THE GERMANTOWN MANOR HOMEOWNERS ASSOCIATION, INC.
GGAT DEVELOPMENT CORP., ET AL.
28, 2017 Session
from the Circuit Court for Shelby County No. CT-000239-15
Felicia Corbin Johnson, Judge
homeowner's association, filed suit against Appellants,
owners of lots in the development, to collect association
fees. The trial court held that Appellee, a non-profit
corporation, was not authorized to formally assess
association fees until it elected a board of directors. Tenn.
Code Ann. § 48-58-101. The trial court charged
Appellants' with association fees accruing after the
election of the board and also denied Appellants'
counter-complaint for quantum meruit damages allegedly
accrued for upkeep of certain common areas, which remained
under Appellants' ownership. Discerning no error, we
affirm and remand.
R. App. P. 3 Appeal as of Right; Judgment of the Circuit
Court Affirmed and Remanded
W. Reid and Eugene G. Douglass, Jr., Bartlett, Tennessee, for
the appellants, GGAT Development Corporation, and Charleston
II Builders, Inc.
Brandon F. McNary and Peter D. Baskind, Memphis, Tennessee,
for the appellee, The Germantown Manor Homeowners
Armstrong, J., delivered the opinion of the court, in which
J. Steven Stafford, P.J., W.S., and Brandon O. Gibson, J.,
Manor consists of 29 lots, which were all initially owned by
William Tagg, who is the sole shareholder of Charleston II
Builders, Inc. ("Charleston II") and GGAT
Development Corporation ("GGAT, " and together with
Charleston II, "Appellants"). Charleston II owns
two of the 29 Germantown Manor lots; GGAT owns twelve lots
and certain common areas. The original plat for Germantown
Manor was filed with the Shelby County Registrar on November
14, 2005; the plat contains the following, relevant
19. All lot owners shall become members of the Germantown
Manor Homeowners Association and shall pay dues as set by its
members and shall comply with the Germantown Manor Home
Owners Association's bylaws and regulations. The holder
or holders of fee simple title of each lot in this
subdivision shall be a fee simple "owner" with one
approximately 2004 to 2008, Bud Hurley, a Germantown Manor
homeowner, informally collected association fees from other
homeowners (not lot owners). In 2008, Mr. Hurley moved from
Germantown Manor, and the task of collecting association fees
fell to another homeowner, Misty Patel. It was at this time
that the homeowners decided to formally organize the
Germantown Manor Homeowners Association ("Association,
" or "Appellee"). To this end, Ms. Patel met
with a local attorney, and the Association filed its
Corporate Charter with the Tennessee Secretary of State on
March 25, 2008. The Charter was filed pursuant to Tennessee
Code Annotated Section 48-52-102; however, no board members
were identified in the Charter. On or about April 23, 2008,
after the Charter was filed, Ms. Patel sent a letter to the
homeowners (not lot owners), stating that the Association had
been incorporated and calling for a meeting on April 26,
2008. The meeting was subsequently rescheduled for May 3,
about August 15, 2008, a second letter was sent to the
homeowners (not lot owners), inviting them to attend a
special meeting called for August 25, 2008. The purpose of
the August 25, 2008 meeting was to discuss proposed bylaws
and a proposed declaration of covenants, restrictions, and
conditions for the Association. The meeting notice made no
mention of establishing an annual assessment to be paid by
all lot owners. At the August 25, 2008 meeting, Wayne Mink
(an attorney) discussed proceeding with the enactment of
formal bylaws, covenants, assessments, and liability issues
related to the common areas. At the August 25, 2008 meeting,
the homeowners voted to begin collecting homeowner
association assessments in the amount of $750.00 per year
effective January 1, 2009. Importantly, the Association
members did not hold an election of board members at either
of the 2008 meetings.
September of 2008, Attorney Mink sent a letter to Mr. Tagg
discussing issues with the development, including the
possibility of an arrangement by which Charleston II could be
exempt from assessments under the new covenants, conditions,
and restrictions for Germantown Manor. Mr. Mink testified
that Mr. Tagg contacted him shortly after he received the
letter to discuss his concerns. Mr. Mink sent Mr. Tagg a
second letter on or about September 24, 2008, referencing the
discussion. The second letter included proposed covenants,
conditions and restrictions, and indicated that the documents
would, inter alia, exempt Mr. Tagg and his related
entities from assessments. The letter also included a quit
claim deed for conveyance of the common areas (held by GGAT)
to the Association. Mr. Tagg allegedly did not agree with the
proposed covenants, conditions, and restrictions, and did not
execute and return the quit claim deed.
January of 2009, the Association began to collect assessments
formally. Despite allegedly receiving bills for assessments,
neither Mr. Tagg nor his entities paid association fees. The
Association did not hold a meeting in 2009, 2010, 2011, 2012,
or 2013. On June 23, 2014, the Association mailed notice of a
June 23, 2014 meeting to its members. It was not until the
June 23, 2014 meeting that a quorum of the Association
members elected a board of directors.
January 20, 2015, the Association filed, in the Circuit Court
for Shelby County ("trial court"), a complaint for
breach of contract against GGAT, seeking damages for unpaid
association fees. On January 29, 2015, the Association filed
a civil warrant in the Shelby County General Sessions Court
against Charleston II. The Association received a judgment
against Charleston II in the general sessions court and
appealed the judgment to the trial court. On September 14,
2015, the trial court entered a consent order, consolidating
the two cases into the present action. By its complaint, the
Association sought damages, against GGAT and Charleston II,
for unpaid homeowners association fees dating back to 2009.
On April 4, 2015, GGAT filed an answer and counter-complaint,
seeking compensation for amounts it claimed were incurred in
maintaining certain common areas at Germantown Manor.
trial was held on April 29 and May 3, 2016. By order of June
20, 2016, the trial court awarded the Association a judgment
against Charleston II in the amount of $1, 800 and awarded
the Association a judgment against GGAT in the amount of $10,
800. The trial court awarded the Association its assessments
dating no earlier than 2014, concluding that the
Association's board of directors was not empowered to act
before that time. The trial court denied GGAT's
counterclaims, finding that it had failed to satisfy the
requirements for recoupment of quantum meruit
appeal, raising nine issues as stated in their brief:
1. Whether the trial court erred in assessing dues from
January 2015 up to and including January 2016 against
Charleston II in the amount of $1, 800.00?
2. Whether the trial court erred in assessing dues from
January 2015 up to and including January 2016 against GGAT in
the amount of $10, 800.00?
3. Whether the trial court erred in finding that The
Germantown Manor Homeowners Association was properly
incorporated and organized?
4. Whether the trial court erred in finding that Charleston
II and GGAT are members of The Germantown Manor Homeowners
Association by virtue of Paragraph 19 of the Plat?
5. Whether the trial court erred in finding that The
Germantown Manor Homeowners Association elected a valid board
of directors on June 23, 2014?
6. Whether the trial court erred in finding that Charleston
II received notice of meetings and bills beginning in 2008?
7. Whether the trial court erred in finding that GGAT
received notice of meetings and bills beginning in 2008?
8. Whether the trial court erred in finding that GGAT
received inquiry notice by virtue of the fact that a separate
and distinct corporate entity, Charleston II, received notice
of bills and meetings?
9. Whether the trial court erred in dismissing
Appellants' Counter-Complaint for recoupment based ...