CAROLINA MARLIN CLUB MARINA ASSOCIATION, INC. d/b/a MOREHEAD-BEAUFORT YACHT CLUB, Plaintiff,
HARRY PREDDY and VALERIE PREDDY, Defendants
Heard in the Court of Appeals 8 September 2014.
This Decision is not final until expiration of the twenty-one day rehearing period. [North Carolina Rules of Appellate Procedure 32(b)]
Appeal by defendants from judgment entered 14 August
2013 by Judge L. Walter Mills in Carteret County District Court.
Carteret County. No. 11 CVD 415.
Wheatly, Wheatly, Weeks, Lupton & Massie, P.A., by Claud R. Wheatly, III, for plaintiff-appellee.
Amie M. Huber, Attorney at Law, PLLC, by Amie M. Huber, for defendants-appellants.
McCULLOUGH, Judge. Judges ERVIN and BELL concur.
Harry Preddy and Valerie Preddy (" defendants" ) appeal from a judgment entered in favor of Carolina Marlin Club Marina Association, d/b/a Morehead Beaufort Yacht Club (the " Association" ). For the following reasons, we affirm.
On 11 April 1988, the Department of Natural Resources and Community Development and the Coastal Resources Commission issued a permit to Gene McClung (" declarant" ) " authorizing development [of private property] in Carteret County at Newport River, adjacent to Ware and Runsel Creeks[.]" Thereafter, in accordance with the permit, declarant constructed an upland marina on the private property by excavating a basin with channel to the Newport River.
In connection with the construction of the marina, on 22 June 1989, declarant made and entered into a Declaration of Unit Ownership (the " Declaration" ) subjecting the marina to the North Carolina Condominium Act, Chapter 47C of the North Carolina General Statutes (the " Condominium Act" ), as a condominium development known as Carolina Marlin Club Marina. Additionally, as provided in the Declaration, declarant created the Association as a non-profit corporation charged with maintaining and administering the common facilities; performing maintenance on buildings, docks, the basin, and other improvements; administering and enforcing covenants and restrictions in the Declaration; and levying, collecting, and disbursing assessments and charges allowed by the Declaration. The Declaration, along with the bylaws of the Association, was recorded in the Carteret County Register of Deeds office on 23 June 1989.
As originally recorded, the Declaration described the marina as common areas and docking facilities, referred to as units or slips, for forty-four vessels. However, shortly after the Declaration was recorded, declarant, in accordance with Article VI of the Declaration, constructed additional docking facilities so as to increase the total number of slips to seventy-four. An amendment to the Declaration entered into on 8 December 1989 and recorded on 15 December 1989 subjected the additional slips to the terms and conditions of the Declaration.
By General Warranty Deed made and entered into on 15 June 1992 and recorded on 22 June 1992, defendants acquired from declarant " Slip #46, Carolina Marlin Club Marina, a condominium as described in [the] Declaration . . . together with the undivided interest in the common areas appurtenant to each such slip or unit[.]" At all times relevant to this appeal, defendants had a 1/73 undivided interest in the Association as the Association owned one slip.
Since the time defendants acquired Slip #46, the Association has levied assessments for numerous maintenance projects. This case concerns the validity of a special assessment levied against members for dredging in 2010.
In 2009, the Association determined extensive dredging was needed in the access channel and marina basin, including the areas beneath individual slips. At that time, the Association held a Coastal Area Management Act (" CAMA" ) permit allowing it to maintain a water depth of six feet. In preparation for dredging, at the December 2009 annual members meeting, the members voted and passed an assessment of $2,750.00 per slip (the " spoils assessment" ) to cover the estimated $200,750.00 cost of modifying and enlarging the dredge spoils area to accommodate future dredging spoils. However, bids for the spoils rebuild were less than expected, resulting in excess funds upon completion of the project.
In January 2010, a newly elected board called a special meeting for 6 February 2010. Two proposals were to be submitted for member approval: (1) approval of the 2010 operating budget and (2) use of the excess funds from the spoil assessment and an additional $500.00 special assessment (the " dredge assessment" ) to cover the balance of the dredging costs.
Notice of the 6 February 2010 special members meeting was included in the Association's " Smooth Sailing Newsletter," which was emailed to defendants on 17 January 2010. Around the same time, Mr. Preddy, the webmaster for the Association, posted notice on the website indicating " there was going to be a special meting . . . on February 6th at 1:00." A second notice that the time of the 6 February 2010 special members meeting had been changed to 3:00 was later sent to defendants by email on 26 January 2010.
Additionally, Mr. Preddy received a call from the Association's President, Mr. Joseph Barwick, on 1 February 2010 informing him that Mr. Barwick had been designated as his representative. During their conversation, Mr. Preddy raised his concern over not receiving notice of the special meeting in the mail. Mr. Preddy recalled that Mr. Barwick informed him that the emails were his notice.
Despite Mr. Preddy's concerns regarding the notice provided by email, defendants attended the meeting on 6 February 2010. At the meeting, Mr. Preddy orally objected to the notice of the meeting and submitted a written objection, joined by other members, to the board. Defendants, however, remained at the meeting and Mr. Preddy voted against the assessment as the owner of Slip #46.
The minutes from the 6 February 2010 special members meeting indicate the dredge assessment was approved.
Following approval of the dredge assessment, several members, including defendants, sent letters to the N.C. Department of Environment and Natural Resources, Division of Coastal Management (the " NCDENR-DCM" ) disputing the Association's authority to dredge the submerged lands beneath their slips by claiming that they owned the property. Upon reviewing the objections, the NCDENR-DCM, based on an opinion from the N.C. Attorney General's office that the submerged lands under the slips in question were privately owned by the members, revoked the Association's permit to dredge the marina by letter dated 5 March 2010. However, on 20 October 2010, a modified CAMA permit was issued allowing the Association to dredge the marina basin, including the submerged land under those slips owned by members granting the Association permission to dredge. Defendants and five other members refused to allow the Association to dredge beneath their slips.
Dredging of the marina pursuant to the modified CAMA permit took place late in 2010. The access channel and all portions of the marina basin, except those six slips owned by members who objected, were dredged.
At a special members meeting of the Association on 22 May 2010, the Association put to a vote certain amendments to the bylaws. An amendment to allow electronic notice of meetings was passed by the members. Thereafter, on 11 January 2011, notice of a special meeting to be held 5 February 2011 was sent to members by U.S. mail and email. As stated in the notice, " [t]he purpose of the meeting [was] to revote a proposal to (1) use remaining funds from the dredge spoils project for the dredging project and (2) to assess the members $500 per slip for the purpose of dredging the channel, basin and slips." Sixty-three members voted in favor of the dredge assessment at the special members meeting.
Following approval of the dredge assessment, defendants were billed for $500.00. When defendants refused to pay, the Association commenced this suit against defendants by means of the issuance of a summons and the filing of a complaint in Carteret County District Court on 16 March 2011. In the complaint, the Association sought to collect the dredge assessment, interest, attorneys' fees, and costs.
Defendants responded to the complaint by filing an answer and counterclaim on 16 May 2011. In their response, defendants asserted each slip was private property and the dredge assessment could not be used to maintain private property. Following an arbitration decision in favor of the Association, defendant filed a request for a trial de novo on 12 August 2011. The case came on for a bench trial in Carteret County District Court before the Honorable L. Walter Mills on 21 February 2013. The trial carried over to 22 February 2013, was continued, and later tried to its conclusion on 17 April 2013. Upon the consideration of ...