The Supreme Court of Colorado answered that question in Mac McShane and Cynthia Calvin v. Stirling Ranch Property Owners Association, Inc. (2017 CO 38).
Mac McShane and his wife, Cynthia Calvin (“Owners”) bought property, hoping to build a multi-story home overlooking the Roaring Fork Valley. The Stirling Ranch Property Owners Association (“POA”) approved the Owners’ architectural designs, but then denied approval of the plans. The POA is governed by an Executive Board, and the Executive Board appointed a Design Review Board (“DRB”). The DRB was in charge of making sure buildings complied with the vibe of the area, and the Garfield County height restrictions. The architect the Owners hired submitted plans for the building, incorrectly stating that the plans complied with the Garfield County regulations. The DRB approved the plans. Building commenced. Soon after, a neighbor determined the Owners’ new home was blocking their view. The DRB was working to resolve the conflict, when Garfield County put a stop work order on the property because of the height restriction violation. After revisions and submissions and arguments and rejections, the Owners finally got a one-story plan approved.
The Owners blamed the POA for the costs associated with the conversion, so they filed suit. The Owners pursued declaratory judgment/equitable estoppel and negligence claims against the POA, claiming more than $260,000 in damages. The lower courts found that the exculpatory language in the Design Guidelines protected the POA. The Supreme Court disagreed. Because the plain language of the exculpatory clauses at issue in this case do not limit the association’s liability. The association, as an entity, is distinct from the Executive Board and the Design Review Board, which are acting as its agents, and it cannot benefit from exculpatory clauses protecting those agents. The Supreme Court concluded the clauses’ plain language did not name, and therefore did not exculpate, the POA. Therefore, the Owners may bring their claim against the POA. The case was reversed and remanded.
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