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Conleys Creek Limited Partnership v. Smoky Mountain Country Club Property Owners Association, Inc.

Court of Appeals of North Carolina

April 4, 2017

CONLEYS CREEK LIMITED PARTNERSHIP, a North Carolina limited Partnership, and MARSHALL CORNBLUM, Plaintiffs,
SMOKY MOUNTAIN COUNTRY CLUB PROPERTY OWNERS ASSOCIATION, INC., a North Carolina nonprofit corporation, Defendant, Counter claimant, WILLIAM SPUTE, RONALD SHULMAN, and CLAUDETTE KRIZEK, Defendants, ANDMICHAEL CORNBLUM, MADELINE CORNBLUM, M&D CREEK, INC., a North Carolina corporation, CORNDERMAY PARTNERS, by and through its general partners, M&D Creek, Inc. and other unknown partners, and SMCC CLUBHOUSE, LLC, a North Carolina limited liability company, Counterclaim Defendants, ANDROBERT YOUNG, Defendant in Counterclaim of SMCC Clubhouse.

          Heard in the Court of Appeals 1 December 2016.

         Appeal by Smoky Mountain Country Club Property Owners Association from two orders entered in Swain County No. 14 CVS 238 Superior Court: (1) order entered 30 July 2015 by Judge Tanya T. Wallace (the "Wallace Order") and (2) order entered 26 January 2016 by Judge Marvin P. Pope, Jr. (the "Pope Order"). Cross-appeal by SMCC Clubhouse, LLC, from summary judgment order entered 26 January 2016 by Judge Marvin P. Pope, Jr., in Swain County Superior Court (the "Summary Judgment Order").

          Sigmon Law, PLLC, by Mark R. Sigmon and Sanford L. Steelman, Jr., for Conleys Creek Limited Partnership, Marshall Cornblum, Michael Cornblum, Madeline Cornblum, M&D Creek, Inc., Corndermay Partners, Counterclaim Defendants/Plaintiffs-Appellees, and SMCC Clubhouse, LLC, Counterclaim Defendant/Cross-Appellant.

          James W. Kilbourne, Jr., for Smoky Mountain Country Club Property Owners Association, Inc., Defendant-Counterclaimant/Appellant.


          DILLON, Judge.

         This matter involves a dispute concerning a residential planned community, Smoky Mountain Country Club ("SMCC"), developed by members of the Cornblum family. On one side of the dispute are members of the Cornblum family and certain entities they manage or control. On the other side of the dispute is the property owners' association (the "Association") of SMCC and several members of the Association's board of directors.

         Most of the issues on appeal concern a provision included by the Cornblums in SMCC's declaration which provided that the Cornblums would build and own a clubhouse and that the Association would collect dues from the homeowners and pay the dues to the Cornblums for the right to use the clubhouse. This matter was commenced after the homeowners took control of the Association's board of directors from the Cornblums and the new board issued a letter to the community stating that the Association would no longer collect clubhouse dues on behalf of the Cornblums.

         In this opinion, the association and its members are collectively referred to as the "Association." The individual property owners are referred to collectively as the "Homeowners."

         I. Factual Background

         SMCC is a planned community development in Swain County. SMCC was established as a planned community in 1999 by Conleys Creek Limited Partnership (the "Declarant"), one of numerous entities involved in this matter managed by members of the Cornblum family.

         Prior to 1999, the Swain County property owned by the Cornblums was already partially developed, consisting of single-family residential lots subject to the "Phase I Declaration" and condominium-style units subject to the "Townhouse Declaration." Some of the Cornblum property remained undeveloped and was not subject to either declaration.

         In 1999, the Declarant recorded a declaration (the "Declaration" or "1999 Declaration") which essentially formed a new planned community by merging the residential lots and condominium-style units subject to the Phase I and Townhouse Declarations and including some of the undeveloped land. The 1999 Declaration was recorded in accordance with the North Carolina Planned Community Act (the "PCA") found in Chapter 47F of our General Statutes. The prior declarations which controlled the residential lots and the condominium-style units were terminated.

         The 1999 Declaration provided that the Declarant would construct and own a clubhouse (the "Clubhouse") which would be available to the Homeowners for their use in exchange for Homeowners' payment of dues (the "Clubhouse Dues"). The Declaration further required the Association to collect the dues and to pay the collected dues to the Declarant. Specifically, the Declaration provided as follows:

Declarant shall grant to the Association and the Owners . . . a perpetual nonexclusive right to use the [Clubhouse], and each Owner, in consideration thereof, shall pay the Clubhouse Dues to the Association, and the Association shall pay all of the Clubhouse Dues collected . . . to Declarant. The obligation of each Owner to pay Clubhouse Dues to the Association shall be absolute for the entire period of time that such Owner is an Owner . . ., and shall not be dependent on such Owner's actual use of the [Clubhouse]. The Association shall bill and collect the Clubhouse Dues from each Owner . . . [and] shall pay the total collected amount of Clubhouse dues to Declarant.

         In 2002, the Declarant completed construction of the Clubhouse. Thereafter, the Association collected the Clubhouse Dues from the Homeowners and paid the collected amount to the Declarant as required by the Declaration.

         In 2013, the Declarant and three other entities conveyed their interest in the Clubhouse property to another Cornblum family-controlled entity called SMCC Clubhouse, LLC ("SMCC Clubhouse").[1] The Association collected Clubhouse Dues and paid the collected amount to SMCC Clubhouse, as required by the Declaration, [2] until 2014 when control of the Association board flipped from the Cornblums to the Homeowners.

         After this change in control in the Association board, the Association sent a notice to all of the Homeowners stating that the Association would no longer be billing or collecting Clubhouse Dues. After the Association stopped collecting Clubhouse Dues, approximately one-third of the Homeowners began paying Clubhouse Dues directly to SMCC Clubhouse; however, two-thirds chose not to do so.

         Approximately one month after the Association issued the notice, the Declarant commenced this action against the Association and three of its directors. None of the claims asserted in the original complaint are part of this appeal.

         The Association's responsive pleadings included numerous counterclaims and added two members of the Cornblum family, two entities controlled by the Cornblums, and SMCC Clubhouse as defendants to the counterclaims.

         SMCC Clubhouse responded to the Association's counterclaims by asserting several reverse counterclaims against the Association for its refusal to honor its obligation under the 1999 Declaration to collect Clubhouse Dues.

         The Association's counterclaims and SMCC Clubhouse's reverse counterclaims were all dismissed in a series of three orders of the trial court. These orders are all properly before us on appeal.

         II. Analysis

         The Association appeals from the Wallace Order, in which the trial court dismissed several of its counterclaims. The Association also appeals from the Pope Order, in which the trial court dismissed its remaining counterclaims. SMCC Clubhouse cross-appeals from the Summary Judgment Order, in which the trial court dismissed SMCC Clubhouse's reverse counterclaims against the Association. We address the appeal and the cross-appeal in turn.

         A. Appeal by the Association from Dismissal of Counterclaims

         1. The Wallace Order

         The Association first appeals from the trial court's Rule 12(b)(6) dismissal of several paragraphs of its counterclaim. We affirm in part and reverse in part.

         In considering a motion to dismiss pursuant to Rule 12(b)(6) our Rules of Civil Procedure, this court must conduct a de novo review of the pleadings to determine whether, as a matter of law, "the allegations state a claim for which relief may be granted." Skinner v. E.F. Hutton & Co., 314 N.C. 267, 269-70, 333 S.E.2d 236, 238 (1985).

         In the Wallace Order, the trial court dismissed four of the Association's prayers for relief - Nos. 4, 7, 13 and 14 - based on its conclusion that the counterclaims supporting these prayers for relief were barred by a statute of repose. Specifically, the trial court stated as follows:

[P]ursuant to the Statute of Repose contained in N.C. Gen. Stat. § 47F-2-117(b), Plaintiffs and Counterclaim Defendants' Motion to Dismiss in part is GRANTED. Paragraphs 4, 7, 13, and 14 of the Prayer for Relief in the [Association's] Second Amended and Restated Counterclaim challenging the validity of an amendment to the Declaration are dismissed in their entirety.

         We note that the Association has not contested the dismissal of ...

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