Court Opinion

ID: 2727147
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:12:04.372382+00
Date Added: 2024-06-11T10:03:13.266217
License: Public Domain

NO. COA13-1116

                 NORTH CAROLINA COURT OF APPEALS

                       Filed:    1 July 2014

ANN B. WALLACH; DAVID WALLACH;
PHILIP C. MILLER and STEEN
CONSTRUCTION COMPANY,
     Plaintiffs,

    v.                               Wake County
                                     No. 12 CVS 11131
LINVILLE OWNERS ASSOCIATION, INC.;
WILLIAM BUFF CLAYTON; JAMES B.
CUSHMAN; KIRSTEN M. CUSHMAN; DALIP
AWASTHI; MONICA AWASTHI; WILLIAM
J. SPARKMAN; ROXANNE E. SPARKMAN;
RAJESH K. MANICKAM; REEMA PATEL
MANICKAM; MARGARET S. NORTON,
Trustee of Margaret S. Norton
Revocable Living Trust dated 12-4-
2007; STUART P. GOLDBLATT; N.C.
PEAKS, LLC; FELICIA R. KADIS;
MATTHEW C. KING, JR.; JAMES A.
WILLETTS; LINDA BADDOUR; CLAUDE Z.
DEMBY; DONNA H. DEMBY; ROBERT D.
HILLMANN; SUSAN L. HILLMANN; SHAWN
M. BRITT; AARON VEDDER; MICHELLE
VEDDER; TODD R. STIEFEL; DIANA G.
STIEFEL; SCOTT J. POOLE; MATTHEW
S. PALKA, JR.; FRANCES K.
O’SULLIVAN; KEITH THOMAS SHELLY;
KATHARINE KNOBIL; JOSIP CERMIN;
LANTY L. SMITH; MARGARET G. SMITH;
SCOTT ALLEN BROWN; SARA BETH
BROWN; MASOUD MOGHADASS; MARIA D.
CLARK and CHRISTOPHER JAMES CLARK,
Trustees of the Maria D. Clark
Living Trust dated September 17,
2010, and any amendments thereto;
PABLO E. PRIU; HEIDI D. PRIU;
SHEHZAD H. CHOUDRY; SABEEN J.
KHAWAJA; JASON L. PAYTON; AMIR A.
FIROZVI; ASRA S. FIROZVI; CHARLES
STIEFEL; DANEEN STIEFEL; MARK F.
KOZACKO; TAMMY Y. KOZACKO; MARK A.
                                  -2-
REIN; TARA A. DOW-REIN; MOHIT
PASI; SONIA PASI; WILLIAM H.
SCHEICK, JR., Trustee of the
Carolyn R. Scheick Revocable
Trust-1994/TR; CAROLYN R. SCHEICK,
Trustee of the William H. Scheick
Revocable Trust-1994/TR; JOHN T.
SCHEICK, Trustee of the Gloria M.
Verrochi Irrevocable Trust-1994;
CAROLYN R. SCHEICK, Trustee of the
Gloria M. Verrochi Irrevocable
Trust-1994; JOHN T. SCHEICK,
Trustee of the Gloria M. Verrochi
Revocable Trust 1994 GST Exemption
Trust; CAROLYN R. SCHEICK, Trustee
of the Gloria M. Verrochi
Revocable Trust 1994 GST Exemption
Trust; STEVEN KJELLBERG; JULIE
KJELLBERG; RICHARD P. MCCOOK; ANNA
T. MCCOOK; IMAD OMAR; PAUL F.
BONAVITA; HEATEHR S. BONAVITA;
DIMITRI LYSANDER STOCKTON; RENEE
CECILE ALLAIN-STOCKTON,
     Defendants.

    Appeals    by   plaintiffs   and   defendant   from   final   judgment

entered 12 March 2013 by Judge Donald W. Stephens in Wake County

Superior Court.     Heard in the Court of Appeals 19 February 2014.

    Harris & Hilton, P.A., by Nelson G. Harris, for plaintiff-
    appellants.

    Jordan Price Wall Gray Jones & Carlton, by Brian S. Edlin
    and J. Matthew Waters, for defendant-appellant.

    McCULLOUGH, Judge.

    Linville      Owners   Association,   Inc.     (the   “Association”),
                                          -3-
appeals the trial court’s denial of its motion to dismiss for

failure to join necessary parties.                   Ann B. Wallach and David

Wallach,      the     owners    of     Lot     40   and    Lot    46    in    Linville

Subdivision, and Steen Construction Company, the owner of Lot 44

in   Linville       Subdivision       (together     “plaintiffs”),        appeal    the

trial court’s grant of partial summary judgment and award of

attorneys’ fees in favor of the Association.                      For the following

reasons, we affirm the denial of the Association’s motion to

dismiss and reverse the grant of partial summary judgment and

the award of attorneys’ fees.

                                  I.     Background

       This    case    concerns        amendments     to    the     Declaration     of

Covenants,       Conditions,           Easements     and     Restrictions          (the

“Declaration”) for Linville Subdivision, a gated community in

North Raleigh.

       The    Declaration      was     first    recorded    in    the     Wake   County

Register of Deeds on page 197 of book 10362 on 13 August 2003.

It was then re-recorded in the Wake County Register of Deeds on

page 2198 of book 11283 on 29 March 2005 to include an exhibit

that   was     inadvertently         omitted    during     the    first      recording.

Prior to June 2005, the Declaration governed only those lots in

“phase one” of Linville Subdivision.                However, on 9 June 2005, a
                                          -4-
supplementary      declaration          was    recorded      in   the    Wake     County

Register   of   Deeds        on    page       2201   of    book   11483     subjecting

additional land, “phase two” of Linville Subdivision, to the

terms of the Declaration.           At all times relevant to this appeal,

the Declaration governed all forty-four lots comprising phases

one and two of Linville Subdivision.1

      Between October and December of 2011, amendments to the

Declaration were recorded in the Wake County Register of Deeds.

The   amendments     revised        or    added      the    following      provisions:

“Subdividing    and      Recombination               of     Lots,”      “Architectural

Control,” “Performance Bond and Builder Agreement,” and “Date of

Commencement of Annual Assessment.”                       Particularly relevant to

this appeal, the amendment regarding “Date of Commencement of

Annual Assessment” (the “Assessment Amendment”) was recorded in

the Wake County Register of Deeds on page 2295 of book 14530 on

7 November 2011.

      On 6 August 2012, plaintiffs and Philip C. Miller, all of

whom owned vacant lots in Linville Subdivision, commenced this

action by filing a complaint seeking a declaratory judgment that

the    amendments       to        the     Declaration         were      invalid      and

1
 The lots in Linville Subdivision are numbered 1 through 46.
Lots 15 and 18 were eliminated by consolidation with other lots.
                                       -5-
unenforceable.     The Association and all other lot owners at the

time the suit was filed were named as defendants.

      In order to provide notice of the action to those acquiring

title to lots in Linville Subdivision following commencement of

the   action,    plaintiffs    filed    a    lis   pendens    in   Wake    County

Superior Court on 17 September 2012.

      The lis pendens, however, did not provide notice of the

action to James B. Cushman, II, and Kirsten M. Cushman, who

acquired title to Lot 2 from Capital Bank in the time between

the   commencement   of   this   action      and   the   filing    of     the   lis

pendens.   As a result, on 29 September 2012, plaintiffs filed a

motion to amend the complaint to substitute the Cushmans as

defendants.

      Thereafter, on 4 October 2012, Jordan L. Staal and Heather

Staal acquired title to Lot 26 from Masoud Moghadass with notice

of the pending action via the lis pendens.                    Plaintiffs never

sought to substitute the Staals as defendants.

      By order filed 5 November 2012, the trial court allowed

plaintiffs’     motion   to   amend    the   complaint   to    substitute       the

Cushmans as defendants.          Plaintiffs then filed a second lis

pendens naming the Cushmans as owners of Lot 2 on 7 November

2012.
                                      -6-
     On 8 November 2012, plaintiffs moved for summary judgment

on the ground that the amendments were not reasonable, exceeded

the purpose of the original Declaration, and were inconsistent

with the original intent of the Declaration.                  The Association

responded on 13 November 2012 by moving to quash the lis pendens

as unnecessary and moving to dismiss the complaint pursuant to

N.C. Gen. Stat. § 1A-1, Rule 12(b)(7) for failure to join the

Staals, whom the Association argues are necessary parties.

     By order filed 14 December 2012, the trial court denied the

Association’s motion to dismiss and continued the hearing on

plaintiffs’   motion    for   summary       judgment.      The      trial     court

concluded,

          All owners in the subdivision are not
          necessary parties to this action by virtue
          of the Lis Pendens filed by the Plaintiffs.
          Properties in the Linville Subdivision may
          be freely bought and sold without new owners
          having to be parties to the action and all
          owners at the time of the final judgment in
          this case are bound by the final judgment in
          this case even though they are not named
          parties to this action.

     Following   the    denial       of   its   motion   to        dismiss,    the

Association   filed    an   answer    and   counterclaim      on    31   December

2012.   In the counterclaim, the Association sought to collect

unpaid assessments owed by plaintiffs, foreclose on Claims of

Lien filed and served on plaintiffs’ lots to secure payment of
                                                   -7-
the     assessments,          and       collect          attorneys’      fees    incurred       in

prosecuting the action.

      On 4 February 2013,                     the Association filed a motion for

summary judgment on plaintiffs’ claims.                                 Also on 4 February

2013,     plaintiffs          filed           a    response        to    the     Association’s

counterclaim arguing no past due assessments were owed because

the     amendments            to        the        declaration          were     invalid        and

unenforceable.

      Plaintiffs’           and      the      Association’s         motions       for    summary

judgment    came       on     for       hearing      in    Wake    County      Superior       Court

before the Honorable Paul Ridgeway on 18 February 2013.                                       On 4

March 2013, the trial court entered an order granting summary

judgment     in       part        and      denying        summary       judgment    in      part.

Pertinent       to     this        appeal,        the     trial    court       determined      the

Assessment Amendment was valid and enforceable.                                The trial court

further concluded that the Association’s counterclaim was the

only remaining matter to be tried.

      Thereafter,           the     Associations’           counterclaim         came    on    for

trial    that        same     week       in       Wake    County    Superior       Court,       the

Honorable Donald Stephens, Judge presiding.                                Following trial,

the trial court entered judgment in favor of the Association,

ordering the Wallachs to pay $5,010 in unpaid assessments for
                                          -8-
Lots 40 and 46 and ordering Steen Construction Company to pay

$2,345     in   unpaid     assessments        for   Lot   44.       The   trial     court

further ordered that a Commissioner be appointed and directed to

sell the lots to satisfy the indebtedness due the Association.

The     issue     of      attorneys’      fees      was       reserved      until       the

Association’s counsel filed a supplemental affidavit.

      Following         receipt   of    the    supplemental        affidavit,      on   25

March    2013,    the     trial   court       awarded     $5,000    in    fees   to     the

Association.

      Plaintiffs gave notice of appeal on 10 April 2013.                                The

Association gave notice of appeal on 11 April 2013.

                                  II.     Discussion

      We    address      the   Association’s        appeal      first,    followed       by

plaintiffs’ appeal.            The Association appeals the trial court’s

denial of its motion to dismiss.                    Plaintiffs appeal the trial

court’s partial summary judgment order finding the Assessment

Amendment       valid    and   enforceable       and    the   trial      court’s    order

awarding the Association attorneys’ fees.

                               Association’s Appeal

      In the Association’s appeal, the sole issue is whether the

trial court erred in denying the Association’s motion to dismiss
                                      -9-
for failure to join necessary parties.           Upon review, we hold the

trial court did not err in denying the Association’s motion.

    “‘A necessary party is one who is so vitally interested in

the controversy that a valid judgment cannot be rendered in the

action    completely     and    finally     determining   the     controversy

without his presence.’” Warrender v. Gull Harbor Yacht Club,

Inc., _ N.C. App. _, _, 747 S.E.2d 592, 606 (2013) (quoting

Carding Developments v. Gunter & Cooke, 12 N.C. App. 448, 451–

52, 183 S.E.2d 834, 837 (1971)).            “‘The term “necessary parties”

embraces all persons who have or claim material interests in the

subject   matter    of   a     controversy,    which   interests    will    be

directly affected by an adjudication of the controversy.’”                 N.C.

Dep’t of Transp. v. Stagecoach Village, 174 N.C. App. 825, 827-

28, 622 S.E.2d 142, 144 (2005) (quoting Wall v. Sneed, 13 N.C.

App. 719, 724, 187 S.E.2d 454, 457 (1972)) (citation omitted in

the original), disc. rev. denied, 360 N.C. 483, 630 S.E.2d 929

(2006).      Pursuant    to     the   North    Carolina   Rules    of   Civil

Procedure, necessary parties “must be joined as plaintiffs or

defendants[.]”     N.C. Gen. Stat. § 1A-1, Rule 19(a) (2013).

    On the other hand, “[a] proper party is one whose interest

may be affected by a decree, but whose presence is not essential

in order for the court to adjudicate the rights of others.”
                                        -10-
Stagecoach Village, 174 N.C. App. at 828, 622 S.E.2d at 144.

“‘Proper parties may be joined.            Whether proper parties will be

ordered joined rests within the sound discretion of the trial

court.’”       DeRossett v. Duke Energy Carolinas, LLC, 206 N.C. App.

647,    660,     698   S.E.2d    455,    464   (2010)    (citations   omitted)

(emphasis in original).

       On appeal, the Association claims the trial court erred in

denying its motion to dismiss because the Staals, who acquired

Lot 26 on 4 October 2012, were not named defendants in the

action.    Relying on Karner v. Roy White Flowers, Inc., 351 N.C.

433, 527 S.E.2d 40 (2000) and Page v. Bald Head Ass’n., 170 N.C.

App. 151, 611 S.E.2d 463, disc. rev. denied, 359 N.C. 635, 616

S.E.2d 542       (2005),   the Association      argues    all lot owners    in

Linville Subdivision were necessary parties, without which the

judgments are null and void. See McCraw v. Aux, 205 N.C. App.

717, 721, 696 S.E.2d 739, 741 (2010).

       In Karner, our Supreme Court held nonparty property owners

in a Charlotte subdivision were necessary parties to an action

to enjoin a property owner from violating                 a residential    use

restrictive covenant running with each lot.              Karner, 351 N.C. at

440, 527 S.E.2d at 44.          The Court reasoned,

           each property owner within Elizabeth Heights
           has the right to enforce the residential
                                       -11-
              restriction against any other property owner
              seeking to violate that covenant.        This
              right has a “distinct worth.”    By operation
              of law, if the residential restrictive
              covenant is abrogated as to the lots owned
              by defendants, each property owner within
              the subdivision would lose the right to
              enforce that same restriction. Unless those
              parties are joined, they will not have been
              afforded   their   “day   in  court.”      An
              adjudication   that   extinguishes   property
              rights without giving the property owner an
              opportunity to be heard cannot yield a
              “valid judgment.”      For this reason, we
              conclude the nonparty property owners of
              Elizabeth Heights are necessary parties to
              this action because the voiding of the
              residential-use restrictive covenant would
              extinguish their property rights.

Id. at 439-40, 527 S.E.2d at 44 (citations omitted).

      Thereafter, in Page this Court affirmed the trial court’s

dismissal      of   an   assessment    claim     for    failure       to   join    all

property owners.         Page, 170 N.C. App. at 154, 611 S.E.2d at 465.

In affirming the trial court in Page, this Court simply cited

Karner for the holding that “all property owners affected by a

residential use restrictive covenant were necessary parties to

an   action    to     invalidate    that     covenant[]”      and     indicated    the

plaintiffs      acknowledged       Karner    controlled       their    case.       Id.

Thus, this Court found the plaintiffs’ argument meritless.                        Id.

      The   Association      now    claims    Karner    and    Page     control    the

present       case.        We,     however,      find      the      present       case

distinguishable.
                                           -12-
       In   Midsouth     Golf,      LLC    v.     Fairfield     Harbourside    Condo.

Ass’n., Inc., 187 N.C. App. 22, 652 S.E.2d 378 (2007) this Court

distinguished a covenant for the payment of recreational amenity

fees from the residential use restriction at issue in Karner.

This Court explained that, whereas a residential use restrictive

covenant included in all deeds conveying lots in a subdivision

according    to    a    common      plan    of    development      was   a    valuable

property right enforceable by all property owners,

            only the owner of the recreational amenities
            [in Midsouth Golf] ha[d] the power to levy
            such a recreational amenity charge.       As
            such, only the owner of the recreational
            amenities ha[d] the power to enforce [the]
            restrictive covenant.   None of the property
            owners within Fairfield Harbour ha[d] the
            right to enforce the covenant to pay amenity
            fees against any of the other owners.
            Accordingly,   the  extinguishment   of  the
            restrictive covenant in     [Midsouth Golf]
            would not deprive the other property owners
            of any property right akin to the right that
            the nonparty property owners were deprived
            of in Karner.

Id. at 28-29, 652 S.E.2d at 383.                   In Midsouth Golf, this Court

also addressed its decision in Page, indicating it could not

rely upon Page because “Page does not reveal sufficient facts

for us to determine whether the covenant at issue was similar to

the one at issue in the present case.”                   Id. at 29, 652 S.E.2d at

383.    This Court further explained that:

            Page       does   not    discuss       how    the   nonparty
                                         -13-
              property owners were in danger of losing a
              property   right   by    invalidation of   the
              covenant because the plaintiffs effectively
              conceded that Karner applied and that the
              Court   was    bound   by    Karner.     While
              invalidation of the covenant in the present
              case could have some effect on nonparty
              property    owners    in    Fairfield  Harbor,
              invalidation of the covenant would not
              deprive them of any property right, which is
              required under Karner to make them necessary
              parties.

Id. at 29-30, 652 S.E.2d at 383-84 (citation omitted).

    Following         the    reasoning     in   Midsouth      Golf,    we    hold    the

Staals were proper parties to the action seeking to declare the

amendments     to     the    Declaration    invalid     and   unenforceable,         but

were not necessary parties.                The amendments at issue in the

present    case     did     not    extinguish   any     property      rights   of    the

Staals akin to those in Karner.                 Therefore, we hold the trial

court   did     not    err    in    denying     the   Association’s         motion    to

dismiss.

    Because the Staals were not necessary parties, we need not

address whether the lis pendens was proper in this action.

                                  Plaintiffs’ Appeal

    In     plaintiffs’        appeal,    plaintiffs      first   argue      the   trial

court erred in entering partial summary judgment upholding the

validity      and     enforceability       of     the    Assessment         Amendment.

Specifically, plaintiffs contend the trial court erred because
                              -14-
the assessment amendment was not signed by seventy-five percent

(75%) of the lot owners and is not reasonable in light of the

contracting parties’ original intent.

    “Our standard of review of an appeal from summary judgment

is de novo; such judgment is appropriate only when the record

shows that ‘there is no genuine issue as to any material fact

and that any party is entitled to a judgment as a matter of

law.’”   In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572,

576 (2008) (quoting Forbis v. Neal, 361 N.C. 519, 523-24, 649

S.E.2d 382, 385 (2007)).

    For background, the original Declaration required each lot

owner to pay annual assessments to the Association.      Builders,

however, were afforded the following benefits:

          Lots owned by the builder of the initial
          improvements on the Lot (“Builder”) shall be
          assessed at a rate of twenty-five percent
          (25%) of the amount of the assessment due
          for a Lot that is owned by the Builder. The
          assessments on Lots owned by a Builder shall
          accrue each month that the Builder owns the
          Lot and shall not be required to be paid by
          the Builder until the date of closing of the
          sale of a Lot from a Builder to a consumer-
          occupant Lot Owner or the date of rental of
          a Lot from a builder to a consumer-occupant
          Lot Owner.

The Assessment Amendment recorded in the Wake County Register of

Deeds on 7 November 2011 eliminated these benefits to builders.

Specifically, the Assessment Amendment provides:
                                    -15-
            There shall be no reduced assessment or
            delayed   payment  schedule   for  any Lot,
            regardless who owns the Lot or whether or
            not the Lot has been developed. . . .

            As of the effective date of this amendment,
            Owners    of   developed/unsold,   partially
            developed   or  undeveloped  Lots  will   be
            required to pay all accrued assessments in
            full that were previously scheduled to be
            due per the old Article IV, Section 9 prior
            to this amendment (at the previous 25%
            rate). These assessments are to be paid by
            January 31, 2012.

Pursuant to its terms, the Assessment Amendment became effective

1 January 2012.

      On appeal, plaintiffs first contend the trial court erred

in   upholding   the   Assessment   Amendment    because   the   Assessment

amendment was not properly signed by the required number of lot

owners.

      The    general   provisions    of    the   Declaration     allow   for

amendment during the first twenty (20) years “by an instrument

signed by not less than seventy-five percent (75%) of the Lot

Owners[.]”    It is undisputed that at the time of the amendments,

there were 44 lots in Linville Subdivision.          Therefore, approval

of an amendment required the signatures of the owners of 33

lots.

      The Assessment Amendment, as recorded in the Wake County

Register of Deeds, appears to include signatures of approval by
                                       -16-
owners of 33 lots.         Additionally, a certification signed by the

president and the secretary of the Association verifying the

Assessment     Amendment       was    “duly      executed     by   the    written

signatures of seventy-five percent (75%) of the membership” was

recorded with the Assessment Amendment.

      On appeal, plaintiffs acknowledge that if the signatures

for   the    33    lots    were      properly     executed,    the   procedural

requirements      for   amendment      were     met.     Plaintiffs,      however,

contend that the amendment was only properly signed by owners of

30 lots.      Plaintiffs allege the signatures for Lot 5, Lot 22,

and Lot 37 were inadequate to approve the Assessment Amendment.

      Upon    review      of   plaintiffs’      argument,     we   find    it   is

unnecessary to assess the validity of each signature.

             On a motion for summary judgment the moving
             party has the burden of establishing that
             there is no genuine issue as to any material
             fact.   Once the moving party has met its
             burden, the opposing party may not rest on
             the mere allegations or denials of his
             pleading.   Instead, the opposing party must
             set forth specific facts showing that there
             is a genuine issue for trial[.]

Gillis v. Whitley's Discount Auto Sales, Inc., 70 N.C. App. 270,

274, 319 S.E.2d 661, 664 (1984) (citations omitted).

      In this case, the Association moved for summary judgment

and the Assessment Amendment, as recorded, appears to contain

the required signatures for approval.                  As plaintiffs admitted,
                                      -17-
it is their burden to bring forward specific facts showing the

Assessment Amendment was not properly approved.                  Plaintiffs have

not done so in this case.       We hold plaintiffs’ allegations as to

the lack of the signees’ authority to sign on behalf of the

contested lots, without more, is insufficient to raise an issue

for trial.

      Moreover,      during   oral     arguments        before     this   Court,

plaintiffs focused on the validity of the signatures for Lot 37

by   arguing    an   acknowledgment    signed      by   the   trustees    of   the

trusts owning Lot 37 and recorded in the Wake County Register of

Deeds on 22 December 2011 is evidence that the amendment was not

properly signed.        We are not convinced.             The acknowledgement

provided that the trustees of the trusts owning Lot 37 “were in

agreement with the [Assessment] Amendment in all respects and

intended to sign off on the amendment indicating their intent to

be bound by the amendment and did, in fact, sign off on the

[Assessment] Amendment indicating their intent to be bound by

it[.]”    In executing the acknowledgment, the trustees did not

concede   the    Assessment   Amendment      was    not   executed     properly.

Moreover, the acknowledgement was signed and recorded prior to 1

January 2012, the effective date of the Assessment Amendment.
                                          -18-
    Nevertheless,          plaintiffs’          procedural      argument     is    not

determinative in this case.                   Plaintiffs also argue the trial

court erred in entering partial summary judgment upholding the

Assessment     Amendment        because       the   amendment     contravenes       the

original    intent    of     the       Declaration.       In    support    of     their

argument,    plaintiffs         rely    on    Armstrong   v.    Ledges     Homeowners

Ass’n., Inc., 360 N.C. 547, 633 S.E.2d 78 (2006).

    In Armstrong, our Supreme Court explained the following:

            The term amend means to improve, make right,
            remedy,   correct   an   error,    or  repair.
            Amendment    provisions    are    enforceable;
            however, such provisions give rise to a
            serious question about the permissible scope
            of amendment, which results from a conflict
            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. In the same way that the powers of
            a homeowners' association are limited to
            those powers 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 (citations omitted).                          Thus, the

Court   held    that       “a      provision        authorizing    a     homeowners’

association to amend 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.”    Id. at 559, 633 S.E.2d at 87 (emphasis in original).
                                        -19-
       “[A] 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.”       Id. at 559, 633 S.E.2d at 88.             Yet, “[i]n all such

cases, a court reviewing the disputed declaration amendment must

consider        both     the    legitimate      needs   of     the      homeowners’

association and the legitimate expectations of lot owners.”                        Id.

at 560, 633 S.E.2d at 88.

       Applying the above to the facts of Armstrong, the Court

held     an    amendment       authorizing     “broad   assessments       ‘for     the

general purposes of promoting the safety, welfare, recreation,

health, common benefit, and enjoyment of the residents of [the

community] as may be more specifically authorized from time to

time by the Board’ [was] unreasonable[,]” and thus invalid and

unenforceable.           Id. at 560-61, 633 S.E.2d at 88.               In reaching

its conclusion, the Court noted the nature of the community and

the fact that there was nothing in the original declaration

revealing an intent to confer unlimited powers of assessment on

the homeowners’ association.            Specifically, the community was a

“small     residential      neighborhood      with   public    roads,    no   common

areas,     and    no   amenities.”      Id.     at   560,   633    S.E.2d     at   88.
                                         -20-
Furthermore,        the    “petitioners     purchased          their         lots     without

notice    that      they   would   be    subjected        to    .    .       .    additional

affirmative        monetary    obligations        imposed       by       a       homeowners’

association.”        Id. at 561, 633 S.E.2d at 89.

       The         Association,         however,          citing                 Southeastern

Jurisdictional Admin. Council, Inc. v. Emerson, 363 N.C. 590,

598, 683 S.E.2d 366, 371 (2009) (holding an assessment amendment

was reasonable given the community, which was in existence for

nearly a century, was developed to foster a unique religious

character,       purchasers    purchased        lots    with        knowledge         of   the

extensive amenities and with notice that the lots were subjected

to a wide variety of detailed restrictions, and it was clear the

original intent of the parties was to bind all purchasers to any

rules    deemed       necessary    to     preserve        the       unique          religious

character and history of the community), argues the Assessment

Amendment     is     reasonable    in    light     of     Linville           Subdivision’s

unique characteristics and certain unanticipated circumstances.

       Specifically,        the    Association          distinguishes                Linville

Subdivision from the community in Armstrong on the grounds that

Linville Subdivision is a private community with private roads,

common areas, and amenities, all of which must be maintained and

paid    for   by    the    Association.         Quoting    the       Declaration,          the
                                            -21-
Association      further       argues      the     prevailing       intent       behind     the

Declaration’s original assessment provisions was to provide an

assessment    rate      that    was     adequate      to    meet     the    needs      of   the

Association.          The Association contends it was never intended,

nor anticipated, that builders would own unimproved lots and be

exempt from the full assessment rate for extended periods of

time.   The developer expected that all lots would be built on by

2011.   In fact, the Association points to a provision in builder

agreements    executed         by   plaintiffs        that      requires         builders    to

build   promptly       to    support       its     position      that      the    Assessment

Amendment is proper to address unanticipated circumstances.

      While    we       agree       with     the     Association           that     Linville

Subdivision      is    easily       distinguishable          from    the     community       in

Armstrong,     we      also     find       the     Assessment         Amendment        easily

distinguishable         from    the     amendment          at   issue      in     Armstrong.

Owners of lots in Linville Subdivision have been subjected to

assessments from the beginning.                  Unlike the amendments at issue

in   Armstrong      and     Emerson,       the   Assessment         Amendment       does    not

establish new assessments on the entire community, but instead

eliminates     benefits        afforded      builders;          benefits        that   likely

persuaded builders to purchase lots in the first place and were

essential to the original bargain.
                                         -22-
       We find it evident from the Declaration’s original language

that the intent of the provision providing builders with reduced

assessments and deferrals in the payment of assessments was to

encourage builders to purchase lots from the developer earlier

than    they   might    otherwise       have    purchased      them;     even    before

builders   were      ready   to   build.        Not    only    did   the   provisions

benefit builders, they also benefited the developer who was able

to sell the lots more expeditiously.                    In a complete reversal,

the    Assessment      Amendment     eliminated        the    benefits     that       were

essential to the original bargain with builders like plaintiffs.

       While the primary purpose of the assessment provisions in

the    Declaration     may   be    to   provide       sufficient     funds      for    the

Association     to     maintain     the    community          and    amenities,       the

Association     originally         approved      the     Declaration         with      the

benefits to builders included.                 Now that all lots in Linville

Subdivision are sold and the Association has the required number

of votes for amendment, the Association cannot now amend the

Declaration to the detriment of the builders who purchased lots

with the expectation that they would be afforded the benefits.

Moreover, with the exception of the easement                         for a separate

construction entrance, the costs that the Association claims it

cannot now afford because three out of the forty-four lots in
                                       -23-
Linville Subdivision do not pay the full assessment rate are

costs that should have been anticipated to begin with.                        Lastly,

we are not persuaded that the language in builder agreements

requiring builders to build promptly controls where the intent

of the Declaration’s original provisions are clear.                       Besides,

even if the builder agreements did control, this Court will not

determine what constitutes prompt as a matter of law.

       Where the Assessment Amendment disregards the purpose of

the Declaration’s original provisions and completely eliminates

the benefits to builders, we hold the amendment unreasonable,

invalid,     and   unenforceable.       Holding      otherwise        would    permit

homeowners’ associations to amend similar provisions whenever

they    acquire     the    requisite    number      of    votes   for    approval,

regardless of the original intent.             As our Supreme Court stated

in Armstrong, “[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.”           Armstrong, 360 N.C. at 561, 633 S.E.2d at

89.

       The trial court’s final judgment and order awarding the

Association attorneys’ fees were based on its grant of partial
                                       -24-
summary   judgment    upholding    the    Assessment   Amendment.      Having

determined the Assessment Amendment is unreasonable, invalid,

and unenforceable, we vacate the final judgment and the order on

attorneys’ fees.       Thus,    we do not address plaintiffs’ final

argument regarding the sufficiency of the trial court’s order on

attorneys’ fees.

                               III. Conclusion

      For the reasons discussed above, we affirm the denial of

the   Association’s    motion     to    dismiss,   reverse   the    grant   of

partial summary judgment, and vacate the final judgment and the

award of attorneys’ fees in favor of the Association.

      Affirmed in part, reversed in part, vacated in part.

      Judges McGee and GEER concur.