FAIRVIEW FOREST HOMEOWNERS'
ASSOCIATION, INC.,
Plaintiff
v
.
Buncombe County
No. 99 CVD 4842
GERALD DEAN,
Defendant
Philip J. Roth for plaintiff.
Matney & Associates, PA, by Peter R. Henry, for defendant.
McGEE, Judge.
Gerald Dean (defendant) purchased a residence located in the
Fairview Forest subdivision in Buncombe County on or about 30 March
1979.
The trustees of the Fairview Forest Trust, a developer of
Fairview Forest subdivision, executed a document entitled
"Restrictive Covenants, Conditions and Easements" (restrictive
covenants), establishing restrictive covenants applicable to
certain lots owned by Fairview Forest Trust, which was recorded in
the Office of Register of Deeds in Buncombe County in October 1988.
The restrictive covenants stated in part that they were made andentered into
by and among FAIRVIEW FOREST TRUST,
hereinafter referred to as "Owner" of that
certain property described in Exhibit "A"
attached hereto, which property shall be
hereinafter referred to as "Property[,]" and
all future purchasers and owners of Property,
hereinafter referred to as "Future Owners[.]"
. . .
WHEREAS, Owner is the owner of that
certain Property described in Exhibit "A"
attached hereto located in Fairview Township,
Buncombe County, North Carolina[.]
. . .
8. A Homeowners Association is hereby
established[.]. . . Any portion of the
Property acquired by a Future Owner shall be
subject to the rules and regulations of the
Homeowners Association and shall be assessed
an annual fee for the maintenance and
administration of the Association's Property
and the rights-of-way providing ingress,
egress and regress within the Property. . . .
Owner shall until such time as all of the
Property is sold and/or transferred, not be
responsible for the payment of any
assessment. . . .
. . .
10. The Homeowners Association as
provided for herein shall be responsible for
collection of all assessments. Any assessment
not paid within 90 days of the due date shall
bear interest from the due date at the rate of
12% per annum. Any unpaid assessment shall
constitute a lien against the property of the
Owner personally obligated to pay same. The
Homeowners' Association and/or any Owner or
Future Owner may bring an action at law
against the Owner personally obligated to pay
an assessment or foreclose a lien of such
assessment against the Property which the
assessment has been levied. . . . Should the
Homeowners Association be requir[e]d to
foreclose the lien of any assessment, the
Owner personally obligated to pay suchassessment shall be responsible for the
expenses incurred by the Homeowners
Association including but not limited to court
costs and attorney's fees[.]
Defendant's residence was not originally included in the properties
listed in Exhibit "A," but he agreed to subject his property to the
restrictive covenants in an agreement recorded on 26 July 1989 .
Defendant acquired an option to purchase additional properties
in Fairview Forest from the Fairview Forest Trust in 1992, which he
exercised in January 1993. On 30 June 1993, Stephen Barnwell,
defendant's attorney at that time, sent a letter to the Fairview
Forest Homeowners Association, Inc. (plaintiff) stating that
defendant "is responsible only for assessments for" his residence,
not the additional properties defendant purchased in 1993.
Plaintiff filed an action against defendant in 1996 and
defendant filed a counterclaim; plaintiff and defendant entered
into a settlement agreement on 12 August 1996 "resolv[ing] the
allegations raised in the claims and counterclaims in the action
[numbered] 96 CVS 01673[.]" The settlement agreement also stated
that plaintiff "agrees and accepts that [defendant], his
successors, or assigns are the successor 'Owner' as that term is
used in the Restrictive Covenants[.]"
Defendant failed to pay annual assessments to plaintiff
beginning in 1995. Plaintiff filed a claim of lien against
defendant's residence on 20 September 1999. Plaintiff filed this
action on 26 October 1999, seeking $1,878.92 in unpaid assessments,
as well as late charges, interest, attorneys' fees, and costs.
Plaintiff also sought enforcement of the lien filed againstdefendant's residence. In his answer, defendant admitted he had
not paid the assessments.
Lot owners who were members of the homeowners' association, by
a favorable vote of at least 67 percent, amended the restrictive
covenants on 15 December 1999 to include a provision applying the
North Carolina Planned Community Act, N.C. Gen. Stat. § 47F-1-101
et seq., to the planned community of Fairview Forest.
The trial court heard this action in a non-jury trial on 1
November 2000. Counsel for plaintiff filed with the court an
affidavit dated 13 November 2000 regarding attorneys' fees and
costs, stating that "[i]n prosecuting this action, my client has
incurred costs in the amount of $111.45" and "attorneys fees in the
amount of $7,641.00."
The trial court entered judgment for plaintiff on 17 November
2000 and made the following pertinent findings of fact:
3. In 1979 Defendant purchased real
property in Fairview Forest which is located
at 102 Weeping Cherry Forest Road
(hereinafter, "Residence"). . . .
4. Defendant acquired an Option to
Purchase additional properties in Fairview
Forest from a previous subdivision developer,
Fairview Forest Trust . . . . Defendant
exercised the option in January[] 1993.
5. The Fairview Forest subdivision and
its property owners are subject to a set of
restrictive covenants called the [Restrictive
Covenants] which were recorded in October[]
1988[.]
6. In October[] 1988 Defendant agreed,
along with other property owners, to subject
his Residence to the Restrictive Covenants in
an Agreement which was recorded in July[]
1989[.]
7. Paragraph 8 of the Restrictive
Covenants authorizes [plaintiff] to assess
members annually for common expenses.
Paragraph 10 of the Restrictive Covenants
authorizes [plaintiff] to assess a 12%
interest rate against any assessments which
remain unpaid after 90 days; Paragraph 10
further authorizes [plaintiff] to file a lien
against [members'] properties based on unpaid
assessments and to charge a Lien Fee of $50
for each such lien; [plaintiff] is also
authorized to bring an action at law or to
foreclose a lien of such assessments and to
obtain reimbursement of attorneys' fees and
costs in prosecuting the action. [Plaintiff]
has in due course made annual assessments
since 1990 against all of the properties
within the purview of the Restrictive
Covenants.
8. In accordance with his 1988 Agreement
to subject his Residence to the Restrictive
Covenants, Defendant honored his obligation to
pay to Plaintiff assessments for the years
1990, 1991, 1992, 1993 and 1994. Defendant
has not paid assessments for the years 1995
through the 2000-2001 assessment.
9. Acting through his attorney in June[]
1993 - after Defendant acquired the
Development Properties - Defendant reaffirmed
his obligation to pay assessments on his
Residence.
10. By Agreement dated August 12, 1996,
Plaintiff and Defendant settled an unrelated
lawsuit upon the following two relevant terms:
Plaintiff agreed to remove all liens then
existing on Defendant's properties in Fairview
Forest; and the parties thereto agreed that
Defendant was the "Owner" of Fairview Forest
as that term is described in the Restrictive
Covenants.
11. . . . Plaintiff has properly
approved the . . . assessments and duly
notified Defendant as to his obligations
respecting the same. Defendant has not paid
the assessments on his residence to date[.]
12. . . . Plaintiff properly filed . . .
a Claim of Lien upon Defendant'sresidence. . . .
. . .
15. Defendant's failure to pay
assessments on his Residence following the
date of the 1996 Settlement Agreement . . .
including lien fees and interest calculated at
12% per year, amounts to $1,895.55.
16. A provision of the [North Carolina]
Planned Community Act . . . as well as the
Restrictive Covenants themselves authorize
[plaintiff] to foreclose upon the lien as
provided by Article 2A of Chapter 45 of the
North Carolina General Statutes.
17. In prosecuting this action Plaintiff
has incurred costs in the amount of $111.45
and attorneys' fees in the amount of
$7,641.00.
The trial court concluded as a matter of law that
18. Through the 1988 Agreement, Defendant
subjected his Residence to the terms and
conditions of the Restrictive Covenants.
19. Defendant's later acquisition of his
Development Properties from Fairview Forest
Trust did not extinguish his obligations under
the Restrictive Covenants with respect to his
Residence.
20. The 1996 Settlement Agreement between
the parties involved claims which are
unrelated to the present action; hence,
Plaintiff is not estopped from raising its
claims in this matter. However, the
Settlement Agreement discharged Defendant from
his obligation to pay any assessments, lien
fees and interest then owing and due as of the
date of the Agreement. The Settlement
Agreement did not discharge Defendant from his
obligation to pay assessments on his Residence
which came due after the Settlement Agreement.
21. Defendant has defaulted in his obligations
to pay assessments on his Residence for the
years 1997 through 2000. . . . Defendant is
currently liable to Plaintiff in the amount of
$1,895.55.
22. Under the Restrictive Covenants, Defendant
is liable for the reimbursement of
attorneys['] fees and costs Plaintiff incurred
in prosecuting this action.
23. In addition, under the . . . [North
Carolina] Planned Community Act
. . . Plaintiff is entitled to reimbursement
for the reasonable attorneys['] fees and costs
incurred in prosecuting this action.
The trial court entered judgment for plaintiff in the
principal amount of $1,895.55 for past due assessments, costs
totaling $111.45, and attorneys' fees in the amount of $750.00.
From this judgment, plaintiff appeals and defendant cross appeals.
We first address defendant's cross appeal in which he raises
seven assignments of error.
(2) If such note, conditional sale
contract or other evidence of indebtedness
provides for the payment of reasonable
attorneys' fees by the debtor, without
specifying any specific percentage, such
provision shall be construed to mean fifteen
percent (15%) of the 'outstanding balance'
owing on said note, contract, or other
evidence of indebtedness.
In this case, the restrictive covenants contain a provision
allowing for attorneys' fees "[s]hould the Homeowners Association
be requir[e]d to foreclose the lien of any assessment[.]"
The trial court found that "[i]n prosecuting this action
Plaintiff has incurred costs in the amount of $111.45 and
attorneys' fees in the amount of $7,641.00." The trial court
concluded that under both the restrictive covenants and the North
Carolina Planned Community Act, plaintiff is entitled to attorneys'
fees and costs incurred. The trial court entered judgment ordering
defendant to pay costs of $111.45 and attorneys' fees in the amount
of $750.00.
We are unable to determine from the order of the trial court whether it awarded attorneys' fees based upon the provision in the
restrictive covenants and N.C.G.S. § 6-21.2, or whether it awarded
attorneys' fees pursuant to the North Carolina Planned Community
Act. Therefore, we remand this issue for appropriate findings as
to whether the trial court awarded attorneys' fees under the
restrictive covenants and N.C.G.S. § 6-21.2, or whether it awarded
attorneys' fees based upon the North Carolina Planned Community
Act.
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