Moss Creek Homeowners Ass'n v. Bissette

• Decision Date: 02 February 2010
• Docket Number: No. COA08-1156-2.,COA08-1156-2.
• Court: North Carolina Court of Appeals
• Parties: MOSS CREEK HOMEOWNERS ASSOCIATION, INC., Deloris Gail Benton, Jo Anne K. Bishop, Janice Hamby, David L. Hamilton, David J. Knoche, and Charles F. Peeler, Plaintiffs, v. Ted L. BISSETTE, Mary Holly Bissette, Scott W. Rich, Laura K. Rich, and Provident Funding Associates, Limited Partnership, Defendants, v. Ted L. Bissette and Mary Holly Bissette, Scott W. Rich and Laura K. Rich, Third Party Plaintiffs, v. Terry Miller, Jim Benton, Angela Peeler, Fred Bishop and Peggy Hamilton, Third Party Defendants.

689 S.E.2d 180

MOSS CREEK HOMEOWNERS ASSOCIATION, INC., Deloris Gail Benton, Jo Anne K. Bishop, Janice Hamby, David L. Hamilton, David J. Knoche, and Charles F. Peeler, Plaintiffs, v. Ted L. BISSETTE, Mary Holly Bissette, Scott W. Rich, Laura K. Rich, and Provident Funding Associates, Limited Partnership, Defendants, v. Ted L. Bissette and Mary Holly Bissette, Scott W. Rich and Laura K. Rich, Third Party Plaintiffs, v. Terry Miller, Jim Benton, Angela Peeler, Fred Bishop and Peggy Hamilton, Third Party Defendants.

No. COA08-1156-2.

Court of Appeals of North Carolina.

February 2, 2010.

Appeal by Ted and Mary Bissette (as defendants and third-party plaintiffs) from orders entered 3 May 2006 by Judge John O. Craig III, 29 December 2006 by Judge Ronald E. Spivey, 26 March and 12 June 2007 by Judge Steve A. Balog, 30 April 2007 by Judge Edgar B. Gregory, 28 November 2008 by Judge Paul C. Ridgeway, and 12 and 13 February and 4 March 2008 by Judge James M. Webb in Guilford County Superior Court. Heard in the Court of Appeals 21 April 2009. Petition to Rehear allowed on 25 November 2009. This opinion supersedes opinion filed on 20 October 2009.

Robertson, Medlin & Blocker, PLLC, by John F. Bloss, Greensboro, for defendants and third-party plaintiff-appellants.

Forman Rossabi Black, P.A., by T. Keith Black and Emily J. Meister; and Gregory A. Wendling, Greensboro, for plaintiffs and third-party defendant-appellees.

HUNTER, JR., ROBERT N., Judge.

Ted and Mary Bissette (the "Bissettes") appeal from orders: (1) granting plaintiffs' and third-party defendants' summary judgment motion, (2) dismissing their claim for breach of fiduciary duty, and (3) awarding attorneys' fees for contempt and enforcement of subdivision restrictions. We affirm in part and reverse in part.

FACTS

Moss Creek is a single-family residential development in Guilford County, North Carolina, developed by Moss Creek Land Development Company, Inc. ("Development Company"). On 18 June 1987, the Moss Creek Homeowners Association, Inc. (the "Association") was incorporated; and following incorporation, Development Company filed a Declaration of Covenants, Conditions, and Restrictions for Moss Creek (the "Declaration") and the Bylaws of Moss Creek Home Owners Association (the "Bylaws") with the Guilford County Register of Deeds.

The Declaration reserves to the Development Company, as "declarant," certain approval rights restricting purchasers of lots from locating buildings on lots, installing well and septic tanks, erecting mailboxes, and altering landscaping on property without the Association's approval. Moreover, the Declaration gives to the Association a first right of refusal to purchase lots and provides the Declarant, the Association or any lot owner the right to sue to enforce the covenants. Section 5 of Article III of the Declaration provides in particular that "[n]o Lot covered by this Declaration may be subdivided by sale or otherwise as to reduce the total area of the Lot as shown on the maps and plats of any Sections of Moss Creek referred to above except by wrtten [sic] consent of the Declarant."

On 30 January 1990, Development Company transferred its rights as "declarant" to Byron Investments, Inc. ("Byron"). Byron filed for bankruptcy protection in 1991, and received its discharge from bankruptcy on 24 August 2005. On 23 December 1993, the Bissettes acquired title to Lot 6 in Moss Creek Development, and subsequently built a house on the lot.

On 5 July 2002, the Bissettes acquired title to the parcel of property adjoining their lot known as Lot 8, and on 10 November 2003, the Bissettes recorded an Instrument of Combination combining the two lots formally. The Bissettes thereafter recorded a plat on 5 December 2003 which (1) split former Lot 8 into two pieces and labeled the new parcels Lot 1 and Lot 2, and (2) recombined Lot 6 and Lot 2 to create a new L-shaped Lot 6 which expanded the backyard of the Bissettes. On 27 January 2004, the Bissettes placed a deed of trust on the combined property of Lot 6 and Lot 2 for $165,500.00 payable to Provident Funding Associates, L.P. ("Provident").

On 21 August 2004, the Association placed the Bissettes on notice that the Association would conduct a hearing on 31 August 2004 to determine whether the Bissettes were in violation of the subdivision covenant in the Declaration. The Bissettes failed to appear at the hearing, and were fined by the Association until such time as the violation was remedied.

Without prior notice to the Association, the Bissettes sold Lot 1 to Scott and Laura Rich (the "Riches") on 28 April 2005. The sale of Lot 1 and the architectural plans of the Riches' home to be constructed thereon were not approved by the Association prior to the beginning of the construction of their house on 2 May 2005.

PROCEDURAL HISTORY

The Association, Deloris Gail Benton, Jo Anne K. Bishop, Janice Hamby, David L. Hamilton, David J. Knoche, and Charles F. Peeler (collectively "plaintiffs") filed a complaint for the present action on 18 May 2005. The Bissettes filed an answer, counterclaim, and third-party complaint against Terry Miller, Jim Benton, Angela Peeler, Fred Bishop and Peggy Hamilton (the "board members") on 25 July 2005. The Bissettes filed a motion for summary judgment on 17 November 2005.

Plaintiffs filed their amended complaint on 7 June 2006, and sought declaratory and injunctive relief against the Bissettes and Riches for violating the restrictive covenants. Plaintiffs further asked the trial court to void the deed of trust executed by the Bissettes to Provident.

On 7 July 2006, the Bissettes filed an answer to the amended complaint while renewing their counterclaim and third-party complaint. The Bissettes' amended pleading denied liability as to plaintiffs' amended complaint; affirmatively pled laches, waiver, and estoppel; and sought damages for slander and breach of fiduciary duty against the board members.

Provident filed an answer and cross-claim against the Bissettes on 11 July 2006; and on 17 July 2006, the Association filed a motion for summary judgment on all claims pending against the Bissettes. On 1 August 2006, plaintiffs and the board members (collectively "appellees") filed a Rule 12 motion to dismiss, motion for judgment on the pleadings, motion for more definite statement, motion to strike, and motion for Rule 41 sanctions including involuntary dismissal against the Bissettes.

On 29 December 2006, Judge Ronald E. Spivey entered an order granting summary judgment to appellees: (1) denying the Bissettes' summary judgment motion; (2) finding that the Bissettes had violated the restrictive covenants; and (3) denying all the Bissettes' defenses "including but not limited to[:]"

laches, waiver, estoppel, improper election of [the Association's board of directors,] that Defendant Mary Holly Bissette and/or [Byron] constitute the Declarant [in the Declaration], and approval/ratification of [the Bissettes'] actions by any person or entity.

The order further provided that the Bissettes pay: $16,290.00 in fines to the Association, $6,673.66 in costs of the action, and $60,026.07 in "partial" attorney fees to plaintiffs.

Judge Spivey entered a simultaneous second order with regard to appellees' motions under Rules 12 and 41 of the North Carolina Rules of Civil Procedure, and awarded appellees an additional $11,656.25 in attorneys' fees and $240.79 in costs to be paid by the Bissettes within 45 days. The second order also denied appellees' requested Rule 41 motion, granted appellees' motion for a more definite statement on the issue of breach of fiduciary duty, and directed the Bissettes to file a more definite statement no later than 30 days from 29 December 2006.

On 29 January 2007, the Bissettes filed a more definite statement. On 14 February 2007, appellees renewed their Rules 12 and 41 motions to dismiss, and moved further for sanctions contending that the Bissettes had failed to comply with Judge Spivey's prior orders. On 15 February 2007, plaintiffs filed a show cause motion for contempt claiming that the Bissettes had failed to timely pay the costs awarded in the first 29 December 2006 order. On 7 March 2007, appellees filed a show cause motion on the Bissettes' failure to pay the costs assessed in the second 29 December 2006 order.

Contempt hearings were held on 6 and 30 March 2007, and Judge Steve A. Balog found the Bissettes in willful contempt. Despite multiple opportunities to purge themselves of contempt, the Bissettes failed to do so, additional legal fees were awarded, and Mary Holly Bissette was briefly incarcerated.

On 17 January 2008, the Bissettes moved for summary judgment arguing that the Declaration should be rescinded or reformed. Judge James M. Webb denied their motion on 4 March 2008, and granted plaintiffs' motion for summary judgment on "any remaining claims not previously adjudicated." Notice of appeal was properly given, and this Court has jurisdiction to hear the matter. N.C. Gen.Stat. § 1-279.1 (2007).

STANDARD OF REVIEW

The standard of review on a summary judgment motion is whether there is a genuine issue of material fact and whether the moving party is entitled to judgment as a matter of law. Oliver v. Roberts, 49 N.C.App. 311, 314, 271 S.E.2d 399, 401 (1980), cert. denied, 276 S.E.2d 283 (1981); Barbour v. Little, 37 N.C.App. 686, 692, 247 S.E.2d 252, 256, disc. review denied, 295 N.C. 733, 248 S.E.2d 862 (1978). "In ruling on the motion, the court must consider the evidence in the light most favorable to the nonmovant, who is entitled to the benefit of all favorable inferences which may reasonably be drawn from the facts proffered." Averitt v. Rozier, 119 N.C.App. 216, 218, 458 S.E.2d 26, 28 (1995). Summary judgment may be properly shown by a party: "`(1) proving that an essential element of the plaintiff's case is non-existent, or (2) showing through discovery that the plaintiff cannot produce evidence to support an...