Appeal by defendant from orders entered 6 October 1999 and 15
October 1999 by Judge Howard R. Greeson, Jr., and 11 February 2002
by Judge Peter M. McHugh in Montgomery County Superior Court.
Heard in the Court of Appeals 9 January 2003.
Thomas D. Windsor for plaintiff-appellees.
McNair Law Firm, P.A., by Allan W. Singer, for defendant-
appellant.
HUNTER, Judge.
Woodrun Association, Inc. (“defendant”) appeals various orders
including and stemming from a grant of partial summary judgment in
favor of Mr. and Mrs. James R. Brown and CCTD, Inc. (collectively
“plaintiffs”) regarding the enforcement of restrictive covenants
for the Woodrun subdivision (“Woodrun”). We affirm for the reasons
stated herein.
Woodrun is located in Montgomery County, North Carolina.
Defendant is a North Carolina nonprofit corporation that was set up
to act as the homeowners' association for Woodrun. In 1971,
defendant filed a Declaratory Statement of Covenants and
Restrictions to Run with Land (“Declaration”) with the MontgomeryCounty Register of Deeds. The Declaration required defendant to
maintain the common areas of the subdivision, as well as allowed
defendant to enforce restrictive covenants as they applied to all
lot owners in the subdivision. Furthermore, Paragraph 11 of the
Declaration provided, inter alia:
All of the restrictions, conditions, covenants
and agreements contained herein shall continue
until January 1, 1992, except that they may be
changed, altered, amended or revoked in whole
or in part by the record owners of the lots in
the sub-division whenever the individual and
corporate record owners of at least 2/3 of
said platted lots so agree in writing.
Pursuant to Paragraph 11, defendant executed a Restatement of
Declaratory Statement of Covenants and Restrictions to Run with
Land (“Restatement”) on 5 December 1991. The Restatement was filed
on 7 April 1992 in the Montgomery County Register of Deeds. The
Restatement was substantially the same as the Declaration except
that all of the restrictions, conditions, covenants, and agreements
contained in the Restatement continued until 1 January 2002 instead
of 1 January 1992, “after which time said covenants and
restrictions [would] be automatically extended for successive
periods of ten years each” unless a two-thirds vote of the lot
owners provided otherwise.
In his capacity as President of plaintiff CCTD, Inc.,
plaintiff James Brown (“Brown”) bought two lots in Woodrun in April
of 1997. In June of 1997, Brown and his wife also bought a lot in
Woodrun. The development of those lots, directed by Brown,
subsequently created problems between the parties regarding whetherproposed construction plans of plaintiffs complied with
restrictions set forth in the Declaration and the Restatement.
On 14 July 1998, plaintiffs filed an action challenging the
validity of the restrictions. In their complaint, plaintiffs
alleged that the restrictive covenants in the Declaration had
expired and could not be extended by the Restatement due to their
ambiguity. Thus, plaintiffs sought (1) a declaration that the
restrictive covenants in the Restatement were unenforceable, (2)
injunctions to prevent defendant from enforcing the restrictions,
and (3) monetary damages resulting from defendant's alleged
enforcement of the restrictions. In defendant's answer, it denied
plaintiffs' allegations and asserted the affirmative defenses of
statute of limitations, laches, waiver, estoppel, and unclean
hands. Defendant also counterclaimed for (1) overdue assessments
“in a sum to be determined[,]” and (2) an injunction to prevent
plaintiffs “from commencing or carrying on any construction on
their lots in Woodrun [that was] not in compliance with the terms
and conditions of the Declarations[.]” The counterclaim was later
voluntarily dismissed without prejudice.
Defendant filed a motion for summary judgment on 7 April 1999.
On 4 October 1999, the Montgomery County Superior Court denied
defendant's motion, but granted partial summary judgment in favor
of plaintiffs on all issues other than damages. After the court
also denied defendant's motion for rehearing, reconsideration, and
relief from the grant of partial summary judgment, defendant
appealed to this Court. We remanded the case to the lower court asinterlocutory and not appealable because there were remaining
factual issues to decide. On 22 January 2002, defendant filed a
Rule 56(f) motion asking the trial court to clarify the remaining
factual issues for trial. In response, plaintiffs voluntarily
dismissed their damages claim without prejudice on 5 February 2002.
After hearing arguments from all parties, the court denied
defendant's motion, holding it no longer had jurisdiction over the
parties because plaintiffs had voluntarily dismissed their damages
claim. Thereafter, defendant gave notice of appeal to this Court
from (1) the partial summary judgment order; (2) the order denying
its motion to rehear, reconsider, and grant relief from the grant
of partial summary judgment; and (3) the order denying its motion
to clarify issues for trial.
I.
In its first assignment of error, defendant argues the trial
court erred in granting partial summary judgment in favor of
plaintiffs because genuine issues of fact existed as to the
termination of the Declaration on 1 January 1992. Plaintiffs
argue, however, that the ambiguous language in Paragraph 11 of the
Declaration prevented it from being extended by the Restatement.
We agree with plaintiffs.
As cited by plaintiffs in their brief, this case is controlled
by
Allen v. Sea Gate Assn., 119 N.C. App. 761, 460 S.E.2d 197
(1995). The issue in
Allen was whether provisions regarding dues
and assessments in a restrictive covenant that affected subdivision
lots owned by the plaintiffs were void and unenforceable. Specifically, those plaintiffs argued the following provision was
ambiguous and therefore unenforceable:
12. . . . All of the restrictions,
conditions, covenants and agreements contained
herein shall continue until January 1, 1992,
except that they may be changed, altered,
amended or revoked in whole or in part by the
record owners of the lots in the Subdivision
whenever the individual and corporate record
owners of at least 2/3 of said platted lots so
agree in writing.
Id. at 765, 460 S.E.2d at 200 (emphasis added). We concluded:
The provision allowing alteration,
amendment, or revocation follows a provision
stating emphatically that all restrictions
will end on 1 January 1992. There is no
provision that clearly permits an extension.
As phrased, the expiration date deals with the
ending of all restrictions; it is not of the
same nature as the other restrictions. At
most, the phrase allowing alteration,
amendment, or revocation creates an ambiguity
as to whether the expiration date may be
extended. Since we must construe any
ambiguity in favor of limited duration and
against restricting property . . . we read
these provisions as failing to provide for
extension of the expiration date. Such a
construction is reasonable in light of the
clearly established expiration date and the
lack of a provision permitting extension.
Accordingly, the original Declaratory expired
on 1 January 1992, and could not be extended.
Id.
The provision at issue in the present case is virtually
identical to the provision in
Allen. Having previously held in
Allen that a declaration containing the language in Paragraph 11 of
the Declaration is ambiguous as to whether the expiration date may
be extended, we may not now hold otherwise.
See In the Matter of
Appeal from Civil Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 37(1989) (holding “a panel of the Court of Appeals is bound by a
prior decision of another panel of the same court addressing the
same question, but in a different case, unless overturned by an
intervening decision from a higher court”). Therefore, the
Declaration is unenforceable and cannot be extended by the
Restatement because its ambiguity must be construed in favor of
limited duration and against restricting property.
In the alternative, defendant argues that even if the
Declaration cannot be extended by the Restatement, equitable
defenses bar plaintiffs' claims challenging the validity of the
restrictions. Specifically, defendant contends that because
plaintiffs both benefitted and acquiesced to the restrictions, they
impliedly waived the right to challenge them, are estopped to
assert that right, and are barred by unclean hands from asserting
it. However, none of the cases cited by defendant in support of
this contention involved the application of equitable remedies as
a means of recovery when restrictive covenants were deemed void.
In fact, we have found no North Carolina authority stating that
equitable remedies are available to a party in this particular
situation. Thus, we decline to do so now.
II.
Defendant also assigns error to the trial court's denial of
its Rule 56 motion to clarify issues for trial. Defendant contends
the issue of whether it could collect assessments and fees for the
maintenance of roads and common areas under a theory of implied
contract was still left to be decided despite the court'sconclusion that the restrictions were unenforceable. Defendant
supports his contention by citing
Miles v. Carolina Forest Ass'n,
141 N.C. App. 707, 541 S.E.2d 739 (2001).
In
Miles, a declaration containing a provision with language
similar to that in Paragraph 11 in this case was at issue. By
relying on
Allen, the
Miles Court held the declaration was
unenforceable because the ambiguous provision did not clearly
authorize an extension.
Id. at 713, 541 S.E.2d at 742. However,
unlike
Allen, the trial court in
Miles had found that an implied
contract existed between the defendant and several of the
plaintiffs, which required those plaintiffs to contribute to the
maintenance, repair, and upkeep of their subdivision for a specific
period of time.
Id. at 711, 541 S.E.2d at 741. Thus, on appeal,
this Court remanded the case to the trial court for a determination
as to whether all plaintiffs had impliedly agreed to pay for
maintenance, repair, and upkeep of the subdivision, and if so, in
what amount.
Id. at 714, 541 S.E.2d at 742.
Unlike
Miles, the trial court in the case
sub judice never
found that an implied contract existed. This theory of relief was
never raised by defendant at the trial level as a counterclaim even
though defendant had raised two other counterclaims which it later
voluntarily dismissed. Therefore, defendant's failure to raise an
implied contract theory as a counterclaim limits our review on
appeal to whether defendant had the ability to enforce restrictions
and dues based on the 1991 Restatement. Nevertheless, as
plaintiffs' counsel stated in oral arguments, the possibleexistence of an implied contract between the parties raises a
separate issue that can be determined in a separate action.
For the aforementioned reasons, we affirm the trial court's
grant of partial summary judgment in favor of plaintiffs and its
subsequent denial of defendant's (1) motion to rehear, reconsider,
and grant relief from the grant of partial summary judgment, and
(2) motion to clarify issues for trial.
Affirmed.
Judges McGEE and CALABRIA concur.
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