Title: Southeastern Jurisdictional Admin. Council, Inc. v. Emerson
Citation: 363 N.C. 590
Docket Number: 62A08
State: north-carolina
Issuer: north-carolina Supreme Court
Date: October 9, 2009

IN THE SUPREME COURT OF NORTH CAROLINA
No. 62A08 
FILED: 9 OCTOBER 2009
SOUTHEASTERN JURISDICTIONAL ADMINISTRATIVE COUNCIL, INCORPORATED 
v.
GORDON W. EMERSON, DIANE R. EMERSON, PAUL D. HUFFMAN, DONALD N.
PATTEN, and VIRGINIA B. PATTEN
Appeal pursuant to N.C.G.S. § 7A-30(2) from the
decision of a divided panel of the Court of Appeals, 188 N.C.
App. 93, 655 S.E.2d 719 (2008), affirming in part and reversing
in part a judgment entered on 6 June 2006 by Judge W. Erwin
Spainhour in Superior Court, Haywood County.  Heard in the
Supreme Court on 9 September 2008.
Adams Hendon Carson Crow & Saenger, P.A., by George 
Ward Hendon and Matthew S. Roberson, for plaintiff-
appellant.
Brown, Ward and Haynes, PA, by Frank G. Queen, for 
defendant-appellees Emerson and Huffman; and Brown &
Patten, PA, by Donald N. Patten, pro se, and for
Virginia B. Patten, defendant-appellees.
NEWBY, Justice.
This case presents the issue of whether community
regulations that levy annual service charges on properties in the
Lake Junaluska Assembly Development (“the Assembly”) impose valid
affirmative obligations upon the property owners to pay the fees. 
In light of the unique character of the Assembly and its long-
standing history of covenant-imposed regulations, we uphold the
covenants as enforceable and reverse the Court of Appeals.
Plaintiff Southeastern Jurisdictional Administrative
Council, Inc. (“the Council”) is a nonprofit, non-stock
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1 In order to give full consideration to “the nature and
character of the community” at issue here, Armstrong v. Ledges
Homeowners Ass’n, 360 N.C. 547, 548, 633 S.E.2d 78, 81 (2006), we
elect, ex mero motu, to take judicial notice of certain facts
pertaining to the Assembly that do not appear in the record on
appeal.  See N.C.G.S. § 8C-1, Rule 201 (2007).
corporation that manages, owns, develops, and sells land in
Haywood County known as the Lake Junaluska Assembly Development. 
In addition, the Council maintains and operates the Assembly by
providing such services as street lighting, fire and police
protection, and maintenance of roads and common areas.  The
Council is the successor in interest to the Lake Junaluska
Assembly; the Lake Junaluska Methodist Assembly; and ultimately
the Southern Assembly of the Methodist Church, which was the
Assembly’s earliest incarnation.  The Council operates the
Assembly under the auspices of the Southeastern Jurisdictional
Conference of the United Methodist Church in the United States of
America.
A brief recitation of the Assembly’s history is helpful
to an understanding of the issues in this case.1  The idea for
the Assembly first took shape in 1908 during the Laymen’s
Missionary Conference in Chattanooga, Tennessee, when a
resolution was passed calling for the establishment of a
Methodist assembly in this region.  The Southern Assembly was
incorporated on 30 June 1910, and soon thereafter, the
commissioners chose a location for the assembly and purchased
1200 acres of land for meeting grounds and private residences. 
By spring of 1913 construction had commenced, and the Southern
Assembly began selling lots for private residential use.  The
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Assembly officially welcomed its first visitors on 25 June 1913,
when the Second General Missionary Conference of the Methodist
Episcopal Church, South was held on the property.  In 1929 the
Southern Assembly adopted the name of the adjacent lake and
officially became the Lake Junaluska Methodist Assembly.  In 1948
ownership was transferred to the Southeastern Jurisdiction of the
Church.
In addition to being a private residential community
and a center for religious conferences and retreats, the Assembly
is also the administrative headquarters of the Southeastern
Jurisdictional Administrative Council, formed in 1988 when the
Lake Junaluska Assembly merged with the Jurisdictional Council of
the Southeastern Jurisdictional Conference of the Methodist
Church.  Today, the Assembly comprises the two hundred acre lake
and its adjacent amenities, including meeting facilities and
event auditoriums, a campground for recreational vehicles, and
rental accommodations such as hotels, apartments, and cottages;
as well as more than seven hundred private homes.  In its
declaration of the protective covenants applicable to certain
real property in the Assembly, the Council states that it “is
dedicated to the training, edification and inspiration of people
who are interested in and concerned with Christian principles and
concepts.”  In furtherance of those purposes, the Assembly offers
a variety of family oriented activities for its visitors and
year-round residents, such as boat rentals, an aquatic center and
outdoor pool, tennis courts, an eighteen hole golf course and a
miniature golf course, heritage museums, and historic structures
-4-
2 The parties have variously referred to the subdivision as
“Hickory Hill” and “Hickory Hills.”  Consistent with the
subdivision plat and the recorded declaration, we refer to the
subdivision as “Hickory Hill.”
and gardens.  Through its many annual events, the Assembly has
established itself as a center for religious worship and
education, and each year more than 150,000 people visit Lake
Junaluska for ministry retreats and other events.
Since the first owners purchased lots in the Assembly
nearly one hundred years ago, the development’s residential
properties have always been subject to restrictive covenants
aimed at preserving the unique religious character and heritage
of the Assembly.  Dating back to 1913, the covenants describe the
Assembly’s aims as “health, rest, recreation, Christian work and
fellowship, missionary and school work, and other operations
auxiliary and incidental thereto.”  Numerous covenants have been
incorporated in all deeds to residential properties in the
Assembly and are now included in the recorded declaration for the
Assembly’s more recently developed Hickory Hill subdivision.2  A
provision included in the original covenants gives the Council
authority to fine or penalize property owners for violation of
the conditions and restrictions set forth in those covenants. 
The covenants pertinent to this case state:
Second:  That said lands shall be held,
owned, and occupied subject to the provisions
of the charter of the Lake Junaluska
Assembly, Inc., and all amendments thereto,
heretofore, or hereafter enacted, and to the
by-laws and regulations, ordinances and
community rules which have been, or hereafter
may be, from time to time, adopted by said
Lake Junaluska Assembly, Inc., and its
successors. 
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. . . .
Fifth:  That it is expressly stipulated
and covenanted between [Grantor] and [Grantee
and its] heirs and assigns, that the by-laws,
regulations, community rules and ordinances
heretofore or hereafter adopted by the said
Lake Junaluska Assembly, Inc., shall be
binding upon all owners and occupants of said
lands as fully and to the same extent as if
the same were fully set forth in this Deed,
and that all owners and occupants of said
lands and premises shall be bound thereby. 
(Emphasis added.)
In November 1996 the Council adopted the current Rules
and Regulations of the Lake Junaluska Assembly (“the
Regulations”) pursuant to the authority granted by the foregoing
deed covenants.  The Regulations require, inter alia, that
property owners comply with rules that govern landscaping and
property appearance, types of structures, livestock and animals,
mobile homes and recreational vehicles, gasoline powered boats,
alcoholic beverages, inappropriate clothing, and the manner and
locations in which roller blades, roller skates, skateboards, and
bicycles may be used.  The Regulations also implement several
fees, including an annual service charge, a grounds fee, and a
road impact fee.  The subject of this litigation is the annual
service charge provision, which states:  “Each owner shall pay
annually a SERVICE CHARGE in an amount fixed by the SEJ
Administrative Council for police protection, street maintenance,
street lighting, drainage maintenance, administrative costs and
upkeep of the common areas.”  Owners of property in the Hickory
Hill subdivision are obligated to pay the annual service charge
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through similar protective covenants that are incorporated in the
Hickory Hill deeds.
Defendants are landowners in the Assembly who refuse to
pay the annual service charges assessed to their properties. 
Defendant Huffman purchased property in 1970 and 1974, and
defendants Emerson purchased property in 1992.  The deeds to the
Huffman and Emerson properties are virtually identical and
contain the original covenants that require compliance with the
Regulations.  Defendants Patten purchased a lot in Hickory Hill
in 1996 and are required to pay the service charges pursuant to
the protective covenants contained in the subdivision’s recorded
declaration.
The Council filed suit against defendant property
owners to recover the unpaid assessments with interest.  In
response, defendants variously contended that their deeds did not
provide for the assessment of any fee or charge, did not contain
a description of the permissible uses of the assessments, and did
not describe the property and facilities to be maintained with
the money collected.  Further, defendants argued plaintiff is not
a homeowners’ association and thus that defendants’ interests
were not adequately represented through elections of directors or
officers.  Finally, defendants argued the expenditures by
plaintiff were primarily for upkeep of its own property and
development activities.  Plaintiff moved for summary judgment as
to all defendants, and in response, defendants Patten made a
cross-motion for summary judgment.  The trial court granted
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plaintiff’s motion for summary judgment, and in so ruling,
considered the following “non-controverted” facts:
2.  All lots sold by Plaintiff within
the Development, other than those within the
Hickory Hills subdivision, were conveyed by
deeds containing restrictions providing that
the properties shall be held, owned and
occupied subject to by-laws, regulations,
ordinances and community rules adopted from
time to time by Plaintiff and its successors,
the same to run with the land.  Among the
rules and regulations adopted by Plaintiff on
November 22, 1996 is a requirement that each
owner pay an annual service charge for police
protection, fire protection, street
maintenance, street lighting, drainage
maintenance, administrative costs and upkeep
of the common areas.  Deeds to lots sold
within the Hickory Hill area incorporate
protective covenants directly obligating
owners to pay an annual service charge for
garbage and trash collection, police
protection, fire protection, street
maintenance, street lighting and upkeep of
common areas.
3.  Plaintiff has adopted Service
Charges, also referred to as Annual General
Assessments, for owners of property within
the Development, including Hickory Hills, on
an annual basis as a millege [sic] rate
applied to the real property values of the
respective properties as assessed by the Tax
Office of Haywood County.
4.  Plaintiff, either with its own
forces or by means of contractual
arrangements with other providers, has
provided services and incurred expenses for
police protection, fire protection, street
maintenance, street lighting, drainage
maintenance, administrative costs and upkeep
of the common areas in the Lake Junaluska
Assembly Development, including Hickory
Hills, and Defendant owners of real property
have received the benefits of such services
and expenses.
Based on these facts, the trial court concluded “that
the restrictions, rules and regulations applicable to Defendants’
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properties provide adequate standards by which to measure the
Defendants’ liability and that the property to be served and the
services to be provided are described with particularity and are
sufficiently definite.”  The trial court then ordered defendants
to pay the service charges with accrued interest and dismissed
defendants’ counterclaims.
A divided panel of the Court of Appeals reversed,
holding the Council lacked authority to levy assessments against
defendants Huffman and Emerson and that the service charges were
unenforceable against defendants Patten.  Se. Jurisdictional
Admin. Council, Inc. v. Emerson, 188 N.C. App. 93, 97-98, 655
S.E.2d 719, 721-22 (2008).  The dissent would have affirmed the
trial court, noting that “[t]he 1996 Regulations correspond in a
legal sense most closely to an amendment to the covenants in the
deeds” and that such amendments are evaluated for reasonableness. 
Id. at 100, 655 S.E.2d at 723 (Hunter, Robert C., J., dissenting)
(citing Armstrong v. Ledges Homeowners Ass’n, 360 N.C. 547, 548,
633 S.E.2d 78, 81 (2006)).
In Long v. Branham, this Court stated that, although
real property covenants are typically construed in favor of free
use of land, such construction “must be reasonable” and this
canon “should not be applied in such a way as to defeat the plain
and obvious purposes of a restriction.”  271 N.C. 264, 268, 156
S.E.2d 235, 239 (1967) (citation and internal quotation marks
omitted).  “In construing restrictive covenants, the fundamental
rule is that the intention of the parties governs, and that their
intention must be gathered from study and consideration of all
-9-
the covenants contained in the instrument or instruments creating
the restrictions.”  Id. at 268, 156 S.E.2d at 238 (citing
Callaham v. Arenson, 239 N.C. 619, 625, 80 S.E.2d 619, 623-24
(1954)).
Dating back to the Assembly’s inception, the relevant
documents demonstrate that the covenanting parties’ original
intent was for the governing body to retain significant control
over the planning, development, and operation of the Assembly. 
The Assembly’s charter states that the community was established
for the benefit of the United Methodist Church as “a resort for
religious, charitable, educational and benevolent purposes.” 
Under that charter, the Assembly is empowered to make rules and
regulations through the duly elected Council, which “is dedicated
to the training, edification and inspiration of people who are
interested in and concerned with Christian principles and
concepts.”  The original deed covenants prohibit property owners
from knowingly renting or leasing to persons with questionable
moral character, require that notice and an option to purchase be
given to the Council before any transfer of the land, reserve
“the fee in all the avenues, streets and alleys,” and provide
that “the by-laws and regulations, ordinances and community rules
which have been, or hereafter may be, from time to time, adopted”
by the governing body are “binding upon all owners and occupants”
in the Assembly.  Our study, as directed by Long, of the deed
covenants and other documents creating similar restrictions
reveals that the parties’ intent was for the Council to retain
significant control over minute aspects of the Assembly,
-10-
including the character of people who may live there, the usage
and development of common areas, and the future creation of
further governing standards to preserve and maintain the
Christian character of the Assembly.  With these intentions in
mind, we proceed to consider the covenant amendments that are the
basis of the contested service charges for defendant Huffman and
defendants Emerson.
This Court has held that the enforceability of
amendments to real covenants depends on whether the amendments
are reasonable.  Armstrong, 360 N.C. at 548, 633 S.E.2d at 81. 
In Armstrong v. Ledges Homeowners Ass’n, as in the instant case,
an incorporated community group exercised its authority to
augment original real covenants in order to subject property
owners to fees for maintenance of the community.  As here,
property owners in Armstrong disputed the enforceability of the
amended covenants requiring them to pay the maintenance fees.  In
our opinion, this Court recognized that “[d]eclarations of
covenants that are intended to govern communities over long
periods of time are necessarily unable to resolve every question
or community concern that may arise during the term of years.” 
Id. at 557, 633 S.E.2d at 86 (citing 2 James A. Webster, Jr.,
Webster’s Real Estate Law in North Carolina § 18-10, at 858
(Patrick K. Hetrick & James B. McLaughlin, Jr. eds., 5th ed.
1999)).  On the other hand, we cautioned that “[a] covenant
represents a meeting of the minds and results in a relationship
that is not subject to overreaching by one party or sweeping
subsequent change.”  Id. at 554, 633 S.E.2d at 84-85.  We thus
-11-
identified the tension “between the legitimate desire of a
homeowners’ association to respond to new and unanticipated
circumstances and the need to protect minority or dissenting
homeowners by preserving the original nature of their bargain.” 
Id. at 558, 633 S.E.2d at 87 (citations omitted).  We resolved
this tension by holding that, to be enforceable, “amendments to a
declaration of restrictive covenants must be reasonable. 
Reasonableness may be ascertained from the language of the
declaration, deeds, and plats, together with other objective
circumstances surrounding the parties’ bargain, including the
nature and character of the community.”  Id. at 548, 633 S.E.2d
at 81.  In short, this Court established in Armstrong that such
amendments are enforceable if they are “reasonable in light of
the contracting parties’ original intent.”  Id. at 559, 633
S.E.2d at 87 (emphasis omitted).
In considering “the legitimate expectations of [the]
lot owners” in Armstrong, id. at 560, 633 S.E.2d at 88, this
Court emphasized that, at the time the plaintiff property owners
purchased their lots, the community contained “no common areas or
amenities,” id. at 548-49, 633 S.E.2d at 81, and that “[n]either
the Declaration nor the plat shows any source of common expense,”
id. at 560, 633 S.E.2d at 88.  The plaintiffs in Armstrong
professed a specific desire to live in a community lacking
amenities for which they did not wish to pay, and they believed
at the time of purchase that The Ledges was such a community. 
Id. at 552, 633 S.E.2d at 83.  This Court agreed that the
plaintiffs “purchased their lots without notice that they would
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be subjected to additional restrictions on use of the lots and
responsible for additional affirmative monetary obligations
imposed by a homeowners’ association” and therefore, concluded
that it would be unreasonable to enforce the amended covenants
against them and require them to pay the disputed fees.  Id. at
561, 633 S.E.2d at 88-89.
The Assembly stands in stark contrast to the community
at issue in Armstrong.  Whereas The Ledges community had only
existed for about fifteen years when that controversy arose and
was a fairly typical subdivision, the Assembly has existed for
nearly a century and has spent that entire time purposefully
developing its unique, religious community character.  To that
end, the Council and its predecessors have subjected the
Assembly’s residential lots to a wide variety of detailed
restrictions, and they have done so consistently since the first
lots were sold.  Since the Assembly’s establishment, all deeds
conveying land within the community have included covenants
requiring compliance with the bylaws, rules, and regulations
periodically adopted by the Council.  Indeed, the covenants
incorporated in all defendants’ deeds are nearly identical to one
another.  In purchasing property in the Assembly, defendants
presumably desired to take advantage of the Assembly’s
exceptional community atmosphere, and in order to preserve that
atmosphere, they were willing to relinquish significant ownership
rights and give the Council substantial control over the
community.  While the current Regulations were not yet in
existence at the time of the original conveyances here, the
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original intent of the parties was to bind all purchasers of
property within the Assembly to any rules the Council deemed
necessary to preserve the unique religious character and history
of the community.  In enacting the Regulations, therefore, the
Council was acting in a manner that defendant Huffman and
defendants Emerson could reasonably have anticipated.
Also, regardless of whether their deeds explicitly
required them to pay the annual service charges, all defendants
in the case sub judice purchased property in the Assembly with
knowledge of the development’s extensive amenities and were thus
aware of many potential sources of common expense.  In light of
defendants’ desire to avail themselves of the Assembly’s various
facilities and conveniences, and their willingness to subject
their property ownership to numerous restrictions aimed at
preserving the amenities for residents’ continued enjoyment,
their “legitimate expectations,” id. at 560, 633 S.E.2d at 88,
should have included an understanding that the Council might
amend those covenants to generate the funds necessary for
maintenance of the Assembly.
In addition to defendants’ expectations, we must also
consider the legitimate needs of the Council.  Id.  In that
regard, we note that the purposes for the service charges, which
include police protection, street maintenance, and upkeep of
common areas, are eminently reasonable community expenses.  We
are persuaded that it was permissible for the Council to respond
to conditions by requiring Assembly residents to contribute
financially to the maintenance of their community.
-14-
Having concluded that it was reasonable to amend the
covenants to institute the disputed service charges, it remains
for us to determine whether those amended covenants are
enforceable as written.  To be enforceable, the covenants
imposing the service charges must be subject to standards by
which courts can measure the property owners’ liability to pay
the charges, must identify with particularity the properties to
be maintained, and must provide guidance to courts reviewing the
Council’s decision as to which properties and facilities will be
kept up with the proceeds.  See, e.g., Beech Mountain Prop.
Owner’s Ass’n v. Seifart, 48 N.C. App. 286, 295-96, 269 S.E.2d
178, 183 (1980).  Our review of the record reveals that a list of
Policies and Procedures distributed to Assembly residents
explains how the Council determines property values for purposes
of assessing service charges and describes the procedure for
establishing the applicable millage rate.  Meanwhile, the
Regulations (or, in the case of the Hickory Hill subdivision, the
deeds) contain an itemized description of the purposes for the
assessments, which are limited to common expenses such as police
protection, street maintenance, and upkeep of common areas.  We
hold that the covenants imposing the disputed service charges, in
tandem with supporting documentation, provide sufficient guidance
to enable courts to enforce the covenants.  We therefore hold
those covenants enforceable against defendants.
Defendants Patten argue further that the service
charges collected pursuant to the declaration of covenants that
is incorporated in their deed may only be used for the benefit of
-15-
the property that is explicitly subject to the terms of that
declaration.  Clause I of the declaration describes the subject
property as “Hickory Hill, section one” (“Section One”).  Section
One is a portion of the Hickory Hill subdivision containing only
four lots.  The declaration goes on to state:  “No property other
than that described above shall be deemed subject to this
Declaration, unless specifically made subject thereto.” 
Defendants Patten rely on this provision (“the limiting
provision”) in contending that the Council has violated the
declaration by attempting to use service charges paid by
defendants Patten to maintain portions of the Assembly outside
Section One.
The declaration’s service charge provision reads as
follows:  “Each owner shall pay annually a SERVICE CHARGE in an
amount fixed by the SEJ Administrative Council for garbage and
trash collection, police protection, fire protection, street
maintenance, street lighting and upkeep of common areas.”  This
provision contains no language to indicate that the service
charge proceeds may only be utilized to benefit the very small
section of the Assembly named in the declaration.  Moreover, the
subdivision plat and the declaration make it abundantly clear
that Hickory Hill is part of the greater Assembly.  The plat
reflects that Section One is part of the “Property of Lake
Junaluska Assembly” and shows that all four Section One lots
share at least one boundary with “Remaining Property of Lake
Junaluska Assembly.”  The declaration likewise refers to Hickory
Hill as part of the Assembly and states that one of the purposes
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3 The paragraph that follows the limiting provision in the
declaration reads:  “The [Council] may, from time to time,
subject additional real property to the conditions, restrictions,
covenants, reservations, liens and charges herein set forth by
appropriate reference hereto.”
of the covenants is “to enhance Lake Junaluska Assembly as a
community of people, families, and homes of the high values in
the Hebrew Christian faith.”  If any inference is to be drawn
from the declaration regarding permissible uses of the service
charge proceeds, it is that the parties intended the proceeds
from Section One landowners to be used for the maintenance of the
whole Assembly.
In circumscribing the property that is subject to the
declaration, the limiting provision upon which defendants Patten
rely merely acknowledges that the Council is binding a limited
portion of the Assembly to the declaration’s covenants.  In no
way does this provision limit which portions of the Assembly can
reap the covenants’ benefits.  With respect to the service
charges, the limiting provision establishes that the declaration
does not bind the owners of any property outside Section One to
pay the charges (unless such owners’ property is “specifically
made subject thereto”3).  The limiting provision does not,
however, establish that service charge payments from Section One
landowners cannot be used for the maintenance of portions of the
Assembly outside Section One.  For that reason, and because
Hickory Hill is part of the Assembly, it is reasonable for
purchasers of lots in Section One to share the Assembly’s
communal maintenance costs.
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By virtue of living in the Lake Junaluska Assembly
Development, all defendants have benefitted from the services and
protection provided to the entire Assembly from the proceeds of
the annual service charges.  Indeed, the safety, protection, and
maintenance of the Assembly contribute to the overall atmosphere
that induces potential buyers to purchase property there. 
Invalidating the source of funding for such services would only
risk eroding the fundamental nature and character of a community
that has existed and flourished since the beginning of the
twentieth century.  We reiterate that the assessments in this
case were initiated for the purpose of paying reasonable and
specific expenses associated with upkeep and maintenance of the
entire Assembly.
In Armstrong, we stated that “broad assessments for the
general purposes of promoting the safety, welfare, recreation,
health, common benefit, and enjoyment of the residents of [a
development] as may be more specifically authorized from time to
time by the [development’s governing body]” are unreasonable
because they grant “practically unlimited power” to the governing
body to assess property owners.  360 N.C. at 560-61, 633 S.E.2d
at 88 (internal quotation marks omitted).  Thus, the proceeds of
the service charges must actually be used to fund the particular
purposes stated in the restrictions.  In their Answers,
defendants questioned whether the assessment funds were used for
development of the newer parts of the Assembly rather than for
the purposes stated in the covenants.  If defendants had been
able to show that, despite the legitimate purposes stated in the
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covenants, the Council had in fact used the proceeds for
specific, targeted projects such as building roads to develop new
parts of the Assembly, the assessments would not be enforceable. 
However, given that the trial court did not make any
determination on this issue before ruling on the motions for
summary judgment, it appears that insufficient evidence was
presented to the trial court to create a genuine issue of
material fact whether the funds were used for improper purposes.
We hold that the amendments instituting the annual
service charge assessments are reasonable and that the service
charge provisions are enforceable against all defendants.  We
thus reverse the Court of Appeals’ decision that the trial court
erred in granting summary judgment to the Council.  The remaining
issues addressed in the Court of Appeals’ opinion are not before
this Court and its decision as to those issues remains
undisturbed.
REVERSED.
No. 62A08 - Se. Jurisdictional Admin. Council, Inc. v. Emerson
Justice EDMUNDS concurring.
I concur with the majority holding that, in this case,
the annual service charge assessments instituted under the
restrictive covenants are reasonable and are enforceable against
all defendants.  I write separately to emphasize that the unique
nature of Lake Junaluska is fundamental to that outcome.  In the
ordinary case, by contrast, a restrictive covenant purporting to
bind all owners and occupants to future regulations that a
developer might adopt would not be sufficient to make an
assessment implemented decades later by the developer reasonable
or enforceable.
A “fundamental premise” of real property law is that
“[w]hile the intentions of the parties to restrictive covenants
ordinarily control the construction of the covenants, such
covenants are not favored by the law, and they will be strictly
construed to the end that all ambiguities will be resolved in
favor of the unrestrained use of land.”  J.T. Hobby & Son, Inc.
v. Family Homes of Wake Cty., Inc., 302 N.C. 64, 70, 274 S.E.2d
174, 179 (1981) (citations omitted).  As the majority states,
rules and regulations created pursuant to a restrictive covenant,
like amendments to a declaration of restrictive covenants, must
be reasonable.  The reasonableness of such rules and regulations
“may be ascertained from the language of the declaration, deeds,
and plats, together with other objective circumstances
surrounding the parties’ bargain, including the nature and
-20-
character of the community.”  Armstrong v. Ledges Homeowners
Ass’n, 360 N.C. 547, 548, 633 S.E.2d 78, 81 (2006).  The majority
opinion properly highlights the contrast between the “fairly
typical” subdivision at issue in Armstrong and the “unique,
religious community character” of Lake Junaluska.  Slip Op.
at 12.  This distinction is critical to the holding because I
believe that, consistent with our analysis in Long v. Branham,
271 N.C. 264, 156 S.E.2d 235 (1967), in most cases affirmative
obligations may not be imputed to real property owners when such
obligations could not reasonably be anticipated.  In a more
typical subdivision where the developer does not retain
significant control over minute aspects of the development,
affirmative obligations adopted pursuant to a restrictive
covenant that purports generally to bind all owners and occupants
to rules and regulations that may be adopted at some future time
by a developer ordinarily would not be reasonable.
For the reasons above, I concur in the majority
opinion.
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No. 62A08 - SOUTHEASTERN JURISDICTIONAL ADMINISTRATIVE COUNCIL,
INCORPORATED v. EMERSON
Justice HUDSON dissenting.
With respect to defendants Emerson and Huffman, the
restrictive covenants at issue do not contemplate any affirmative
financial assessment on defendants, and I conclude that the
service charge contained in the 1996 Rules and Regulations
therefore exceeds the scope of the original bargain.  As for
defendants Patten, the applicable restrictive covenants do
explicitly provide for assessment of service charges, but I
conclude that the language is not sufficiently definite to be
enforceable under North Carolina law.  For these reasons, I
respectfully dissent.
The majority and concurring opinions emphasize “the
unique, religious community character” of the Lake Junaluska
Assembly Development (the “Assembly”) as “fundamental” to the
holding that the amendments to the restrictive covenants here are
reasonable, even going so far as to take judicial notice of facts
not in the record to support that position.  However, the
Southeastern Jurisdictional Administrative Council (SEJAC) has
advanced no argument for an exception for religious communities,
in either its original complaints against defendants or its
briefs to the Court of Appeals and this Court.  Moreover, neither
the majority or dissenting opinions below discussed such an
exception.  Rather, this dispute has been presented by all
parties as an ordinary dispute between a commercial property
developer and its property owners, and I can discern no basis for
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us to treat it otherwise.  Indeed, I have found no statutory or
case law that would support an expansive reading of restrictive
covenants only here, based on the presumably religious nature of
the community.  I do not believe it is appropriate for us to
reach out and resolve this case on grounds not argued,
particularly when doing so requires the Court to consider matters
not in the record.  On this point, I also dissent.
The facts are straightforward and require us to look
only at the language of the deeds signed by the parties here,
including the applicable restrictive covenants.  Given that the
language of the deeds and covenants is plain and unambiguous, we
have no need to refer to the history of SEJAC or even to the
parties’ relationship, in order to infer their respective
intentions at the times the deeds were signed.  See Long v.
Branham, 271 N.C. 264, 276, 156 S.E.2d 235, 244 (1967) (“The
fundamental rule in construing restrictive covenants is that the
intention of the parties as shown by the covenant governs.”
(emphasis added) (citation and internal quotation marks
omitted))).  
As we have previously held, this Court will generally
enforce a restrictive covenant in the same manner as any other
contract.  Wise v. Harrington Grove Cmty. Ass'n, 357 N.C. 396,
400-01, 584 S.E.2d 731, 735-36 (2003); see also Armstrong v.
Ledges Homeowners Ass'n, 360 N.C. 547, 554, 633 S.E.2d 78, 85
(2006) (“Covenants accompanying the purchase of real property are
contracts which create private incorporeal rights, meaning
non-possessory rights held by the seller, a third-party, or a
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group of people, to use or limit the use of the purchased
property.” (citations omitted)).  As such, “[i]f the plain
language of a contract is clear, the intention of the parties is
inferred from the words of the contract.”  State v. Philip Morris
USA Inc., 359 N.C. 763, 773, 618 S.E.2d 219, 225 (2005) (citation
and internal quotation marks omitted). 
While the majority speculates as to the reason
defendants Emerson and Huffman purchased their respective lots in
the Lake Junaluska Assembly Development, our cases show that we
must restrict our determination of the “intention of the parties”
based only on our “study and consideration of all the covenants .
. . creating the restrictions.”  Long, 271 N.C. at 268, 156
S.E.2d at 238 (citation omitted); cf. id. at 268, 156 S.E.2d at
239 (“Where the meaning of restrictive covenants is doubtful the
surrounding circumstances existing at the time of the creation of
the restriction are taken into consideration in determining the
intention.” (citation and internal quotation marks omitted)).  
Accordingly, as with any contract, the written words of
the parties, not our own theories as to their respective
motivations, must underlie our analysis of the bargain they
struck.  We have also previously held that, because of the unique
nature of restrictive covenants:
Covenants and agreements restricting the
free use of property are strictly construed
against limitations upon such use.  Such
restrictions will not be aided or extended by
implication or enlarged by construction to
affect lands not specifically described, or
to grant rights to persons in whose favor it
is not clearly shown such restrictions are to
apply.  Doubt will be resolved in favor of
the unrestricted use of property, . . . and
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that construction should be embraced which
least restricts the free use of the land.
Such construction in favor of the
unrestricted use, however, must be
reasonable.  The strict rule of construction
as to restrictions should not be applied in
such a way as to defeat the plain and obvious
purposes of a restriction.
Id. at 268, 156 S.E.2d at 239 (emphases added) (citation and
internal quotation marks omitted).  Likewise, in Armstrong we
recently held that an amendment to a declaration of covenants
“does not permit amendments of unlimited scope; rather, every
amendment must be reasonable in light of the contracting parties’
original intent.”  360 N.C. at 559, 633 S.E.2d at 87.
The Armstrong case is instructive to the analysis of
the situation presented here.  In Armstrong, we considered a
challenge by property owners to their homeowners’ association’s
amendment of a declaration of restrictive covenants so as to
“authorize[] broad assessments ‘for the general purposes of
promoting the safety, welfare, recreation, health, common
benefit, and enjoyment of the residents of [the subdivision] as
may be more specifically authorized from time to time by the
Board.’”  Id. at 548, 633 S.E.2d at 81.  There, we noted
disapprovingly that the amendment “grants the [homeowners’]
Association practically unlimited power to assess lot owners and
is contrary to the original intent of the contracting parties,”
in part because the assessments billed were “unrelated to all
other provisions of the deeds, Declaration, and plat.”  Id. at
561, 633 S.E.2d at 88.  In finding the amendment to be invalid
and unenforceable, we concluded that “[i]n the same way that the
powers of a homeowners’ association are limited to those powers
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granted to it by the original declaration, an amendment should
not exceed the purpose of the original declaration.”  Id. at 558,
633 S.E.2d at 87.  
In Armstrong, we also highlighted the unexpected nature
of the assessments, observing that “petitioners purchased their
lots without notice that they would be subjected to additional
restrictions on use of the lots and responsible for additional
affirmative monetary obligations imposed by a homeowners’
association.”  Id. at 561, 633 S.E.2d at 89.  Significantly, we
emphasized the importance of respecting the parties’ expectations
regarding the original bargain struck, stating unequivocally that
“[t]his Court will not permit the Association to use the
Declaration’s amendment provision as a vehicle for imposing a new
and different set of covenants, thereby substituting a new
obligation for the original bargain of the covenanting parties.” 
Id.
Here, defendants Emerson and Huffman agreed to the
following restrictive covenants when they signed their respective
deeds:
Second:  That said lands shall be held,
owned, and occupied subject to the provisions
of the charter of the [Lake Junaluska
Assembly, Inc.], and all amendments thereto,
heretofore, or hereafter enacted, and to the
bylaws and regulations, ordinances and
community rules which have been, or hereafter
may be, from time to time, adopted by [Lake
Junaluska Assembly, Inc.], and its
successors.
. . . . 
Fifth:  That it is expressly stipulated
and covenanted between the Grantor and the
Grantee, his heirs and assigns, that the
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4 I note that the majority opinion does not address
defendants’ argument that the 1996 Rules and Regulations are not
an enforceable amendment to the covenants because they are
contained in a private document that has not been recorded.  See
Armstrong, 360 N.C. at 555, 633 S.E.2d at 85 (“An enforceable
real covenant is made in writing, properly recorded, and not
violative of public policy.” (citations omitted)); Hege v.
Sellers, 241 N.C. 240, 248, 84 S.E.2d 892, 898 (1954) (stating
that real covenants must be recorded).  Because I would find the
service charges to be unenforceable regardless, I have not
discussed this point.
bylaws, regulations, community rules and
ordinances heretofore or hereafter adopted by
the [Lake Junaluska Assembly, Inc.] shall be
binding upon all owners and occupants of said
lands as fully and to the same extent as if
the same were fully set forth in this Deed,
and that all owners and occupants of said
lands and premises shall be bound hereby.
Defendant Huffman purchased his lots in 1970 and 1974; defendants
Emerson purchased their lot in 1992.  In November 1996, the
Assembly enacted Rules and Regulations4 providing in part:  “Each
owner shall pay annually a SERVICE CHARGE in an amount fixed by
the SEJ Administrative Council for police protection, street
maintenance, street lighting, drainage maintenance,
administrative costs and upkeep of the common areas.”  Put
simply, years after defendants struck their original bargains
with SEJAC-–and, in the case of defendant Huffman, decades later-
–SEJAC amended the restrictive covenants to impose affirmative
financial obligations on defendants.  Thus, when defendants
Emerson and Huffman decided to purchase, and struck their
original bargains, they had before them only the language of the
original covenants, which make no mention of financial
assessments.
-27-
Given that the restrictive covenants contain absolutely
no reference to even the possibility of assessments or fees to be
paid by property owners, I disagree that defendants Emerson and
Huffman “should have anticipated” this action by the Assembly. 
Likewise, in light of our holding in Armstrong and our case law
directing that such covenants be strictly construed against
limitations on use of property, I cannot agree with the majority
that this amendment is reasonable and within the scope of the
original restrictive covenants agreed to by the parties.  Indeed,
this amendment appears to be precisely the type of “overreaching
by one party or sweeping subsequent change” that we cautioned
against in Armstrong.  360 N.C. at 554, 633 S.E.2d at 84-85.  I
believe that the majority’s holding here today dilutes beyond
usefulness the reasonableness standard that we articulated in
Long and Armstrong.  
The entire passage from Armstrong explaining how
“reasonableness” may be determined is informative:
However, the court may ascertain
reasonableness from the language of the
original declaration of covenants, deeds, and
plats, together with other objective
circumstances surrounding the parties’
bargain, including the nature and character
of the community.  For example, it may be
relevant that a particular geographic area is
known for its resort, retirement, or seasonal
“snowbird” population.  Thus, it may not be
reasonable to retroactively prohibit rentals
in a mountain community during ski season or
in a beach community during the summer.
Similarly, it may not be reasonable to
continually raise assessments in a retirement
community where residents live primarily on a
fixed income.  Finally, a homeowners’
association cannot unreasonably restrict
property rental by implementing a garnishment
or “taking” of rents (which is essentially an
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assessment); although it may be reasonable to
restrict the frequency of rentals to prevent
rented property from becoming like a motel.
Correspondingly, restrictions are
generally enforceable when clearly set forth
in the original declaration.
Id. at 559-60, 633 S.E.2d at 88.  We made these observations in
the context of our concern that, with homeowners’ associations in
general, “[t]he law . . . not subject a minority of landowners to
unlimited and unexpected restrictions on the use of their land
merely because the covenant agreement permitted a majority to
make changes in existing covenants.”  Id. at 561, 633 S.E.2d at
89 (citation and internal quotation marks omitted).
Here, that concern is even greater, as SEJAC is the
corporate property developer; there is no homeowners’ association
or other representative vehicle through which defendants and
other property owners could vote to approve or strike down
amendments to the original covenants.  “[R]etaining significant
control over minute aspects of the Assembly” is not equivalent to
charging property owners monthly assessments, sometimes totaling
thousands of dollars a year, that were not contemplated, and
therefore, not agreed to, in the original contracts signed by the
parties.  
The majority opinion distinguishes the facts here from
those in Armstrong by focusing on the “unique, religious
community character” of the Assembly, as opposed to the “fairly
typical subdivision” at issue in Armstrong.  Our analysis in
Armstrong was based not only on the nature of the community in
question, but also in large part on the expectations of the
property owners themselves as to future financial obligations at
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the time they purchased their lots.  While it is true that we
quoted two of the six petitioners in Armstrong regarding their
express decision not to live in “a gated community with ‘all the
amenities,’” id. at 552, 633 S.E.2d at 83, we did so to
illustrate their opposition to the notion of living in a planned
community in light of the homeowners’ association’s repeated
references to North Carolina’s Planned Community Act in its
attempts to amend the bylaws.  
Significantly, the original declaration of covenants in
Armstrong did, in fact, allow property owners to be assessed for
“an equal pro-rata [sic] share of the common expense for
electrical street lights and electrical subdivision entrance sign
lights and any other common utility expense for various lots
within the Subdivision.”  Id. at 550, 633 S.E.2d at 82.  Even
with that language, which gave property owners notice that they
were subject to future financial obligations related to their
lots, this Court found an amendment expanding the assessments to
be invalid and unenforceable.  Here, purchasers of Assembly
property had no such notice.  Further, I see no distinction
between the new affirmative obligations this Court struck down in
Armstrong for “‘promoting the safety, welfare, recreation,
health, common benefit and enjoyment’” of residents, id. at 553,
633 S.E.2d at 84, and those that the majority would allow here,
as “necessary to preserve the unique religious character and
history of the community.”  Neither the majority nor the
concurring opinion articulates a legal basis or cites any
authority for the proposition that the development corporation
-30-
managing this community should be permitted to infringe upon the
individual property rights of its property owners in a manner
that would be impermissible for any other developer. 
Here, the parties have not argued in their briefs, nor
does anything in the record before us give any indication, why
defendants Emerson and Huffman elected to purchase property in
the Assembly.  We do have their sworn affidavits that their deeds
contain no reference to “any charges or assessments by Lake
Junaluska Assembly, Inc.” and that the reference to the “‘bylaws
and regulations, ordinances and community rules’” is “too vague
to give any notice of an obligation to pay money for anything.” 
Perhaps they purchased their lots because they were attracted to
the Assembly’s “unique, religious community character” or maybe
they did so because they expected that the community would be
fully maintained by SEJAC, without any additional financial
burden on them as property owners.  Neither the briefs nor the
record reflect why they made their decisions to purchase, and we
simply do not know.  In light of well-established principles
requiring strict construction of covenants, I do not agree that
we should allow speculation as in the majority opinion to form
the basis of a decision to expand these covenants.
Although amendments are sometimes necessary, as we
recognized in Armstrong, they must be reasonable and “preserv[e]
the original nature of [the parties’] bargain.”  Id. at 558, 633
S.E.2d at 87 (citations omitted).  The majority’s holding allows
the Assembly to infringe on the individual property rights of
defendants Huffman and Emerson by amending the original covenants
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in a manner that impermissibly “substitute[s] a new obligation
for the original bargain of the covenanting parties.”  Id. at
561, 633 S.E.2d at 89.  Further, it runs contrary to our long-
standing case law directing such covenants to be strictly
construed.  I would find the amendments to be invalid and
unenforceable.
Defendants Patten are differently situated than
defendants Emerson and Huffman, as the Pattens purchased their
lot in 1996, at which point the covenants included the following
language:  “Each owner shall pay annually a SERVICE CHARGE in an
amount fixed by the SEJ Administrative Council for garbage and
trash collection, police protection, fire protection, street
maintenance, street lighting, and upkeep of common areas.”  Thus,
defendants Patten had notice that they owed an ongoing financial
obligation to the Assembly for those services.
In Armstrong, we cited with approval the Court of
Appeals holding in Beech Mountain Property Owner’s Ass’n v.
Seifart, 48 N.C. App. 286, 269 S.E.2d 178 (1980), that
affirmative covenants are unenforceable “unless the obligation
[is] imposed in clear and unambiguous language which is
sufficiently definite to guide the courts in its application.” 
360 N.C. at 556, 633 S.E.2d at 85 (quoting Beech Mountain, 48
N.C. App. at 295, 269 S.E.2d at 183 (alteration in original)). 
In Beech Mountain, the Court of Appeals articulated a three-part
test to determine if an obligation is “sufficiently definite”: 
Does the covenant (1) describe an adequate standard to determine
the amount of the assessment; (2) identify with particularity the
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property to which the assessment applies; and (3) give guidance
to the reviewing court regarding the facilities maintained with
the assessment funds?  48 N.C. App. at 295-96, 269 S.E.2d at 183-
84.
Here, the deed and covenants signed by defendants
Patten refer to their subdivision, Hickory Hill, but also include
references to the larger Assembly development.  Each property
owner in the Assembly receives a copy of policies and procedures
outlining how the service charges are calculated using property
values, and I find that explanation sufficient to meet the first
prong of the test.  
Turning to the second and third prongs, I find that the
language in the covenants gives no guidance on the property or
facilities that will be maintained with the assessment funds. 
Although defendants Pattens’ deed specifies that it subjects
Section One of the Hickory Hill subdivision to the covenants
therein, nothing in the service charge description specifies that
the assessment funds will be used for the Assembly Development as
a whole, or even limited to use only in the Assembly.  From the
documents in the record, it is clear that the service charges are
being used for maintenance and upkeep throughout the Assembly
Development as a whole, which, without operative language to
allow for such application, goes beyond what our case law
permits.  See Long, 271 N.C. at 274, 156 S.E.2d at 243 (“It is
our opinion, however, that, nothing else appearing, restrictions
imposed upon a particular subdivision are for the benefit of that
particular development and no other.”).
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Moreover, although the service charge includes a
reference to “common areas,” Mitchell Buddy Young, SEJAC’s
Director of Residential Services at the Assembly, admitted in his
deposition that there are no common area fees, a fact which was
also admitted in SEJAC’s responses to interrogatories.  Likewise,
defendants Patten also pay a separate monthly fee for garbage and
trash collection and fire protection.  Thus, as to at least some
of the “eminently reasonable community expenses” highlighted by
the majority opinion, defendants are already contributing
financially “to the maintenance of their community” through other
monthly charges.  More troubling, SEJAC in its response to
interrogatories, and Mr. Young in his deposition, conceded that
the service charge assessed to defendants Patten is also used for
administrative costs (including payroll, pension and retirement
benefits, and attorney’s fees), which are not purposes mentioned
explicitly or by implication in the covenants.
As the majority opinion itself observes, “the proceeds
of the service charges must actually be used to fund the specific
purposes stated in the restrictions.”  Here, by SEJAC’s own
admission, they are not.  Moreover, the deed contains no language
limiting the property or facilities to which the service charge
may be applied, again giving SEJAC unfettered discretion to
continue to expand the streets, lighting, and other areas that
might be maintained using the service charges.  If this language
is sufficiently definite to be enforceable, defendants Pattens’
liability could be virtually unlimited.  Similarly, the covenants
struck down in Beech Mountain required an assessment for “road
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maintenance and maintenance of the trails and recreational
areas,” “road maintenance, recreational fees, and other charges
assessed by the Association,” and “all dues, fees, charges, and
assessments made by that organization, but not limited to charges
for road maintenance, fire protection, and security services,”
without specifying which roads, trails, or areas in the
development were covered.  48 N.C. App. at 288, 269 S.E.2d at
179-80.  I find the language here to be at least as vague and
would affirm the Court of Appeals in reversing summary judgment
against defendants Patten.
For the foregoing reasons, I would hold that the
restrictive covenants and the 1996 Rules and Regulations at issue
here impermissibly infringe on the property rights of defendants. 
I therefore respectfully dissent.
Justice TIMMONS-GOODSON joins in this dissenting
opinion.