Ashley Villas Homeowners' Association v. Johnson

• Court: Court of Appeals of South Carolina
• Decided: December 7, 2004
• Docket: 2004-UP-614
• Status: Unpublished

Opinion

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS
PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

Ashley Villas Homeowners’ Association, Inc., Appellant,

v.

Geona Shaw Johnson; et al., Respondents.

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Appeal From Charleston County
 Thomas L. Hughston, Jr., Circuit Court Judge

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Unpublished Opinion No. 2004-UP-614
Submitted November 1, 2004 – Filed December 7, 2004

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REVERSED

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Helen Ann Harper and Robert A. Kerr, Jr., both of Mt. Pleasant, for Appellant.

Benjamin Goldberg, of Charleston, for Respondent.

PER CURIAM: Ashley Villas Homeowners’ Association appeals from an order granting summary judgment to Respondents.  We reverse. [1]

FACTS

Ashley Villas is a residential neighborhood constituting 234 townhouse properties.  Thomas M. Evans (the “developer”) developed the neighborhood in 1974.  At that time, the developer recorded the original restrictive covenants in the Register of Mesne Conveyance (RMC) office for Charleston County.

The developer built and maintained common recreation areas in the neighborhood; however, he deeded the recreation areas to the Ashley Villa homeowners in 1976.  The homeowners accepted the transfer and created the Recreation Association to maintain the areas.  The Recreation Association was incorporated as a nonprofit organization in March 1976.

By 1990, the neighborhood had fallen into a state of disrepair.  As a result, a group of homeowners organized an effort to improve the neighborhood.  The group sought the votes necessary to amend the original covenants and to establish a homeowners’ association to enforce the covenants.  In December 1994, the group recorded the amended covenants and the creation of the Homeowners’ Association in the RMC.

Initially, the Recreation Association continued to own the recreation areas.  However, the Recreation Association’s members voted to transfer the recreation areas to the newly created Homeowners’ Association because the association lacked the funds necessary to maintain the areas.  The Homeowners’ Association accepted the transfer in December 1998.

On August 9, 2000, the Homeowners’ Association brought an action to collect past due annual assessments from delinquent homeowners.  The trial court ordered arbitration and an arbitration hearing was held on June 13, 2001.  The arbitrator found in favor of the Homeowners’ Association and awarded it past due annual assessments and attorney’s fees.  Respondents appealed and the judge granted them a right to a jury trial.  The Homeowners’ Association then filed a motion for summary judgment, which was denied on December 20, 2001.  Respondents also filed a motion for summary judgment and a hearing was held on September 18, 2003.  The trial court granted Respondents’ motion for summary judgment on November 18, 2002.  The Homeowners’ Association now appeals.

STANDARD OF REVIEW  

On appeal from an order granting summary judgment, we review all ambiguities, conclusions, and inferences arising from the evidence in a light most favorable to the non-moving party.  Ferguson v. Charleston Lincoln Mercury, Inc., 349 S.C. 558, 563, 564 S.E.2d 94, 96 (2002).  “Summary judgment is appropriate when it is clear that there is no genuine issue of material fact and the conclusions and inferences to be drawn from the facts are undisputed.”  Etheredge v. Richland Sch. Dist. One, 341 S.C. 307, 311, 534 S.E.2d 275, 277 (2000).  Moreover, summary judgment is proper only when the moving party is entitled to a judgment as a matter of law.  Jackson v. Doe, 342 S.C. 552, 555, 537 S.E.2d 567, 568 (Ct. App. 2000). 

“Summary judgment is not appropriate where further inquiry into the facts of the case is desirable to clarify the application of the law.”  Tupper v. Dorchester County, 326 S.C. 318, 325, 487 S.E.2d 187, 191 (1997). “Summary judgment should not be granted even when there is no dispute as to evidentiary facts if there is dispute as to the conclusion to be drawn from those facts.”  Id.  Summary judgment is a drastic remedy, which should be cautiously invoked so that no party will be improperly deprived of a trial of the disputed factual issue.  Schmidt v. Courtney, 357 S.C. 310, 318-319, 592 S.E.2d 326, 331 (Ct. App. 2003). 

LAW/ANALYSIS

I. Extrinsic Evidence

The Homeowners’ Association argues the trial court erred in admitting extrinsic evidence to explain the terms of the original covenants because the evidence violates the parol evidence rule.  We agree.

The parol evidence rule prevents the introduction of extrinsic evidence of agreements or understandings contemporaneous with or prior to execution of a written instrument when the extrinsic evidence is to be used to contradict, vary, or explain the written instrument.” Redwend Ltd. P’ship v. Edwards, 354 S.C. 459, 471, 581 S.E.2d 496, 502 (Ct. App. 2003).  “The cardinal rule of contract interpretation is to ascertain and give effect to the intention of the parties and, in determining that intention, the court looks to the language of the contract.”  Friarsgate, Inc. v. First Federal Sav. and Loan Ass’n of South Carolina, 317 S.C. 452, 457, 454 S.E.2d 901, 905 (Ct. App. 1995).  “When a contract is unambiguous, clear, and explicit, it must be construed according to the terms the parties have used, to be taken and understood in their plain, ordinary, and popular sense.”  Id.

Ashley Villas’ original covenants state that the “[c]ovenants shall automatically renew . . . unless a change in part or in whole shall be agreed upon by a majority vote of the homeowners of Ashley Villas.” Respondents argue the developer never intended for Ashley Villas to have a homeowners’ association.To prove the developer did not intend for the language “change in part or in whole” to include altering the original covenants to allow for the creation of a homeowners’ association, the trial court allowed an affidavit from Alvie Evans, an individual involved in the original development of Ashley Villas, to be admitted as extrinsic evidence.However, taken in the light most favorable to the Homeowners’ Association, the language of the original covenants was “unambiguous, clear, and explicit” in its “plain, ordinary, and popular sense.”Therefore, the trial court erred in admitting Evans’ affidavit to prove the developer’s intent.  

Moreover, summary judgment was improper even if the language of the original covenants was ambiguous because the determination of a party’s intent is a question of fact.  Southern Financial Servs., Inc. v. Middleton, 349 S.C. 77, 81, 562 S.E.2d 482, 484 (Ct. App. 2002).  “Once the court decides the language is ambiguous, evidence may be admitted to show the intent of the parties.”  Id.  Examined in the light most favorable to the Homeowners’ Association, there is conflicting evidence as to the developer’s intent. 

Evans’ affidavit stated the developer did not include a homeowners’ association in the original covenants because he did not intend for one to be created.  Phoebe Miller, a past president and current treasurer of the Homeowners’ Association, testified the developer did not provide for a homeowners’ association because he wanted federal assistance financing.  Miller also testified the homeowners created a Homeowners’ Association because of new federal guidelines requiring a homeowners’ association for federal financing.  The conflicting evidence of Evans’ affidavit and Miller’s testimony create a genuine issue of material fact as to whether the developer intended to qualify for federal financing or to exclude a homeowners’ association.  Therefore, even if the trial court properly admitted the extrinsic evidence, summary judgment was improper because a genuine issue of material fact exists regarding the developer’s intent. 

II. South Carolina Nonprofit Corporation Act

The Homeowners’ Association also contends the trial court erred in holding the Recreation Association failed to comply with the South Carolina Nonprofit Corporation Act.  Specifically, the Homeowners’ Association argues a genuine issue of material fact exists as to whether the notice requirements of section 33-31-1202(c) of the South Carolina Code (Supp. 2003) were satisfied.  We agree.

The sale of assets by a nonprofit corporation other than in the ordinary course of activities is governed by section 33-31-1202 of the South Carolina Code (Supp. 2003).  A nonprofit corporation may:

[S]ell, lease, exchange, or otherwise dispose of all, or substantially all, of its property, with or without the goodwill, other than in the usual and regular course of its activities on the terms and conditions and for the consideration determined by the corporation’s board if the proposed transaction is authorized by subsection (b).

S.C. Code Ann. § 33-31-1202(a) (Supp. 2003). 

However, section (c) further states:

If the corporation does not have members, or does not have members entitled to vote on the transaction, the transaction must be approved by a vote of a majority of the directors in office at the time the transaction is approved.  In addition, the corporation shall provide notice of any directors’ meeting at which such approval is to be obtained in accordance with Section 33-31-822(c).  The notice also must state that the purpose, or one of the purposes, of the meeting is to consider the sale, lease, exchange, or other disposition of all, or substantially all, of the property or assets of the corporation and contain or be accompanied by a copy or summary of a description of the transaction.

S.C. Code Ann. § 33-31-1202(c) (Supp. 2003). 

If a nonprofit corporation has members entitled to vote, the proposed transaction must be approved by the board and by two-thirds of members’ votes cast or a majority of the voting power, whichever is less.  S.C. Code Ann. § 33-31-1202(b) (Supp. 2003).  A director’s attendance at or participation in a meeting waives the notice requirement for the meeting.  S.C. Code Ann. § 33-31-823(b) (Supp. 2003).

At trial, Respondents argued the transfer of the recreation area from the Recreation Association to the Homeowners’ Association was invalid because the Recreation Association failed to comply with the notice requirements of section 33-31-1202(c) of the South Carolina Code.  Specifically, Respondents alleged some Recreation Association members and directors did not receive notice of the transfer or vote on the transfer, rendering the transfer invalid.  The trial court agreed and held the Homeowners’ Association could not charge any assessments because it did not own, lease, or have a duty to maintain the recreation areas as the transfer was invalid for failure to comply with South Carolina Code section 33-31-1202.

Taken in the light most favorable to the Homeowners’ Association, a genuine issue of material fact exists as to whether the requisite number of directors and members of the Recreation Association received notice and voted on the transfer.  The parties presented conflicting evidence of the number of Recreation Association directors at the time of the transfer.  Michael Oshinsky, president of the Homeowners’ Association, testified the three directors who voted unanimously to transfer the recreation areas to the Homeowners’ Association were also the only remaining members of the Recreation Association.  Oshinsky testified the notice provision of section 33-31-1202 of the South Carolina Code was satisfied because the three directors were the only members and their vote for the transfer waived the notice requirements.  Moreover, evidence suggested the Recreational Association had no members after May 3, 1996, which was more than four months prior to the September 22, 1996 vote to transfer the property to the Homeowners’ Association. [2]   Therefore, summary judgment was improper.

REVERSED.

ANDERSON, STILWELL, and SHORT, JJ., concur.

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[1] We decide this case without oral argument pursuant to Rule 215, SCACR.

[2] The Record on Appeal includes a list of members, an itemized category report, and check register for the Recreation Association.  The last deposit for a membership fee was made on May 3, 1995, and because memberships were annual the last membership would have expired on May 3, 1996, more than four months before the meeting to transfer the recreation areas to the Homeowners’ Association.