Court Opinion

ID: 9781279
Source: CourtListenerOpinion
Date Created: 2023-08-30 16:28:18.16615+00
Date Added: 2024-06-11T07:34:23.436101
License: Public Domain

HUNTER, Robert C., Judge,
concurring in part and dissenting in part.
I agree with the majority’s conclusion that this case must be vacated and remanded to the trial court for a proper determination regarding the costs of those renovations which were “exclusively” for the benefit of the condominium unit owned by respondents Jeffrey J. Johnson, Donna N. Johnson, Gary Proffit, and Jo Proffit. I likewise concur in vacating the trial court’s order awarding attorney’s fees to respondents due to the lack of jurisdiction to enter such an order. I disagree, however, with the majority’s holding that the trial court correctly concluded that petitioner Starboard Association, Inc.’s assessment was “unlawful” because it was not uniform and not levied on a pro rata basis. Consequently, I respectfully dissent.
Starboard filed this action to foreclose on the claims of lien asserted against respondents ownership interest in the condominium unit located in Building 33 of the Starboard by the Sea condominium complex in Ocean Isle, North Carolina. The foreclosure proceedings were initiated under N.C. Gen. Stat. § 45-21.16 (2009) based on respondents’ alleged “failure to timely pay assessments and other charges levied by [Starboard].”
According to N.C. Gen. Stat. § 45-21.16(d), “there are only four issues before the clerk at a foreclosure hearing: [1] the existence of a valid debt of which the party seeking to foreclose is the holder, [2] the existence of default, [3] the trustee’s right to foreclose, and [4] the sufficiency of notice to the record owners of the hearing.” In re Foreclosure of Helms, 55 N.C. App. 68, 71, 284 S.E.2d 553, 555 (1981), disc. review denied, 305 N.C. 300, 291 S.E.2d 149 (1982); accord In re Foreclosure of Brown, 156 N.C. App. 477, 489, 577 S.E.2d 398, 406 (2003) (“In a foreclosure proceeding, the [petitioner] bears the burden of proving that there was a valid debt, default, right to foreclose under power of sale, and notice.”). “ ‘On appeal from a determination by the clerk that the trustee is authorized to proceed, the judge of the district or superior court having jurisdiction is limited to determining [de novo] the same four issues resolved by the clerk.’ ” In re Adams, — N.C. App. —, —, 693 S.E.2d 705, 709 (2010) (quoting In re *547Foreclosure of Burgess, 47 N.C. App. 599, 603, 267 S.E.2d 915, 918, appeal dismissed, 301 N.C. 90, — S.E.2d — (1980)).
After this matter was transferred to superior court from the clerk of court, the court conducted a bench trial where, at the close of Starboard’s evidence, it granted respondents’ motion for involuntary dismissal pursuant to Rule 41(b), ruling that Starboard had failed to establish the existence of a valid debt under N.C. Gen. Stat. § 45-21.16(d)’s first prong. With respect to the validity of the debt, the trial court found that in 2005, Starboard contracted for the renovation of Buildings 1 through 32, but not Building 33; that Starboard imposed a special assessment against the owners of the units in Buildings 1 through 32; that in 2007, Starboard contracted for the repair and renovation of Building 33; that Starboard levied a special assessment against the unit owners of Building 33, including respondents, in the amount of $54,000.00 per unit; that the total cost of the renovations to Buildings 1 through 33 was $5,074,000.00; and, that “applying the Respondent’s [sic] common area percentage ownership interest[] to this total would have resulted in an assessment against Respondents of $53,865.54, just $134.46 less than the actual assessment against Respondents for the Building 33 renovations alone.” Based on these findings, the trial court concluded:
2. The assessment by the Board of Directors of Starboard against the Respondents’ unit for the Building 33 renovations was unlawful in that it was not computed in accordance with Respondent’s [sic] percentage undivided interest in the common areas and facilities, as required by § 47A-6 and 47A-12 of the N.C. Unit Ownership Act, Chapter 47A of the North Carolina General Statutes, and the Declaration of Condominium for Starboard By The Sea.
3. The Board of Directors did not have the authority to assess the cost of renovations for Building 33 solely against the units located in Building 33, despite the fact that Respondents and other owner[s] of units located in Building 33 requested such renovations.
[4] The alleged debt which forms the basis for the claim of hen and foreclosure of the Petitioner against Respondents’ unit is therefore invalid.
The trial court, consequently, dismissed with prejudice Starboard’s foreclosure action.
*548In concluding that the debt based on Starboard’s claim of lien was invalid, the trial court determined, and the majority agrees, that Starboard violated N.C. Gen. Stat. § 47A-12 (2009) and Article XXIII of the amended Declaration of Condominium in that the challenged assessment was not uniform and was not levied on a pro rata basis. The statute provides in pertinent part:
The unit owners are bound to contribute pro rata, in the percentages computed according to G.S. 47A-6 of this Article, toward the expenses of administration and of maintenance and repair of the general common areas and facilities and, in proper cases of the limited common areas and facilities, of the building and toward any other expense lawfully agreed upon. No unit owner may exempt himself from contributing toward such expense by waiver of the use or enjoyment of the common areas and facilities or by abandonment of the unit belonging to him.
N.C. Gen. Stat. § 47A-12. Section A of Art. XXIII of the Declaration provides in pertinent part:
All assessments levied against the Unit Owners and their Condominium Units shall be uniform and, unless specifically otherwise provided for in this Declaration of Condominium, all assessments made by the Association shall be in such an amount that any assessment levied against a Unit Owner and his Condominium Unit shall bear the same ratio to the total assessment made against all Unit Owners and their Condominium Units as the undivided interest in Common Property appurtenant to each Condominium bears to the total undivided interest in Common Property appurtenant to all Condominium Units.
Respondents argued at trial, and the majority appears to agree, that respondents are not obligated to pay for any of the renovations (except for the “exclusive” benefit renovations) because the costs of both phases of the renovations were not aggregated and apportioned pro rata in a single, uniform assessment of all unit owners at the conclusion of all the work, but rather each unit owner was assessed piecemeal at the conclusion of the phase of the renovations affecting the owner’s unit. Neither § 47A-12 nor Declaration Art. XXIII, Sec. A mandate such a severe result. Notably, both § 47A-12 and the declaration focus on the ultimate outcome of the assessment process, not the process itself. N.C. Gen. Stat. § 47A-12 only requires unit owners to “contribute pro rata” according to their calculated share; it does not impose any restrictions on owners’ associations regarding the *549sequencing of assessments. (Emphasis added.) Nor does any other provision of the Unit Ownership Act dictate the procedure through which an owners’ association may assess unit owners so long as the “work” is “carried out” in compliance with the Act and the association’s declaration. N.C. Gen. Stat. § 47A-6. Similarly, Sec. A, Art. XXIII of Starboard’s Declaration merely requires “uniform” assessments levied in accordance with the specified ratio.
Here, Starboard’s assessment was clearly uniform in that the record indicates that all unit owners were assessed. And each unit owner was ultimately assessed on a pro rata basis. To be candid, as the trial court found and Starboard concedes, Starboard miscalculated respondents’ assessment by $134.46. The majority appears to hold, however, that this minor discrepancy ($54,000.00 versus $53,865.54) warrants finding the entire assessment void. Our Supreme Court’s reasoning in Dunes South Homeowners Assn. v. First Flight Builders, 341 N.C. 125, 459 S.E.2d 477 (1995), one of the few appellate decisions dealing with the Unit Ownership Act, does not support the majority’s holding. In Dunes South Homeowners Assn., 341 N.C. at 130, 459 S.E.2d at 480, the Court held that a condominium developer, as a unit owner, could not “unilaterally exempt itself from the payment of its pro rata share of the maintenance expenses for the common areas” under § 47A-12. As the Court noted, the overarching goal of Unit Ownership Act is to “ensure the orderly, reliable and fair government of condominium projects and to protect each owner’s interest in his or her own unit as well as the common areas and facilities.” Id. at 130, 459 S.E.2d at 479. To that end, the Court concluded that the statute was intended to be a shield to “protect unit owners from shouldering a disproportionate share of the maintenance expenses for common areas” not a sword to allow unit owners to escape paying their pro rata share of community expenses. Id. at 130, 459 S.E.2d at 479. Yet, to borrow Dunes South Homeowners Assn.’s words, “[tjhis is exactly what [respondents] attempted to do.” Id. at 130-31, 459 S.E.2d at 480.
In the end, all 33 buildings were renovated and each unit owner was assessed approximately their pro rata share of the costs of those renovations. The fact that the amount of respondents’ assessment was incorrectly calculated does not require invalidating the entire debt on the assessment. Rather, as this Court has held, N.C. Gen. Stat. § 45-21.16(d) “permit[s] the clerk to find a valid debt of which the party seeking to foreclose is the holder if there is competent evidence that the party seeking to foreclose is the holder of some valid debt, *550irrespective of the exact amount owed.” Burgess, 47 N.C. App. at 603, 267 S.E.2d at 918 (citation and internal quotation marks omitted) (emphasis added).
The $134.46 difference between respondents’ actual assessment and the amount their assessment would have been if Starboard had aggregated the renovation costs on all 33 buildings before levying the assessments underscores the illogic of respondents’ argument and the majority’s holding. The per unit expense of the renovations of all 33 buildings was substantially the same — approximately $54,000.00— irrespective of whether the assessment based on that per unit expense was levied at the end of the first phase of the renovations or at the end of all the renovations. Neither § 47A-12 nor Dunes South Homeowners Assn. mandate hyper-technical compliance at the expense of “ensur[ing] the orderly, reliable and fair government of condominium projects . . . .” Id. at 130, 459 S.E.2d at 479 (emphasis added).
Moreover, despite the majority’s reliance on Dunes South Homeowners Assn. for the proposition that § 47A-12 is “designed to protect unit owners from shouldering a disproportionate share of the maintenance expenses for common areas,” 341 N.C. at 130, 459 S.E.2d at 479-80 (emphasis added), that is precisely the result dictated by the majority’s holding. Because the majority affirms the trial court’s dismissal of Starboard’s foreclosure action against respondents, all the other condominium unit owners will necessarily be forced to “shoulder[]” the cost of respondents unpaid assessment. This makes no sense and clearly conflicts with the legislative intent behind § 47A-12. Consequently, I would hold that the trial court erred in concluding that the challenged assessment was unlawful, reverse the trial court’s order dismissing the foreclosure action, and remand the case for further proceedings in accordance with N.C. Gen. Stat. § 45-21.16.
Furthermore, in simply concluding that the assessment was “unlawful” under the Unit Ownership Act and Starboard’s Declaration, the majority fails to address Starboard’s independent argument that the trial court erred in determining that Starboard could not assess the units located in Building 33 — including respondents’ unit — for the renovations done to that building “despite the fact that Respondents and other owner[s] of units located in Building 33 requested such renovations.” This Court has held that assessments may be imposed under an implied contract theory where the governing owners’ association declaration does not provide for the assess*551ments. See Miles v. Carolina Forest Ass’n, 141 N.C. App. 707, 714, 541 S.E.2d 739, 742 (2001) (holding invalid extension of declaration which authorized assessments against owners in subdivision, but remanding case for “trial court to address whether all of the plaintiffs have impliedly agreed to pay for maintenance, upkeep and operation of the roads, common areas and recreational facilities within the subdivision, and if so, in what amount”). Generally, “ ‘[a]n implied in law contract will... lie wherever one man has been enriched or his estate enhanced at another’s expense under circumstances that, in equity and good conscience, call for an accounting by the wrongdoer.’ ” Id. at 713, 541 S.E.2d at 742 (quoting Ellis Jones, Inc. v. Western Waterproofing Co., 66 N.C. App. 641, 646, 312 S.E.2d 215, 218 (1984)). Here, however, the trial court simply concluded that because the Declaration did not authorize the assessment based on the renovations of Building 33, Starboard could not assess respondents. As Starboard argued at trial in opposition to respondents’ motion for involuntary dismissal, there is evidence in the record that respondents — as well as other Building 33 owners — made a request to Starboard that their building be renovated and that Starboard resultantly incurred the cost of performing the requested renovations. Under Miles, there is an issue as to whether a contract implied in law existed between Starboard and respondents for the renovation of Building 33. As the trial court did not address this issue in its order, believing that the Declaration did not authorize the assessment, I would direct the trial court to make findings of fact and conclusions of law on this issue on remand.