Mitchell Howell v. Lochwolde Homeowners Association, Inc.

• Court: Court of Appeals of Georgia
• Decided: June 22, 2020
• Docket: A20A0608
• Status: Published

Opinion

FOURTH DIVISION DILLARD, P. J., RICKMAN and BROWN, 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. http://www.gaappeals.us/rules

June 22, 2020

In the Court of Appeals of Georgia A20A0608, A20A0609. HOWELL v. LOCHWOLDE RI-019 HOMEOWNERS ASSOCIATION, INC.; and vice versa.

RICKMAN, Judge.

After Mitchell Howell began construction of additional structures on his

property without obtaining approval from the Architectural Review Board (“ARB”)

of his homeowners association, the ARB disapproved Howell’s construction plans as

being inconsistent with the restrictive covenants. Howell brought suit, challenging

the enforceability of the covenants. Following a bench trial, the trial court found the

covenants enforceable. Howell appeals, and the homeowners association cross

appeals a ruling prohibiting it from fining Howell. Because the trial court did not

reach the factual or legal conclusions required to resolve this case, we vacate the

order below and remand with direction. Construed in favor of the judgment, see City Heights Condo. Assn. v. Bombara,

337 Ga. App. 679, 679 (788 SE2d 563) (2016), the evidence shows that the

Lochwolde Homeowners Association, Inc. (the “LHA”) was originally incorporated

in July 1988 but that it was administratively dissolved nine years later for failure to

pay the annual renewal fee; the original covenants expired in 2004.

The corporation remained dissolved until 2016, but meanwhile, beginning in

2006, owners in the development referring to themselves as the LHA undertook the

drafting and recording of new covenants for the development. The proposed

covenants were distributed at the October 2006 annual meeting, and at both the

ensuing November special meeting and thereafter, a majority of the owners in the

development voted in favor of the new “Bylaws and Declaration of Covenants,

Conditions and Restrictions for Lochwolde Subdivision” (the “2007 Covenants”).

The covenants were recorded in the county register the following year, and they

purported to submit the LHA to the Georgia Property Owners’ Association Act (the

“POAA”). Nevertheless, the owners did not reincorporate the LHA at that time even

though at least one owner was aware that the LHA had been dissolved.

Howell’s predecessors in title voted in favor of the 2007 Covenants, and, when

they sold their property to Howell, they told both the closing attorney and Howell that

2 there were restrictive covenants on the property and that a homeowners association

existed for the development. And Howell signed a seller’s disclosure indicating that

the property was “subject to a Declaration of Covenants, Conditions and

Restrictions.” After purchasing the property, Howell paid the LHA annual dues for

the first four years he owned the property. And he attended a meeting of the LHA in

October 2015 where various issues were discussed, including enforcement and

payment of dues and enforcement of the covenants.

In 2015, Howell began construction of additional structures on his property,

including a free-standing, 26-foot high, fully insulated “tree-house” with a shingled

roof and a separate lookout tower and zip line platform. Thereafter, officers of the

LHA met with Howell, advised him that the structures violated the 2007 Covenants,

and asked him for a copy of the plans, which Howell provided. Howell agreed to halt

construction until the ARB could review the plans, but the ARB disapproved

Howell’s plans on the ground that they were “not consistent with the community-wide

standard” as provided in the covenants. Howell requested an appeal of the ARB’s

decision and challenged the authority of the LHA. In May 2016, an attorney for the

LHA responded that the ARB decision would stand.

3 The current incarnation of the LHA was incorporated on April 4, 2016. In

connection thereto, the board of directors adopted a resolution in lieu of an

organizational meeting, by which the board accepted and approved the Articles of

Incorporation for the LHA and the Certificate of Incorporation issued by the

Secretary of State. The board ratified and approved the actions of the incorporator,

and it acknowledged and approved the 2007 Covenants and accepted the LHA’s

obligations thereunder. Finally, the board ratified and affirmed “each and every

election, action, decision, and transaction undertaken by the [LHA] at any time prior

to April 4, 2016. . . pursuant to its authority under the [2007 Covenants].”

Howell thereafter brought an action against the LHA, seeking an order

prohibiting enforcement of the 2007 Covenants, a declaration that the 2007

Covenants did not apply to his property or that the LHA had no authority to prohibit

him from the construction at issue, and attorney fees. The LHA answered and

counterclaimed, seeking injunctive relief requiring Howell to cease construction and

to remove the structures. The LHA also sought attorney fees and a fine against

Howell of $25 for each day that Howell was in violation of the 2007 Covenants.

Following discovery and the denial of Howell’s motion for summary judgment,

the case was tried without a jury. The parties stipulated the basic facts and presented

4 additional evidence. Following the trial, the court held that the fact that the LHA was

not incorporated at the time the 2007 Covenants were recorded was not fatal to their

viability. The court held that Howell therefore proceeded at his own peril by

commencing construction of the structures without ARB approval, and that he is

required to remove the structures. In case No. A20A0608, Howell appeals these

rulings. The court further held that the LHA did not have authority to adopt a

resolution imposing a fine of $25 per day for covenant violations. In A20A0609, the

LHA cross-appeals this ruling.

A20A0608

1. Howell contends the trial court erred by holding that the 2007 Covenants

were enforceable for several reasons.1

We apply a de novo standard of review to any questions of law decided by the trial court; factual findings made after a bench trial shall not be

1 Although Howell contends the trial court erred by denying his motion for summary judgment on the same grounds, “[g]enerally, a ruling on a motion for summary judgment becomes moot following the verdict and judgment.” Smith v. Saulsbury, 286 Ga. App. 322, 323 (1) (a) (649 SE2d 344) (2007). A party may appeal the denial of summary judgment as part of the direct appeal “if the legal issues raised and resolved in denying the motion for summary judgment were not considered at trial.” Id. But Howell only argues that certain facts contained in the discovery depositions show that the trial court erred, and these same facts either were or could have been addressed at trial.

5 set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of witnesses.

(Citation and punctuation omitted.) ALA Constr. Svcs. v. Controlled Access, 351 Ga.

App. 841, 841-842 (833 SE2d 570) (2019).

Howell’s primary argument is that because the original LHA had been

administratively dissolved and therefore was only authorized to wind up its affairs,

it was not authorized to create and record the 2007 Covenants, and, consequently, the

covenants are not enforceable. See generally OCGA § 14-3-1421 (c) (“A corporation

administratively dissolved continues its corporate existence but may not carry on any

business except that necessary to wind up and liquidate its business and affairs. . . .”);

OCGA § 44-3-227 (a) (“Prior to submission to [the POAA], the association shall be

duly incorporated.”).

But the trial court did not conclude that the original LHA created and recorded

the 2007 Covenants. Rather, the trial court held that under two “savings provisions”

of the POAA, the fact that the LHA was not formally incorporated in 2007 was “not

fatal to the viability of the 2007 Covenants,” citing OCGA §§ 44-3-232.1 and 44-3-

233. We conclude, therefore, that Howell’s argument is inapposite. Nevertheless, for

the following reasons, we hold that the trial court failed to apply the correct law and

6 to find facts pertaining thereto, which requires remanding the case for

reconsideration.

(a) The first of the two statutes upon which the trial court relied provides that

the right to control an association can pass from the declarant to the property owners

in the development even if, such as here, the declarant fails to maintain its annual

registration as a corporation. See OCGA § 44-3-232.1 (a). But to take effect, that

statute requires an action in superior court by one or more owners to gain control of

the association, see OCGA § 44-3-232.1 (b), and there is no evidence that such an

action was ever filed. Thus, we find OCGA § 44-3-232.1 inapplicable as a matter of

law.

(b) The trial court also relied on OCGA § 44-3-233, but the trial court failed

to make appropriate findings of fact and law, which requires us to remand.

A property owners’ association is “a corporation formed for the purpose of

exercising the powers of the property owners’ association created under [the POAA].”

OCGA § 44-3-221 (16). And, as shown above, “[p]rior to submission to [the POAA],

the association shall be duly incorporated.” OCGA § 44-3-227. But, OCGA § 44-3-

233 expressly provides that “substantial compliance with the requirements of [the

POAA] for the establishment of a property owners’ association shall suffice to b[r]ing

7 property described in an instrument recorded pursuant to this article within the

purview and application of this article.” OCGA § 44-3-233.The POAA further

provides that its provisions and the provisions of “an instrument recorded pursuant

thereto shall be liberally construed in favor of the valid establishment of [a] property

owners’ association pursuant to this article with respect to the submitted property.”

Id.

Thus, to apply OCGA § 44-3-233 to this case, the trial court was required to

find that those acting in the name of the LHA who recorded the 2007 Covenants

substantially complied with the requirements of the POAA for the establishment of

a property owners’ association, which is a question of fact for the trial court. See

generally Del Lago Ventures v. QuikTrip Corp., 330 Ga. App. 138, 143 (1) (b) (764

SE2d 595) (2014) (finding a question of fact as to whether delivery of termination

letter constituted substantial compliance with contract); Evans v. Ohio Cas. Ins. Co.,

264 Ga. App. 485, 486 (1) (591 SE2d 378) (2003) (finding a question of fact as to

whether party substantially complied with insurance contract).

Here, the trial court held that the LHA did not exist at the time that the 2007

Covenants were recorded, but given that (1) the requisite number of owners voted for

the 2007 Covenants at the time, (2) the POAA has certain applicable “savings

8 provisions,” and (3) the newly incorporated LHA appropriately assumed the

responsibilities set forth in the 2007 Covenants, “the subsequent incorporation [of the

LHA] resulted in a governing authority which appropriately assumed the

responsibilities set forth in the 2007 Covenants.”

Although the trial court correctly cited OCGA § 44-3-233 as relevant to the

issues before it, it did not conclude that the owners had substantially complied with

the requirements of the POAA for the establishment of a property owners’

association; indeed, it did not specifically reference any such requirements. See

OCGA § 44-3-220 et seq. (the POAA); see also Marino v. Clary Lakes Homeowners

Assn., 322 Ga. App. 839 (747 SE2d 31) (2013) (analyzing the enforceablity of a

covenant under the POAA), overruled on other grounds by S-D RIRA, LLC v.

Outback Property Owners’ Assn., 330 Ga. App. 442 (765 SE2d 498) (2014). Rather,

the trial court appears to have determined that the actions of the LHA appear to be

reasonable based on the cited facts. But that reasoning does not support the trial

court’s conclusion that under OCGA § 44-3-233 the fact that the LHA was not

incorporated at the time the 2007 Covenants were recorded was not fatal to their

viability.

9 We therefore vacate the trial court’s order and remand for proper consideration

of, and conclusions regarding, the factual and legal questions at issue in this case. See

Wallace v. Wallace, 301 Ga. 195 (800 SE2d 303) (2017) (vacating trial court order

entered following a bench trial and remanding for consideration of the correct legal

and factual questions at issue in the case). When, such as here, parties request

findings of fact and conclusions of law, “a dry recitation that certain legal

requirements have been met is insufficient to satisfy the requirements of the law. The

trial judge is to ascertain the facts and to state not only the end result of that inquiry

but the process by which it was reached.” (Citation, punctuation, and emphasis

omitted.) Id. at 199 (II). Without such findings, “meaningful appellate review is not

possible.” Id.

Accordingly, after proper consideration of the factual and legal questions at

issue, the trial court is directed to issue appropriate findings of fact and conclusions

of law that address whether the 2007 Covenants are enforceable against Howell.

A20A0609

2. In the cross-appeal, the LHA contends that the trial court erred by holding

that it was not authorized to enforce a fine against Howell for his failure to remove

the structures. Because this holding is dependent on the primary issue discussed in

10 Division 1, we also vacate this ruling by the trial court and remand for further

consideration consistent with this opinion.

Judgment vacated and case remanded with direction. Dillard, P. J., and

Brown, J., concur.