Court Opinion

ID: 4290328
Source: CourtListenerOpinion
Date Created: 2018-06-29 20:53:37.354291+00
Date Added: 2024-06-11T14:38:07.964929
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE                                       06/29/2018
                            AT NASHVILLE
                               February 21, 2017 Session

     LEIGH ANN URBANAVAGE, ET AL. v. CAPITAL BANK, ET AL.

                Appeal from the Chancery Court for Davidson County
                  No. 14-604-IV     Russell T. Perkins, Chancellor
                      ___________________________________

                           No. M2016-01363-COA-R3-CV
                       ___________________________________

Homeowners in housing development brought suit against their homeowners association,
its directors and the bank that assumed management of the development after the
developers defaulted on their loans used to finance the development; the homeowners
sought damages and other relief arising from the defendants’ alleged failure to fulfill their
obligations to properly maintain the subdivision. Plaintiffs asserted claims for tortious
interference with their contract rights, breach of fiduciary duties, invalid liens, and
slander of title. The court granted summary judgment to the defendants on the various
claims, and plaintiffs appeal. We reverse the grant of summary judgment to the bank on
plaintiffs’ claim of tortious interference, and to the homeowners association on its
counterclaim for recovery of delinquent assessments; we vacate the award of counsel fees
to the association and the order quashing the notice of deposition of a director of the
association and the association’s counsel; in all other respects we affirm the judgment.

 Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
          in Part, Vacated in Part, and Reversed in Part; Case Remanded

RICHARD H. DINKINS, J., delivered the opinion of the court, in which FRANK G.
CLEMENT, JR., P.J., M.S., and ANDY D. BENNETT, J., joined.

Robert E. Motsenbocker, Thompson’s Station, Tennessee, for the appellants, Leigh Ann
Urbanavage and Amanda Falk Cook.

Sam J. McAllester, Anne C. Martin, and Mandy Strickland Floyd, Nashville, Tennessee,
for the appellee, Capital Bank.

Thomas H. Peebles, IV, and Jacquelyne D. Fiala, Nashville, Tennessee, for the appellee,
Carothers Crossing Neighborhood Association, Inc.

Samuel T. Bowman and Sarah D. Murray, Nashville, Tennessee, for the appellees,
Carothers Crossing Neighborhood Association, Inc., Lonnie E. Malone, Jim D. Evans,
and Ann Vanderhoof.
                                                  OPINION

                           I. FACTUAL AND PROCEDURAL BACKGROUND

        From December 14, 2005 through January 7, 2008, Wood Ridge Development
Inc., (“WRD”) and Woodridge Investments, LLC, (“WRI”), entities in which Edward M.
Richey and Don B. Smithson each owned a fifty percent membership interest, borrowed
funds to develop Carothers Crossing, a “traditional neighborhood development” in the
cities of Lavergne and Nashville, Tennessee; GreenBank, was the original lender.1 WRD
and WRI executed notes and entered into loan agreements memorializing the debts and
obligations, which were secured by the individual guarantees of Mr. Richey and Mr.
Smithson. On June 27, 2007, WRD recorded various documents relating to the
development, including the Declaration of Charter, Easements, Covenants and
Restrictions (“the Declaration”), Master Deed Restrictions, and the By-Laws of the
Carothers Crossing Neighborhood Association (“the Association”); in due course, WRD
appointed the initial Board of Directors of the Association. The development ran into
financial difficulty and on January 14, 2010, GreenBank sued WRI, WRD, Don B.
Smithson, and Edward M. Richey, in Davidson County Chancery Court to collect the
unpaid balances of the notes; WRI and WRD filed for bankruptcy on January 15, 2010.

       On March 5, 2010, WRD, WRI, Mr. Smithson, Mr. Richey, and Capstone
Homebuilders Group, LLC, which had also borrowed funds from GreenBank, entered
into a Settlement Agreement and Release of Claims. The Settlement Agreement was
presented to the bankruptcy court, and when approved by that court, it granted
GreenBank relief from the bankruptcy stay and allowed it to proceed with foreclosure; on
March 26, Trustee’s deeds conveyed the Carothers Crossing property to GreenBank.2

       Leigh Ann Urbanavage purchased lot 84 in Carothers Crossing on May 8, 2008,
and Amanda Falk Cook (then Amanda Fay Falk) purchased lot 79 on June 26, 2008; by
purchasing lots, Ms. Urbanavage and Ms. Cook became members of the Association. In
March 2010, following a decline in the maintenance of the common areas, Ms.
Urbanavage and Ms. Cook stopped paying their HOA fees; liens were placed on their
properties by the Association to secure payment of the fees.

     On July 22, 2014, Ms. Urbanavage and Ms. Cook (“Plaintiffs”) filed their “First
Amended Complaint”3 (“complaint”) against Capital Bank, the Association, and Lonnie

1
  In September 2011, GreenBank merged with Capital Bank, and Capital Bank became successor in
interest to GreenBank.
2
 The conveyances were made subject to, inter alia, the original Declarations, Supplemental Declarations,
and First Amendment to the Declarations.
3
    The original complaint is not in the record on appeal.

                                                       2
Malone, Jim Evans, and Ann Vanderhoof, who were Capital Bank employees who were
appointed by the bank to serve as directors of the Association (“the Association
Directors”). The complaint alleged that Capital Bank breached its fiduciary duty to
Plaintiffs, tortiously interfered with the Association’s obligations under the Declaration,
and breached the Master Deed Restrictions and Declaration; the complaint also alleged
that the Association Directors breached their fiduciary duties to Plaintiffs, and the
Association Directors caused invalid liens to be filed against Plaintiffs and slandered
Plaintiffs’ titles.

       The Association, Capital Bank, and the Association Directors answered, denying
Plaintiffs’ allegations; the Association also filed a counter-claim for unpaid association
fees, prejudgment interest, late fees, and attorney’s fees. 4 Subsequently, the Association,
Capital Bank, and the Association Directors moved for summary judgment on Plaintiffs’
claims; the Association sought summary judgment on its counter-claims as well.

       Following a hearing, the court granted summary judgment to the Association
Directors on the breach of fiduciary duty claim on the ground that they were immune
from suit under Tennessee Code Annotated section 48-58-601(c); granted summary
judgment to Capital Bank on the claims of breach of fiduciary duty, tortious interference,
invalid liens, and slander of title; and granted summary judgment to the Association on
its counterclaim. The court subsequently entered an “Additional Order,” granting the
Association summary judgment on all claims on the ground that no causes of action
remained against the Association separate and apart from those asserted against the
individual directors, and another “Additional Order” in which the parties agreed to entry
of summary judgment to Capital Bank on the breach of contract claim.

        Following entry of the order granting summary judgment, the Association filed a
motion for Attorneys’ Fees, Interest, and Discretionary Costs and supporting affidavits
from Thomas Peebles, counsel for the Association with regard to its counterclaim, as well
as affidavits of two local attorneys, Anne C. Martin and Samuel T. Bowman. The
Association requested $81,364.22 in attorneys’ fees and $58.34 in discretionary costs to
be split evenly between both Plaintiffs, $15,159.36 in unpaid assessments and $1,435.61
in interest against Ms. Urbanavage, and $13,995.36 in unpaid assessments and $1,399.56
in interest against Ms. Cook. Plaintiffs served notices of deposition on Thomas Peebles
and an unnamed member of the Board of Directors. The Association filed a Motion to
Quash Notices of Depositions, which was granted by the trial court.5

4
  Throughout this litigation, the Association and the Association Directors have been represented by
different counsel.
5
    In the order the court stated:

           The Court further finds that the proposed taking of the deposition of CCNA’s counsel, as
           well as a member of CCNA’s Board of Directors, is not reasonably calculated to lead to
           the discovery of admissible evidence. The Court also finds that no depositions are
                                                      3
       The court thereafter entered judgment in favor of the Association against each
Plaintiff for unpaid assessments, discretionary costs, pre-judgment interest, and 60
percent of the Association’s attorneys’ fees. A final order was entered on May 31, 2016.

       Plaintiffs appeal the grant of summary judgment on their tortious interference
claim against Capital Bank; and the breach of fiduciary duty claim against the
Association Directors. Plaintiffs appeal the grant of summary judgment to the
Association on the grounds that no claims remained against the Association after the
grant of summary judgment to the Association Directors, on the invalid liens claim, and
on the Association’s counterclaim.6 Plaintiffs also appeal the grant of the motion to
quash the notices of depositions of an Association director and its attorney. The
Association contends that the trial court erred in awarding Carothers Crossing only sixty
percent of the attorneys’ fees it incurred in obtaining the judgment.

                                             II. ANALYSIS

A. The Court’s Grant of Summary Judgment to Defendants on Plaintiffs’ Claims

       A party is entitled to summary judgment only if the “pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits…show that
there is no genuine issue as to any material fact and that the moving party is entitled to
judgment as a matter of law.” Tenn. R. Civ. P. 56.04. In Rye v. Women’s Care Ctr. of
Memphis, MPLLC, our Supreme Court adopted the standard applicable to summary
judgment practice under Federal Rule of Civil Procedure 56, holding that:

       [I]n Tennessee, as in the federal system, when the moving party does not
       bear the burden of proof at trial, the moving party may satisfy its burden of
       production by either (1) affirmatively negating an essential element of the
       nonmoving party’s claim or (2) by demonstrating that the moving party’s
       evidence at the summary judgment stage is insufficient to establish the
       nonmoving party’s claim or defense. . . . “[W]hen a motion for summary
       judgment is made [and] . . . supported as provided in [Tennessee Rule 56],”
       to survive summary judgment, the nonmoving party “may not rest upon the
       mere allegations or denials of [its] pleading,” but must respond, and by
       affidavits or one of the other means provided in Tennessee Rule 56, “set
       forth specific facts” at the summary judgment stage “showing that there is a
       genuine issue for trial.” Tenn. R. Civ. P. 56.06. . . . [S]ummary judgment
       should be granted if the nonmoving party’s evidence at the summary

       needed in order to allow both sides a fair opportunity to present their cases with respect to
       liability for attorneys [sic] fees and the reasonableness of those attorneys [sic] fees.
6
 With reference to this issue, Plaintiffs refer to a “breach of contract damage claim[]” against the
Association
                                                    4
       judgment stage is insufficient to establish the existence of a genuine issue
       of material fact for trial. Tenn. R. Civ. P. 56.04, 56.06. . . .

477 S.W.3d 235, 264-65 (Tenn. 2015), cert. denied, 136 S. Ct. 2452, 195 L. Ed. 2d 265
(2016). We review the trial court’s ruling on a motion for summary judgment de novo
with no presumption of correctness, as the resolution of the motion is a matter of law.
Rye, 477 S.W.3d at 250 (citing Abshure v. Methodist Healthcare–Memphis Hosp., 325
S.W.3d 98, 103 (Tenn. 2010); Bain v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997)). We
view the evidence in favor of the non-moving party by resolving all reasonable inferences
in its favor. Stovall v. Clarke, 113 S.W.3d 715, 721 (Tenn. 2003); Godfrey v. Ruiz, 90
S.W.3d 692,695 (Tenn. 2002).

       1. Tortious Interference of Contract by Capital Bank

       In order to recover for tortious interference with the performance of a contract, the
injured party must prove “(1) that there was a legal contract; (2) that the defendant knew
of the existence of a contract; (3) that the defendant intended to induce a breach of the
contract; (4) that the defendant acted maliciously; (5) that the contract was actually
breached; (6) that the defendant’s acts were the proximate cause of the breach; and (7)
that plaintiff suffered damages resulting from the breach.” Lee v. State Volunteer Mut.
Ins. Co., No. E2002-03127-COA-R3-CV, 2005 WL 123492, at *10 (Tenn. Ct. App. Jan.
21, 2005) (citing Buddy Lee Attractions, Inc. v. William Morris Agency, Inc., 13 S.W.3d
343, 359 (Tenn. Ct. App. 1999); Dynamic Motel Mgmt., Inc. v. Erwin, 528 S.W.2d 819,
822 (Tenn. Ct. App. 1975)). Moreover, a complaint for tortious interference must do
more than merely state the legal elements of the cause of action; the complaint must state
specific facts for each of the seven elements of the tort. Lee, 2005 WL 123492, at *10.

       In the context of tortious interference with contract claims, malice is defined as
“the willful violation of a known right.” Whalen v. Bourgeois, No. E2013-01703-COA-
R3-CV, 2014 WL 2949500, at *12 (Tenn. Ct. App. June 27, 2014) (quoting Prime Co. v.
Wilkinson & Snowden, Inc., No. W2003-00696-COA-R3-CV, 2004 WL 2218674, at *4
(Tenn. Ct. App. Sept. 30, 2004)). Evidence of malice is sufficient if it shows that the
defendant’s “conduct was intentional and without legal justification.… Interference is
without justification if it ‘is done for the indirect purpose of injuring the plaintiff or
benefitting the defendant at the plaintiff’s expense.’” Whalen, 2014 WL 2949500, at *12
(quoting Crye-Leike Realtors, Inc. v. WDM, Inc., No. 02A01-9711-CH-00287, 1998 WL
651623 at *6 (Tenn. Ct. App. Sept. 24, 1998)).

       Plaintiffs assert the trial court erred in granting summary judgment for Capital
Bank on Plaintiffs’ claims for tortious interference of contract because a genuine issue of
material fact existed as to the malice element of the claim. Plaintiffs argue that Capital
Bank tortiously interfered with the Association’s contractual obligations under the
Declaration by appointing its employees to the Association Board. Specifically,
Plaintiffs contend that Capital Bank induced the Association to shirk its contractual
                                              5
obligations to the homeowners by appointing Capital Bank employees as directors, who
were motivated to advance the interests of Capital Bank—interests that run counter to the
interests of the property owners.

       Capital Bank contends that Plaintiffs have failed to allege sufficient facts to
sustain their claim of tortious interference, specifically, that Capital Bank acted with
malice in replacing the Board and that the replacement of the Board was the proximate
cause of the inability to maintain the common areas.

      In support of its motion, Capital Bank relied on the Declaration and the Settlement
Agreement with WRD and WRI. Section 6.7(b) of the Declaration sets forth the right of
the Developer to replace the Board:

      (b) Initial Selection by Developer. The Developer shall appoint and remove
      the initial officers and members of the Board and may elect a majority of
      the Board until the earlier of (1) the time required by any Tennessee state
      law or (ii) sixty (60) days after ninety-nine percent (99%) of the Buildings
      Indicated by or permitted under the Urban Design Overlay or PDR have
      been completed and conveyed to Owners other than the Developer or a
      Builder. When used in this paragraph, “buildings” shall include both
      detached Buildings and Residential Units, but not outbuildings. The
      Developer may voluntarily surrender the right to appoint and remove
      officers and members of the Board before termination of the control period
      set forth in this Section 6.7(b), in which case the Developer reserves the
      right to record an instrument specifying that, until the time Developer
      would have been required to end control of the Board, certain actions of the
      Association or Board must be approved by the Developer before they
      become effective.

The Agreement sets forth Capital Bank’s rights and obligations:

      [E]ffective the date of this Agreement, which shall be incorporated in the
      9019 [Bankruptcy Court] Order, Borrowers Richey and Smithson hereby
      transfer, convey and assign all rights, title, and interest of Borrowers
      Richey and/or Smithson on behalf of Borrowers, to the extent assignable, in
      and to all Carothers Materials, including all rights, but not the obligations,
      to exercise the privileges allowed the “declarant”, “founder” and/or
      “developer” of Carothers Crossing under those Master Deed Restrictions
      for Carothers Crossing of record as Instrument No. 20070627-0076581,
      Davidson County Register of Deeds, together with amendments and
      supplements thereto of any nature, and together with all rules and by-laws
      referred to therein or later created (collectively, the “Master Deed”);
      provided, however, by such conveyance, transfer or assignment, the Banks
      are not assuming any obligations or responsibility to perform or any
                                            6
       liability to pay for the Carothers Materials or to have any obligation under
       the Master Deed. It is the intent of the parties that the Banks will be
       vested with all rights, title and interest on the Carothers Materials which
       may, in the Banks’ sole discretion, be executed by the Banks or transferred
       and assigned to any subsequent owner of the property secured to the Banks.

(Emphasis added.)

        The Agreement confers on Capital Bank the rights of the developer; the
Declaration gives the developer the authority to appoint and remove a majority of the
members of the Board. This is evidence that Capital Bank acted within its authority in
appointing members of the Board, and thus it acted with legal justification. See Whalen,
2014 WL 2949500, at *12 (explaining that malice is an act done without legal
justification). Accordingly, Capital Bank put forth evidence to negate an essential
element of the tortious interference of contract claim and shifted the burden to Plaintiffs
to establish a material question of fact on the issue of malice.

       Plaintiffs responded to Capital Bank’s motion for summary judgment and filed
their own statement of additional material facts which they asserted were in dispute,
relying on the declaration of Don Smithson, the founder and original developer of
Carothers Crossing, as well as language in the Declaration to support their contention that
Capital Bank acted with malice in replacing the board members for the Association.

       The Declaration states that the “Association is responsible…for maintaining the
Development and enforcing the Declaration”; the Master Deed states that “the
Association is responsible, among other things, for maintaining the Commons and
enforcing the Declaration.” In his Declaration, Mr. Smithson states the following:

       16. In discharge of my duties and responsibilities as Director, I joined with
       the other Directors in making demand on GreenBank to performed [sic] its
       obligations under the Declaration of Covenants like other property owners
       are required to do by the Declaration and Master Deed Restrictions. These
       demands started April 2010 and continued until my removal from the
       Board on August 26, 2011.
       17. Attached hereto as Exhibit C is a true and exact copy of a letter I
       prepared and sent to Stan Puckett, President of GreenBank, to which no
       response was ever received.
       18. In addition to not honoring its obligations under the Declaration of
       Covenants, GreenBank requested that the Board relieve GreenBank of its
       Declaration obligations.
       19. On behalf of the Association and all other property owners in the
       Subdivision, the Board refused GreenBank’s request to be relieved of its
       obligations.

                                            7
        20. At a meeting of the Board on August 26, 2011, attended by the
        Association Directors and their attorney, and GreenBank officers and
        attorney, repeated requests were made by GreenBank’s attorney that the
        Directors to [sic] forgive GreenBank of its Declaration obligations, which
        the Board refused to do, at which time the Directors were given the removal
        letter attached hereto as Exhibit A.

       The statements in Mr. Smithson’s declaration show that Capital Bank requested
the former members of the Association board to be relieved of the bank’s obligations
under the Declaration, that the former members refused Capital Bank’s requests, and
those members were thereafter removed from the board; other material filed by Plaintiffs
in response to the motion shows that the board members were replaced by Capital Bank
employees.

       While Capital Bank had the right under the Declaration to replace board members,
the fact that Capital Bank sought to avoid its responsibilities under the Declaration and,
when it was refused, replaced the board with its employees who did not perform those
responsibilities, raises an inference that Capital Bank’s actions were motivated by malice
and were taken to prevent the Association from fulfilling its obligations under the
Declaration; this inference creates a genuine issue of fact for trial. Accordingly, Capital
Bank was not entitled to judgment as a matter of law on the claim of tortious interference
of contract claim, and we need not address the element of proximate cause.

        2. Invalid Liens Claim against Association Directors7

       Plaintiffs included a count in the Amended Complaint entitled “Invalid Liens,” in
which they asserted that the directors had filed liens against their homes for unpaid
assessments for maintenance of the common areas in the subdivision; Plaintiffs sought a
declaration that the liens were invalid.

        The Association contended that its right to collect the payment of assessments was
absolute and independent of the Association’s obligations under the Master Deed and
Charter. In support of this contention, the Association relied on its records showing an
outstanding balance of $13,564.32 for Ms. Urbanavage and $13,601.38 for Ms. Cook;
section 10.1 of the Declaration, which sets forth the obligation to pay the assessment; and
section 10.9 of the Declaration, which authorizes the placement of liens on properties for
the failure to pay assessments and reads as follows:

7
  Plaintiffs do not specifically appeal the slander of title claim but only contend that “the trial court erred
by granting the Association summary judgment upon Plaintiffs’ claims for removal of liens because a
genuine issue of fact existed as to whether Plaintiffs owed the debt stated in the liens.” Their brief on
appeal goes on to address issues pertaining to the invalid liens claim.

                                                      8
      10.9 Effect of Nonpayment of Assessment; Remedies
      ***

      (b) Creation of a Lien. The Assessment Charge shall also be charged on
      the land and shall be a continuing lien upon the Parcel against which the
      Assessment Charge is made, which may be enforced upon recording of a
      claim of lien. This lien, in favor of the Association, shall secure the
      Assessment Charge which is then due and which may accrue subsequent to
      the recording of the claim of lien and prior to entry of final judgment of
      foreclosure. Any subsequent owner of the Parcel shall be deemed to have
      notice of the Assessment Charge on the land, whether or not a lien has been
      filed. The lien established by this Section 10.9(b) shall be subordinate to
      any first priority deed of trust placed on any Parcel from time to time.

       This evidence put forth by the Association shows that both Ms. Urbanavage and
Ms. Cook had an outstanding balance on their account for unpaid assessments, which is a
continuing lien on the property, and that there is no language conditioning the payment of
assessments on the Association performing its obligations under the Declaration.
Accordingly, the Association put forth evidence that shows it was entitled to summary
judgment.

        Plaintiffs failed to put forth any evidence in their response to the Association’s
statement of facts or along with their own statement of material facts that raises a
question of fact regarding the claim for invalid liens. Accordingly, the Association was
entitled to judgment on this claim.

      3. Breach of Fiduciary Duties by Association Directors

       Plaintiffs also contend that the Association Directors breached their fiduciary duty
to Plaintiffs by putting the financial interests of Capital Bank above the interests of the
Association and its members by discontinuing the maintenance of the common areas in
the subdivision and by allowing Capital Bank to pay reduced lot owner assessments
instead of common expense shortfalls. Plaintiffs assert the trial court erred in granting
summary judgment for the Association directors individually on this claim because a
genuine issue of material fact existed as to whether the Association directors’ conduct
amounted to willful, wanton, or gross negligence under Tennessee Code Annotated
section 48-58-601(c).

      Tennessee Code Annotated section 48-58-601(b) and (c) set forth the rationale for
and the grant of immunity to board members of nonprofit corporations, such as the
Carothers Crossing Neighborhood Association:

      (b) The general assembly finds and declares that the services of nonprofit
      boards are critical to the efficient conduct and management of the public
                                            9
        and charitable affairs of the citizens of this state. Members of such
        nonprofit boards must be permitted to operate without concern for the
        possibility of litigation arising from the discharge of their duties as policy
        makers.
        (c) All directors, trustees or members of the governing bodies of nonprofit
        cooperatives, corporations, clubs, associations and organizations described
        in subsection (d), whether compensated or not, shall be immune from suit
        arising from the conduct of the affairs of such cooperatives, corporations,
        clubs, associations or organizations. Such immunity from suit shall be
        removed when such conduct amounts to willful, wanton or gross
        negligence. . . .

Thus, the Association directors are immune from suit as a matter of law unless Plaintiffs
put forth evidence establishing a material question of fact as to whether the members’
conduct of the Association’s affairs amounted to willful, wanton, or gross negligence.

       “In order to prevail on a claim of gross negligence, a plaintiff must prove that the
act was ‘done with utter unconcern for the safety of others, or one done with such a
reckless disregard for the rights of others that a conscious indifference to consequences is
implied in law.’” McCaig v. Whitmore, No. W2015-00646-COA-R3-CV, 2016 WL
693154, at *6 (Tenn. Ct. App. Feb. 22, 2016), perm. app. denied (June 24, 2016) (quoting
Leatherwood v. Wadley, 121 S.W.3d 682, 693-94 (Tenn. Ct. App. 2003)).

       In their response to the Association’s motion, Plaintiffs relied on statements
contained in paragraphs 19 and 20 of their amended complaint8 to support their
contention that the Association directors breached their fiduciary duties to them. Upon
our review of the evidence put forth by Plaintiffs in response to both Capital Bank’s and
Carothers Crossing’s motions for summary judgment, the only additional evidence in
support of their contention are paragraphs 10 and 11 of Ms. Urbanavage’s declaration and
paragraphs 12 and 13 of Ms. Cook’s declaration, which are identical to paragraphs 10 and
11 of Ms. Urbanavage’s declaration:

        10. Capital Bank appointed different persons to the Board of Directors of
        the Association in April, 2011, installing its employees and officers.

        11. After the election of the new directors, nothing changed with respect to
        the rundown, trash[y] and unsightly condition of the Subdivision or

8
  Plaintiffs asserted that the directors appointed by Capital Bank “discontinued proper and adequate
maintenance of the common areas and common maintenance areas in the Subdivision, as required by the
Declaration, in order to relieve Capital Bank of its financial obligations under the Declaration to pay for
such maintenance to the extent the cost thereof exceeds assessment revenues” and that the “Capital Bank
Directors put the interests of them and their employer above the interests of Association members by not
requiring Capital Bank to maintain lots it owns as required by the Declaration.”

                                                    10
       Association’s failure to provide the necessary goods and services to restore
       and maintain the Subdivision in the condition required by the Declaration.

       Plaintiffs’ bare assertions in the Amended Complaint and the language in their
declarations do not create a genuine issue of fact as to whether the directors acted with
willful, wanton, or gross negligence. Accordingly, the court correctly granted summary
judgment in favor of the directors on Plaintiffs’ breach of fiduciary duty claim.

       Plaintiffs also contend that the trial court erred in granting summary judgment to
the Association on the basis that no claims remained after the directors were determined
to be entitled to judgment as a matter of law. Pertinent to this issue, the court entered the
following order:

       Carothers Crossing Neighborhood Association, Inc., contends that there is
       no cause of action against it separate and apart from the causes of action
       Plaintiffs assert against the individual directors, and, therefore, there are no
       causes of action remaining against the Association to be tried. The
       Association is, therefore, entitled to take judgment upon all causes [of]
       action asserted against it by Plaintiffs.

       The Court is of the opinion that the Association’s contention is well-taken
       and should be included as part of the Order Addressing Summary Judgment
       Motions. The Court therefore finds that having granted summary judgment
       in favor of the individual directors, this Court concludes as a matter of law
       that nothing else remains to be tried against the Association.

       We agree with this holding. Plaintiffs asserted no claim against the Association
apart from those claims asserted against the individual directors. Accordingly, the court
correctly held that there were no issues to be tried relative to the Association.

B. Summary Judgment on the Association’s Counterclaims

       The trial court granted the Association summary judgment on its counterclaim for
unpaid HOA assessments, holding that “nothing in the language of the warranty deeds,
the Master Deed, or other governing documents in the record indicates that Plaintiffs are
permitted to unilaterally stop paying the monthly HOA assessments because Carothers
Crossings may have failed to properly maintain the common areas.” Plaintiffs contend
that the court erred in granting partial summary judgment on the Association’s
counterclaim because genuine issues of material fact exist as to Plaintiffs’ affirmative
defenses of prior, material breach and failure of consideration.

       In support of its motion for summary judgment, the Association filed seven
exhibits: (1) Ms. Urbanavage’s Warranty Deed; (2) Ms. Cook’s Warranty Deed; (3) the

                                             11
Master Deed;9 (4) Ms. Urbanavage’s financial transactions; (5) Ms. Urbanavage’s notice
of lien; (6) Ms. Cook’s financial transactions; (7) Ms. Cook’s notice of lien.

       Both the Urbanavage Warranty Deed and the Cook Warranty Deed state that the
conveyances are subject to “Covenants, Conditions, Restrictions and Agreements,
including the agreements to pay assessments for the maintenance of common areas,
contained in the Master Deed (and By-Laws) for Carothers Crossing” and the “Charter of
Incorporation of Carothers Crossing…”

       The Declaration states “that the property comprising the Development shall be
held, sold, and conveyed subject to the covenants, restrictions and easements of this
Declaration, which shall run with the land and be binding on all parties and heirs…”
Article 10.0 of the Declaration sets forth the Covenants for Maintenance Assessments:

        10.1 Obligation for Assessments. The Developer, for each Parcel owned
        within the property submitted by this Declaration or Supplemental
        Declaration to the Development, hereby covenants, and each Owner of any
        Parcel by acceptance of a deed or other transfer instrument, whether or not
        it shall be so expressed in such deed, is deemed to covenant and agree to
        pay to the Association the following Assessments:

                (a) General Assessments for expenses included in the budget,

                (b) Special Assessments for the purposes provided in this
                Declaration,

                (c) Telecommunications Assessments for the purposes provided in
                this Declaration; and

                (d) Individual Parcel Assessments for any charges particular to that
                Parcel,

        ***

        10.6 Telecommunication Assessments. A monthly Telecommunication
        Assessments shall be paid by each Owner for the provision of

9
  The Association’s Statement of Undisputed Facts cites to section 10 of the Master Deed, which was
filed as Exhibit 3. Exhibit 3 is titled “Master Deed Restrictions for Carothers Crossing” and only contains
seven sections. In their response to the Association’s Statement of Undisputed Fact, Plaintiffs admit that
such language “is contained in the Declaration of Charter, Easements, Covenants, and Restrictions.”
Upon our review of the Declaration, it is apparent that the Association incorrectly cites to the Master
Deed Restrictions, as section 10 of the Declaration contains the language the Association erroneously
referenced. Because Plaintiffs do not dispute the error and correctly cite to the Declaration, we have
examined the Declaration in our consideration of this issue.
                                                    12
           Telecommunication Services to Owner’s Parcel through Bulk Service
           Agreements as set forth in Article 17 of this Declaration, such assessment
           to mean the fee and any applicable taxes, franchise fees, surcharges or other
           amount that may be charged by the service provider for provision of
           Telecommunication Services. The Telecommunication Assessment may be
           billed separately from other Assessments levied by the Association, shall be
           in addition to the other Assessments set forth in this Declaration, and shall
           be subject to the terms and conditions applicable to Assessments contained
           in Article 17. No Owner may be exempted from liability for the
           Telecommunication Assessment by reason of waiver of the use or
           enjoyment of the Telecommunication Services.
           ***

       The Association also filed documents titled “Financial Transactions – 7/28/15” for
Urbanavage and Cook; the documents stated that Urbanavage owes $199.36 per month
for Assessments and has a balance of $13,564.32 and that Cook owes $194.38 per month
in assessments and has a balance of $13,601.36.

       This evidence shows that Ms. Urbanavage’s and Ms. Cook’s ownership of
property in Carothers Crossing requires that they pay monthly assessments, as set forth in
the Declaration and the master deeds. Moreover, there is no evidence to suggest that
their obligation to pay is conditioned on the obligations of the association. The court
correctly held that Plaintiffs did not have the right under the documents to unilaterally
withhold payment of the assessment. We are of opinion, however, that the material put
forth by the Association did not entitle it to summary judgment on Plaintiffs’ affirmative
defenses to the Associations’ claims, evidence in support of which was contained in the
declarations of Ms. Urbanavage and Ms. Cook.10

10
     The Plaintiffs’ reply to the counter-claim included the following Affirmative Defenses:

           1. Counter-Plaintiff cannot enforce Counter-Defendants’ obligations under the Master
           Deed and Declarations of Charter because of its prior, material breach of its obligations
           as imposed therein.
           2. There is and has been a failure of consideration because of Counter-Plaintiffs failure to
           provide the services to which Cross-Defendants were and are entitled to receive under the
           Master Deed Restrictions and Declaration of Charter.
           3. Counter-Defendants are entitled to offset any judgment rendered against them for
           money damages against the damages they have sustained because of the tort and contract
           claims alleged against Counter-Plaintiff.

In her declaration, Ms. Urbanavage identifies representations made to her as to the matters maintained by
the Association; states that the Association “abandoned its duties and responsibilities” to maintain the
common areas required by the Declaration and that “the claim made against me in large part represents
proprietary services, such as internet, television and telephone, that the Association failed to provide or
which were so unusable and nonfunctional that they were of no value.” She also describes the decrease in
value of her home “because the Association ceased providing the water, fertilizer, manpower and
                                                       13
C. Award of Attorney Fees

       In the order granting attorney’s fees, the court explained the contractual and legal
basis for the award:

          The Court further finds that the parties are bound by the terms of the Master
          Deed, which clearly provides for reasonable attorney’s fees in the event the
          Association pursues legal action for unpaid assessments. The Court has
          carefully considered the Affidavits submitted by counsel for both sides, as
          well as the factors set forth in the Tennessee Code of Professional
          Responsibility DR2-106,[11] which is a part of Tenn. Sup. Ct. R. 8. After
          carefully reviewing the bills submitted by Carothers Crossing
          Neighborhood Association, Inc., the Court finds that 60% of the fees
          incurred were proper, reasonabl[e] attorney’s fees incurred by the
          Association and that the Association is entitled to a judgment against
          [Plaintiffs].

      The court correctly held, and the parties do not dispute, that section 10.1 of the
Declaration provides the contractual and legal basis for the award of attorney’s fees.12
Inasmuch as we have determined that Plaintiffs’ affirmative defenses to the Association’s
counterclaim are still before the court, we have determined that the award of fees should
be vacated, to be reconsidered after the trial on the counterclaim. Accordingly, the issue

equipment to maintain the Subdivision in the condition it was to when I bought my lot.” The statements
in Ms. Cook’s declaration largely mirror those in Ms. Urbanavage’s.
11
  The former Disciplinary Rule 2-106, a part of Rule 8 of the Tennessee Supreme Court Rules, was not in
effect at the time the award in this case was made, having been replaced by Rule of Professional Conduct
1.5. As noted in Chaffin v. Ellis, the rules “closely mirror[]” each other. 211 S.W.3d. 264, 290 n.14
(Tenn. Ct. App. 2006).
12
     Section 10.1, “Obligation for Assessments” reads as follows:

          The Developer, for each Parcel owned within the property submitted by this Declaration
          or Supplemental Declaration to the Development, hereby covenants, and each Owner of
          any Parcel by acceptance of a deed or other transfer instrument, whether or not it shall be
          so expressed in such deed, is deemed to covenant and agree to pay to the Association the
          following Assessments:

          ***
                  together with a late fee and interest, as established by the Board from time to
                  time, and cost of collection when delinquent, including a reasonable attorney’s
                  fee whether or not suit is brought. Upon default in the payment of any one or
                  more installments, the Board may accelerate the entire balance of such
                  Assessment, which shall be declared due and payable in full.

                                                      14
raised by Plaintiffs with respect to the court’s grant of the motion to quash is
pretermitted.

      In light of our resolution of this appeal and in our discretion, we decline to award
the Association its attorneys’ fees incurred in this appeal.

                                    IV. CONCLUSION

       For the foregoing reasons, we reverse the grant of summary judgment to Capital
Bank on Plaintiffs’ claim of tortious interference with their contractual rights and to the
Association on its counterclaim; we vacate the judgment awarding fees to the Association
and the order quashing the Plaintiff’s notice of deposition; we affirm the grant of
summary judgment to the Association and Association Directors on Plaintiffs’ breach of
fiduciary duty and invalid liens claims. We remand the case for proceedings consistent
with this opinion and the judgment filed herewith.

                                           RICHARD H. DINKINS, JUDGE

                                            15