To: Woods Edge HOA Members
From: Angela M. Ward, Esquire - Counsel to Board of Directors for Woods Edge HOA
Re: Phelps v. Woods Edge Homeowners Association
Date: 12/9/15
This is to advise you that the Board of Directors for Woods Edge has been served with the above-referenced lawsuit being pursued by Richard W. Phelps and Cheryl M. Rishell and John Does 1 - 20 alleging that the HOA is guilty of Negligence, Breach of Contract and Unjust Enrichment for charging double assessments to (allegedly) single lot owners.
In order to clarify the HOA position on assessments to 'double lot' owners, it js necessary to provide a little history on how the double lot issue came about. On March 1, 1991 Declarant The Murry Companies/Sher-Wal, Inc. Joint Venture filed the Second Amendment to the Declaration of Covenants, Conditions and Restrictions to create the HOA and identify the properties that would be subject to it, including the 34 Lots that Declarant consolidated into 17 nine years later. When the consolidation occurred in 2000, the Board of Directors challenged the action as a violation of Declarant's rights under law and the Declaration which prohibits its reducing the number of HOA lots without HOA member approval. At that time, Declarant assured the Board that Declarant would require any owner of a consolidated lot to pay double reserve fees upon purchase and double annual assessments thereafter, so that the BOA would lose 110 income from the consolidation. The Declarant filed its lot add-on plan showing the consolidation of two lots into one which would affect seventeen unit owners of Woods Edge. In reliance upon the Declarant's representation as to how the double lots would be handled, from 2000 to present the HOA continued to collect double assessments from owners of consolidated lots.
The HOA intends to defend the suit based upon the following arguments:
Time - The complaint is time-barred because any complaint about double assessment should have been made at the time that said assessment was imposed;
Declarant's right - Declarant had the right to determine the assessments on consolidated lots;
HOA's right - The HOA has the right to rely upon Declarant's determination;
Undue hardship - To reverse the determination of the Declarant to charge the consolidated double lots double assessments at this time and force the HOA to repay past assessments and to collect only single assessments from double lot owners in the future, would pose an undue hardship upon the HOA which relies upon collection of the double assessments for the budget under which it has operated for over fifteen years in order to meet its obligations;
Counterclaim against Declarant - Although the HOA firmly believes that Declarant had the right to impose a double assessment, in the event that it is ruled that Declarant had no right, then, it is Declarant who is liable for any resulting losses to double lot owners and to the HOA.
The Board appreciates your continued cooperation with the Association and although the Board of Directors is presently in the process of determining the most time and cost-effective way to resolve this litigation, it certainly welcomes any questions or concerns that you may have.
Time - As of January 2017, the judge has refused the request to dismiss on the basis of "lateness of the claim."
Declarant's right - If the Declarant felt these were "double lots," no revised Subdivision Plans would have been submitted, and the properties would be described in Deeds and Titles as two separate lots, and would be taxed as two separate lots. Anecdotal evidence is that in an Annual Meeting some years ago, Mr. Murry stated verbally that it was his intention that the combined Lots were indeed single lots.
HOA's right - If the HOA BOD was sure it had the right to double bill, it should have created two separate bills for each of the supposed two lots for every billing period and supplied these to the homeowners. This is standard procedure in other HOAs. The WEHOA, however, was careful never to use the term "double lot" on any of the invoices.
Undue hardship - It would never have been an undue hardship for the WEHOA to properly assess equal dues for all properties as outlined in the Declaration and all Amendments. The assessments would have been slightly higher for all Lot owners, as they should have been. Instead, the HOA thought it was fine to present Undue Hardship against seventeen particular homeowners, some of whom have paid over $8,000 in excess dues over the past 15 years. The HOA thinks nothing of this hardship, and is unwilling to consider creative solutions to repay these homeowners over time instead of in one lump payment. Instead, it is willing to spend homeowners money on a legal defense.
Counterclaim against Declarant - First of all, it wasn't a counterclaim at all! A counterclaim would have been if the WEHOA filed a claim against the plaintiffs. This was, rather, a crossclaim trying to make the Declarant (AKA the Builder, AKA Murry / Shur-Wal) responsible for the collection of the double bills. That crossclaim never had any merit, and was dismissed in 2016.