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Reserves Management Corp. v. R.T. Properties, LLC

Supreme Court of Delaware

November 15, 2013

The RESERVES MANAGEMENT CORPORATION, n/k/a Reserves Management, LLC, Plaintiff Below, Appellant,
v.
R.T. PROPERTIES, LLC, Mountain Range, LLC, a/k/a Mountain Rance, LLC, Fountain, LLC, Waterscape, LLC, and Wind Chop, LLC, Defendants Below, Appellees.

Submitted: Sept. 4, 2013.

Page 953

Court Below: Superior Court of the State of Delaware, in and for Sussex County, C.A. No. S10C-09-020.

Upon appeal from the Superior Court. AFFIRMED in part, REVERSED in part, and REMANDED.

Adam Hiller, Esquire (argued), Hiller & Arban, LLC, Wilmington, Delaware, for Appellant.

Timothy S. Martin (argued) and Marc S. Casarino, Esquires, White and Williams LLP, Wilmington, Delaware, for Appellees.

Before STEELE, Chief Justice, HOLLAND and JACOBS, Justices.

JACOBS, Justice:

This case involves a dispute between two developers over the payment of property assessments allegedly due under certain restrictive covenants. The plaintiff-below, The Reserves Management, LLC (" Reserves" ), appeals from two Superior Court rulings granting summary judgment in favor of the defendants-below, R.T. Properties, LLC, Mountain Range, LLC, Fountain, LLC, Waterscape, LLC, and Wind Chop, LLC. We affirm in part, reverse in part, and remand for further proceedings.

FACTS AND PROCEDURAL BACKGROUND

Reserves is an entity created to administer and maintain The Reserves Resort Spa and Country Club, a planned residential community consisting of approximately 180 lots located in Sussex County, Delaware. On August 13, 2001, The Reserves Development Corporation [1]— an affiliate of Reserves and the record owner of the residential community— filed a Declaration of Restrictions containing covenants that imposed certain obligations on future lot

Page 954

owners (the " Declaration" ). Those obligations included periodic assessments that would be payable to Reserves.[2] Abraham Korotki is the sole owner and manager of Reserves and The Reserves Development Corporation. Korotki also controls another affiliate, Reserves Development LLC.

In April 2005, Reserves Development LLC, together with The Reserves Development Corporation, entered into a contract (the " Sale Agreement" ) to sell seventeen lots to R.T. Properties, LLC (" R.T. Properties" ) for $4,250,000. The Sale Agreement recited that R.T. Properties was " acquiring the Property in order to construct homes thereon for sale to the general public." In November 2005, R.T. Properties transferred all seventeen lots to four affiliated entities— Mountain Range, LLC, Fountain, LLC, Waterscape, LLC, and Wind Chop, LLC.[3] Three years later, in May 2008, Korotki caused the Declaration to be amended by adding, (among other things), a sewer connection assessment that obligated each lot owner to pay approximately $4,000 to Reserves.

On August 24, 2009, Reserves sent R.T. Properties an invoice for $517,778.01, representing outstanding assessments claimed to be due from all seventeen lots from their date of purchase. Thereafter, Reserves regularly sent R.T. ...


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