Grand Crest Owners Ass'n, Inc. v. Stites
| Decision Date | 06 August 2020 |
| Docket Number | Case No. 117,433 |
| Citation | 512 P.3d 800 |
| Parties | GRAND CREST OWNERS ASSOCIATION, INC., an Oklahoma Not for Profit Corporation, Plaintiff/Appellant, v. Jeffry T. STITES, an individual, a/k/a Jef T. Stites; Beverly L. Stites, an individual, a/k/a Beverly Stites; Grand Crest Association, Inc., an Oklahoma Corporation; and O'Connor Legacy Home, LLC, Defendants/Appellees. |
| Court | United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma |
Sam P. Daniel, III, SAM P. DANIEL, III, PLLC, Tulsa, Oklahoma, For Plaintiff/Appellant
Jef Stites, LAW OFFICE OF JEF STITES, PLLC, Tulsa, Oklahoma, For Defendants/Appellees Jeffry T. Stites, Beverly L. Stites, and Grand Crest Assoc.
Gregory P. Reilly, HALL, ESTILL, HARDWICK, GABLE, GOLDEN & NELSON, P.C., Tulsa, Oklahoma, For Defendant/Appellee O'Connor Legacy Home, LLC
OPINION BY JOHN F. FISCHER, JUDGE:
¶1 Grand Crest Owners Association, Inc. (Grand Crest), appeals the district court's September 18, 2018 Order granting the motions for partial summary judgment filed by Jeffry and Beverly Stites and their corporation, Grand Crest Association, Inc. (collectively the Stites), and O'Connor Legacy Home, LLC. The district court certified its order for immediate appeal pursuant to 12 O.S.2011 § 994(a). The appeal has been assigned to the accelerated docket pursuant to Oklahoma Supreme Court Rule 1.36(b), 12 O.S. Supp. 2013, ch. 15, app. 1, and the matter stands submitted without appellate briefing.
¶2 The order appealed quieted title to certain real property owned by O'Connor and the Stites, "subject to easement rights," on the basis that there was no Grand Crest association with any authority over the defendants' lots. The property involved in this case originally was conveyed by Grand Crest subject to the covenants and restrictions in the corporation's bylaws. The Stites and O'Connor acquired their interests in that property subject to those covenants and restrictions. Further, they agreed to be bound by those covenants and restrictions when they acquired their interests in the property. Therefore, we reverse the order appealed and remand for further proceedings.1
BACKGROUND
¶3 Grand Crest Association, Inc., was formed on May 27, 1954.2 At its organizational meeting on September 4, 1954, Grand Crest adopted bylaws and elected a board of directors to serve until the corporation's first annual meeting set for January of 1955. According to its bylaws, Grand Crest was formed for the purpose of establishing and maintaining "a non-profit association for the social pleasure and enjoyment of its members; to acquire, hold and dispose of such property, both real and personal, as the purposes of the corporation shall require ... for the use and benefit of its members." The corporate purpose also included providing "such services as the members of the corporation may deem necessary or desirable for their pleasure and enjoyment."
¶4 Grand Crest acquired the property involved in this case on June 2, 1954. The property, previously used as a work camp, contained twenty cabins. Grand Crest prepared a plat dividing the property into four blocks and certain designated streets. Block 1 was divided into twenty lots, the eastern boundary of which abutted the shoreline of Grand Lake of the Cherokees in Mayes County. One of the cabins was located on each of the lots. Grand Crest also prepared an Owner's Certificate of Dedication and Assurance designating the property as Grand Crest Subdivision. Grand Crest recorded the Dedication and plat with the Mayes County Clerk on December 21, 1954. The bylaws of the corporation were not recorded until 1991.
¶5 The Grand Crest bylaws provided that there would be nineteen shareholders of the corporation. Ownership of stock in the corporation was limited to those who would acquire one or more of the twenty lots in the Subdivision — the owners of lots three and four were limited to one share of stock. The bylaws provided that the owner of each lot would be entitled to one share of, or membership in, the corporation and that each share "shall be appurtenant to the respective lot owned by the member and shall not be transferable except in conjunction with the transfer of title to the respective lot to which it is appurtenant ...."
¶6 Accordingly, the stock certificate issued to each purchaser of a lot in the Grand Crest Subdivision provided that the holder was: "entitled to all the privileges of a member [of Grand Crest] and to a pro-rata interest in all the property and assets of the corporation, subject to the by-laws thereof now in force and hereafter adopted, such by-laws being deemed to be an essential part of the contract of membership between the corporation and the member." At that time, the assets of the corporation included blocks 2, 3 and 4 of the Subdivision, the streets and common areas, the caretaker's quarters, buildings, pump stations and tools.
¶7 Three lots in the Subdivision, 18, 19 and 20, are at issue in this case. The Stites acquired their interest in lots 18 and 19 in 1998 and 2002, respectively. O'Connor acquired its interest in lot 20 on March 17, 2014. When they acquired their interests in the Subdivision, the Stites and O'Connor were issued and accepted stock in the corporation. The stock certificates were issued pursuant to the corporation's bylaws. After acquiring their lots in the Subdivision, the Stites paid membership dues and assessments to Grand Crest and attended meetings of the corporation. O'Connor paid the dues owed by its predecessor in title at the time it acquired its interest in lot 20.
¶8 In 2012, South Shore at Grand Lake, LLC, began plans to develop real property immediately north of the Subdivision and adjacent to lots 18, 19 and 20. The Stites and O'Connor supported that development. Eventually, a dispute arose between the South Shore developer and Grand Crest members. That dispute precipitated this lawsuit and the summary judgment rulings that are the subject of this appeal.
STANDARD OF REVIEW
¶9 Title 12 O.S.2011 § 2056 governs the procedure for summary judgment in this case. A motion for summary judgment "should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." When deciding a motion for summary judgment, the district court considers factual matters but the ultimate decision is purely legal. Carmichael v. Beller , 1996 OK 48, ¶ 2, 914 P.2d 1051. The de novo standard controls an appellate court's review of a district court order granting summary judgment. Id . De novo review involves a plenary, independent, and non-deferential examination of the trial court's rulings of law. Neil Acquisition, L.L.C. v. Wingrod Invest. Corp ., 1996 OK 125, n.1, 932 P.2d 1100.
ANALYSIS
¶10 Grand Crest filed this action generally alleging that the Stites and O'Connor breached the covenants and restrictions in the corporation's bylaws and refused to pay properly assessed dues and assessments. Grand Crest seeks to recover those unpaid dues and assessments, damages for breach of the corporation's building restrictions, to obtain declaratory and injunctive relief and to quiet title with respect to the corporation's interest in lots 18, 19 and 20 resulting from the applicable covenants in the corporation's bylaws.
¶11 The district court specifically declined "to determine the existence or non-existence of a home owners association" that might have some other rights regarding the property. Neither party contends that the stockholders of Grand Crest constitute an "owners association" as defined in 60 O.S.2011 § 852, or that the property involved in this suit is subject to the Real Estate Development Act, 60 O.S.2011 §§ 851 through 858. Therefore, we assume that the Act does not apply and look to other sources of law to resolve this appeal.
¶12 For example, Grand Crest is an Oklahoma corporation governed by the Oklahoma General Corporation Act, 19 O.S.2011 §§ 1001 through 1144. The bylaws involved in this appeal were first adopted by the original "shareholders entitled to vote." Id . § 1013(A). Bylaws of a corporation "may contain any provision, not inconsistent with law or with the certificate of incorporation, relating to the business of the corporation, the conduct of its affairs, and its rights or powers or the rights or powers of its shareholders, directors, officers or employees." Id . § 1013(B). The Grand Crest bylaws provide that the corporation's business and affairs are to be conducted by a board of directors elected by the stockholders of the corporation.
¶13 The bylaws also contain certain restrictions on the sale of corporate stock. In this regard, the Act provides: "A restriction on the transfer ... of securities of a corporation ... may be imposed ... by the bylaws or by an agreement among any number of security holders or among such holders and the corporation." Id. § 1055(B). One such provision permits a corporation to require "the holder of the restricted securities to offer to the corporation or to any other holders of securities of the corporation ... a prior opportunity, to be exercised within a reasonable time, to acquire the restricted securities." Id . § 1055(C)(1). The central issue in this appeal is whether certain restrictions in the Grand Crest bylaws can be enforced against subsequent grantees of the original Grand Crest shareholders and, particularly, the defendants.
¶14 In their summary judgment motions, the Stites and O'Connor asserted two propositions. First, they argued that to be enforceable the restrictions in the Grand Crest bylaws were required to be included in the dedication and plat creating the Grand Crest Subdivision recorded in 1954, or in the deeds from Grand Crest to the original purchasers of the lots in the Subdivision, their predecessors in title....
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