Opinion
2018 CA 0733
02-06-2019
SAMUEL SKINNER v. MEADOW LAKE PROPERTY OWNERS ASSOCIATION, INC., AND THE PARISH OF ST. TAMMANY
Robert Cooper Mandeville, Louisiana Michael D. Allday New Orleans, Louisiana Attorneys for Plaintiff/Appellant Samuel Skinner Douglass E. Alongia Richard A. Tonry, II. Brian L. Gloriso Slidell, Louisiana Attorneys for Defendant/Appellee Meadow Lake Property Owners Association, Inc.
NOT DESIGNATED FOR PUBLICATION On Appeal from the Twenty-Second Judicial District Court In and for the Parish of St. Tammany State of Louisiana
No. 2012-14140 Div. "H" The Honorable Donald M. Fendlason, Pro Tempore Judge Presiding Robert Cooper
Mandeville, Louisiana
Michael D. Allday
New Orleans, Louisiana Attorneys for Plaintiff/Appellant
Samuel Skinner Douglass E. Alongia
Richard A. Tonry, II.
Brian L. Gloriso
Slidell, Louisiana Attorneys for Defendant/Appellee
Meadow Lake Property Owners
Association, Inc. BEFORE: McDONALD, CRAIN, AND HOLDRIDGE, JJ. HOLDRIDGE, J.
Plaintiff, Samuel Skinner, appeals the trial court's granting of a motion for summary judgment in favor of defendant, Meadow Lake Property Owners Association, Inc. (Meadow Lake), dismissing this lawsuit. We affirm.
BACKGROUND
The facts forming the basis of this litigation are largely undisputed. In 1994, Wyndemere Development Co., Inc. (Wyndemere) executed an "ACT CREATING DEED RESTRICTIONS AND COVENANTS" for Meadow Lake Subdivision, Phase 1, located in Slidell, Louisiana. That 1994 Act recognized that Meadow Lake would be created as a non-profit corporation owned entirely by all of the property owners of the subdivision. The Act further decreed that the common property would be designated in later phases of the subdivision and "all common property is to be owned and maintained" by Meadow Lake. Meadow Lake was formed in 1994 as a non-profit corporation under the laws of Louisiana.
On April 4, 1995, Wyndemere transferred the subject property to Meadow Lake, described in an Act of Sale as a parcel of land "containing 10.79 acres of land, more or less, and is a retention pond servicing the subdivision as part of its drainage plan." As consideration for the sale, Meadow Lake accepted all responsibility for maintenance of the property containing the retention pond and agreed to the release of Wyndemere from all responsibility in connection therewith.
On December 30, 1996, Wyndemere executed a sixth amendment to the deed restrictions and covenants to add Phase 6 of Meadow Lake subdivision. A map of Meadow Lake's Phase 6 depicts the retention pond, which is located directly behind Lot 178.
On July 29, 1997, Mr. Skinner purchased Lot 178, which contained a home, in Meadow Lake Subdivision Phase 6. Thereafter, on October 16, 2003, Meadow Lake donated the retention pond behind Mr. Skinner's home to the Parish of St. Tammany (Parish).
On July 31, 2012, Mr. Skinner filed this lawsuit against Meadow Lake and the Parish. He alleged he discovered in 2011 that Meadow Lake donated the retention pond and property surrounding the pond to the Parish. Mr. Skinner alleged that Meadow Lake did not have the authority to donate the property and further, that the property was donated without a vote by the homeowners and without advance notice to the homeowners. Mr. Skinner sought to revoke the donation based upon Meadow Lake's alleged lack of authority and capacity to donate the property and because the donation was not brought before the homeowners and because they were not given advance notice of the donation. He also alleged that the Parish had begun working on the property, removed trees therefrom, and intended to change the use of the property. Mr. Skinner sought injunctive relief commanding the Parish to cease and desist from doing any further work on the property and from selling the property until such time as a hearing could be held on the revocation of the donation.
On October 29, 2012, Mr. Skinner amended his petition to assert a breach of contract claim against Meadow Lake. He alleged that Meadow Lake breached the terms of the 1994 Act Creating Deed Restrictions and Covenants as well as Meadow Lake's Articles of Incorporation (sometimes collectively referred to as the "governing documents") by its unauthorized donation of the property to the Parish. Specifically, Mr. Skinner alleged that Meadow Lake breached provisions of those documents stating that the common property is to be owned and maintained by Meadow Lake, that Meadow Lake failed to abide by the notice and voting provisions of the documents, and Meadow Lake failed to fulfill its duty to enforce the provisions of the restrictions, covenants, articles, and by-laws.
Mr. Skinner alleged that as a result of Meadow Lake's breach of the contract by virtue of the unauthorized donation of the property at issue, he lost the view he had when he purchased his home. He alleged that at the time, he had a view of the pond as well as the lush trees and scenery surrounding the pond; however, following the donation, he lost that view as the Parish removed most of the trees and scenery surrounding the pond, decreased the size of the pond, and installed visible drainage pipes in the pond.
The Parish filed peremptory exceptions urging the objections of prescription and no right of action, which were granted by the trial court on November 13, 2012. Mr. Skinner's motion for a preliminary injunction was dismissed as moot as it pertained to the Parish.
On February 5, 2013, Meadow Lake filed peremptory exceptions urging the objections of prescription and no right of action. On June 10, 2013, the trial court granted Meadow Lake's exception of prescription with respect to Mr. Skinner's action seeking to set aside the October 16, 2003 donation. The court denied Meadow Lake's exception of prescription as to Mr. Skinner's breach of contract claims, finding such were subject to a liberative prescription of ten years pursuant to La. C.C. art. 3499. The court further denied Meadow Lake's exception of no cause of action and dismissed Meadow Lake's exception of no right of action as moot due to the partial sustaining of the prescription exception.
Thereafter, Meadow Lake filed its first motion for summary judgment, asserting that, as a matter of law, all actions taken by the 2003 Meadow Lake Board surrounding the 2003 donation attacked by Mr. Skinner had been cured by the ratification accomplished by Meadow Lake's current property owner's association at a special meeting properly noticed and held on August 22, 2013. On March 3, 2014, the trial court denied Meadow Lake's motion for summary judgment.
On January 21, 2014, Mr. Skinner filed a second amended and supplemental petition to assert two additional causes of action. Mr. Skinner sought to recover damages based on his alleged co-ownership of the property in question, asserting that Meadow Lake is liable for damages caused by the 2003 donation under various provisions of the Civil Code governing the rights and obligations of co-owners. He further alleged that he is entitled to damages under La. C.C.P. art. 2033, claiming that the 2003 donation was an absolutely null contract, as it was done without notice and consent of the subdivision homeowners, entitling him to damages.
In the supplemental petition, Mr. Skinner added Century Surety Company (Century) as a defendant. Century filed peremptory exceptions raising the objections of no right of action and prescription. On August 4, 2014, Century was dismissed from the lawsuit pursuant to a consent judgment. --------
On November 25, 2015, Meadow Lake filed another motion for summary judgment, asserting that Mr. Skinner's exclusive remedy against it is a shareholder's derivative action. On November 30, 2015, Mr. Skinner filed a pro se motion for summary judgment. On March 21, 2016, the trial court denied both motions. In so doing, the court rejected Meadow Lake's claim that Mr. Skinner's exclusive remedy is a derivative action, noting that it had previously held that Mr. Skinner had alleged a cause of action for direct losses. Meadow Lake's application for supervisory writs challenging the trial court's March 21, 2016 denial of its motion for summary judgment was denied by this court on July 13, 2016.
On August 14, 2017, Meadow Lake filed the motion for summary judgment under review in this case, asserting five bases on which it asserted it was entitled to judgment as a matter of law. First, Meadow Lake urged that it exclusively owned the retention pond, there is no material question of fact that Mr. Skinner is not a co-owner of the retention pond, and all of Mr. Skinner's claims for damages based on his allegations of co-ownership of the pond should be dismissed as a matter of law.
Second, Meadow Lake sought dismissal of Mr. Skinner's breach of contract claim on the basis that Mr. Skinner offered no affirmative proof to show that Meadow Lake's board acted without authority in donating the retention pond to the Parish. Meadow Lake submitted that the governing documents relied on by Mr. Skinner in support of his breach of contract claim do not limit Meadow Lake's authority to alienate or otherwise encumber immovable property, and specifically, La. R.S. 12:207(4) permits a non-profit corporation to alienate or otherwise encumber immoveable property. Meadow Lake urged that while Mr. Skinner has alleged a breach of contract on the basis that the donation allegedly occurred without a proper vote of the membership, Mr. Skinner did not provide support for his claim that the donation occurred without proper authority. In fact, Meadow Lake insisted, Mr. Skinner has offered no affirmative proof showing that its board acted without authority aside from his self-serving accusations, and his breach of contract claim should be dismissed as a matter of law.
In its third challenge, Meadow Lake insisted that Mr. Skinner's breach of contract claim must be dismissed because La. R.S. 9:1141.8 does not create a "new" cause of action entitling Mr. Skinner to pursue a claim for damages, and Mr. Skinner failed to pursue damages pursuant to a shareholder's derivative action, the legally mandated cause of action for damages due to the invalidity of an act of a corporation. Louisiana Revised Statute 9:1141.8 of the Louisiana Homeowners Association Act provides as follows:
The community documents of residential planned communities shall have the force of law between the homeowners association and the individual lot owners and as between individual lot owners. The remedies for breach of any obligation imposed on lot owners or the association shall include damages, injunctions, or other remedies as provided by law.According to Meadow Lake, the legislature enacted this provision not with the intent to create a new cause of action, but strictly to emphasize that the governing documents are the force of law between the parties, and control in situations regarding homeowners' associations. Meadow Lake posited that Mr. Skinner's exclusive remedy for any alleged breach of the governing documents due to the alleged invalidity of the donation is a derivative action pursuant to La. R.S. 12:208.
Louisiana Revised Statue 12:208 of the Nonprofit Corporation Law sets forth the defense of "ultra vires," which provides that the invalidity of a conveyance of immovable property by a corporation, by reason of the fact that the corporation lacked capacity or power to perform such conveyance, may only be asserted in four actions. One such action, in relevant part, is a derivative suit filed by a member of the corporation to recover damages against the officers or directors of the corporation. See La. R.S. 12:208A(3). Meadow Lake insisted that the more specific provision of La. R.S. 12:208A(3) controlled over the purported "general" provision set forth in La. R.S. 9:1141.8, and limited Mr. Skinner's claim for damages against Meadow Lake to a derivative action.
Additionally, Meadow Lake submitted that Mr. Skinner's claims for damages must be dismissed as he has no damages for which he may recover. It pointed out that Mr. Skinner alleged various forms of damages included loss of interest in plantings he made, loss of interest in fish, loss of opportunity to maintain the property, and loss of use of the property. However, Meadow Lake urged, Mr. Skinner was never entitled to maintain the property, to stock fish, or to plant trees. Instead, Meadow Lake had the sole responsibility for the maintenance of the retention pond. It also claimed that any claim for loss of use is "non-existent," as although ownership of the property transferred, Mr. Skinner is not barred from enjoying the views or walking along the pond. Furthermore, while Mr. Skinner alleged he suffered from stress due to the donation, he did not provide any medical testimony or documentary evidence to support that claim, and has no evidence as to any impact the donation has had on his allegedly "premium property."
Lastly, Meadow Lake asserted that Mr. Skinner's claims must be dismissed as a matter of law as the claims he has alleged have prescribed. Meadow Lake argued that the claims based on the alleged co-ownership of the pond prescribed within one year of the date the donation was filed into the public records, and the nullity action prescribed five years after the donation was recorded in the public records. With respect to the breach of contract claim, Meadow Lake submitted that any action against the directors of the board of Meadow Lake prescribed, at most, within three years of the date of the 2003 donation.
In support of its motion for summary judgment, Meadow Lake attached the following documents: (1) a Secretary of State printout showing that Meadow Lake is a non-profit corporation organized under the laws of Louisiana; (2) Meadow Lake's Articles of Incorporation; (3) the March 30, 1994 Act creating deed restrictions and covenants for the subdivision; (4) the April 4, 1995 sale of the retention pond from Wyndemere to Meadow Lake; (5) documents pertaining to the 1997 sale of lot 178 to Mr. Skinner; (6) the Sixth Amendment to Deed Restrictions and Covenants and the map of Meadow Lake Phase 6 depicting the retention pond; (7) The October 16, 2003 donation of the retention pond by Meadow Lake to the Parish; and (8) Mr. Skinner's responses to Meadow Lake's interrogatories in which Mr. Skinner detailed his alleged damages as a result of the donation.
In opposition to the motion for summary judgment, Mr. Skinner argued that by alienating the subject property, without unanimous consent of all of Meadow Lake's members, Meadow Lake breached the contract between it and all of the members. He admitted that he was no longer seeking to invalidate the donation as the court had already ruled that such action has prescribed. He submitted that while the governing documents he is relying on to state a claim for breach of contract do not prohibit nor do they grant Meadow Lake the power to alienate immovable property, Meadow Lake breached those provisions of those documents declaring that all property is to be held in trust for its members.
In support of his opposition to the motion for summary judgment, Mr. Skinner attached the following documents to his memorandum: (1) Meadow Lake's November 25, 2015 motion for summary judgment asserting that Mr. Skinner's exclusive remedy is a derivative action, the trial court's denial of that motion for summary judgment, and this court's denial of Meadow Lake's supervisory writ application challenging that ruling; (2) Meadow Lake's Articles of Incorporation and a certificate of the Secretary of State showing its incorporation as of November 23, 1994; (3) the March 30, 1994 Act creating deed restrictions and covenants for Meadow Lake Subdivision's first phase and amendments thereto; (4) a photocopy of what appears to be a ledger sheet showing a $450.00 payment to Mr. Skinner for tree-trimming; (5) the 2003 donation of the retention pond to the Parish; and (6) Mr. Skinner's purchase agreement for lot 178, which states that the purchase price included a "premium lot," and a 1997 listing showing Meadow Lake properties for sale with a notation under "optional custom selections" that "premium homesites" were available.
In opposition to the motion for summary judgment, Mr. Skinner relied on Article IV Paragraph C of Meadow Lake's Articles of Incorporation which states that "[Meadow Lake] shall have no power to purchase a lot in the Subdivision, unless the membership gives unanimous approval." Mr. Skinner also relied on Article IV Paragraph D of those articles which provides that "[t]he titles of all properties and all funds acquired by [Meadow Lake] and the proceeds thereof shall be held in trust for the [Meadow Lake] members according to the provisions of the Restrictions and Covenants, these Articles and the By-Laws of the Association." Additionally, Mr. Skinner focused on a definition contained in the Act Creating Deed Restrictions and Covenants defining Meadow Lake as a "non-profit corporation owned entirely by all of the property owners of the subdivision" described in the documents. He insisted that by virtue of this provision, all 204 members of Meadow Lake owned the common property of the subdivision, and therefore, the common property was to be held by Meadow Lake for the benefit and use of all its members.
Following a hearing on the motion for summary judgment, at which Mr. Skinner did not personally appear, the trial court granted judgment in favor of Meadow Lake, finding that there were no substantial facts in dispute and, as a matter of law, the donation of the property in question did not breach the terms of the governing documents relied on by Mr. Skinner. In written reasons for judgment, the court stressed that Meadow Lake owned the pond and the surrounding property, the governing documents relied on by Mr. Skinner clearly did not limit the authority of Meadow Lake to alienate or otherwise encumber immoveable property, La. R.S. 12:207 permits a non-profit corporation to alienate or otherwise encumber immoveable property, and it was undisputed that there is no provision in the governing documents requiring Meadow Lake to obtain the unanimous consent of all Meadow Lake members before donating immovable property. On November 2, 2017, the trial court signed a judgment granting Meadow Lake's motion for summary judgment and dismissing Meadow Lake's peremptory exceptions of prescription and no cause of action as moot.
Mr. Skinner filed this appeal, in which he contends that the trial court's grant of summary judgment is based upon a misinterpretation of the contract between himself and Meadow Lake.
SUMMARY JUDGMENT
After an opportunity for adequate discovery, a motion for summary judgment shall be granted if the motion, memorandum, and supporting documents show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966A(3). The burden of proof rests with the mover. Nevertheless, if the mover will not bear the burden of proof at trial on the issue that is before the court on the motion for summary judgment, the mover's burden on the motion does not require him to negate all essential claims of the adverse party's claim, action, or defense, but rather, to point out to the court the absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. Thereafter, the burden is on the adverse party to produce factual support sufficient to establish the existence of a genuine issue of material fact or that the mover is not entitled to judgment as a matter of law. La. C.C.P. art. 966D(1).
Appellate courts review evidence de novo under the same criteria that govern the trial court's determination of whether summary judgment is appropriate. Crosstex Energy Services, LP v. Texas Brine Company, LLC, 2017-0895 (La. App. 1 Cir. 12/21/17), 240 So.3d 932, 936, writ denied, 2018-0145 (La. 3/23/18), 238 So.3d 963. Appellate courts ask the same questions as the trial court: whether there is any genuine issue of material fact and whether the mover is entitled to judgment as a matter of law. Id. The applicable substantive law determines materiality; thus, whether a particular dispute is material can only be seen in light of the substantive law applicable to the case. Id. A genuine issue is one as to which reasonable persons could disagree. If reasonable persons could reach only one conclusion, there is no need for trial on that issue and summary judgment is appropriate. Thompson v. Center for Pediatric and Adolescent Medicine, L.L.C., 2017-1088 (La. App. 1 Cir. 3/15/18), 244 So.3d 441, 445, writ denied, 2018-0583 (La. 6/1/18), 243 So.3d 1062.
In brief, Mr. Skinner acknowledges that his claims to revoke Meadow Lake's donation of the pond and the land behind his home to the Parish have prescribed, and that any claims he may have for a derivative action had prescribed. Mr. Skinner insists that the trial court erred in its interpretation of the "governing documents," which according to Mr. Skinner, clearly state that the property at issue was to be "held in trust" by Meadow Lake for its membership. Mr. Skinner argues that when he purchased his lot in the subdivision, and became a member of Meadow Lake, he could reasonably rely on public records showing that the common property of Meadow Lake included the retention pond and the land surrounding it. He also claims that he was reasonable in relying that Meadow Lake would abide by its contract with him and hold the pond and surrounding property in trust for him and the rest of its membership. According to Mr. Skinner, Meadow Lake's donation of that property to the Parish in 2003 breached the contract Meadow Lake entered into with Mr. Skinner when he became a member of the association in 1997, when he purchased his lot in the subdivision. Mr. Skinner concludes by asserting that he has described his damages resulting from the donation and should be given the opportunity to prove them and Meadow Lake's responsibility for his damages at a full trial on the merits.
In response, Meadow Lake contends that summary judgment was appropriate on all of the grounds set forth in its motion for summary judgment. Specifically, Meadow Lake urged that Mr. Skinner failed to offer proof of the alleged improper donation or that Meadow Lake acted without authority pursuant to La. R.S. 12:207. It also submits that Mr. Skinner's sole cause of action for the injury alleged is a derivative action, and it is undisputed that Mr. Skinner did not follow the procedure for asserting a derivative action. Further, according to Meadow Lake, it was the sole owner of the property at issue and as a matter of law, all of Mr. Skinner's claims regarding his alleged co-ownership of the property were properly dismissed. Finally, Meadow Lake submits that there is no material question of fact as to the nonexistence of damages, as Mr. Skinner failed to create any issue of material fact in his opposition to Meadow Lake's motion for summary judgment, by affidavit or otherwise, setting forth his damages.
Louisiana Civil Code Article 1983 provides that "[c]ontracts must be performed in good faith." A party having obligations under a contract "is liable for the damages caused by his failure to perform a conventional obligation." La. C.C. art. 1994. Thus, the essential elements of a breach of contract claim are: (1) the obligor's undertaking of an obligation to perform; (2) the obligor's failure to perform the obligation (the breach); and (3) the failure to perform resulted in damages to the obligee. Denham Homes, L.L.C. v. Teche Federal Bank, 2014-1576 (La. App. 1 Cir. 9/18/15), 182 So.3d 108, 119. The burden of proof in an action for breach of contract is on the party claiming rights under the contract. The existence of the contract and its terms must be proven by a preponderance of the evidence. Bond v. Allemand, 632 So.2d 326, 329 (La. App. 1 Cir. 1993), writ denied, 94-0718 (La. 4/29/94), 637 So.2d 468. Further, a party alleging a breach of contract bears the burden of proving that breach. Hinchee v. Soloco, L.L.C., 2007-770 (La. App. 3 Cir. 12/5/07), 971 So.2d 478, 484, writ denied, 2008-0065 (La. 3/7/08), 977 So.2d 911.
As a matter of law, by virtue of La. R.S. 9:1141.8, the governing documents of Meadow Lake Subdivision have the force of law between Meadow Lake and the individual lot owners. Pursuant to La. R.S. 9:1141.8 and the jurisprudence, Mr. Skinner has a cause of action for breach of any obligation imposed on Meadow Lake by those documents, and the remedy for such breach shall include damages. Contrary to Meadow Lake's argument, La. R.S. 9:1141.8 governing homeowners associations is the more specific provision and is thus applicable in this case rather than the more general provisions set forth in La. R.S. 12:208. To recover on his claim for breach of contract against Meadow Lake, Mr. Skinner must prove the existence of a contract, a breach of the contract, and damages. See Denham Homes, L.L.C., 182 So.3d at 119.
As stated above, Mr. Skinner has proven the existence of an obligation between Meadow Lake and the individual homeowners of the subdivision. This obligation requires that Meadow Lake adhere to the governing documents which created the homeowner's association. However, Meadow Lake's motion for summary judgment challenges Mr. Skinner's ability to prove a breach of the terms of the governing agreement and damages as a result of that breach. In its reasons for judgment, the trial court specifically found as a matter of law that the donation of the retention pond to the Parish did not breach the terms of the governing documents. We agree.
There is no specific provision of the governing documents that could be reasonably construed to prevent Meadow Lake from making a donation of the retention pond to the Parish. Nor is there any specific provision of those documents requiring notice to Meadow Lake's members of an opportunity to vote on the donation of the retention pond to the Parish. The documentary evidence established that on April 4, 1995, the developer transferred the retention pond to the homeowner's association as part of its drainage plan for Meadow Lake Subdivision. The association then transferred the property on which the pond was located to the Parish for drainage purposes. The transfer did not violate any obligations owed to Mr. Skinner. The only relevant obligation owed by Meadow Lake to Mr. Skinner when he purchased the lot in the subdivision was that there would be a retention pond behind his property dedicated for the purpose of drainage. The size, condition, or elements of the drainage pond or plan are not contained in the governing documents. Mr. Skinner did not demonstrate that he will be able to prove in a trial on the merits that Meadow Lake's transfer of the retention pond to the Parish to utilize the property for a drainage purpose breached any specific provision of the governing documents. Therefore, we hold that the trial court was correct in granting Meadow Lake's motion for summary judgment.
CONCLUSION
For the foregoing reasons, the summary judgment rendered in favor of Meadow Lake Property Owners Association, Inc. is hereby affirmed. Costs of this appeal are assessed to appellant, Samuel Skinner.
AFFIRMED.