1. Deeds--assessment covenants--definiteness
The trial court did not err in granting summary judgment in favor of plaintiffs, who
sought to recover annual assessments plus interest from defendant-property owners, because the
Ocean Declaration covenant: (1) establishes a sufficient standard for ascertaining defendants'
liability for assessments; (2) describes the property to be maintained with particularity; and (3)
provides sufficient guidance as to which properties and facilities are required to be maintained
with assessment funds.
2. Deeds--assessment covenants--enforcement--attorney fees--written notice--fifteen
percent limitation
In a case where an Owners' Association sought to recover annual assessments plus
interest from defendant-property owners pursuant to their Ocean Declaration covenants, the
trial court's order awarding attorney fees to plaintiffs under N.C.G.S. § 6-21.2 is vacated and
remanded for further findings on the issue of whether plaintiffs have provided written notice to
defendants stating that defendants have five days from the mailing of such notice to pay the
assessments without incurring attorney fees, and if notice was provided, the original award of
attorney fees must be limited to fifteen percent of the outstanding assessment balance under
N.C.G.S. § 6-21.2(2).
Kirkman, Whitford & Brady, P.A., by Carolyn B. Brady, for
plaintiff-appellees.
Temple & Petersen, by G. Henry Temple, Jr., for defendant-
appellants.
LEWIS, Judge.
Plaintiffs, McGinnis Point Owners Association, Inc. ("Owners'
Association") and its Board of Directors, are charged with
maintaining and administering the real properties of McGinnis
Point, administering and enforcing applicable covenants andrestrictions, and collecting and disbursing all relevant
assessments. Two tracts of land approximately one mile apart
comprise McGinnis Point. The first tract ("McGinnis Point
Subdivision") is a ten-acre, ninety-unit development located on
Bogue Sound. The second tract, ("McGinnis Point-Ocean") includes
seven lots located on the Atlantic Ocean. McGinnis Point
Subdivision is composed of single-family detached homes, a
swimming pool, two tennis courts and a boat ramp. McGinnis Point-
Ocean is composed of single-family detached homes and an ocean
front beach access area with a parking lot, walkway and deck,
called McGinnis Point Ocean Park ("ocean park").
Defendants here are the record owners of Lot 4 in McGinnis
Point-Ocean pursuant to a General Warranty Deed recorded 15 May
1992 in the Carteret County Registry. The deed in the conveyance
states that it is made subject to that Declaration of Covenants,
Restrictions and Easements for McGinnis Point-Ocean ("Ocean
Declaration"), recorded in the Carteret County Registry 8 June
1987. The Ocean Declaration references the Declaration of
Covenants, Restrictions, and Easements for McGinnis Point
Subdivision ("Subdivision Declaration"), which was recorded in the
Carteret County Registry several years prior to the Ocean
Declaration.
The portion of the Ocean Declaration which is pertinent to
this appeal is set forth as follows:
Article 11. McGinnis Point Amenities
The owner of each lot within McGinnis
Point-Ocean shall be deemed an associate
member of the McGinnis Point Owner's
Association, Inc. Each such associate membershall be entitled to use the McGinnis Point
swimming pool, the McGinnis Point tennis
courts, and the McGinnis Point ocean park, and
no other McGinnis Point amenity or common
area, except as may be required to allow
ingress and egress to those amenities for
which utilization is permitted herein. No
such associate member shall be a voting member
of the McGinnis Point Owner's Association,
Inc. To assist in bearing the maintenance
cost associated with the use of such
facilities, each lot shall pay an annual
assessment to the McGinnis Point Owner's
Association, Inc., in an amount equal to 25%
of the annual dues payable by the owner of a
Currituck unit within McGinnis Point, as such
dues level may be established from time to
time, plus $100.00 per year. All such
assessments shall be payable in advance.
Failure to pay said dues shall be treated as
failure to pay an assessment under the
Declaration of Covenants for McGinnis Point
recorded in Deed Book 491, Page 52, Carteret
County Registry, and the Association shall
have the right to enforce said assessment by
all means allowed by law, or allowed by said
covenants. The use of such master common
properties shall be subject to the rules and
regulations adopted by the Association from
time to time, and applicable to all members
and associate members of the Association.
Plaintiffs assessed defendant-property owners pursuant to the
Ocean Declaration for the years 1994, 1995, 1996, 1997 and 1998.
Plaintiffs' complaint alleged defendant-property owners failed and
refused to pay annual assessments from 1994 through 1998,
requested payment of such assessments with twelve percent (12%)
interest in accordance with the Owners' Association Bylaws as well
as reasonable attorneys' fees. Defendants counterclaimed asking
to recover damages from plaintiffs for improvements to the
surrounding properties if it were determined that defendants were
liable for assessments.
On 11 August 1998, the trial court granted plaintiffs' motionfor summary judgment and denied defendants' motion for summary
judgment. The court ordered defendants to pay the amounts owing
under their respective assessments with interest, totaling
$3508.87, and reasonable attorneys' fees in the amount of
$5876.49. Defendants appeal from this Order.
[1]Defendants first argue the trial court acted improperly
in granting plaintiffs' motion for summary judgment and denying
defendants' motion for summary judgment under Rule 56. The test
to be applied by the trial court in ruling on a motion for summary
judgment was whether the pleadings, depositions, answers to
interrogatories, admissions of file or affidavits established a
genuine issue as to any material fact. N.C.R. Civ. P. 56(c);
Tuberculosis Assoc. v. Tuberculosis Assoc., 15 N.C. App. 492, 494,
190 S.E.2d 264, 265 (1972). If no such issue exists, the trial
court must then determine whether the moving party is entitled to
judgment as a matter of law. N.C.R. Civ. P. 56(c); Van Poole v.
Messer, 19 N.C. App. 70, 71, 198 S.E.2d 106, 107 (1973).
Defendants assert that Article 11 of the Ocean Declaration is
insufficient to require the McGinnis Point-Ocean property owners
to pay assessments. Specifically, defendants contend that Article
11 does not satisfy the standards relevant to covenants imposing
affirmative obligations that this Court applied in Homeowners'
Association v. Parker and Homeowners' Association v. Laing, 62
N.C. App. 367, 303 S.E.2d 336, disc. review denied 309 N.C. 320,
307 S.E.2d 170 (1983) and clarified in Allen v. Sea Gate Assn.,
119 N.C. App. 761, 460 S.E.2d 197 (1995). Further, defendants
attempt to distinguish the covenant provisions which we heldenforceable in Homeowners' from those in this case in order to
establish that the terms of Article 11 fail for vagueness,
rendering it unenforceable. We disagree.
Covenants which impose affirmative obligations on property
owners are strictly construed and unenforceable unless the
obligations are executed in "'clear and unambiguous language'"
that is "'sufficiently definite'" to guide the courts in their
application. Allen, 119 N.C. at 764, 460 S.E.2d at 199 (quoting
Beech Mountain Property Owner's Assoc. v. Seifart, 48 N.C. App.
286, 295, 269 S.E.2d 178, 183 (1980)). There must be "'some
ascertainable standard'" by which a court "'can objectively
determine both that the amount of the assessment and the purpose
for which it is levied fall within the contemplation of the
covenant.'" Id. In Allen, we clarified the inquiry relevant to
the imposition of assessment obligations. There, we held that
assessment provisions "(1) must contain a 'sufficient standard by
which to measure . . . liability for assessments,' . . . (2) 'must
identify with particularity the property to be maintained,' and
(3) 'must provide guidance to a reviewing court as to which
facilities and properties the . . . association . . . chooses to
maintain.'" Id. (quoting Homeowners' Association, 62 N.C. App. at
376, 303 S.E.2d at 341). Accordingly, we must determine whether
the test in Allen as applied to the assessment provisions here
supports the trial court's grant of summary judgment in favor of
plaintiffs. We first consider whether the Ocean Declaration
sets forth a sufficient standard by which to measure defendant-
property owners' liability for assessments. Article 11 of theOcean Declaration requires the owner of each lot to pay "an amount
equal to 25% of the annual dues payable by the owner of a
Currituck unit within McGinnis Point, as such dues level may be
established from time to time, plus $100.00 per year." The dues
payable by the owner of a Currituck Unit are contained in the
Subdivision Declaration, which Article 11 makes applicable by
providing that a "[f]ailure to pay said dues shall be treated as
failure to pay an assessment under the [Subdivision Declaration]."
The assessment provisions in the Ocean Declaration sufficiently
specify the standard by which to measure liability in light of
that held sufficient in Homeowners' Association, to wit: "[S]uch
assessment or charge shall be in an amount to be fixed from year
to year by the Company, which may establish different rates from
year to year as it may deem necessary . . . ." 62 N.C. App. at
371, 303 S.E.2d at 338. We find that the Ocean Declaration
establishes a sufficient standard for ascertaining defendant-
property owners' liability for assessments.
We find that Article 11 describes the property to be
maintained with particularity. Article 11 of the Ocean
Declaration establishes each homeowner's right to use and
obligation to bear the maintenance costs of the "McGinnis Point
swimming pool, the McGinnis Point tennis courts, and the McGinnis
Point ocean park." Because McGinnis Point only contains one of
each of these facilities, we can discern no construction of
Article 11 which would support any conclusion other than that of
the trial court.
We also find that Article 11 of the Ocean Declarationprovides sufficient guidance as to which properties and facilities
are required to be maintained with assessment funds. Defendants
were made aware by the terms of Article 11 that assessment funds
would be used for maintenance costs associated with the use of the
particularly described facilities. There are no after-acquired
properties or facilities other than those specified in the Ocean
Declaration requiring maintenance with assessment funds.
Consequently, we find the covenants sufficient to guide the trial
court in its determination.
Our careful review of the record on appeal and consideration
of the arguments advanced by defendants fail to persuade us that
there is any genuine issue of material fact as to the application
and enforceability of the assessment provisions against
defendants. We therefore find the trial court properly entered
summary judgment in favor of plaintiffs on the issue of assessment
provisions. In affirming the grant of plaintiffs' summary
judgment motion, we necessarily conclude that defendants' motion
for summary judgment was properly denied.
[2]Defendants also argue that the trial court's award of
reasonable attorneys' fees in excess of fifteen percent (15%) of
the balance owing was improper under N.C. Gen. Stat. § 6-21.2.
The Bylaws in this case, recorded as part of the Subdivision
Declaration, allow for the collection of reasonable attorneys'
fees incident to the collection of assessments. As a general
rule, a party cannot recover attorneys' fees "unless such a
recovery is expressly authorized by statute." Enterprises, Inc.
v. Equipment Co., 300 N.C. 286, 289, 266 S.E.2d 812, 814 (1980). In accordance with this rule, N.C. Gen. Stat. § 6-21.2 authorizes
an award of attorneys' fees pursuant to the provisions of a
covenant when certain requirements have been fulfilled. Four
Seasons Homeowners Assoc., Inc. v. Sellers, 72 N.C. App. 189, 191-
92, 323 S.E. 2d 735, 737-38 (1984). Plaintiffs must have complied
with section 6-21.2 to be entitled to an award of attorneys' fees.
Our first consideration on the award of attorneys' fees is
the explicit notice requirement in section 6-21.2(5).
Specifically, plaintiffs must have provided written notice to
defendants stating that defendants had five days from the mailing
of such notice to pay the assessments without incurring attorneys'
fees. Blanton v. Sisk, 70 N.C. App. 70, 74-75, 318 S.E.2d 560,
564 (1984). Defendants argue plaintiffs failed to fulfill this
notice requirement, making the trial court's award of attorneys'
fees improper. Nothing in the record indicates that plaintiffs
did or did not provide defendants written notice in accord with
section 6-21.2(5), nor is there a finding either way. Absent a
finding of notice, the trial court was not authorized to award
attorneys' fees under section 6-21.2. We therefore vacate the
trial court's award of attorneys' fees and remand to the trial
court for findings on the issue of notice.
If it is determined on remand that defendants were provided
with requisite notice, the court must reconsider its award of
reasonable attorneys' fees pursuant to the Bylaws. When
reasonable attorneys' fees are authorized without specifying a
certain percentage, the provision shall be construed to mean
fifteen percent (15%) of the balance outstanding on theassessments. N.C. Gen. Stat. § 6-21.2(2). The trial court's
$5876.49 award far exceeded this fifteen percent (15%) limitation.
Accordingly, if the trial court on remand determines plaintiffs
provided notice under section 6-21.2(5), the original award of
attorneys' fees must be limited to fifteen percent (15%) of the
outstanding assessment balance under section 6-21.2(2).
We also note that the North Carolina Planned Community Act,
enacted in February 1999, allows a court to award reasonable
attorneys' fees exceeding fifteen percent (15%) in a case such as
this. N.C. Gen. Stat. § 47F-1-101 (1999). Section 47F-3-120
allows the prevailing party in an action to enforce a Declaration
of Covenants to recover reasonable attorneys' fees if the
Declaration of Covenants permits such recovery, unlike section 6-
21.2(2), where a specific percent must be stated to override the
fifteen percent (15%) limitation. But Chapter 47F only applies to
planned communities created prior to February 1999 if their
Declaration of Covenants is amended to indicate that this statute
applies. N.C. Gen. Stat. § 47F-1-102(d) (1999). No such
amendment was made here, so plaintiffs' only statutory basis for
attorneys' fees is through section 6-21.2.
The order of the trial court granting summary judgment to
plaintiffs is affirmed. The order awarding attorneys' fees to
plaintiffs is vacated and remanded.
Affirmed in part, vacated in part and remanded.
Chief Judge EAGLES and Judge MARTIN concur.
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