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All owners are necessary parties in condominium litigation when class action fails

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The Villa Dorado condominium has 45 buildings, only nine of which have elevators. When the condominium association’s board assessed every unit owner for repairs to elevators, Epstein and Root protested. Their units were in buildings with no elevators, and they weren’t issued key cards to use the elevators.

Epstein and Root called their lawsuit a class action, claiming that they represented all owners of units in Villa Dorado. The trial court agreed, issuing an injunction against the association to require that the special assessment for elevators be imposed only against those units in buildings with elevators. The trial court’s judgment also recognized Epstein and Root as representatives of all the unit owners in Villa Dorado and awarded them attorney fees, which are recoverable under the terms of the Missouri Uniform Condominium Act.

Missouri’s Eastern District Court of Appeals made short work of the trial court’s decision, in Epstein v. Villa Dorado Condominium Association, tossing it back to the trial judge.

Class action rule not complied with

The Court of Appeals could not find anything in the trial court’s record to show that Epstein and Root gave all the Villa Dorado owners the notice of the lawsuit required by Missouri Supreme Court Rule 52.08. This rule requires that each member of the proposed class that the receive a notice advising the member that:

  1. the court will exclude the member from the class if requested by a specified date;
  2. the judgment, whether favorable or not, will include all members who do not request exclusion; and
  3. any member who does not request exclusion may, if desired, enter an appearance through counsel.

If the trial court determines that the proper notice has been given and that the plaintiffs are proper representatives of the class, the court can issue an order certifying that the case is a class action, obtaining jurisdiction over persons who did not opt out. No such order was issued by the trial judge that would have established jurisdiction over the owners other than Epstein and Root, who filed the suit.

In reversing the trial court’s judgment, the court noted that any judgment on the issues presented would affect all the owners:

Here, all unit owners not served by elevators were not made parties to the proceedings; however, any declaration made by the trial court affected these owners directly, and therefore, all owners without elevator access had an obvious interest in any judicial declaration regarding the elevators, rendering them an indispensable party to the trial-court proceeding.

Things not considered

It’s fun to second-guess the methods used by the attorneys, though the exercise isn’t quite fair, since we don’t know all the facts.

The plaintiffs’ attorney might have filed the case as a “derivative suit” under the Missouri Non-Profit Corporation Law, which allows those who possess at least 10% of the voting power of a non-profit corporation to challenge the action of the board. In some circumstances, getting 10% participation may be quicker or cheaper than obtaining certification of a class.

For condominiums created before September 1, 1983, the Missouri Condominium Property Act, section 448.190, allows any two unit owners to file a suit in the name of the association’s board.

Similarly, for condominiums created on and after September 1, 1983, the Missouri Uniform Condominium Act, section 448.3-102.1(4), authorizes the association to “institute, defend, or intervene in litigation or administrative proceedings in its own name on behalf of itself or two or more unit owners on matters affecting the condominium.”

Epstein and Root, or the Villa Dorado board, might have claimed (or possibly did claim) that under one of these Missouri statutes, that they represented all the unit owners in the condominium.

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About Harry Styron

I'm a lawyer who lives in Branson, Missouri, whose professional interests involve real estate, construction and local government.

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