here was the unprecedented judicial nullification of the four commercial units that had been owned, paid for and voted on by Brett/Robinson for almost a decade. To read the false information apparently derived, in large part, from a one-sided interview of Ms. Montgomery (and possibly her counsel), one is left with the completely inaccurate impression that the commercial units were not properly created when the POB II Declaration was recorded in 2007, and that Montgomery and the POB II owners’ association were unaware of the existence of these units until the lawsuit was filed in 2015.
The undisputed evidence at trial, and indeed Montgomery’s own trial testimony, shows just the opposite.
For example, it is undisputed that under the Alabama Uniform Condominium Act, the POB II condominium and its units were created when the POB II declaration was recorded in the Baldwin County Probate Court in 2007, and that no units could be closed on until after the recordation. That declaration clearly stated that there were four commercial units in addition to the 104 residential units, and attached plans and other documents that plainly described the units, their voting ownership, etc. The existence of these commercial units actually reduced the amounts that each residential unit owner would otherwise have to pay for the common areas.
Contrary to the assertions provided to the Lagniappe, Montgomery did not “discover” the four commercial units in 2015, when the lawsuit was filed. At trial, Montgomery testified that in 2011 she saw the commercial units being voted by name at a POB II Owners Association meeting. She further testified that she asked about this and was told by the Association’s own independent auditor that they had the right to vote because they were units.
And, again contrary to the misrepresentations given to Lagniappe, the commercial units were well known to the POB II Owners Association (of which Montgomery is the president of the Board), because, in addition to accepting votes for those units, the Association was also paid and accepted over $230,000 in unit owner dues and assessments as to the four commercial units since 2007. This is on top of the Baldwin County property taxes assessed against the units by name, also paid regularly since 2007.
In fact, Montgomery admitted that she never even read the recorded POB II declaration before she closed on her unit, even though she also admitted at trial that a condominium is created only by the recorded declaration – not by an earlier draft proposed declaration (which is often subject to change during construction) – and even though she claimed to have substantial knowledge of how condominium documents operate.
Instead, Montgomery focuses solely on an earlier proposed declaration for POB II to claim “fraud,” but that draft declaration specifically states that it is only a “proposed” document and that it was “neither executed nor recorded.” But even that document makes plain the intent to maintain and control four commercial areas in the condominium, and lists them by name.
To be sure, there should be, and there are, numerous powerful remedies available to a unit purchaser who believes that they have been fraudulently induced to buy a unit based on some perceived misrepresentation concerning the condominium. There are statutory and common law remedies to get out of a unit purchase and get one’s money back, and significant statutory penalties under certain conditions.
In addition, a purchaser could bring a civil fraud claim (which could even bring punitive damages), or sue for damages for breach of contract. But there is no legal basis whatsoever for a court to rewrite a declaration to nullify condominium units that have existed (and been paid for) for almost a decade based on another owner’s claim that she was purportedly unaware of those units at the time she closed, as Montgomery asserts here.
Again, while Montgomery had numerous avenues to assert her unsupported “fraud” theory to get out of her unit purchase or to seek damages, she did not pursue any of those, and for good reason: her claim of fraud is utterly meritless, and would have failed for many reasons.
Montgomery also spreads a series of baseless, unrelated allegations that Brett/Robinson somehow breached its obligations as condominium manager. But, unfortunately, Lagniappe readers are not told that the circuit court rejected the vast majority of her claims of breach as being so without merit that they did not even warrant a trial.
If the Alabama Supreme Court were to adopt Montgomery’s “condominium unit nullification” theory, it would be the first appellate court in the country to do so, and it would have to not only ignore the Alabama Uniform Condominium Act and its stated purposes but would also have to overrule decades of its own precedent. Such a decision would radically destabilize condominium law and development in Alabama, and would allow a court to rewrite condominium declarations based on one unit owner’s wishes, contrary to how other unit owners might feel.
This is the reason that Brett/Robinson’s position is supported by several “friend-of-the-court” briefs filed by the State of Alabama (through the Attorney General), the Alabama Associated Builders and Contractors, the Alabama Association of Realtors, several distinguished Professors of Law from all of Alabama’s accredited law schools, and even other experienced condominium developers from the Gulf Coast. (Also, the Coastal Alabama Business Chamber has asked the Supreme Court to add its name to this list as well.)
One can rest assured that these distinguished persons and entities, and their equally distinguished counsel, would not appear without very good reason.
In this respect, Montgomery’s unbelievable personal attack on the integrity of Alabama’s Attorney General – that the AG is somehow “OK with fraud” when it helps businesses – is truly beyond the pale. As is clearly discussed in the State of Alabama’s friend-of-the-court brief, the Attorney General sees the radical nature of the theory proposed by Montgomery, the danger it represents to Alabama’s condominium law and to other condominium unit owners.
The Attorney General’s brief makes clear that the State of Alabama’s interest is to preserve the numerous, proper remedies available to an aggrieved unit purchaser, while preventing courts from rewriting declarations in favor of one unit purchaser’s wishes and to the detriment of many other unit purchasers who do not feel defrauded and who may like changes that were made to a proposed declaration.
In the end, all of the briefs in this case are a matter of public record, and Brett/Robinson would invite any who are interested to read them. There is an old saying in the law: “If you have the law, pound the law. If you have the facts, pound the facts. If you do not have the law or the facts, pound the table.”
Unfortunately for Laginappe readers, the inaccurate narrative being pushed by Montgomery or her counsel in the March 11 article sounds more in personal-attack table pounding than it does the truth.
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