Recent Cases in Community Association Law

Law Reporter provides a brief review of key court decisions throughout the U.S. each month. These reviews give the reader an idea of the types of legal issues community associations face and how the courts rule on them. Case reviews are illustrations only and should not be applied to other situations. For further information, full court rulings can usually be found online by copying the case citation into your web browser. In addition, CAI’s College of Community Association Lawyers prepares a case law update annually. Case law summaries along with their references, case numbers, dates, and other data are available online.

Developer Prohibited from Turning a Residential Lot on a Cul-de-Sac into an Access Road

Centennial Park, LLC v. Highland Park Estates, LLC, No. 20A-PL-467 (Ind. Ct. App. July 21, 2020)

Highland Park Estates, LLC (HPE) developed the Highland Park subdivision in Monroe County, Ind. Centennial Drive ran through phase 1 of the subdivision, beginning at State Road 46 at the subdivision entrance and culminating at a cul-de-sac on the other end of phase 1. The Highland Park plat contained a restrictive covenant prohibiting anything from being done on any lot which may be or become an annoyance or nuisance to the neighborhood (nuisance covenant).

Centennial Park, LLC (Centennial) purchased property north of Highland Park with the intention of developing it as the Centennial Park subdivision. The property had access to a public road to the east, but Centennial considered access to State Road 46 to be more desirable. HPE was developing phase 2 of Highland Park and offered Centennial an easement through phase 2 for access to the state road, but Centennial did not want to wait for the phase 2 road to be constructed.

Instead, Centennial purchased the vacant lot 15 at the end of the Centennial Drive cul-de-sac. Centennial asked the Town of Ellettsville (town) to annex lot 15 into the town's boundaries, which the town did in May 2017. Centennial began construction of a road on lot 15 connecting Centennial Drive to the Centennial subdivision, and it granted the town a 50-foot-wide easement and right of way over lot 15.

Debra Hackman (Hackman) owned lot 16, which was adjacent to lot 15 and also located on the cul-de-sac. During construction of the road, access to lot 16 was often completely blocked by construction vehicles. Hackman's mailbox was knocked down three times, the construction tore up the cul-de-sac, and mud was spread across the road.

In August 2017, HPE sued Centennial, seeking to bar Centennial from using lot 15 as a permanent public right of way or construction road. The trial court determined that using lot 15 as an access road violated the nuisance covenant and issued an injunction (order prohibiting or mandating certain action) ordering Centennial to halt construction of the road and to remove the road improvements from lot 15.

Centennial petitioned the town to partially vacate (cancel or rescind) the plat and the plat's restrictive covenants (including the nuisance covenant) with respect to lot 15. The town approved the request. HPE and Hackman petitioned the trial court to overrule the plat vacation. The town moved to dismiss the petition, arguing that HPE and Hackman had not timely pursued the claim. Meanwhile, Centennial asked for relief from the trial court's injunction since it was based on the now canceled nuisance covenant. The trial court denied Centennial's request, and Centennial appealed.

Centennial argued that there was no longer any valid reason to prevent it from building a road on lot 15 since the nuisance covenant had been vacated. The Indiana Code defines a nuisance as something injurious to health, indecent, offensive to the senses, or an obstruction to the free use of property so as to essentially interfere with the comfortable enjoyment of life or property. When evaluating a nuisance claim, the relevant question to ask is whether the thing complained about produces such a condition that, in the judgment of reasonable persons, would naturally cause actual physical discomfort to persons of ordinary sensibility, tastes, or habits.

The appeals court determined that using lot 15 as an access road for the Centennial Park subdivision would negatively impact the area around the cul-de-sac. The Centennial Park subdivision was planned to include about 200 lots. The evidence indicated that the lots would generate a tremendous increase in traffic through the cul-de-sac and Centennial Drive, with one projection showing an increase of about 2,000 vehicle trips per day.

The appeals court ruled that Centennial's actions would transform the original cul-de-sac into a major thoroughfare, dramatically altering the nature of Centennial Drive and the Highland Park neighborhood. Although the Highland Park plat did not restrict lot 15 to residential use, the plat clearly showed that lot 15 and other lots would be located on a cul-de-sac, not a major thoroughfare. The appeals court held that Centennial's actions were subject to general nuisance law, regardless of whether the nuisance covenant existed.

Accordingly, the trial court's judgment was affirmed.

Contract Prohibits Newer Law from Altering Terms

C.V.P. Community Center, Inc. v. McCormick 105, LLC, No. 4D19-1515 (Fla. Ct. App. Aug. 5, 2020)

Century Village of Pembroke Pines was a condominium located in Broward County, Fla. The recreational facilities serving the condominium were leased from C.V.P. Community Center, Inc. (CVP) under a long-term lease (lease).

The lease and the declaration of condominium (declaration) required each individual unit owner to pay rent to CVP for use of the recreational facilities. The documents provided that an institutional mortgagee who acquired title to a unit as a result of foreclosure was not liable for rent that was due prior to the acquisition of title.

McCormick 105, LLC (McCormick) acquired title to a unit after foreclosing on a mortgage it held on the unit. When McCormick tried to sell the unit, a dispute arose with CVP as to whether McCormick was obligated to pay the delinquent rent amounts due from the prior unit owner at the time of the foreclosure sale.

McCormick filed suit against CVP for breach of contract and declaratory judgment (judicial determination of the parties' legal rights) concerning the rent obligations. The trial court determined that McCormick was an institutional mortgagee and was not liable for any rent that was past due at the time McCormick acquired the unit.

McCormick and CVP both filed motions seeking their attorneys' fees and costs in the lawsuit. McCormick sought the fees as the prevailing party based on a lease provision that entitled CVP, as the lessor, to recover its attorneys' fees if it prevailed. CVP also sought to recover its attorneys' fees and costs under the same provision. The trial court determined that McCormick had prevailed and awarded it $141,475 in attorneys' fees and costs. The trial court did not grant any fees or costs to CVP. CVP appealed.

CVP argued that only it could recover attorneys' fees and costs under the lease and the declaration. The lease limited recovery of attorneys' fees and costs to CVP, as the lessor, if it prevailed. In 1988, the Florida Legislature adopted a statute addressing attorneys' fees in contract cases. The statute provided that, where a contract contained a provision allowing attorneys' fees to one party if it took action to enforce the contract, then the court may allow reasonable attorneys' fees to the other party if it prevailed in the action. The statute specified that it applied to any contract entered into on or after October 1988.

Both the lease and the declaration were executed in 1984 and stated that they were to be interpreted in accordance with the Florida laws as they existed on Feb. 1, 1984. The appeals court found no provision in either the lease or the declaration that incorporated future statutory amendments into the documents. As such, the appeals court determined that the 1988 attorneys' fee statute did not apply.

McCormick argued that a novation (substitution of a new party and discharge of an original party to a contract by agreement of the parties) to the lease and the declaration occurred each time there was a transfer of title to a unit because the obligations of the former unit owner were canceled and new obligations by the new owner arose. The appeals court determined that a novation did not occur because McCormick did not assume any of the former owner's obligations. Rather, it agreed to be bound by the lease as it already existed.

In addition, the lease and the declaration expressly stated that the 1984 law applied. The documents went further to provide that no amendments to the declaration or a change in Florida law would amend the lease. As such, there was no mutual consent to establish a new contract as required for novation. Therefore, McCormick was not entitled to attorneys' fees or costs based on the lease and declaration provisions.

Accordingly, the trial court's judgment was reversed.

Community Vote Enough to Allow Redevelopment of Golf Club Property

Garrigues v. Hardie, No. 13-18-00418-CV (Tex. Ct. App. Aug. 13, 2020)

Apex Golf Properties Corporation (Apex) owned the Pharaoh Country Club (club) in the Pharaoh Valley subdivision in Corpus Christi, Texas. The subdivision contained detached homes as well as condominiums. John Hardie (Hardie) owned a lot in the subdivision.

The club property was subject to a restrictive covenant (covenant) stating that no use was permitted on the property other than a country club and any improvements that might be used in connection therewith, such as storage barns, clubhouse, golf course, swimming pool, tennis courts, or "improvements consistent with such use." The covenant stated that any person owning any real property adjacent to the club property was a beneficiary entitled to enforce the covenant.

Apex closed the club in July 2010, claiming it was no longer financially viable and stopped maintaining the club property about six months later. Apex continued mowing a strip of land between the club property and the adjacent residential properties, but the rest of the club property returned to its natural state. A developer obtained zoning approval from the City of Corpus Christi to turn the club property into a mixed-use development, but the covenant's use restriction prohibited the project from moving forward.

In 2015, Chapter 213 of the Texas Property Code (amenity act) was enacted to provide a mechanism by which property owners can terminate or modify restrictions on amenity property. The amenity act defines "amenity property" as real property restricted to use as a golf course or country club. To qualify, the amenity property must not have been in operation for a continuous period of at least 36 months. The amenity act allows the use restriction to be terminated or modified with the approval of 75% of the owners of property designated as beneficiary property in the document containing the restriction.

Hardie circulated a proposed amendment (amendment) to the covenant specifically stating that improvements that are consistent with use as a country club shall include a mixed-use development on an approximately 42-acre portion of the club property fronting the road (new development) subject to certain conditions, including building setbacks, height limitations, and requiring that owners in the development be members of the club. The amendment required that the remaining 69 acres of the club property remain subject to the original use restriction and be used solely as a golf course, clubhouse, tennis courts, swimming pool, and accessory buildings related to such uses.

Hardie considered the detached homes adjacent to the club property as well as units in the adjacent condominiums to qualify as benefitted properties. The owners of 296 of the 355 units that Hardie believed were benefitted properties voted in favor of the amendment, and Hardie recorded the amendment.

Unit owners Francis Garrigues, Barbara Smith, and Claude Gilson (collectively, the plaintiffs) sued Apex and Hardie (collectively, the defendants), seeking to invalidate the amendment and to enforce the original covenant. The trial court granted judgment in favor of the defendants, and the plaintiffs appealed.

The plaintiffs asserted that condominium units located away from the club property did not qualify as benefitted properties (and could not vote on the amendment) since they were not "adjacent" to the club property, even if the condominium complex was considered adjacent property. The appeals court found that, even setting the disputed votes aside, the amendment still received 79% of the votes.

The plaintiffs contended that owners of units adjacent to the club property but not adjacent to the new development were not eligible to vote. The appeals court found that the amenity act required that the covenant be used to determine benefitted properties, and the covenant referred to all units adjacent to the larger club property as benefitted properties, so the owners of all such units could vote on the amendment.

The plaintiffs complained that the amendment violated the mutuality doctrine, which requires that any action to alter, extend, or revoke existing restrictive covenants must apply to all of the properties subject to the restrictive covenants. The appeals court held that the doctrine did not bar the amendment because the covenant applied only to the club property; the adjacent residential properties were beneficiaries of the covenant but were never subject to the covenant. Thus, the amendment did not impermissibly remove restrictions from certain lots that uniformly burdened the entire subdivision.

The plaintiffs argued that the amenity act violated the Contracts Clause of the U.S. and Texas Constitutions because it impaired the plaintiffs' contractual rights to enforce the covenant. The Contract Clause of the U.S. Constitution provides that no state shall pass any law impairing contract obligations. The Texas Constitution also provides that no law impairing contract obligations shall be made.

The appeals court noted that the amenity act did not modify or terminate the covenant but merely provided a procedure for the covenant's beneficiaries to modify or terminate the covenant. The amenity act's application also was limited because it applied only to amenity properties that had been abandoned for at least 36 months. The amenity act did not affect successful clubs or even clubs that had recently been closed; it was aimed at properties for which the original use had become unsustainable. The appeal court concluded that the amenity act did not result in a substantial impairment of a contractual relationship as to constitute a constitutional violation.

Accordingly, the trial court's judgment was affirmed.

Owners of Lake Lots Cannot Alter Declaration's Requirement, Shift Responsibility to Entire Community

Holman v. Glen Abbey Homeowners Association, Inc., No. A20A0895 (Ga. Ct. App. July 28, 2020)

Glen Abbey Homeowners Association, Inc. (association) governed the Glen Abbey subdivision in Alpharetta, Ga. The subdivision included a 4.5-acre lake that served as the stormwater detention pond for the subdivision. Seventeen lots bordered the lake (lake lots). The association owned one of the lake lots, which served as a recreation area for the association's members. The remaining 16 lake lots were residential lots owned by individual owners.

Six years after the subdivision was established, it was annexed into the City of Alpharetta. In June 2015, the city notified the association that it was required to make repairs to the lake and the dam, which were projected to cost more than $1.9 million. In 2018, the association sought to allocate the repair costs among the owners of the lake lots, which meant that the association would be responsible for 1/17^th of the cost for its one lake lot.

The Glen Abbey declaration of covenants and restrictions (subdivision declaration) provided that the association had no liability or duty whatsoever to the lake, except with respect to the association's lake lot and only to the extent provided by a separate declaration of covenants, restrictions, and easements covering the lake lots (lake declaration). The subdivision declaration stated that if the owners of the lake lots did not maintain the lake in accordance with the lake declaration, the association had the right, but not the obligation, to perform the required maintenance and repair and to assess the costs against the owners of the lake lots.

The lake declaration obligated the owners of the lake lots to perform all reasonably necessary maintenance and repair of the lake and dam. It stated that such maintenance and repair included, but was not limited to, any maintenance imposed upon the owners of the lake lots by any governmental body or agency. The lake declaration provided that each owner of a lake lot, including the association with respect to its lake lot, was responsible for an equal share of all lake maintenance and repair costs.

The lake declaration could be amended with the approval of the owners of a majority of the lake lots and the association. The initial term of the lake declaration ended in March 2019, after which time it would be automatically extended for successive periods of 20 years, unless the extension was disapproved in writing by owners of more than a majority of the lake lots and the association.

In May 2018, 13 of the lake lot owners signed and recorded an amendment to the lake declaration (amendment), stating that the association was responsible for maintaining and repairing the lake and dam and had the right to assess the association's full membership for such maintenance and repair costs. In July 2018, the association recorded a notice that the amendment was invalid.

In January 2019, 12 of the lake lot owners (plaintiffs) sued the association, alleging that the lake was owned by and served the entire subdivision. The plaintiffs asserted that the city's ordinance that made homeowners associations responsible for maintaining stormwater management facilities serving the subdivision took precedence over the lake maintenance provisions of the subdivision declaration and the lake declaration (the declarations).

In March 2019, days before the lake declaration's term was set to be automatically extended, the plaintiffs signed and recorded a disapproval of the lake declaration (disapproval) to prevent the automatic renewal.

The trial court determined that the amendment was invalid because it was not approved by the association. It found that the declarations expressed the clear intent that the lake lot owners (including the association) would share the lake maintenance expenses in 17 equal shares, and the city ordinance had no bearing on the parties' dispute. The trial court invalidated the amendment and the disapproval and held that the lake declaration remained in full force and effect. The plaintiffs appealed.

Restrictive covenants must be interpreted so as to give a reasonable and effective meaning to all expressions of the parties' intent, rather than an interpretation that leaves a part of these expressions unreasonable or of no effect. The appeals court found that the two declarations expressed a consistent mandate that the costs of maintaining the lake would be borne solely by the lake lot owners.

Georgia follows the general rule that amendments to restrictive covenants that do not apply uniformly to similar lots are not effective without the approval of owners whose interests would be adversely affected. There are two exceptions to this rule: (1) where a change in conditions renders the restrictions unreasonable, or (2) the declaration expressly notifies purchasers that such amendments may be made.

The appeals court found that the amendment attempted to shift liability for the lake to all association members without their consent, and there was no evidence suggesting that either of the two exceptions to the rule against non-uniform amendments applied. As such, the amendment was invalid. The disapproval also was invalid because the lake declaration required both the consent of a majority of the lake lot owners and the separate consent of the association for any termination or amendment of the lake declaration.

Accordingly, the trial court's judgment was affirmed in part and vacated in part (with respect to other claims), and the case was remanded for further proceedings.

Association Can Ban Short-Term Rentals Through Rules

JBrice Holdings, L.L.C. v. Wilcrest Walk Townhomes Association, Inc., No. 14-17-00790-CV (Tex. Ct. App. Aug. 18, 2020)

Wilcrest Walk Townhomes Association, Inc. (association) governed a townhome community in Houston. JBrice Holdings, L.L.C. and 231 Trioaks Lane, an individual series of JBrice Holdings, L.L.C. (collectively, JBrice) owned two townhomes in the community.

JBrice used its units for short-term rentals, renting them for periods of one to 10 days through Airbnb. JBrice's cleaning crews cleaned the units after the renters departed. The renters accessed the units using a keypad lock. JBrice paid state and local hotel and motel taxes on the rental proceeds.

In March and May of 2016, the association notified JBrice that its short-term rental activity violated the single-family residential use restriction in the community's declaration of covenants, conditions, and restrictions (declaration). In June 2016, JBrice sued the association, seeking a determination that the declaration did not restrict the length of tenant occupancy periods. The association countersued, asserting claims for breach of the declaration's residential use restriction and for nuisance.

In January 2017, the association's board of directors (board) adopted rules prohibiting the use of a unit for hotel, motel, or transient use by individuals who did not utilize the unit as a bona fide primary or secondary residence. The rules defined "hotel, motel, and transient use" as including any use for which payment of a hotel or motel tax would be applicable. JBrice did not dispute that it used the units for hotel and transient use, but it asserted that the new rule was void and unenforceable because the board did not have the power to regulate the use of the units through rulemaking.

The trial court determined that the association, acting through the board, had the power to adopt rules concerning leasing and that the short-term leasing rule was enforceable. It granted judgment in the association's favor, barred JBrice from continuing any further short-term rental activity, and awarded attorneys' fees to the association. JBrice appealed.

The declaration gave the association the right to make and enforce reasonable rules for the use of the common area and common area facilities. JBrice argued that this provision limited the association's rulemaking power to only rules regulating the common area, not individual units. The association argued that Chapter 204 of the Texas Property Code (code) provided an independent source of authority to regulate the use of the units. The code stated that, unless otherwise provided by the declaration or the association's bylaws or articles of incorporation, the board had the authority to regulate the use, maintenance, modification, and appearance of the subdivision.

The appeals court found that, although the declaration was silent as to the association's authority to regulate the use of the units, it did not prohibit the adoption of such rules. As such, the declaration provision giving the association the authority to adopt common area rules did not impose a limit on the association's other powers. Since neither the declaration nor any other association governing document limited the code's applicability, the board had the powers established under the code, including the power to regulate unit use by adopting rules prohibiting short-term rentals.

Accordingly, the trial court's judgment was affirmed.

Owners Can Amend Declaration to Withdraw Their Lots

Prime Locations of CT, LLC v. Rocky Hill Development LLC, 199 Conn. App. 642 (Conn. App. Ct. Aug. 18, 2020)

Coles Brook Commerce Park Owners Association, LLC (association) governed a business park in Cromwell, Conn. The business park comprised seven lots of various sizes.

A declaration of easements, covenants, and restrictions (declaration) obligated every lot owner to be a member of the association. It also prohibited any construction on a lot except in conformity with the declaration's standards and specifications. The declaration provided that it could be modified in part or terminated in its entirety by the recordation of a document signed by the owners of lots having more than 50% of the votes in the association, but no modification could change or terminate any easement that burdened or benefitted a lot without the consent of the lot owner.

In June 2012, the lot owners voted to remove lot 1, owned by Rocky Hill Development, LLC (Rocky Hill), from the association, but no amendment to the declaration or other document evidencing the vote was recorded. After the vote took place, Rocky Hill did not participate in association meetings or pay association assessments.

Luke DiMaria (DiMaria) wanted to purchase lot 2, owned by MPM Enterprises, LLC (MPM), for the purpose of constructing and operating a crematorium. Believing that the association would not approve a crematorium on lot 2, DiMaria sought to withdraw lot 2 from the declaration. DiMaria drafted an amendment withdrawing lots 1, 2, and 7 from the declaration, which was signed by Rocky Hill, MPM, and Rescue One, LLC (Rescue One), the owner of lot 7.

The amendment stated that the owners of the three lots held more than 50% of the total association votes (lot 1–27.84%; lot 2–11.01%; and lot 7–15.30%) and could amend the declaration. The amendment stated that lots 1, 2, and 7 were withdrawn from the declaration, and the owners of those lots would no longer have membership in the association, votes in the association, or liability for association expenses.

The amendment was recorded in July 2012, and DiMaria purchased lot 2 in September 2012. DiMaria began to seek zoning approval for a crematorium. The owners of lots 3, 4, 5, and 6 (collectively, the plaintiffs) participated in the application process, and their attorney confirmed to the town planner that the owners of lots 1, 2, and 7 (collectively, the defendants) had withdrawn from the association.

In June 2013, the association's treasurer wrote to Rescue One, accepting Rescue One's withdrawal from the association. The association did not send similar letters to Rocky Hill or DiMaria, but DiMaria never participated in association meetings or paid association assessments. During the zoning approval process, the association took the position that DiMaria was not part of the association.

The Cromwell Planning and Zoning Commission (commission) initially denied the application to build a crematorium, and DiMaria appealed. The plaintiffs sought to intervene in the zoning appeal and asserted that the defendants were not association members in their motion to intervene. The commission and DiMaria eventually reached a settlement, and DiMaria began construction of the crematorium in August 2014.

That same month, the plaintiffs filed suit against the defendants, seeking a determination that the amendment was void, an order preventing DiMaria from connecting to the association's drainage system, and an order barring DiMaria from building any structure on lot 2 without association approval. The trial court found that the amendment was not valid because the declaration did not permit lots to be withdrawn from the declaration, and it entered judgment in the plaintiffs' favor. The defendants appealed. The appeals court reversed the judgment on technical grounds, and the case was remanded to the trial court.

In the second trial, the plaintiffs argued that the declaration created a drainage easement for the benefit of the association and its members and that the defendants had relinquished their rights to use the drainage easements by voluntarily withdrawing from the association. The defendants asserted that the drainage system was created as part of the subdivision approval before the declaration was recorded, and their drainage rights arose from the subdivision approval rather than the declaration. The town had already told DiMaria that he could tie into the stormwater drainage system and charged him a fee for doing so, which DiMaria paid.

The trial court found the declaration permitted lots to be withdrawn by an amendment. It also determined that the plaintiffs were barred by the doctrines of equitable estoppel and laches (unreasonable delay in asserting a claim that has caused prejudice to the party against whom the claim is made) for an inexcusable delay in claiming the amendment was invalid. The trial court also held that the defendants had the right to tie into the drainage system regardless of whether they were association members. The plaintiffs appealed.

The declaration did not specifically address whether a lot could not be withdrawn. Since the declaration included language limiting amendments terminating easements, the appeals court inferred that the declaration would have included language limiting lot withdrawal had there been an intent to limit it. The ability for lots to be withdrawn also was supported by the plaintiffs' and the association's actions since they consistently took the position throughout the zoning approval process that the defendants were not members of the association.

The plaintiffs asserted that the amendment was invalid because Rocky Hill was not an association member at the time it signed the amendment since lot 1 had already been withdrawn. The appeals court determined that lot 1 was not withdrawn prior to the amendment because no instrument was recorded to effectuate withdrawal, as required by the declaration.

The plaintiffs insisted that the amendment was invalid because the Connecticut Common Interest Ownership Act (COIA) required a 67% vote, but the appeals court found that the 67% vote requirement did not apply to non-residential property. The appeals court also determined that the drainage system was created as part of the subdivision approval, prior to and independent of the declaration. Therefore, the defendants' rights to use the drainage system arose before the declaration created any easements and were not dependent upon membership in the association.

Accordingly, the trial court's judgment was affirmed.

Association Did Not Discriminate Against Owner by Undoing Illegal Parking Space Assignment

Sun v. Braddock Place Townhouses Association, No. 1:19-cv-00423 (E.D. Va. Aug. 7, 2020)

Braddock Place Townhouses Association (association) governed a 20-unit townhouse community in Alexandria, Va. The community was fairly racially and ethnically diverse with Asian, Latin American or Hispanic, African American, Turkish, and white owners.

Eighteen of the townhomes had garages, and two did not. The Braddock Place declaration of covenants, conditions, and restrictions (declaration) provided that each unit had permanent, exclusive use of one parking space near the unit. All owners were entitled to reasonable use of the remaining, unreserved parking spaces (common spaces).

In 2000, the association had a meeting where parking was discussed. The association followed up by sending a letter to all owners explaining that each unit with a garage was assigned one reserved parking space, but units 4749 and 4751 (the two units without garages) were each assigned one reserved and one common space as regular parking spots. In 2001, the association formally designated two visitor parking spaces as reserved for units 4749 and 4751 and painted the spaces to indicate the assignment. The association's handbook given to all owners indicated that the two common spaces were reserved for those units, but that the common spaces could not be conveyed.

In 2013, Mekdes Bogale (Bogale) purchased unit 4751 from Gary Moran (Moran). The association's board of directors (board) discussed that the extra common space assigned to unit 4751 could not be conveyed with the purchase, but it decided not to do anything to redesignate the extra space as visitor parking since there had been complaints about parking after the board made the original assignment in 2001.

In 2016, Bogale listed unit 4751 for sale. Han Le, an Asian unit owner who had the reserved parking space next to the extra common space assigned to unit 4751, inquired about the validity of assigning the extra space to unit 4751. Le asked the board to restore the common space to visitor parking.

In August 2016, Quingling Sun and Jinshan Tang (collectively, the plaintiffs) purchased unit 4751 from Bogale. Bogale gave them the Braddock Place disclosure packet that he received when he purchased the unit from Moran. A few weeks later, the board decided to investigate whether the extra common spaces had been legally assigned to units 4751 and 4749 and, if not, to repaint the extra spaces as visitor parking.

In October 2016, the board distributed a visitor and assigned parking handout to all owners, detailing the investigation into the parking situation. The association's attorney advised that the board did not have the authority to designate common spaces for the exclusive use of two units since the declaration granted all owners an easement to use the common spaces. The attorney said that the only way the two spaces could be assigned to particular units was to amend the declaration by a vote of three-fourths of the owners. In 2018, the association repainted the two common spaces to mark them as visitor spaces.

In 2019, the plaintiffs sued the association and individual board members (collectively, the defendants), alleging violations to the federal Civil Rights Act of 1866 (the act). The plaintiffs were Asian, of Chinese origin. The act protects all persons from racial discrimination in making and enforcing contracts. A claimant must first show that he or she was deprived of a protected right and then establish causation.

The court found that the plaintiffs did not establish that they were deprived of a protected right under a contract because the declaration did not give them the right to a second parking space. The declaration expressly gave each unit one designated parking space and granted all owners the reasonable use of the remaining common spaces. The declaration further granted each owner an easement over the common spaces. The court determined that the board's attempt to designate the two common spaces as reserved for specific units exceeded its authority. Therefore, the sale contract between Bogale and the plaintiffs could not have included the second parking space.

The court found that the plaintiffs also failed to establish discriminatory intent. In the absence of direct evidence, a court may infer discriminatory intent from the evidence of a general pattern of racial discrimination. However, the board's action was prompted by the concern of another owner, who was a member of the same protected class as the plaintiffs. Also, the allocation of a common space to unit 4751 deprived other owners, many of whom were either Asian or members of other minority groups, of their rights to use the common space.

Plaintiffs argued that the disclosure packet they received from Bogale constituted a contract with the association for unit 4751 to receive two assigned spaces. However, the association did not prepare the disclosure packet and had no communications with the plaintiffs prior to their purchase.

Accordingly, the court granted summary judgment (judgment without a trial based on undisputed facts) in favor of the defendants, and the plaintiffs' claims were dismissed.

Association Not Responsible for Repairing Construction Defects, Unable to Sue Manufacturer of Defective Products

Shearon Farms Townhome Owners Association II, Inc. v. Shearon Farms Development, LLC, No. COA18-1308 (N.C. Ct. App. Aug. 4, 2020)

Shearon Farms Townhome Owners Association II, Inc. (association) governed a townhome community in Wake County, N.C. In early 2018, some of the unit owners noticed that the siding on their homes was warped and distorted and looked as if it were melting. An investigation revealed that the damage was due to abnormal reflections of extremely high heat from the unit windows.

In May 2018, the association sued various parties involved in the construction of the units, including the developer and the window manufacturer, JELD-WEN, Inc. JELD-WEN asserted that the association did not have standing to pursue claims against it because the association had no legal responsibility for the windows. The trial court agreed and dismissed the claims against JELD-WEN. The association appealed.

Standing is a prerequisite to a court having jurisdiction over the claim. North Carolina's standing doctrine is based on the idea that the claimant must have suffered some injury sufficient to confer a genuine stake in a dispute that may be adjudicated by a court. The principle of associational standing allows an association to bring suit on behalf of its members when (i) its members would otherwise have standing to sue in their own right, (ii) the interests the association seeks to protect are germane to the organization's purpose, and (iii) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.

The third associational standing requirement ordinarily cannot be satisfied where the damage claims are not common to the entire membership or are not shared by all members to the same degree. The association conceded that the units were not all damaged to the same degree, but the association asserted that it was contractually obligated to repair the damaged siding and to allocate the repair costs equally among its members.

The appeals court determined that the association was not obligated to repair the damaged siding. The Shearon Farms declaration of covenants, conditions, and restrictions (declaration) obligated the association to maintain the exterior building surfaces. However, the declaration specified that the association's maintenance obligations were for maintenance and repairs arising from normal usage and weathering and did not include maintenance and repairs made necessary by fire or other casualty or damage. The appeals court found that the three terms "fire," "casualty," and "damage," coupled with the phrase "normal usage and weathering," indicated that all three terms carried meanings that they are not normal and are not events that one would expect to occur simply given the passage of time.

The association did not allege any damage to the siding resulting from normal wear and usage. Rather, it alleged that the siding was severely damaged from abnormal reflections of extremely high heat from the windows. Thus, the appeals court determined that the association was not obligated to repair the damage based on the declaration's plain language.

The association urged that its repair obligation under the declaration should be interpreted as excluding only damage that would be covered by standard property insurance. The appeals court rejected this notion since it would violate the declaration's plain and unambiguous terms. The appeals court viewed the phrase "casualty or damage" as indicating that casualty and damage are independent occurrences that were not dependent upon a casualty covered by an insurance policy. The principles of covenant interpretation required that the word "or" not be ignored.

The appeals court also noted that the owners whose units were damaged may have other claims, in particular claims against other owners whose windows allegedly deflected heat onto the neighboring units. Since the association represented all owners, it clearly could not represent owners in claims against other owners. The appeals court held that the association lacked standing to pursue the claims against JELD-WEN.

Accordingly, the trial court's judgment was affirmed.

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