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Southwind Residential Properties Association, Inc. v. Ford

Court of Appeals of Tennessee, Jackson

March 14, 2017


          Session February 14, 2017

         Appeal from the Circuit Court for Shelby County No. CT-003095-13 Jerry Stokes, Judge

         The association obtained a favorable judgment for unpaid assessments against property owner of 1.6 lots as well as attorney's fees in the trial court. Property owner appeals. We vacate the trial court's attorney's fee award in favor of the association and remand for consideration of the reasonableness factors as outlined in the Tennessee Rules of Professional Responsibility. We affirm the trial court's judgment in all other respects. Affirmed in part, vacated in part, and remanded.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed in Part; Vacated in Part; and Remanded

          Joshua B. Bradley, Memphis, Tennessee, for the appellant, Kelvin Ford.

          Peter D. Baskind, Robin H. Rasmussen, Memphis, Tennessee, for the appellee, Southwind Residential Properties Association, Inc.

          J. Steven Stafford, P.J., W.S., delivered the opinion of the court, in which D. Michael Swiney, C.J., and Arnold B. Goldin, J., joined.




         Defendant/Appellant Kelvin Ford ("Mr. Ford") and his wife Tasha Ford ("Dr. Ford" and together with Mr. Ford, "the Fords") purchased a piece of property by special warranty deed on July 30, 2010. The property is located in a portion of the Southwind Planned Development known as "The Estates." The subdivision plat for The Estates was filed on May 6, 1991 and reflects twelve large lots. According to the special warranty deed, the property purchased by the Fords consists of "Lot 1 and part of Lot 2, Phase XXVII, . . . as recorded in Plat Book 134, Page 39, in the Register's Office of Shelby County, Tennessee." Of the twelve original lots in the recorded subdivision plat, only Lots 1-4 survive to this day; Lots 5-12 were subdivided into smaller plots, referred to as Lots 1-26 of Phase XL, and recorded in the plat book.

         All of the property in the subdivision is subject to the Declaration of Protective Covenants, Agreements, Easements, Charges and Liens for Southwind (Residential), referred to as the "CCRs" by the parties. Under a 1995 amendment to the CCRs ("1995 Amendment" or "Amended CCRs"), the properties in the subdivision are subject to the "Assessment of Annual Charge, " which is to be determined by the Board of Directors ("the Board") of the Plaintiff/Appellee Southwind Residential Properties Association, Inc. ("the Association").[1] The assessment is to be calculated taking into account the "Lot Share" of each parcel, as discussed in detail, infra. The CCRs do not specifically address parcels that include partial lots. In addition to rules regarding the Annual Assessment, the CCRs provide rules regarding the maintenance of property. Specifically, Section 1.01 of Article X of the CCRs provides that: "Each owner shall keep all or thereon, in good order and repair, including the seeding, watering, and mowing of all lawns [and] the pruning and cutting of all trees and shrubbery[.]" Additionally, the Association Bylaws, adopted in 2009, specifically provide that: "The membership rights of any Member, including the right to vote, may be suspended by the [Association] for any period during which any assessment or charge owed to the Association by any such Member remains unpaid."

         The dispute in this case largely stems from the assessment charged for the Fords' property. According to the Fords, the Association initially charged them for two full Lot Shares, despite the fact that he only owned one lot, plus a partial lot. Mr. Ford paid the full assessment for two years, but in 2012 brought the issue to the Association's attention. After 2012, the Association agreed to reduce the assessment to reflect a 1.6 Lot Share, taking into account the Fords' full ownership of Lot 1 and partial ownership of Lot 2; the Fords contended, however, that they properly owed only a single Lot Share. The Fords then unilaterally chose to remit only the assessment for a single Lot Share to the Association.

         The Association thereafter filed a general sessions civil warrant against the Fords on March 25, 2013. The civil warrant requested $2, 847.74 in unpaid assessments, as well as costs and attorney's fees for a total judgment of $25, 000.00. The Association was initially awarded a default judgment; however, the default judgment was set aside and a trial was held. On June 26, 2013, the general sessions court awarded a judgment in favor of the Association in the amount of $3, 368.39, "plus costs." Mr. Ford filed an appeal to circuit court on July 3, 2013. Although no notice of appeal was signed in the name of Dr. Ford, when the case was docketed in Division III of the Shelby County Circuit Court, both Mr. Ford and Dr. Ford were named as defendants.

         The parties subsequently entered into a period of discovery. On October 28, 2013, the Association filed a petition for civil contempt against both Mr. Ford and Dr. Ford for their failure to appear at scheduled depositions. The Fords filed a response to the contempt petition on January 17, 2014, contending that they were in the process of obtaining new counsel at the time the deposition was scheduled. The parties thereafter agreed to strike the contempt petition and to reschedule the depositions.

         On March 27, 2014, the Association filed an amended complaint. Therein, the Association more specifically outlined its claim for unpaid assessments, noting that it sought both a full assessment for Lot 1 and "at least sixty percent of a yearly assessment for Lot 2, " reflecting the portion of Lot 2 owned by the Fords. The Association therefore sought a judgment for the full amount of unpaid assessments due at the time of trial, as well as pre-judgment interest, attorney's fees, and costs.

         At some point, the clerk of the circuit court pointed out to the parties that no notice of appeal was filed on behalf of Dr. Ford. On June 13, 2014, Mr. Ford and Dr. Ford filed a motion to "determine parties to appeal from general sessions[.]" In their motion and accompanying memorandum, the Fords noted that both Mr. Ford and Dr. Ford had participated in the circuit court case for over a year without any confusion. As such, the Fords asked that the trial court enter an order clarifying that Dr. Ford was a proper party to the case.

         On June 17, 2014, the Fords filed an answer to the Association's amended complaint and a counter-complaint. Therein, the Fords denied that the Association was entitled to any damages for unpaid assessments, as they alleged that the Association had in fact been overcharging for the assessments due to ambiguities in the CCRs that should be construed in the Fords' favor. The Fords also asserted that "some or all of [the Association's] costs and expenses are unnecessary and are not reasonably related to the collection of the assessments alleged due from the Fords." In addition, the Fords raised claims of negligent and intentional misrepresentation and breach of contract. Finally, the Fords asserted that the intentional misrepresentation by the Association "constitutes outrageous conduct worthy of punishment through the assessment of exemplary damages." As such, the Ford sought an unspecified amount of damages due to the Association's allegedly tortious conduct.

         The Association filed a response to the Fords' motion to determine the proper parties to the appeal on June 19, 2014. Therein, the Association noted that a notice of appeal was filed only on behalf of Mr. Ford, not Dr. Ford. Accordingly, the Association asked the trial court to enter an order finding that only Mr. Ford was a party to the appeal. On June 27, 2014, the trial court entered an order finding that only Mr. Ford had effectively appealed the general sessions judgment and therefore Dr. Ford was not a party to the appeal. The caption of the case was thereafter changed to reflect Mr. Ford as the sole defendant.[2]

         The Association next filed an answer to Mr. Ford's counter-complaint on July 16, 2014, denying the material allegations contained therein. The Association's answer also raised affirmative defenses of, inter alia, the expiration of the statute of limitations and failure to plead certain claims with particularity. Shortly, thereafter, the Association filed a motion for partial summary judgment against Mr. Ford, arguing that Mr. Ford's counter-claims were barred by the statute of limitations and that the claims for intentional misrepresentation and outrageous conduct were not pled with particularity as required by Rule 9.02 of the Tennessee Rules of Civil Procedure. Mr. Ford responded in opposition to the motion for partial summary judgment on November 24, 2014.

         The case was continued several times, nearly all of which occurred at Mr. Ford's request. One such continuance occurred when Mr. Ford's second attorney withdrew and Mr. Ford retained substitute counsel. During this time, the case was transferred to Division IV of Shelby County Circuit Court. On February 19, 2016, the trial court entered an order granting Mr. Ford "one (1) final continuance, " setting trial for April 26, 2016, and ordering the parties to participate in mediation.

         On April 4, 2016, Mr. Ford filed a motion regarding the proper interpretation of the CCRs as applied to Mr. Ford's property. The Association responded in opposition on April 19, 2016, asserting that the specific question presented by the motion "has no bearing upon the case." Both parties thereafter filed pre-trial briefs.

         A trial occurred as scheduled on April 26, 2016. Robert Cox, the vice-president of the Association, first testified about the dispute between the Association and the Fords.

         Mr. Cox acknowledged that Mr. Ford approached him in 2012 concerning what Mr. Ford considered an overcharge of assessments as to his property. Ultimately the parties were unable to amicably resolve the dispute, leading to this litigation. According to Mr. Cox, the litigation expenses in this case stemmed from the Association's need to respond to Mr. Ford's motions, the multiple continuances granted to Mr. Ford, and "Mr. Ford's lack of cooperation [throughout the litigation, which] has driven up the attorney's fees in this case[.]" Mr. Cox denied that he ever gave any assurances to the Fords that their property would be assessed as a single lot; according to Mr. Cox, he lacked the authority to make such an assurance. Mr. Cox admitted, however, that he could not know whether another Association board member or employee made such an assurance to the Fords. Mr. Cox further admitted that Mr. Ford had made some payments since 2012 on the assessment, but not the entirety of what the Association contended was owed.

         Tamela Moss, an employee of the Association's management company testified regarding both the assessment allegedly owed by Mr. Ford and the costs associated with the litigation. According to Ms. Moss, the Fords were initially assessed for two lots, but it was later determined that he should be assessed on only 1.6 lots. At that time, Ms. Moss testified that the Association "went back and calculated, verified everything, and . . . did all the adjustments." Ms. Moss testified that Mr. Ford paid the assessment in full the first two years after the purchase of the property, but even after the assessment was reduced to reflect only a 1.6 Lot Share, Mr. Ford failed to make a full payment to the assessment after 2012. Instead, Mr. Ford only paid for one Lot Share. According to Ms. Moss, using the 1.6 Lot Share to calculate Mr. Ford's assessment, Mr. Ford owed unpaid assessments on Lot 1 in the amounts of $3, 401.74 and $4, 939.32. Ms. Moss admitted, however, that Mr. Ford made a payment of $1, 175.00 on the Lot 1 assessment for which he had yet to be credited.

         Ms. Moss also testified that the Association incurred costs of $2, 500.00 from her management company relative to the litigation, which had apparently been included in Ms. Moss's prior $4, 939.32 figure concerning the unpaid assessment on Lot 2. Ms. Moss explained that she "put in considerable over-time which [her] boss had to pay [her] for, " as the dispute between the Association and the Fords "hijacked [her] work life." Ms. Moss testified that the Association was required to reimburse the management company for these costs, as the costs were related to the Association's effort to collect outstanding assessments. Ms. Moss admitted, however, that this was not a typical cost assessed to a homeowner, but was merely a result of the extensive litigation.

         Ms. Moss next testified that the Association incurred legal fees of $68, 018.75, which had been paid by the Association at the time of trial. Through Ms. Moss, counsel for the Association presented billed and paid invoices for legal fees totaling $68, 018.75 and asked that the invoices be admitted into evidence. Counsel for Mr. Ford initially objected to the admission of the invoices on the basis that he had not been given the bills in discovery. The trial court thereafter granted Mr. Ford a short recess to allow his counsel time to review the bills. At the resumption of trial, Mr. Ford's counsel stated that he had been able to superficially review the invoices. Mr. Ford's counsel did not renew his objection to the bills or offer any additional objections as to their admissibility. The invoices were therefore admitted as exhibits.

         In contrast to the testimony of Mr. Cox and Ms. Moss, Mr. Ford testified that he should be assessed only a single Lot Share for his property. Specifically, Mr. Ford testified that although he was initially aware that his property "would be assessed two lot fees, " Ms. Moss informed him prior to the closing on the property that he could easily obtain permission from the Association to only pay a single lot fee. Mr. Ford testified that based upon this assurance, he and Dr. Ford decided to purchase the property and address the proper calculation of the assessment "down the road." According to Mr. Ford, he and Dr. Ford paid fees on "two full lots" at the time of closing on the property and for a period of two years thereafter. Mr. Ford testified that he later sent a letter to the Association formally asking that he only be charged an assessment for a single lot. Mr. Ford testified that the Association admitted that it had made a mistake in assessing the Fords for two full lots, but refused to reduce the assessment to a single lot. Instead, the Association indicated that the Fords pay a full assessment on Lot 1 and a pro-rated assessment for Lot 2, reflecting the amount of Lot 2 actually owned by the Fords. Mr. Ford testified that even after the Association conceded that the Fords only owed an assessment on 1.6 lots, they received a letter from the Association requesting payment for two full Lot Shares.

         Mr. Ford admitted that he and Dr. Ford own 1.6 lots. Mr. Ford asserted, however, that consideration of the lots was improper and that the assessment should instead be calculated by tract, of which the Fords only own one. After paying two full Lot Shares in 2010 and 2011, Mr. Ford testified that he asked that his 2012 assessment be calculated using only one Lot Share and also that he be credited in the amount of his prior overpayment. As a result, Mr. Ford testified that in 2012 and 2013 he only paid the amount owed for a single Lot Share after deducting the purported credit. Thereafter, in 2014, 2015, and 2016, Mr. Ford testified that he paid the assessment on one full Lot Share.

         With regard to his counter-claim for breach of contract, Mr. Ford testified that he and Dr. Ford were initially informed that they were not required to mow the lawn on a portion of their property because it was wooded and shielded from view. After several years, however, Mr. Ford testified that the Association objected to the condition of the property and required the Fords to mow the area, leading to instances of trespass by children. In addition, Mr. Ford testified that after this dispute arose, the magnetic stickers that allowed the Fords to reach their property through The Estates' back gate were deactivated. Instead of using the back gate like other homeowners, the Fords were thereafter required to go through the front gate of The Estates. Mr. Ford further admitted that the underlying matter was not the only litigation in which he and the Association were involved. First, Mr. Ford testified that the Association had filed another complaint against Mr. Ford in circuit court involving Mr. Ford's failure to maintain his property. It appears from the testimony at trial that this matter was resolved. Mr. Ford also testified that he had filed a complaint in chancery court against the Association alleging that the Association had racially discriminated against him. The record is unclear of the resolution of this lawsuit.

         At the conclusion of Mr. Ford's testimony, Ms. Moss was recalled. Ms. Moss unequivocally denied that she had ever informed Mr. Ford that his property could be assessed as a single lot. According to Ms. Moss, that is not the Association's typical practice, having never allowed such a consolidation in the past, and she has no authority to determine the property assessment for a parcel of property. Ms. Moss also testified that the Fords' property was "consistently overgrown, " which required the Association to file a separate lawsuit to force Mr. Ford to mow the lawn. Ms. Moss explained that the Association has a written delinquency policy indicating that the Association may suspend privileges to owners who have failed to pay their assessments. According to Ms. Moss, the suspension of privileges occurs frequently throughout the neighborhood and the Association has previously gone to great lengths to collect unpaid assessments from other owners.

         The trial court issued an oral ruling at the conclusion of the proof, which ruling was incorporated into the trial court's May 9, 2016 final judgment. Therein, the trial court noted that the case had "a very lengthy history" and that there was no dispute that the Fords own one lot and sixty percent of a second contiguous lot or that all property in the Southwind neighborhood is subject to the CCRs including Annual Assessments. The trial court found that the CCRS provide that Annual Assessments were to "be assessed by lot, " as defined by the "recorded subdivision plat." Because the trial court concluded that Mr. Ford owned 1.6 lots based upon the recorded subdivision plat, the trial court determined that Mr. Ford was responsible for Annual Assessments on 1.6 Lot Shares. As such, the trial court entered a total judgment against Mr. Ford for $7, 166.06 for unpaid assessments. In reaching this award, the trial court deducted Mr. Ford's uncredited payment of $1, 175.00 from the unpaid assessment on Lot 1, resulting in a net unpaid assessment on Lot 1 of $2, 226.74 In addition, the trial court ruled that Mr. Ford owed $4, 939.32 in unpaid assessments for Lot 2, which award included expenses charged by the Association's management company "for overtime hours associated with this case, a cost of collection to the Association[.]"

         The trial court also dismissed Mr. Ford's counter-claims, finding that he failed to meet his burden of proof. In the trial court's ruling, it noted that the parties were "fairly sophisticated and knowledgeable" and that the parties had "full knowledge of what was being purchased." In addition, the trial court noted that the property purchased was "fairly expensive" leading the trial court to believe that Mr. Ford "had the wherewithal to get counsel . . . if he had wanted to [] spell out what he felt his rights were and what his obligations would be." The trial court also mentioned the long-standing nature of the dispute and the fact that the dispute could have been resolved on multiple occasions as early as 2010 at the property closing. Finally, the trial court awarded the Association $66, 892.25 in attorney's fees, which represented the Association's entire fee request less the fees accrued when the Association filed an objection to a discovery request. The trial ...

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