1. Deeds--restrictive covenants--assessment for dredging waterway
The trial court did not err by granting defendants' motion for summary judgment in an
action by a member of a coastal homeowner's association challenging the association's authority
to levy a special assessment for dredging and maintaining a waterway. The standards for
interpreting covenants imposing affirmative obligations include the identification of the property
to be maintained with particularity and the existence of sufficient standards by which to measure
liability for assessments. The language involved here clearly provides that assessments may be
used for channel dredging, maintenance of marshes and waterways, and payment of
governmental charges, and the covenants included maps. The court reasonably construed the
covenants to include an area not covered by the maps and not adjacent to the island because it
directly affects the island's boating community. Additionally, the members who voted were
informed of the location of the area to be maintained, the cost, and the duration of the
commitment.
2. Appeal and Error--failure to pursue remedy at trial--not heard on appeal
Plaintiff could not pursue on appeal the issue of access to ballots in a homeowner's
association assessment election where he was granted bifurcated access to protect the secrecy of
the vote, he agreed to review the ballots at a break on the assumption that he could raise the issue
again, and he did neither.
Johnson & Johnson, P.A., by Rebecca J. Davidson, for
plaintiff-appellant.
Patterson, Dilthey, Clay, Bryson & Anderson, L.L.P., by Stuart
L. Egerton, for defendant-appellee Figure “8” Beach
Homeowners' Association, Inc.
E. Holt Moore, III, for defendant-appellee New Hanover County.
HUDSON, Judge.
This case concerns a dispute between a coastal homeowner's
association and one of its members about the association's
authority to levy a special assessment for dredging and maintenance
of a waterway. On 21 February 2002, plaintiff Raymond Clifton
Parker sued for judgment declaring that a vote on the assessment,
the assessment itself, and a contract between defendant New Hanover
County (“the county”) and defendant Figure “8” Beach Homeowners'
Association, Inc. (“HOA”) were ultra vires, inappropriately
obtained, and null and void. Both defendants moved for summary
judgment, and by consent of all parties, plaintiff was deemed to
have moved for summary judgment. The court denied plaintiff's
motion and granted defendants' motions by order entered 16 May
2003. Plaintiff appeals. We affirm.
Plaintiff owns property on Figure 8 Island (“Figure 8”), a
privately owned island of 563 lots in New Hanover County. Mason
Inlet runs along the south end of the island, separating it from
the Town of Wrightsville Beach. Figure 8 is governed pursuant to
the HOA bylaws and applicable restrictive covenants. Figure 8
property owners, including plaintiff, are members of the HOA. On
29 January 1993, the covenants were amended to add “channel
dredging; beach renourishment” as purposes for which annual
assessments could be used. Until 12 April 1993, there were three
versions of restrictive covenants on Figure 8 lots, based on their
date of sale. On 12 April 1993, the HOA made the 1978 version of
the restrictive covenant applicable to all lots. This covenant
obligates property owners to pay an annual assessment in an amountfixed by the HOA board, which can also levy additional assessments
as it deems necessary. Any assessment for new capital improvements
costing more than $60,000 requires approval by a majority of HOA
members eligible to vote.
In 1999, the county, the HOA, and several other homeowner
associations in the Wrightsville Beach area had been considering
measures to deal with erosion, channel dredging and other beach-
related maintenance matters. The homeowner associations formed a
coalition called the Mason Inlet Preservation Group (“MIPG”), which
undertook a project to relocate Mason Inlet. The sand dredged from
the project would be used to renourish Figure 8's beaches. The
county commissioners voted to sponsor the project and pay for it
through a special assessment on the property owners of Wrightsville
Beach and Figure 8. Over the next two years, the project moved
through the permitting and planning process, and in November 2001,
the county obtained from the U.S. Army Corps of Engineers a permit
to relocate Mason Inlet. The permit required that the county
maintain the relocated inlet for thirty years through regular
dredging. On 5 November 2001, the county commission voted 3-2
against the project based on concerns about the cost of maintaining
the relocated inlet.
The Figure 8 HOA board quickly developed a plan to seek
reversal of the commissioners' vote. Having determined that the
costly maintenance was a capital improvement, the board approved
immediate solicitation of a vote by HOA members to approve a
special assessment covering the maintenance costs of the relocatedinlet. On 14 November 2001, the board mailed letters and ballots
to all eligible HOA voters. A majority of the ballots returned
voted in favor of the special assessment associated with the
project.
[1] Plaintiff first argues that the court erred in denying
plaintiff's motion for summary judgment and in allowing defendants'
motion for summary judgment. We disagree.
“The test to be applied by the trial court in ruling on a
motion for summary judgment [is] whether the pleadings,
depositions, answers to interrogatories, admissions of file or
affidavits established a genuine issue as to any material fact.”
McGinnis Point Owners Ass'n v. Joyner, 135 N.C. App. 752, 754, 522
S.E.2d 317, 319 (1999) (citing N.C.R. Civ. P. 56(c)). “If no such
issue exists, the trial court must then determine whether the
moving party is entitled to judgment as a matter of law.” Id.
This Court has set forth the following standard for interpreting
covenants imposing affirmative obligations:
Covenants that impose affirmative obligations
on property owners are strictly construed and
unenforceable unless the obligations are
imposed in clear and unambiguous language that
is sufficiently definite to assist courts in
its application. To be enforceable, such
covenants must contain 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. Assessment provisions in
restrictive covenants (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 andproperties the . . . association . . . chooses
to maintain.
Allen v. Sea Gate Assn., 119 N.C. App. 761, 764, 460 S.E.2d 197,
199 (1995) (internal quotation marks omitted) (citing Figure Eight
Beach Homeowners' Ass'n, Inc. v. Parker and Laing, 62 N.C. App.
367, 376, 303 S.E.2d 336, 341 (1983) and Beech Mountain Property
Owners Assoc. v. Seifart, 48 N.C. App. 286, 295-96, 269 S.E.2d 178,
183-84 (1980), disc. review denied, 309 N.C. 320, 307 S.E.2d 170
(1983)).
We first consider whether the covenants “contain a sufficient
standard by which to measure” the HOA's liability for assessments,
and whether the covenants “identify with particularity the property
to be maintained,” and provide us guidance as to which facilities
and properties are to be maintained. Regarding annual assessments,
the covenant provides:
8(c) The funds arising from such assessment or
charges or additional assessment may be used
for any or all of the following purposes:
Maintaining, operating, improving or replacing
the bridges; protection of the property from
erosion; collecting and disposing of garbage,
ashes, rubbish and the like; maintenance,
improvement and lighting of the streets,
roads, drives, rights of way, community land
and facilities, tennis courts, marsh and
waterways; employing watchmen; enforcing these
restrictions; paying taxes, indebtedness to
the Association, insurance premiums,
governmental charges of all kinds and
descriptions and, in addition, doing any other
things necessary or desirable in the opinion
of the Association to keep the property in
neat and good order and to provide for the
health, welfare and safety of owners and
residents of Figure Eight Island.
(Emphasis supplied). The 29 January 1993 amendment added the
language “channel dredging; beach renourishment” to paragraph 8(c).
Taken together, the language of this paragraph provides for
assessments to be used for channel dredging and maintenance of
marshes and waterways and for payment of governmental charges of
all kinds and descriptions. Maps included in the covenants depict
and refer to several of the areas which the assessment would be
used to dredge and maintain.
One area covered by the assessment which is not immediately
adjacent to Figure 8, and thus not depicted in the maps, is that
where the to-be-opened Mason Creek would flow into the Atlantic
Intracoastal Waterway (“AIW”). This area was of concern to the
Army Corp of Engineers and the HOA because the planned relocation
of Mason Inlet and the reopening of Mason Creek could create
problems with sand build up at this juncture with the AIW.
Plaintiff contends that because this area is neither named nor
depicted in the covenants, it is not specifically identified and
could not have been intended for inclusion in the covenants'
maintenance provisions. Our courts have stated that “[r]estrictive
covenants are strictly construed, but they should not be construed
'in an unreasonable manner or a manner that defeats the plain and
obvious purpose of the covenant.'” Hultquist v. Morrow, 169 N.C.
App. 579, 582, __ S.E.2d __, __ (2005) (quoting Cumberland Homes,
Inc. v. Carolina Lakes Prop. Owners' Ass'n, 158 N.C. App. 518, 521,
581 S.E.2d 94, 97 (2003)).
Concerning this location the trial court noted in finding 14: 14. Figure Eight Island has a boating
community, with a marina near its main
clubhouse and with several private docks on
the back, or “sound side,” of the island.
Boating access to the AIW has been enhanced
for residents on the southern back side of the
island with the dredging and reopening of
Mason's Creek, and the entire island's boating
community is benefitted by once again having a
navigable inlet on the southern end to the
Atlantic Ocean. Periodic dredging of shoaling
sands within the intersection of Mason's Creek
and the AIW, occurring at a location some
4,500 feet from the southern end of the island
proper, nevertheless directly benefits the
navigability of channels for the Figure Eight
Island boating community and the boaters'
access to Mason Inlet, Wrightsville Beach and
points both south and north on the AIW.
This finding is supported by the exhibits before the trial court,
such as the aerial photo of the island and the environmental
assessment report created by the U.S. Army Corp. of Engineers. As
several aspects of the overall Mason Inlet relocation plan would
have an impact on the confluence of AIW and Mason Creek, we believe
that the court's construction of the covenants was reasonable and
that the evidence adequately supports this finding, which in turn
supports the legal conclusion that the “authority of the Figure 8
HOA to assess its property owners/members upon a vote of the
membership is lawfully authorized.”
In addition, the HOA ballot clearly specified the possible
cost involved and the period of time dredging maintenance could be
required. The ballot states, in pertinent part:
The Board of Directors of the Figure “8” Beach
Homeowners' Association, Inc. proposes a
Special Assessment to be submitted to a vote
of the members. The Assessment is for the
purpose of funding the costs of maintenance
dredging of the Atlantic Intracoastal Waterway(AIW) in the vicinity of the confluence of the
AIW and Mason Creek, but only at times when
maintenance of this area is required to be
done by New Hanover County as a condition of
federal or state permits authorizing the
relocation of Mason Inlet. The assessment is
not to be used when dredging of this area is
being done in connection with the Mason Inlet
Relocation Project by New Hanover County. The
assessment will not be levied if the Mason
Inlet Relocation Project is not constructed by
July 1, 2003. The Board is authorized to
assess up to $350,000 in any year. The
assessment may be levied at such times and in
such amounts as the Board deems appropriate
for up to thirty years from the date of
approval.
HOA members who voted were informed of the location of the area to
be maintained as well as the cost involved and the duration of the
commitment upon which they were voting.
[2] Plaintiff also argues that rulings at the hearing and in
settling the record prejudiced plaintiff in his appeal. We
disagree.
Plaintiff contends that he was prejudiced by his inability to
review the actual ballots submitted by HOA members during the vote
on the special assessment. Plaintiff alleged that some of the
signatures on ballots might be fraudulent. However, the transcript
of the hearing on the parties' summary judgment motions reveals
that plaintiff was not denied such access. Defendants' counsel
stated:
We are not wanting to deny access to the
entire ballots to Mr. Parker and his attorney.
We simply want to maintain the secrecy of how
the members voted and we've offered some means
by which--I've already folded 55 no votes
where we could first let them count the no
votes without seeing the names, the names are
folded under. Mr. Parker's name is amongthese. We could also allow them to inspect
the ballots which were determined to be
invalid. Most of them simply weren't marked.
People signed their names and then forgot to
vote on the top half of the page.
The trial court then undertook an in camera inspection of the
ballots to look for signs of tampering. After this inspection, the
court told plaintiff he could examine the ballots in a bifurcated
process in order to preserve the secrecy of HOA members' votes.
Plaintiff could see all of the signatures first, then could see the
portion of the ballots indicating the vote cast. Plaintiff's
counsel objected to this process, stating that he believed there
was no expectation of privacy regarding the ballots, but then
stated:
I will review the ballots at a break and . . .
. And then we'll move forward. And I assume
that at some point in time, if I feel like we
need to open this issue up, we can do it
Plaintiff's counsel never raised the issue again. Having failed
even to avail himself of the opportunity to review the ballots as
described at the hearing and to raise this issue further with the
trial court, plaintiff may not now complain that the access he was
granted was insufficient and unduly prejudicial to him.
Affirmed.
Judges TIMMONS-GOODSON and STEELMAN concur.
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