{ "id": 793153, "name": "DUNES SOUTH HOMEOWNERS ASSOCIATION, INC. v. FIRST FLIGHT BUILDERS, INC.", "name_abbreviation": "Dunes South Homeowners Ass'n v. First Flight Builders, Inc.", "decision_date": "1995-07-28", "docket_number": "No. 3A95", "first_page": "125", "last_page": "133", "citations": [ { "type": "official", "cite": "341 N.C. 125" } ], "court": { "name_abbreviation": "N.C.", "id": 9292, "name": "Supreme Court of North Carolina" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "451 S.E.2d 636", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1994, "opinion_index": -1 }, { "cite": "117 N.C. App. 360", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8525379 ], "year": 1994, "opinion_index": -1, "case_paths": [ "/nc-app/117/0360-01" ] }, { "cite": "159 S.E.2d 513", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1968, "opinion_index": 0 }, { "cite": "273 N.C. 28", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8574316 ], "year": 1968, "opinion_index": 0, "case_paths": [ "/nc/273/0028-01" ] }, { "cite": "306 S.E.2d 791", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1983, "opinion_index": 0 }, { "cite": "309 N.C. 319", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4766950, 4761735, 4765805, 4761782, 4762359 ], "year": 1983, "opinion_index": 0, "case_paths": [ "/nc/309/0319-05", "/nc/309/0319-03", "/nc/309/0319-04", "/nc/309/0319-02", "/nc/309/0319-01" ] }, { "cite": "301 S.E.2d 459", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "pin_cites": [ { "page": "465" }, { "page": "465" } ], "opinion_index": 0 }, { "cite": "61 N.C. App. 350", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8521301 ], "weight": 2, "pin_cites": [ { "page": "362" }, { "page": "361" } ], "opinion_index": 0, "case_paths": [ "/nc-app/61/0350-01" ] }, { "cite": "143 S.E.2d 270", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1965, "opinion_index": 0 }, { "cite": "265 N.C. 86", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8574473 ], "year": 1965, "opinion_index": 0, "case_paths": [ "/nc/265/0086-01" ] }, { "cite": "334 S.E.2d 63", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 4, "year": 1985, "pin_cites": [ { "page": "65", "parenthetical": "quoting 18 Am. Jur. 2d Corporations \u00a7 158, at 693 (1965)" }, { "page": "66" } ], "opinion_index": 0 }, { "cite": "314 N.C. 423", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4696235 ], "year": 1985, "pin_cites": [ { "page": "426", "parenthetical": "quoting 18 Am. Jur. 2d Corporations \u00a7 158, at 693 (1965)" } ], "opinion_index": 0, "case_paths": [ "/nc/314/0423-01" ] }, { "cite": "451 S.E.2d 636", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 5, "year": 1994, "pin_cites": [ { "page": "640-41" }, { "page": "640" }, { "page": "641" } ], "opinion_index": 0 }, { "cite": "117 N.C. App. 360", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8525379 ], "weight": 2, "year": 1994, "pin_cites": [ { "page": "368" }, { "page": "366" } ], "opinion_index": 0, "case_paths": [ "/nc-app/117/0360-01" ] } ], "analysis": { "cardinality": 731, "char_count": 19867, "ocr_confidence": 0.726, "pagerank": { "raw": 8.649306375017723e-08, "percentile": 0.49137806875999335 }, "sha256": "ca530149c7831839e6583691e36b702e77aba6172a0203d9ae15f2bd58990352", "simhash": "1:2f5fcd972429a8f2", "word_count": 3162 }, "last_updated": "2023-07-14T22:14:42.837437+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Justice ORR did not participate in the consideration or decision of this case." ], "parties": [ "DUNES SOUTH HOMEOWNERS ASSOCIATION, INC. v. FIRST FLIGHT BUILDERS, INC." ], "opinions": [ { "text": "FRYE, Justice.\nPlaintiff presents two issues on this appeal: (1) whether defendant, the developer of a condominium project subject to the provisions of Chapter 47A of the North Carolina General Statutes as it existed in 1980, may exempt itself from the payment of its pro rata share of maintenance assessments for units it owns; and (2) whether all or a portion of plaintiffs claim for assessments for the years 1986 through 1.993 is barred by the statute of limitations. We conclude that the provisions of Chapter 47A of the General Statutes prohibit defendant from unilaterally exempting itself from the payment of its pro rata share of maintenance assessments. Furthermore, we conclude that no portion of plaintiff\u2019s claim is barred by the statute of limitations. Accordingly, we reverse the decision of the Court of Appeals and remand this case to that court for further remand to Superior Court, Dare County, for reinstatement of the order granting plaintiff\u2019s motion for summary judgment.\nDunes South is a condominium development in which units are sold by time-share weeks. Defendant is the original developer of the Dimes South project and at the time of the institution of this action owned a number of units within the development, some of which had been previously conveyed by defendant and later reacquired, as well as some which had not previously been conveyed by defendant. On 7 August 1980, in accordance with Chapter 47A of the North Carolina General Statutes, defendant filed the original \u201cDeclaration of Covenants and Restrictions\u201d (Declaration). This Declaration provided that defendant, as well as other unit owners in the development, would pay annual, per-unit maintenance assessments to plaintiff homeowners association. The Declaration further provided that it could be amended at any time with approval of two-thirds of the membership in plaintiff homeowners association. Subsequently, on 21 January 1983, defendant, as holder of two-thirds of the votes in the association, filed a \u201cDunes South Supplemental Declaration of Covenants and Restrictions\u201d (Supplemental Declaration). This Supplemental Declaration purported to exempt defendant from the obligation to pay annual per-unit maintenance assessments on units \u201cremaining unsold\u201d and instead provided that defendant would pay for any operating expenses in excess of the per-unit assessments collected from other unit owners.\nOn 17 February 1993, plaintiff homeowners association filed this action for money judgment and to foreclose upon a lien for unpaid maintenance assessments on Dunes South units owned by defendant. In its answer, defendant did \u201cnot admit the validity of the liens claimed against such units for unpaid assessments nor the validity of the assessment amount.\u201d Plaintiff then filed a motion for summary judgment supported by an affidavit listing seventy-six units previously conveyed and then reacquired by defendant and setting out the amount of maintenance assessments allegedly owed by defendant on these units for the years 1986 through 1993. On 24 November 1993, defendant filed a motion for leave to amend its answer to allege that at least a portion of plaintiffs claim was barred by N.C.G.S. \u00a7 1-52(1), the three-year statute of limitations for filing an action based on contract. On that same day, Mr. Gerald Friedman, president of defendant corporation, filed an affidavit stating, in pertinent part:\n5. Pursuant to the terms of the Supplemental Declaration of Covenants and Restrictions, First Flight Builders, Inc. was only responsible for the actual operating expenses incurred by plaintiff in excess of the collections of assessments on units within Dunes South and was not responsible for paying per unit annual assessments on unit[s] owned by First Flight Builders, Inc.\nOn 29 November 1993, the trial court entered an order allowing defendant to amend its answer. However, on 30 November 1993, Judge Watts entered an order allowing plaintiff\u2019s motion for summary judgment, from which defendant appealed.\nThe Court of Appeals vacated the trial court\u2019s order, concluding that summary judgment for plaintiff was improper since the term \u201cremaining unsold\u201d in the Supplemental Declaration was ambiguous and therefore created a question for the jury as to whether defendant was liable to plaintiff for the maintenance assessments on units previously conveyed and then reacquired by defendant. Dunes South Homeowners Assn. v. First Flight Builders, 117 N.C. App. 360, 368, 451 S.E.2d 636, 640-41 (1994). In addition, the Court of Appeals held that plaintiff\u2019s claim for assessments for the years 1986 through 1990 was barred by the statute of limitations for actions based on contract, N.C.G.S. \u00a7 1-52(1) (1983). Dunes South, 117 N.C. App. at 366, 451 S.E.2d at 640. Judge Eagles dissented, concluding that the terms of the Supplemental Declaration were not ambiguous and that the trial court properly granted plaintiffs motion for summary judgment as to those assessments not barred by the statute of limitations. Id. at 369, 451 S.E.2d at 641. Plaintiff appeals to this Court based on Judge Eagles\u2019 dissent. Additionally, plaintiff\u2019s petition for discretionary review as to an additional issue was allowed by this Court on 9 February 1995.\nPlaintiff first contends that the Court of Appeals erred in ignoring the provisions of Chapter 47A of the North Carolina General Statutes when it reversed the trial court\u2019s grant of summary judgment in plaintiff\u2019s favor. Plaintiff argues that under the provisions of Chapter 47A, more specifically N.C.G.S. \u00a7 47A-12, defendant developer was bound to contribute its pro rata share of the maintenance expenses for the common areas of the condominium project and was prohibited from unilaterally exempting itself from the payment of the maintenance assessments at issue in this case. Accordingly, plaintiff argues that, regardless of the language of the Supplemental Declaration, defendant is obligated to pay the maintenance assessments at issue here. We agree.\nBy executing and recording a declaration of unit ownership, defendant submitted its condominium project to the provisions of Chapter 47A of the General Statutes. N.C.G.S. \u00a7\u00a7 47A-2, -4 (1976). N.C.G.S. \u00a7 47A-12 provides, in pertinent part:\nThe unit owners are bound to contribute pro rata, in the percentages computed according to G.S. 47A-6 of this Chapter, toward the expenses of administration and of maintenance and repair of the general common areas and facilities and, in proper cases of the limited common areas and facilities, of the building and toward any other expense lawfully agreed upon. No unit owner may exempt himself from contributing toward such expense by waiver of the use or enjoyment of the common areas and facilities or by abandonment of the unit belonging to him.\nN.C.G.S. \u00a7 47A-12 (1976) (emphasis added). A \u201cunit owner\u201d is defined as \u201ca person, corporation, partnership, association, trust or other legal entity, or any combination thereof, who owns a unit within the building.\u201d N.C.G.S. \u00a7 47A-3(14) (1976). Neither the definition of \u201cunit owner\u201d nor the provisions of N.C.G.S. \u00a7 47A-12 makes any distinction between a developer and any other unit owner. Defendant developer, as a corporation owning several units within the condominium project, qualified as a \u201cunit owner\u201d under section 47A-3(14). Thus, defendant was \u201cbound to contribute pro rata... toward the expenses of administration and of maintenance and repair of the general common areas and facilities.\u201d N.C.G.S. \u00a7 47A-12. Consistent with this statutory requirement, defendant covenanted, in its original Declaration, to pay annual, per-unit maintenance assessments for each unit it owned.\nThe crucial issue then becomes whether defendant may, through provisions in the Supplemental Declaration, exempt itself from its statutory obligation as a unit owner to pay its pro rata share of the maintenance expenses for common areas. Having submitted the project to the provisions of Chapter 47A, defendant\u2019s obligation, as a unit owner, to contribute its pro rata share of maintenance expenses derived not only from its Declaration, but also from the provisions of N.C.G.S. \u00a7 47A-12. Section 47A-12 is but one of several sections within Chapter 47A which evidence the legislature\u2019s intent to ensure the orderly, reliable and fair government of condominium projects and to protect each owner\u2019s interest in his or her own unit as well as the common areas and facilities. For example, N.C.G.S. \u00a7 47A-6(b) protects the unit owners\u2019 interests in the common areas, providing that the ratio of the undivided interest of each unit owner in the common areas shall have a permanent character and shall not be altered except with the unanimous consent of all unit owners expressed in an amended declaration. N.C.G.S. \u00a7 47A-6(b) (1976). Likewise, we believe that the provisions of section 47A-12 are designed to protect unit owners from shouldering a disproportionate share of the maintenance expenses for common areas when other unit owners, including the developer, attempt to unilaterally exempt themselves from contributing their pro rata share of maintenance expenses.\nSection 47A-12 explicitly states that each unit owner is \u201cbound to contribute\u201d pro rata toward maintenance expenses for the common areas. N.C.G.S. \u00a7 47A-12 (emphasis added). In addition, this section also addresses two methods by which an individual unit owner might attempt to unilaterally exempt itself from paying its share of maintenance expenses, providing that \u201c[n]o unit owner may exempt himself from contributing toward such expense by waiver of the use or enjoyment of the common areas and facilities or by abandonment of the unit belonging to him.\u201d Id. In light of the purposes behind Chapter 47A and the language of N.C.G.S. \u00a7 47A-12, we do not believe that the legislature intended to allow a developer, as a unit owner, to unilaterally exempt itself from the payment of its pro rata share of the maintenance expenses for the common areas. This is exactly what defendant attempted to do. Accordingly, we conclude that the Supplemental Declaration filed by defendant in this case was ineffective to exempt it from paying the maintenance assessments at issue here.\nHaving determined that defendant is obligated to pay its pro rata share of the common expenses, we must now determine what, if any, portion of defendant\u2019s obligation to plaintiff is barred by the statute of limitations. Plaintiff contends that the Court of Appeals erred in applying the three-year statute of limitations for actions based on contract contained in N.C.G.S. \u00a7 1-52(1) and in holding that the portion of plaintiff\u2019s claim for assessments due prior to 17 February 1990 was time-barred. Plaintiff argues that the Declaration containing defendant\u2019s covenant to pay maintenance assessments was an instrument under seal subject to the ten-year statute of limitations contained in N.C.G.S. \u00a7 1-47(2) and, therefore, that no portion of its claim was time-barred. We agree.\nN.C.G.S. \u00a7 1-47(2) provides that an action upon a sealed instrument \u201cagainst the principal thereto\u201d must be commenced within ten years. N.C.G.S. \u00a7 1-47(2) (1983). Defendant, as the party executing and filing the Declaration here, qualifies as the \u201cprincipal thereto.\u201d Id. Furthermore, there is no dispute that the corporate seal of defendant is impressed upon the Declaration at issue here. However, \u201c \u2018the seal of a corporation is not in itself conclusive of an intent to make a specialty [sealed instrument].\u2019 \u201d Square D Co. v. C.J. Kern Contractors, 314 N.C. 423, 426, 334 S.E.2d 63, 65 (1985) (quoting 18 Am. Jur. 2d Corporations \u00a7 158, at 693 (1965)). \u201c[T]he determination of whether an instrument is a sealed instrument... is a question for the court.\u201d Id. (citing Security Nat\u2019l Bank v. Educator\u2019s Mut. Life Ins. Co., 265 N.C. 86, 143 S.E.2d 270 (1965)).\nIn Square D Co., we considered whether the impression of a corporate seal on a construction contract would transform the contract into a specialty so that the ten-year statute of limitations under N.C.G.S. \u00a7 1-47(2) would apply. We stated that \u201cthe question to be answered in order to determine whether the corporate seal transforms the party\u2019s contract into a specialty is whether the body of the contract contains any language that indicates that the parties intended that the instrument be a specialty or whether extrinsic evidence would demonstrate such an intention.\u201d Id. at 428, 334 S.E.2d at 66. In concluding that the contract in that case did not evince any intention on the part of the parties to create a specialty, this Court stated that\n[t]he contract contains no language in the body which would indicate that the parties intended the contract to be a specialty. There is no language such as \u201cI have hereunto set my hand and seal,\u201d \u201cwitness our hands and seals,\u201d or other similar phrases contained within the contract that would explicitly support plaintiffs assertion that the instrument is a specialty under seal. See 68 Am. Jur. 2d, Seals \u00a7 3-4 (1973). Neither is there any extrinsic evidence that would indicate the parties intended the instrument to be a specialty.\nId. In the present case, the Court of Appeals, relying upon the above-quoted language and its own decision in Blue Cross and Blue Shield v. Odell Associates, 61 N.C. App. 350, 362, 301 S.E.2d 459, 465 (\u201croutine use of a corporate seal is merely to demonstrate authority to execute a document, the mere presence of a corporate seal, without more, does not convert the document into a specialty\u201d), disc. rev. denied, 309 N.C. 319, 306 S.E.2d 791 (1983), determined that because the Declaration in this case contained none of the specialty language mentioned, the Declaration amounted to a simple contract, rather than an instrument under seal.\nWe believe that the nature of the instrument involved here distinguishes this case from Square D Co. and Blue Cross and Blue Shield. The instruments involved in both of those cases were construction contracts. Here, however, the instrument in question is the \u201cDeclaration of Covenants and Restrictions\u201d for the Dunes South condominium project, which contains several restrictive covenants, including defendant\u2019s covenant to pay annual, per-unit maintenance assessments. A restrictive covenant constitutes an interest in land in the nature of a negative easement. Cummings v. Dosam, Inc., 273 N.C. 28, 159 S.E.2d 513 (1968). While technically not a deed, the Declaration in this case did affect an interest in land and, as the Court of Appeals noted in Blue Cross and Blue Shield, \u201c[i]n certain areas of the law, an instrument under seal is required, e.g., a valid conveyance of land.\u201d Blue Cross and Blue Shield, 61 N.C. App. at 361, 301 S.E.2d at 465. Accordingly, we conclude that the Declaration at issue here, by its very nature, evidences an intention that it constitute an instrument under seal.\nFurthermore, the terms of the Declaration indicate an intent that the Declaration be an instrument under seal. In addition to defendant\u2019s corporate seal affixed to the Declaration, there was also a notary acknowledgment contained in the Declaration which stated as follows:\nThis is to certify that on the 7th day of August 1980, before me personally came Gerald Friedman, with whom I am personally acquainted, who, being by me duly sworn, says that he is the President, and Nancv Friedman is the Secretary of First Flight Builders, Inc., the corporation described in and which executed the foregoing instrument; that he knows the common seal of said corporation; that the seal affixed to the foregoing instrument is said common seal, and the name of the corporation was subscribed thereto by the said President, and that said President and Secretary subscribed their names thereto, and said common seal was affixed, all by order of the Board of Directors of said corporation, and that the said instrument is the act and deed of said corporation.\nIn light of the nature of the Declaration, as well as its express terms, we conclude that the Declaration constituted an instrument under seal subject to the ten-year statute of limitations contained in N.C.G.S. \u00a7 1-47(2). Accordingly, we reverse the Court of Appeals\u2019 holding that the portion of plaintiff\u2019s claim for assessments due prior to 17 February 1990 was time-barred.\nFor the foregoing reasons, we reverse the decision of the Court of Appeals and remand this case to that court for further remand to Superior Court, Dare County, for reinstatement of the court\u2019s order granting plaintiff\u2019s motion for summary judgment.\nREVERSED AND REMANDED.\nJustice ORR did not participate in the consideration or decision of this case.\n. In 1980, Chapter 47A of the General Statutes consisted only of Article I of the current Chapter 47A. Effective 1 January 1984, Chapter 47A was amended to include two articles. All references to Chapter 47A in this opinion pertain to the version in effect in 1980. We further note that the provisions of Chapter 47C of the General Statutes, rather than Chapter 47A, apply to all condominiums created within this State after 1 October 1986. N.C.G.S. \u00a7 47C-1-102 (1987).", "type": "majority", "author": "FRYE, Justice." } ], "attorneys": [ "Aycock, Spence & Butler, by Charlie Aycock and Betsy Butler, for plaintiff-appellant.", "Defendant-appellee did not file a brief.", "Michael F. Easley, Attorney General, by Thomas R. Miller, Special Deputy Attorney General; and Blackwell M. Brogden, Jr., Chief Deputy Legal Counsel, on behalf of the North Carolina Real Estate Commission, amicus curiae." ], "corrections": "", "head_matter": "DUNES SOUTH HOMEOWNERS ASSOCIATION, INC. v. FIRST FLIGHT BUILDERS, INC.\nNo. 3A95\n(Filed 28 July 1995)\n1. Housing, and Housing Authorities and Projects \u00a7 74 (NCI4th)\u2014 time-share condominium \u2014 developer not exempted from maintenance expenses\nA Supplemental Declaration of Covenants and Restrictions filed by defendant time-share developer was ineffective to exempt it from paying maintenance assessments where defendant had previously executed and recorded a declaration of unit ownership, which submitted the project to Chapter 47A of the General Statutes. Defendant was thus bound under N.C.G.S. \u00a7 47A-12 to contribute pro rata toward the expenses of administration and maintenance of the common areas and, in light of the purposes behind Chapter 47A and the language of N.C.G.S. \u00a7 47A-12, the legislature did not intend to allow a developer, as a unit owner, to unilaterally exempt itself from the payment of its pro rata share of the maintenance expenses for the common areas.\nAm Jur 2d, Condominiums and Co-operativ\u00e9 Apartments \u00a7 34.\n2. Seals \u00a7 1 (NCI4th)\u2014 condominium declaration of covenants \u2014 statute of limitations for maintenance assessments \u2014 document under seal\nA Court of Appeals holding that a portion of plaintiffs claimed condominium maintenance assessment was time barred through application of the three-year statute of limitations for actions based on contract was reversed because the Declaration of Covenants constituted an instrument under seal subject to the ten-year statute of limitations contained in N.C.G.S. \u00a7 1-47(2). While technically not a deed, the Declaration did affect an interest in land, and in certain areas of the law, an instrument under seal is required. Furthermore, the terms of the declaration indicate an intent that it be an instrument under seal.\nAm Jur 2d, Seals \u00a7 2.\nAppeal by plaintiff pursuant to N.C.G.S. \u00a7 7A-30(2) from the decision of a divided panel of the Court of Appeals, 117 N.C. App. 360, 451 S.E.2d 636 (1994), vacating an order granting plaintiffs motion for summary judgment entered by Watts, J., at the 27 November 1993 Civil Session of Superior Court, Dare County. Discretionary review of an additional issue allowed by the Supreme Court on 9 February 1995. Submitted on 11 May 1995 without oral argument, by motion of the parties, pursuant to Rule 30(d) of the North Carolina Rules of Appellate Procedure.\nAycock, Spence & Butler, by Charlie Aycock and Betsy Butler, for plaintiff-appellant.\nDefendant-appellee did not file a brief.\nMichael F. Easley, Attorney General, by Thomas R. Miller, Special Deputy Attorney General; and Blackwell M. Brogden, Jr., Chief Deputy Legal Counsel, on behalf of the North Carolina Real Estate Commission, amicus curiae." }, "file_name": "0125-01", "first_page_order": 159, "last_page_order": 167 }