Ocean Beach Resort v. Bernice Rodack

The plaintiff, Ocean Beach Resort, Inc. [Ocean Beach], appeals the final judgment rendered in favor of the defendants, the single unit owners, and the order denying its motion for rehearing. We affirm in part, reverse in part and remand with instructions. The Ocean Beach Resort, a Motel Condominium [condominium], consists of sixty-six units which were converted from a motel in 1982 by the original developer. In 1984, each of the three defendants purchased a unit from the original developer. The original developer filed for bankruptcy and, as a result, the lender instituted a foreclosure action against the unsold units upon which it still had a lien. Ocean Beach, the successor developer, purchased the remaining unsold sixty-two units at the foreclosure sale in 1986. Subsequent to its purchase, Ocean Beach spent approximately $400,000.00 in repairs and renovations.1{/Cite} Of the $400,000.00 spent, $204,580.00 was included in a special assessment. Accordingly, the association levied a special assessment against each of the unit owners. This special assessment included $3,099.70 (product of $204,580.00 expenditure divided by sixty-six, the number of units) for repairs, $138.66 for prepayment of two months regular maintenance assessments as working capital, and $415.00 as a reserve contribution for roof and plumbing repairs.2{/Cite} The defendants refused to pay the special assessment and the association filed claims of lien. The liens were assigned to Ocean Beach and Ocean Beach filed an action to foreclose on the special assessment liens. The trial court entered a judgment in favor of the defendants finding that the expenditures comprising the disputed special assessment were development costs which must be borne exclusively by Ocean Beach, the subsequent developer. The trial court also denied Ocean Beach's motion for rehearing. Ocean Beach appeals.