KINGWOOD INTERNATIONAL RESORT, LLC v. THOMAS MCMURRY

Court of Appeals of Georgia·Decided March 16, 2026·No. A25A2035·Published

Opinion

THIRD DIVISION

DOYLE, P. J.,

MARKLE and PADGETT, 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.

https://www.gaappeals.us/rules

March 16, 2026

In the Court of Appeals of Georgia A25A2035. KINGWOOD INTERNATIONAL RESORT, LLC et al. v. MCMURRY et al.

DOYLE, Presiding Judge.

Various homeowners in The Overlook at Kingwood subdivision (“The Overlook”) filed the instant suit,1 alleging claims of fraud and violations of the Georgia Racketeer Influenced Corrupt Organizations Act (“RICO Act”), among other things, against Kingwood International Resort, LLC (“KIR”), Farbod Zohouri, Richard Nasser, Joshton Zohouri, Peng Wang, (collectively “the Defendants”) and The Overlook at Kingwood Property Owners Association, Inc. (“The Association”).2 The

1 Two sets of homeowners filed separate suits that were consolidated by the trial court.

2 This opinion refers to Farbod as “Zohouri” and Joshton by his first name.

Defendants appeal, challenging the verdicts and the punitive damages award. For the reasons that follow, we affirm the verdicts as to fraud and violation of the RICO Act, but we vacate the punitive damages award and remand the case for further proceedings.

Viewed in the light most favorable to the verdict, see Paine v. Nations, 283 Ga.

App. 167, 167–68 (641 SE2d 180) (2006), the record shows that in 2006, Kingwood, LLC (“Kingwood”), executed the Declaration of Covenants, Conditions, and Restrictions for The Overlook (“2006 Declaration”), which was recorded in Rabun County along with a plat of the subdivision (“the Plat”). The 2006 Declaration named Kingwood the declarant, and both the Plat and the 2006 Declaration were referenced in the homeowners’ deeds. The 2006 Declaration referenced The Association as the nonprofit homeowner’s association for the Outlook as well as various covenants and procedures governing the subdivision.

In 2010, Kingwood lost its ownership interest in The Overlook (essentially the remaining unsold lots and common areas) after United Community Bank (“UCB”) foreclosed. Great Oak Owner, LLC, (“Great Oak”) purchased UCB’s interest, and in 2015, KIR purchased Great Oak’s interest. Meanwhile, the Georgia Secretary of

State administratively dissolved The Association on August 26, 2011. None of the homeowners acted under the Georgia Property Owners Association Act (“POA Act”) to create a new association after the dissolution, but several took initiative to care for the common areas using their own time and money.

On May 15, 2015, when KIR acquired Great Oak’s interest in The Overlook, including multiple undeveloped lots, Kingwood executed “the First Amendment” to the Declaration, which purported to assign Kingwood’s declarant rights to KIR. After the First Amendment was filed, KIR executed “the Second Amendment” on May 30, 2015, raising the yearly assessments and declaring that ownership of two adjacent lots counted as a single ownership interest. On April 16, 2018, KIR executed the “Third Amendment,” declaring that all current and future lot owners were required to join as members of Kingwood Country Club. Finally, on January 30, 2020, KIR executed “the Fourth Amendment,” abolishing the previous 1,200-square-foot building minimum, and KIR began construction on 2 homes under that minimum.

In March 2020, after construction began on the smaller homes, the homeowners notified the Defendants and The Association that the homeowners believed that KIR was violating the Declaration and Plat by constructing the smaller

homes; that the homeowners had been charged unauthorized fees, penalties, and assessments; and that the Defendants had threatened to take the homeowners to court, had reported them to debt collectors, and had made negative reports to credit bureaus.

In April 2020, the homeowners filed suit seeking injunctive relief and alleging claims of conversion, breach of contract, fraud, RICO Act violations, and Fair Credit Reporting Act violations, among other things. Initially, the suit focused on obtaining an injunction to prevent KIR from constructing homes smaller than the 2006 Declaration’s 1,200-square-foot requirement.

After a hearing on May 12, 2020, the trial court issued a temporary restraining order (“TRO”) against the Defendants, ordering them to cease construction on the smaller homes. Another hearing occurred later that summer revisiting the TRO and addressing the homeowners’ motion for contempt, at which time evidence was submitted as to the legality of the First Amendment to the Declaration. KIR argued that the First Amendment gave it declarant rights and allowed it to unilaterally issue the Second, Third, and Fourth Amendments, including elimination of the square- footage minimum, among other things. The homeowners argued that KIR was not the

true declarant, rendering void the subsequent Amendments to the 2006 Declaration, and they argued that KIR had no authority to make assessments, demand money, or construct houses in violation of the 2006 Declaration.

In July 2020, the trial court entered an omnibus order addressing the homeowners’ requests for an extension of the TRO, their contempt motion, and the Defendants’ motion to dismiss. The trial court denied the motion to dismiss, determining that KIR was not the declarant because (1) declarant’s rights were not explicitly included as collateral in the chain of title documents transferring ownership from Kingwood to UCB, to Great Oak, and then to KIR; and (2) Kingwood had no declarant rights to transfer to KIR via the 2015 First Amendment.3 The court relied on the language of the 2006 Declaration, Armstong v. Roberts, 254 Ga. 15 (325 SE2d 769) (1985), and Chisholm v. Danforth, LLC, 352 Ga. App. 682 (835 SE2d 666) (2019), in making the determination. The trial court concluded that the Second, Third, and Fourth Amendments to the 2006 Declaration were void as a result.

3 KIR requested a certificate of immediate review from this order, which the trial court granted, and thereafter, this Court granted its interlocutory appeal application. See Kingwood Int’l Resort, LLC v. Bachewicz, Case No. A21I0013 (Ga. App., Aug. 12, 2020). KIR failed to transmit the record and withdrew its appeal in May 2022.

Thereafter, discovery ensued as to the other claims alleged by the homeowners, but agents of KIR purported to hold a vote in order to elect a Board for The Association, later moving to lift the injunction on the basis that it was empowered to enact changes to the 2006 Declaration. After a hearing, the trial court denied the motion to lift the injunction, declared the vote void, and issued an order with instructions for The Association to conduct a new vote. The homeowners also moved for sanctions based on the Defendants’ failure to allow them to view The Association’s financials.

In June 2021, KIR filed a second motion to amend the injunction, seeking approval of the latest Board election and seeking dismissal of the amended complaint. The trial court again declined to approve the vote, finding that KIR had acted improperly during the vote and ordering a third election. The court also granted the homeowners’ motion for sanctions.

The Association moved for the court to approve the third election of the Board, and KIR then moved to modify the injunction as to its uncompleted homes. The homeowners again moved for contempt, claiming that KIR had started constructing other homes in violation of the injunction and had failed to pay the earlier sanctions

award. The court denied KIR’s motion as to the injunction based on its failure to obtain a variance from the county. The court initially declined to approve the third election, approving it on reconsideration. The court granted the homeowners’ contempt motion and ordered KIR to immediately halt construction.

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KINGWOOD INTERNATIONAL RESORT, LLC v. THOMAS MCMURRY, (Ga. Ct. App. 2026).

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