Lismore Village Homeowners' Association Inc v. Eastwood Construction LLC
Filing
26
OPINION AND ORDER denying 5 Motion to Dismiss for Failure to State a Claim; granting 21 Motion to Amend/Correct. (Amended Complaint due by March 30, 2015) Signed by Honorable Bruce Howe Hendricks on 3/20/2015.(abuc)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
GREENVILLE DIVISION
Lismore Village Homeowners’ Association, ) Civil Action No.: 6:14-2185-BHH
Inc.,
)
)
Plaintiff, )
)
OPINION AND ORDER
v.
)
)
Eastwood Construction, LLC, f/k/a
)
Eastwood Construction Company, Inc.,
)
)
Defendant. )
__________________________________ )
This matter is before the Court on the defendant Eastwood Construction, LLC’s (“the
defendant”) motion to dismiss (ECF No. 5) and the plaintiff’s motion to amend complaint
(ECF No. 21). The case was removed from the Court of Common Pleas, County of
Greenville, South Carolina on June 5, 2014, by the defendant. (ECF No. 1.) In its
amended complaint, the plaintiff asserts causes of action for breach of covenants and
breach of fiduciary duty. (ECF No.1-2.)
FACTUAL AND PROCEDURAL BACKGROUND
The plaintiff is a South Carolina not-for-profit corporation “composed of all
Homeowners in Lismore Village Subdivision [“Lismore Village”] located in Greenville
County.” (Am. Compl. ¶ 1.) The defendant is a North Carolina limited liability company
with its principal place of business in Mecklenburg County, North Carolina, which does
business in Greenville County, South Carolina. According to the Complaint, the defendant
purchase some 71 residential lots within Lismore Village for the purpose of constructing
residential dwellings. Id. ¶ 11.
Lismore Village is governed by a Declaration of Covenants, Conditions, Restrictions,
and Easements for Lismore Village (the “Declaration”) recorded in the Office of the
Register of Deeds for Greenville County, South Carolina, in Deed Book 2242 at Page
1633. Id. ¶ 6. Article V, Section 1 of the Declaration provides that the owner of a lot in
Lismore Village “covenants and agrees to pay the Association annual and special
assessments.” (Am. Compl. ¶ 8.) Article 1, Section 4 of the Declaration defines the term
“Declarant” for purposes of the Declaration. Id. ¶ 7. According to the plaintiff, and per the
terms of this definition, the defendant “was a Declarant for Lismore Village for the purpose
of constructing seventy one (71) Lots.” Id. ¶¶ 7, 15. Article V, Section 5 of the Declaration
provides a special “Assessment Rate for Declarant-owned Lots” by which a declarant pays
twenty-five percent (25%) of the applicable assessment until a residence is completed on
the lot and then pays one hundred percent (100%) of the applicable assessment until the
lot is sold to another owner. Id. ¶ 9.
The plaintiff alleges that the defendant failed to pay such assessments and in so
doing also breached its fiduciary duty.
STANDARD OF REVIEW
A plaintiff’s complaint should set forth “a short and plain statement . . . showing that
the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Rule 8 “does not require ‘detailed
factual allegations,’ but it demands more than an unadorned, the-defendant-unlawfullyharmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To show that the plaintiff is “entitled to
relief,” the complaint must provide “more than labels and conclusions,” and “a formulaic
recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. In
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considering a motion to dismiss under Rule 12(b)(6), the Court “accepts all well-pled facts
as true and construes these facts in the light most favorable to the plaintiff . . . .” Nemet
Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009). Notably,
“legal conclusions, elements of a cause of action, and bare assertions devoid of further
factual enhancement” do not qualify as well pled facts.
To survive a Rule 12(b)(6) motion to dismiss, a complaint must state “a plausible
claim for relief.” Iqbal, 129 S. Ct. at 950. “The plausibility standard is not akin to a
‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has
acted unlawfully. Where a complaint pleads facts that are ‘merely consistent with’ a
defendant’s liability, it ‘stops short of the line between possibility and plausibility of
entitlement to relief.’” Id. (quoting Twombly, 550 U.S. at 557). Stated differently, “where
the well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged--but it has not ‘show[n]’—‘that the pleader is entitled
to relief.’” Id. (quoting Fed. R. Civ. P. 8(a)). Still, Rule 12(b)(6) “does not countenance . . .
dismissals based on a judge’s disbelief of a complaint’s factual allegations.” Colon Health
Centers of Am., LLC v. Hazel, 733 F.3d 535, 545 (4th Cir. 2013) (quoting Neitzke v.
Williams, 490 U.S. 319, 327 (1989)). “A plausible but inconclusive inference from pleaded
facts will survive a motion to dismiss . . . .” Sepulveda-Villarini v. Dep’t of Educ. of Puerto
Rico, 628 F.3d 25, 30 (1st Cir. 2010) (Souter, J.).
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DISCUSSION
The defendant alleges various pleading deficiencies in the plaintiff’s Amended
Complaint (ECF No. 1-2). To the extent there were any, they have all been cured by the
proposed second amended complaint, which the Court now grants leave to file. (See ECF
No. 21-1.)
In the proposed amended complaint, the plaintiff now portends to allege that the
defendant had actual knowledge of the assessment rate and applicable due dates and of
its liability to make payment of such assessments pursuant to the Declaration but did not.
(Prop. Amend. Compl. ¶¶ 26, 27, 30.) Most importantly, it is now alleged that defendant,
itself, was responsible for setting and making such assessments and that it “specifically
directed HOA Community Management not to charge assessments against” the
defendant’s own lots. Id. ¶ 24, 31, 47, 48. These averments plead more fully a plausible
claim for relief on a breach of covenants claim, although the Court would likely have
reached the same result on the original amended Complaint.
As to the plaintiff’s breach of fiduciary duty claim, the defendant has made an
argument that the fiduciary duty recognized, in Goddard v. Fairways Dev. Gen. Partn., 310
S.C. 408 (S.C. Ct. App. 1993), does not apply here. But, the duty, recognized in Goodard,
appears much broader than the defendant would characterize it (for maintenance of
common areas only) and the Court believes factual issues remain as to whether its
pronouncements apply to the the relationship of the parties (whether or not the defendant
can be considered a developer or comparably owing duties).
Allegations that the
defendant was responsible for assessment setting and collection, and yet intentionally
declined to assess its own properties, are sufficient to allow the plaintiff’s claim for breach
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of fiduciary duty to continue now.
CONCLUSION
For the foregoing reasons, the defendant’s motion to dismiss is DENIED. (ECF No.
5.) The plaintiff’s motion to amend is GRANTED and the plaintiff shall have ten (10) days
from the date of this Order to file it.
IT IS SO ORDERED.
s/ Bruce Howe Hendricks
United States District Judge
March 20, 2015
Greenville, South Carolina
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