The South Carolina Court of Appeals handed down a decision last week against a group of disgruntled homeowners who attempted to create their own property owners' association. 

    The homeowners live in Phase I of Wright's Point Plantation, a waterfront community in Beaufort County. Wright's Point was purchased by the developer in 1997, and in 1998 the Declarations of Covenants, Conditions, Restrictions, and Easements ("Declarations") were recorded. Subsequently, the Wright's Point Homeowners' Association was incorporated. In 2003, several property owners from Phase I decided to band together and form a new entity: The Wright's Point Property Owners' Association. The Phase I owners disapproved of certain Architectural Committee Requirements and did not wish to share Phase I amenities with owners in future phases of the development. 

    The newly founded Property Owners' Association held it's first annual meeting, which the developer attended with his attorney. The developer contested the existence of the new association under the Declarations and stated that only the developer could appoint and remove directors, the meeting was not official, several owners had not been provided with notice of the meeting, and any meetings done without the developers' knowledge were "not legal."

    The homeowners then filed suit asking the court to declare, among other things, that the developer's authority to control appointment of directors and officers had terminated, the Wright's Point Property Owners' Association was valid, and only the owners in Phase I had a right of use and access to the common areas owned by the Association. The homeowners also sought an injunction against the developer to prevent him from trying to control the business of the Association. The developer counter claimed for damages in multiple causes of action to include civil conspiracy, breach of contract, breach of implied covenant of good faith and fair dealing, conversion, tortious interference with contractual relationships, and defamation.

    The circuit court issued an order in October 2007, denying relief to the homeowners on all claims. The circuit court also denied the developer's counterclaims for damages, but did grant the developer's request for an injunction allowing them to control the Association and allowing all property owners to use and access the common areas in dispute. Both parties appealed. 

    The court of appeals first addressed the interpretation of the Declarations. Because the Declarations are contractual, the court looked to the intention of the parties as expressed in the plain language of the contract. The circuit court and court of appeals disagreed with the homeowners' contention that several covenants were ambiguous. Both courts determined that the intent of the parties and the express language of the Declarations were clear and unambiguous.

    The court also rejected arguments that White's Point Plantation consisted solely of Phase I of the development. The court noted marketing materials which clearly stated that there would be multiple phases to White's Point. Further, in examining the Declarations in their entirety, the court found it clear that White's Point is not confined to Phase I.

    Finally, the court addressed the issue of the developer's control to appoint and remove members of the Board and officers of the Association and the developer's control of the Architectural Committee. The court again referred to the express language of the Declarations and affirmed the circuit court's findings. Because lots in the subdivision were not fully developed and the developer had not surrendered his authority, the developer still maintains this control, pursuant to the Declarations.

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