EGRETS POINTE TOWNHOUSES v. FAIRFIELD COMMUNITIES

• Decision Date: 09 December 1994
• Docket Number: Civ. A. No. 2:93-2281-18.
• Citation: 870 F. Supp. 110
• Court: U.S. District Court — District of South Carolina
• Parties: EGRETS POINTE TOWNHOUSES PROPERTY OWNERS ASSOCIATION, INC., Erwin F. Dillard, Donald White, and Richard Hill, Individually and in their Representative Capacity as the Board of Directors of Egrets Pointe Townhouses Property Owners Association, Inc., Plaintiffs, v. FAIRFIELD COMMUNITIES, INC., Defendants.

870 F. Supp. 110

EGRETS POINTE TOWNHOUSES PROPERTY OWNERS ASSOCIATION, INC., Erwin F. Dillard, Donald White, and Richard Hill, Individually and in their Representative Capacity as the Board of Directors of Egrets Pointe Townhouses Property Owners Association, Inc., Plaintiffs, v. FAIRFIELD COMMUNITIES, INC., Defendants.

Civ. A. No. 2:93-2281-18.

United States District Court, D. South Carolina, Charleston Division.

December 9, 1994.

COPYRIGHT MATERIAL OMITTED

William Stuart Duncan, Michael Kurt Kendree, Georgetown, SC, for plaintiffs.

William Gordon Lyles, III, Columbia, SC, Paul A. Dominick, Jay S. Masty, Charleston, SC, for defendants.

ORDER

NORTON, District Judge.

This case is before this court on cross motions for summary judgment under Fed. R.Civ.P. 56(c). The dispute is between Fairfield Communities (Fairfield), the developer of a time share community located on Edisto Island called Egrets Pointe Townhouses (Egrets Pointe), and the Egrets Pointe Townhouses Property Owners Association (Association) along with several individual members of the Association's Board of Directors. Although several issues are addressed in this Order, the primary issue is the applicability to Egrets Pointe of the South Carolina Horizontal Property Act, S.C.Code Ann. §§ 27-31-10 to XX-XX-XXX (Law.Co-op.1991 & Supp.1993). For the reasons stated below, this court grants Defendant's Motion for Summary Judgment.

I. FACTS

Egrets Pointe is an interval ownership (timeshare) property developed on Edisto Island by Fairfield Communities. It is one of many communities that comprise a larger resort called Fairfield Ocean Ridge. Although no master deed is on record at the Colleton County Courthouse for Egrets Pointe, Fairfield recorded a "Supplemental Declaration of Covenants and Restrictions for Egrets Pointe Townhouses" (Declarations) on August 26, 1986, to which was appended the "Bylaws of Egrets Pointe Townhouses Property Association, Inc." (Bylaws) and the "Initial Rules and Regulations, Egrets Pointe Townhouses Property Association, Inc." (Rules and Regulations). These three documents have governed the property since its development. The Declarations provided for the imposition of maintenance fees against owners of unit weeks at the property, but further provided that Fairfield would not be responsible for maintenance fees for unit weeks owned by Fairfield. When individuals agreed to purchase unit weeks at Egrets Pointe, they signed three documents: (1) an installment sales contract; (2) an Interval Ownership Purchaser's Affidavit; and (3) a Certificate of Benefits. Although no master deed was ever recorded, an early edition of the Interval Ownership Purchaser's Affidavit drafted by Fairfield and signed by some purchasers listed, among other documents, a "Declarations of Horizontal Property Regime" as being recorded in the county clerk's office and available for review by all purchasers at the Fairfield Ocean Ridge Office. There is no evidence that such a document ever existed and therefore, it is Fairfield's position that reference to a nonexistent document was an technical oversight that Fairfield corrected in these form affidavits in 1992.

As part of the development of Egrets Pointe, Fairfield made available several programs in order to induce the Association to hire Fairfield as the property's manager after the completion of construction. Two of these programs are at issue in this action. The first program, called Fairfield Exchange ("FAX"), allowed the Egrets Pointe owners to exchange time share weeks with other Fairfield time share locations at a discount rate. The second program, called Fairfield USA ("FUSA"), permitted the Egrets Pointe owners to use the numerous recreational facilities at Fairfield Ocean Ridge at discount rates. The FAX program was briefly mentioned in a separate "Certificate of Benefits" that specifically stated that Fairfield could change the conditions of any program at its discretion. None of the documents limit the rates that Fairfield can assess for these programs.

Fairfield managed Egrets Pointe from its inception until 1993 at which point the Association provided written notice of its intent not to renew the management contract with Fairfield. In July the Association did not renew the contract with Fairfield. Instead, the Association contracted with Southern Property (Southern) to assume management of the property on July 14, 1993. When the Association did not renew the management contract with Fairfield, the Association and the Egrets Pointe residents lost the discount prices associated with Fairfield's FAX and FUSA programs. Although the programs were still available to the residents, since Fairfield was not on site as the property manager it increased the fees associated with these programs due to the increased transaction costs. This lawsuit was filed shortly after the change in management.

Plaintiffs' Motion for Summary Judgment requests that this court find that Egrets Pointe, as developed by Fairfield Communities, is governed by the South Carolina Horizontal Property Act ("HPA") and that Fairfield has breached the master deed, Declarations, and Bylaws and violated the HPA. It is Plaintiffs' position that a finding that Egrets Pointe is governed by the HPA would render Fairfield liable to the Association for maintenance and regime fees on its units. Additionally, the Association brought causes of an action for an accounting, interference with prospective contractual relations, and breach of contract.

Defendant denied all claims of Plaintiffs and moved for summary judgment as to the following: (1) that Fairfield is not required to pay maintenance fees at Egrets Pointe because Egrets Pointe is not a horizontal property as defined by the South Carolina HPA; (2) that there has been no tortious interference with prospective contractual relations because Egrets has an existing contract with Southern; (3) that any claim for interference with contractual relations is precluded by the fact that the contract between Southern and Egrets has not been breached; (4) that the Association lacks standing to assert the breach of contract claims of the individual property owners; (5) that Fairfield has acted within the terms and conditions of the installment sales contracts and related documents provided to the individual owners; and (6) that Fairfield is not obligated to pay maintenance fees thus rendering an accounting unnecessary.

II. SUMMARY JUDGMENT STANDARD

To grant a motion for summary judgment, this court must find that "there is no genuine issue as to any material fact." Fed.R.Civ.P. 56(c). The judge is not to weigh the evidence, but rather to determine if there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986). If no material factual disputes remain, then summary judgment should be granted against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case and on which the party bears the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). All evidence should be viewed in the light most favorable to the nonmoving party. Perini Corp. v. Perini Constr., Inc., 915 F.2d 121, 123-24 (4th Cir.1990). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, disposition by summary judgment is appropriate." Teamsters Joint Council No. 83 v. CenTra, Inc., 947 F.2d 115, 119 (4th Cir. 1991).

III. ANALYSIS

A. The Horizontal Property Act

This court finds that Egrets Pointe is not a horizontal property regime as defined by the S.C.Code and therefore is not subject to the provisions of the South Carolina Horizontal Property Act. The South Carolina Code states:

Whenever a lessee, sole owner or the co-owner of property expressly declare, through the recordation of a master deed or lease, which shall set forth the particulars enumerated in § 27-31-100, their desire to submit their property to the regime established by this chapter, there shall thereby be established a horizontal property regime.

S.C.Code Ann. § 27-31-30 (Law.Co-op.1991) (emphasis added). In order to establish a horizontal property regime, a master deed for the property must be recorded and compliance with the requirements of section 27-31-100 is mandatory. Section 27-31-100 states in part:

The master deed or lease creating and establishing the horizontal property regime shall be executed by the owner or owners of the real property making up the regime and shall be recorded with the register of mesne conveyance or clerk of court of the county where such property is located. The master deed or lease shall express the following particulars:

. . . . .

(e) The name by which the horizontal property regime is to be known followed by the words "HORIZONTAL PROPERTY REGIME."

S.C.Code Ann. § 27-31-100 (Law.Coop.1991) (emphasis added).

In Battery Homeowners Ass'n v. Lincoln Fin. Resources, 309 S.C. 247, 422 S.E.2d 93 (1992), the South Carolina Supreme Court held that the failure of a master deed to include the above language was adequate grounds to reverse a master's ruling that held otherwise in spite of the absence of the words "HORIZONTAL PROPERTY REGIME" on the property's master deed. Id. 422 S.E.2d at 95. The court stated:

Section 27-31-100 states the master deed must expressly state the name by which the property is known and include the words "HORIZONTAL PROPERTY REGIME."

The Battery's master deed does not state the Battery is a horizontal property regime. Therefore, the Horizontal Property Act does not apply to the Battery. The master erred in holding that the Battery is a horizontal property and we reverse as to this portion of his order.

Id. at 95. In Battery Homeowners, there was a recorded master deed, but that deed did not have the words "HORIZONTAL PROPERTY REGIME" inscribed on it. In this...