Hedgepeth v. Smoky Mountain Country Club Prop. Owners Ass'n

Docket NumberCOA22-773
Decision Date02 May 2023
PartiesSHIRA L. HEDGEPETH and RONNIE C. HEDGEPETH, Plaintiffs, v. SMOKY MOUNTAIN COUNTRY CLUB PROPERTY OWNERS ASSOCIATION, INC., A North Carolina Corporation, SMCC CLUBHOUSE, LLC, a North Carolina Corporation, CONLEYS CREEK LIMITED PARTNERSHIP, a North Carolina Limited Partnership, MARSHALL CORNBLUM, In his individual and legal capacity, MICHAEL CORNBLUM, In his individual and legal capacity, SHIRLEY SCHUBERT, In her individual and legal capacity, TERRY WALTERS, In his individual and legal capacity, RAY SHARP, In his individual and legal capacity, BILL CHEW, In his individual and legal capacity, ED LAWSON, In his individual and legal capacity, and SANFORD STEELMAN, Defendants.
CourtNorth Carolina Court of Appeals

An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

Heard in the Court of Appeals 7 February 2023.

Appeal by plaintiffs from order entered 8 July 2022 by Judge Athena F. Brooks in Swain County No. 21CVS223 Superior Court.

The Law Office of Shira Hedgepeth, PLLC, by Shira Hedgepeth, and McLean Law Firm, P.A., by Russell L. McLean, III, for plaintiffs-appellants.

Rayburn Cooper &Durham, PA, by Ashley B. Oldfield &amp Ross R. Fulton, and by Sanford L. Steelman, Jr., for defendants-appellees.

Marshall Cornblum, for defendant-appellee Marshall Cornblum.

GORE JUDGE.

Plaintiffs Shira L. Hedgepeth and Ronnie C. Hedgepeth, appeal the trial court's order dismissing their claims for failure to state a claim upon which relief may be granted. Upon review, we affirm the trial court's order dismissing the amended complaint with prejudice.

I.

This case involves an extensive history of lawsuits surrounding the Smoky Mountain Country Club Property Owners Association ("Association"). Plaintiffs purchased a townhome within the planned community of Smoky Mountain Country Club on or about 28 September 2017. At the time of purchase, plaintiffs were made aware of an ongoing lawsuit between the Association and Conleys Creek Limited Partnership ("CCLP") and SMCC Clubhouse, LLC ("SMCC"). The result of that lawsuit was a jury verdict entered against the Association in the amount of $7,071,054.46 on 31 May 2019.

This led the Association to file for Chapter 11 Bankruptcy in the Bankruptcy Court for the Western District of North Carolina. The Association and SMCC negotiated an amended confirmation plan for the multi-million dollar judgment that required the Association to do the following: (1) collect unpaid delinquent Clubhouse Dues from members of the Association; (2) collect and pay SMCC the future Clubhouse Dues owed by the members starting 1 January 2020; and (3) assess and collect a total of $1,500,000 from the members of the Association and pay this total amount in three equal installments of $500,000 on 1 January 2020, 1 January 2021, and 1 January 2022. The Association determined this required a total payment of $9,200 from all members in three yearly installments of $3,066.67, due 1 January 2020, 1 January 2021, and 1 January 2022. For a more extensive history of the events leading to the bankruptcy action, refer to In re Smoky Mountain Country Club Prop. Owners' Ass'n, Inc., 622 B.R. 653, 2020 WL 5633337 (W.D. N.C. 2020).

On 31 December 2019, plaintiffs filed a notice of appeal of the Bankruptcy Order with the United States District Court of the Western District of North Carolina, and defendants filed a motion to dismiss the appeal. Plaintiffs also filed a declaratory action in Swain County Superior Court on 26 March 2020 to determine whether the homeowners are obligated to pay Clubhouse Dues. The notice of appeal to the federal court was dismissed for lack of standing and the state court action was dismissed for lack of subject matter jurisdiction on account of the pending appeal of the bankruptcy confirmation plan. This determination was affirmed when plaintiffs appealed to this Court.

Defendants incurred attorneys' fees in its defense of the bankruptcy appeal. The Association initiated a "hearing" for all members to determine whether the Association could exclusively assess the attorneys' fees to plaintiffs rather than assessing the fees to all members of the Association under N.C. Gen. Stat. § 47F-3-115(e). On 31 March 2021, defendants conducted a "hearing" in which all members were invited, they transcribed the hearing, and they reduced their Decision to writing, which was dispersed to all members. The Board of the Association determined plaintiffs were negligent and acted with misconduct by filing the appeal to the federal court, and therefore, plaintiffs were jointly and severally assessed the total amount of attorneys' fees in the amount of $69,623, alongside the Youngs, who were co-plaintiffs in the bankruptcy appeal.

On 6 October 2021, plaintiffs filed the lawsuit that is now on appeal before this Court. Defendants filed a motion to dismiss the verified complaint. Plaintiffs chose to voluntarily dismiss without prejudice these defendants: CCLP, Michael Cornblum, Ray Sharp, Bill Chew, Ed Lawson, and Sanford Steelman. On 8 February 2022, plaintiffs filed an amended verified complaint naming the Association, SMCC, Shirley Shubert, Marshall Cornblum, and Ed Lawson. Plaintiffs raised the following claims: violation of the North Carolina Debt Collection Act ("NCDCA"), slander and libel per se, slander and libel per quod, and violation of the North Carolina Unfair and Deceptive Trade Practices Act ("UDTPA").

Defendants filed a motion to dismiss the amended verified complaint for failure to state a claim upon which relief may be granted, and this motion was heard in Swain County Superior Court on 25 April 2022. The trial court granted defendants' motion to dismiss with prejudice and taxed the court costs against plaintiffs on 8 July 2022. Plaintiffs timely appealed the final order through an amended notice of appeal filed 8 August 2022.

II.

Plaintiffs appeal of right pursuant to N.C. Gen. Stat. § 7A-27(b). Plaintiffs raise the following issues for this Court to consider: (1) whether the Clubhouse Dues are valid against plaintiffs and whether the Association has authority under section 47F-3-115(e) to assess attorneys' fees against plaintiffs; (2) whether the trial court erred by dismissing the NCDCA claim; (3) whether the trial court erred by dismissing the UDTPA claim; (4) whether the trial court erred by dismissing the defamation claims; and (5) whether the trial court erred by taxing costs against plaintiffs.

Plaintiffs' issues on appeal all stem from the order granting the Rule 12(b)(6) motion to dismiss. "The standard of review for an order granting a Rule 12(b)(6) motion to dismiss is well established. Appellate courts review de novo an order granting a Rule 12(b)(6) motion to dismiss." Taylor v. Bank of Am., N.A., 382 N.C. 677, 679, 878 S.E.2d 798, 800 (2022). When conducting de novo review of a 12(b)(6) motion, we look to see "whether, as a matter of law, the allegations of the complaint, treated as true, are sufficient to state a claim upon which relief can be granted under some legal theory." Lynn v. Overlook Dev., 328 N.C. 689, 692, 403 S.E.2d 469, 471 (1991).

Additionally, the trial court construes the complaint liberally and will only dismiss the appeal when "it appears that the plaintiffs could not prove any set of facts in support of their claim" for relief. Id. Even with this standard in mind, "[w]hen the complaint on its face reveals that no law supports the claim, reveals an absence of facts sufficient to make a valid claim, or discloses facts that necessarily defeat the claim, dismissal is proper." Moch v. A.M. Pappas &Assocs., LLC, 251 N.C.App. 198, 206, 794 S.E.2d 898, 902 (2016) (citations omitted). Accordingly, we address each issue in turn through these lenses.

A.

Plaintiffs first argue as "preliminary matters," within their brief, whether the Clubhouse Dues are valid against them as assignees of the Restrictive Covenants through their warranty deed. Within this same vein, plaintiffs also argue the Association lacked authority to conduct a "hearing" pursuant to section 47F-3-115(e). Defendants argue plaintiffs did not raise legal claims to support these arguments at the trial court.

Plaintiffs did not initiate a claim of relief for these challenges within their amended complaint apart from the allegations related to the NCDCA and UDTPA claims. Although plaintiffs challenged the validity of the Clubhouse Dues and the authority of the Association, these arguments were within the context of plaintiffs' NCDCA and UDTPA claims. Therefore, on appeal, plaintiffs cannot for the first time argue these as separate issues from the claims argued at the lower court after failing to address them separately on the face of their complaint. "[T]he law does not permit parties to swap horses between courts in order to get a better mount, meaning, . . . a contention not raised and argued in the trial court may not be raised and argued for the first time in the appellate court." Wood v. Weldon, 160 N.C.App. 697, 699, 586 S.E.2d 801, 803 (2003) (internal quotation marks and citations omitted). Accordingly, plaintiffs' attempt to present new arguments on appeal when no legal claims were presented at the lower court are unpreserved. As an appellate court, we cannot consider unpreserved arguments. See N.C. R. App. P. 10(a)(1). Therefore, we will not consider these claims for the first time on appeal.

B.

Plaintiffs argue the trial court erred in dismissing their NCDCA claim because their complaint alleged sufficient facts in support of that claim to withstand a 12(b)(6) motion....

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