Shearon Farms Townhome Owners Ass'n II, Inc. v. Shearon Farms Dev., LLC

• Decision Date: 04 August 2020
• Docket Number: No. COA18-1308,COA18-1308
• Citation: 847 S.E.2d 229
• Court: North Carolina Court of Appeals
• Parties: SHEARON FARMS TOWNHOME OWNERS ASSOCIATION II, INC., Plaintiff, v. SHEARON FARMS DEVELOPMENT, LLC ; Dan Ryan Builders–North Carolina, LLC; Abbington Heights, LLC ; Jeld-Wen, Inc., and Jeld-Wen Holding, Inc., Defendants. Dan Ryan Builders–North Carolina, LLC, Defendant/Third-Party Plaintiff, v. JP&M Enterprise, Inc. ; JP&M Enterprise, Inc. d/b/a Ace Vinyl Siding ; Alpha Omega Construction Group of Raleigh, Inc.; Alpha Omega Construction Group of Raleigh, Inc. d/b/a Alpha Omega Const. Group of Raleigh; BMC East, LLC; BMC East, LLC d/b/a BMC; BMC East, LLC f/k/a Stock Building Supply, LLC d/b/a Stock Building Supply; Brinley's Grading Service, Inc.; Brinley's Grading Service, Inc. d/b/a Brinley's Grading Service; GMA Supply Inc.; GMA Supply Inc. f/k/a GMA Supply LLC d/b/a GMA Supply; Locklear Roofing Inc.; Locklear Inc.; Locklear Roofing Inc. d/b/a Locklear Roofing; Locklear Inc. d/b/a Locklear Roofing; Taylor's Landscaping, Inc. ; Taylor's Landscaping, Inc. d/b/a Taylor's Landscaping Inc., Third-Party Defendants.

847 S.E.2d 229

SHEARON FARMS TOWNHOME OWNERS ASSOCIATION II, INC., Plaintiff,

v.SHEARON FARMS DEVELOPMENT, LLC ; Dan Ryan Builders–North Carolina, LLC; Abbington Heights, LLC ; Jeld-Wen, Inc., and Jeld-Wen Holding, Inc., Defendants.

Dan Ryan Builders–North Carolina, LLC, Defendant/Third-Party Plaintiff,

v.JP&M Enterprise, Inc. ; JP&M Enterprise, Inc. d/b/a Ace Vinyl Siding ; Alpha Omega Construction Group of Raleigh, Inc.; Alpha Omega Construction Group of Raleigh, Inc. d/b/a Alpha Omega Const. Group of Raleigh; BMC East, LLC; BMC East, LLC d/b/a BMC; BMC East, LLC f/k/a Stock Building Supply, LLC d/b/a Stock Building Supply; Brinley's Grading Service, Inc.; Brinley's Grading Service, Inc. d/b/a Brinley's Grading Service; GMA Supply Inc.; GMA Supply Inc. f/k/a GMA Supply LLC d/b/a GMA Supply; Locklear Roofing Inc.; Locklear Inc.; Locklear Roofing Inc. d/b/a Locklear Roofing; Locklear Inc. d/b/a Locklear Roofing; Taylor's Landscaping, Inc. ; Taylor's Landscaping, Inc. d/b/a Taylor's Landscaping Inc., Third-Party Defendants.

No. COA18-1308

Court of Appeals of North Carolina.

Filed: August 4, 2020

Jordan Price Wall Gray Jones & Carlton PLLC, by Brian S. Edlin, Raleigh, and H. Weldon Jones, III, for plaintiff-appellant.

Shumaker, Loop & Kendrick, LLP, Charlotte, by Frederick M. Thurman, Jr. and William H. Sturges, and The Sieving Law Firm, A.P.C., by Richard N. Sieving, for defendant-appellee JELD-WEN, Inc.

DIETZ, Judge.

Plaintiff Shearon Farms Townhome Owners Association II, Inc. is a homeowners’ association in Wake County. In early 2018, some members of the association noticed that the siding of their homes was warped and distorted and looked as if it were melting.

After investigating the damage, the association brought tort and warranty claims against JELD-WEN, Inc., a window manufacturer, alleging that the damage was the result of defective windows installed in the townhomes. The trial court dismissed the association's claims against JELD-WEN after concluding that the association lacked standing to bring those claims either on its own behalf or on behalf of its members.

We affirm the dismissal for lack of standing. As explained below, this action seeks monetary recovery for damage to the exterior surfaces of townhomes owned by individual members of the association. Under settled standing precedent, those claims for individual money damages cannot be pursued by a homeowners’ association under theories of associational standing.

Moreover, although the organizational declaration for the association obligates it to maintain and repair the exterior siding of those townhomes, that contractual obligation applies only to upkeep resulting from "normal usage and weathering." The declaration expressly excludes maintenance or repair resulting from the sort of unexpected damage alleged in this complaint.

Accordingly, the trial court properly determined that the association lacked standing to pursue the claims alleged against JELD-WEN because it had neither associational standing nor individual standing sufficient to confer a justiciable stake in the controversy. We therefore affirm the trial court's order.

Facts and Procedural History

Shearon Farms Townhome Owners Association II, Inc.¹ is a non-profit homeowners’ association incorporated in North Carolina. The association's members own townhomes in a community known as "Shearon Farms Townhomes II" within the Shearon Farms neighborhood in Wake County.

In early 2018, several townhome owners in the neighborhood reported to the association that the exterior siding on their townhomes was severely damaged, as if it had melted. The association investigated and determined that this damage was "due to abnormal reflections of extremely high heat from the windows on townhome units." In May 2018, Shearon Farms filed this action against various parties involved in the construction of the townhomes and against JELD-WEN, Inc., the manufacturer of the windows installed in the townhomes.

JELD-WEN moved to dismiss the claims against it for lack of standing. After a hearing, the trial court granted the motion, finding a "lack of standing to pursue claims against Defendant JELD-WEN, INC. because Plaintiff is not legally entitled to assert claims pertaining to the windows and because the Plaintiff is not legally entitled to assert claims for warped, distorted, or melted siding." Shearon Farms timely appealed.

Analysis

I. Appealability

Before we address the merits of this appeal, we must address a challenge to this Court's jurisdiction. Shearon Farms concedes that the challenged order is not a final judgment because the order dismissed its claims against JELD-WEN but not its claims against the other defendants named in the action. See Pratt v. Staton , 147 N.C. App. 771, 772–73, 556 S.E.2d 621, 623 (2001).

"Ordinarily, this Court hears appeals only after entry of a final judgment that leaves nothing further to be done in the trial court." Crite v. Bussey , 239 N.C. App. 19, 20, 767 S.E.2d 434, 435 (2015). "The reason for this rule is to prevent fragmentary, premature and unnecessary appeals by permitting the trial court to bring the case to final judgment before it is presented to the appellate courts." Larsen v. Black Diamond French Truffles, Inc. , 241 N.C. App. 74, 76, 772 S.E.2d 93, 95 (2015).

There is a statutory exception to this general rule when an interlocutory order deprives the appellant of a substantial right which would be jeopardized absent immediate appellate review. Jeffreys v. Raleigh Oaks Joint Venture , 115 N.C. App. 377, 379, 444 S.E.2d 252, 253 (1994) ; N.C. Gen. Stat §§ 1-277(a), 7A-27(b). Shearon Farms argues that the challenged order is immediately appealable under this "substantial rights doctrine" because there is a risk of inconsistent verdicts.

The inconsistent verdicts doctrine is a subset of the substantial rights doctrine and one that is often misunderstood. In general, there is no right to have all related claims decided in one proceeding. J & B Slurry Seal Co. v. Mid-South Aviation, Inc. , 88 N.C. App. 1, 7, 362 S.E.2d 812, 816 (1987). Thus, the risk that a litigant may be forced to endure two trials, rather than one, does not by itself implicate a substantial right, even if those separate trials involve related issues or stem from the same underlying event.

But things are different when there is a risk of "inconsistent verdicts," meaning "a risk that different fact-finders would reach irreconcilable results when examining the same factual issues a second time." Denney v. Wardson Constr., Inc. , 264 N.C. App. 15, 19, 824 S.E.2d 436, 439 (2019). Importantly, not all claims involving the "same factual issues" create a risk of irreconcilable results when tried separately. For example, a fact may be relevant to two separate claims for two different reasons. In that circumstance, there is no substantial right to have those fact issues decided together. See, e.g. , Hamilton v. Mortg. Info. Servs., Inc. , 212 N.C. App. 73, 83–84, 711 S.E.2d 185, 192–93 (2011). But when the same fact is determinative of the same issue in multiple claims, there is a substantial right to have those factual issues determined by the same jury to avoid the risk that two juries decide that fact differently, leading to two judgments from the same initial lawsuit with incompatible outcomes. Davidson v. Knauff Ins. Agency, Inc. , 93 N.C. App. 20, 25–26, 376 S.E.2d 488, 491–92 (1989).

Here, Shearon Farms brought claims against both JELD-WEN and a group of defendants involved in the construction of the townhomes. Many of the claims against the construction defendants are unrelated to JELD-WEN's windows. But some of the claims have overlapping factual allegations. Specifically, at least some claims against both sets of defendants involve questions of whether the windows are defective and caused the alleged damage to the siding of neighboring homes. The resolution of those fact questions is potentially determinative of both the claims against JELD-WEN and certain claims against other defendants that are still pending in the trial court. Thus, we agree with Shearon Farms that it has met its burden to show that there is a risk of inconsistent verdicts. Accordingly, we hold that the challenged order affects a substantial right and is immediately appealable.

II. Standing

Shearon Farms challenges the trial court's grant of a motion to dismiss for lack of standing. After reviewing the complaint and the recorded declaration attached to it, the trial court concluded as a matter of law that Shearon Farms lacked standing to pursue the negligence and warranty claims asserted against JELD-WEN:

Defendant JELD-WEN, INC.’s Motion to Dismiss Plaintiff's Second Amended Complaint is GRANTED as a consequence of Plaintiff's lack of standing to pursue claims against Defendant JELD-WEN, INC. because Plaintiff is not legally entitled to assert claims pertaining to the windows and because the Plaintiff is not legally entitled to assert claims for warped, distorted, or melted siding.

At oral argument, Shearon Farms conceded that it understood the ruling to be one based on lack of standing. But in its briefing, Shearon Farms repeatedly refers to the standard for review of a Rule 12(b)(6) motion to dismiss for failure to state a claim on which relief can be granted. This is understandable because JELD-WEN brought its motion under Rule 12(b)(6) of the Rules of Civil Procedure, although it expressly asserted that the basis for the motion was that "Plaintiff lacks standing."

Standing is a question of "subject matter jurisdiction." Neuse River Found., Inc. v. Smithfield Foods, Inc. , 155 N.C. App. 110, 113, 574 S.E.2d 48, 51 (2002). As a result, a "standing argument implicates Rule 12(b)(1)" of the Rules of Civil Procedure, which governs dismissals based on lack of subject matter jurisdiction. Id. at 113–14, 574 S.E.2d at 51. But, to be fair, this Court also has asserted in several cases that "lack of standing may be challenged by motion to...