Jordan Price lawyers successfully defended a claim brought by owners in a Raleigh subdivision against their homeowners association seeking a ruling from the court that their lot was in compliance with the restrictive covenants of the community and that the homeowners association had unlawfully levied fines against the owners.  The trial court rejected the owners’ arguments and the Court of Appeals recently affirmed the trial court’s ruling.

The covenant at issue in Schwartz v. Banbury Woods was a parking restriction that required boats, trailers, campers and all similar property to be parked in a screened area which is approved by the Architectural Committee in accordance with rules governing such items adopted by the Board of Directors of the homeowners association.  A dispute arose with respect to the owner’s parking of a 2004 Tioga motor home on their lot and eventually the homeowners association levied fines against the owners in accordance with Chapter 47F of the General Statutes.  The owners sued arguing that the fines were invalid and arguing that their 2004 Tioga motor home was not a camper or similar property in accordance with the covenants.  The trial court granted summary judgment for the homeowners association and the Court of Appeals affirmed stating, that it would “defeat the plain and obvious purposes of [the parking] restriction” to adopt the owner’s argument that the 2004 Tioga motor home was not a camper or similar property requiring screening.  The Court of Appeals also affirmed the levying of fines stating that the homeowners association had complied with the procedures of N.C.G.S. § 47F-3-107.1.  You may read the Court of Appeals opinion here. banbury-woods-case.pdf

An article written by Brian Edlin was recently featured in the December 2008 publication of the Real Property Newsletter for the North Carolina Bar Association.  The article traces the highlights of the past 10 years of North Carolina’s Planned Community Act, N.C.G.S. §47F-1-101 et seq. (“Act”) and reviews the legislative changes to the Act since its enactment in 1999.  The article also discusses several of the important cases interpreting the Act over the past 10 years, including cases on fines, standing and the constitutional issues associated with applying portions of the Act to pre-1999 communities.  You may read the article here december-2008-newsletter.pdf.

          The North Carolina Supreme Court has recently retained the case of Riverpointe Homeowners Association v. Mallory to consider certain constitutional issues raised with the Planned Community Act.  Specifically, the Supreme Court will consider arguments from the homeowner in this case that the powers granted to communities in Act, including fining, are unconstitutional as applied to communities formed prior to the effective date of the  Act.

          The Supreme Court issued an order on 27 August 2008 in which it retained review of the constitutional issues raised in the homeowners appeal. The issue of retroactive application of the Act has already been decided favorably for homeowners associations by the North Carolina Court of Appeals in the 2007 case of Reidy v. Whitehart. 

The Virginia Graeme Baker Pool and Spa Safety Act (“Act”) was passed by Congress and signed into law in December 2007.  The Act is named after Virginia Graeme Baker, the granddaughter of former Secretary of State James Baker, who died in a hot tub in 2002.  The Act applies to condominium, townhome, and homeowners’ associations who have pools.

The purpose of the Act is to promote safety of pools and spas and help prevent drowning, especially of children.  The Act establishes a federal pool and spa drain cover standard, a state pool safety grant program and an education program to inform the public of methods to prevent drowning and entrapment.  The Act applies to “public pools and spas” which includes those open to the public generally, whether free or for a fee and those open exclusively to: (1) members of an organization and guests, (2) residents of a multi-unit apartment building, apartment complex, residential real estate development, or other multi-family residential area; and (3) patrons of a hotel or other public accommodations facility.  The Act is intended to apply to community association pools and spas.

Under the Act, by 19 December 2008, public pools and spas must be equipped with anti-entrapment devices or systems.  Generally speaking, every “public pool and spa” with a single main drain, other than an unblockable drain, must be equipped with at least one of the following devices:  (1) safety vacuum release system which ceases operation of the pump, reverses the circulation flow, or otherwise provides a vacuum release at a suction outlet when a blockage is detected, (2) suction-limiting vent system with a tamper-resistant atmospheric opening, (3) gravity drainage system that utilizes a collector tank, (4) automatic pump shut-off system, or (5) device or system that disables the drain. 

              For a copy of the new law, please click here.

The Supreme Court has recently held that a default judgment in favor of an owner against a general contractor cannot form the basis for extinguishing a subcontractor’s lien on property under N.C.G.S. §44A-23.

In the case of Carolina Building Services v. Boardwalk, LLC, the Supreme Court was faced with this issue after a general contractor abandoned a job project before completion of the project.  An unpaid subcontractor filed a lien on the project after the abandonment by the general contractor.  The subcontractor filed suit against the general contractor and owner to perfect the lien and the owner asserted a claim against the general contractor.  The owner moved for default judgment against the general contractor and presented affidavits that the cost to complete the project exceeded the balance of contract owed to the general contractor, effectively nullifying the subcontractor’s lien on funds.  The subcontractor presented competing affidavits showing the owner completed the project for less than the balance of contract, thus preserving the subcontractor’s lien rights.  The trial court indicated the subcontractor did not have standing to challenge the default judgment against the general contractor on the owner’s claim and entered judgment in favor of the owner, effectively cutting off the subcontractor’s subrogation lien rights.  On appeal, the Court of Appeals affirmed the trial court’s ruling.  However, on discretionary review, the Supreme Court held that the general contractor’s default on the owner’s crossclaim was an “action” prejudicing the subcontractor’s lien rights under the mechanics lien statute and the subcontractor should have had an opportunity to prove its entitlement to a lien on funds owed to the general contractor.  Writing for the Supreme Court, Justice Newby indicated, “[subcontractor] presented an affidavit that raised a genuine issue of material fact concerning [the owner’s] liability to [the general contractor] based on a lien against [the owner’s] real property. Rather than consider this affidavit, the trial court focused on the default judgment for [the owner] against [the general contractor]. By its plain meaning, an action is ‘[a] thing done.’  Thus, [the general contractor’s] choice not to defend [the owner’s] claims constituted an “action” which prejudiced the rights of [subcontractor] contrary to the statutory mandate of N.C.G.S. § 44A-23.  [Subcontractor] should have an opportunity to present its evidence concerning the merits of recovery under its lien on real property.”

The Supreme Court recently ruled in the case of Winding Ridge v. Joffe that a single family use restriction in a set of restrictive covenants was a structural limitation as opposed to a restriction on the type of occupancy permitted within a dwelling.  The Supreme Court ruling overturns a July 2007 Court of Appeals case which had held that a group of baseball players were in violation of the usage restriction and prohibited the students from occupying the residence unless they were related by blood or marriage or otherwise structured in the same way as a traditional view of an American family.  Judge Geer dissented in the Court of Appeals case and maintained that the restriction was instead, a structural limitation, as opposed to a usage limitation.  In her dissent, Judge Geer wrote, “I would hold in this case that the restrictive covenant, as drafted, is only a limitation on the type of structure that may be placed on the property and not a restriction on the type of occupancy permitted within the dwelling.”  The case was appealed to the Supreme Court where the Supreme Court reversed the Court of Appeals majority decision and adopted Judge Geer’s dissent.

An article written by Joe Wall was recently featured in the Winter 2007 quarterly publication of the North Carolina Association of Defense Attorneys and in the December 17, 2007 edition of North Carolina Lawyers Weekly. The article examines recently enacted legislation that changed the common law rule regarding the admissibility of expert testimony concerning vehicular speed. For many years, the common law rule in North Carolina was that no one, including experts, could testify concerning the speed of a motor vehicle unless he or she had actually observed the vehicle in motion. The article explains the history of the common law rule, discusses the new legislation, and cites a 2007 Court of Appeals decision that deals with the issue of whether or not the rule change applies to accidents that occur prior to December 1, 2006. Joe Wall practices in the area of civil litigation with an emphasis on insurance defense and trucking law. You may read the article here.

The Court of Appeals has overturned a judgment in favor of a Haywood County developer who sued property owners for collection of assessments. The plaintiff was a developer in the Lake Junaluska development and brought suit against certain individual lot owners within the Lake Junaluska development. Some of the defendant lot owners’ deeds contained restrictive covenants which granted the developer the right to assess for certain service charges. When the defendants refused to pay the relevant assessments, plaintiff brought suit. The defendant owners argued that the restrictive covenants did not specifically set out an affirmative obligation to pay any money to the developer or anyone else. The trial court disagreed and entered judgment in favor of the developer.

On appeal, the Court of Appeals cited a line of appellate cases dating back to 1980 which held that covenants that impose affirmative obligations on property owners are strictly construed and unenforceable unless the obligations imposed are “in clear and unambiguous language” and “sufficiently definite” to assist courts in their application. Applying this line of cases, the Court of Appeals ruled that the restrictions in this case were not “reasonable” and “sufficiently definite.” As a result, the Court of Appeals reversed the trial court’s ruling in favor of the developer. Unique to this decision was the fact that this case involved a developer and not a homeowners’ association seeking to use the assessments sought to be collected.

Paul T. Flick, Jordan Price’s managing member, announced that the firm is pleased to welcome two new associates, J. Carr McLamb, Jr. and Lori Peoples Jones. Mr. McLamb practices in the area of civil and business litigation. Mr. McLamb has experience with pleadings, discovery, motions and legal research for cases at both the state and federal trial and appellate level. Mr. McLamb was valedictorian of the May 2004 graduating class of North Carolina State University and a member of Phi Kappa Phi Honor Society. He is licensed to practice in the State of North Carolina. Ms. Jones is an Associate of the Firm and focuses her practice on general civil litigation matters. She has experience with construction litigation and general liability defense matters. She is licensed to practice in North Carolina and the U.S. District Courts for the Eastern and Middle Districts of North Carolina.