Seabrook Island Property Owners Ass'n v. Pelzer, 0942

• Decision Date: 19 January 1987
• Docket Number: No. 0942,0942
• Citation: 356 S.E.2d 411,292 S.C. 343
• Court: South Carolina Court of Appeals
• Parties: SEABROOK ISLAND PROPERTY OWNERS ASSOCIATION, Respondent, v. J. Randolph PELZER, Appellant. . Heard

Page 411

356 S.E.2d 411

292 S.C. 343

SEABROOK ISLAND PROPERTY OWNERS ASSOCIATION, Respondent, v. J. Randolph PELZER, Appellant.

No. 0942.

Court of Appeals of South Carolina.

Heard Jan. 19, 1987.

Decided April 27, 1987.

John P. Algar, of Pelzer & Algar, of Charleston, for appellant.

Gedney M. Howe, III, and David B. Wheeler, of Holmes & Thomson, Charleston, for respondent.

BELL, Judge:

Seabrook Island Property Owners Association instituted this action against J. Randolph Pelzer to collect an unpaid annual assessment for 1984 on two lots owned by Pelzer at Seabrook Island. Pelzer counterclaimed, alleging the assessment was invalid. He also sought a refund of assessments he had previously paid for the years 1976 through 1983, alleging that they, too, were invalid. The Association replied to the counterclaim, raising the defense of estoppel as to past assessments. The circuit court entered judgment for the Association in the sum of $992.25, representing the unpaid 1984 assessment, and dismissed Pelzer's counterclaim with prejudice. Pelzer appeals. We affirm in part and reverse in part.

The Association is a non-profit corporation organized under the laws of South Carolina. Its purpose is to preserve the amenities of Seabrook Island and to maintain roads, open spaces, and landscaping for all property owners of the Seabrook Island development. Its membership is composed of all property owners on Seabrook Island.

The Association is governed by protective covenants and bylaws. These authorize it to collect from each property owner an annual maintenance charge. The authority to assess and the method of assessment are prescribed in Paragraph 7 of the protective covenants and in Article VIII, Section 1, of the bylaws. Paragraph 7 of the protective covenants provides, in pertinent part:

Each lot and lot owner in the subdivision shall be subject to an annual maintenance charge based upon the assessed valuation of the premises and any improvements thereon as fixed each year by the Tax Assessor of Charleston County, South Carolina, for County taxation purposes.

Article VIII, Section 1, of the bylaws states:

The Board of Directors ... shall have the right and power to subject the property situated on Seabrook Island ... to an annual maintenance charge. * * * * The annual charge may be increased, adjusted or reduced from year to year by the Board of Directors ... and such maintenance charge may be set at a fixed rate for unimproved property and a fixed rate for improved property. After reassessment of all the property on Seabrook Island by the Tax Assessor of Charleston County, the annual charge may be increased, adjusted or reduced from year to year by the Board of Directors ... based on the dollar [sic] of the assessed valuation of the premises and any improvements constructed thereon ... as fixed each year by the Tax Assessor of Charleston County, South Carolina, for County taxation purposes.

In 1984, Pelzer received two bills for maintenance charges on his improved and unimproved lots, respectively. Although he had paid previous assessments from 1976 through 1983 without protest, he investigated the manner in which the assessments were fixed in connection with litigation for clients challenging special assessments for beach renourishment and bridge repair. ¹ As a result of his investigation, Pelzer concluded the Association had been improperly assessing his properties, because the annual maintenance charge was not based upon assessed valuation for taxation purposes as required by the restrictive covenants and bylaws. He, therefore, requested the Association in writing to reassess the property on a valid basis and refused to pay the annual maintenance charges for which he had been billed.

I.

The Association admits it has been assessing all property owners on a fixed fee basis without regard to the value of their property. Owners of improved lots are assessed at one uniform fee, regardless of the value of their lots; owners of unimproved lots are assessed at another uniform fee, regardless of the value of their lots. The flat fee for improved property for 1984 was $610.00; the fee for unimproved property was $315.00.

The Association defends this flat fee system of assessment as a "business judgment" of the Board of Directors. It contends a flat fee is authorized under the clause in Article VIII, Section 1, which says "such maintenance charge may be set at a fixed rate for unimproved property and a fixed rate for improved property." We reject this argument.

In Lovering v. Seabrook Island Property Owners Association, 291 S.C. 201, 352 S.E.2d 707 (1987), our Supreme Court construed the Association's bylaws to provide that "adjustments to the annual maintenance charge are to be based on the assessed value of the property as fixed by the county tax assessor." Id. at ----, 352 S.E.2d at 708. This is the plain import of both the restrictive covenants and the bylaws.

The authorization to set the maintenance charge at a "fixed rate" does not permit a "flat fee" system of charges. A "rate" is a proportional charge based on value, not a flat fee. A "fixed rate" is a fixed amount of assessment per stated amount of valuation. The "rate" of assessment is the proportion or ratio the maintenance charge bears to the assessed value of the property. ...