Broken Top Community Association sues for $2.46 million 
By Kevin Max 
Article Courtesy of The Bend Bulletin
Published: June 19, 2002

On the surface, Broken Top is a portrait of perfection. Its mountain views are stunning and wide, its homes spacious and lavish, its golf course trim and green. 

But behind the serenity of the gated community is a contentious neighborhood association that is suing its developers for $2.48 million. 

On May 28, the Broken Top Community Association of homeowners filed a suit in Deschutes County Circuit Court against the neighborhood's developers seeking damages for what it calls a "misrepresentation" and "violation of fiduciary duty." 

The developers, Broken Top Limited Partnership, have not built neighborhood roads to meet city and county requirements, have not maintained a sufficient reserve account for repairs, have not built a swimming pool they had promised and have broken a promise to hand over two tracts of land to residents, according to court documents. 

"The developers were surprised the lawsuit had been filed because they thought the issues were being worked out," said Dick Alexander, a partner in the Portland law firm of Stoel Rives, which represents Broken Top developers. "The developers are optimistic that the matters will be resolved, but, if not, will defend themselves in court and expect to prevail." 

In its lawsuit against Broken Top developers, the homeowner association contends that this vacant land be turned over to the association to prevent commercial development.

Martin E. Hansen, the lawyer for the homeowners association, finds it odd that the developers are surprised. 

"I spent the past five or six months just trying to get the (developers) to agree to one of four or five issues," Hansen said. "It surprised me that we were so patient. These are the same issues that were here at the time the developers turned over control to the owners and at that time, the developer said ‘not my problem.'" 

The negotiations had been simmering for many months but came to a boil after Broken Top developers sent a letter to property owners saying that they wouldn't mediate all of the issues on the association's list, according to Gary Heck, vice president of the community association. 

In November, the association sent the developers a notice of litigation. Heck said the association delayed the suit, thinking that there was still hope for mediation. The two sides could not find a middle ground, so the association decided to go forward in court. 

But the property owners had one more high hurdle before clear before they could file the suit. Broken Top developers had included language in its covenants, conditions and restrictions (CC&Rs) that said the association could sue the developers only if they obtained a majority vote from owners, a notion that Hansen questioned. 

"I've absolutely never seen anything like this," said Hansen. "We're very familiar with CC&Rs. We represent Black Butte Ranch and Sunriver Resort and I've never seen anything like this." The owners, though, easily cleared this hurdle with 80 percent voting in favor of suing, said Hansen. 

Hansen added that he has been in serious negotiations with the developers since October and still hopes that mediation will bring the two sides together. 

At least four items need to be addressed before that happens. 

The first claim in the four-part suit alleges that Broken Top developers were to turn over six acres of land to the community association last year for a park. Instead, the developers gave the land to its own unit, Broken Top Club L.L.C., for possible commercial development, according to Heck. 

"All common property was supposed to be transferred to the association at the time that all control was was transferred to property owners in October last year," Heck said. "That's the only piece of park land in this development. Granted there is a golf course here, but that's for members only." 

Alexander, the lawyer for the developers, would not comment on the details of the suit. 

The single largest claim against the developers is a $1.38 million charge to repair roads that the association claims were not properly built. 

"The roads weren't built to the standards that were stipulated under the (master plan)," said Heck. "As you drive around Broken Top, you would see areas that are clearly sinking and manhole covers that are above the level of the road." 

The association charges the developers with failing to "establish and maintain and adequate reserve account to repair the roads and certain other common property," a sum that would financially protect the association against further road damage. 

Finally, association members said in the suit that Broken Top developers "made repeated representations through sales advertisements and direct communications with buyers that (they) would construct a swimming pool for the benefit of the association's members on land belonging to the club." The club already has one pool for its members. 

"The original promise was that there would be a community pool," said Heck. "Now they said they will build a club pool and allow community access for a fee. Our preference is to resolve these issues as quickly and as simply as possible."