Dockside Ass'n, Inc. v. Detyens

• Decision Date: 19 January 1987
• Docket Number: No. 0864,0864
• Citation: Dockside Ass'n, Inc. v. Detyens, 352 S.E.2d 714, 291 S.C. 214 (S.C. App. 1987)
• Parties: DOCKSIDE ASSOCIATION, INC., Appellant, v. William J. DETYENS, a/k/a William James Detyens and Marie Detyens Burbic a/k/a Marie D. Burbic, Respondents.
• Court: South Carolina Court of Appeals

Page 714

352 S.E.2d 714

291 S.C. 214

DOCKSIDE ASSOCIATION, INC., Appellant, v. William J. DETYENS, a/k/a William James Detyens and Marie Detyens Burbic a/k/a Marie D. Burbic, Respondents.

No. 0864.

Court of Appeals of South Carolina.

Submitted Dec. 17, 1986.

Decided Jan. 19, 1987.

A. Arthur Rosenblum, Charleston, for appellant.

Gedney M. Howe, III, Charleston, for respondents.

GOOLSBY, Judge.

This is an action by Dockside Association, Inc., against William J. Detyens and Marie Detyens Burbic to foreclose liens for unpaid assessments for emergency common expenses made pursuant to the Horizontal Property Act. The circuit court disallowed foreclosure and entered judgment in favor of Detyens and Burbic. Dockside Association appeals, contending principally that the trial judge improperly required it to establish the good faith of its Board of Directors in levying an assessment for emergency common expenses. We reverse and remand for a new trial.

Dockside Association is a duly organized non-profit corporation and the administrator of the Dockside Horizontal Property Regime. Its Board of Directors manages the association's affairs.

By-laws either inserted in or appended to and recorded with the master deed establishing the horizontal property regime authorize the association to make assessments for improvements to the common elements and for emergency expenditures. Assessments made for improvements to the common elements require approval by 60 per cent of all co-owners while those made for emergency expenditures require approval by 51 per cent.

In December 1983, Dockside Association levied a special assessment against the co-owners. Approximately 57 per cent of the co-owners had earlier approved the special assessment following a declaration by the Board of Directors that an emergency situation existed. The special assessment was to pay for repairs to the common elements and to establish a reserve fund with which to pay for future emergency repairs. The motion made by a co-owner and calling for the vote by the co-owners on the special assessment specifically referred to the "emergency nature of the situation."

Detyens and Burbic, who are co-owners, refused to pay the special assessment because less than 60 per cent of the co-owners approved it.

Dockside Association then brought this action to foreclose its liens. See S.C. Code of Laws § 27-31-210 (1976). The amount of the liens sought to be foreclosed is $20,045.

The trial judge invalidated the special assessment and dissolved the liens, holding that the Board of Directors failed to establish that it acted in good faith in declaring that an emergency existed, that the conditions existing at the time of the assessment for emergency common expenses did not constitute an emergency, and that the special assessment required approval by 60 per cent of the co-owners.

Dockside Association's chief complaint centers upon the failure of the trial judge to accept the Board of Directors' determination regarding the existence of an emergency. It maintains that the Board of Directors' "business judgment" that an emergency situation existed cannot be set aside by a court absent a showing of bad faith.

In the instant case, the by-laws give the Board of Directors the implied authority to determine the existence of an emergency where the by-laws prescribe that notice of a need for an assessment for emergency common expenses shall be given to the co-owners. The trial judge did not hold otherwise. Moreover, Detyens and Burbic make no argument that the action by the Board of Directors in declaring the existence of an emergency constituted an ultra vires act.

A court should be reluctant to question action taken intra vires by the governing board of a non-profit corporation. See Papalexiou v. Tower West Condominium, 167 N.J.Super. 516, 401 A.2d 280, 286 (Chanc.Div.1979) ("If the corporate directors' conduct is authorized, a showing must be made of fraud, self-dealing or unconscionable conduct to justify judicial review.")....