Slok, LLC v. Courtside Condo. Owners Ass'n, Inc.

Citation862 S.E.2d 438 (Table)
Decision Date21 September 2021
Docket NumberNo. COA20-606,COA20-606
Parties SLOK, LLC, Plaintiff, v. COURTSIDE CONDOMINIUM OWNERS ASSOCIATION, INC., Defendant.
CourtCourt of Appeal of North Carolina (US)

James, McElroy & Diehl, P.A., by Preston O. Odom, III and J. Alexander Heroy, for plaintiff-appellant.

Sellers, Ayers, Dortch & Lyons, P.A., by Michelle Massingale Dressler, for defendant-appellee.

MURPHY, Judge.

¶ 1 When a condominium association seeks a judicial sale as a remedy, which is a type of foreclosure authorized under N.C.G.S. § 47C-3-116 and N.C.G.S. § 1-339.1, a trial court has subject matter jurisdiction over a judicial sale under N.C.G.S. § 47C-3-116 and N.C.G.S. § 1-339.1. Here, in its pleading, the condominium association requested both a "judicial foreclosure" by an execution sale, a remedy that is disallowed under N.C.G.S. § 47C-3-116 and N.C.G.S. § 1-339.1, and alternatively a judicial sale as a secondary remedy, providing the trial court subject matter jurisdiction over the judicial sale.

¶ 2 Further, when an appellate court voids a judicial foreclosure and remands to the trial court for further proceedings, the trial court errs in declaring on remand that the original judicial foreclosure was valid and enforceable. Here, the trial court erroneously declared on remand that the voided original judicial foreclosure was "valid and enforceable" due to valid and enforceable fines the condominium association levied against Plaintiff.

¶ 3 Additionally, a party is not entitled to attorney fees for defending a claim on appeal that the opposing party has abandoned. Here, while the trial court did not err in determining Plaintiff's Chapter 75 claim was frivolous and malicious, and in awarding attorney fees to the condominium association under Chapter 75, we cannot deduce the amount of attorney fees awarded to the condominium association for any time spent defending the Chapter 75 claim in the prior appeal after Plaintiff clearly abandoned the claim on appeal. Such attorney fees awarded for defending against an abandoned claim would be improper and not authorized by statute. We vacate the Chapter 75 attorney fees award in part and remand for determination of the proper Chapter 75 attorney fees amount, which excludes the Chapter 75 attorney fees accrued by the condominium association defending the merits of the matter after Plaintiff abandoned the Chapter 75 claim in the prior appeal.

¶ 4 Finally, an attorney fees award pursuant to N.C.G.S. §§ 47C-3-116 and 47C-4-117, which requires a prevailing party as to a motion for a judicial foreclosure, is erroneous when there is no prevailing party to the motion for judicial foreclosure. Here, the trial court erroneously awarded attorney fees and costs to the condominium association pursuant to N.C.G.S. §§ 47C-3-116 and 47C-4-117 as our opinion in the prior appeal voided the original judicial foreclosure, leaving no prevailing party to the original judicial foreclosure.

BACKGROUND

¶ 5 Plaintiff Slok, LLC brings its second appeal in this case. While facts from this case are set out in the original appeal, Slok, LLC v. Courtside Condo. Owners Ass'n , No. COA18-736, 265 N.C. App. 111, 826 S.E.2d 580, 2019 WL 1749031 (unpublished) ("Slok I "), disc. rev. denied , 372 N.C. 706, 830 S.E.2d 834 (2019), we include a recitation of "the facts and procedural history relevant to the issues currently before us." Premier, Inc. v. Peterson , 255 N.C. App. 347, 348, 804 S.E.2d 599, 601 (2017).

¶ 6 Plaintiff purchased a condominium's single commercial unit ("the Property") in July 2014; the Property is located within Courtside Condominium ("the Condominium"), which is comprised of 106 residential units and the Property. See Slok I , 2019 WL 1749031 at *1. The Condominium is maintained and administered by Defendant Courtside Condominium Owners Association, Inc. ("the Association"). See id. The Property's prior owner and the Association entered into an amendment to the Condominium's original Declaration ("the Declaration") allowing the Property to have its own trash room, with the Property's owner being assessed maintenance, repair, and operation costs. See id. at *1-2. When Plaintiff became delinquent in those costs, the Association commenced a foreclosure proceeding, which was dismissed due to Plaintiff's subsequent repayment of the outstanding assessments. See id. at *2. The Association also assessed fines against Plaintiff for violations of the Declaration's terms. See id.

¶ 7 Plaintiff prosecuted this action against the Association by filing an amended complaint on 7 August 2017, including the following claims: declaratory judgment that, inter alia , the amendment to the Declaration was void and Plaintiff could recover its fees paid to the Association; breach of contract; unjust enrichment; unfair trade practices pursuant to N.C.G.S. § 75-1.1 ; breach of the covenant of good faith and fair dealing; and rescission. In this complaint, Plaintiff alleged, inter alia , the Association was denying and impairing "Plaintiff's rights regarding participation on the [Association's] Board," was "conducting secret meetings and not alerting Plaintiff to the specific time and place of said meetings," and therefore had violated "Chapter 75 of the North Carolina General Statutes."

¶ 8 The Association filed an answer on 6 September 2017 and maintained it complied with the Declaration, Bylaws, and North Carolina General Statutes, and asserted the following counterclaims: judicial foreclosure on its claim of lien for fines imposed for the Declaration violations; injunctive relief requiring Plaintiff to cure all violations; breach of contract for Plaintiff's failure to pay fines; attorney fees accrued in defending Plaintiff's frivolous and malicious Chapter 75 claim; and declaratory judgment the Association did not violate the Declaration, Bylaws, or North Carolina laws in these matters.

¶ 9 The trial court granted summary judgment on 16 January 2018 in favor of the Association on all claims ("Summary Judgment Order"), excluding the Association's claims for attorney fees, which were to be resolved at a later time. The Summary Judgment Order "authorized [the Association] to proceed with judicial foreclosure of the full amount of the fines levied against Plaintiff" if "Plaintiff [did] not make[ ] full payment to [the Association]" of the fines and "remove all personal property from the Commercial Trash Room within thirty days of the date of execution of [the Summary Judgment Order.]" Plaintiff timely appealed the Summary Judgment Order. When Plaintiff failed to pay the fines, a judicial foreclosure occurred via Notice of Sale of Real Estate on 9 March 2018 and a bid at sale on 3 April 2018. Plaintiff redeemed the Property on 13 April 2018, and the Notice of Redemption was filed 17 April 2018.

¶ 10 In Slok I , we affirmed the trial court's dismissal of Plaintiff's claims, but vacated the following two paragraphs in the Summary Judgment Order as a void conditional order:

11. The fine imposed against Plaintiff for storing Plaintiff's personal property in the Commercial Trash Room is reduced from $42,500 to $27,400 so long as Plaintiff does the following within thirty days of the execution of this Order: (1) makes full payment to [the Association] in the amount of $27,400; and (2) removes all personal property from the Commercial Trash Room
12. In the event Plaintiff does not make full payment to [the Association] in the amount of $27,400; and ... remove all personal property from the Commercial Trash Room [within thirty days of the execution of this Order], then [the Association] is authorized to proceed with judicial foreclosure of the full amount of the fines levied against Plaintiff.

Slok I , 2019 WL 1749031 at *7-8. Importantly, we stated:

[P]aragraphs 11 and 12 of the [S]ummary [J]udgment [O]rder, which reduce the fines ... and authorize a ‘judicial foreclosure,’ are void in that they are conditioned upon Plaintiff's failure to pay the Association and remove all personal property from the Commercial Trash Room within thirty days of the order's entry.

Id. at *8 (emphasis added).

¶ 11 While we affirmed the "portion of the trial court's [S]ummary [J]udgment [O]rder concluding that the fines imposed by the Association are valid and enforceable," we vacated the reduction of the fine and the authorization for judicial foreclosure, should Plaintiff not make full payment and remove personal property, and remanded to the trial court. Id. at *7-8.

¶ 12 Further, we characterized the Association's first counterclaim for Plaintiff's outstanding fines as follows:

The Association asserted counterclaims against Plaintiff for the outstanding fines imposed for Plaintiff's storage of personal property in the Commercial Trash Room, as secured by the 31 August 2017 Claim of Lien. The Association's third counterclaim asserted breach of contract for Plaintiff's failure to pay the fines. Though titled "Judicial Foreclosure," the Association's first counterclaim primarily sought the ordering of an execution sale, pursuant to Section 1-302 and Article 29B of our General Statutes, upon the Association's Claim of Lien "in the amount of the fines actually accrued through the date Final Judgment is entered." In the alternative, the Association requested an order that the Commercial Unit be sold via judicial sale, pursuant to Article 29A of our General Statutes.

Id. at *6.

¶ 13 After our Supreme Court denied Plaintiff's 22 May 2019 petition for discretionary review on 20 August 2019, the Association's motion for attorney fees was heard 2 December 2019. See Slok, LLC v. Courtside Condo. Owners Ass'n , 372 N.C. 706, 830 S.E.2d 834 (2019). On 13 February 2020, the trial court entered the Order on Remand and Granting Attorney Fees ("the Attorney Fees Order"), which upheld the original judicial foreclosure as "valid and enforceable," and granted the Association's attorney fee request. Specifically, the trial court concluded the Association "was entitled to foreclosure on...

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