Diamante, LLC v. Dye
2013 Ark. 501
Ark.2013Background
- Diamante, a private-membership golf club, holds supplemental declarations running with roughly 450 lots in two subdivisions that oblige lot owners to be Full Golf Members and pay monthly dues; Diamante has a lien/foreclosure right for unpaid dues.
- Gary and Linda Dye sued for declaratory judgment seeking a ruling that Diamante’s selective failure to collect dues and other conduct rendered the tie-in rights unenforceable under multiple equitable and contract doctrines.
- The Dyes moved to certify a class of current lot owners in the Diamante and Diamante Villas subdivisions (excluding Diamante, Cooper affiliates, deferred-lot purchasers, and six lots in pending foreclosure).
- The Saline County Circuit Court certified the class, finding numerosity, commonality, typicality, adequacy, predominance, and superiority satisfied; it rejected arguments that arbitration provisions, varying membership forms, and deferred-dues status defeated certification.
- Diamante appealed the class-certification order, challenging class counsel’s adequacy/possible necessary-witness status, the representatives’ adequacy (conflict with deferred-dues owners), commonality given covenant variations, inclusion of deferred-dues owners, arbitration agreements, and class-definition changes.
Issues
| Issue | Plaintiff's Argument (Dyes) | Defendant's Argument (Diamante) | Held |
|---|---|---|---|
| Whether class counsel is qualified and not a necessary witness | Counsel is a class member but is qualified; any testimony is largely uncontested and not fatal to adequacy | Counsel may be a necessary witness about membership documents, handwriting, and deferred-dues agreements, warranting disqualification | Court: Counsel presumed adequate; disqualification not shown. No abuse of discretion in certification |
| Whether class representatives are adequate (conflict with deferred-dues owners) | Dyes will fairly represent all owners; they have minimal required familiarity and interest | Dyes pay dues and thus conflict with owners receiving deferred dues | Court: No conflict; representatives met Rule 23(a)(4) minimal-interest/familiarity standards |
| Whether commonality/typicality exist given differing supplemental declarations and membership agreements | The common question is Diamante’s conduct and enforceability of tie‑in rights that affect all lot owners | Slight variations in covenants and arbitration clauses defeat commonality/typicality | Court: Commonality and typicality satisfied because central issue is Diamante’s identical conduct and identical supplemental-declaration provisions |
| Whether arbitration provisions or deferred-dues status defeat predominance/superiority or class membership | Arbitration clauses and deferred-dues arrangements mean individual issues will predominate; deferred-dues owners lack a justiciable interest | Arbitration and deferred-dues do not alter the equitable question whether Diamante’s conduct made tie-in rights unenforceable; class defined by burden on land is administratively feasible | Court: Arbitration provisions not controlling for this declaratory action (motion to compel arbitration previously denied); inclusion of deferred-dues owners and predominance/superiority findings affirmed |
Key Cases Cited
- Arthur v. Zearley, 320 Ark. 273, 895 S.W.2d 928 (Ark. 1995) (discussing risks when counsel testifies at class-certification proceedings)
- Weigel v. Farmers Ins. Co., Inc., 356 Ark. 617, 158 S.W.3d 147 (Ark. 2004) (attorney-witness disqualification test and Rule 3.7 considerations)
- Advance Am. Servicing of Ark., Inc. v. McGinnis, 2009 Ark. 151, 300 S.W.3d 487 (Ark. 2009) (requirements for adequacy of class representatives and counsel)
- Faigin v. Diamante, 2012 Ark. 8, 386 S.W.3d 372 (Ark. 2012) (class-certification denied where class members did not share common defenses due to differing procedural postures)
- State Farm Fire & Casualty Co. v. Ledbetter, 355 Ark. 28, 129 S.W.3d 815 (Ark. 2003) (class definition should include only those actually harmed where necessary)
- Williamson v. Sanofi Winthrop Pharms., Inc., 347 Ark. 89, 60 S.W.3d 428 (Ark. 2001) (Rule 23(a)(2) commonality requires at least one common question)
- Cheqnet Sys., Inc. v. Montgomery, 322 Ark. 742, 911 S.W.2d 956 (Ark. 1995) (commonality principle in class certification)