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Chisolm v. Danforth, LLC

Court of Appeals of Georgia, Second Division

October 29, 2019

CHISOLM
v.
DANFORTH, LLC.

          MILLER, P. J., RICKMAN and REESE, JJ.

          Reese, Judge.

         Tuneen Chisolm (the "Appellant") and two other property owners (collectively, the "Owners") filed suit against Danforth, LLC (the "Appellee") and the Owners' homeowners' associations, challenging, inter alia, the validity of assessments levied against them. In this appeal, the Appellant seeks review of an order of the Superior Court of Fulton County, reallocating and directing reimbursement of mediation fees. The Appellant also seeks review of a "final" order entered the same day, which granted the Appellee's motion for summary judgment and declaratory judgment and denied the Owners' motion for partial summary judgment. For the reasons set forth infra, we reverse the "final" order, vacate the mediation costs order, and remand the case for further proceedings not inconsistent with this opinion.

         Viewed in the light most favorable to the non-movants in the parties' respective motions for summary judgment, [1] the record shows the following facts.[2] The Owners in this case own lots within the Tapestry subdivision, situated within the master planned community of Le Jardin. In their original complaint, the Owners named as defendants the following three entities: (i) Tapestry at Le Jardin Owners Association, Inc., [3] as the homeowners' association pursuant to a declaration of covenants that burdened the individual lots (including the Owners') and common property located within Tapestry; (ii) Le Jardin Community Association, Inc. ("Le Jardin CAI"), as the homeowners' association pursuant to a declaration of covenants that burdened the individual lots (including the Owners') and common property located within the master planned community of Le Jardin; and (iii) the Appellee, as the purported declarant as defined within both declarations of covenants.

         The Owners alleged that the Appellee had not validly obtained declarant rights, yet had claimed the unilateral right to appoint the directors of the homeowners' associations; and that, under the Appellee's direction and control, the homeowners' associations had levied assessments and recorded the liens. The Owners claimed, however, that they did not owe the assessments because: the right to levy assessments was vested in the associations' boards of directors; the boards were never duly elected or were otherwise illegally constituted; and in the absence of properly constituted boards, the associations lacked authority to impose the assessments and record the liens at issue.

         The Appellee acquired the property that is the subject of this lawsuit in the early 2000s. Said property is designated as Land Lots 10, 11, 15, 16, 30, and 31 of the Ninth District C, Fulton County, Georgia (hereinafter, the "Property"). The Property is in the "Le Jardin" subdivision and is subject to the Le Jardin subdivision homeowners' association's Declaration of Covenants, Conditions and Restrictions ("Le Jardin Declarations"), which burden the entire Property. Additional neighborhood Declarations, such as that of the Tapestry at Le Jardin ("Tapestry Declarations"), also burden the Owners' lots. These Declarations were recorded on April 13, 2006, and named Le Jardin, LLC, as the "Declarant" under both Declarations.

Le Jardin, LLC, a Georgia limited liability company, or any successor, successor-in-title, or assign who holds or takes title to any portion of the [Property] for the purpose of development and/or sale and who is designated as the Declarant in a recorded instrument executed by the immediately preceding Declarant; provided, however, there shall be only one (1) Person entitled to exercise the rights and powers of the "Declarant" hereunder at any time.

         Le Jardin, LLC, was the owner and developer of the subdivision and, under Section 3.2 of the Declarations, was the sole Class B Member. Under that provision, the Declarant could:

appoint the members of the Board of Directors until the first to occur of the following: (i) when 100% of the total number of Lots permitted by the Master Plan for the [Property] have certificates of occupancy issued thereon and have been conveyed to Persons other than Declarant or Builders; (ii) December 31, 2020; or (iii) when, in its discretion, the Class "B" Member so determines and voluntarily relinquishes such right. At such time, the Class "B" Membership shall terminate, and the Declarant shall be a Class "A" Member[.[4]

Between 2005 and 2007, Le Jardin, LLC, took out a number of loans with Fairfield Financial Services ("Fairfield"). The loans were secured by the Property, as described in four recorded Deeds to Secure Debt ("security deeds").

         In August 2008, before the development was completed, Le Jardin, LLC, filed a voluntary Chapter 11 petition for bankruptcy relief. With permission of the bankruptcy court, Fairfield foreclosed on the Property in May 2009. Three separate Deeds Under Power of Sale ("foreclosure deeds") were issued in favor of Ridge Road, LLC, and the fourth foreclosure deed was issued in favor of EvaBank. Pursuant to the foreclosure deeds, filed and recorded on May 7, 2009, Ridge Road, LLC, and EvaBank purchased the described land, along with "[a]ll buildings, . . . improvements, . . . fixtures, . . . equipment, . . . and personal property of every kind[, ] all easements, . . . all construction or development contracts, . . . tools, . . . and all contracts or [trade name] licenses[.]"

         After purchasing two bundles of the Property at the foreclosure sale on "Loan No. 1[, ]" Ridge Road, LLC, then quitclaimed the property to First State Bank of Northwest Arkansas ("FSB") in a deed recorded on May 7, 2010. At the same time, "in connection with the sale[, ]" Ridge Road, LLC, "as the successor 'Declarant'" under the Declarations, assigned its rights as successor Declarant to FSB. The "Assignment of Declarant's Rights" was also recorded on May 7, 2010.

         In June 2012, FSB conveyed the property to Oladapo, who quitclaimed the property to the Appellee in November 2012. Meanwhile, in October 2012, FSB executed and caused to be recorded an "Assignment by Quitclaim of Declarant Rights" directly to the Appellee.

         EvaBank was the purchaser of property at the May 2009 foreclosure sale held with respect to "Loan No. 2[.]" In June 2013, EvaBank conveyed the property to the Appellee, and, simultaneously executed and recorded an "Assignment by Quit Claim Deed of Declarant's Rights" to the Appellee.

         Thus, the Appellee was the ultimate purchaser of two bundles of the Property as the result of the foreclosures on Loan No. 1 and Loan No. 2.

         According to the affidavit of Rufus Oladapo, the Appellee's president and sole owner, one of the ultimate purchasers from the other two sales, Sricharan Kantipudi, was a medical doctor who did not own any lots in the Giverny subdivision and had never indicated that he owned Declarant's rights for Le Jardin. Oladapo testified further that the other ultimate purchaser, Le Jardin VCOFI, LLC, did not own any lots for development and/or sale. According to Oladapo, neither the owner of this LLC, nor anyone else associated with it, had ever made any claim to Declarant rights of the Property.

         After the Appellee began exercising authority as the sole Class B Member under the Declarations, the Owners filed this action, seeking, inter alia, a declaratory judgment that the ...


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