Stowe v. Edwards

• Decision Date: 01 June 2021
• Docket Number: 2019-CA-01178-COA
• Citation: 331 So.3d 24
• Parties: Richard STOWE, Joy Barret Stowe, Linda Davis, Geoffrey Scheele, and Margaret Scheele, Individually and as Homeowners in Oakmont Subdivision, Appellants, v. Larry W. EDWARDS, Pamela B. Edwards, and Edwards Homes Inc., Appellees.
• Court: Mississippi Court of Appeals

331 So.3d 24

Richard STOWE, Joy Barret Stowe, Linda Davis, Geoffrey Scheele, and Margaret Scheele, Individually and as Homeowners in Oakmont Subdivision, Appellants,

v.Larry W. EDWARDS, Pamela B. Edwards, and Edwards Homes Inc., Appellees.

No. 2019-CA-01178-COA

Court of Appeals of Mississippi.

June 1, 2021

Rehearing Denied September 21, 2021

ATTORNEY FOR APPELLANTS: WILLIAM P. FEATHERSTON JR., Ridgeland

ATTORNEYS FOR APPELLEES: CECIL MAISON HEIDELBERG, REEVE G. JACOBUS JR., Ridgeland

BEFORE WILSON, P.J., GREENLEE AND McDONALD, JJ.

WILSON, P.J., FOR THE COURT:

¶1. Richard and Joy Stowe, Geoffrey and Margaret Scheele, and Linda Davis own homes in the Oakmont subdivision in Ridgeland. They filed a lawsuit in chancery court against Larry Edwards and Edwards Homes Inc.,¹ who developed the subdivision. They alleged that Edwards had improperly served as the president of the Oakmont Homeowners Association ("the HOA") since its inception in 1997 and had violated its covenants and bylaws by failing to call annual meetings and by increasing the HOA's annual assessment. The plaintiffs requested a declaratory judgment that all actions taken by Edwards since 1997 were void, and they asked the court to order Edwards "to refund or give credit" for allegedly improper assessments. They also asked the court to enjoin Edwards from taking any further actions as president of the HOA. Finally, they asked the court to appoint a receiver or trustee to act on behalf of the HOA and to call a proper meeting of the HOA. After a trial, the court ordered the HOA to hold a special meeting to elect new board members and officers, and the court directed the chancery clerk to preside over that meeting. However, the court denied the plaintiffs’ claims for damages and other relief, finding that they were barred by the statute of limitations and the doctrine of waiver and that Edwards was not the proper party for their claims alleging improper assessments. The plaintiffs appeal. We find no error and affirm.

FACTS AND PROCEDURAL HISTORY

¶2. Larry Edwards is a real estate developer, homebuilder, and the president of Edwards Homes Inc. Around 1996, he acquired property in Ridgeland now known as the Oakmont subdivision. By that time, he had already developed "thousands" of lots and several other subdivisions throughout the State. Oakmont was the first subdivision he had developed that had a homeowners association at its inception. On March 14, 1996, Edwards filed with the chancery clerk a plat for Oakmont showing forty-five lots. At that time, the entire property and all of the lots were owned by Edwards Homes. Edwards testified that he borrowed covenants used in other subdivisions, and he filed the Covenants, Conditions, and Restrictions for Oakmont ("the Covenants") with the chancery clerk in March 1997.

¶3. Under the Covenants, any person who buys a lot in Oakmont is a member of the HOA. The Covenants provide that the HOA shall hold an annual meeting each September to hear a report from the president and treasurer and elect directors. Edwards testified that one of the purposes of the Covenants was to manage the common areas of the subdivision.

¶4. On March 21, 1997, the HOA held its first meeting. Edwards was elected as chairman of the meeting and his wife, Pamela, was elected secretary. Edwards, Pamela, and W.W. Bailey, all of whom were directors of Edwards Homes, were "elected" as directors for the HOA. The minutes indicated that the directors were elected "to serve for the ensuing year, to serve until such time as their successors are duly elected and qualified." At a board of directors meeting that same day, Edwards was elected president of the HOA and Pamela was elected secretary. They likewise were "to serve for the ensuing year, to serve until such time as their successors are duly elected and qualified." Despite the requirement in the Covenants for an annual meeting each September, Edwards admitted at trial that he did not call for another HOA meeting until 2018. Edwards explained that he had continued to serve as president because it was his understanding that he and the other officers would serve until someone else was elected or qualified to serve as an officer.

He did not have an explanation as to why he never called an annual meeting until 2018.

¶5. Edwards testified that from 1997 to 1999, there were no homeowners because the property was in its development stages. During that period, Edwards Homes paid all expenses for the property. Edwards testified that between 2004 and 2008, Edwards Homes sold every available lot to either a third party or one of Edwards's other businesses.

¶6. Edwards said that between 2006 and 2008, some Oakmont homeowners held informal meetings to discuss concerns with the HOA and to try to encourage more participation from homeowners. Edwards testified that at that time, the HOA's annual assessment of $900 per "Class A Member" (i.e., a lot owner other than the developer) was not sufficient to cover all maintenance costs and that Edwards Homes was still making contributions to cover the costs of the subdivision. The Covenants provide that Edwards Homes is a "Class B Member" of the HOA and that its contributions to the HOA are voluntary. Edwards said that he did not attend the homeowners’ informal meetings because he was trying to let the homeowners make decisions without his interference or influence. He provided financial information to the group so they could see that income was insufficient to cover expenses. Following the informal meetings, no homeowner stepped up to take over leadership of the HOA, but they did create a new HOA budget and recommended increasing the HOA assessment to $125 per month (or $1,500 per year).

¶7. In March 2008, Edwards sent all Oakmont homeowners a letter informing them of a necessary increase in the HOA annual assessment from $900 to $1,500. The Covenants provided for an initial maximum annual assessment of $900 but allowed for incremental increases or decreases when appropriate. Edwards testified that there were no significant complaints about the increase to the assessment until April 2018. He said that some homeowners, particularly the Stowes, had asked for refunds, but he explained that the HOA could not refund every homeowner dating back to 2008 because the money had been used to maintain the common areas of the neighborhood.

¶8. Initially, the plaintiffs in this case all paid the increased annual assessment,² but in 2015 or 2016 the plaintiffs stopped paying their assessments in whole or in part. In the spring of 2018, Edwards received a letter from the Scheeles in which they alleged that the 2008 increase had been improper and requested a credit for their overpayment. By that point, the Scheeles were $3,500 in arrears on their HOA payments. Davis also sent a letter claiming that she had overpaid and asked to pay only a pro rata portion going forward.

¶9. Edwards testified that homeowners frequently complained about the maintenance of the common areas in the neighborhood. He said that some homeowners thought it was his responsibility as the developer to maintain all common areas. A provision in the Covenants required the developer to convey title to the common areas to the HOA. At trial, Edwards admitted that he had not transferred title to the pool and clubhouse common area to the HOA.³ Edwards testified that he thought that title had transferred to the HOA automatically pursuant to the plat that he had filed with the chancery clerk. He said that he was ready and willing to sign a deed from Edwards Homes to the HOA.

¶10. Some homeowners also complained to Edwards about Oakmont Parkway, the main road in the subdivision. Edwards testified that the road needed to be resurfaced, and he estimated that it would cost approximately $141,000 to resurface the road. Edwards explained that a gated subdivision can dedicate its streets to the City of Ridgeland for maintenance but that the subdivision must then allow public access to its streets. Edwards said that homeowners had discussed the issue in the past, but he thought "the consensus was they wanted to continue to maintain it as a private street."

¶11. In May 2018, some homeowners approached Edwards about holding an HOA meeting. A meeting was called and held on June 7, and owners of thirty-six of the forty-five lots were present or represented by proxy.⁴ Edwards addressed questions he had received regarding the legality of the 2008 increase to the HOA assessment. Richard Stowe argued that the meeting had not been called properly, and he tried to stop it from going forward. However, another homeowner moved that any rules of order be suspended to allow the meeting to continue, and the motion was seconded and passed.

¶12. After "considerable discussion" of the 2008 assessment increase, a motion was made and seconded to "assess a Special Operating Assessment of $6,000 per lot owner/member effective immediately." The motion further provided "that the HOA shall give credit towards this Special Assessment for any portion of the $600 increase previously paid by the lot owner/member or previous lot owner/member since 4/1/2008." The motion also retroactively "ratified" the 2008 increase. The motion passed with twenty-seven votes in favor. At trial, Edwards explained that the special assessment was structured to require all homeowners who had stopped paying the full ($1,500) annual assessment to pay their arrearages while homeowners who had been paying the full amount received full credit and did not owe any special assessment.

¶13. During the June 2018 meeting, the homeowners also discussed repaving Oakmont Parkway. After Edwards explained the estimated cost for the resurfacing project, thirty members voted to pass a separate special assessment of $3,500 to cover the cost of repaving. Edwards testified that the HOA board decided that if they did not receive enough money to pay for the repaving by a date certain, then the $3,500 special assessment...