Background - Planned community in Swain County created by Developer via a 1999 Declaration that consolidated two prior developments into one 195-acre community. 1999 Declaration reserved ownership of condo common areas and the clubhouse to Developer/Association rather than vesting condominium common elements in unit owners. - Homeowner-controlled Association assumed board control in 2014 and voted to stop enforcing certain Declaration provisions (notably collection/remittance of perpetual "Clubhouse Dues"). - Developer sued the Association; Association filed counterclaims including (a) declaratory judgment that the condo ownership form violated North Carolina law and (b) reformation, (c) multiple claims about the Clubhouse dues, and (d) fiduciary, Chapter 75, covenant and accounting claims against Developer principals. - Trial court dismissed several counterclaims and granted summary judgment to the Association on multiple Developer claims; both sides appealed. - Court of Appeals reversed dismissal of Association's declaratory counterclaim (condo ownership invalid under statutory scheme), affirmed dismissal of the reformation claim (necessary parties absent), affirmed most dismissals on Clubhouse-related Association claims but reversed summary judgment on Developer's breach-of-contract/good-faith claim, and reversed dismissal of fiduciary-duty and breach-of-implied-covenant claims in part. ### Issues | Issue | Plaintiff's Argument | Defendant's Argument | Held | |---|---:|---|---| | Validity of condominium-style unit ownership under 1999 Declaration | Assn: The Declaration’s scheme (Association owns condo common areas) violates NC statutory scheme requiring unit owners to hold common elements in common under Condominium Act when horizontal boundaries exist in a planned community | Developer: Common-law and Declaration govern; horizontal division permitted absent statutory restraint | Held: Declared invalid form of ownership under NC law; reversed dismissal of Association's declaratory counterclaim | | Reformation of the Declaration to conform to Condominium Act | Assn: Reformation should correct ownership scheme to conform with Condominium Act | Developer: Reformation would alter non-party owners’ interests; necessary parties not joined | Held: Reformation claim properly dismissed for failure to join necessary parties; dismissal affirmed | | Association’s authority and obligations regarding Clubhouse Dues (counterclaims) | Assn: Planned Community Act prohibits collecting dues for non-common-element third-party-owned amenity; Clubhouse Dues unenforceable and paid sums recoverable | Developer: Declaration expressly authorized Association to collect and remit Clubhouse Dues; Act does not forbid such arrangement | Held: Statute permitting associations’ powers does not prohibit Declaration’s arrangement; Association’s Clubhouse counterclaims dismissed (trial court’s statute-of-limitations rationale rejected but result affirmed on other grounds) | | Developer’s breach of contract / good-faith claim for Association ceasing collection/remittance | Developer: Declaration contractually obligates Association to bill/collect Clubhouse Dues and remit to Declarant; Association’s cessation breaches contract and covenant of good faith and fair dealing | Association: Asserted time bars and argued statutory limits and that obligations are personal, not enforceable | Held: Reversed summary judgment for Association on Developer’s breach/good-faith claim — genuine fact issues exist; civil conspiracy and Chapter 75 claims against Association dismissed | | Association’s fiduciary duty, Chapter 75 and implied covenant claims against Developer principals | Assn: Cornblum principals engaged in self-dealing and deceptive practices harming Association | Developer: Actions were contractual/declarant conduct or internal corporate matters not within Chapter 75; some acts outside "commerce" | Held: Fiduciary-duty claims against individual directors (Michael and Carolyn) survive dismissal; claim against Declarant entity dismissed. Chapter 75 claim largely dismissed as internal conduct; breach of implied covenant claim survived. Accounting claim is moot by consent order | ### Key Cases Cited Cheape v. Chapel Hill, 320 N.C. 549 (1987) (common-law principles on dividing fee simple ownership discussed) Weyerhaeuser Co. v. Carolina Power & Light Co., 257 N.C. 717 (1962) (clear and unambiguous contract language must be enforced) Governors Club, Inc. v. Governors Club Ltd. P'ship, 152 N.C. App. 240 (2003) (directors owe fiduciary duties to the corporation) Midsouth Golf, LLC v. Fairfield, 187 N.C. App. 22 (2007) (treatment of dues/amenity covenants and analysis whether obligations are real or personal)