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Waggle v. Woodland Hills Association, Inc.

Commonwealth Court of Pennsylvania

July 10, 2019

Kevin M. Waggle and Linda Ann Waggle and Salvatore Russo as trustee
v.
Woodland Hills Association, Inc. Appeal of: Kevin M. Waggle and Linda Ann Waggle

          Submitted: April 11, 2019

          BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge HONORABLE MICHAEL H. WOJCIK, Judge (P.) HONORABLE CHRISTINE FIZZANO CANNON, Judge

          OPINION

          MARY HANNAH LEAVITT, President Judge

         Kevin M. and Linda Ann Waggle (collectively, Waggles) appeal an order of the Court of Common Pleas of Wayne County (trial court) granting Woodland Hills Association, Inc.'s (Association) request for a clarification of the parties' Settlement Agreement and holding the Waggles in contempt of court. The trial court held that the Settlement Agreement required the Waggles to share in the cost for capital improvements to common areas in a planned community and for liability insurance on a shared boat dock. On appeal, the Waggles argue that the trial court erred in its construction of the Settlement Agreement. They further contend that the trial court's interpretation of the Settlement Agreement effected an unauthorized modification of the agreement. For the reasons to follow, we affirm the trial court.

          Background

         Woodland Hills is a planned community located on Lake Wallenpaupack in Wayne County, Pennsylvania. The Association maintains the Woodland Hills common areas, including the roads and boat docks, and imposes fees upon residents to fund this work.

         In 2005, the Waggles purchased a slip at Woodland Hills' boat dock. In 2008, a dispute arose between the Waggles and the Association about whether the Waggles were members of the Association or entitled to own a slip at the boat dock. In 2009, the Waggles filed a declaratory judgment action to establish that they were not members of the Association and did not need to be in order to own a boat slip.[1]In 2013, the parties resolved their dispute with a Settlement Agreement that, inter alia, established that the Waggles, albeit not members of the Association, were entitled to keep their boat slip and to vote on discrete issues. In return, they had to pay a proportionate share of the costs related to common areas, the boat docks, and the community's water system. Reproduced Record at 28a-49a (R.R. __).[2] On October 22, 2013, the trial court entered an order approving the Settlement Agreement.

         In May 2015, the Waggles filed a petition for contempt against the Association. The petition alleged that the Association had failed to provide liability insurance on their boat slip in accordance with the Settlement Agreement and had not correctly calculated their 2015 Association and dock fees.

          In October 2016, the Association filed a cross-petition for contempt, alleging that the Waggles had not paid their 2015 and 2016 Association fees. In addition, the Association sought a clarification that the Settlement Agreement required the Waggles to share in the expense of maintaining the facilities they used, including the roads and the boat dock. The Association asserted that maintenance of the roads included their resurfacing, when needed.

         On January 24, 2017, the trial court ordered the Waggles to pay, within 30 days, $1, 470.24, which represented the total of the Association's 2015 and 2016 assessments on the Waggles. Additionally, the trial court scheduled a hearing on the Association's petition for clarification of the Settlement Agreement and directed the parties to submit memoranda of law on what constitutes a maintenance expense as opposed to a capital improvement expense.

         On February 21, 2017, the trial court conducted a hearing on the Association's contempt petition. At the hearing, the Waggles acknowledged that they had not paid the $1, 470.24. Their counsel explained that he

wouldn't like them, necessarily, to pay it before [they] had a judicial determination on that, 'cause it does include, from what we believe to be, a capital improvement in the form [of] the levelling, the blacktopping, etc.

Notes of Testimony (N.T.), 2/21/2017, at 92; R.R. 238a. Their counsel also stated, "I'm just asking that we give [the Waggles] additional time on that portion, until we conclude the case." Id.

         On March 7, 2017, following the hearing, the trial court entered the following order:

(1) As to streets, roads and/or traffic ways of which Non-Members of the [Association] are permitted to use, [the] Waggle[s] shall pay their proportionate share of maintenance expenses.
We hold specifically that streets, roads and/or traffic ways, and transportation capital improvements are deemed to be improvements which have a life expectancy of three years or more, not including costs for maintenance, operation or repair. See In re: Maibach, LLC, 25 A[.]3d 1214 (Pa. Cmwlth[.] 2011).
(2) In general capital improvements shall constitute building and/or construction of which according to Internal Revenue Service law and/or regulations would be required to be treated for tax purposes as capital improvements.

Order, 3/7/2017, at 1; R.R. 242a.

         The Association construed this order to mean that its road leveling[3]project in Woodland Hills constituted a maintenance expense. The Waggles, however, construed the order to mean that the Association's road leveling project was a capital improvement because it would extend the life of the road for more than three years.

         On July 27, 2017, the Association filed another contempt petition against the Waggles, alleging that they had not paid the entire $1, 470.24, as ordered by the trial court on January 24, 2017. The Waggles still owed approximately $300.[4]Contemporaneous with its petition for contempt, the Association petitioned for a clarification of the trial court's March 7, 2017, order, to resolve the remaining issues between the Association and the Waggles.

         On November 15, 2017, the trial court held a hearing on the Association's petition. At the hearing, counsel for the Waggles acknowledged that they had withheld $300 from the $1, 470.24 owed to the Association. Counsel explained that

when the Court issued its Order back [in] January of 2017, the Court directed the Waggle[s] … to pay $1, 470.2[4] for Association dock dues for 2015 and Association dock and water dues for 2016. Now at that same time in that January Order the Court indicated that it would be entertaining the Association's request for clarification of the Settlement Agreement with the implication being that the Court would issue another Order clarifying the Settlement Agreement … which the Court did on March 7, 2017. So in this March 7, 2017 Order the Court clarifies that the Waggle[s] … are required to pay their proportionate share of maintenance expenses of those streets, roads and traffic ways that they are permitted to use, and that they're not required to pay capital improvement costs for the streets, roads and traffic ways. And then the Court goes on to say that if you want to know what a capital improvement is you should look at the IRS law and IRS regulations. So, a part of the $1, 470.2[4] that the Waggle[s] … were directed to pay, it turns out, is for capital improvements specifically that $300[] is for a levelling course and special projects.

N.T., 11/15/2017, at 9-10; R.R. 277a-78a (emphasis added). In short, the Waggles construed the trial court's March 7, 2017, order to mean that the resurfacing, or "leveling," of existing roads in Woodland Hills constituted a capital improvement for which they were not responsible. Thus, they withheld payment of $300 out of the $1, 470.24.

         On December 12, 2017, the trial court entered an order holding the Waggles in contempt for not paying the entire amount of $1, 470.24 they had been ordered to pay. Additionally, the trial court stated as follows:

a. Section 6 of the Settlement Agreement is clarified to provide that Plaintiffs … are required to pay their proportionate share of any costs and expenses incurred by [the Association] to complete maintenance fees under the Settlement Agreement.
b. Section 6 of the Settlement Agreement is clarified to provide that Plaintiffs … are required to pay [the Association] their proportionate share of costs incurred to complete capital improvements to facilities that Plaintiffs have the right to use and enjoy including but not limited to roads, under the definition set forth in the Internal Revenue Services' laws and regulations, including the specific costs identified in [the Association's] 2016 Road Budget and other projects that are designated "Special Projects" or "Special Repairs" when those "Special Projects" or "Special Repairs" ...

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