IRONMAN MEDICAL PROPERTIES, LLC and HODGES FAMILY PRACTICE, INC., Plaintiffs,
TANVIR CHODRI, M.D. a/k/a Tanvir Chaudhary, PREMIER MEDICAL CENTER CONDOMINIUM ASSOCIATION, INC., RANDOLPH PULMONARY & SLEEP CLINIC, PLLC and WHITE OAK MEDICAL PROPERTIES, LLC, Defendants.
BETH HODGES, M.D. and FRANCISCO HODGES, M.D., Third-Party Defendants.
in the Court of Appeals 6 September 2018.
by plaintiffs and third-party defendants from judgment
entered 20 December 2016 and cross-appeal by defendants from
order entered 2 December 2016, both entered by Judge Eric C.
Morgan in Randolph County No. 15 CVS 527 Superior Court.
Mullins Riley & Scarborough LLP, by Lorin J. Lapidus and
G. Gray Wilson; Allman Spry Davis Leggett & Crumpler,
P.A., by D. Marsh Prause and Jodi D. Hildebran and; and
Yates, McLamb & Weyher, LLP, by Rodney E. Pettey and
Brian M. Williams, for plaintiffs and third-party defendants.
Rossabi Reardon Klein Spivey PLLC, by Gavin J. Reardon and
Amiel J. Rossabi, for defendant Premier Medical Center
Condominium Association, Inc.
Medical Properties, LLC ("Ironman") and Hodges
Family Practices, Inc. ("HFP") (collectively,
"Plaintiffs"), as well as Drs. Beth and Francisco
Hodges (the "Hodges") as third-party defendants,
appeal from a 2 December 2016 order granting a motion for a
directed verdict made by Dr. Tanvir Chodri ("Dr.
Chodri"), Premier Medical Center Condominium
Association, Inc. ("Premier") and White Oak Medical
Properties, LLC ("White Oak") (collectively,
"Defendants"). These parties also appeal the 20
December 2016 judgment entered following a jury's
verdict. Premier cross-appeals from a separate order denying
its motion for attorney's fees and its motion to tax
costs to Plaintiffs entered on 2 December 2016.
no error in the jury's verdict and the judgment entered
thereon. We affirm the trial court's entry of directed
verdict dismissing all claims asserted by the tenant, HFP,
the Hodges and dismissing Ironman's punitive damage
claims. We reverse and remand for trial on Ironman's
claim for breach of fiduciary duty against Premier and Dr.
Chodri and for the trial court to address Defendant
Premier's motion for costs and attorney's fees.
and HFP are separate and distinct legal entities chartered as
a North Carolina Limited Liability Company and corporation,
respectively. The Hodges, as individuals, hold ownership
interests in both these entities.
Oak developed Premier Medical Center as a ten-unit
condominium complex located ("Condominium") in
Asheboro, North Carolina. Ironman is the record owner of one
condominium unit in the Premier Medical Center. In June 2010,
Ironman leased its unit to HFP.
Oak is a North Carolina Limited Liability Company, which owns
and maintains the other nine units located in Premier Medical
Center. Premier is a chartered North Carolina not-for-profit
condominium association corporation. Dr. Chodri serves as the
sole officer of Premier and is a co-owner of White Oak.
Neither White Oak, Premier, nor Dr. Chodri is a party to
Ironman's lease to HFP nor have any other connection to
the Hodges on these issues, except through Ironman.
voting interests in Premier were divided twenty-six percent
(26%) to Ironman and seventy-four percent (74%) to White Oak.
The common areas were allocated as twenty-one percent (21%)
to Ironman and seventy-nine percent (79%) to White Oak.
Oak was developed and initially owned by Dr. Chodri, his wife
and a development partner. They managed Premier for
approximately one year before their partner declared
bankruptcy. Dr. Chodri had no prior experience managing
investment properties or condominium associations.
Chodri practiced medicine and relied upon his medical
practice office manager, Julie Trollinger
("Trollinger") to handle the financial affairs of
White Oak and the Premier condominium complex. The parties
agree that the office manager was "inexperienced,
unsophisticated, and not particularly knowledgeable about
such matters" involving managing condominium property.
quit paying its condominium dues in June 2012, despite
repeated demands from Premier. On 4 December 2012,
Ironman's unit's tenant, HFP, requested a breakdown
of expenses for 2011 and 2012. The parties dispute whether
Premier failed to timely provide the summaries of a budget
and whether the budget summaries it provided were correct.
alleged, despite HFP's multiple verbal and written
requests, they were not furnished with income, expense,
balance, or bank statements for the Condominium until after
the lawsuit was filed in 2015.
also sent to Premier a written request for statements after
Premier had responded to HFP's prior request by sending
Ironman allegedly all financial documentation Premier had at
the time. Plaintiffs were unsatisfied with these responses
from Premier, claiming they were limited and entirely devoid
of the requested financial information they were entitled to
inquiry into Premier's finances revealed that the
Condominium's assets had not been managed in accordance
with the Declaration's bylaws. Under the bylaws, Premier
had the authority and power to, inter alia, levy and
to collect assessments. Assessments for the benefit of all
the unit owners should have been levied in the same ratio as
the percentage ownership interests.
Declaration also provided that Premier was to treat all
monies collected on its behalf as the separate property of
Premier. All unit owner's assessments were to be paid
monthly. The failure to enforce any right, provision, or
covenant within the Declaration did not constitute a waiver
of the right to seek enforcement in the future, within the
applicable statute of limitations.
assets were allegedly commingled with those of White Oak and
all Premier unit owners were allegedly charged an
invalidly-calculated assessment fee. Improper assessments and
account management allegedly allowed White Oak to underpay
condominium dues to Premier by over $200, 000.00 since 2010.
annual meetings of Premier's shareholders to elect
officers and directors to the Association were conducted, as
is required by the bylaws. Premier sought no federal or state
tax ID number until 2015, maintained no separate corporate
records, and never conducted audits of its finances.
to the filing of this lawsuit, Premier, as an entity, had
never generated profit and loss statements or balance sheets
and had never sent required notices of annual reserve
balances to its unit owners. Starting in 2010 when Ironman
bought its unit, dues it paid were deposited into White
Oak's bank account, rather than into a separate Premier
account. White Oak never paid its required unit dues to
Trollinger would collect rent from tenants of White Oak's
units and deposit them into a White Oak account. She also
paid Premier's operating expenses from that account.
After Ironman quit paying its required dues in 2012, Dr.
Chodri would move funds from his other accounts to cover
Premier's expenses, if the White Oak account was close to
assessments to the unit owners were invalidly calculated
based upon the occupied square footage, rather than the total
project square footage, as is required by the Declaration.
Consequently, no separate or earmarked payments were made by
White Oak to Premier for its vacant units. The improper