IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA16-647

Filed: 5 September 2017

Swain County, No. 14 CVS 238

CONLEYS CREEK LIMITED PARTNERSHIP, a North Carolina limited 

Partnership, and MARSHALL CORNBLUM, Plaintiffs,

AND

MICHAEL 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,

v.

SMOKY MOUNTAIN COUNTRY CLUB PROPERTY OWNERS ASSOCIATION, 

INC., a North Carolina nonprofit corporation, Defendant, Counterclaimant,

WILLIAM SPUTE, RONALD SHULMAN, and CLAUDETTE KRIZEK, Defendants,

AND

ROBERT YOUNG, Defendant in Counterclaim of SMCC Clubhouse.

Appeal by Smoky Mountain Country Club Property Owners Association from 

two orders entered in Swain County Superior Court: (1) order entered 30 July 2015 

by Judge Tanya T. Wallace and (2) order entered 26 January 2016 by Judge Marvin 

P. Pope, Jr. Cross-appeal by SMCC Clubhouse, LLC, from summary judgment order 
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entered 26 January 2016 by Judge Marvin P. Pope, Jr., in Swain County Superior

Court. Heard in the Court of Appeals 8 June 2017.1

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.

Smoky Mountain Country Club (the “Planned Community”) is a residential 

planned community located in Swain County. This matter involves a dispute between 

the Planned Community’s developer (the “Developer”) and the Planned Community’s 

homeowners association (the “Association”). The Developer consists of members of 

the Cornblum family and entities they control and are listed above the “v.” in the 

caption. The Association includes the homeowners association and certain members 

of its board of directors and are listed below the “v.” in the caption.

I. Factual Background

 

1 This matter was originally heard in this Court on 1 December 2016. We filed an opinion on 

4 April 2017. However, we withdrew that opinion. Shortly thereafter, Judge McCullough, who was 

on the original panel, resigned from this Court. This matter was heard again on 8 June 2017, with 

Judge Stroud replacing Judge McCullough on the panel.
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The Planned Community is located on 195 acres (the “Property”). It was 

established in 1999 pursuant to a declaration (the “1999 Declaration”) recorded by 

the Developer. Prior to 1999, the Developer had developed two residential 

communities on different portions of the Property. The Planned Community 

consolidated these communities along with the Property’s undeveloped portions into 

a new single community.

The Association’s board was initially controlled by the Developer. This dispute 

arose shortly after the homeowners gained control of the board in 2014.

II. Procedural Background

Shortly after the homeowners took control of the Association board, the board 

voted to disregard certain provisions in the 1999 Declaration. In response to the 

board action, the Developer commenced this action against the Association. The 

Association responded by asserting a number of counterclaims against the Developer. 

In a series of orders, the trial court has dismissed a number of the claims and 

counterclaims from which this appeal arises.

On appeal, the Association seeks review of two orders in which the trial court

dismissed its counterclaims against the Developer. The Developer seeks review of a 

summary judgment order which dismissed many of its claims against the 

Association.

2

 

2 All other claims which have been pleaded in this matter have been dismissed and are not 

subject to this appeal.
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III. Analysis

In its brief, the Association contests trial court rulings concerning three 

different areas of dispute. The Developer’s cross-appeal contests a trial court ruling 

concerning one of these areas. We address each area of dispute in turn.

A. Status of the Planned Community’s Condo Units

The first area of dispute concerns the legal status of the Planned Community’s 

condominium-style residential units which were established, developed, and sold by 

the Developer in accordance with the 1999 Declaration.

Specifically, the Planned Community includes single-family residences and 

townhomes, separated from adjacent residences by vertical property boundaries. 

The Planned Community also includes multi-story buildings with residences (the 

“condo units”) located on each floor. Each condo unit is separated by vertical 

boundaries from other condo units on the same floor and by horizontal boundaries 

from condo units located on different floors.

Pursuant to the 1999 Declaration, each condo unit owner acquired an interest 

in real estate which does not fit the technical definition of “condominium” found in 

our Condominium Act. More specifically, the condo unit owners own the air space

and interior walls within their respective units, but the Association owns the common 

areas of the condo buildings and condo building lots. In contrast, the Condominium 

Act states that property is not a “condominium” as defined by that Act unless the
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common areas are owned by the unit owners, in common, rather than owned by an 

association. N.C. Gen. Stat. § 47C-1-103(7) (“Real estate is not a condominium unless 

the undivided interests in the common elements are vested in the unit owners.”).

3

Based on the inconsistency between the 1999 Declaration and the 

Condominium Act, the Association sought (1) a declaratory judgment stating that the

form of ownership held by the Planned Community’s condo unit owners is illegal 

under North Carolina law and (2) a reformation of the provisions of the 1999 

Declaration concerning the condo units to conform with our Condominium Act.

The trial court granted the Developer’s Rule 12(b)(6) motions with respect to 

these counterclaims, without stating its reasoning. For the reasons stated below, we 

reverse the trial court’s dismissal of the Association’s declaration counterclaim. We 

affirm, however, the trial court’s dismissal of the Association’s reformation 

counterclaim.

1. Declaratory Counterclaim---Validity of Form of Ownership

The condo units established by the 1999 Declaration – where the common 

areas within the condo buildings and condo building lots are owned by the Association 

and not by the condo unit owners in common – would be permissible under the 

common law:

 

3 In everyday parlance, the word “condominium” or “condo” sometimes refers to an individual 

condo unit. In the Condominium Act, however, the word “condominium” refers to the entire 

condominium community, which contains all of the units and common areas.
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At common law, the holder of a fee simple also owned the 

earth beneath and the air above – “cujus est solum, ejus 

usuqe ad coelom et ad inferos”.

4 This law applies in North 

Carolina. Plaintiffs concede that air rights are thus a part 

of land ownership, but they argue that absent specific 

authority, the holder of a fee simple may not divide his fee 

horizontally. . . . It appears[,] [however,] to be the general 

rule that absent some specific restraint, the holder of a fee 

simple may divide his fee in any manner he or she chooses.

Cheape v. Chapel Hill, 320 N.C. 549, 563, 359 S.E.2d 792, 800 (1987) (emphasis 

added) (internal citations omitted). The General Assembly, however, has abrogated 

the common law by establishing a “specific restraint” against the form of ownership 

established by the 1999 Declaration through the passage of the Planned Community 

Act. Specifically, the Planned Community Act requires that residential real estate

with horizontal boundaries and located within a planned community “shall” meet the 

definition of “condominium” as set forth in the Condominium Act, as explained below.

In 1985, thirteen years before enacting the Planned Community Act, the 

General Assembly enacted the Condominium Act. By its terms, the Condominium 

Act regulates those properties which fit the Act’s definition of “condominium.” 

Properties with horizontal boundaries which do not fit the Act’s definition of 

 

4Translation of italicized Latin phrase in the quote is “whoever’s is the soil, it is theirs all the 

way to Heaven and all the way to hell.”
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“condominium” are not expressly forbidden by the Act; rather, such properties are 

simply not subject to the provisions of the Act.5

In 1998, thirteen years after the Condominium Act became law, the General 

Assembly passed the Planned Community Act to govern planned communities. The 

Planned Community Act allows properties within a planned community to have 

horizontal boundaries but forbids the type of ownership established by the 1999 

Declaration. Specifically, the North Carolina Comment to N.C. Gen. Stat. § 47F-1-

101 expresses the General Assembly’s intent that residences within a planned 

community which has horizontal boundaries must be a “condominium” as defined by

the Condominium Act:

It is understood and intended that any [planned 

community] development which incorporates or permits 

horizontal boundaries or divisions between the physical 

portions of the planned community designated for separate 

ownership or occupancy will be created under and governed 

by the North Carolina Condominium Act and not this Act.

N.C. Gen. Stat. § 47F-1-101 cmt. 2 (emphasis added.)6

 

5 The “Official Comment” to N.C. Gen. Stat. § 47C-1-103 states that “unless the ownership 

interest in the common elements is vested in the owners of the units, the project is not a condominium. 

. . . Such projects may have many of the attributes of condominiums, but they are not covered by [the 

Condominium] Act”). N.C. Gen. Stat. § 47C-1-103 cmt. 5.

6 The North Carolina Comment is not technically part of the Act’s statutory language. 

However, the General Assembly authorized that the comments be printed with the Act. Specifically, 

Section 2 of the session law which enacted the Planned Community Act states that the General 

Assembly’s “Revisor of Statutes shall cause to be printed with this act all relevant portions of the 

official comments to the [Act] and all explanatory comments of the drafters of this act, as the Revisor 

deems appropriate.” North Carolina Planned Community Act of October 15, 1998, ch. 199, sec. 2, 1998 

N.C. Sess. Laws at 691.
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Based on the foregoing, we conclude that the Association is entitled to an order 

declaring that the 1999 Declaration establishes a form of property ownership in the 

Planned Community’s condo units not recognized in North Carolina. Therefore, we 

reverse the order of the trial court dismissing the Association’s counterclaim and 

remand the matter to enter judgment for the Association on this counterclaim. Such 

judgment, of course, would not affect the rights of those not parties to this action.

2. Reformation Claim

The Association’s counterclaim seeking reformation of the 1999 Declaration 

provisions relating to the condo units was properly dismissed. Any reformation order 

would necessarily affect the ownership interests of these condo unit owners in certain 

common areas; and, therefore, they are necessary parties. See NCDOT v. Fernwood 

Hill, 185 N.C. App. 633, 636-37, 649 S.E.2d 433, 436 (2007); NCDOT v. Stagecoach 

Village, 174 N.C. App. 825, 622 S.E.2d 142 (2005); N.C. Gen. Stat. § 1A-1, Rule 

19(a)(2015). Also, any reformation order would decide whether the condo units would 

be subject to a single condominium association or whether each condo building would 

be governed by a separate association. Without all necessary parties, the trial court 

and this Court lack the authority to decide the reformation claim. See Rice v. 
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Randolph, 96 N.C. App. 112, 113, 384 S.E.2d 295, 297 (1989). Therefore, we affirm 

Judge Pope’s order dismissing the Association’s reformation counterclaim.7

We note that the Planned Community Association may own the common 

elements of the Planned Community at large. The common elements of the 

condominium portion of the Planned Community, however, may not be owned by the 

Association but must be held in common by the condo unit owners in common. The 

condo unit owners are still part of the Planned Community and subject to the 1999 

Declaration pertaining to common elements of the Planned Community, see N.C. Gen. 

Stat. § 47F-1-103 (providing that real estate comprising a condominium may be part 

of a planned community), notwithstanding the fact that they are also subject to a 

condominium association, see N.C. Gen. Stat. § 47C-3-101 (requiring that a 

condominium association be organized where a condominium is established).

B. The Clubhouse Dispute

The second dispute between the Developer and the Association concerns the 

Planned Development’s clubhouse amenity (the “Clubhouse”). Pursuant to the 1999 

Declaration, ownership of the Clubhouse remains with the Developer in perpetuity, 

never to be turned over to the Association; and the Association is required in 

 

7 Our holding should not be construed as an opinion that the property rights of the owners of 

the condominium-styled residences are, at present, unmarketable. See N.C. Gen. Stat. § 47F-2-103(d) 

(“Title to a lot and common elements is not rendered unmarketable or otherwise affected by reason of 

an insubstantial failure of the declaration to comply with this Chapter. Whether a substantial failure 

to comply with this Chapter impairs marketability shall be determined by the law of this State relating 

to marketability.”)
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perpetuity to assess dues (the “Clubhouse Dues”) from the homeowners and remit 

them to the Developer. Specifically, the 1999 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.

After control of the Association’s board was assumed by the homeowners, the board 

voted to stop honoring this obligation to assess and collect the Clubhouse Dues for 

the Developer.

In this action, the Developer and the Association have asserted a number of 

claims and counterclaims regarding the Clubhouse Dues, all of which have been 

dismissed in a series of orders by the trial court.

For the reasons below, we conclude that the Planned Community Act does not 

forbid the arrangement established in the 1999 Declaration, whereby (1) the 

Developer retains ownership of the Clubhouse amenity; (2) the Association is

authorized to assess dues from its homeowners to pay the Developer for the right to 

use the amenity; and (3) the Association is obligated to assess its homeowners for the 

Clubhouse Dues and remit them to the Developer. (We note that the Planned 
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Community Act does allow that when homeowners take control of an association

board from the developer, the association may relieve itself of obligations made on its

behalf by the developer, where it is found that the arrangement was “not bona fide or 

was unconscionable[.]” N.C. Gen. Stat. § 47F-3-105.) We address the Association’s 

counterclaims and the Developer’s claims concerning the Clubhouse dispute in turn 

below.

1. Association Clubhouse Dispute Counterclaims

The Association asserted four prayers for relief relating to the Clubhouse 

dispute which were dismissed by the trial court. For the reasons stated below, we

affirm the dismissal as to three of these prayers for relief, but not based on the legal 

reasoning of the trial court. 8

The trial court’s legal justification for dismissing the Association’s claims 

concerning the Clubhouse dispute was that the claims were time-barred by N.C. Gen. 

Stat. § 47F-2-117(b). This statute provides that “[n]o action to challenge the validity 

of an amendment [to a declaration] adopted pursuant to this section may be brought 

 

8 The Association has not made any argument on appeal regarding the dismissal of the fourth 

prayer for relief and is therefore abandoned. Developer contends that the Association’s failure to 

contest the dismissal of one prayer for relief prevents the Association from arguing its other claims.

We disagree. While it is true that Rule 28 of our Appellate Rules provides that issues not presented 

in a party’s brief are deemed abandoned, N.C. R. App. P. 28(b)(6), this does not affect the party’s right 

to appeal “[f]rom any final judgment of a superior court[.]” N.C. Gen. Stat. § 7A-27(b)(1)(2015).
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more than one year after the amendment is recorded.” N.C. Gen. Stat. § 47F-2-117(b)

(2015) (emphasis added).

We conclude that G.S. 47F-2-117(b) does not apply to the 1999 Declaration and 

that, therefore, the trial court erred by relying on this statute as its justification for 

dismissing the claims.

9 Specifically, one-year time limit contained in G.S. 47F-2-

117(b) – by its plain language – only applies to challenges to “amendments” to an

existing declaration, not to challenges to the declaration itself. Here, though, the 

1999 Declaration was not an “amendment” of the prior declarations recorded by the 

Developer concerning the Property. Rather, the 1999 Declaration was a new

declaration, and the prior declarations recorded by the Developer governing the 

predecessor communities developed on the Property were terminated.

Specifically, the Planned Community Act does not view the process by which 

communities subject to separate declarations are merged into one community as an 

amendment to the former declarations. Rather, the Act treats this process as a 

merger which essentially terminates the former planned communities/declarations 

and establishes a new planned community subject to a new declaration. 10 See N.C. 

Gen. Stat. § 47-2-121 (2015).

 

9 We need not – and do not – reach the issue of whether G.S. 47F-2-117(b) is, in fact, a statute 

of repose.

10 Under the Act, a merger requires the approval of the same percentage of owners which must 

approve a termination, not the lower percentage needed to approve an amendment. See N.C. Gen. 

Stat. § 47F-2-121. And under the Act, a termination (and therefore a merger) requires the approval 
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We note that the 1999 Declaration refers to itself as an “amendment.” 

However, it also states that the two prior declarations “shall be . . . of no further force 

and effect for any purpose whatsoever, and [shall be] replaced in their entirety by the 

[1999] Declaration.” Whether labelled as an amendment or not, it is clear that the 

1999 Declaration “merged or consolidated” two former planned communities “into a 

single planned community.” See N.C. Gen. Stat. § 47F-2-121(a).

Notwithstanding its reliance on G.S. 47F-2-117(b), we conclude that the trial 

court properly dismissed the Association’s counterclaims concerning the Clubhouse 

Dues dispute, though for a different reason, as explained below.

a. Clubhouse Dues

The Association prayed for (1) a declaration that “the Association has no duty 

under the law to collect Clubhouse Dues from owners and that any such duty stated 

in the Declaration is null and void[,]” and (2) the repayment of “all Clubhouse Dues 

improperly collected and paid [to the Developer].”

The Association argues in its brief that the Planned Community Act does not 

authorize it to collect dues from its homeowners to pay to a third party for use of 

property that is not part of the Planned Community. The Association essentially 

 

of 80% of the owners. See N.C. Gen. Stat. § 47F-2-118. Here, it appears that one of the two former 

communities approved the merger with 99% of the vote and the other with 75% of the vote. We note 

that neither party has made any argument concerning the validity of the adoption of the 1999 

Declaration, and all parties have been acting for almost two decades as if the 1999 Declaration was 

validly approved.
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argues that the Act, specifically N.C. Gen. Stat. § 47F-3-102(10),

11 only allows an 

association to assess dues for “common elements” and that the Clubhouse is not a 

common element.

We conclude that the Association’s argument is unpersuasive for two reasons. 

First, N.C. Gen. Stat. § 47F-3-102, which enumerates certain powers enjoyed by 

planned community’s associations, is not the sole source of authority for an 

association. Indeed, the Act states that it is the declaration of a planned community 

which “form[s] the basis for the legal authority for the planned community to act” so 

long as the declaration is “not inconsistent with the provisions of [the Act].” N.C. 

Gen. Stat. § 47F-2-103(a). And here, the 1999 Declaration has expressly authorized

the Association to assess its homeowners the Clubhouse Dues.

We conclude that that the General Assembly did not intend N.C. Gen. Stat. § 

47F-3-102 to limit the power of a planned community’s association. Rather, its plain 

language – which begins with “[u]nless . . . the declaration expressly provides to the 

contrary, the association may . . .” – indicates that the General Assembly intended 

for N.C. Gen. Stat. § 47F-3-102 to provide powers to an association in addition to 

those already provided to it by its declaration, provided that the declaration is silent 

 

11 The Association did not plead or argue any other theory. For instance, it did not contend 

that the Declaration was valid but that the Association had the right to terminate its obligation to 

collect the Clubhouse Dues based on N.C. Gen. Stat. § 47F-3-105 (2015), which allows an association 

to terminate any contractual obligation put in place by a declarant that is not bona fide or is 

unconscionable to the owners within the planned community.
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regarding said powers. Further, the Association has not pointed to any other 

provision in the Act which prevents a declaration from authorizing an association to 

enter into a contract with a third party (here, the Developer) to provide an amenity 

for the homeowners and to assess the homeowners for the costs associated with the 

contract. Therefore, since the 1999 Declaration specifically authorizes the 

Association to assess its homeowners for the Clubhouse Dues, and since the Act does 

not proscribe the granting of this power to an association, we overrule the 

Association’s argument.

Second, presuming that N.C. Gen. Stat. § 47F-3-102 is controlling, this section 

authorizes the Association to collect the Clubhouse Dues. For instance, N.C. Gen. 

Stat. § 47F-3-102(10) states that, unless otherwise prohibited by the declaration, a 

planned community association has the power to “[i]mpose and receive any payments, 

fees or charges” not only for the use of “common elements” but also “for services 

provided to lot owners[.]” Though the Clubhouse is not a “common element” of the 

Planned Community, see N.C. Gen. Stat. § 47F-1-103(4) (defining a common element 

as “any real estate within a planned community owned or leased by the association”),

G.S. 47F-3-102 also empowers an association to assess dues for “services.” And, here, 

the Developer’s role of providing access to and maintaining a clubhouse amenity is a

“service.”

b. Real and Personal Covenants
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The Association argues that we are bound by Midsouth Golf, LLC v. Fairfield, 

187 N.C. App. 22, 652 S.E.2d 378 (2007) and other cases to conclude that the 

obligations imposed in the 1999 Declaration for the payment of Clubhouse Dues are 

personal covenants rather than real covenants, and are therefore unenforceable by 

the Developer in this case. We disagree.

Midsouth Golf is one of three opinions from our Court involving a residential 

community and a golf course amenity owned by a third party. Those appeals dealt 

with covenants contained within declarations which essentially required the 

developer and its successors to maintain a golf course amenity for the homeowners 

and for the homeowners to pay dues for the amenity. In a series of three decisions, 

panels of our Court held that (1) the covenant which created the homeowners’ 

obligation to pay the dues was a personal covenant, and therefore, was unenforceable 

against those who bought homes from the original owners and (2) despite this 

holding, any successor to the developer had a continuing obligation to maintain the 

golf courses amenity, even if only one homeowner chose to continue paying the dues. 

See id.; Fairfield v. Midsouth Golf, 215 N.C. App. 66, 715 S.E.2d 273 (2011); Waterford 

v. Midsouth Golf, 215 N.C. App. 394, 716 S.E.2d 87 (2011). These three opinions from 

our Court are discussed in the opinion issued in a subsequent federal proceeding

involving the bankruptcy of the successor to the developer who owned the golf courseamenity owner. See In re Midsouth Golf, 549 B.R. 156, 169 (2016). Of significance, 
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bankruptcy judge noted that our Court, in determining that the association had the 

right to enforce the covenant, applied the law of contract, and not the law of real and 

personal covenants: “Those covenants specifically identify the property owners’ 

association [] as an entity authorized to enforce the provisions therein against the 

property owner[.] As between those parties and in that context, the inquiry is a basic 

matter of contract law. Whether the [] covenant was ‘real’ or ‘personal’ was both 

immaterial to and wholly outside the scope of the [North Carolina Court of Appeals’] 

analyses.” Id.

In the present action, the Developer has not sued the homeowners themselves

to enforce any covenant. Indeed, the homeowners are not parties. Rather, the 

Developer has asserted claims against the Association to enforce the Association’s 

obligation under the 1999 Declaration to pay money to the Developer. This obligation

is contractual in nature, and whether this obligation is real or personal is irrelevant 

to our analysis, since the Association is the original party expressly obligated under 

the 1999 Declaration. See id.

We make no ruling regarding the obligation of the homeowners themselves to 

pay Clubhouse Dues to the Association, as they are not parties to this action. We 

only note that homeowners within a planned community are generally obligated to 

respect not only real covenants governing their property, but also to pay any dues 

which are assessed by their association.
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2. Developer’s Clubhouse Dispute Claims

Developer, through its entity which owns the Clubhouse, has asserted four 

claims against the Association relating to the Association’s refusal to continue 

assessing Clubhouse Dues. Judge Pope granted the Association’s summary judgment 

motion on all four claims.12 Developer appealed. We affirm in part and reverse and 

remand in part.

a. Breach of Contract and the Covenant of Good Faith and Fair Dealing

The first claim asserted by the Developer was for breach of contract and breach 

of the covenant of good faith and fair dealing, based on the Association’s decision not 

to honor its obligation in the 1999 Declaration to assess and remit Clubhouse Dues. 

We hold that the Developer met its burden to survive summary judgment; and, 

therefore, we reverse that portion of the order granting summary judgment on the 

claim.

The terms of the 1999 Declaration clearly establish obligations which are 

contractual in nature between the owner of the Clubhouse and the Association:

Declarant shall grant to the Association and the 

[homeowners] a perpetual nonexclusive right to use the 

Clubhouse Use Facilities, 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 from Owners to Declarant.

 

12 Developer has made no argument on appeal regarding the trial court’s grant of summary 

judgment on its claim for libel per se, and therefore we regard this claim as abandoned. See N.C. R. 

App. P. 21.
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. . . The Association shall bill and collect the Clubhouse 

Dues from each Owner on a current basis, and . . . shall 

pay the total collected amount of Clubhouse Dues to 

Declarant.

The language of the 1999 Declaration clearly obligates the Association to bill and 

collect Clubhouse dues and to pay the total collected amount of Clubhouse Dues to 

the Declarant. The fact that the original Declarant does not currently hold title to 

the Clubhouse because title was transferred to another Developer-controlled entity is 

irrelevant. The 1999 Declaration provides that its provisions and all of its covenants 

would be “binding upon Declarant, its successors and assigns[.]”

“When the language of a contract is clear and unambiguous, effect must be 

given to its terms, and the court, under the guise of constructions, cannot reject what 

the parties inserted or insert what the parties elected to omit.” Weyerhaeuser Co. v. 

Carolina Power & Light Co., 257 N.C. 717, 719, 127 S.E.2d 539, 541 (1962).

The Developer produced evidence tending to show that the Association sent a 

message to its homeowners that the Association “would no longer bill for or collect 

Clubhouse Dues,” that monthly payments “would no longer include Clubhouse Dues,” 

and that members of the Association were “not required” to belong to the Clubhouse 

and “may opt out if they so desire.” The evidence clearly creates a genuine issue of 

fact regarding the Developer’s breach of contract and good faith claims. Of course, at 

trial the Association may bring forth evidence that conflicts with the Developer’s 
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evidence or which shows that the provisions in the 1999 Declaration are not ‘bona 

fide” or are “unconscionable.” See N.C. Gen. Stat. § 47F-3-105.13

b. Civil Conspiracy and Unfair or Deceptive Acts or Practices

The Developer asserted a claim for civil conspiracy against the Association and 

its members. In order to establish a claim for civil conspiracy, a party must allege (1) 

the existence of a conspiracy, (2) wrongful acts done by certain of the alleged 

conspirators in furtherance of that conspiracy, and (3) injury as a proximate result of 

the conspiracy. State ex rel. Cooper v. Ridgeway Brands Mfg., LLC, 362 N.C. 431, 

444, 666 S.E.2d 107, 116 (2008). The doctrine of intra-corporate immunity provides 

that because “at least two persons must be present to form a conspiracy, a corporation 

cannot conspire with itself, just as an individual cannot conspire with himself.” State 

ex rel. Cooper v. Ridgeway, 84 N.C. App. 613, 625, 646 S.E.2d 790, 799 (2007), rev’d 

on other grounds, State ex rel. Cooper, 362 N.C. 431, 666 S.E.2d 107 (2008).

Here, we conclude that the trial court properly granted summary judgment for 

the Association on Developer’s civil conspiracy claim because the Association, as a 

corporation, cannot conspire with itself. See id. There is no allegation that the 

 

13 We note that the Condominium Act provides that a condominium association may terminate 

any “contract or lease between the association and a declarant” even if the contract is not found to be 

unconscionable. N.C. Gen. Stat. § 47C-3-105. The General Assembly, though, did not see fit to include 

this additional protection for planned community associations in the Planned Community Act. Here, 

any dispute regarding the provisions of the 1999 Declaration is governed by the Planned Community 

Act, and not the Condominium Act, notwithstanding that there are condo units located within the 

Planned Community.
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Opinion of the Court

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Association conspired with any third party regarding the Clubhouse Dues. We 

further affirm the trial court’s grant of summary judgment dismissing the Developer’s 

claim for damages for unfair or deceptive acts or practices, as this claim is based on 

the alleged civil conspiracy.

C. Association Counterclaims

The third area of dispute challenged in this appeal concerns a number of 

counterclaims asserted by the Association against members of the Cornblum family 

for alleged self-dealing. We address each counterclaim in turn.

1. Breach of Fiduciary Duty

In its third counterclaim, the Association sought damages for breach of 

fiduciary duty by Michael Cornblum, Carolyn Cornblum and the Cornblum-controlled 

entity which served as the declarant (the “Declarant”) in the 1999 Declaration.

14 We 

affirm the dismissal as to the Association’s counterclaim against the Declarant. 

However, we reverse as to Michael Cornblum and Carolyn Cornblum.

“A claim for breach of fiduciary duty requires the existence of a fiduciary duty.” 

Governors Club, Inc. v. Governors Club Ltd. P'ship, 152 N.C. App. 240, 247, 567 

S.E.2d 781, 786 (2003).

We agree with the Developer that the trial court properly dismissed this 

counterclaim because its relationship with the Association was contractual. See 

 

14 The first two counterclaims concern the legal status of the condominium-style units 

addressed in section III.A. of this opinion.
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Opinion of the Court

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Highland Paving Co., LLC v. First Bank, 227 N.C. App. 36, 43, 742 S.E.2d 287, 292-

93 (2013) (“[P]arties to a contract do not thereby become each other’s fiduciaries[.]”). 

A declarant is not required to put the interests of the association ahead of its own in 

every instance when it sets up a planned community, as generally would be required 

of a fiduciary. Indeed, a declarant is allowed to reserve rights to itself and enter into 

contractual relationships between itself and the association.

However, while serving as directors and officers of the Association, Michael and 

Carolyn Cornblum certainly did owe a fiduciary duty to the Association. See 

Governors Club, 152 N.C. App. at 248, 567 S.E.2d at 786-87 (citing Underwood v. 

Stafford, 270 N.C. 700, 703, 155 S.E.2d 211, 213 (1967) (stating that under North 

Carolina Law, “directors of a corporation generally owe a fiduciary duty to the 

corporation”); see also Meiselman v. Meiselman, 309 N.C. 279, 307 S.E.2d 551 (1983).

N.C. Gen. Stat. § 55–8–30 requires a corporate director to discharge his or her 

duties as a director: (1) in good faith; (2) with the care an ordinarily prudent person 

in a like position would exercise under similar circumstances; and (3) in a manner 

the director reasonably believes to be in the best interests of the corporation. N.C. 

Gen. Stat. § 55-8-30(a)(1)-(3) (2015); see also N.C. Gen. Stat. § 55-8-42(a) (2015) (“An 

officer . . . shall discharge his duties . . . in a manner the officer reasonably believes to 

be in the best interests of the corporation.”) (emphasis added). “Allegations of breach 

of fiduciary duty that do not rise to the level of constructive fraud are governed by the 
CONLEYS CREEK V. SMOKY MTN. COUNTRY CLUB

Opinion of the Court

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three-year statute of limitations applicable to contract actions contained in N.C. Gen.

Stat. § 1-52(1) (2003).” Toomer v. Branch Banking & Trust Co., 171 N.C. App. 58, 

66–67, 614 S.E.2d 328, 335 (2005) (citing Tyson v. N.C.N.B., 305 N.C. 136, 142, 286 

S.E.2d 561, 565 (1982)); see N.C. Gen. Stat. § 1-52(1) (2015).

The Association’s counterclaim alleges that Carolyn Cornblum was an officer 

until 2014 and that Michael Cornblum was a director until 2014. The Association 

makes a number of allegations which, if true, tend to show that the Cornblums acted 

in their own interests and not in the best interests of the Association within the 

applicable limitations period. Accordingly, we hold that the trial court improperly 

dismissed the Association’s counterclaim for breach of fiduciary duty as to Michael 

and Carolyn Cornblum.

2. Unfair and Deceptive Trade Practices

In its fourth counterclaim, the Association sought damages based on 

allegations that Michael Cornblum, Carolyn Cornblum, Madeline Cornblum and the 

Declarant committed unfair and deceptive trade practices under N.C. Gen. Stat. § 75-

1.1 (2015). We affirm in part, and reverse in part.

Our Supreme Court has instructed that a claim under N.C. Gen. Stat. § 75-1.1 

“does not extend to a business’s internal operations, but rather extend to acts between 

a business with another business(es) or a business with a consumer(s). White v. 

Thompson, 364 N.C. 47, 52-53, 691 S.E.2d 676, 679-80 (2010). Here, as in Thompson, 
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Opinion of the Court

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the bad acts alleged by the Association “did not occur in . . . dealings with [other 

market participants].” Thompson, 364 N.C. at 54, 691 S.E.2d at 680. The purported 

misconduct by the Cornblum family was alleged to have taken place while members 

of the Cornblum family were controlling directors of the Association. Even taken as 

true, most of the allegations regarding the actions of the Declarant and the members 

of the Cornblum family are more properly classified as occurring within a single 

entity rather than “within commerce.” Id.

We do note that some of the bad acts alleged by the Association deal with the 

Cornblum’s marketing of the condo units in violation of North Carolina law. These 

acts were arguably “within commerce.” However, none of the past or present condo 

unit owners are parties. Thus, we state no opinion and do not rule upon the issue of 

whether individual homeowners, who are not parties to this action, could state a valid 

Chapter 75 claim against the Cornblums.

Therefore, we conclude that the trial court properly dismissed the Association’s 

claim for unfair and deceptive trade practices.

3. Breach of Covenant of Good Faith and Fair Dealing

In its fifth counterclaim, the Association sought damages based on an alleged 

breach of the covenant of good faith and fair dealing by the Declarant. To state a 

valid claim for breach of the implied covenant of good faith and fair dealing, a plaintiff 

must plead that the party charged took action “which injure[d] the right of the other 
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Opinion of the Court

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to receive the benefits of the agreement,” thus “depriv[ing] the other of the fruits of 

[the] bargain.” Bicycle Transit Authority, Inc. v. Bell, 314 N.C. 219, 228-29, 333 

S.E.2d 299, 305 (1985).

We conclude that the Association’s fifth counterclaim should not have been 

dismissed. The counterclaim does allege a contractual relationship, established in 

the Declaration itself. The Association alleged that “[the Declarant] imposed upon 

the owners [within the Planned Community] a declaration whose terms and 

provisions must be in good faith and fair dealing.” We conclude that this counterclaim 

does state a claim for which relief could be granted, and, on this point, we reverse the 

order of the trial court.

4. Accounting

In its final counterclaim, the Association sought an equitable accounting of the 

Association’s income and expenses and collection history during all periods of 

Declarant control. We dismiss this portion of the appeal as moot. We base our 

dismissal on the parties’ agreement via a consent order that the Declarant would 

deliver all “books and records relating to the Association” in their custody or control. 

The consent order provided that these “books and records” would include financial 

records of the Association, including a schedule of all funds receivable for the payment 

of assessments. A determination on this counterclaim would have no practical effect 

in light of the consent order. See Roberts v. Madison Cnty. Realtors Ass'n, Inc., 344 
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Opinion of the Court

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N.C. 394, 398–99, 474 S.E.2d 783, 787 (1996) (“A case is ‘moot’ when a determination

is sought on a matter which, when rendered, cannot have any practical effect on the

existing controversy.”).

IV. Conclusion

We reverse Judge Wallace’s order dismissing the Association’s counterclaim 

seeking a declaration regarding the legal status of the Planned Community’s 

condominium-style residences, and we direct the trial court on remand to enter 

judgment for the Association on this counterclaim, consistent with this opinion. We, 

however, affirm Judge Wallace’s order dismissing the Association’s counterclaim 

seeking reformation of the 1999 Declaration, based on the Association’s failure to join 

all necessary parties as explained in this opinion. On remand, the trial court may, in 

its discretion, allow the Association for leave to amend to join necessary parties and 

to re-assert its reformation claim.

We affirm the trial court’s order dismissing the Association’s counterclaims 

relating to the Clubhouse dispute. We reverse the trial court’s summary judgment 

on Developer’s claim for breach of contract and breach of the covenant of good faith 

and fair dealing, and remand for further proceedings not inconsistent with this 

opinion. We affirm that summary judgment order as to the Developer’s other claims.

We reverse Judge Pope’s dismissal of the Association’s third counterclaim for

breach of fiduciary duty against Michael Cornblum and Carolyn Cornblum, and 
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Opinion of the Court

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remand for further proceedings not inconsistent with this opinion. We dismiss the 

Association’s appeal of Judge Pope’s dismissal of its counterclaim seeking an 

accounting, as moot. Judge Pope’s dismissal of the remainder of the Association’s 

counterclaims in that order is affirmed.

AFFIRMED IN PART, DISMISSED IN PART, REVERSED IN PART, AND 

REMANDED.

Judges STROUD and TYSON concur.