STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
COUNTY OF PAMLICO SUPERIOR COURT DIVISION
FILE No.: 09 CVS _26_
RICHARD HAPP, )
v. ) COMPLAINT
) (Jury Trial)
CREEK POINTE HOMEOWNER’S )
ASSOCIATION, INC., )
NOW COMES PLAINTIFF, Richard Happ, complaining of Defendant, and alleges and says the following:
1. Plaintiff is a resident of Pamlico County, North Carolina, who owns a home situated on more than two hundred acres at 1000 Deep Creek Drive in New Bern, North Carolina (“the Home”).
2. Defendant Creek Pointe Homeowner’s Association (“the Association”) is a non-profit corporation incorporated in the state of North Carolina with its address in Aurora, North Carolina, and its registered agent is T.R. Thompson, Jr. Plaintiff is required to be a member of the Association by virtue of his ownership of the Home and is required to pay dues to the Association.
3. On or about December 5, 1989, the Association was formed by the recordation of Articles of Incorporation with the Secretary of State of North Carolina. The function, purpose, and powers of the Association are those set out in the Declaration of Covenants, Conditions and Restrictions (hereinafter “the Declaration”) dated November 14, 1989 and filed at Book 263, Page 905 with the Pamlico County Register of Deeds. The purposes of the Association there enumerated are to provide enforceable standards for improvement and development whereby aesthetics, living conditions, and property value may be enhanced.
4. Declaration Article XIII. 2B provides that each lot owner is assessed the sum of two hundred dollars ($200.00) yearly, and that said sum will be deposited in an account known as the “Creek Pointe Maintenance Fund.” It is further provided that said sum will be owned jointly by all of the lot owners of the property and said funds shall be used only for the road maintenance expenses of the private road.
5. In addition, a second non-profit corporation is provided for in the Declaration, Article XIII. 2A, to be named the “Goose Creek Road Maintenance Association,” and each lot owner is thereby assessed three hundred dollars ($300.00) yearly. This second association was formed on or about December 5, 1989 by the recordation of Articles of Incorporation with the Secretary of State of North Carolina. The Goose Creek Maintenance Association was suspended by the Secretary of State and has not operated for many years.
6. The Defendant Association had also been suspended in 1990. Upon information and belief both associations had been allowed to become inactive because of rampant infighting and administrative neglect between the members. Defendant Association was reinstated in 1997 by the North Carolina Secretary of State and through the efforts of Plaintiff.
7. Despite the suspension of the Goose Creek Maintenance Association, Plaintiff, and other lot owners, have paid both the three hundred and the two hundred dollar assessments with the understanding that those funds would be used for road maintenance only. Additional money has also been collected at various times from owners not within the subdivision but owning property on the roads for the same purpose.
8. The community for which the Association is responsible is situated at the end of more than six miles of isolated and rural dirt road. This “outer road” also services properties not a part of the Association. These properties are not required to contribute to the maintenance of the outer road and it is left to the Association alone to provide for the upkeep.
9. The lots within the community are large and isolated, consisting of vast forested acreage with most lots containing no improvements or residences. There are fewer than ten homes in the community.
10. The lots that belong to the Association rest on a few short inner roads, called “Deep Creek Drive,” “Island View Drive”, “Sandy Curve Drive” and “Waterview Drive” which are rural dirt roads. These roads exclusively serve properties required to be members of the Association by the applicable Declaration, though not all properties or members have been or are currently required to pay dues, road maintenance fees or special assessments.
11. Plaintiff’s property is at the terminal point of Deep Creek Drive, approximately one mile past the entrance to the community. The Plaintiff’s approximately two hundred and forty acres are separated from the rest of the community by means of a gate that encloses the road leading to the Home.
12. The minutes of the last two Association meeting, held on March 3, 2007 and March 15, 2008, respectively, have contained the position of the Association that the increasing cost of maintenance for the roads is exceeding the ability of the Association to maintain those roads. By way of illustration, the Association decreased the number of loads of rock and gravel from twenty-five loads with four gradings, to seventeen loads and three gradings. The Association subsequently did decrease the number of loads of gravel to seven. The Association has also decreased the number times the areas adjacent to the roads are mowed. It is unknown to Plaintiff what maintenance has occurred or has been paid for.
13. The roads maintained by the Association have been in a state of decreasing repair and are difficult to traverse being narrow, washed out, and pot hole covered.
14. At the same time the roads have fallen into disrepair, upon information and belief, the Association expended more than $100,000.000 in legal fees to maintain a baseless lawsuit. This legal action was filed in 1999 and continued through the appeals process until 2002.
15. In resolution of the previous action, the Association did receive a settlement from the developer and organizer of the Association. This settlement, consisting of more than Seven Thousand Dollars ($7,000.00) was not distributed pro-rata among the members of the Association, but was instead distributed in preference to those who controlled the Association.
16. At the same time the roads have fallen into disrepair, upon information and belief the Association has expended several thousand dollars to install a security gate, lights, and an internet camera at the end of the six miles of rural, rutted dirt road.
17. Subsequent to the previous legal action involving Plaintiff and the Association, the members of the Association did vote to exclude the Association from being subject to the North Carolina Planned Community Act found in Chapter 47F of the North Carolina General Statutes, therefore Defendant Association is not governed by that statute.
18. The authority of the Association as provided in the Declaration is limited to the maintenance of the inner Deep creek Drive and the approval of aesthetical changes to the properties through the organization of an Architectural Committee.
19. Upon information and belief, the Architectural Committee as designated by the Declaration has been inactive, never organized per the Declaration, and the only action under the Architectural Committee was by a proxy decision of the Board of Directors against the Plaintiff. Upon information and belief, the improvements made upon all other properties have either not been submitted to an architectural committee or have not been subject to an adverse proceeding by such a committee or the Board of Directors.
20. Upon information and belief, and as previously described, Defendant Association has violated its fiduciary duties, has wasted, spent, and improperly used funds for purposes as directed by those that have controlled the Association.
21. It is unreasonable for the Plaintiff, as well as the other members of the Association, to assume liability for approx. 7 miles of a community road. Damage to person and/or property could easily occur due to poor maintenance or errors in judgment of the Association. The legal status of the road per Pamlico County records is that of a public community road with full public access. The road has become increasingly busy with use by the general public of the surrounding community for general hunting and recreation, in addition to the use and home development of numerous lot owners along the road, none of which are members of the Association. These users assume no liability, costs or maintenance obligations of this approximately 7 miles of road.
22. Upon information and belief the majority of the houses that are now standing in the community have been sold or are now currently for sale at least in part because of the infighting that has developed within the Association.
23. Upon information and belief, the Association has acted and continues to act with prejudice against the interests of the Plaintiff; and has acted and continues to act against the common interests of all lot owners of the Association.
FIRST CLAIM FOR RELIEF
24. Plaintiff realleges, as if fully set forth herein, each and every allegation contained in the preceding paragraphs of this Complaint.
25. It is reasonably necessary for the protection of the rights and interest of Plaintiff that the Defendant non-profit corporation be dissolved.
26. Those in control of Defendant non-profit corporation have acted in an oppressive manner, corporate assets have been misapplied and wasted, causing Plaintiff damages in an amount in excess of Ten Thousand Dollars ($10,000.00), and the Defendant non-profit corporation is no longer able to carry out its purposes.
27. There is no other remedy which will provide for the termination of the infighting and oppressive behavior that has injured Plaintiff and the other members of the Association.
SECOND CLAIM FOR RELIEF
28. Plaintiff realleges, as if fully set forth herein, each and every allegation
contained in the preceding paragraphs of this Complaint.
29. By wasting assets as heretofore described, the Association has acted outside of the scope of its authority and such acts are therefore ultra vires and invalid as a matter of law.
30. Pursuant to N.C. Gen. Stat. § 1-253, Plaintiff is entitled to a declaratory judgment that the Association must use the monies collected for road maintenance for that purpose and none other, including the installation of a gate, light, and camera.
THIRD CLAIM FOR RELIEF
31. Plaintiff realleges, as if fully set forth herein, each and every allegation
contained in the preceding paragraphs of this Complaint.
32. By virtue of the Associations continuing misapplication of funds, acts of
waste, and ultra vires acts, Plaintiff will suffer irreparable harm in that the Association will continue to commit such acts. By spending fees collected for road maintenance on other pursuits, the Association has wrongfully misallocated funds and committed waste by allowing the road to deteriorate.
33. Upon information and belief, the Association believes that it has the authority to perform such acts, and is therefore likely to repeat them.
34. Plaintiff does not have an adequate remedy at law in respect to the misallocation of funds, waste, and ultra vires acts. Unless the Association is restrained and enjoined from performing such acts, Plaintiff will continue to suffer this severe and irreparable injury. As such, Plaintiff is entitled to an injunction directing that the Association account for the funds it has collected and apply future collected fees to the maintenance of roads.
35. Plaintiff respectfully requests that if the Association is not dissolved, that the Court issue an injunction compelling the Association to use the monies collected for road maintenance and only for that purpose, and to limit its activities to those provided for in the Declaration.
36. Additionally, Plaintiff respectfully requests that if the Association is not dissolved, that the Court order those properties lying on the outer road that are not subject to the Declaration but benefit from the use of this outer road to contribute to the maintenance of that road.
FOURTH CLAIM FOR RELIEF
37. Plaintiff realleges, as if fully set forth herein, each and every allegation
contained in the preceding paragraphs of this Complaint.
38. As previously alleged, Plaintiff is required to be a member of the Association by virtue of his having taken the Homes by deed which was subject to the covenants contained in the Declaration.
39. As previously alleged, the function, purpose, and powers of the Association are those set out in the Declaration, the purposes of the Association there enumerated are to provide enforceable standards for improvement and development whereby aesthetics, living conditions, and property value may be enhanced.
40. Said purposes of the Association are enforceable because of the covenants that run with the land contained in the Declaration.
41. The conditions and character of the property subject to membership in the Association has changed substantially. As noted in Paragraph 21 above, increased development has occurred along the outer road so as to create a burden on Plaintiff as a member of the Association to have to pay maintenance fees for a road used increasingly by owners of properties who are not required to contribute to the maintenance of that road.
42. In addition, the gate, light, and camera being installed on Creek Pointe Road along with the inaction of the architectural committee have changed the nature of the property as stated in the Declaration from one of rural, forested, and isolated properties where one would seek privacy, to a gate-guarded community where a homeowner would have to have their picture taken before entering their own property.
43. The changed conditions and change in character of the property subject to membership in the Association have so substantially changed the property as to make enforcement of the restrictions inequitable and unjust.
44. These changes are so radical as to have destroyed the essential objects of the scheme of development, and such changes have been acquiesced in by the owners of the other lots so as to constitute a waiver of their rights to enforce the restrictions.
45. Pursuant to N.C. Gen. Stat. § 1-253, Plaintiff is entitled to a declaratory judgment that the covenants which created the Association are unenforceable.
WHEREFORE, Plaintiff respectfully requests this honorable Court:
1. For dissolution of the defendant non-profit corporation pursuant to the provisions of North Carolina General Statute 55-125(c);
2. That the Court direct and accounting of all funds paid into the road maintenance treasury held by the defendant non-profit corporation, and in the event funds have been diverted, misspent, or misapplied, that Plaintiff have and recover funds paid into said treasury by him to the extent of misapplication;
3. For the Court to entertain such further proceedings as may be necessary and proper for the involuntary liquidation of the assets of the defendant non-profit corporation and the winding up and dissolution of the defendant non-profit corporation;
4. For declaratory relief stating that the restrictive covenants are no longer enforceable due to the substantially changed nature of the development;
5. For injunctive relief enjoining the Association from acting outside of its authority to maintain the roads;
6. That the Plaintiff have and recover judgment against Defendant in an amount in excess of $10,000.00;
7. That Plaintiff be awarded attorney’s fees in addition to the costs of this action being taxed against Defendant;
8. For such other and further relief as the court deems fair and just.
DEMAND FOR JURY TRIAL
This the _23_day of _January_, 2009.
The Diener Law Office, P.A.
NC Bar # 38209
Richard A. Diener
NC Bar # 31487
Attorneys for Plaintiff
102 SW 1st Street
Snow Hill, NC 28580
CERTIFICATE OF SERVICE
THIS IS TO CERTIFY that the undersigned has this date served a copy of the Plaintiff’s foregoing Complaint upon the Defendant by depositing a copy hereof in a wrapper with sufficient postage in an official depository under the exclusive care of the United States Postal Service, properly addressed to the Defendant at the last known address as indicated below:
Creek Pointe Homeowner’s Association, Inc.
P.O. Box 610
Aurora, NC 27806
PO Box 61
Grantsboro, NC 278529
THIS the __26_ day of January, 2009.
THE DIENER LAW OFFICE, P.A.
Attorneys for Defendant
Jared E. Hammett
Post Office Box 555
Snow Hill, NC 28580
Ph: (252) 747-7400
Fx: (866) 243-9263
NC State Bar #38209