American Holdings V. Town of Naples

Annotate this Case

Download PDF

STATE OF MAlNE BUSINESS AND CONSUNIER COuRT Loc11tion: Portland Docket No.: BCD~CV -20 14-43 \) CillvlBERLAND, ss AMERICAN HOLDINGS, INC. Plaintiff, v. TOWN OF NAPLES, et al. Defendft_nts. ) ) ) ) ) ) ) ) ) ) ORDER ON PARTIES~ CROSSMOTIONS FOR PARTIAL SUWIMARY JUDGMENT I. INTRODUCTION Plaintiff, American Holdings, Inc. ("American Holdings") moves this court for partial summftfy judgment for a declaration that neither the Plaintiff's conversion to the condominium form of ownership nor the sale of snid condominium units to Katherine Bourbon, Bmce J. Lnndry, Jennifer M. Land1y, and Jolm Hudgins (together "Parties-In-Interest") violated the Defendant Town of Naples's (tbe "Town" or "Defendnnt") minimum lot size 1111d subdivision regulations. The Plaintiff further seeks judgment that the Town's mentioned ordinances violate 33 M.R.S.A § 1601l 06, wllich prohibits discriminatory enforcement by tbe Town. The Defendaut Town opposes Plaintiff's motion 11nd separ11tely cross-111oves tllis court as to the same issues. The Town seeks judgment as a matter of law that Pl11intifT's conversion to 11nd sale of condominium llnits violated the Town's zoning regulations including the Shorel11nd Zoning Ordinance, Site Plan Review Ordinance, Subdivision Ordinance, as well as Maine Law. FinaUy, the Town seeks an order directing the Plaintiff to repurchase the subject condominium units from the Dcfendaut Parties-in-Interest nnd to reintegmte the property and buildings as i1 existed plior to the formation of the condominium. Defendant Pnrties-in-interest request that this court deny the Town's motion a11d move this cout1 for siumnary judgment in their favor liS to the Town's First Amended Counterclaim. JI, lVIATERIAL FACTS American Holdings is a corporation duly organized under the laws of the State of Maine. (Def.'s Addt'l S.M.F. ~ 3.) 1 In 1999 American Holdings purchased Sunnyside Village located in the Town ofNaples. 2 (Pl.'s S.M.F. ~ I; Def. 's Opp. S.M.F. ~ l.) At the time the Plaintiff purchased the property, the Village contained seven (7) stmctures iucluding:, a main building, a 2-car garage, a mobile home, aud four cottages. 3 Id. In 2006, the Plaintiff began operating Sunnyside Village as a condominium.'1 (Pl.'s S.M.F. ,, 2; Def.'s Opp. S.M.F. ~ 2.) Prior to 2006, several chnnges and altemtions were made to the main building and the garage struct\1res at' Sunnyside Village. (Def.'s Addt'l S.M. F. ~ 17.) The Town argues that the changes constit\lte changes in use for which Town approval was required. s !d. Christopher Merrill, acting as an employee of American Holdings, 1 Americnu Holdings is owned by Bnrbnrn and Khristopher Ktimek {collectively the "KJimeks"). (Def. 's Addt'l S.M. F. , •1.) Bnrbnra serves os the Vice President nnd Khristopher serves as the President of the corporntion. ld. From the time the Klimeks took coutrollmlil2012, on individual by the unme of Christopher Merrill wns employed by Americnn Holdings nnd subsequently ncted ns wnunger of Sunnyside Village, (Def. 's Addt'l S.M. F.~ 5.) Merrill nlso sen~cd ns Secretory of the corporntion and oversnw or ~ersonally handled the operation of Sunnyside Villnge front 1999 to 2012. (Pl.'s Rep. S.M. F. '16.) -Edward nud Thelmn Torres owned and opernted Sunnyside Villnge prior to 1999. (Def. 's Addt'l S.M. F. 'l 3 1.) 3 The previous owners bad nttewpled lo con veri one of the commercial spnces on the property to a residential unit. However, the Board rejected the Torreses request to do so. (Def. 's Addt'l S.M. F.~ II.) ., Defendants contends U101 filing of n declnrntion of condominiums hnd no effect been use they were done frnudulently by n personlnckiug authority to bind lite corporation. (Def. 's Opp. S.M.F. ~ 3.) 5 When American Holdings purchased Sunnyside Village, Wren Coustn1ction rented the first floor of the mnin building. The uuit wns n single uuil with ono Iorge oren. After Wren Conslmction vncated, Americnn Holdings, couvcr!ed the open spnce into efficiency-style npnrtments by ndding n sepnrnting wnti. (Def.'s Addt'l S. M.F. ~, 18-21.) American Holdings then reconverted the spnee into its business office. (Def. 's Addt'l S.M. F. ft'l23·2•J.) Further, the gnrnge 111ti1 wns trnusfonncd ond modified to include a window, 1111 1 interior wall stmcture, toilet, interior plumbing. The plumbing wns not conneeted ton septic tnnk. (De£. 's ' Addt'l S.M.F ~~ 26-27.) The Town ofNoples notes thnt no building pennits were pulled or nuthorized for the work do11e to the gnrnge. (Def. 's Addt'l S.M.F ~ 27.) Plaintiff denies lhnt nny use on the property wns 2 completed the work on the various units on the property. 6 (Def 's Addt'l S.M.F. ~ 28.) Khristopher Klimek claims to hnve been unaware of the chnnges made to the property until after Merrill was ultimately fired. (Rep. Addt'l S.M.F. ~ 28.) The Town claims that it was unaware of any changes made to the property until 2013. (Dcf.'s Addt'l S.M.F. ~ 32.) The Town further contends that neither prior nor cmTent Code Enforcement Officers were aware of any nlterntions or changes in use to the property. 7 (Def.'s Addt'l S.M.F. ~ 33.) ~ In 2005, Khristopher Klimek was diagnosed with cancer. (Def.'s Addt'l S.M.F. 35.) While J'v1r. Klimek wns recovering from his illness, Christopher Merrill filed a declaration to establish Sunnyside Village Condominium Associntion. 8 (Def.'s Addt'l S.M.F. ~ 36.) Me1Till signed the document as "Vice President" of American Holdings. (Pl.'s Rep. Addt'l S.M.F. Def. 's Addt'l S.M.F. ~ ~ 40; 39.) Since the Declaration was filed, there have been three amendments to the document. Merrill signed two of the three amendments. In 2012, American Holdings sold three (3) cottage condominium units to the Defendant Partie5-in-Interest. 9 (Pl.'s S.M.F. ~ 3; Def.'s Opp. S.M.F. ~ 3.) Un.it 4 was sold to John Hu~gins. (Def.'s Addt'l S.M.F ,147.) Thereafter, on August 16, 2012, Units 1 and 2 were sold to Katherine Bourbon. Bourbon conveyed Unit 2 to the Landrys on the same day. (Def.'s Addt'l S.M.F ~56.) couuue,·cinl in nature. (Rep. Addt'l S.M. F. ~,114.) The Plointiff contends tbnt Khristopher Klimek hnd no iuvolveLUeut in tile operntion of Sunnyside Village during this period. (Rep. Addt'l S.M.F. ~ 21). 6 Christopher Merrill understood that work perfomted on building in the Town required npprovol by the Town. (Def. 's Addt'l S.M,F ~~ 30.) 1 The Plaintiff denies that the Town wns unnwnre of Plai.lltiffs t>rojects nnd contends that Khristopher Klimek wos under the impression thnt no permits were needed because the Code Enforcement Officer, Reuce Corter hnd seen photographs ofthe work. Further, Piniutiff contends thnt John Thompson, the previous Code Enforcement Officer hod authorized the constmction, ns there wns no i.llcrense to the buildings footpri.lll. (Pl.'s Rep. Addt'l S.M. F., 3<1.) . . · 8 Defendants contend thnt. Mr. Klimck bnd previous discussions with Merrill regnrding U1e possibility of establishing the condomiuiuru fonil of ownership and creating condos from the units withii1 Smut~·side Village. (Dcf. 's Addt'l S.M.F ~, 38-39.) Howe,•er, the Plaintiff denies this assertion. (Rep. Addt'l S.M. F. ~ 37.) On November 16, 2006, n Dcclnrotiou of Condominiums wns filed with the Cumberlnud Couuly · I I Registry ofDecds. · 9 Defeudnnts deuy thnt the cottnges were sensounlas uo such restrictions were mentioned when the property wns sold to the Defendants. (De f.'s Opp. S.M. F. , 3.) 3 In October of 20 12, Renee Carter became the Code Enforcement Officer for the Town of Naples. (Def. 's Acldt'l S.M.F, 59.) Believing tllllt Mr. Klimek had a valid permit from the previous Code Enforcement Officer, Ms. Carter did not issue a "stop work" order for the ongoing projects. !d. However, in June 2013, Ms. Carter noticed a contractor's vehicle at the site and inquired into the new projects. (Def. 's Addt'l S.M.F ~ 65.) The contractor infomted Ms. Carter that a kitchen was· being added to the garage unit. (Def. 's Addt'l S.M.F ~~ 67-68.) At that time Ms. Carter stopped the projects. In 2014, the Town asserted violations of the Town's sttbdivision and minimwn lot size ordinances. The Code Enforcement Officer demanded that Ametican Holdings rept1rchase the condominhnn uttits and restore the property to its pre-2006 use. (Pl.'s S.M.F. ~ 4; Def. 's Opp. S.M.F. ~ 4.) The Town has adopted separate !Vlinimurn Lot Size, Shorelnnd Zoning, Land Use, and Zoning ordinnnces. (Pl.'s S.M.F. ~ 5; Def 's Opp. S.M.F. ~ 5.) Plaintiff contends that there is no restriction in the variO\JS zoning ordinances prohibiting it from converting property to the condominium form of ownership. Jd. The Defendants, on the other hand, believe the facts demonstrate that Americnn Holdings' actions violated the Town's Shoreland Zoning Ordinance, Site Plan Review Ordinance, Subdivision Ordinance, and Maine Law. (Def.'s Opp. S.M.F. ~ 4.) On May 14, 2014, Ametican Holdings filed a third amendment to the condominium declaration. (Def.'s /\ddt' I S.M.F ~ 87.) In said document Americnn Holdings reduced the total munb~r of condominium units to seven consisting of four cottages, a main building, a mobile home, nnd a garage stmcture. (Def. 's Addt'l S.M.F. ~ 89.) The Town of Naples has a definitional Ordinance. 10 (Pl.'s S.M.F. ~ 6; Def.'s Opp. S.:!VLF. ~ 6.) The Plaintiff contends that Sunnyside Village today contains an identical mix of dweflings 10 The Town believes lhol tbe opproprinte authority for detenninntion in U1is cnsc is n 19'90 nud n 1992 plnJJ..U.i.ug bonrd decision as well ns n more recent 2014 decision whero the Plnun.iug Board found thnt conversion of property into n condominium fonn of ownership constitutes 1111 illegnl supdivision nnd requires 4 recognized by the Ordinances of the Town of Nnples ns existed when the property was purchased by American Holding in 1999. However, the Town denies this assertion. The Town contends thnt previous non-confonning uses for the garage on the property do not allow for residential uses. 11 (Def. 's Opp. S.M. F. ~ 7.) III. STANDARD OF REVIEW M.R. Civ. P. 56(c) instructs that summary judgment is warranted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any .. show that there is no genuine issue as to any material fact set forth in those statements and that any patty is entitled to a judgment as a matter of law." To survive a motion for summary judgment, the opposing party must produce evidence that, if produced at trial, would be sufficient to resist a motion for a j\1dgment ns n matter of law. Rodrigue v. Rodrigue, 1997 :Wffi 99, ~ 8, 694 A.2d 924. For purposes of summary judgment, "[a] material fact is one that can affect the outcome of the suit." Burdzel v. Sobus, 2000 ME 84, ~ 6, 750 A.2d 573 (citing Kenny v. Dep 't ofHtmtan Services, 1999 ME 158, ~ 3, 740 A.2d 560); see also Mcilroy v. Gibson's Apple Orchard, 2012 ME 59, ~ 7, 43 AJd 948. A genuine issue exists when sufficient evidence supports 11 factual contest to require a fnct-ftnder to choose between competing versions of the truth nt trial. Assessor, 1998 !VIE 250, ~ Sue Presco/1 v. Ta.r 5, 721 A.2d 169 (citing Garside v. OscoDrug, Inc., 895 F.2d 46, 48 (lst Cir. I990)). A pArty wishing to avoid summary judgment must present a prima facie case for each element of a claim or defense that is asserted. See Reliance Nat '1/ndem. v. Knowles Indus. Servs., 2005 Ivffi 29, ,f9, 816 A.2d 63. "If material facts are disputed, the dispute rnllst be resolved through fact-finding." .Curtis v. Porter, 2001 Ivffi 158, ~ 7, 784 A.2d 18. When the court mles on a motion npprovnl under the Town Ordinonces due to specific minimum lot size nnd shorelnnd zoning issues. (Def. 's Opp. S.M.F. ~ 6.~ I 11 The Dcfenclnnt contends thot the gnrnge hns been olmost completely converted into residential use and now hns n kitcheu, bathroom, nnd o bedroom. (De f.'s Opp. S.M. F. 1 7.) 5 for summary judgment, '"[it] is to consider only the portions of the record referred to, ancj the material facts set forth, in the Rule 7(d) stntements."' Handy Boat Serv., Inc. v. Prof'! Sei1'S., Inc:., 1998 rvrn 134, ~ 16, 71 I A.2d 1306 (quoting Gerrity Co. V. Lake Arrowhead COiyJ., 609 A.2d 293 (Me. 1992)). The court will view the evidence in light most favorable to the non-moving party. See, Steeves v. Bf!mslein, S/mr, Sm•'yer & Nelson, P. A., 1998 rv!E 21 0, V11, 718 A.2d 186. IV. DISCUSSION A. The Declaration of Condominium and Subsenuent Amendments Are Valid On November 16, 2006, Christopher MetTill, the acting Secretary of American Holdings, tiled a Declaration of Condominium (the "Declnration") and established the "Sunnyside Village Condominium Association." Mr. Merrill signed the Declaration liS "Vice President" of the corporation. Both Kluistopher and Barara Klimek indicated in their depositions that tho Declaration and subsequent amendments were filed without authorization of American Holdings nnd were fraudulent. 12 (Def.'s Addt'l S.M.F. ~~ 43-44.) The Defendants argue that Merrill lacked authority to bind Americ11n Holdings and therefore the Declaration is invalid. (Def.'s Mot. 10.) Under tlus argument, the Sunnyside Condominium was never established and the property remnins as it wns in 2006. (Def. 's Mot. 11.) 1. AgencJl and Authority in Geneml "Whether an agency relationship exists is a question of fact." QAD Investors, Inc. v. Kelly, 2001 ME 116, ~ 18, 776 A.2d 1244 (citing Williams v. lnvemess C01p., 664 A.2d 1244, 1246-47 (Me. 1995); Clapperton v. UnUed Stales Fidelity & Gum·. Co., 148 Me. 257, 266, 92 A.2d 336, 341 (1952)). Agency is the fiduciary relationship "which results from the manifestation of consent by 12 At the time the Declorntion wns filed Khristopher Klimek wns recovering from cnncer nnd wns incnpn'cilnled. (Dcf. 's Addt'l S.M.F. ~~ 34-35.) While the Plninti.fl' questions the mnterintily of tllis fnct, the court finds thot Mr Klimeks cnpncily is mllterin1 in determining whether the corporation was npproprintely bound to the Declnrntion of Condominium. 6 one person to another that the other shall act on his behalf ond subject to his control, and consent by the other so to act." Libby v. Concord Gen. !14ut. Ins. Co., 452 A.2d 979, 981 (Me. 1982) (citing Defosses v. Notis, 333 A.2d 83, 86 (Me. 1975)); see also J&E Air, Inc v. Stale Tax Assessor, 773 A.2d 452, 456 (Me. 2001). In this case, it is \llldisputed that Christopher Merrill was employed by, and held himself o\lt as on agent for Amelicnn Holdings at the time he entered into the Declaration of Condominium. (Def.'s Addt'l. S.M.F. ,15; Pl.'s Rep. S.M.F ~ 5.) The scope of an agent's authority to act on behalf of the principal or corporation is detem1ined by the intention of the principal or by the manifestation of that intention to the agent. Express authority is "that authority which is directly granted to or conferred upon the agent ... in express terms by the principal .... " Stevens v. Frost, 140 Me. J, 7, 32 A.2d 164 (1943). It is undisputed thnt there was no express nuthority in this case granting Merrill the authority to enter into a binding declnmtion of condominium. Doth Kluistoper nnd Dnrbara Klimek hnve indicated that Menill's actions were unnuthorized and fraudulent. (Def.'s Addt'l. S.M.F. S.M. F. ~ ~ 43; Pl.'s Rep. 43.) Thus, Menill acted outside the scope of any actual express authoJity. 2. @J2.arelll Authority, "Apparent auth.ority is authority which, though not nctually grnnted, the principal knowiltgly pennits the agent to exercise or which he holds him out as possessing. Appnrent authotity exists only when the conduct of the principal leads a third party to believe that a given party is [its] agent." 13 QAD Investors, Inc. v. Kelly, 200 l .fvfE 116, ~ 19, 776 A.2d 1244; Sf:!e also Restatement (Second) of Agency § 8 (1958). "[T]he third person must believe the agent to be authorized." 13 The Restatemem (Second) ofthe Law ofAgency § 261 (1958) provides: Oue who represents Utnt nnother is his sen• out ot other ogeut oud thereby cnuses 11 third person justillnbly to rely upon the core and skill of such apparent ngent is subject to liability to the third person for horm cm1sed by the lnck or core or ski~l of tJte one oppeoring to be n sen•llut or other ogeut ns if he were such. Sea also Williams v. fnwmess Corp., 664 A.2d 12<14, 12<16 (Me. 1995) 7 .. /~" Restatement (Second) of Agency § 8 cmt. C; see also Restatement (Third) o.f Agency § 2.03 cmt. c ("Apparent authority holds a principnl accountable for the results of third-party beliefs about an actor's authority to act as an agent when the belief is reasonable and traceable to a mnnifestation of the principal.") In this case, a third party could reasonably believe that Merrill was acting with the requisite authority in his capacity as n corporate officer of American Holdings and as manager of Sunnyside Village. 14 However, the C0\111 need not draw a legal conclusion 1\S to this issue. The court finds based on undisputed facts that even if Christopher Merrill lacked apparent authority, the Klimeks' subsequent conduct ratified the declaration of condominium and nccompRnying documents, including the first and second amendments executed by Merrill. 3. RaliOe-·ation An agent can bind the principal onJy if all terms and conditions have been nuthorized. Hendrickson 11. Wright, 285 A.2d 839, 842 (Me. 1971) (citing Swtjt v. Erwin, 104 Ark. 459, 148 S. W. 267 ( 1912)). If the principal is to be bound by unauthorized acts of au agent the principal must know all of fncts regarding said unauthorized act. 15 !d. (citing Gould v. Maine Fanners Mutual Fin: Ins. Co., 114 Me. 416, 96 A 732 (1916)). In other words: See Steelstone lndu.~.. Inc. v. N. Ridge Ltd. P'ship, 1999 tviE 132, ~ 2, 735 A.2d 980. ln Steelstone, The Lnw Court determined thnt tho priuoipnlnegligently held its sub-contrnclor out ns its ogent. The court reasoned that it could infer thot the priucipolnuthorized Ute ogentto contnct prospective subcontroctors. Similnrly, intllis cnse, tvlerrill mnnnged the dny·lo-dny operotions of SmUlyside Villnge. lt is undisputed here thntthe Kli.J.ueks were nwnre of Merrill's deoliugs nud work with the property ns they hired ond continued to employ him. 15 According to the Restatement (Second) of Ageucy: 14 Rntificntion is the nfflnnnnce by n persou ofn prior net which did uot bind him but which wns done or professedly done on his nccouut, whereby the net, as to some or all persons, is given effect ns if ·, originnlly nuthori:zcd by him .... Affirmnnce is either (n) n mnuifestnlion of on election by ouc on whose account nn unouthorizcd net hns been done to trent the net ns authorized, or (b) conduct by him justifiable only if there were such nn election. An nffirmnnce of nn nnnuthorizcd transnction con be inferred from a foil\lte to repudiate it. 8 When the principal receives the benefits of an tnumthorized act of his agent, when he is apprised of the fncts, if he has S\lffered no prejudice and can rnake restit\ltion, he must elect whether to mtify or disaffirm and if he decides not to ratify he must return the fruits of the unautholized act within a rensonable time. QAD Investors, Inc. v. Kelly, 200 t l\IIE I I6, ,, 21, 776 A.2d 1244 (citing Perkins v. Phil/Jt•ick, 443 A.2d 73, 75 (Nle. 1982)). In this case, the Klimeks continued to operate Smmyside Village under the condominium form of ownership after Merrill entered into the Declnrntion in 2006. American Holdings actively advertised the condominimn units and Khristoplier Klimek willingly signed the Third Amendment to the Declaration. At the time he entered into s11id Amendment it is llndisputed that he was well aware of the facts concerning Merrill's fraudulent signature as Vice President of the corporation and the rnmifications of the original Declaration filed in 2006. 16 Thus. because it is uridisputed both that American Holdings continued to operate Sunnyside Village as a condominium ofter Christopher .tv1en·ill's misrepresentation, nnd that the corporation did not repudiate his actions, the Declaration of Condominium was ratified and accepted by American Holdings notwithstanding the fraudulent actions of Merrill. B. Change in Use The Town contends that the Plnintifrs chnnge to the condominium form of ownership discontinued the prior "commercial uses" and changed the character of the residential uses. (Def. 's Opp. Mot. 12.) At the time the Plaintiff purchased the subject property in 1999, Sunnyside Village operated legally existing non-conforming residential and commercial uses. The property consisted of: One year-round 70' home including a two-car garage; Q.1W Investors, Inc. v. Kelly, 2001 i'v1E 116, ~]22, 776 A.2d 124•1, 1250 (intemol citations omilled). 16 In Perkins v. Pili/brick, the Low Court denied thnt rntificntioil hnd tnkeu plnce where nn individunl wns tmnware his lnwyer hnd forged his nnme on settlement documents. The Court noted "[fjor rntiticntion of nn ngent's nctions to occur, it is necessaz thntnll material fncts be kno\vn by the principal." 443 A.2d 73, 75 (Me. 1982) (citiug Nend11ckson v. 1J rtgJu, Me., 285 A.2d 839 ( 1971)). However. iu this case, it lwdispuled Lbat the Klimek's nffinuntively elected to contume with the condomini\lln ronn of ownership nfler they became ownre of his fraudulent conduct. is 9 • • Four seasonal camps with a total of seven (7) bedrooms; One year-round trailer with two (2) bedrooms; and One building containing two apartments (4 bedrooms total) and 3 commercial units . (Def.'s Addt'l S.M.F. ~~ 10-12.) Upon acquisition of the property, the Plaintiff continued to operate in accordance with the property's pre-existing uses. The operation consisted of short-term nnd seasonal cottage rentals as well fiS a commercial tenancy on the first floor of the main building. The space was leased to Wren Constntction. 17 (Def.'s Addt'l S.M.F. ~ 18) 1. The Plaintiff's Change to the Condominium Form o( Ownership Does Not Constitute an Expansion or Intensification o( Use In Maine, "a mere clumge in ownerships does not constitute a change in use .... In order to constitute a change in use, an alteration in the character aud qunlity of the use will suffice; an increase in the intensity or volume will not suffice." Wachuselt Proprctfes Inc. v. Town of Chinct 2008 WL 7055411 (citing Keith v. Saco River Corridor Comm'n, 464 A.2d 150, 155-56 (Me. 1983)). Here, the undisputed facts indicate that no additional residential or dwelling units were created. Rather, the Declaration of Condominium only changed the ownership of the property into a multi-owner structure ·with divided interest in the individual units. The Town expresses concern that the seasonal use of the units may develop into year-round use by owners. The Town contends that by allowing previously seasonal units to operate on a year· round basis there will be a greater adverse impact on the subsurface sewerage system and an increase in septic waste. 18 (Def.'s Opp. Mot. 14.) In support, the Town cites Oman v. Town of Lincolnville. In Omcm the plaintiff proposed to sell pre-existing seasonal cabins and a hmtse ns 17 The pmties disngree ns to whether the spnce lensed to Wren Coustructiou constituted n "commercinl" or "residentinl" usc. The court nddrcsses this questiou below. 18 Pursunnt to Section 12(0)(3) of the Town's Shorehmd Ordinnncc: Au existing non-con.fonning usc mny be chnuged to nuother non-conforming use provided tltnl the proposed usc hns no grenter ndverse impnct on the subject nnd ndjncent properties nnd resources, 1 including wnter dejlcndent uses in Ute CFMA district, than the former use, ns dc 1ennined by the Code Enforcement Officer. The determinntion of no grentcr adverse impnct sholl be mnde nccordiug to criterin listed iu 12(C}(5) nbovc. 10 individual condominium units. The Law Court upheld the decision of the Zoning Board of Appeals that the plaintiff's proposal constiMed a change in use and, as 1\ result, required compliance with the Town's minimum lot requirement. 567 A.2d 1347, 1348 (Nie. 1990). However, Oman is easily distinguishable. Central to the Law Court's decision was the definition of the tenn "dwelling unit" in the Town's ordinance. The ordinance in Oman did not include "seasonal property" in its definition. !d. 1348. The Court determined that "rental cabins serving [a] transient population were not 'dwelling units' witl1in the meaning of the zoning ordinance nnd, accordingly, [the] conversion to condominiums would involve creation of nine individual dwelling units out of fom1cr single use, each of which would be required to comply with minimum lot requirement." /d. The Town of Naples, on the other hand, defines "dwelling unit" in its Definitional Ordinance as: "a room or group of rooms designed fmd equipped exclusively for use as permanent, seasonal or temporary living quarters for only one family, including provisions for living, cooking and eating." See Town ofNaples Definitional Ordinance (emt>hasis added). Thus, the Town Cfttmot establish a change in use using the sntne rationale provided by the Law Court in Oman. Rather, the court finds that this case is more in line with Keith v. Saco River Corridor Comm'n, 464 A.2d 150, 154 (Me. 1983). In Keith, the owner of a grnndfathered parcel proposed to sell and divide the land into four separate lots. 19 !d. nt 152. The land was traditionally occupied by tenallts. Although d1e property was lawfully nonuconfonning, the Town contended that the owner's division and sale proposal would destroy its grandfathered status. !d. at 153. The Law Court found that "the proposed shift from tenant-occupation to owner-ocCU!>ation of the delineated lots did not constitute and extension, 19 "The plot coutnincd o duplex residence, nnd two detnched single·fomily houses with gornge, ench dwelling 1 being served by lts own utility oud sewage disposnl system." Keith, 464 A.2d nt 152. 11 expnnsion or enlargement of the existing nonconforming use so as to defeat the grandfathered status of the property." !d. at 152. The Court noted: The central point ... when denling with nonconfonning buildings or uses is, that it is the building or the lnnd that is 'grandf.1thered' and not the owner. . .. Once a nonconforming use or building is shown to exist, neither is affected by the use1•s title or possessory rights in relation to the owner of th'e land. ld. at 154. The Law Court went on to established the following test to detennine whether the use of a particular property fits within the grandfathered noJHonforming use: (I) whether the use reflects the "nature and purpose" of the use prevailing when the zoning legislation took effect; (2) whether there is created a use different in quality or character, as well as in degree, from the original use, or (3) whether the current use is different in lcind in its effect on the neighborhood Id. nt 155. In tlus case, under the Plaintiff's condominium proposnl, the property will continue to l.>e used seasonally, no expansion of existing buildings or units will or has occurred. Further, even if the condominium owners use the units year-round as opposed to seasonally, the Law Court has held "where the original nature and purpose of the enterprise remain the snme, and the nonconforming use is not changed in character, mere increase in the amount or intensity of the nonconforming use within the same area does not constitute an improper expansion or enlargement of such nonconforming use. Frost v. Lucey, 231 A.2d 441, 448 (Me. 1967). 2. Residential and Rental Property Operations Are Not "Commercial Uses'' Under Both Stale Law and the Towns' Definitional Ordinance. The Law Court has held tl111t rental property is more appropriately deemed a "residential" as opposed to n "commercinl" use. For example, in Silsby v. Belch, the court found tlutt: A person residing in an apartment building is not, ,by virtue of residing in an. apartment engaged in commerce or working 'having profit as [berJ primnry aim.' The fact that· a resident pnys some manner of rent to a building owner, creating a profit in some instances • nnd in some instances not, does not in itself render the residential b'1ilding 11 commercii\! enterprise. The property, like an owner-occupied, single-family residence beside it, remains 12 a place for people to live. Its character is f'uncl!lmentally different from a department store or service station. 2008 Ivffi 104, ~ 13, 952 A 2d 218. In 11ccordauce with this policy, the Town's Definitional Ordinance defines "Commercial Use" as "[t]he use of lands, buildings or stluctures, other than a 'home occupation' ... the intent and result of which activity is the production of income from the buying and selling of goods and/or services, e.\·c/usive of relllal qf residential buildings and/or dwelling units.,.20 The Ordinance goes on to define "residential building" as "[s]ingle tiunily dwellings, duplexes, cluster, apartments nnd condominiums." Town of Nnples Definitional Ordinance (emphasis added). The Town contends that the Definitional Ordimmce does not apply to this case because the Plnintiff's property w11s grandfathered under the Town's t>reviously existing ordinances as a nonconforming commercial use. This nrgumellt is not compelling. The interpretation of a zoning ordinance provision is a question of law. See Huddleson v. lnhabi!ants q{Town ofE/iot, 2004 WL 1598724, at *2 (Me. Super. July 6, 2004). While the property may have been non-conforming prior to the 2002 implementation of the Town's Definitional Ordinance, the plnin language of the Definitional Ordinance reveals that rental prope11y and residential buildings are speciticaUy excluded from the Town's definition of "commercial use." Thus, the Town's argument that the Plaintiff has converted commercially run cottages and nn office space into a "residential use" is without merit. Under the Town's own Definitional· Ordinance, the Plaintiff's rental operation was not a commercial use. ·3. Commercial Uses Emp.foved By American Holdings As mentioned above, the operation of rental property is n non-commercial use. However, Sunnyside Village has operated as a mixed-use property. The Plaintiff argues that the spnce previously J'CIHed to Wren Constmction was a non-tommercinl use. To support this asse11ion, the 20 The Town's Definilionnl Orclinnnce was nclopted June II, 2002 nud nmcndcd on June 24,2009. 13 Plaintiff contends that Wren Construction did not engage in "the production of income from the buying and selling of goods and/or services" as required under the Town's definition of "commercial use." The Plaintiff's reading of the ordinance is too nnrrow. Under the Plaintiff's interpretation, only retail/service establishments would. qualify ns "commercial." Wren Construction utilized the office space to fi.1rther its business, whether through private drafting or through the preparation of the services that it rendered. Thus, the court finds based on undisputed facts thnt Wren Construction's lensed unit on the Sunnyside Village property was n commercial use. Today, the. Plaintiff occupies the unit previo\lsly occupied by Wren Construction. The court finds based on undisputed facts that the Plaintiff also occupies the unit in n commercial capacity. The Definitional Ordimmce npplies to the use of the property nnd not the type of business operated by the tenant. In this case, it is undisp\lted that the Plaintiffs utilize the office to maintain and manage the condominium property and to produce income for the business. Thus, the court flnds that there has bee·n no change in use as the office portion of Sunnyside Village has continued to operate as a commercial entity and in confonnance with its grandfathered use. Because the court finds, ns a matter of law, that there has been no change in use, the Plaintiff is not subject to the minimum lost size requirements under the Town's Shoreland Zoning Ordinance or approval under the Town's Site Plan Review Ordinance. C. Sunnyside Condominium is Not an Unlawful Subdivision The Town contends that the creation of SUimyside Condominiums constituted an illegal subdivision by establishing new residential dwelling units on the Sunnyside Village prope11y with separate ownership interests. Pursuant to 30-A M.R.S.A § 4401(4), "Subdivision" means: [T)he division of a tract or p11rcel .of land into 3 or more lots within any 5-year petiod that begins on or after September 23, 1971. This definition applies whether the division is accomplished by sale, lease, development, bulldings or otherwise. The tenn "subdivision" also includes the division of a new 'stn.ICh.lre or stmctures on n tract or parcel of land into ~ or more dwelling units within a 5-year period, the constmction or placement of 3 or more dwelling units on n single tract or parcel of land and the division of an existing stmcture or 14 structures previously lJSed for commercial or industrial use into 3 or more dwelling tmits within a 5-year period. The first sentence of the definition encompasses "land Sllbdivisions" and the third sentence encompasses "dwelling unit" subdivisions. I. Land Subdivision In 1998, prior to the amendment of the Subdivision Act encompassing dwelling unit subdivisions, the Law Court decided Townl?f York v. Cmlgin. In Craigin, the Law Court held: The division of a structure, as distinguished from the division of a parcel of land into lots, does not result in the creation of a subdivision under [the Subdivision Act]. The term 'land' in its broadest sense may include interests in a structl1re, but in defining a subdivision as involving the creation of' lots' from a 't>arcel of land', the statute refers unmistakably to an interest on the ground. 541 A.2d 932, 934 (Me. 1988). Thus, afier Craigin and the subsequent amendment to the Subdivision Act, it is clear that unless the division of an existing stmcture qualifies as a dwelling unit st~bdivision under the Subdivision Act, there is no subdivision. In this case, there is no evidence on the record that American Holdings divided the S\.lbject property into "[tbree] or more lots within any five-year period ... by sale, lease, development, buildings or otherwise." Rather, the condominium units were created within the interior of the existing buildings. The only legnl status of the lot that changed was the ownership of the interior units. See supm Section C. I. Thus, the court next addresses whether the change in ownership constit\1tes a dwelling unit subdivision. 15 ;. Dwe/liug Unit Subdivislons 21 As mentioned above, a "dwelling unit" subdivision occurs under three specific circumstances. First, when a new structure located on a tract or parcel of land is divided into thre~ or more· dwelling units wilhin a five-year period; Second, when three or more dwelling units are constructed or placed on a single tract or parcel of land;· and Third, when a stmch.1re previously used for commercial and or it1dustrial use is divided into three or more dwelling units within a five-year period. 30-A M.R.S.A § 4401(4). The court finds based on undisputed record facts that no dwelling unit subdivision has been created by Plaintifrs conversion to the ·condominium form of ownership. The court finds based on undisputed facts that the Plaintiff did not divide any new struch.lfe into tbree or more dwelling units. !d. The statute defines "new stmcture" as "any structure for which constmction begins on or after Septembe1· 23, 1988." /d. In this case, the divided structures ench p1·edate 1988.:'2 The court further finds based on undisputed facts that the Plaintiff did not constntct or place three or more units on any parcel or tract of land. In fact, the units in question predate the declaration of condominium. Finally, there is no evidence on the record that the Plnintiff converted a stn1ch.1re previously used for commercial or industrial use into three or more dwelling units. In Waclwsett Properties v. Town of China, the plaintiff owned twenty-six (26) individual cabins and a lodge. 21 Plaintiff converted the interiors of the cabins nnd established The Town of Nnplcs employs n modified version of the defutilion of "subdivision" which is silent os to ''dwelling unit" subdivisions. The Plaintiff contends lhnt the absence of dwelling unit' subdivision precludes the Town from seeking enforcement under Stole low. However, the court disagrees. While 30-A M.R.S.A § thot auy ordinance enacted under this section is n vnlid exercise of n JU\Wici'pnlity's home nde nulbority," in U1is cnse, the Town's ord1nnuce is silent ns lo "dwelling unit" subdivisions, therefore, Mni.ue Stole low must coutrol. n This analysis excludes the garage. 3001(2) indicates thnt: "there is n rebuuoble presumption 16 individual condominium units to convey to individual owners. 23 The Town argued that the condominium was a "division of an existing structure or stmctures previously used for commercia! or industrial use into 3 or more dwelling units within a S-year period." 30-A M.R.S.A. § 440(4); Wac:lmsett Properties Inc. v. Town of China, 2008 \VL 70554 I I. The superior court detennined that: By selling the inte1ior of tile cabins to new owners, the proposed condominium plan would result in the "splitting off of nn interest" in the cabins, and the creation, by means of sale, of an interest in another. The sale of the cabins under the proposed plan constitutes a "division of an existing stmcture or stmctures." ld. The court then analyzed the commercial use employed on the premises. The lodge was previously used for the sale of meals and would continue to be used in the same manner under the condominium proposal. The Towns definitional ordinance, like the Town of Naples, excluded the rental of residential buildings or dwelling units from the definition of commercial use. The court detenuincd that there was no subdivision because the stmctures were not previO\!Sly used for commercial usc. In this case, residential rental units are similMiy excluded from the Towit's definition of "commercial use." Further, it is the court's understanding, based on undisputed facts that the preexisting commercial space in the "main building" will continue as a business office for operation of the condominium. In line with the holding of Wachusefls Properties, the sale of t11e interior Sunnyside Condominium units do not constitute a dwelling unit subdivision as defined by State law. Thus, the court grants Plaintiff's motjon as to this issue. The court fw1her grants Defendants' Parties-in-Interests' motion concerning the same. Defendant's cross-motion is denied. 1 The exterior dikensions of the buildings nnd slmclurcs did not chnuge nnd 110 new stnrch1res or units were crcnted. The lot size remained the some. Waclmsefl P1·operlfes Inc. v. Town of China, No. CV -07-329, 2008 H WL 7055411 (Me. Super. Sept. 9, 200&). 17 D. The Court Finds No Violation of 33 M.R.S.A. Section 1601-106 The Plaintiff contends that the Town's Minimum Lot Size Ordinance violates 33 M.R.S.A. § 1601-106, which states: A zoning, subdivision, building code or other real estate use law, ordinance or regulation may not r>rohibit the condominium form of ownership. Otherwise, no provision of this Act invalidates or modifies any provision of any zoning, subdivision, building code or other real estate use law, ordinance or regulation. No county, municipality, village corporation or other political subdivision, whether or not ncting under the municipall10me mle powers provided for under the Constitution of Maine, Article VIll, Part Second or Title 30-A, chapter Ill, and section 300 l, or any other authority from time to time, 1i1ay adopt or enforce any law, ordinance, mle, regt1lntion or policy which conflicts with the provisions of this Act. While the Plaintiff has demonstrated that th·e Town enforced it Minimum Lot Size Ordinnnce nfter Plaintiff filed the Declaration of condominium, the Plaintiff has failed to establish a prima facie case on this record that said enforcement was disctiminatory. For this reason, the court denies Plaintiff's Motion for Summary Judgment as to this claim. V. CONCLUSION Bnsed on the foregoing, the court shall: GRANT Plaintiff's Motion for Partin! Summmy Judgment finding the Declarntion of Condominium to be valid. Further, the court finds that neither the Plaintiff's conversion to the condominium form of ownership nor tile sale of individual condominium units violated the Town's ordinances as asserted in the NOV. DENY Plaintiff's Motion as it relates to 33 TvfRSA § 1601-106. DENY Defendant's Motion for Partin! Summary Judgment seeKing an order directing the Plaintiff to repurchase the condominium units from the Defendant Parties-in-Interest and to reintegrate the property and bllildings as it existed prior to the formation of the condominium. GRANT Defendant Parties-In-Interest request for summary judgment in their favor as to the Town's First Amended Counterclaim. 18 Pursuant to M.R. Civ. P. 79, the clerk is hereby directed to incorporate this order into the docket by reference. Dntcd: Mm·ch 23,2015 · Com·t J.r . tntered on the Docket: j /;. 3 Copies sent via Maii_EiectronicallyX. 19 American Holdings, Inc. v. Town of Naples American Holdings, Inc., Kristopher Klimek and Barbara Klimek v. Christopher Merrill & Estate of Jerry Merrill, and Katherine E. Bourbon, et als. BCD-CV -14-43 American Holdings, Inc. Plaintiff I 3rd Party Plaintiff Counsel: David Lourie, Esq. 189 Suprwink Ave Cape Elizabeth, ME 04107 Kristopher Klimek and Barbara Klimek Intervenor I 3rd Party Plaintiff Counsel: David Lourie, Esq. 189 Suprwink Ave Cape Elizabeth, ME 04107 Town of Naples Defendant Counsel: Bryan Dench, Esq. Norman Rattey, Esq. 95 Main St Auburn, ME 04210 AND Benjamin Smith, Esq. 227 Water St PO Box 1051 Augusta, ME 04332-1051 Christopher Merrill & Estate of Jerry Merrill 3rd Party Defendant Counsel: Nicholas H. Walsh, Esq. 120 Exchange St Suite 202 PO Box 7206 Portland, ME 04112-7206 Catherine E. Bourbon, John Hudgins, Jennifer M. Landry, Bruce J. Landry Parties in Interest Counsel: Keith E. Glidden, Esq. One Boston Place Suite 2330 Boston, MA 02108 AND Seth S, Coburn Esq. One Portland Square PO Box 586 Portland, ME 04112-0586

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.