Rice v. Lost Mountain Homeowners Assoc.

• Decision Date: 16 August 2004
• Docket Number: No. A04A1244.,A04A1244.
• Citation: Rice v. Lost Mountain Homeowners Assoc., 604 S.E.2d 215, 269 Ga. App. 351 (Ga. App. 2004)
• Parties: RICE et al. v. LOST MOUNTAIN HOMEOWNERS ASSOC., INC. et al.
• Court: Georgia Court of Appeals

604 S.E.2d 215

269 Ga. App. 351

RICE et al. v.LOST MOUNTAIN HOMEOWNERS ASSOC., INC. et al.

No. A04A1244.

Court of Appeals of Georgia.

August 16, 2004.

Reconsideration Denied August 31, 2004.

Certiorari Denied November 22, 2004.

J. Andrew Rice, Power Springs, pro se.

Kathryn W. Rice, Power Springs, pro se.

Brock, Clay, Calhoun, Wilson & Rogers, Richard W. Calhoun, Marietta, for appellees.

ELDRIDGE, Judge.

J. Andrew Rice and Kathryn W. Rice, who are pro se appellants, own a home in the Lost Mountain Township subdivision, which was developed in three phases; they lived in Phase III.They appeal from a final injunction brought against them by the Lost Mountain Homeowners Association, Inc.("LMHA") for constructing and maintaining an 11-foot-high white vinyl stockade type fence in violation of restrictive covenants applicable to their house.The Rices challenge the standing of LMHA and of the applicability to them of the restrictive covenants.Finding no error, we affirm.

LMHA created under its bylaws the Architectural Control Committee("ACC") for the Lost Mountain Township subdivision.On June 8, 1989, the original developers created LMHA, which the Rices contend was only for Phase I. The Rices contend that on May 15, 1987, the developers created Lost Mountain Township Association, Inc.("LMTA") to govern the covenants for Phase II and Phase III.In October 2000, the Rices created as the sole owners, officers, and shareholders a rival Lost Mountain Township Homeowners Association, Inc.("LMTHA").However, in 1996, by a majority vote of all lot owners in the entire Lost Mountain Township subdivision, including Phases I, II, and III, LMHA and its ACC were designated the governing entity for the Township.

The Rices purchased their lot in Phase III and throughout the period prior to the litigation, they acted as if LMHA and its ACC were the governing entities for the entire subdivision.They paid the assessed homeowner's association dues to LMHA, attended LMHA meetings, and corresponded with LMHA.The Rices tendered their architectural submissions for review and approval by the ACC of LMHA.In 1999, as the governing entity for the subdivision, LMHA sold a parcel of land and distributed the proceeds to all residents of the Lost Mountain Township subdivision, which included the Rices.

On June 7, 2002, LMHA sued the Rices for violating the restrictive covenants.On September 13, 2002, Larry Cox, Mark Lindsey, and Kathryn Rice, acting as the ACC, sought to intervene; however, on August 3, 2001, the interveners were given authority by only one of the two defunct developer corporations, which sold the last lot in 1996.Therefore, the developer's authority over the subdivision ceased as a matter of law in 1996 after the last lot was sold."A developer of a subdivision who reserved the authority to waive restrictions in covenants running with the land no longer possesses that authority after divesting himself of his interest in the subdivision."Armstrong v. Roberts,254 Ga. 15, 16, 325 S.E.2d 769(1985).

On April 24, 2003, after a bench trial, the trial court entered its final order that the fence comply with the covenants, from which the Rices now appeal.

1.The Rices' motion to disqualify and strike the brief of appellees is denied.

2.The Rices contend that the trial court erred as a matter of law in finding that LMHA and its ACC had standing to bring the suit against them.

(a) The Rices claim lack of standing in LMHA not because it is a noncorporation, but because it was created to govern Phase I only and not to govern Phases II and III.The question is whether or not LMHA and its ACC had authority to govern the entire Lost Mountain Township subdivision consisting of all homes in Phases I, II, and III.The covenants applicable to the Lost Mountain Township subdivision provide that Phases II and III shall be governed by the Lost Mountain Township Association, Inc., its successors and assigns.By 75 percent, homeowners in Phase I, and by 66 percent, homeowners in Phases II and III voted to have LMHA as their governing homeowners' association.Therefore, the vote of owners of lots in the Lost Mountain Township subdivision to make LMHA the governing body for Phases I, II, and III made LMHA the successor and assign of the Lost Mountain Township Association, Inc. as a merger.See generallyFloyd v. Springfield Plantation Property Owners' Assn.,245 Ga.App. 535, 537(4), 538 S.E.2d 455(2000).Whether or not there were other homeowner associations ceases to matter where the majority of the homeowners in the entire subdivision voted to have only one homeowners' association govern the subdivision rather than to have multiple competing associations.The 1996 majority vote of all lot owners in the Lost Mountain Township subdivision was sufficient to have LMHA designated as the governing entity for the entire Lost Mountain Township subdivision, even if LMHA was originally to govern only Phase I.

Further, until the Rices were denied permission to erect their fence by the ACC of LMHA, they recognized, accepted, and relied upon LMHA as the governing body by paying it dues, attending its meetings, and participating in LMHA.Ron Cannon, the president of LMHA, testified that the Rices sought to have LMHA enforce the covenants against the Rices' neighbors.Even more compelling, the Rices accepted their pro rata distribution proceeds of the sale of property in the subdivision by LMHA.Thus, the Rices are now equitably estopped to argue that LMHA does not govern the entire Lost Mountain Township subdivision.Pethel v. Waters,220 Ga. 543, 552(4), 140 S.E.2d 252(1965);Davis v. Auerbach,78 Ga.App. 575, 579-580(3), 51 S.E.2d 527(1949).

(b) On April 4, 2000, LMHA commenced this action against the Rices.On February 24, 2001, LMHA was administratively dissolved by the Secretary of State for failure to file its annual registration.Such suit was voluntarily dismissed, because of such dissolution, and on June 7, 2002, was renewed.An administratively dissolved corporation may have the capacity to maintain a lawsuit."The question of whether an administratively-dissolved corporation lacks capacity to pursue a particular course of action must be decided on a case-by-case basis."(Citation omitted)Crews v. Wahl,238 Ga. App. 892, 894(1), 520 S.E.2d 727(1999).Gas Pump v. General Cinema Beverages etc.,263 Ga. 583, 584-585(2), 436 S.E.2d 207(1993), is distinguishable in law and fact, because such authority dealt with the administrative dissolution and reinstatement of a business corporation for profit under a different chapter of the Corporate Code and was beyond the two years within which it could be reinstated; here, LMHA is a nonprofit corporation organized under a different chapter of the Corporate Code, which contains no time limit upon reinstatement of an administratively dissolved corporation and where the lawsuit was pending at the time of administrative dissolution.

(c) Under Article III § 5(a) of the Lost Mountain Township subdivision covenants, "the Architectural Control Committee shall be empowered to enjoin or remove any such construction" that violates the subdivision covenants.Thus, the ACC of LMHA, consisting of Charlie Butler, Don Mateyka, Ron Cannon, Clark Allen, and Bart Leeds, has standing to enforce such subdivision covenants.

In 1999, the Rices submitted their application to construct their proposed fence to the ACC and dealt with its members as the proper authority.

Legally insufficient covenants may be enforced under the doctrine of promissory estoppel where landowners continue to abide by and enforce their covenants in reliance on the covenants' continued viability.SeeCanterbury Forest Assn. v. Collins,243 Ga.App. 425, 427-428(2), 532 S.E.2d 736(2000);McLean v. Turtle Cove Property Assn.,222 Ga.App. 709, 710(1), 475 S.E.2d 718(1996)."This court, as indeed all civilized courts, has ruled that such recognition of a being- even of an artificial being — will stop the mouth of any other being, natural or artificial, from denying, in a case growing out of such recognition, that the being thus recognized ever had being."Imboden v. Etowah, etc., Mining Co.,70 Ga. 86, 107(1)(1883).

(d) The Rices contend that their recently created LMTHA and its architectural control committee, consisting of Larry Cox, Mark Lindsey, and Kathryn W. Rice, interveners, was the appropriate architectural control committee to approve their fence.The original developers, Sayre Ross Company and Knox Brothers, Inc., sold their last lot prior to 1996, and certainly by 1999 had lost any and all rights, authority, or power over the subdivision as a matter of law and were without authority to appoint the interveners to any architectural control committee.Armstrong v. Roberts,supra at 15, 325 S.E.2d 769.

Thus, both LMHA and its ACC had standing and were proper parties as found by the trial court as a matter of fact and law.

3.The Rices contend that the trial court erred in finding that the covenants and amendments run with their land.

On May 22, 1987, the covenants that the Rices complained about were recorded in the deed records.In 1991 after the covenants were recorded, the Rices purchased their lot.The recorded covenants gave the Rices constructive notice of the restrictions to which their lot was subject.Hendley v. Overstreet,253 Ga. 136, 137, 318 S.E.2d 54(1984).Restrictive covenants on real estate run with the title to the land and are specialized contracts that inure to the benefit of all property owners affected.Duffy v. Landings Assn.,245 Ga.App. 104, 106-107, 536 S.E.2d 758(2000).The parties to the contract/covenants were LMHA, its ACC, and each and every lot owner of the Lost Mountain Township subdivision, Phases I, II, and III.The courts will give effect to the substantial compliance with covenant procedures and the clear intent and purpose of the covenants....