When Can a Homeowner Be Joined as an Indispensable Party

In a recently reported appellate court case, Clubhouse at Fairway Pines v. Fairway Pines Estates Owners, 214 P.3d 451 (Colo. App. 2008) the appellate court based on prior court holdings stated that joinder of an indispensable party can be raised for the first time on appeal. The appellate court pointed out a decision in the Colorado Supreme Court that held, “….a court of appeals should, on its own initiative, take steps to protect the absent party, [by ordering joinder of the unnamed party] who of course had no opportunity to plead his interest below [in the trial court]” (cite omitted) at p. 455. The Court of Appeals then reasoned, that if the Court could on its own initiative protect the interest of an absent party, then there should be no reason a party should be foreclosed from raising the same issue on appeal. 

Colorado Rules of Civil Procedure, Rule 19, Joinder of Persons Needed for Just Adjudication, provides for the addition of parties who are necessary for a complete adjudication of all issues. This column does not answer the question of who is an indispensable party necessary for joinder in a lawsuit. The intent is to discuss the timing of when homeowners can be added as indispensable parties during pending litigation. The case cited below does talk about homeowners as indispensable parties, but it does not focus on the factors that make the owners indispensable to the litigation. In fact the law on whether homeowners are necessary parties in homeowner association litigation has the possibility of being radically revised as the Supreme Court has granted review of the case discussed below. 

The Association in this case was allowed to move for joinder after the trial, because it was determined that the Association was seeking to protect the absent owners and not itself against possible future claims; and the Association as the defendant did not chose the parties to the action.

As implied above, not every party to the litigation can successfully argue the need to join an indispensable party after the judgment in the trial court or even during the course of the trial. The purpose of allowing joinder of parties is to protect the interest of the absent party. Where a party is only moving for joinder to protect his/her own self –interest, and not the interest of the alleged indispensable party, the Court can deny the request as a waiver by the party raising the issue. 

The appeals court cited a case for the above proposition where the issue was raised after entry of the judgment and six years of litigation. It held that the rule, C.R.C.P. Rule 12(h) Waiver or Presentation of Certain Defenses, “…does not mean that a party with information to make a motion for joinder can sit back and raise the issue at any time when the only effect would be to protect himself,” at p. 454.

 

In a second cited case a tenant in a landlord –tenant lawsuit waited until the end of the trial and then requested that the landlord only be awarded half the damages because his wife, a co-owner of the property, was an indispensable party and was not a party to the lawsuit. The trial court rejected the tenant’s assertion because he had the opportunity to insist upon joinder of the party from the beginning and failed to do so. The tenant was only raising it for his protection and not the alleged “indispensable party” at p. 455. The court was not going to let the tenant game the process by sitting back and doing nothing in hopes if not defeating the landlord, minimizing his damages.

 

If a party becomes aware that there are others out there who are “indispensable” for full relief, he/she can raise the issue at any time during the proceeding – if the joinder is for the protection of the absent party(ies) and not for the sole purpose of serving the moving party’s self-interest. Alternatively, if the party becomes aware of a necessary party to be named to protect him or herself, he/she should move as quickly as possible in bring that party into the case or lose the right, and suffer the resulting harm of being sued multiple times for the same matter.

 

The Clubhouse case was decided August 7, 2008. The Colorado Supreme Court granted certiorari August 31, 2009. The issues the Supreme Court agreed to review have the possibility of making significant changes in the law regarding joinder of homeowners. As certiorari has only been recently granted a decision on the issues is probably a year down the road.

 

The issues the Supreme Court is looking to review are:

 

Whether the court of appeals incorrectly concluded that the defendant [the Association] did not waive its right to raise the need for indispensable parties by failing to raise the issue in a timely manner.

 

Whether the court of appeals decision is not in accord with the Colorado Common Interest Ownership Act; e.g. section 38-33.3-311, CRS.

 

Whether the court of appeals incorrectly concluded that the interests of the homeowners were not adequately represented.

 

Whether the court of appeals decision that lot owners are indispensable parties is contrary to public policy, unduly chilling the rights of litigants and rendering cases excessively cost prohibitive.