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Littlebrook Airpark Condominium Association v. Sweet Peas, LLC

Supreme Court of Maine

January 8, 2019

LITTLEBROOK AIRPARK CONDOMINIUM ASSOCIATION
v.
SWEET PEAS, LLC, et al.

          Argued: December 12, 2018

          Gene R. Libby, Esq., and Tyler J. Smith, Esq. (orally), Libby O'Brien Kingsley & Champion, LLC, Kennebunk, for appellants Sweet Peas, LLC, and Jean M. Hardy

          James A. Hopkinson, Esq. (orally), and Gerald B. Schofield, Jr., Esq., Hopkinson & Abbondanza, P.A., Portland, for cross-appellants Littlebrook Airpark Condominium Association

          Panel: ALEXANDER, MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ.

          MEAD, J.

         [¶1] Sweet Peas, LLC, and party-in-interest Jean Hardy appeal from a judgment of the Superior Court (York County, Fhtzsche, J.) denying their motions for summary judgment and granting the cross-motion for summary judgment of Littlebrook Airpark Condominium Association (the Association) on the Association's action for a declaratory judgment on the issue of the effectiveness of a lease amendment. The court found that, although a lease amendment resulted in a default of the mortgage encumbering property owned by Sweet Peas, the amendment was not void. We vacate the judgment.

         I. FACTS AND PROCEDURE

         A. Facts

         [¶2] The following facts are drawn from the summary judgment record and are undisputed. On March 18, 1999, John Hardy, who then was the owner of the property at issue, entered into a twenty-year lease agreement with Littlebrook Airport Development Co., Inc. (LADC), of which John's wife, Jean Hardy, was the president. Through this agreement, LADC was granted the right to develop and maintain ten condominium units on the leased property, which were then to be sold to individual unit owners. The same day, LADC executed a declaration of condominium subjecting the leased property to the Maine Condominium Act, 33 M.R.S. §§ 1601-101 to 1604-118 (2017), and thereby created the Association. Both the lease and the declaration were recorded. Later in 1999, condominium units seven, nine, and ten were sold, and the lease was amended in a manner not relevant to this appeal.

         [¶3] When John Hardy died on November 15, 2000, Jean Hardy became the owner of the property that was leased to LADC. By a recorded deed dated June 30, 2005, Jean Hardy then sold the leased property to Littlebrook Ventures, LLC (LV), an organization of which James Barrett was the sole member. LV executed and delivered to Hardy a mortgage on the property and an assignment of leases and rentals, both of which were recorded. In the mortgage, LV agreed not to modify any leases or tenancies without Hardy's prior written consent. Likewise, in the lease assignment, LV agreed not to alter, modify, or change the terms of the lease without Hardy's prior written consent.

         [¶4] The same day, LADC assigned its interest in the lease and its rights as declarant of the condominiums pursuant to the Maine Condominium Act to Windmill, USA, LLC (Windmill). James Barrett was also the sole member of Windmill. Additionally, LADC sold its interest in condominium units one through six to Windmill, retaining its interest in unit eight. Windmill sold units one through six to individual unit owners in October 2005, and LADC sold unit eight to an individual unit owner in June 2006.

         [¶5] On October 11, 2005, Windmill executed and recorded a document styled as an amendment to the declaration of condominium which purported to extend the term of the lease for forty years beyond the original twenty-year term and to give unit owners the right to use the runway on the property without a fee. Two days later, LV and Windmill signed an addendum to the lease purporting to amend the lease in accordance with the declaration amendment by extending the term of the lease and allowing use of the runway without a fee. The lease amendment was not recorded, and there is nothing in the record to suggest that Hardy gave prior written consent to the amendment.[1]

         [¶6] By deed in lieu of foreclosure dated December 15, 2005, and recorded on March 31, 2006, LV conveyed the property back to Hardy. Hardy then enforced her statutory power of sale and purchased the property at the foreclosure sale on July 27, 2006. On October 25, 2006, she conveyed the property to Sweet Peas in a quitclaim deed that stated that the conveyance was explicitly subject to the 2005 declaration amendment and the 1999 ...


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