Snider v. Tull’s Bay Colony Property Owners Association, Inc. (Lawyers Weekly No. 11-16-0954, 11 pp.) (Rick Elmore, J.) Appealed from Currituck County Superior Court. (Wayland J. Sermons, J.) N.C. App. Unpub. Click here for the full-text opinion.
Holding: In a prior action by the defendant-property owners’ association to collect an assessment against the plaintiff-owners, the trial court ruled that the restrictive covenants in plaintiffs’ deed did not give the association authority to impose assessments. Although the association amended its bylaws to apply the Planned Community Act to the parties’ subdivision, the association is nevertheless collaterally estopped from imposing assessments.
We reverse the trial court’s grant of summary judgment in favor of the association. Plaintiffs are entitled to judgment as a matter of law.
Collateral estoppel applies when the following conditions are met: (1) the issues to be concluded must be the same as those involved in the prior action; (2) in the prior action, the issues must have been raised and actually litigated; (3) the issues must have been material and relevant to the disposition of the prior action; and (4) the determination made of those issues in the prior action must have been necessary and essential to the resulting judgment.
In the prior dispute between the parties, the district court considered whether the association had the authority to impose assessments on the lot owners of Tull’s Bay. The court decided, “The restrictive covenants make no mention of assessments and … [the association] has no right or authority to impose assessments against members of Tulls Bay Colony.”
The association did not appeal the order of the district court; therefore, that order is final and valid.
Next, the association amended its bylaws to incorporate the Planned Community Act. The PCA grants certain powers to the homeowner’s association of a planned community. G.S. ¤ 47F-1-102. One of the powers the PCA provides is the power to impose assessments.
Following the passage of this amendment, plaintiffs filed the present suit to have the amendment invalidated in order to avoid future claims to pay assessments. Therefore, the principal issue considered by the trial court was again, whether the association has the authority to impose assessments on the lot owners of Tull’s Bay.
The final judgment of the district court in the prior action clearly stated that the association had no authority to impose assessments because the restrictive covenants of the lot owners’ deeds make no mention of assessments. It is obvious from this determination that the ruling of the district court in the prior action was based entirely on the language of the deeds.
The language of the bylaws was not dispositive of the judgment. Therefore, the association’s distinction between authority for imposing assessments under the bylaws and authority for imposing assessments under the PCA is immaterial when framing the issue. We conclude that the issue presented to the trial court in the present case was the same issue presented to the court in the prior case.
In the prior action, the association claimed, “Pursuant to the restrictive covenants and Bylaws Plaintiff Association has established a special assessment and annual assessments which Defendants have refused and failed to pay in full since March, 2005.”
The association asked the district court to allow the association to “recover of Defendants [(here plaintiffs)] the sum of $208.42….” The district court entered an order finding that the association had no authority to impose assessments on the lot owners of Tull’s Bay. When analyzing the pleadings and the judgment, we conclude that association actually raised the issue of whether it may impose assessments, and the court issued a final judgment. The final judgment ruled that the association did not have the right to impose assessments. Therefore, we conclude that the issue was actually raised and litigated in the prior action.
The issue of whether the association had the authority to impose assessments was material and relevant to the prior action. Furthermore, the judgment of the district court ordered that plaintiffs were not required to pay the assessments. The judgment stated that the association did not have the authority to impose assessments on the lot owners of Tull’s Bay. Therefore, the determination of whether the association had the authority to impose assessments on the lot owners of Tull’s Bay was essential to the judgment.
The doctrine of collateral estoppel applies. Plaintiffs are entitled to judgment as a matter of law.