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Issue  298  Article  453
Published:  12/1/2023

Bulliard v. Highland Gate HOA, Inc. (COA 23-452) 11/27/2023
Failure to Join Necessary Parties Challenging Amendments to Covenants

Chris Burti, Vice President and Senior Legal Counsel

This unpublished opinion on appeal resulted from the trial court's granting of the defendants' motion to dismiss for failure to join necessary parties and imposition of sanctions by making the dismissal a dismissal with prejudice.

Highland Gate subdivision was created in 1987 consisting of fifteen lots ("Sunset") subject to a recorded Restrictive Covenants Agreement ("Restrictive Agreement"). The original Restrictive Agreement in its Paragraph 14 stated:

The Architectural Committee shall have the right and responsibility to preserve the views from each lot within Highland Gate, and in order to carry out such responsibility, shall have the right to top or trim trees and shrubbery which obstruct the natural view of the surroundings within Highland Gate.

And its Paragraph 19 stated:

The covenants are to run with the land and shall be binding on all parties and all persons claiming under them until the 1st day of January, 2016, at which time said covenants shall be automatically extended for successive periods of ten (10) years, unless by vote of those persons then owning a majority of said lots, it is agreed to change said covenants in whole or in part.

The plaintiff owned Lot 13 and quitclaimed the lot by deed to the PRB Living Trust of which plaintiff is the trustee and sole beneficiary. The defendant Association recorded a First Amendment to the Restrictive Agreement ("First Amendment") in 2016 replacing the original Paragraph 14 providing:

It was the intent of the developer of Highland Gate that all lots enjoy and retain views of the city and the mountains to the west, which views contribute to the retention of property values on all lots in the subdivision. All lots, therefore, shall have the right to such views, and no owner shall be allowed to cultivate, grow, or maintain plants, trees or shrubbery that obstructs views from any lot. In the event that any owner ("Complaining Owner") believes that the view from his/her lot is obstructed, then that Complaining Owner must so inform the owner of the lot that is causing the obstructed-view condition ("Obstructing Owner") and also inform the Association. Obstructing Owner will immediately remove the plants, trees, and/or shrubbery causing the obstructed view, unless removal of the obstruction by topping, cutting or otherwise would not be allowed by any City of Asheville ordinance. If so, then the Complaining Owner must engage an arborist to provide a plan for trimming and/or cutting to remove the obstruction and any such plan must comply with the City ordinances. Upon receipt of a plan, the Obstructing Owner must carry it out. If the Obstructing Owner fails or refuses to remove the obstruction according to the plan, then such failure or refusal is deemed a violation of this covenant. The Association shall then have the right to take any and all legal action against the Obstructing Owner to effect compliance.

This amendment also replaced Paragraph 19 of the original with the following language:

The covenants are to run with the land and shall be binding on all parties and all persons claiming under them until the 1st day of January, 2046 at which time said covenants shall be automatically extended for successive periods of ten (10) years. At any time, the owners may amend or revise the covenants by a majority vote of all lot owners. Any such amendment or revision shall become effective upon recordation in the Office of the Register of Deeds.

In 2019, disputes arose among lot owners and the Association concerning their rights to views. A special meeting of the Association was held in August 2021, with multiple motions to change the language of Paragraph 14 of the First Amendment. This motion was approved by a majority vote and recorded in the Buncombe County Registry in August 2021 as the Third Amendment replacing Paragraph 14 with the following language:

Views contribute to the retention of property values on all lots in the subdivision: therefore, the Highland Gate Homeowners agree to help each other preserve existing views under the current Asheville City rules and regulations concerning tree trimming while balancing an owner's privacy and property aesthetics. Owners shall take care to not cultivate, grow or maintain plants, trees or shrubbery that could obstruct views. If any owner (Requesting Owner) feels that his/her view is beginning to be obstructed then he/she should contact the Obstructing Owner and the HOA Board by email with his/her specific concerns. In Asheville, an arborist plan may be required. In that case the Requesting Owner and the Obstructing Owner will agree to an arborist and a plan. The Requesting Owner will pay for all expenses of his/her view benefit. The Obstructing Owner will execute the plan with the arborist.

The plaintiff subsequently filed a declaratory judgment action against the Association and four board members (the "Board Members") seeking to invalidate the Third Amendment on 6 October 2021. Instead of an answer, the Board Members filed a motion on behalf of the Association to dismiss. The Association filed an answer and motion to join necessary parties, asserting all members were necessary parties. The trial court issued an order allowing the Association's motion to join necessary parties.

The opinion recites the following fact that are essential to understanding the decision:

Counsel for the Association sent Plaintiff an email reminder on 21 March 2022 to join the other members of the Association as parties to the lawsuit. On 21 April 2022, after receiving no response or the amended complaint, counsel for the Association filed a motion to show cause. On the same day, Plaintiff filed a motion to dismiss the motion to show cause and motion to compel Defendants to join the necessary parties, arguing the Association had the obligation to add the necessary parties and amend the complaint, not him.

On 17 June 2022, after a hearing on the Association's motion to show cause and Plaintiff's motion to dismiss the motion to show cause and motion to compel, the Honorable Jacqueline Grant issued an order allowing Plaintiff thirty (30) days to file his amended complaint or his action would be subject to dismissal. On 22 June 2022, Plaintiff filed his first amendment to complaint for declaratory judgment. Plaintiff only issued summonses to his neighbors colloquially, instead of naming each owner to reflect legal title for each lot within Highland Gate. Plaintiff issued a single summons to "Joe and Kellie Kiely", and not the owners "Joe Kiely" and "Kellie Pruitt" of Lots 3 & 4, as is listed on their title. Plaintiff issued a summons to "Laura Elizabeth Miller" and not the owner of Lot 7, "Laura Miller as Trustee of the Laura Elizabeth Miller Revocable Trust."

On 18 July 2022, Plaintiff filed a motion for leave to file a second amendment to the complaint for declaratory judgment to add the new owners of Lot 5, which had recently been sold. On 19 August 2022, the Association and Board Members, in responding to the first amendment to the complaint for declaratory judgment, again raised Plaintiff's failure to join necessary parties and filed a motion to dismiss instead of an answer.

On 4 October 2022, Judge Grant heard the pending motions for a second time. Counsel for the Association provided Plaintiff with the various deeds reflecting title for each Lot and argued Plaintiff had failed to properly issue summonses to multiple owners. At this time, Judge Grant explicitly warned Plaintiff of the importance of identifying and serving parties by their proper legal names. On 13 October 2022, Judge Grant issued an order requiring Plaintiff to file his second amended complaint within ten (10) days or his action would face dismissal. On 14 October 2022, Plaintiff filed his second amended complaint for declaratory judgment, adding the new owners of Lot 5, correcting the name of an owner of Lots 3 & 4 from "Kellie Kiely" to "Kellie A. Pruitt" and correcting the name of the owner of Lot 7 from "Laura Elizabeth Miller" to "Laura Miller as Trustee of the Laura Elizabeth Miller Revocable Trust." Plaintiff only issued new summonses for the new owners of Lot 5, and he failed to serve Kellie Pruitt or Laura Miller as Trustee of the Laura Elizabeth Miller Revocable Trust.

On 2 December 2022, the Association brought yet another motion to dismiss and moved to join necessary parties with its answer to the second amendment to the complaint. On the same date, Kellie Pruitt and Laura Miller, as Trustee of the Laura Elizabeth Miller Revocable Trust, each filed motions to dismiss, asserting they had not been properly served with summonses as required under Rules 3 and 4 of the North Carolina Rules of Civil Procedure. The remaining lot owners also filed motions to dismiss and answers.

On 5 December 2022, Plaintiff filed a motion for summary judgment. On 12 January 2023, the Association filed a motion for summary judgment. On 13 January 2023, other lot owners filed a motion for summary judgment. On 19 January 2023, Plaintiff filed a memorandum in support of his motion for summary judgment, arguing all necessary parties had been joined to the action and served. However, Plaintiff's certified mail receipts were addressed to "Joe & Kellie Kiely" and "Laura Elizabeth Miller", not the actual legal owners and parties to the action. Based on a delivery date of 22 June 2022, Plaintiff does not explain nor does the record show service of the second amendment to the complaint, which was not filed until 14 October 2022. The record is also devoid of evidence showing a summons was issued to or served on Kellie Pruitt or Laura Miller as Trustee of the Laura Elizabeth Miller Revocable Trust.

On 23 January 2023, the Honorable Alan Z. Thornburg heard oral arguments on the Association's motion to dismiss the lawsuit. After hearing from all parties, the court indicated it would dismiss Plaintiff's complaint for failure to join all necessary parties. The Association argued this issue had been pending over a year, and Judge Grant had warned Plaintiff that leeway for pro se litigants extended only so far. After hearing from Plaintiff, the court determined dismissal with prejudice was appropriate. On 27 January 2023, the trial court entered an order granting the Association's motion to dismiss for Plaintiff's continued failure to join necessary parties and ordered the cause and action dismissed with prejudice. On 10 February 2023, Plaintiff filed a timely notice of appeal.

The opinion emphasizes that all members of the Association are necessary parties to an action citing Karner v. Roy White Flowers, Inc., 351 N.C. 433, (2000) (finding nonparty property owners were necessary parties to the action because voiding residential-use restrictive covenants would extinguish their property rights). the Court observes that the North Carolina Rule of Civil Procedure 19 requires the joinder of necessary Parties and defines who they might be:

(a) Necessary joinder. - Subject to the provisions of Rule 23, those who are united in interest must be joined as plaintiffs or defendants; but if the consent of anyone who should have been joined as plaintiff cannot be obtained he may be made a defendant, the reason therefor being stated in the complaint; provided, however, in all cases of joint contracts, a claim may be asserted against all or any number of the persons making such contracts.
(b) Joinder of parties not united in interest. - The court may determine any claim before it when it can do so without prejudice to the rights of any party or to the rights of others not before the court; but when a complete determination of such claim cannot be made without the presence of other parties, the court shall order such other parties summoned to appear in the action.

Proper service is essential to establishing the trial court's jurisdiction. The opinion cites established doctrine:

Post & Front Properties v. Roanoke Construction. Co., Inc., 117 N.C. App. 93, 97, 449 S.E.2d 765, 768 (1994) (holding an individual who was not served with a summons was not made a party to the action); Sink v. Easter, 284 N.C. 555, 561, 202 S.E.2d 18, 143 (1974) (explaining "the court acquired no jurisdiction over defendant" without valid service of process); Ryals v. Hall-Lane Moving And Storage Co., 122 N.C. App. 242, 247, 468 S.E.2d 600, 604 (1996) (providing "process must be issued and served in the manner prescribed by statute, and failure to do so makes the service invalid, even though a defendant had actual notice of the lawsuit."" (citations omitted)).

The problem for the plaintiff in this case is as the Court observes:

After amending his complaint twice to purportedly add necessary parties, no evidence in the record tends to show Plaintiff ever issued and served new summonses and copies of the amended complaints on the correct parties. Plaintiff failed to obtain or serve a summons in the names of "Kellie Pruitt" or "Laura Miller as Trustee of the Laura Elizabeth Miller Revocable Trust."

The plaintiff, making a compelling argument, contended that the summonses issued to "Joe and Kellie Kiely" and "Laura Elizabeth Miller" are sufficient relying upon Storey v. Hailey, 114 N.C. App. 173, (1994) and Harris v. Maready, 311 N.C. 536, (1984).

[A] suit of law is not a children's game, but a serious effort on the part of adult human beings to administer justice; and the purpose of process is to bring parties into court. If it names them in such terms that every intelligent person understands who is meant, . . . it has fulfilled its purpose; and courts should not put themselves in the position of failing to recognize what is apparent to everyone else. Id. (citing United States v. A.H. Fischer Lumber Co., 162 F.2d 872, 873 (4th Cir. 1947)).

The court observes that the facts in Storey and Harris are different in that the "summonses and complaints were actually served on the intended individuals, even though they had deficiencies. Here, the amended complaints and summonses reflecting the correct parties were never served on either Kellie Pruitt or Laura Miller as Trustee of the Laura Elizabeth Miller Revocable Trust. To comply under Rule 4(b), two separate summonses should have been issued for Joe Kiely and Kellie Pruitt." The Court also points out that a single summons cannot be used to serve multiple parties citing Stack v. Union Reg'l Mem'l Med. Ctr., Inc., 171 N.C. App. 322, (2005) "It would be inconsistent with such holdings to now hold that an action against multiple defendants can be commenced by issuing a summons to a single defendant, with process and service to the other defendants to come at plaintiff's leisure.". Further, the plaintiff never served a summons on either Kelly Pruitt or Laura Miller, as Trustee of the Laura Elizabeth Miller Revocable Trust, with the second amendment to the complaint. The Court of Appeals cites Dunn v. Cook, 204 N.C. App. 332, 337, 693 S.E.2d 752, 756 (2010) for "The general rule . . . in suits, respecting the trust property, brought either by or against the trustees, the cestuis que trustent, or beneficiaries as well as the trustees also, are necessary parties." (citation and quotation marks omitted)".

The Court of Appeals concludes that the trial court correctly dismissed the action for the plaintiff's failure to join necessary parties after multiple notices, warnings, and opportunities to do so. Ordinarily, a dismissal for failure to join a necessary party "is not a dismissal on the merits and may not be with prejudice." Carding Developments v. Gunter & Cooke, 12 N.C. App. 448, 453, 183 S.E.2d 834, 838 (1971) (citation omitted) as cited in the opinion. The opinion details the circumstances the led the trial court to dismiss the case with prejudice and the case law supporting its conclusion to affirm: "Plaintiff was provided numerous opportunities to comply with multiple court orders, but he failed to do so for over a year. The trial court properly dismissed Plaintiff's complaint with prejudice as a sanction."

It is to be noted that an unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority, that citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure. While not controlling precedent, this case is useful in outlining the spectrum of permissible imprecision in naming of parties and also pointing out the consequences of repeatedly ignoring a court's instructions to be more precise in pleading. Of interest also is the Court's apparent assumption that the names on the deeds in this matter were, in fact, the parties' 'legal' names. Real property practitioners with any significant experience are well aware that property owners all too frequently use their commonly used form of their name instead of their proper legal name.

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