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Litchfield Plantation: Developer asks court to protect its control of POA at annual meeting

By Charles Swenson
Coastal Observer

The developer of Litchfield Plantation wants a judge to bar any action to limit its control of the property owners association when that group holds its annual meeting next week, according to documents filed in Circuit Court this week. It has also asked that the court disqualify the attorney for property owners who have brought suit over control of the association, saying he will be a witness in the case.

A group of property owners filed suit earlier this year asking the court to rule that a provision in the development’s restrictive covenants that gives the Litchfield Plantation Co. control of the homeowners association was voided when the company failed to fund a shortfall in the association budget. The property owners also asked the court to confirm that they are the properly-elected board of the association as the result of a special meeting in February when the former head of the company was ousted from the board.

Judge Larry Hyman heard arguments in the property owners’ request for a summary judgement in September, but has yet to rule.

The Litchfield Plantation Co., under new ownership since the suit was filed, has filed a counter claim, alleging the property owners’ suit has damaged values in the development and thwarted a plan to sell the undeveloped property.

This week, Litchfield Plantation Co. asked for a temporary injunction that would bar any action that prevents it from exercising control over the property owners association when the association meets Nov. 19. Mark Neill, attorney for the company, said in the motion that he tried “to resolve this matter with the plaintiffs before filing this motion.”

Under the covenants, the development company has Class B shares in the association which are equal to all other shares plus one.

The Litchfield Plantation Co. wants to be able to attend the meeting, vote its Class B shares and nominate members to the board, according to the filing.

It also wants to be able to vote on any issues and exercise “its right of disapproval” on any actions. It asks the court to enjoin the plaintiffs from any action to prevent those activities.

Without the injunctions, “any legal remedy would be inadequate,” the company claims.

The property owners – Joseph Johnston, Thomas Eckard, Carol Kirby, Robert McMahan and Thomas Phillips – have filed documents that show the former president of the company, Scott Trotter, acknowledged it could not pay a shortfall in the association budget as required by the covenants. If it doesn’t pay the shortfall, it is required to pay the same assessment as other owners on its property.

Trotter, who tried to engineer a buyout of the company from its former owner, Louise Parsons, was voted off the board along with Parsons’ attorney. Parsons later sold the company to John Miller, who is its current president.

In an affidavit also filed this week, a former attorney with the McNair Law Firm, Robert Dibble Jr., says that failure to fund the budget shortfall or pay assessments does not trigger an end to the Litchfield Plantation Co.’s Class B shares. He said he tried to negotiate that provision with Parsons’ attorney, Jeff Van Treese, when he represented the association in 2005. Van Treese “refused to agree to this request,” Dibble says.

“After serious and sometimes acrimonious negotiations,” he says they agreed the Class B shares would expire if the development company failed to sell 100 lots in a five year period, if it sold 90 percent of the undeveloped lots or if it decided to give up the shares.

The two sides “never agreed the Class B membership would be terminated in the event Litchfield Plantation Co. Inc. failed to pay dues, assessments or the budget shortfall,” Dibble says.

“Litchfield Plantation was unique in my experience because I was able to obtain the consent of 100 percent of the property owners to the terms and provisions,” according to his affidavit.

The property owners who brought suit over control of the association are represented by McMahan, an attorney with the firm of Harris & Graves in Conway. Litchfield Plantation Co. asked the court to disqualify McMahan and his firm because court rules don’t allow him to act as both an advocate and a witness.

“The issues Mr. McMahan will testify about are very much contested and are the basis of the litigation between the parties,” according to the company’s motion.

In its counterclaim, the company alleges it has been damaged by the mismanagement of the association by the board elected at the special meeting.

In asking to have McMahan disqualified, it says he will be asked to testify about that meeting, which it claims was improper, and about “his actions and inactions” while serving on the board elected at that meeting.

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