FILED
Sep 13 2016, 6:17 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Scott C. Andrews John A. Stroh
Andrews Law Office, LLC Sharpnack Bigley Stroh &
Columbus, Indiana Washburn LLP
Columbus, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Marvin Hamilton and September 13, 2016
Linda Hamilton, Court of Appeals Case No.
Appellants-Defendants, 03A05-1511-SC-1906
Appeal from the Bartholomew
v. Superior Court
The Honorable James D. Worton,
Schaefer Lake Lot Owners Special Judge
Association, Inc., Trial Court Cause No.
Appellee-Plaintiff 03D02-1309-SC-2182
Baker, Judge.
Court of Appeals of Indiana | Opinion 03A05-1511-SC-1906 | September 13, 2016 Page 1 of 10
[1] Marvin and Linda Hamilton (collectively, the Hamiltons) appeal the trial
court’s judgment entered against them and in favor of Schaefer Lake Lot
Owners Association, Inc. (the Association). As consolidated and restated, the
Hamiltons contend that they are not members of the Association and do not
owe money for annual and special assessments, and that the statute of
limitations bars claims for assessments made prior to 2008. Finding that the
Hamiltons are members of the Association and therefore owe money for the
assessments, and that the statute of limitations does not bar any of the
Association’s claims, we affirm.
Facts
[2] Schaefer Lake Addition was developed by Albert and Helen Schaefer in three
sections: Section 1 was platted in 1960, Section 2 was platted in 1961, and
Section 3 was platted later. In 1971, the Association was formed.
[3] In 1973 or 1974, the Hamiltons purchased lot 89 in Section 2 of Schaefer Lake
Addition. At the time of purchase, their property was subject to the Schaefer
Lake Addition Covenants (Covenants). The Covenants provided the following:
These covenants are to run with the land and shall be binding on
all parties and all persons claiming under them for a period of
twenty five years from the date this plat is recorded, after which
time said covenants shall be automatically extended to successive
periods of ten years unless an instrument signed by a majority of the
then owners of the lots has been recorded agreeing to change said
covenants in whole or in part.
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Defendant’s Ex. 1 (emphasis added). The Covenants did not mention
requirements relating to membership in the Association and did not specify that
lot owners have to pay any assessments to the Association.
[4] In 1976, the Association amended its Articles of Incorporation, and in 1977, it
filed the Amended Articles of Incorporation (Amended Articles) with the
Secretary of State. The Amended Articles provided that a lot owner is entitled
to membership in the Association and “said membership [is] predicated upon
the remittance of the initial membership fee of $15.00.” Defendant’s Ex. 3.
Also in 1977, Albert and Helen Schaefer recorded additional covenants entitled
Declaration of Covenants (Declaration). The Declaration provided that any
lots owned by anyone other than the Schaefers may be subject to the
Declaration by voluntarily executing and recording a Supplementary
Declaration of Covenant. The Schaefers could also subject additional lots
owned by them to the Declaration by providing in a deed, original platting, or
additions to the plats, that the lots be subject to, owned, held, and transferred
under the provisions of the Declaration. The Declaration provided that any
new owner must pay an initial membership fee of fifteen dollars, and that this
fee is to be paid upon change of legal ownership, within thirty days of the date
of transfer of legal title.
[5] In 1996, owners of thirty of the fifty-eight Section 2 lots voted to amend the
Covenants that related to Section 2. The amendment provided:
All Lot Owners in Schaefer Lake Addition, Section 2, their
assigns or successors, shall be members in Schaefer Lake Lot
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Owners Associates, Inc., an Indiana Corporation, or any
successor to this organization, and shall be subject to all rules and
regulations thereof.
All Lots in Schaefer Lake Addition, Section 2, shall be subject to
the covenants, restrictions, charges, liens, and provisions of the
Declaration of Covenants executed by Albert A. Schaefer and
Helen E. Schaefer, husband and wife, July 29, 1977, and
recorded September 27, 1977, in the Office of the Recorder of the
Bartholomew County, Indiana.
These covenants are to run with the land and shall be binding on
all parties and all persons claiming under them for a period of
one year from the date this plat is recorded . . . .
Plaintiff’s Ex. C.
[6] In 2002, the Association adopted the Rules and Regulations of Schaefer Lake
Lot Owners Associates, Inc. (Rules). The Rules provide that the Association
can determine the need for and establish the amount of an annual assessment or
special assessment against each lot.
[7] On September 19, 2013, the Association filed a complaint against the
Hamiltons in small claims court for non-payment of annual and special
assessments. Following a July 10, 2015, bench trial, the court found for the
Association, awarding a judgment of $4,240 and attorney fees of $1,760 for a
total of $6,000 plus court costs of $91 and post-judgment interest. The
Hamiltons now appeal.
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Discussion and Decision
[8] The Hamiltons raise four issues, which we consolidate and restate as follows:
whether the Hamiltons are members of the Association and, if so, whether they
owe dues and assessments, and whether the statute of limitations has run on the
action.
I. Standard of Review
[9] Small claims court judgments are “subject to review as prescribed by relevant
Indiana rules and statutes.” Ind. Small Claims Rule 11(A). Pursuant to Trial
Rule 52(A), the clearly erroneous standard applies to appellate review of facts
determined in a bench trial with due regard given to the opportunity of the trial
court to assess witness credibility. This deferential standard of review is
particularly important in small claims actions, where trials are designed to
speedily dispense justice by applying substantive law between the parties in an
informal setting. Trinity Homes, LLC v. Fang, 848 N.E.2d 1065, 1068 (Ind.
2006). Parties in a small claims court bear the same burdens of proof as they
would in a regular civil action on the same issues. Ind. Small Claims Rule
4(A). It is incumbent upon the party who bears the burden of proof to
demonstrate that it is entitled to the recovery sought. LTL Truck Serv., LLC v.
Safeguard, Inc., 817 N.E.2d 664, 668 (Ind. Ct. App. 2004). We consider
evidence in the light most favorable to the judgment, together with all
reasonable inferences to be drawn therefrom. Id. at 667. We will reverse a
judgment only if the evidence leads to but one conclusion and the trial court
reached the opposite conclusion. Id.
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II. Association Membership and Assessments
[10] The Hamiltons argue that they are not members of the Association because the
Covenants did not require membership in a lot owners’ association and did not
require payment of dues and assessments. They also argue that they are not
members of the Association because they never signed or agreed to the 1996
amendments or voluntarily joined the Association.
[11] Restrictive covenants serve in part “to maintain or enhance the value of land by
controlling the nature and use of lands subject to a covenant’s provisions.”
Grandview Lot Owner Ass’n, Inc. v. Harmon, 754 N.E.2d 554, 557 (Ind. Ct. App.
2001) (internal quotation marks and citations omitted). They are a form of
express contract recognized under the law. Id. As such, we apply the same
rules of construction when a dispute arises as to a covenant’s terms. Harness v.
Parkar, 965 N.E.2d 756, 760 (Ind. Ct. App. 2012). Restrictive covenants must
be strictly construed, and all doubts should be resolved in favor of the free use
of property and against restrictions. Id. The covenanting parties’ intent must be
determined from the specific language used and from the situation of the parties
when the covenant was made. Id.
[12] The record here establishes that the Hamiltons purchased their lot subject to the
Covenants. The Covenants expressly provided that the covenants are to run
with the land and are binding on all parties subject to them. The Covenants
also expressly provided that the Covenants could be amended through an
instrument signed by a majority of the then lot owners and recorded. In 1996, a
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majority of lot owners did vote to amend the Covenants; the amendment
provided that all lot owners are members of the Association and subject to the
Association’s rules and regulations. In 2002, the Association adopted rules that
allow it to establish annual and special assessments against each lot.
[13] We disagree with the Hamiltons’ assertions that the amendment was outside
the scope of the Covenants’ intended purpose and that the amendment was an
attempt “to force an owner to join a lot owner’s association.” Appellant’s Br. p.
7. The Covenants provided that they could be changed after twenty-five years
had run, and the 1996 amendments were passed after this allotted time. The
Covenants did not specify or restrict what changes could be made, but instead
left any changes to the decision of the majority of lot owners. Thus, because
the amendment was enacted by a majority of lot owners, it was within the
scope of the Covenants’ intended purpose. Further, the amendment did not
“force” the Hamiltons to become Association members; they bought their lot
subject to the Covenants, thereby agreeing to be subject to the restrictions and
regulations in the Covenants and any approved changes to the Covenants.
[14] Nor has the fact that the Hamiltons have not paid a fifteen-dollar initial
membership fee prevented them from becoming Association members.
Although the Amended Articles provide that membership is predicated on the
fee, this provision applied before all lot owners were required to be Association
members. The 1996 amendments that make Association membership
mandatory do not mention any fee for membership, thereby making all lot
owners members regardless of any initial fee. Accordingly, their argument that
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they are not Association members because they did not pay the membership fee
fails.
[15] Finally, we are not persuaded by the Hamiltons’ argument that the Association
did not prove by a preponderance of the evidence that the assessments they owe
were validly approved. The Rules provide that the Association’s Board of
Directors determines the need for and establishes the amount of an annual or
special assessment, and that a majority of a quorum of members in good
standing must approve the assessments. The Rules provide that the
Association’s annual meeting is to take place in January, with the date, time,
and place designated by the Board, and that special meetings may take place at
the discretion of the Board. The Board must give notice of each meeting in
writing by mailing or by placing a notice in the mailbox of the members not less
than one week prior to a meeting.
[16] We find that the Association presented sufficient evidence to show that the
assessments the Hamiltons owe were validly approved. Christina Moore, the
current Association president, who has been a resident of Schaefer Lake for
eleven years, testified that the Board always mailed a letter to each lot owner
with the date, time, and location of the annual meeting, two to three weeks in
advance. The letter included a copy of the current year’s budget and the
coming year’s estimated budget, an amount of the dues owed, and a form for
proxy voting. Following the meeting, the Association mailed a letter with
information about what took place at the meeting and an invoice for
assessments. She also testified that the Association has followed this procedure
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since at least 2000, and that the Members passed an assessment each year since
2004. Marvin Hamilton was aware that the Association had an annual
meeting, he received letters about the meetings, and he knew that the
Association decided on assessments at the meetings. In 2003, Linda Hamilton
signed and submitted a proxy vote for them for that year’s annual meeting.
Thus, we find that the Association met its burden of proof when establishing
that the assessments were validly approved.
[17] In sum, we agree with the trial court that, pursuant to the Association’s
covenants, amendments and rules, the Hamiltons are Association members and
must pay their annual and special assessments.
III. Statute of Limitations
[18] On appeal, the Hamiltons assert that the statute of limitations has run on any
amount assessed prior to 2008. The Hamiltons did not raise the statute of
limitations issue at trial. Failure to raise an issue at trial results in waiver of that
issue. Van Winkle v. Nash, 761 N.E.2d 856, 859 (Ind. Ct. App. 2002).
[19] Waiver notwithstanding, we find that the Association’s claim is within the
statute of limitations for breach of contract actions. As noted above, restrictive
covenants are a form of express contract recognized under the law. Grandview
Lot Owner Ass’n, Inc., 754 N.E.2d at 557. An action based on a written contract
must be commenced within ten years after the cause of action accrues. Ind.
Code § 34-11-2-11. The Association filed its cause of action in 2013, seeking
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judgment for assessments dating back to 2004, which is within the ten-year time
period provided by law.
[20] The judgment of the trial court is affirmed.
Bradford, J., and Altice, J., concur.
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