Brenner v. Hound Ears Club, Inc.

• Decision Date: 31 August 2022
• Docket Number: 22 CVS 128
• Citation: 2022 NCBC 47
• Parties: MICHAEL BRENNER; EDWIN CUMMER; JACK ELLEDGE; DOUGLAS GOODENOUGH; THOMAS J.GOSDECK; ASHLEY HOGE; WOODY HUBBARD; RICHARD KAUFMAN; TIMOTHY MORSE; ROBERT PRAGER; MARK RICKS; WILLIAM WALKER; and STEPHEN WEISHOFF, Plaintiffs, v. HOUND EARS CLUB, INC., Defendant.
• Court: Superior Court of North Carolina

2022 NCBC 47

MICHAEL BRENNER; EDWIN CUMMER; JACK ELLEDGE; DOUGLAS GOODENOUGH; THOMAS J.GOSDECK; ASHLEY HOGE; WOODY HUBBARD; RICHARD KAUFMAN; TIMOTHY MORSE; ROBERT PRAGER; MARK RICKS; WILLIAM WALKER; and STEPHEN WEISHOFF, Plaintiffs,
v.
HOUND EARS CLUB, INC., Defendant.

No. 22 CVS 128

Superior Court of North Carolina, Wauga

August 31, 2022

Miller & Johnson, PLLC, by Nathan A. Miller, for Plaintiffs Michael Brenner, Edwin Cummer, Jack Elledge, Douglas Goodenough, Thomas Gosdeck, Ashley Hoge, Woody Hubbard, Richard Kaufman, Timothy Morse, Robert Prager, Mark Ricks, William Walker, and Stephen Weishoff.

Parker Poe Adams & Bernstein, LLP, by Morgan H. Rogers and Alexandra Davidson, for Defendant Hound Ears Club, Inc.

ORDER AND OPINION ON RULE 12(c) CROSS-MOTIONS FOR JUDGMENT ON THE PLEADINGS

Louis A. Bledsoe, III Chief Business Court Judge

1. THIS MATTER is before the Court upon Plaintiffs Michael Brenner, Edwin Cummer, Jack Elledge, Douglas Goodenough, Thomas Gosdeck, Ashley Hoge, Woody Hubbard, Richard Kaufman, Timothy Morse, Robert Prager, Mark Ricks, William Walker, and Stephen Weishoff's (collectively, the "Plaintiffs") Motion for Judgment on the Pleadings ("Plaintiffs' Motion"), (ECF No. 16), and Defendant Hound Ears Club, Inc.'s ("Defendant") Motion for Judgment on the Pleadings ("Defendant's Motion"; together with Plaintiffs' Motion, the "Motions"), (ECF No. 14), in the above-captioned case.

2. After considering the parties' respective briefs and the arguments of counsel at the hearing on the Motions, the Court hereby GRANTS Defendant's Motion, DENIES Plaintiffs' Motion, and DISMISSES this action with prejudice.

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I.

FACTUAL AND PROCEDURAL BACKGROUND

3. The Court does not make findings of fact when ruling on motions to dismiss under Rule 12(c) of the North Carolina Rules of Civil Procedure; rather, the Court recites only those facts from the Complaint that are relevant and necessary to the Court's determination of the motion. See Aldridge v. Metro Life Ins. Co., 2019 NCBC LEXIS 53, at *8 (N.C. Super. Ct. Aug. 15, 2019).

4. Defendant is a non-profit corporation organized under North Carolina law, which owns and operates a private club named Hound Ears Club (the "Club") in Watauga County, North Carolina. (Compl. ¶ 17, ECF No. 3.) The Club operates a gated residential subdivision that includes various communal amenities, including a swimming pool, a restaurant, tennis courts, and other facilities. (Compl. ¶ 18.)

5. The Club sells and transfers equity memberships, up to a membership cap set by the Club's bylaws. (Compl. ¶¶ 20-21; Compl. Ex. A at 8, ECF No. 3.) The bylaws establish six categories of membership. (Compl. Ex. A at 17-21.) Equity members in five of the six categories hold the right to one vote each during votes held on Club business, including the election of the Club's Board of Directors. (Compl. ¶¶

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25, 29.) The Club does not require ownership of property in the Club's subdivision as a condition of equity membership. (Compl. ¶ 30.)

6. As of 11 September 2021, the Club's equity membership was filled up to its current cap of 355 members. Of the equity members, 276 owned property within the subdivision, while the other 79 did not. (Compl. ¶ 31.) The Club's bylaws make no explicit distinction between property-owning equity members and non-property-owning equity members. (Compl. Ex. A at 17-21.)

7. All equity members are subject to assessments by the Club. The Club's authority to assess payments from equity members is under the Club's bylaws, which authorize the Club's Board of Directors to compute and levy dues and fees on equity members. (Compl. Ex. A at 11.) The Club collects fees from property owners within the subdivision to fund the subdivision's various amenities pursuant to the Club's declaration of restrictions. (Compl. ¶¶ 37-38).^[1]

8. The Club's bylaws further authorize the Board to "issue and make available [the six membership categories] and other categories of membership as long as the maximum number of voting memberships does not exceed three hundred fifty-five (355) . . . ." (Compl. Ex. A at 17.)

9. The bylaws also empower the Board to "determine . . . the amount of dues, fees, . . . and other charges to be paid for each category of membership." (Compl. Ex. A at 11.)

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10. The Club bylaws establish a detailed set of procedures to amend the bylaws. (Compl. Ex. A at 15.) These procedures provide that the Board may amend the bylaws so long as the membership receives advance notice of the Board's vote, the Board approves the amendment by a two-thirds supermajority, and the amendment is not "materially adverse" to the rights of the Club's members. (Compl. Ex. A at 15.)

11. Several categories of amendment are placed explicitly beyond the powers of the Board, and require an affirmative vote of a majority of all members for passage. (Compl. Ex. A at 15-16.) The five such categories are any amendment that would: (1) increase the cap on memberships, (2) change restrictions on memberships, (3) change membership eligibility, (4) change the number of directors needed to constitute the full Board, or (5) which would alter the amendment procedures themselves. (Compl. Ex. A at 16.)

12. At the Board's 11 September 2021 annual meeting, the Board adopted a new fee structure to fund the subdivision's amenities. (Compl. ¶ 39.) This change included the assessment of fees against non-property-owning equity members, and it was memorialized to the Club members in a 17 September 2021 letter from the President of the Board. (Compl. Ex. B, ECF No. 3.)

13. Plaintiffs initiated the instant action on 22 March 2022, asserting claims against the Club for breach of the bylaws and seeking a declaratory judgment. (See Compl. ¶¶ 46-55.) Defendant filed its Answer on 25 April 2022. (See Answer, ECF No. 5.)

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14. The parties filed the instant Motions on 30 June 2022. (See Def.'s Mot. J. Pleadings, ECF No. 14; Pls.' Mot. J. Pleadings, ECF No. 16.) After full briefing, the Court held a hearing on the Motions on 17 August 2022 (the "Hearing"), at which all parties were represented by counsel. The Motions are now ripe for resolution.

II.

LEGAL STANDARD

15. Rule 12(c) is intended "to dispose of baseless claims or defenses when the formal pleadings reveal their lack of merit and is appropriately employed where all the material allegations of fact are admitted in the pleadings and only questions of law remain." Dicesare v. Charlotte-Mecklenburg Hosp. Auth., 376 N.C. 63, 70 (2020) (cleaned up). In deciding a Rule 12(c) motion, "the trial court is required to view the facts and permissible inferences in the light most favorable to the nonmoving party, with all well-pleaded factual allegations in the nonmoving party's pleadings being taken as true and all contravening assertions in the movant's pleadings being taken as false." Id. "All allegations in the nonmovant's pleadings, except conclusions of law, legally impossible facts, and matters not...