Diamante, LLC v. Dye

2013 Ark. 501, 430 S.W.3d 710, 2013 WL 6327504, 2013 Ark. LEXIS 586
CourtSupreme Court of Arkansas
DecidedDecember 5, 2013
DocketCV-13-467
StatusPublished
Cited by22 cases

This text of 2013 Ark. 501 (Diamante, LLC v. Dye) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Diamante, LLC v. Dye, 2013 Ark. 501, 430 S.W.3d 710, 2013 WL 6327504, 2013 Ark. LEXIS 586 (Ark. 2013).

Opinion

JOSEPHINE LINKER HART, Justice.

11 Diamante, LLC (Diamante), appeals the orders of the Saline County Circuit Court granting the motion of appellees, Gary Dye and Linda Dye, for class-action certification. This order is immediately appealable pursuant to Ark. R.App. P.-Civ. 2(a)(9) (2012). On appeal, Diamante argues that the circuit court abused its discretion by (1) ruling that the class counsel is qualified and is not a likely, necessary witness; (2) ruling that the class representatives met the adequacy requirement and that they do not have a conflict of interest in representing members of the class whose dues were deferred; (3) ruling that all class members have a common claim when the restrictive covenant filed in connection with the lot owned by the class representatives is different than the restrictive covenant of other class members; (4) including members of the class whose dues are currently being deferred; (5) including members of the class who signed documents agreeing to arbitrate controversies with Diamante; and (6) certifying a class including as members of the class those whose dues 12were deferred.

When we review a circuit court’s decision to grant or deny class certification, we will reverse only when the appellant can demonstrate an abuse of discretion. DIRECTV, Inc. v. Murray, 2012 Ark. 366, 423 S.W.3d 555. In this interlocutory appeal, we do not consider the merits of the underlying claims as the issue of whether to certify a class is not determined by whether the plaintiff has stated a cause of action for the proposed class that will prevail. Id. This court thus views the propriety of a class action as a procedural question. Id. The six requirements for class-action certification as stated in Rule 23 of the Arkansas Rules of Civil Procedure are (1) numerosity, (2) commonality, (3) typicality, (4) adequacy, (5) predominance, and (6) superiority. Id.

Diamante operates a private-membership golf club located in Hot Springs Village. There are approximately 450 privately owned lots around the golf course and clubhouse. The lots are in two subdivisions, the Diamante Subdivision and the Diamante Villas Subdivision. Supplemental declarations of covenants and restrictions (supplemental declarations) are on file in the Saline County land records. The supplemental declarations run with the land and create certain obligations and restrictions referred to as “tie-in rights.” Among those tie-in rights are requirements that lot owners become “Full Golf Members” of the Diamante Country Club (the Club); pay monthly dues to the Club; and grant Diamante a lien and foreclosure right with respect to the lot that arises in the event of failure to pay the monthly Club dues.

Appellees filed a declaratory-judgment action, asking the circuit court to declare the |stie-in rights unenforceable. They alleged that Diamante owed them a duty to collect monthly dues from all Full Golf Members, but had failed to collect those dues from “up to 100 Diamante and Diamante Villa lot owners.” The appellees asserted that the failure to collect dues made the tie-in rights unenforceable because (a) Diamante committed a material breach of its duty owed to members; (b) there was a failure of consideration; (c) the “material breaches” by Diamante equated to a failure to operate in accordance with the plan of development set out in the supplemental declarations; (d) Diamante violated the implied law to act in good faith and fair dealing in the performance of its duties under the supplemental declarations; (e) the doctrine of “unclean hands” would bar enforcement of the tie-in rights at equity; (f) inequitable conduct in selectively collecting dues would bar enforcement of the tie-in rights in equity; (g) Diamante’s seeking to enforce the tie-in rights while it is materially breaching them is “unconscionable”; (h) selective enforcement by Diamante is not permitted by the plan of development and supplemental declarations; (I) the rule against perpetuities makes the tie-in rights unenforceable and void; (j) the tie-in rights constitute an unreasonable restraint on alienation on the appellees’ home and lot; (k) Diamante’s failure to satisfy “virtually the only provision” in the supplemental declarations that placed a duty on the Club caused the tie-in rights to be unenforceable due to lack of mutuality of obligation; and (l) Diamante has “abandoned” the plan of development by not collecting the full monthly dues. The appellees subsequently amended their petition to add that Diamante had also abandoned the plan of development by not keeping the golf course exclusively reserved for dues-paying members.

14Appellees then filed a motion for class certification. They proposed to define the class as

Current owners of Diamante Lots, improved or unimproved, located in the Diamante and Diamante Villas subdivisions [excluding from the Class: RESPONDENT, entities affiliated with Defendant Cooper Land Development, Inc., purchasers of about 100 ‘Deferred Lots,’ and owners of the six lots for which foreclosure cases brought by RESPONDENT are on file and pending.]

Appellees asserted that class certification was proper because

1) the class is so large that joinder of all members is impracticable, 2) the legal and factual defensive issues to be determined are common to all members of the proposed class, 3) the defenses of the PETITIONERS as representative parties are typical of the defenses of the class, and 4) the PETITIONERS as representative parties will fairly and adequately protect the interests of the class.

Appellees argued in a memorandum to the circuit court that was filed in support of its motion for class certification that all the requirements of Arkansas Rule of Civil Procedure 23 were met by the proposed class. These requirements are (1) numer-osity, (2) commonality, (3) typicality, (4) adequacy, (5) superiority, and (6) predominance. The memorandum then set forth how each of the six requirements were met. First, they asserted that the likely class of approximately 330 members should be found to be more than enough class members to satisfy the numerosity requirement. Second, they asserted that the commonality requirement should be found to have been met because the question of “enforceability” of the tie-in rights and whether Diamante’s conduct affected its right to enforce them is common to all members of the proposed class. Third, appellees asserted that the typicality requirement should be found to have been met because there are no varying fact patterns for the court to deal with, as the claims involved identical provisions in the Plan of Development, and all the material | Sfacts relating to Diamante’s conduct provide all class members with the same defenses to enforceablity. Fourth, they asserted that the adequacy requirement should be found to have been met because class counsel and the class representatives will fairly and adequately represent the interests of the class because there are no known conflicts between the representatives and other class members, the appel-lees have more than a minimal interest in the action, the appellees are familiar with the practices being challenged, and they have the ability to assist in decision-making as to the conduct of the litigation. Also, they asserted that the class counsel is presumed to be adequate.

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Bluebook (online)
2013 Ark. 501, 430 S.W.3d 710, 2013 WL 6327504, 2013 Ark. LEXIS 586, Counsel Stack Legal Research, https://law.counselstack.com/opinion/diamante-llc-v-dye-ark-2013.