THIRD DIVISION MILLER, P. J., RAY and BRANCH, JJ.
NOTICE: Motions for reconsideration must be physically received in our clerk’s office within ten days of the date of decision to be deemed timely filed. (Court of Appeals Rule 4 (b) and Rule 37 (b), February 21, 2008) http://www.gaappeals.us/rules/
March 28, 2013
In the Court of Appeals of Georgia A12A1972. HALL v. TOWN CREEK NEIGHBORHOOD ASSOCIATION.
B RANCH, Judge.
The Town Creek Neighborhood Association filed this action against Danielle
Hall1 in the State Court of Fulton County, seeking to recover amounts allegedly owed
by Hall as special assessments levied by the Association against all homeowners in
2009 and 2010. Additionally, pursuant to the Association’s Declaration of Covenants,
the Association also sought reasonable attorney fees. In her answer, Hall asserted that
the power to levy assessments was vested in the Association’s Board of Directors, that
either no such Board was ever appointed or that it was otherwise illegally constituted,
1 The Association also named Jejuan Hall as a co-defendant in this action, but it subsequently dismissed its claim against Mr. Hall, and he is not a party to this appeal. and that in the absence of a properly constituted Board, the property developer was
without authority to impose the assessments at issue. The trial court disagreed and
entered an order granting summary judgment against Hall and in favor of the
Association, and awarding the Association damages and attorney fees. Finding that
the trial court erred in holding that the developer of the property was entitled to
function as and in lieu of the Association’s Board of Directors, we reverse.
To be entitled to summary judgment, the moving party “must show that there
is no genuine dispute as to a specific material fact and that this specific fact is enough,
regardless of any other facts in the case, to entitle the moving party to judgment as a
matter of law.” (Citation and punctuation omitted.) Beale v. O’Shea, 319 Ga. App. 1,
__ (735 SE2d 29) (2012). “We review a grant or denial of summary judgment de novo
and construe the evidence in the light most favorable to the nonmovant.” (Citation
omitted.) Samuels v. CBOCS, Inc., ___ Ga. App. ___ (734 SE2d 758) (2012).
The evidence in this case is undisputed and shows that the Association came
into existence on September 28, 2006, when the developer 2 of the property (the
“Declarant”) filed a “Declaration of Covenants, Conditions and Restrictions for Town
2 The original developer of the property was Bethlehem Road, LLC, who later transferred its rights in and title to the development to Atrias Homes and Communities.
2 Creek.” The Covenants defined “Association” as the “Town Creek Neighborhood
Association, Inc.”; defined “Board or Board of Directors” as “the elected body
responsible for management and operation of the Association”; and defined “Bylaws”
as “[t]he Bylaws of Town Creek Neighborhood Association, Inc., attached [hereto]
as Exhibit ‘C’ and incorporated herein by this reference.” The Declarations also
provided that “the Board of Directors shall have the power to make specific special
assessments . . . in its discretion, as it shall deem appropriate.” Article III, section 2
of the Association’s Bylaws provides3:
Declarant shall have exclusive authority to appoint and remove directors and officers until the earlier of: (1) seven (7) years after the recording of the Declaration, (2) [the] date as of which one hundred percent (100%) of the Lots shall have been conveyed by the Declarant to Owners other than a Person constituting the Declarant[,] unless Declarant at that time has an unexpired option to add Additional Property, or (3) the surrender in writing by Declarant of the authority to appoint and remove officers and directors of the Association.
3 No copy of the Association’s Bylaws appears in the appellate record. We are therefore relying on the language quoted in the trial court’s order and upon which it relied in granting the Association’s motion for summary judgment. The trial court order identifies that language as being Article III, § 2 of the Bylaws. Hall does not dispute the accuracy of this language or the fact that it is found in Article III, § 2 of the Bylaws. The Association declined to file a brief in this case.
3 After Hall filed her answer, the Association moved for summary judgment; in
so doing, it conceded that no Board of Directors had ever been appointed. It argued,
however, that the Declarant was entitled to act as the Board of Directors for the first
seven years of the Association’s existence and therefore that the assessments were
legal even in the absence of a Board. In support of this argument, the Association
relied on the above-quoted language from the Association’s Bylaws, as well as the
affidavit of R. C. Shanks, an employee of Declarant who claims to serve as the
property manager for the Association. Shanks averred that “[f]rom 2006 through the
filing of this [affidavit], the Declarant, as authorized by the Declaration, acted as the
Board of Directors,” and that “[i]n new homeowners[‘] associations, it is very
common for the Declarant to act as the Board of Directors.”
Following a hearing, the court below granted summary judgment in favor of the
Association and against Hall, finding that Hall did not dispute that the Declaration of
Covenants governing the Association was properly recorded with her title; that those
Covenants authorized the imposition of special assessments by the Association’s
Board of Directors; that under the Bylaws of the Association, the Declarant was
entitled to appoint the Board of Directors for the first seven years of the Association’s
4 existence; that in light of this provision granting the Declarant control of the Board,
the Declarant was not obligated to appoint a Board; and that the assessments imposed
by the Declarant, acting in lieu of the Board, were legal.
Despite the arguments relied upon by both the Association and the trial court,
the question in this case is not whether the Declarant had the authority to control the
Board or whether it is a “common practice,” in situations such as this, for the
Declarant to act as and in lieu of the Board. Rather, the question is whether, under
these circumstances, the covenants permitted the Declarant to forego appointing a
Board and simply act in place of that Board. W e find that they do not.
The Declaration of Covenants states that its filing “does not and is not intended
to submit the Property to the terms of the Georgia Property Owners’ Association Act,
OCGA § 44-3-220, et seq.” Accordingly, in construing those Covenants we apply the
common law of covenants. See Georgia Jurisprudence, Property, § 6:80; Country
Greens Village One Owner’s Assn. v. Meyers, 158 Ga. App. 609, 610 (281 SE2d 346)
(1981). And under that law, the Declaration of Covenants is viewed as a contract; in
interpreting that document, therefore, we apply the usual rules of contract
construction. Southland Dev. Corp. v. Battle, 272 Ga. App. 211, 213-214 (612 SE2d
12) (2005). See also Sassafras Mountain Estates Property Owners Assn. v. Gould, 302
5 Ga. App. 690, 691 (1) (691 SE2d 600) (2010). Thus, if the language at issue is clear
and unambiguous, our job is simply to apply that language as written. Southland Dev.
Corp., supra at 213.
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THIRD DIVISION MILLER, P. J., RAY and BRANCH, JJ.
NOTICE: Motions for reconsideration must be physically received in our clerk’s office within ten days of the date of decision to be deemed timely filed. (Court of Appeals Rule 4 (b) and Rule 37 (b), February 21, 2008) http://www.gaappeals.us/rules/
March 28, 2013
In the Court of Appeals of Georgia A12A1972. HALL v. TOWN CREEK NEIGHBORHOOD ASSOCIATION.
B RANCH, Judge.
The Town Creek Neighborhood Association filed this action against Danielle
Hall1 in the State Court of Fulton County, seeking to recover amounts allegedly owed
by Hall as special assessments levied by the Association against all homeowners in
2009 and 2010. Additionally, pursuant to the Association’s Declaration of Covenants,
the Association also sought reasonable attorney fees. In her answer, Hall asserted that
the power to levy assessments was vested in the Association’s Board of Directors, that
either no such Board was ever appointed or that it was otherwise illegally constituted,
1 The Association also named Jejuan Hall as a co-defendant in this action, but it subsequently dismissed its claim against Mr. Hall, and he is not a party to this appeal. and that in the absence of a properly constituted Board, the property developer was
without authority to impose the assessments at issue. The trial court disagreed and
entered an order granting summary judgment against Hall and in favor of the
Association, and awarding the Association damages and attorney fees. Finding that
the trial court erred in holding that the developer of the property was entitled to
function as and in lieu of the Association’s Board of Directors, we reverse.
To be entitled to summary judgment, the moving party “must show that there
is no genuine dispute as to a specific material fact and that this specific fact is enough,
regardless of any other facts in the case, to entitle the moving party to judgment as a
matter of law.” (Citation and punctuation omitted.) Beale v. O’Shea, 319 Ga. App. 1,
__ (735 SE2d 29) (2012). “We review a grant or denial of summary judgment de novo
and construe the evidence in the light most favorable to the nonmovant.” (Citation
omitted.) Samuels v. CBOCS, Inc., ___ Ga. App. ___ (734 SE2d 758) (2012).
The evidence in this case is undisputed and shows that the Association came
into existence on September 28, 2006, when the developer 2 of the property (the
“Declarant”) filed a “Declaration of Covenants, Conditions and Restrictions for Town
2 The original developer of the property was Bethlehem Road, LLC, who later transferred its rights in and title to the development to Atrias Homes and Communities.
2 Creek.” The Covenants defined “Association” as the “Town Creek Neighborhood
Association, Inc.”; defined “Board or Board of Directors” as “the elected body
responsible for management and operation of the Association”; and defined “Bylaws”
as “[t]he Bylaws of Town Creek Neighborhood Association, Inc., attached [hereto]
as Exhibit ‘C’ and incorporated herein by this reference.” The Declarations also
provided that “the Board of Directors shall have the power to make specific special
assessments . . . in its discretion, as it shall deem appropriate.” Article III, section 2
of the Association’s Bylaws provides3:
Declarant shall have exclusive authority to appoint and remove directors and officers until the earlier of: (1) seven (7) years after the recording of the Declaration, (2) [the] date as of which one hundred percent (100%) of the Lots shall have been conveyed by the Declarant to Owners other than a Person constituting the Declarant[,] unless Declarant at that time has an unexpired option to add Additional Property, or (3) the surrender in writing by Declarant of the authority to appoint and remove officers and directors of the Association.
3 No copy of the Association’s Bylaws appears in the appellate record. We are therefore relying on the language quoted in the trial court’s order and upon which it relied in granting the Association’s motion for summary judgment. The trial court order identifies that language as being Article III, § 2 of the Bylaws. Hall does not dispute the accuracy of this language or the fact that it is found in Article III, § 2 of the Bylaws. The Association declined to file a brief in this case.
3 After Hall filed her answer, the Association moved for summary judgment; in
so doing, it conceded that no Board of Directors had ever been appointed. It argued,
however, that the Declarant was entitled to act as the Board of Directors for the first
seven years of the Association’s existence and therefore that the assessments were
legal even in the absence of a Board. In support of this argument, the Association
relied on the above-quoted language from the Association’s Bylaws, as well as the
affidavit of R. C. Shanks, an employee of Declarant who claims to serve as the
property manager for the Association. Shanks averred that “[f]rom 2006 through the
filing of this [affidavit], the Declarant, as authorized by the Declaration, acted as the
Board of Directors,” and that “[i]n new homeowners[‘] associations, it is very
common for the Declarant to act as the Board of Directors.”
Following a hearing, the court below granted summary judgment in favor of the
Association and against Hall, finding that Hall did not dispute that the Declaration of
Covenants governing the Association was properly recorded with her title; that those
Covenants authorized the imposition of special assessments by the Association’s
Board of Directors; that under the Bylaws of the Association, the Declarant was
entitled to appoint the Board of Directors for the first seven years of the Association’s
4 existence; that in light of this provision granting the Declarant control of the Board,
the Declarant was not obligated to appoint a Board; and that the assessments imposed
by the Declarant, acting in lieu of the Board, were legal.
Despite the arguments relied upon by both the Association and the trial court,
the question in this case is not whether the Declarant had the authority to control the
Board or whether it is a “common practice,” in situations such as this, for the
Declarant to act as and in lieu of the Board. Rather, the question is whether, under
these circumstances, the covenants permitted the Declarant to forego appointing a
Board and simply act in place of that Board. W e find that they do not.
The Declaration of Covenants states that its filing “does not and is not intended
to submit the Property to the terms of the Georgia Property Owners’ Association Act,
OCGA § 44-3-220, et seq.” Accordingly, in construing those Covenants we apply the
common law of covenants. See Georgia Jurisprudence, Property, § 6:80; Country
Greens Village One Owner’s Assn. v. Meyers, 158 Ga. App. 609, 610 (281 SE2d 346)
(1981). And under that law, the Declaration of Covenants is viewed as a contract; in
interpreting that document, therefore, we apply the usual rules of contract
construction. Southland Dev. Corp. v. Battle, 272 Ga. App. 211, 213-214 (612 SE2d
12) (2005). See also Sassafras Mountain Estates Property Owners Assn. v. Gould, 302
5 Ga. App. 690, 691 (1) (691 SE2d 600) (2010). Thus, if the language at issue is clear
and unambiguous, our job is simply to apply that language as written. Southland Dev.
Corp., supra at 213. Such is the case here.
As noted supra, the Association’s Bylaws, which are made a part of the
Covenants, grant the Declarant the power to appoint and remove members of the
Board of Directors for the first seven years of the Association’s existence. Neither the
Declaration nor the Bylaws, however, state that the Declarant is not obligated to
appoint a Board or that the Declarant may act in lieu of the Board. Thus, it is clear that
the Declaration contemplated the creation of a Board of Directors, as well as the legal
and procedural safeguards the creation of such a board would provide to the property
owners. See Saunders v. Thorn Woode Partnership, 265 Ga. 703, 704 (2) (462 SE2d
135) (1995) (recognizing that the board of directors of a homeowners’ association is
legally required to exercise its authority in a way that is “procedurally fair and
reasonable,” to make its “substantive decision[s] . . . in good faith,” and to make
decisions that are “reasonable and not arbitrary [or] capricious”) (citation omitted);
Bailey v. Stonecrest Condominium Assn., 304 Ga. App. 484, 494 (3) (696 SE2d 462)
(2010) (recognizing that members of a homeowners’ association’s board of directors
may be held liable for breach of fiduciary duty)
6 Given that no Board of Directors was ever appointed, there was no body that
had the authority to levy the assessments at issue. Under the terms of the Declaration
of Covenants, therefore, Hall was not required to pay those assessments. The order of
the trial court granting summary judgment against Hall and awarding the Association
monetary damages and attorney fees is reversed. On remand, judgment should be
entered in favor of Hall on the Association’s complaint. We leave it for the trial court
to determine whether Hall is entitled to an award of attorney fees.
Judgment reversed and case remanded with direction. Miller, P. J., and Ray,
J., concur.