Opinion
COA23-226
11-07-2023
IN THE MATTER OF THE FORECLOSURE OF THE CLAIM OF LIEN ON LOT OWNED BY [RONNIE C. HEDGEPETH AND SHIRA L. HEDGEPETH]
McLean Law Firm, P.A., by Russell L. McLean, III, and The Law Office of Shira Hedgepeth, PLLC, by Shira Hedgepeth, pro se attorney appellant, for respondent-appellants. Sanford L. Steelman, Jr., and David A. Sawyer, and Rayburn, Cooper &Durham, PA, by Ashley B. Oldfield and Ross R. Fulton for petitioner-appellees Smoky Mountain Country Club Property Owners Association, Inc. and Smoky Mountain Country Club.
An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
Heard in the Court of Appeals 20 September 2023.
Appeal by respondent-appellants from order entered 19 December 2022 by Judge William Coward in Swain County No. 22SP33 Superior Court.
McLean Law Firm, P.A., by Russell L. McLean, III, and The Law Office of Shira Hedgepeth, PLLC, by Shira Hedgepeth, pro se attorney appellant, for respondent-appellants.
Sanford L. Steelman, Jr., and David A. Sawyer, and Rayburn, Cooper &Durham, PA, by Ashley B. Oldfield and Ross R. Fulton for petitioner-appellees Smoky Mountain Country Club Property Owners Association, Inc. and Smoky Mountain Country Club.
GORE, Judge
Respondent-appellants appeal the order granting the foreclosure sale of their property due to an outstanding claim of lien against the property. Upon review of the parties' briefs and the record, we affirm.
I.
Respondent-appellants bring a third appeal this year before this Court regarding the underlying disputes between themselves and petitioner-appellees, Smoky Mountain Country Club Property Owners' Association, Inc. ("Association"). Respondent-appellants became part of the Association when they purchased a townhome within the planned community in 2017. Later, the Association assessed respondent-appellants, along with all members of the Association, for repayment of the multi-million dollar judgment entered against the Association and negotiated in the amended confirmation plan during the Association's Chapter 11 bankruptcy proceedings. Respondent-appellants and other members, the Youngs, appealed the bankruptcy order in the United States District Court for the Western District of North Carolina. The federal court dismissed the appeal for lack of standing.
The Association incurred attorneys' fees in the amount of $69,623.00 while defending respondent-appellants' bankruptcy appeal. Respondent-appellants received notice of the legal fees during the bankruptcy appeal and did not object or challenge the amount in legal fees. The Association initiated a hearing before its board of directors to determine whether respondent-appellants and the Youngs should be solely assessed the outstanding legal fees pursuant to section 47F-3-115(e) of the North Carolina Planned Community Act. Neither respondent-appellants nor the Youngs attended the hearing. The Association's board of directors issued a written decision with findings of fact and conclusions of law ultimately deciding respondent-appellants and the Youngs acted negligently and with misconduct; therefore, respondent-appellants were assessed the legal fees jointly and severally. Full payment of the legal fees assessment was required by 31 May 2021, or the Association would file a lien against respondent-appellants' property and institute a nonjudicial foreclosure pursuant to section 47F-3-116.
Respondent-appellants did not pay the assessment; consequently, the Association filed a claim of lien against the property on 21 March 2022, in the amount of $69,623.00 with 8% interest per annum. In response, respondent-appellants filed a lawsuit on 1 April 2022, No. 22-CVS-65, and later an amended complaint seeking declaratory relief and to quiet title against the Association ("Prior Action").
The Association proceeded with foreclosure of respondent-appellants' property on 8 August 2022 by issuing a Notice of Hearing in Foreclosure before the clerk of court ("Foreclosure Action"). Respondent-appellants filed a 12(b)(6) motion to dismiss the foreclosure and later a motion to consolidate the case with the Prior Action and to amend the Prior Action. Additionally, respondent-appellants filed a motion to stay the foreclosure until determination of the Prior Action. On or about 16 September 2022, the clerk of court entered an order allowing foreclosure and denying the motion to stay.
Respondent-appellants appealed the Foreclosure Action decision to the Swain County Superior Court. Respondent-appellants once again filed a motion to stay the foreclosure, consolidate the case with the Prior Action, and filed a motion to waive mediation. Additionally, respondent-appellants filed a 12(b)(1) motion to dismiss the Foreclosure Action. The trial court heard the motions and denied the motion to stay the Foreclosure Action, denied the motion to set aside and dismiss the Foreclosure Action, and denied the alternative motion to consolidate the Foreclosure Action with the Prior Action. The trial court conducted a de novo bench trial, and on 19 December 2022, entered the Order Allowing Foreclosure Sale that is the subject of this appeal. Respondent-appellants timely filed a notice of appeal specifying appeal of the Order Allowing Foreclosure Sale.
II.
Respondent-appellants assert the following challenges on appeal: (1) whether the trial court erred in its finding of fact and conclusion of law that the assessment levied against respondent-appellants was a valid debt; (2) whether the trial court erred in finding the Association's assessment is authorized pursuant to section 47F-3-115(e); (3) whether the trial court erred in finding section 47F-3-115(e) permits the Association to assess its legal fees upon respondent-appellants; (4) whether the trial court erred by finding respondent-appellants waived objections to the Assessment by not participating in the hearing before the Association's board of directors; (5) whether the trial court erred by exclusively assessing the legal fees to respondentappellants and the Youngs pursuant to section 47F-3-115(e); (6) whether the trial court erred in finding the Association may assess common expenses jointly and severally against specific members; and (7) whether the trial court erred by not consolidating the Foreclosure Action with the Prior Action.
When the trial court conducts a bench trial, we review "whether competent evidence exists to support the trial court's findings of fact and whether the conclusions reached were proper in light of the findings." In re Foreclosure Under That Deed of Tr. Executed by Azalea Garden Bd. &Care, Inc., 140 N.C.App. 45, 50, 535 S.E.2d 388, 392 (2000). "[U]nchallenged findings of fact are . . . binding on appeal. Otherwise, a trial court's findings of fact are conclusive on appeal if supported by any competent evidence." Cherry Cmty. Org. v. Sellars, 381 N.C. 239, 246, 871 S.E.2d 706, 714 (2022). We review conclusions of law de novo. In re Bass, 366 N.C. 464, 467, 738 S.E.2d 173, 175 (2013).
Before we address respondent-appellants multiple claims, we believe it is necessary to first discuss our North Carolina Rules of Appellate Procedure. Essential to this Court's review is the appellants' consideration and application of the appellate rules to their arguments. Rule 28(b)(6) requires that the appealing party include citations to authorities in support of their argument; when the party fails to properly provide reason or argument with legal support, the issue is considered abandoned. See N.C. R. App. P. 28(a), (b)(6). "It is not our role to create an appeal for an appellant. That burden rests solely with the appellant." State v. Patterson, 269 N.C.App. 640, 645, 839 S.E.2d 68, 72 (2020) (internal quotation marks and citations omitted). When appellants "fail to apply any legal authority to the evidence presented below or to explain how the trial court's order was inconsistent with the law," we consider the argument abandoned under Rule 28(b)(6). K2HN Constr. NC, LLC v. Five D Contractors, Inc., 267 N.C.App. 207, 214, 832 S.E.2d 559, 564 (2019). Merely stating elements of a claim but then failing to apply the evidence and cite to authority as to how the evidence does or does not support the elements, is insufficient. Id.
A.
Respondent-appellants first argue the trial court erred by finding and concluding the assessment was a valid debt. Respondent-appellants cite the correct elements of a valid lien, but the rest of their argument is derailed by unsupported claims, i.e., that petitioner-appellees set up their own court and how that invalidated the debt. Respondent-appellants cite no law or authority to support their argument. While they claim this is an issue of first impression, they provide no persuasive authorities or any substance to support their claims. Nor do they demonstrate a lack of competent evidence to support the finding of fact that the assessment is a valid debt. Accordingly, we determine respondent-appellants failed to comply with Rule 28(b)(6), and as a result, abandoned the issue.
B.
Next, respondent-appellants argue issues 2 and 3 separately, but they are essentially the same argument: whether section 47F-3-115(e) authorizes the Association to assess its legal fees against respondent-appellants. In support of their argument, respondent-appellants state section 47F-3-115 only allows assessments for common expenses, which they assert are defined as "maintenance [and] repair replacements of a limited common element." They apply this definition with section 47F-3-115(e) to limit its application to mean "the negligence or misconduct must be associated with the maintenance or repair of a common area." They link this application with section 47F-3-107 to ultimately conclude that the Association is limited to hearing and assessing this legal responsibility only if the amount is no more than the limit in a small claims court case.
Section 47F-3-115(e) is part of a larger scheme defining the roles and powers of planned communities within North Carolina. See generally North Carolina Planned Community Act Chapter 47F. We do not read section 47F-3-115(e) as limiting the common expenses to "the maintenance, repair, or replacement of a limited common element," because the definition of "common expenses" is explicitly stated within section 47F-1-103. N.C. Gen. Stat. § 47F-1-103(5) (2022). "Common expenses" are defined as, "expenditures made by or financial liabilities of the association, together with any allocations to reserves." Id. Because respondent-appellants limit common expenses to maintenance and repair, they justify their reliance upon section 47F-3-107 to limit the Association's power to make assessments to any amount less than $10,000.00. However, the definition for common expenses is much broader than sections 47F-3-115(c) and 47F-3-107(b) and (c). The procedural mechanism for assessing maintenance and repair is not automatically applicable to all other common expenses. Beyond these statutory references, respondent-appellants provide no legal support for their narrow interpretation; without such support, we are unpersuaded by their interpretation.
Both parties rely upon Willow Bend Homeowners Ass'n, Inc. v. Robinson to support their countering arguments. In Willow Bend, one of the issues this Court passed upon, was whether a particular covenant within the HOA's Declaration allowed for an assessment against its lot owners to cover legal costs incurred during the HOA's defense of a lawsuit by one of the lot owners. 192 N.C.App. 405, 414, 665 S.E.2d 570, 575-76 (2008). This Court recognized that non-profits must obtain legal representation in legal proceedings rather than represent themselves. Id. at 414, 665 S.E.2d at 576. We reasoned in that case that "[i]f the covenant at issue contemplate[d] assessments for the payment of court judgments, it surely contemplate[d] assessments for the employment of legal counsel to defend against such judgments." Id. We ultimately held "both the purpose and amount of the assessment . . . [fell] within the contemplation of the covenant[,] . . . and [was] enforceable." Id. at 415, 665 S.E.2d at 576.
Respondent-appellants argue the assessment was an ultra vires act beyond the scope of the Declaration. They argue the Association utilized section 47F-3-115(e) to "act as a judge and jury . . . and assess an amount of $69,623 solely against the Hedgepeths." However, we previously recognized that "section 47F-3-102 authorizes the collection and distribution of funds for litigation in which a homeowners' association is a party as long as this collection and distribution is not prohibited in the Association's Declaration." Happ v. Creek Pointe Homeowner's A'ssn, 215 N.C.App. 96, 104, 717 S.E.2d 401, 406 (2011). In Happ, this Court considered the statutory authorization first, and secondly, considered whether the covenants within the Association's Declaration prohibited the special assessment. Id. Upon determination of the broad nature of the statutory authorization along with the explicit language within the Declaration allowing the Association to utilize assessments for litigation purposes, we concluded the Association acted within its authority by distributing the litigation funds. Id.
We have already addressed the broad statutory authorization for common expenses and the legal precedent that allows assessments that ultimately pay for legal fees. Turning to the Association's Declaration, we determine there is no prohibition of such assessments. The Declaration conveys power to the Association "to institute, defend, or intervene in litigation or administrative proceedings on matters affecting the planned community or the Association.... To foreclose on the lien of any assessment . . . [t]o exercise any other powers necessary and proper for the governance and operation of the Association." Additionally, within Article IV, section 2, it grants the Association power to levy various types of assessments, including special assessments. Within the same article, section 7 grants the Association the right to seek a lien on any lot owner's unpaid assessment if it is outstanding thirty days or longer. Accordingly, given the statutory authority and the supporting covenants that permit the Association to make such assessments, we determine the trial court did not err when it found and concluded the Association was authorized under section 47F-3-115(e) to assess legal fees.
C.
Next, respondent-appellants challenge the trial court's finding of fact that they waived any objections to the evidence presented at the hearing before the Association's board of directors, and that they waived objections to any of the arguments presented at the hearing by failing to attend and object during the hearing. As previously stated, we review a challenged finding of fact to determine whether there is competent evidence to support the finding.
Respondent-appellants provide no argument to demonstrate the finding was unsupported by competent evidence. The trial court included the following unchallenged findings of fact:
15. On December 4, 2020, the Board of Directors of Association sent out written notice to its members, including the Hedgepeths and the Youngs, of a hearing scheduled for March 31, 2021, to determine whether the Hedgepeths and the Youngs were negligent, or acted with misconduct, in filing the Bankruptcy Appeal without standing to do so, and whether Association should assess the Legal Fees in defending Association in the Bankruptcy Appeal, jointly and severally, exclusively against the lots owned by the Hedgepeths and the Youngs ("Notice of Hearing").
16. On March 31, 2021, a hearing in accordance with the Notice of Hearing was conducted before the Board of Directors of Association and evidence was presented on whether the Hedgepeths and the Youngs were negligent, or acted with misconduct, in filing the Bankruptcy Appeal without standing to do so, and whether the Legal Fees should be assessed exclusively against the lots owned by the Hedgepeths and the Youngs.
18. On April 30, 2021, the Board of Directors of Association rendered a written decision that the common expense of the Legal Fees paid by Association to defend the Bankruptcy Appeal was caused by the
negligence or the misconduct of the Hedgepths and the Youngs, jointly and severally, and that the Association shall assess that expense against the lots owned exclusively by the Hedgepeths and Youngs ("Decision").
19. The Decision levied an assessment exclusively against the lot owned by the Hedgepeths and the lot owned by the Youngs for payment of the common expenses, consisting of the Legal Fees, in the amount of $69,623 by May 31, 2021, and if not then paid in full, Association would be entitled to file a claim of lien with the Clerk of the Superior Court of Swain County, North Carolina ("Assessment").
22. Association elected, as is its right, to pursue a non-judicial foreclosure of a claim of lien under N.C. Gen. Stat. § 47F-3-116 and N.C. Gen. Stat. § 45-21.16 on the lot of the Hedgepeths.
There is also evidence of a notice of hearing before the Association's board of directors sent to all the members; there is evidence of the Association's decision to assess the legal fees against respondent-appellants, and within the decision, discussion regarding the notice sent to the Hedgepeths and Youngs. There is record evidence of who attended the hearing and of the absence of the Hedgepeths and the Youngs. Further, within the hearing transcript from the trial court, respondent-appellants acknowledge notice of a "meeting to discuss the liability of the Hedgepeths and the Youngs"; they acknowledge the hearing took place; and they acknowledge the Association's decision as well as their own lack of participation in the proceedings. Accordingly, there is competent evidence to support the trial court's finding that respondent-appellants had knowledge of the hearing and the decision but chose not to participate in any way.
Respondent-appellants also challenge the finding of waiver as a conclusion of law. However, in support of this challenge, apart from defining the legal definition of waiver, respondent-appellants only direct this Court to laws regarding subject matter and personal jurisdiction. Respondent-appellants devote most of their brief to arguing that the Association illegally acted as a court of law. Yet, there are many institutions that hold hearings, give notice and an opportunity to be heard, but are not considered "courts of law."
In such situations, there are statutory provisions delegating authority to these institutions to hold hearings for certain conduct. When these statutory provisions are present, these institutions merely act with the authority delegated and we do not consider these institutions to be setting up a court of law. See N.C. Gen. Stat. § 115C-325.7 (2022) ("Hearing before [school] board"); Master v. Country Club of Landfall, 263 N.C.App. 181, 186, 188, 823 S.E.2d 115, 119, 121 (2018) (discussing a private country club's compliance with statutory authority and its internal rules and procedures for a disciplinary hearing before its Board). Having recognized this, we now utilize the definition provided by respondent-appellants for waiver and determine they impliedly waived their defense (by their conduct) against the Association's arguments when they knowingly did not appear at the hearing nor raised any argument in opposition. Accordingly, the trial court did not err in concluding respondent-appellants waived their objections within finding of fact No. 17.
D.
Next, we address respondent-appellants' arguments five and six, which essentially cover the same subject-whether the trial court erred by determining the Association could assess the legal fees jointly and severally against respondent-appellants. Respondent-appellants argue the Association may not exclusively assess the legal fees against themselves and the Youngs, but only support this argument by referring to other statutes within Article 47A that require uniformity with assessments of administration and maintenance and repair of common areas. They also argue the legal fees are a special assessment rather than a maintenance or repair assessment and conclude that they should only be assessed a pro rata share between themselves and the Youngs.
We do not follow respondent-appellants arguments and do not understand how these arguments support their challenge that the trial court erred in determining section 47F-3-115(e) authorizes the exclusive assessment of the legal fees against respondent-appellants. Further, respondent-appellants fail to provide an argument under the proper standard of review for findings of fact and conclusions of law. We will not entertain their broad arguments nor create an argument on respondent-appellants' behalf. Because respondent-appellants fail to demonstrate any lack of competent evidence to support the finding of fact that the "assessment is a valid debt levied, jointly and severally, exclusively against the lot of the Hedgepeths and the lot of the Youngs," and they fail to demonstrate that the trial court erred in making that determination as a matter of law, we conclude the trial court did not err.
E.
Finally, respondent-appellants argue the trial court erred in denying the motion to consolidate the Foreclosure Action with the Prior Action. The notice of appeal only specified appeal from the Order Allowing Foreclosure Sale and did not seek appeal from the Order Denying the Motion to Consolidate. Because we are limited to review what is noticed on appeal, we decline to consider this additional argument. See N.C. R. App. P. 3(d) ("The notice of appeal . . . shall designate the judgment or order from which appeal is taken ....); Von Ramm v. Von Ramm, 99 N.C.App. 153, 156, 392 S.E.2d 422, 424 (1990) ("Notice of appeal from denial of a motion to set aside a judgment which does not also specifically appeal the underlying judgment does not properly present the underlying judgment for our review.").
III.
For the foregoing reasons, we affirm the trial court's order authorizing a foreclosure sale of respondent-appellants' property.
AFFIRMED.
Judge DILLON concurs.
Judge ARROWOOD concurs in result only.
Report per Rule 30(e).