Rea v. Breakers Ass'n, Inc., 94-CA-00192-SCT
| Decision Date | 04 April 1996 |
| Docket Number | No. 94-CA-00192-SCT,94-CA-00192-SCT |
| Citation | 674 So.2d 496 |
| Parties | Jimmy REA and Sammie C. Rea v. The BREAKERS ASSOCIATION, INC. |
| Court | Mississippi Supreme Court |
Joshua J. Wiener, Jackson, for Appellant.
William P. Featherston, Jr., Ridgeland, for Appellee.
Before DAN M. LEE, C.J., and BANKS and MILLS, JJ.
MILLS, Justice, for the Court:
On September 9, 1993, The Breakers Association, Inc. (the Association), filed a Complaint for Judicial Foreclosure in the Chancery Court of Madison County against the condominium unit owned by Jimmy Rea and Sammie C. Rea, alleging that the Reas were delinquent in paying their monthly carrying charges to the Association. The Reas answered by affirming that they were ready, willing and able to pay all amounts found to be lawfully due to the Association. They The case was tried on January 26, 1994. Ruling from the bench at the conclusion of the trial, the chancellor awarded the Association judgment for the full amount of carrying charges and late charges which it sought. He specifically denied the Reas' request for a declaration that the Association's 20% per month late charge is unlawful. The Chancellor granted the Reas relief on the other portion of their counterclaim, ordering the Association to perform various repairs and maintenance items within forty-five days.
counterclaimed that the Association had failed to maintain their unit as required by the Association's governing declaration of covenants and bylaws. The Reas sought a declaration that the Association's imposition of a 20% per month late charge on delinquent monthly carrying charges was unlawful under Miss.Code Ann. § 75-17-27 (1972). During the pendency of this action, and with notice to the court and opposing counsel, the Reas tendered in trust to their counsel all amounts claimed to be due by the Association.
The Reas promptly paid in full the amount of the judgment entered below, and filed their appeal to this Court. Aggrieved, they assign as an issue:
Whether the Chancellor erred in refusing to declare unlawful the Association's 20% per month late charge on Defendants' "delinquent" monthly carrying charges?
The Association cross-appeals, assigning as an issue:
Whether the court below erred in failing to award the full amount of the attorney's fees incurred by appellee in the prosecution of its action to collect delinquent homeowners assessments owed by the Reas?
FACTS
Jimmy Rea and Sammie Rea, husband and wife, were owners of a condominium unit at "The Breakers," located on the Ross Barnett Reservoir in Madison County, Mississippi. The condominium complex, the legal name of which is "The Breakers Association, Inc.," was established under the Mississippi Condominium Law, Miss.Code Ann. § 89-9-1 (1972), as a homeowners' association of condominium unit owners, pursuant to a declaration of covenants and bylaws (hereinafter declaration) recorded in the land records of Madison County.
The land on which The Breakers is located is leased by the Association from the Pearl River Water Valley District. Subject to the "land lease," unit owners receive title to their unit as a separate parcel of real property commonly conveyed by an "assignment of leasehold interest" recorded in the land records of Madison County.
The declaration provides that all owners of dwelling units shall be members of the Association. The members elect a board of governors, which is charged with management of the Association. The board of governors hires a general manager and staff to attend to the day-to-day work of managing the Association's finances, and maintaining the complex.
The declaration provides that the Association will charge each unit owner a monthly "assessment or carrying charge." The carrying charges defray the Association's common expenses, including the expenses associated with managing the Association and maintaining the common areas of the complex.
The Association is also obligated to maintain and repair the exteriors of the owners' dwelling units. In addition to monthly carrying charges, unit owners are invoiced for their pro rata share of the casualty insurance carried by the Association, and their share of the land lease.
The bylaws authorize the board to fix a penalty or "late charge" on delinquent payments. The board of governors of the Association adopted a 20% late fee to be charged on unit owners' delinquent monthly charges. If a unit owner fails to pay a monthly carrying charge, and the default continues for an entire year, the unpaid monthly carrying charge will be assessed each month with a 20% late fee, resulting in annual total late fees equaling 240% of the amount due.
Unpaid late charges from a preceding month are added to the principal balance due Upon default by a unit owner in paying monthly carrying charges, the bylaws authorize the Association to "bring an action against the member personally obligated to pay the same, or foreclose on the lien against the unit or units then belonging to said member in the manner provided for in the foreclosure of mortgages, deeds of trust or other liens on real property in the State of Mississippi." See Miss.Code Ann. § 89-9-21 (1972) ().
the next month, to which the 20% per month late charge is applied. By charging 240% per annum on each monthly payment, and by charging late fees on unpaid late fees, the Association accrues a balance due from the unit owner that grows exponentially.
This dispute ripened when the Reas began to wilfully withhold payment of their monthly carrying charges. They did so to show their dissatisfaction with the manner in which the Association was maintaining the exterior of their unit. The Reas hoped that withholding payment would "get the Association's attention."
Discussions and meetings took place between the Reas, the Association's general manager, and the board regarding the Reas' complaints about the maintenance of their unit. The Reas presented their grievances at a meeting with the board of governors in April 1993, including a discussion of the maintenance and repairs needed at their unit, and stated their displeasure with the Association's 20% per month late charge. Believing that a constructive dialogue had been established at the April 1993 meeting with the board of governors, the Reas brought their account current immediately after the meeting.
After attending the April 1993 meeting and bringing their account current, the Reas continued to be dissatisfied by the Association's efforts to repair and maintain their unit, which they characterized as inadequate "patchwork." Also, they continued to be at an impasse with the Association regarding its adoption of the 20% per month late charge, which the Reas believed to be unfair and unlawful. Accordingly, the Reas resumed withholding payment of their monthly carrying charges.
The Association posted notice of the Reas' delinquency and pending foreclosure at every unit in the complex. It also recorded in the Madison County land records a notice of assessment, claiming a lien upon the Reas' unit. The Association then commenced this action seeking judicial foreclosure of the Reas' unit.
At the time of the filing of the complaint, the Association alleged that the Reas were delinquent in paying carrying charges to the Association in the amount of $1,154.75. By the time of trial, the Association showed the Reas' accumulated unpaid account balance to be $3,320.50. Of this amount, $1,378.83, or 42% of the balance, consisted of late charges.
The Reas answered and counterclaimed, affirming that they were ready, willing and able to pay all amounts lawfully due the Association. The Reas alleged, however, that the Association had failed to maintain the exterior of their unit as required by the declaration of covenants. Further, the Reas challenged, under Miss.Code Ann. § 75-17-27, the board of governors' adoption of a 20% per month late charge on unit owners' delinquent carrying charges.
During the pendency of this action in the trial court, the Reas tendered all amounts invoiced by the Association to their counsel. With notice to counsel opposite and the court, this amount was held in counsel's trust account pending the outcome of the trial.
Much proof was presented by both parties regarding the Association's maintenance and repair of the Reas' unit. Ruling from the bench at the conclusion of the trial, the chancellor, among his other rulings, ordered the Association to perform various repairs to the Reas' unit within forty-five days.
The chancellor rebuffed the Reas' challenge to the Association's late charges, and upheld the full amount of the Association's claim for principal, interest and late charges due, plus part of its attorneys' fees claim, for a total of $3,652.55. The Reas promptly paid this amount in full from the funds that had been held in escrow, and notice of satisfaction
of the judgement was duly recorded. Although not disclosed by this record, upon request of the Reas, the Association later canceled the notice of assessment against the unit which it had recorded in the Madison County land records.
Standard of Review
This Court's standard of review in passing on questions of law is de novo. Hattiesburg...
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