Court Opinion

ID: 4326498
Source: CourtListenerOpinion
Date Created: 2018-11-01 07:08:35.582891+00
Date Added: 2024-06-11T14:46:54.748620
License: Public Domain

FIFTH DIVISION
                                MCFADDEN, P. J.,
                              RAY and RICKMAN, JJ.

                    NOTICE: Motions for reconsideration must be
                    physically received in our clerk’s office within ten
                    days of the date of decision to be deemed timely filed.
                                http://www.gaappeals.us/rules

                                                                    October 25, 2018

In the Court of Appeals of Georgia
 A18A0860. HOMELIFE ON GLYNCO, LLC et al. v. GATEWAY
      CENTER COMMERCIAL ASSOCIATION, INC.

      RICKMAN, Judge.

      Gateway Center Commercial Association, Inc. (the “Association”) sued

Homelife on Glynco, LLC and Homelife Companies, Inc. (collectively, “Homelife”)

for failure to pay assessments allegedly owed under a Declaration of Covenants,

Conditions and Restrictions. The parties filed cross motions for summary judgment,

and the trial court granted the Association’s motion for summary judgment in part,

denied it in part, and denied Homelife’s motion for summary judgment. Homelife

appeals, contending that the trial court erred in determining that its properties were

properly annexed into the Association, failing to find that two of its lots were not

subject to assessment, failing to find that the assessments were invalid, and failing to
grant summary judgment on the Association’s claim for unjust enrichment. For

reasons that follow, we affirm in part and reverse in part.

      Summary judgment is warranted when there is no genuine issue of material fact

and the moving party is entitled to judgment as a matter of law. OCGA § 9-11-56 (c).

“On appeal from the grant or denial of summary judgment, we conduct a de novo

review, with all reasonable inferences construed in the light most favorable to the

nonmoving party.” (Citations and punctuation omitted.) Smith v. Found, 343 Ga. App.

816, 817 (806 SE2d 287) (2017).

      The record shows that the Association was organized in November 1995 to

manage and oversee an association of commercial properties located in a planned

business district along the Glynco Parkway Corridor, in accordance with a

Declaration of Covenants, Conditions and Restrictions for Gateway Center

Commercial Properties (the “Declaration”). As part of its role in managing and

overseeing the properties, the Association assesses and collects quarterly dues.

      The Declaration was recorded in the Glynn County, Georgia property records

in November 1995. Pursuant to the terms of the Declaration, the property described

in Exhibit A thereto and any additional property subjected to the Declaration by

Supplemental Declaration was subject to the easements, restrictions, covenants and

                                          2
conditions set forth in the Declaration, including the obligation to pay assessments

levied by the Association. Exhibit B to the Declaration described property that was

subject to annexation, which included the properties now owned by Homelife.

      Pursuant to Article X of the Declaration,

      until all property described in Exhibit “B” has been subjected to this
      Declaration or 50 years after the recording of this Declaration,
      whichever is earlier, Declarant may unilaterally subject to the provisions
      of this Declaration all or any portion of the real property described in
      Exhibit “B. . . . Such annexation shall be accomplished by filing a
      Supplemental Declaration describing the property to be annexed in the
      Official Records.1 Such Supplemental Declaration shall not require the
      consent of Members [of the Association], but shall require consent of
      the owner of such property, if other than Declarant.

A Supplemental Declaration is defined as “an instrument filed in the Official Records

pursuant to Article X which subjects additional property to this Declaration.” Official

Records are defined as “the Office of the Clerk of the Superior Court of Glynn

County, Georgia, or such other place which is designated as the official location for

recording of deeds and similar documents affecting title to real estate.”

      1
        Annexation in this context refers to the process whereby property is annexed
to or subjected to the Declaration.

                                          3
      U. C. Realty Corp. was the initial Declarant under the Declaration and served

as Declarant from 1995 to 2003, when it assigned its status as Declarant to HRB,

LLC. In October 1996, U. C. Realty Corp. conveyed Lot 2A in the Gateway Center

development to Fairhaven Assisted Living Center, L.P., and Lots 2B and Lot 2C to

Fairhaven Eldercare, L.L.C. via limited warranty deeds that were recorded in the

Glynn County, Georgia property records. Lots 2B and 2C were ultimately conveyed

to Fairhaven Assisted Living Center, L.P. (“Fairhaven”). Each deed stated that

      [t]his conveyance is subject to that Declaration of Covenants,
      Conditions and Restrictions of Gateway Center Commercial Properties,
      dated November 8, 1995, recorded in the Office of the Clerk of the
      Superior Court, Glynn County, Georgia, . . . together with those
      Gateway Center Development Guidelines dated November 9, 1995,
      promulgated pursuant thereto, as same may be amended from time to
      time.”

According to Ricky Mitchell, the current president of the Association, subsequent to

this conveyance, Fairhaven paid quarterly dues to the Association for over fifteen

years and participated in regular Association meetings.

      In June 2013, Fairhaven’s owner passed away and her relatives sought a buyer

for the assisted living facility. Don Rankey, President and CEO of Homelife

Companies, Inc. and manager of Homelife on Glynco, LLC, entered into discussions

                                         4
with the former owner’s relatives. Fairhaven and Homelife ultimately entered into an

asset purchase agreement and a management agreement so that Homelife could

manage the facility prior to completing the asset purchase. On October 23, 2013,

Fairhaven executed two warranty deeds – one conveyed Lot 2A of the Gateway

Center to Homelife on Glynco, LLC and one conveyed Lots 2B and 2C of the

Gateway Center to Homelife Companies, Inc. Both deeds stated that “[t]his

conveyance and the warranties herein contained are expressly made subject to those

liens, encumbrances, restrictions and other matters set forth on Exhibit “B” attached

hereto and incorporated herein by reference.” The Declaration was listed as a

permitted exception on Exhibit B to both deeds.

      After this transaction, the Association continued to send quarterly invoices for

assessments to the local address for both Homelife entities. Homelife did not pay the

invoices, some of which were refused and returned to sender. In October 2014, the

Association sued both Homelife entities for breach of contract for failing to pay

assessments, and, in the alternative, unjust enrichment, seeking to recover the unpaid

assessments, interest, and attorney fees. The Association also asserted a lien

foreclosure claim against Homelife on Glynco. Homelife answered and asserted a

counterclaim for breach of contract based on the Association’s alleged lack of

                                          5
maintenance, failure to maintain the common area, failure to provide proper notice

of meetings, taking corporate action at meetings without proper authority, and

improperly calculating assessments. Homelife on Glynco also asserted a claim for

slander of title.

       Following discovery, Homelife moved for summary judgment. The Association

filed a cross-motion for partial summary judgment, seeking a ruling that the Homelife

properties have been annexed into the Association and are subject to assessment,

dismissing Homelife’s slander of title claim, and dismissing Homelife’s claim for

attorney fees. The trial court determined that all of the lots owned by Homelife were

subject to the Declaration, which requires the payment of assessments. The trial court

further determined that “the remaining issues on which summary judgment has been

sought are not ripe for summary adjudication at this time,” and stated that “[b]ecause

there is a potential for offsetting claims for attorney fees, the Court will defer

consideration of that issue until the conclusion of the case.” Homelife appeals from

that order.

       1. Homelife contends that the trial court erred by misinterpreting the language

of the U. C. Realty deeds and concluding that they constituted a Supplemental

Declaration that annexed the Homelife properties into the Association. Homelife

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argues that the language in the U. C. Realty deeds stating that “this conveyance is

subject to th[e] Declaration” is ambiguous and merely provided notice that the

Homelife properties were subject to being annexed into the Association, pointing out

that the deeds do not specifically state that the Homelife properties are being annexed.

          To construe the Declaration and the U. C. Realty Corp. deeds, we apply the

normal rules of contract construction and our application of those rules is de novo.2

See Crabapple Lake Parc Community Assn. v. Circeo, 325 Ga. App. 101, 104-105 (1)

(a) (751 SE2d 866) (2013); Nesbitt v. Wilde, 306 Ga. App. 812, 813 (703 SE2d 389)

(2010).

      The cardinal rule of construction is to ascertain the intent of the parties.
      Where the contract terms are clear and unambiguous, the court will look
      to that alone to find the true intent of the parties. To determine the intent
      of the parties, all the contract terms must be considered together in
      arriving at the construction of any part, and a construction upholding the
      contract in whole and every part is preferred. When the language
      employed by the parties in their contract is plain, unambiguous, and
      capable of only one reasonable interpretation the language used must be

      2
        As a result, we need not address Homelife’s contention that the trial court
misapplied the rules of contract construction to the Declaration and the U. C. Realty
Corp. deeds. See Crabapple Lake Parc Community Assn. v. Circeo, 325 Ga. App.
101, 104 (1) (751 SE2d 866) (2013).

                                           7
      afforded its literal meaning and plain ordinary words given their usual
      significance.

(Citation and punctuation omitted.) Crabapple Lake, 325 Ga. App. at 105 (1) (a); see

also S-D RIRA, LLC v. Outback Property Owners’ Assn., 330 Ga. App. 442, 453 (3)

(c) (765 SE2d 498) (2014) (“If the manifest intent of the parties can be ascertained

from the covenants as a whole, no ambiguity exists, and there is no need for judicial

construction.”) (citation and punctuation omitted).

      Pursuant to Article X of the Declaration, annexation of all or any portion of the

real property described in Exhibit B to the Declaration shall be accomplished by the

Declarant filing a Supplemental Declaration describing the property to be annexed

in the Official Records. A Supplemental Declaration is an instrument filed in the

Official Records pursuant to Article X that subjects additional property to the

Declaration. While serving as the Declarant, U. C. Realty Corp. conveyed its

ownership interests in Lots 2A, 2B, and 2C to Fairhaven via two limited warranty

deeds. Although not titled a “Supplemental Declaration,” the U. C. Realty Corp.

deeds contain all of the required elements for a Supplemental Declaration – the deeds

state that the conveyances described therein are subject to the Declaration, contain

                                          8
property descriptions of each lot conveyed, and were filed in the Glynn County,

Georgia property records.

       Homelife contends that the reference to the Declaration in the U. C. Realty

Corp. deeds is ambiguous and could be construed to mean that the property is not

actually subject to the Declaration, but subject to future annexation. We disagree.

       “Because few titles are absolutely perfect, a warranty deed typically includes

a ‘subject to’ clause and specifies encumbrances that will not be cured or defended

by the grantor.” Great Water Lanier, LLC v. Summer Crest at Four Seasons on

Lanier Homeowners Assn., 344 Ga. App. 180, 187 (1) (811 SE2d 1) (2018). “[T]he

usual and common meaning of [such] terms as used in warranty deeds controls our

analysis.” Id. When the lots were owned by U. C. Realty Corp., they were property

that could be subjected to the Declaration by Supplemental Declaration. When U. C.

Realty Corp., as Declarant, conveyed the lots to Fairhaven, it expressly made the

conveyances “subject to” the Declaration, which meant the lots were to be held, sold,

and conveyed subject to the easements, restrictions, covenants, and conditions set

forth therein. On this issue, we discern no ambiguity in the deeds and therefore

“confine ourselves to the four corners of the document to ascertain the parties’

intent.” Id.

                                          9
      Fairhaven accepted deeds that expressly made its interests in the conveyed

property subject to the terms of the Declaration and the development guidelines. “By

accepting a deed with covenants and restrictions, the grantee consents to be bound by

such covenants and restrictions.” Interchange Drive, LLC v. Nusloch, 311 Ga. App.

552, 557 (716 SE2d 603) (2011); see Great Water Lanier, 344 Ga. App. at 188 (by

accepting deed that unambiguously conveyed the parcel subject to the declaration of

covenants, Great Water voluntarily consented to be bound by such covenants). The

fact that the deeds did not contain the terms “Supplemental Declaration” or

“annexation” did not render the Declaration inapplicable to Homelife’s predecessor

in title. See Interchange Drive, 311 Ga. App. at 556 (failure to follow exact wording

used to define a supplemental declaration did not render Covenants inapplicable).

      Fairhaven’s subsequent conveyance of the lots to Homelife was also made

subject to the Declaration because a grantor in a deed can convey only that which it

owns and a grantee takes no greater title than that held by the grantor. See Great

Water Lanier, 344 Ga. App. at 186 (1); Interchange Drive, 311 Ga. App. at 557. In

addition, the deeds from Fairhaven to Homelife expressly stated that the conveyances

were subject to the Declaration. Accordingly, the trial court properly determined that

                                         10
the Homelife properties are subject to the easements, restrictions, covenants, and

conditions set forth in the Declaration.

      2. Homelife contends that the trial court erred in determining that Fairhaven’s

consent to the alleged annexation was not required to be in writing. Homelife relies

on OCGA § 44-5-60 (d) (4), which provides that “[n]otwithstanding any other

provision of this Code section or of any covenants with respect to the land, no change

in the covenants which imposes a greater restriction on the use or development of the

land will be enforced unless agreed to in writing by the owner of the affected property

at the time such change is made.”

      This code section is inapplicable here because, contrary to Homelife’s

arguments, the deeds conveying the lots to Fairhaven did not change the covenants

with respect to the land after Fairhaven acquired it, but merely applied the existing

covenants when the property was conveyed to Fairhaven. Cf. Charter Club on River

Home Owners Assn. v. Walker, 301 Ga. App. 898, 900 (689 SE2d 344) (2009)

(Because amendment to declaration of protective covenants prohibits a specific use

of the property that was specifically within homeowner’s ownership rights when she

purchased the property and homeowner did not consent to amendment, OCGA § 44-

5-60 (d) (4) renders the amendment inapplicable to homeowner). Further, it is well

                                           11
settled that “‘[w]hen a grantee accepts a deed, he is bound by the covenants contained

therein even though the deed has not been signed by him.’” Great Water Lanier, 344

Ga. App. at 186 (1), quoting OCGA § 44-5-39. Thus, Fairhaven’s consent to the

annexation was not required to be in writing.

      3. Homelife contends that the trial court erred by concluding that Lots 2B and

2C are assessable under the Declaration. Homelife argues that the lots are

undevelopable and therefore not subject to assessment.

      Pursuant to the Declaration, the Association is authorized “to levy assessments

against each Parcel for Association expenses as the Board may specifically authorize

from time to time.” “Parcel” is defined as

      a portion of the Properties, whether improved or unimproved, which
      may be independently owned and conveyed and which is intended for
      development, use and occupancy for purposes consistent with this
      Declaration, any other covenants, and applicable zoning. The term shall
      refer to the land, if any, which is part of the Parcel as well as any
      improvements thereon. . . . If any Parcel is subdivided or resubdivided,
      whether by plat or deed, each such subdivision shall be considered a
      Parcel and votes and liability for assessments shall be recomputed for
      each subdivision. . . .

                                         12
“Properties” includes “the real property described in Exhibit “A,” together with any

such additional property as annexed to this Declaration.” Assessment obligations

under the Declaration are based on the number of “Equivalent Units” assigned to a

particular Parcel relative to all other Parcels subject to a particular assessment. For

each Parcel, Equivalent Units are derived by ascertaining the number of square feet

of usable land for development and the square footage of any enclosed structures.

      Parcel CR4 of the Gateway Center development includes Lots 2A, 2B, and 2C.

Homelife contends that none of the property in Lots 2B and 2C is usable land for

development and is therefore not subject to being assessed. Homelife relies on the

deeds in the chain of title and an affidavit from Jimmy Hudspeth, an architect hired

by Homelife to prepare a preliminary site plan for a possible addition to the facility

on Lot 2A. The deeds conveying Lots 2B and 2C from U. C. Realty Corp. to

Fairhaven contain a restriction – “no improvements may be erected upon or placed

upon this property for a period of 20 years from the date of this conveyance.” That

restriction is repeated in subsequent deeds in the chain of title dated January 2000 and

March 2008, each time adding a new 20-year period. The conveyance of Lots 2B and

2C from Fairhaven to Homelife is subject to the reservations and restrictions

contained in those January 2000 and March 2008 deeds. According to Hudspeth, Lots

                                          13
2B and 2C consist primarily of a lake and property controlled by the U. S. Army Corp

of Engineers, or wetlands, and are therefore not developable.

      The Association responds that Lots 2B and 2C consist primarily of wetlands

controlled by the U. S. Army Corp of Engineers and approximately 14,721 square feet

of developable land, and that it has consistently assessed Fairhaven and Homelife

based on 188,963 square feet of usable land (174,242 for Lot 2A and 14,721 for Lots

2B and 2C) and 32,600 square feet for the structure on Lot 2A. According to

Mitchell, the Association has never assessed wetlands, ponds, lakes or anything under

the control of the Army Corp of Engineers.

      The trial court granted summary judgment to the Association on its claim that

a portion of Lots 2B and 2C are subject to assessment, concluding that covenants

applicable to property cannot be evaded by subdividing the property and obtaining

separate deeds for the parcels. Homelife did not, however, subdivide the property; it

merely divided ownership of the lots between two entities. The trial court erred in

granting summary judgment to the Association on this claim. An issue of fact remains

as to whether any portion of Lots 2B and 2C in Parcel CR4 can be considered usable

land for development and therefore subject to assessment under the Declaration.

                                         14
      4. Homelife contends that the trial court erred in failing to find that the

assessments at issue were invalid. Homelife argues that the Board was improperly

appointed without a quorum and cannot issue valid assessments, and that any actions

taken at meetings for which proper notice was not given are void and unenforceable.

      The Board of Directors is responsible for administration of the Association.

Pursuant to the Declaration, the Class “B” member is entitled to appoint a majority

of the members of the Board during the Class “B” Control Period. The Class “B”

Control Period ends 30 years after the Declaration is recorded or when the Class “B”

member so determines. The Declarant is the sole Class “B” member until the Class

“B” membership terminates, which occurs two years after termination of the Class

“B” Control Period or when the Class “B” member so determines and declares in a

recorded instrument. The Bylaws provide that, during the Class “B” Control Period,

the Board shall consist of three to five directors and that the directors shall be

selected by the Class “B” member. Once the Class “B” membership terminates, the

Class “A” members, defined as all parcel owners, are entitled to elect all directors to

the Board.

      Homelife contends that HRB, as Declarant, was required to appoint at least

three directors to the Board, and that its failure to do so meant that the Board was

                                          15
improperly appointed. The Association responds that the Class “B” Control Period

ended when U. C. Realty Corp. so determined, which occurred when it sold 51% of

its property in the development; that the Class “B” membership terminated two years

thereafter; that HRB therefore had no responsibility for appointing directors during

the time period at issue; and the directors were instead elected by the Class “A”

members.3

      Homelife also contends that the Board was elected without a quorum because

Mitchell admits that attendance at Association meetings “can be minimal and at times

does not reach a quorum of twenty-five percent (25%) of the total Class A Members,

so that a mail in or proxy vote is often used.” The Association’s Bylaws, however,

provide that “[a]t all meetings of the Members, Members may vote in person . . . or

by proxy, subject to the limitations of State of Georgia law.”

      Homelife further contends that the Association has failed to follow the

requirements for nominating directors to the Board by failing to utilize a formal

nominating committee. Section 3.4 of the Bylaws provides that “[e]xcept with respect

      3
         The Association’s brief is somewhat unclear on this point, but the essence of
its position, based in part on communications between Mitchell and a principal with
the former Declarant, U. C. Realty Corp., appears to be that when HRB assumed all
duties and obligations of U. C. Realty Corp. as Declarant in 2003, the Declarant was
no longer responsible for appointing directors to the Board.

                                          16
to directors selected by the Class “B” member, nominations for election to the Board

shall be made by a Nominating Committee.” That same section provides that

nominations shall also be permitted from the floor, which is consistent with how the

Association asserts that it has obtained such nominations.

      Finally, Homelife contends that the Association failed to give proper notice of

meetings of the Board as required by Section 3.14 of the Bylaws, which requires that

notice of Board meetings shall be posted at least 48 hours in advance of the meeting

at a conspicuous place within the [property subject to the Declaration],” and that

Homelife received no notice of the meetings of the Board. Mitchell testified that he

did not recall having separate meetings of the Board of Directors, but instead that

Association business was conducted at the annual membership meeting, and that

notice of those meetings was given in accordance with the Bylaws.

      Construing the record in the light most favorable to the Association, the

nonmovant on this claim, we conclude that issues of fact remain as to whether the

Association complied with the terms of the Declaration and the Bylaws with respect

to appointing and electing directors to the Board and providing notice of meetings.

Accordingly, the trial court did not err in denying Homelife’s motion for summary

judgment on its claim that the assessments at issue were invalid. See generally

                                         17
Skylake Property Owners Assn. v. Powell, 281 Ga. App. 715, 720 (2) (637 SE2d 51)

(2006).

      5. Homelife contends that the trial court erred in failing to find that the

Declaration precludes the Association’s claim for unjust enrichment.

      “The doctrine of unjust enrichment applies in the absence of a written contract

between parties; where such a contract exists, however, it is the contract that governs

the dispute and neither party can rely on the doctrine of unjust enrichment.” S-D

RIRA, LLC, 330 Ga. App. at 452 (3) (b). We have determined that the Homelife

properties are subject to the easements, restrictions, covenants, and conditions in the

Declaration. Thus, the Association’s claims in this case are governed by the relevant

contractual documents, including the Declaration, Bylaws, and the deeds in the chain

of title, and unjust enrichment is inapplicable. See id. Accordingly, Homelife is

entitled to summary judgment on this claim.

      6. Homelife contends that the trial court erred in finding or suggesting that the

Association has a viable claim for recovery of attorney fees because Homelife’s

positions in this case lack merit, are frivolous, and lack a good faith basis. The trial

court, however, specifically deferred ruling on the potential offsetting claims for

attorney fees. “Where there is no final ruling upon an issue by the trial court, there is

                                           18
nothing for the appellate court to pass upon, for this court is a court for the correction

of errors made in the trial court.” (Citation and punctuation omitted.) Mayo v. City of

Stockbridge, 285 Ga. App. 58, 62-63 (5) (b) (646 SE2d 79) (2007). Accordingly, this

contention presents nothing for our review.

      7. The Association contends that the trial court should have ruled on its motion

to dismiss Homelife on Glynco’s slander of title claim. “The general rule is that an

appellee must file a cross-appeal to preserve enumerations of error concerning

adverse rulings.” (Citations and punctuation omitted.) Coen v. Aptean, Inc., 346 Ga.

App. 815, 826 (4) (816 SE2d 64) (2018). An appellate court may, however, consider

“a ruling that becomes material to an enumeration of error urged by an appellant.”

(Citation and punctuation omitted.) Id. The Association’s slander of title argument

is not material to any enumeration of error argued by Homelife. As a result, we will

not consider the Association’s argument without the required cross-appeal.

      Judgment affirmed in part and reversed in part. McFadden, P. J., and Ray, J.,

concur.

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