Creek Pointe Homeowner's Ass'n v. Happ, COA00-556.

• Decision Date: 18 September 2001
• Docket Number: No. COA00-556.,COA00-556.
• Parties: CREEK POINTE HOMEOWNER'S ASSOCIATION, INC. and Kenneth C. Kremer, Plaintiffs, v. Richard HAPP, Defendant and Third-Party Plaintiff, v. WEYERHAEUSER REAL ESTATE COMPANY, INC., Third-Party Defendant.
• Court: North Carolina Court of Appeals

552 S.E.2d 220

146 NC App. 159

CREEK POINTE HOMEOWNER'S ASSOCIATION, INC. and Kenneth C. Kremer, Plaintiffs, v. Richard HAPP, Defendant and Third-Party Plaintiff, v. WEYERHAEUSER REAL ESTATE COMPANY, INC., Third-Party Defendant.

No. COA00-556.

Court of Appeals of North Carolina.

September 18, 2001.

Harris, Shields, Creech and Ward, P.A., by C. David Creech, for plaintiff-appellant.

McCotter, McAfee, & Ashton, PLLC, by Charles K. McCotter, Jr., for defendant-appellee.

Chesnutt, Clemmons, Thomas & Peacock, P.A., by Gary H. Clemmons for third party defendant-appellee.

BIGGS, Judge.

Plaintiff, Creek Pointe Homeowner's Association, Inc., appeals from the trial court's dismissal of its claims for lack of standing, pursuant to N.C.R. Civ. P. 12(b)(6). This matter arises out of a dispute over a fence that Richard Happ (defendant), a resident of the Creek Pointe subdivision, placed across Deep Creek Road, in Creek Pointe. We reverse the decision of the trial court.

The pertinent facts are as follows: Defendant owns lots 27 through 31 in Creek Pointe, which is located in Pamlico County, about sixteen miles from New Bern, North Carolina. His lots comprise over 200 acres, and lie on either side of Deep Creek Road. This land includes the entire eastern portion of Creek Pointe subdivision. His lots are contiguous; they are bordered by Deep Creek Road, by Goose Creek, and by a small triangular portion of lot 22. Defendant purchased the lots in 1994, and erected the fence shortly thereafter.

In November, 1999, the Creek Pointe Homeowner's Association (association) and individual plaintiff Kenneth C. Kremer (Kremer), one of the owners of lot 22, brought suit against defendant, seeking an injunction to require the defendant to remove the fence across Deep Creek Road, and to bar him from replacing it with another fence. The plaintiffs asked for compensatory and punitive damages and for attorneys' fees. In their complaint, plaintiffs alleged that the fence violated a restrictive covenant granting an easement in favor of all Creek Pointe residents and entitling them to the use of all roads in Creek Pointe, including Deep Creek Road. Defendant's answer asserted that permission to erect a fence had been a condition of his contract of sale with Weyerhaeuser Real Estate Co., Inc. (developer), and also that the Creek Pointe Homeowner's Association previously had consented to the fence.

In addition, defendant filed a motion under N.C.R. Civ. P. 19, "Necessary Joinder of Parties," seeking dismissal for failure to join all individual homeowners as necessary parties, and a motion under Rule 12(b)(6), seeking dismissal of all claims of the association for lack of standing or interest. Defendant also filed a third party complaint against the developer. In January, 2000, the defendant filed a motion for summary judgment against both plaintiffs. This was followed by the developer's February, 2000, motion for summary judgment, and by the association's motion of 15 February 2000 seeking an injunction to prohibit defendant from harassing its members.

All motions were heard on 25 February 2000, at which time the trial judge issued the following orders:

1. Granted defendant's 12(b)(6) motion, dismissing all claims as to the association based on lack of standing or interest.

2. Ordered that plaintiff Kremer's wife, all other Creek Pointe homeowners, and the developer, all must be joined as necessary parties to the suit.

3. Ordered the fence moved so that it did not block any part of lot 22.

4. Denied the injunction regarding harassment of association members.

5. Denied the developer's motion for summary judgment.

6. Denied defendant's motion for summary judgment.

On 27 March 2000, the association filed notice of appeal from the dismissal of their claims for lack of standing or interest. It is this appeal that is presently before this Court. The other orders entered by the trial court in this matter are not before this Court.

We first note that the trial court did not dismiss the case as to plaintiff Kremer. Thus, its ruling that the association lacked standing is an interlocutory order. See Jenkins v. Wheeler, 69 N.C.App. 140, 316 S.E.2d 354, disc. review denied, 311 N.C. 758, 321 S.E.2d 136 (1984) (order dismissing claims against one defendant is interlocutory where other defendants remain in suit). Interlocutory orders generally are not immediately appealable. Bailey v. Gooding, 301 N.C. 205, 270 S.E.2d 431 (1980); Mabrey v. Smith, 144 N.C.App. 119, 548 S.E.2d 183 (2001). However, an interlocutory order may be appealed before final judgment under two circumstances: (1) there is a certification by the trial court that there is no just reason to delay the appeal, or (2) the ruling affects a substantial right. Evans v. United Servs. Auto. Ass'n, 142 N.C.App. 18, 541 S.E.2d 782, cert. denied, 353 N.C. 371, 547 S.E.2d 810 (2001); Smith v. Young Moving & Storage, Inc., 141 N.C.App. 469, 540 S.E.2d 383 (2000), aff'd, 353 N.C. 521, 546 S.E.2d 87 (2001); Norris v. Sattler, 139 N.C.App. 409, 533 S.E.2d 483 (2000).

The determination of whether a substantial right is affected is made on a case by case basis. Collins v. Talley, 135 N.C.App. 758, 522 S.E.2d 794 (1999); Stafford v. Stafford, 133 N.C.App. 163, 515 S.E.2d 43,aff'd,351 N.C. 94, 520 S.E.2d 785 (1999). The reviewing court must determine whether denial of immediate review exposes a party to multiple trials with the possibility of inconsistent verdicts. Murphy v. Coastal Physician Grp., Inc., 139 N.C.App. 290, 533 S.E.2d 817 (2000); Moose v. Nissan of Statesville, 115 N.C.App. 423, 444 S.E.2d 694 (1994). In the present case we find that, although there was no certification by the trial judge, the order dismissing all claims as to the association affects a substantial right of appellants and is, therefore, appealable. See Jenkins, 69 N.C.App. 140,316 S.E.2d 354 (substantial right affected where order dismissed claims against one of several defendants, thus raising the possibility of multiple trials against different members of the same group). See also Bernick v. Jurden, 306 N.C. 435, 293 S.E.2d 405 (1982).

The issue before this Court is whether the trial court erred in its conclusion that the Creek Pointe Homeowner's Association lacked standing to join Kremer as a plaintiff in this action. The pertinent features of the association are as follows: The creation of the association was contemplated by the developer, who stated in the Declaration of Covenants, Conditions, and Restrictions that, upon the sale of 75% of the lots in Creek Pointe, "[t]here shall be created, ... The Creek Pointe Homeowner's Association." The association was incorporated in November, 1989. Its membership consists of the owners of all lots in Creek Pointe. Its Articles of Incorporation state that "the specific purposes for which it is formed are to provide for maintenance, preservation and architectural control of the residence lots and roads within [Creek Pointe.]" The Articles also state that the association has "any and all powers, rights, and privileges which a corporation organized under the Non-Profit Corporation Law of the State of North Carolina by law may now or hereafter have or exercise."

In North Carolina, homeowners' associations historically have enjoyed the general right to participate in litigation. Our appellate courts have considered suits brought by homeowners' associations on a case-by-case basis, and have permitted such associations, when appropriate, to pursue their claims in court. See, e.g., Village Creek Prop. Owners' Ass'n, Inc. v. Town of Edenton, 135 N.C.App. 482, 520 S.E.2d 793 (1999) (property owners' association held to have standing to challenge rezoning of neighboring property); McGinnis Point Owners Ass'n v. Joyner, 135 N.C.App. 752, 522 S.E.2d 317 (1999) (homeowners' association successfully sues to enforce restrictive covenant requiring property owners to pay annual assessment).

The association asserts standing under the North Carolina Planned Community Act (NCPCA), N.C.G.S. Chapter 47F. Their argument is based primarily upon the following provision of the statute:

Subject to the provisions of the articles of incorporation or the declaration and the declarant's rights therein, the [homeowners'] association may: ...

(4) Institute, defend, or intervene in litigation or administrative proceedings on matters affecting the planned community[.]

N.C.G.S. 47F-3-102 (1999), Powers of owners' association, 102(4). The association's argument is that this is a matter "affecting the planned community," and thus that the statute assures them of standing to bring suit. However, we do not read the NCPCA as conferring an automatic right upon homeowners' associations, but rather as reiterating the common law rule that, when otherwise proper, a homeowners' association may participate in a lawsuit. Moreover, the statute makes no further attempt to resolve questions of jurisdiction or standing. It does not define the phrase "affecting the planned community," or otherwise restrict the potential range of litigation. The statute does not employ the term `standing' in its recitation of an association's rights; nor does it address issues of standing in any of its other provisions. We conclude that, although the NCPCA clearly authorizes homeowners' associations as a general class to institute, defend, or intervene in litigation, this statute does not diminish our judicial responsibility to evaluate whether the association has standing to bring this suit under the specific fact situation presented. In this regard, we note another relevant provision of NCPCA, N.C.G.S. § 47F-1-108 (1999), "Supplemental general principles of law applicable," which states:

The principles of law and equity as well as other North Carolina statutes ... supplement the provisions of this Chapter, except to the extent inconsistent with this Chapter. When these principles or statutes are inconsistent or conflict with this

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