Litchfield Plantation: Judge rules for developer in suit with POA
The developer of Litchfield Plantation is still in control of the property owners association – or will be once it pays its past due association fees, a Circuit Court judge has ruled.
After a 45 minute hearing Thursday, Judge Larry Hyman granted summary judgement to Litchfield Plantation Co. in a suit filed in March by the homeowners group, the Litchfield Pantation Association. The association asked the court to rule that the provision in the covenants for Litchfield Plantation that gives the developer control of the association terminated when the company failed to pay a shortfall in the budget for common area maintenance and services.
The so-called Class B voting rights give the developer votes equal to all other property owners, plus one.
Mark Neill, attorney for Litchfield Plantation Co., argued that the covenants specify when the Class B rights are terminated, and said failure to pay the association isn't included. The company, which was bought in April, wants to pay the shortfall as required, but can't get an accounting from the property owners who were elected to the association board in February.
"That's ridiculous," said Robert McMahan, a plantation resident and attorney for the association.
He said that until this year the president of the development company was also president of the association. He said that relationship, which existed before the current owners became involved, allowed the company to treat the homeowners association "like a piggy bank."
There are $715,000 in promissory notes outstanding from the developer to the association, McMahan told the court. The development company has breached its fiduciary duty to the association and shouldn't be allowed to retain control of the association, he said.
Neill said that for the court to allow the Class B rights to terminate for any reason other than those specified in the covenants amounts to a rewriting of the contract between the developer and the property owners, and he cited a state Appeals Court ruling that says that can't be done.
"And that's what concerns me," Hyman said.
He said he was unwilling to go beyond the language contained in the covenants, which say that voting rights are suspended for any property owner more than 60 days past due in payments to the association. If an individual owner were past due, would the association terminate his rights forever, Hyman asked McMahan.
McMahan said this situation is different because the developer controls the association, unlike an individual owner.
Hyman said the issue is whether the court can terminate the voting rights. "I cannot do that," he said. "I don't know whether they're terminated or not."
He ruled that the Class B rights are still in effect, though suspended because of the unpaid fees, and ordered an accounting of the past due amount within 60 days. "I'm sure there's going to be a dispute over that," he added.
"If you don't pay it, you don't vote," Hyman told Neill.
Neill said the association denied the company's votes at a special meeting Wednesday to elect board members, and he asked if the Class B rights could be reinstated until the accounting was completed.
Hyman denied that request. "What's good for the goose is good for the gander," he said.