Court Opinion

ID: 6551986
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:28:13.945114+00
Date Added: 2024-06-11T15:56:07.970203
License: Public Domain

John B. Robbins, Judge, dissenting. This court upholds the trial court’s determination that in an election of the board of directors of Bella Vista Property Owners Association, only one vote may be cast for each lot in Bella Vista, even though a lot may have multiple owners. With all due respect to the learned chancellor and my fellow appellate judges, I must dissent. The fallacy of this decision can be illustrated with a hypothetical factual situation. Assume that a lot in Bella Vista is purchased by three brothers, John, Bill, and Jim Smith, and they take title as tenants in common, with each brother owning a one-third undivided interest. Assume further, that these brothers are not purchasing the lot as partners. The trial court’s holding, which is not found clearly erroneous by the majority of this court, limits the Smith brothers’ voting rights in an election for board of directors of the POA to one vote, collectively, for the three of them.1  The trial court and the majority of this court relied, primarily, on three sources of authority in reaching a decision, i.e., the Articles of Incorporation and Declaration of Covenants and Restrictions; an earlier case decided by this same chancery court in Buck v. Medin, No. E-88-441-2 (Benton County Chancery, May 25, 1988); and Ark. Code Ann. § 4-28-212(a) (1991). Sections 1 and 2, Article III, of the Declaration of Covenants and Restrictions, in pertinent part, are identical to Articles IV and V of the Articles of Incorporation, and provide that “every person or entity who is a record owner of a fee, or undivided fee, interest in any Lot . . . shall be a member. . . .” These documents further provide that in all elections other than for directors: [w]hen more than one person holds such interest or interests in any Lot or Living Unit all such persons shall be members,. . . but in no event shall more than one vote be cast with respect to any such Lot or Living Unit. This limitation of one vote per lot is conspicuously and significantly absent in the portion of this section which addresses voting rights in elections for directors and in contrast provides that “every member. . . shall be entitled to one vote in the election of directors. . . .” Consequently, by the plain meaning of this language, if a lot is owned by multiple members, such as the Smith brothers, each of these members is entitled to a vote in an election for the board of directors. However, a member may cast only one vote even though he owns or has an interest in more than one lot. The trial court construed the Articles of Incorporation and Declaration of Covenants and Restrictions to evidence an intent that only one vote per lot may be cast in an election of the board of directors. It specifically relied on the definition of a “member” and the requirement that a member be a person or entity owning a fee or undivided fee interest in a Lot or Living Unit, “who shall have paid the Developer in full for the purchase price of the Lot or Living Unit.” I fail to see, however, how this language could not, and does not, apply equally to the three Smith brothers who has each paid his pro rata share of the purchase price in full, as well as to an individual who purchases a lot in his sole name and pays the full purchase price. The obvious intent of this requirement is that a person does not become a member until the purchase price due the original developer is paid in full. The language of the Articles and Declaration is consistent with the first sentence of Ark. Code Ann. § 4-28-212(a) which provides; “each member shall be entitled to one (1) vote in the election of the board of the directors.” This analysis is the same as was apparently made by the Benton County Chancellor in a 1988 case involving the POA. Buck v. Medin, No. E-88-44-2. In that case, which was not appealed, the trial court held: 4. The said statute, covenants and articles adopt the principle of “one man, one vote” in the election of the directors of the Bella Vista property owners association; that is, that every member of the Association is entitled to one vote and no more in the election of directors. The “one lot, one vote” rule as well as other rules apply to other elections conducted for other purposes.” Not long after this decision, our legislature enacted Act 672 of 1989, the title of which suggested that it dealt with proxy voting. However, it also added a second sentence to Ark. Code Ann. § 4-28-212(a) and provided that in the election of a board of directors of a non-profit corporation, “where more than one (1) membership is held by a single entity, the member shall be entitled to one (1) vote for each such membership.” The majority of this court now holds that this one-sentence amendment accomplished not one, but two, very significant changes in elections of directors. Firstly, an owner of multiple lots now has a vote for each lot owned. This is consistent with the plain meaning of the language of this amendment. The second change, which the majority of this court agrees was accomplished by this amendment, is that multiple members/ owners of a single lot no longer have one vote each, as was provided by the Articles of Incorporation and Declaration of Covenants and Restrictions and clearly stated in the first sentence of Ark. Code Ann. § 4-28-212(a), but now may only participate with the other undivided interest members/owners of the lot in arriving at one collective vote for that lot. This, I submit, is judicial legislation. I believe Judge Cooper’s dissenting opinion in Palmer v. State, 31 Ark. App. 97, 103, 788 S.W.2d 248, 251-252 (1990) is relevant and a fitting commentary on the court’s majority opinion in this case: [O]ur role is not to legislate, but instead to apply the statutes of which the legislature has seen fit to enact according to their plain and unambiguous meaning. I believe that the majority has departed from that role by construing the statutes involved in such a way as to affirm the trial court’s action. This was wrong for several reasons. First, the statutes are unambiguous and require no construction or interpretation. Second, even if statutory construction has been required, we lack jurisdiction to perform that function under Rule 29 [now Rule 1-2] of the Rules of the Supreme Court and the Court of Appeals. Finally, even if these statutes actually required construction and we were authorized to do so, the construction adopted by the majority would be erroneous. The subject statute, the Articles of Incorporation and Declaration of Covenants and Restrictions, and the earlier decision in Buck v. Medin are clear and unambiguous, and we err by failing to apply their plain meaning. I would reverse the trial court’s decision because I believe all three sources of authority clearly recognize that each member/owner of a multiple-owner lot has one vote each in the election of the board of directors.2    The majority opinion suggests that this hypothetical situation is not presented in the case at bar, however, I believe the evidence suggests that it may be. Mr. Larry Frost, management analyst for the Bella Vista Property Owners Association, testified at the trial as follows: A. It [one ballot] goes to the person listed first on the deed. Q. That’s true of any multiple holding, whether they are tenant by the entirety, a husband and wife situation or a joint tenant or tenants in common, the first person on the deed gets one ballot? A. That’s correct. Furthermore, the trial court’s holding that “in the election for the Board of Directors, no more than one vote may be cast for each Lot” does not make exception for tenancies in common such as is presented by this hypothetical.    The majority makes an ad terrorem argument that an absurd situation could develop should each member who owned an undivided interest in a lot be entitled to a vote in an election for board of directors. If such result should occur, the POA could amend its articles and declaration, and seek legislative relief. Neither of such actions would be subject to the obstacle of “one member, one vote” which only applies to elections of the board of directors.