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Inc. v. Blevins

Supreme Court of Alabama

March 2, 2018

Hillwood Office Center Owners' Association, Inc., et al.
v.
Carol A. Blevins Hillwood Office Center Owners' Association, Inc., et al.
v.
Carol A. Blevins Hillwood Office Center Owners' Association, Inc., et al.
v.
Carol A. Blevins

         Appeals from Montgomery Circuit Court (CV-2015-900849; CV-2015-901891; and CV-2016-901627)

          BOLIN, JUSTICE.

         The Hillwood Office Center Owners' Association, Inc. ("the HOCOA"), Steve Nelson, Ron Fullove, and JoAnne Rousso appeal from an order of the Montgomery Circuit Court directing the arbitration of certain claims asserted against them by Carol A. Blevins.

         Facts and Procedural History

         These cases have their genesis in Blevins v. Hillwood Office Center Owners' Ass'n, 51 So.3d 317 (Ala. 2010) ("Blevins I"). A brief discussion of that case is beneficial to an understanding of the present cases. In March 2005, Carol Blevins purchased unit 200-3 in the Hillwood Office Center, a condominium office complex. In April 2005, Carol's husband, Jerry Blevins, established a law practice in the office unit. In May 2005, Carol purported to transfer, by quitclaim deed, her interest in the office unit to Jerry. The deed was witnessed solely by Jerry; it was never recorded in the office of the Montgomery Probate Court; and no copy of the deed was provided to the HOCOA, as required by the declaration of condominium.[1]

         After some shrubbery he had planted in front of his office unit died from a lack of water, Jerry inquired as to why the sprinkler system at the office complex was never activated. Jerry was told by the owner of another unit in the office complex that the sprinkler system had not been operational for several years. Additionally, Jerry learned that the HOCOA had no board of directors and had not held an annual meeting in several years. Subsequently, Jerry organized a meeting of the other unit owners at which a three-person board of directors of the HOCOA was elected in accordance with the bylaws of the HOCOA. Jerry was named a board member, as well as president of the board.

         During Jerry's presidency, the sprinkler system was repaired and became operational. The sprinkler system could be activated by anyone from an unlocked control panel located at the rear of the complex. Jerry activated the sprinkler system at his discretion while he served as president of the board of directors of the HOCOA. Other unit owners objected to Jerry's discretionary use of the sprinkler system based on the costs incurred by the HOCOA for the resulting water usage.

         In June 2008, Jerry resigned from the HOCOA board of directors and its presidency. In July 2008, the HOCOA elected a new board of directors and president. On August 10, 2008, Jerry activated the sprinkler system. He discovered the next day that a lock had been installed on the box containing the control panel for the sprinkler system. Jerry demanded that the board remove the lock from the sprinkler-system control box or provide him with a key, and he informed the board that if he were not provided a key to the lock he would cut the lock off the box. The board refused to remove the lock or to provide Jerry with a key to the lock, taking the position that the board, not the unit owners, was responsible for the common areas. Subsequently, Jerry cut the lock on the control box and activated the sprinkler system. The board replaced the lock to the control box, and Jerry cut the replacement lock. Jerry ultimately cut four locks on the sprinkler-system control box. Eventually, the board removed the entire control panel and placed control of the sprinkler system under the exclusive control of a board member. As a result, Jerry had to water the shrubbery in front of his unit manually with a garden hose.

         On September 29, 2008, Jerry sued the HOCOA and the board members, seeking a judgment declaring that the HOCOA was not a legal entity because of its failure to comply with the laws respecting corporate existence. Jerry further asserted claims of nuisance, breach of fiduciary duty, conspiracy, and conversion and sought specific performance. The HOCOA and the board members argued in response, among other things, that Jerry lacked standing to sue the HOCOA and the board members because Carol was the record owner of the office unit. Jerry then amended his complaint to add Carol as a plaintiff. Subsequently, the HOCOA and the board members moved the trial court for a summary judgment on the Blevinses' claims against them. The trial court entered a summary judgment in favor of the HOCOA and the board members. On appeal, this Court held that the trial court never acquired jurisdiction of the matter because Jerry had failed to establish that he had standing to sue the HOCOA and the board members. Further, this Court held that an action, having begun at the instance of someone without standing, cannot subsequently be maintained by someone with standing. Therefore, this Court in Blevins I vacated the summary judgment entered in favor of the HOCOA and the board members and dismissed the appeal and the case.

         Following the events set forth in Blevins I, Carol, who was then a member of the board, became involved in a controversy with Mitchell Properties, LLC -- owner of units 200-9 and 200-10 at the Hillwood Office Center -- Malone Staffing Solutions, Inc., and the HOCOA and its board members arising out of Mitchell Properties' leasing of its office units to Malone Staffing. At the time the proposed lease between Mitchell Properties and Malone Staffing was being considered by the HOCOA board, its members consisted of Steve Nelson, Steve Arnberg, JoAnne Rousso, and Carol. It appears that on May 11, 2015, the HOCOA board rejected the proposed lease between Mitchell Properties and Malone Staffing on the ground that the proposed lease conflicted with the rules and regulations that governed the HOCOA. On May 14, 2015, Carol resigned her position on the HOCOA board effective immediately. It appears that on May 15, 2015, the HOCOA board notified Mitchell Properties that the proposed lease had been rejected and further afforded Mitchell Properties an additional 10 days to submit a revised lease. On May 16, 2015, Rousso formally resigned from the HOCOA board effective immediately. On May 21, 2015, Arnberg formally resigned from the HOCOA board effective immediately. Those resignations left Nelson as the sole HOCOA board member. On May 22, 2015, Mitchell Properties submitted an addendum to the proposed lease agreement for the HOCOA board to consider. On that same date, Carol offered to "resume her duties as a board member if [Nelson was] agreeable to it." Nelson declined her offer.

         On May 27, 2015, Carol, with husband Jerry representing her, sued Mitchell Properties and Malone Staffing asserting claims of nuisance, breach of fiduciary duty, and breach of contract and seeking a judgment declaring that the lease between Mitchell Properties and Malone Staffing was void and injunctive relief. That action was assigned case no. CV-2015- 900849. Carol set forth the following factual allegations in her complaint:

"Pursuant to its by-laws, HOCOA is governed by a Board of Directors (the 'Board'), which must consist of a minimum of three (3) owners.
"[Carol] owns Suite 200-3 at the [Hillwood Office Center], and also serves on the Board. [Carol] brings this action in both her individual capacity and as board member.
"Mitchell Properties owns Suites 200-9 & 10 at the [Hillwood Office Center].
"The by-laws of the HOCOA read in relevant part:
"'Leasing of a unit by the unit owner is not prohibited; however, the written consent of the Board of Directors must be obtained. The unit owner must submit a request, in writing, setting forth the name of the lessee or sublessee, type of instrument to be used, nature of lessee's or sublessee's business and supply all other information as may be required by the Board of Directors.'
"On or about April 16, 2015, Defendant Mitchell Properties entered into a lease agreement ('the lease agreement') with Defendant Malone Staffing for the lease of Suites 200-9 & 10.
"Defendant Malone Staffing occupied and began conducting business out of Suites 200-9 & 10, on or about May 1, 2015.
"Defendant Mitchell Properties did not seek, nor obtain, the written consent of the Board prior to entering into the lease agreement, nor prior to Defendant Malone Staffing occupying Suites 200-9 & 10.
"In fact, Defendant Mitchell Properties did not submit the lease agreement to the Board until it was confronted about its failure to secure Board approval for the lease agreement.
"After being confronted, Defendant Mitchell Properties then submitted a request to the Board for approval of the lease agreement.
"On May 11, 2015, the Board rejected/denied the lease agreement on the ground that the lease agreement as a whole conflicted with the rules and regulations which govern the operations of HOCOA.
"The Board notified Defendant Mitchell Properties of the rejection of the lease agreement on or about May 15, 2015, and further afforded it ten (10) additional days for submission of a revised lease agreement for consideration by the Board if it chose to do so.
"Subsequent to May 15, 2015, certain members of the Board resigned and the Board is presently without the minimum number of members (3) required to act on any matters.
"On or about May 22, 2015, Defendant Mitchell Properties submitted an addendum ('the addendum') to the lease agreement for consideration by the Board.
"Notwithstanding the fact that the Board is presently unable to act on the addendum due to lacking three (3) members, the addendum does not remedy the problems with the original lease agreement and is due to also be rejected/denied if, and when, it is ever considered.
"In any event, the Board's prior rejection of the lease agreement remains unaltered.
"Defendant Mitchell Properties has refused repeated requests to have Defendant Malone Staffing vacate Suites 200-9 & 10.
"Since occupying Suites 200-9 & 10, Defendant Malone Staffing has engaged in repeated acts in violation of the rules and regulations which govern the HOCOA, to include but not limited to:
"a) permitting loitering at various locations around Suites 200-9 & 10;
"b) leaving the front and rear doors to Suites 200-9 & 10 open for extended periods of time throughout the day, using an old paint can to prop the front door open;
"c) placing advertisements at various locations about the property;
"d) leaving excessive trash in the parking area;
"e) allowing others to congregate and assemble in the parking areas where persons sit on top of their vehicles, listen to music with their doors open and just ...

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