[WSBAPT] Casey v. Sudden Valley

[Rob Wilson-Hoss]

          Reader warning - the following is just my opinion and I have
been wrong before, including even today, so take it for what it is worth. 

 

          Just out - Casey v. Sudden Valley, an unpublished opinion in
which the Court of Appeals says, as to HOAs, that RCW 64.38.025(3) does
not include assessments within budgets; that the process for member
ratification of budgets spelled out in the statute means that the members
can ratify a budget (and will, unless half the total votes of the
association vote to reject it, regardless of whether there is a quorum or
not), but if the Bylaws provisions for approval of assessments are not met
(supermajorities, majorities, whatever, plus a quorum needed), then the
assessment amount that is not according to the Court of Appeals to be a
part of the budget is not ratified. The Court of Appeals reasoned that if
this happens, then the Association just has to adjust its spending to make
up for the shortfall.

 

          I guess that when the Court of Appeals sees "budget," they see
income and expenses (and reserves), but they don't consider the income
side of this to include where the income comes from (assessments,
primarily); so if the income side is zeroed out because no assessment
budget is passed, then the Association just doesn't spend the money it
just got approved to spend in the ratified budget.  

 

          One of my favorite parts of the decision is where they say that
RCW 64.38.025(3) does not specify assessments as part of budgets ('Nowhere
is 'assessment' mentioned."). Great, and that is entirely accurate. But it
also doesn't specify expenses or reserves as part of the budget. It just
says "budget." Nowhere is expense or reserves mentioned, either. Except in
64.38.020(2), which gives an association the power to "[a]dopt and amend
budgets for revenues, expenditures and reserves...."

 

          There is simply no way for this decision to make any sense in
the real world of either statutory interpretation, or homeowners'
associations. Your budget, including expenses, income and reserves, gets
ratified according to the statute, but you lose the assessment vote under
the Bylaws, so what good is your ratified budget?

 

          As is often the case with appellate decisions about HOAs, there
is so much just plain wrong about this opinion, but it is what it is. At
least it is unpublished. When I tried the same case in Superior Court down
here, I called both the prime legislative sponsor of the bill, and the
primary drafter, and they both affirmed that the purpose was to provide a
consistent way for Boards to meet their responsibilities by assessing
enough to pay for an association's business, including preserving its
assets; and at the same time giving members a chance to weigh in on the
assessments that were part of the budget.  Our judge had absolutely no
difficulty ruling that assessment income is part of the income side of the
budget, and if assessment income was going to be part of the budget, it
was going to be part of the budget approval process in 64.38.025(3). Which
made perfect sense, but not to this panel of Division I of the Court of
Appeals. 

 

          For the judges on the panel, my opinion is just mine and please
don't hold it against my partner. 

 

          Good grief. 

 

 

Robert D. Wilson-Hoss 
Hoss & Wilson-Hoss, LLP 
236 West Birch Street 
Shelton, WA 98584 
360 426-2999

www.hossandwilson-hoss.com
rob at hctc.com

 

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