Pittenger v. Gleneagles Homes Ass'n

Pittenger v. Gleneagles Homes Ass'n, 2020 NCBC 85.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
COUNTY OF MECKLENBURG 18 CVS 11280

ROBERT M. PITTENGER and wife,
SUZANNE B. PITTENGER,

Plaintiffs,

v.

GLENEAGLES HOMES
ASSOCIATION, a North Carolina
Nonprofit Corporation; RICHARD B.
ORDER AND OPINION ON
BOOTH, JR., individually and as an
MOTIONS FOR JUDGMENT ON
Officer and Director of GLENEAGLES
THE PLEADINGS AND SUMMARY
HOME ASSOCIATION; KEVIN J.
JUDGMENT
ROCHE, individually and as an Officer
and Director of GLENEAGLES HOME
ASSOCIATION; DWIGHT H. BERG,
individually and as an Officer and
Director of GLENEAGLES HOME
ASSOCIATION; DOUG L. LEBDA
(a/k/a DOUGLAS R. LEBDA); and
MEGAN GREULING,

Defendants.

1. THIS MATTER is before the Court on Defendants Gleneagles Homes

Association, Richard B. Booth, Jr., Kevin J. Roche, and Dwight H. Berg’s Motion for

Judgment on the Pleadings, (ECF No. 28); Defendants Doug Lebda and Megan

Greuling’s Motion for Summary Judgment, (ECF No. 52); and Defendants Gleneagles

Homes Association, Richard B. Booth, Jr., Kevin J. Roche, and Dwight H. Berg’s

Motion for Summary Judgment, (ECF No. 55), (collectively the “Motions”). The

Court, having considered the Motions, materials of record, briefs, and arguments of
counsel, for the reasons stated below, GRANTS the Motions, as a result of which

Plaintiffs’ Amended Complaint is DISMISSED WITH PREJUDICE.

Law Office of Kenneth T. Davies, P.C., by Kenneth T. Davies, for
Plaintiffs Robert M. Pittenger and Suzanne B. Pittenger.

Cranfill, Sumner & Hartzog, LLP, by Patrick H. Flanagan and Meredith
F. Hamilton, for Defendants Gleneagles Homes Association, Richard B.
Booth, Jr., Kevin J. Roche, and Dwight H. Berg.

Wilder Pantazis Law Group, by Raboteau T. Wilder, Jr. and Allison
Vaughn, for Defendants Doug L. Lebda (a/k/a Douglas R. Lebda), and
Megan Greuling.

Gale, Judge.

I. INTRODUCTION

2. Plaintiffs Robert and Suzanne Pittenger (the “Pittengers”) and

Defendants Doug L. Lebda a/k/a Douglas R. Lebda (“Lebda”) and wife, Megan

Greuling (“Greuling”) own adjacent properties in the Quail Hollow subdivision of

Charlotte, North Carolina (“Quail Hollow”). The subdivision is governed by two

recorded declarations containing covenants and restrictions, including the

requirement that construction plans be approved. Lebda and Greuling secured such

approval before constructing their home (the “Lebda-Greuling Property”). The

Covenants provide that plan review and approval will be by either the Board of

Directors (“Board”) of Gleneagles Homes Association (“GHA” or the “Association”) or

a committee to which the Board delegates authority and responsibility for plan

review. The Board delegated that responsibility and authority to an architectural

review committee (the “ARC” or “Committee”). Defendants Kevin J. Roche (“Roche”)

and Dwight H. Berg (“Berg”) were at relevant times both officers and directors of
GHA and members of the ARC. Defendant Richard B. Booth, Jr. (“Booth”) was at

relevant times GHA’s President but not an ARC member. Plaintiffs do not bring

claims against any other Board or ARC members.

3. The Pittengers contend that the ARC improperly approved the “Lebda-

Greuling Property” in violation of multiple covenants, and that these violations

cumulatively constitute a nuisance, which the Covenants prohibit. More specifically,

the Pittengers contend that the Lebda-Greuling Property has five garage bays rather

than the four permitted, does not comply with the required setback on the interior lot

line between properties, exceeds the maximum number of authorized stories, does not

fit the style of the neighborhood, and is so large as to violate the Pittengers’ formerly

enjoyed privacy.

4. The Pittengers additionally contend that, when approving the plans,

the Board and ARC and their members violated fiduciary duties owed individually to

them. Defendants contend that the ARC properly reviewed and approved the plans,

barring all of the Pittengers’ claims.

5. The Court concludes that the uncontested evidence demonstrates that

the ARC’s approval of the Lebda-Greuling Property was not arbitrary and capricious

but rather made reasonably and in good faith, and such approval precludes each of

the Pittengers’ claims.

II. PROCEDURAL HISTORY

6. Plaintiffs commenced this action on June 6, 2018. (Compl., ECF No. 3.)

On June 20, 2018, Plaintiffs filed an amended complaint to add Berg as a defendant.
(ECF No. 4.) Plaintiffs have moved to further amend the complaint to assert

additional claims against Lebda and Greuling. (Mot. Suppl. Compl., ECF No. 77.)

The Court has denied the motion to amend by separate order. (Order on Pls.’ Mot.

Suppl. Compl., ECF No. 81.)

7. The case was designated as a mandatory complex business case on July

20, 2018, (ECF No. 1), and assigned to the undersigned on July 24, 2018, (ECF No.

2).

8. The Pittengers voluntarily dismissed several claims on October 29,

2019, (ECF No. 66), leaving claims against Lebda and Greuling for violations of the

governing covenants, conditions, and restrictions; against GHA, Booth, Roche, and

Berg for arbitrary and capricious approval of the Lebda-Greuling Property plans;

against GHA for negligence; and against GHA, Booth, Roche, and Berg for breach of

fiduciary duty, (Compl. ¶¶ 23–70; Am. Compl. ¶¶ 41–67(a)).

9. On January 30, 2019, GHA, Booth, Roche, and Berg filed their Motion

for Judgment on the Pleadings on several claims. On September 30, 2019, Lebda and

Greuling first and then GHA, Booth, Roche, and Berg filed their Motions for

Summary Judgment seeking to dismiss all claims. All the Motions have been fully

briefed and argued and are ripe for resolution.

III. FACTUAL BACKGROUND

10. The Court does not make findings of fact in ruling on the Motions but

summarizes the evidence and contentions for context.
A. The Parties

11. The Pittengers’ residence is located on Lot 9, Block 2 of Section 1, 7330

Baltusrol Lane, Charlotte, North Carolina, 28210 within Mecklenburg County and

the Quail Hollow subdivision (“Pittenger Property”). (Compl. ¶ 1.)

12. The Lebda-Greuling Property is located on Lot 8, Block 2 of Section 1,

7318 Baltusrol Lane, Charlotte, North Carolina, 28210 within Mecklenburg County

and the Quail Hollow subdivision. (Compl. ¶ 5.)

13. GHA is a North Carolina nonprofit corporation organized for the

purpose of administering, maintaining, and enforcing the covenants and restrictions

of Quail Hollow. (Compl. ¶ 2.)

14. Booth owns property in Quail Hollow and was at relevant times

President of GHA. (Compl. ¶ 3.) He was not an ARC member and did not directly

supervise the ARC’s determinations, although ARC members kept him generally

advised about their review process, and he assisted as needed without exercising any

right to vote on its determinations. (Aff. Kevin Roche ¶¶ 8, 29, (“Roche Aff.”), ECF

No. 56.11.)

15. Roche was at relevant times a GHA officer and director and an ARC

member, serving as its primary point of contact with the Board. (Roche Aff. ¶¶ 2, 6.)

Roche has owned property in Quail Hollow for twenty years. (Roche Aff. ¶ 4.)

16. Berg was at relevant times a GHA officer and director and an ARC

member. (Am. Compl. ¶ 3A; Aff. Dwight H. Berg ¶ 2, (“Berg Aff.”), ECF No. 56.12.)

He is a licensed general contractor and has lived in Quail Hollow since May 1999.
(Berg Aff. ¶ 4; Dep. Dwight H. Berg 20:3, (“Berg Dep.”), ECF No. 56.8.) Berg’s spouse

owns Lot 7 and a portion of Lot 8 in Block 2 adjacent to the Lebda-Greuling Property.

(Am. Compl. ¶ 3A.)

B. The Quail Hollow Development

17. Quail Hollow is a community planned and developed under a common

scheme of development. (Compl. ¶ 12.) The single-family residential community is

subject to a Declaration of Covenants, Conditions, and Restrictions, (ECF Nos. 56.2,

73.2), recorded on June 6, 1975, and a Supplementary Declaration of Covenants,

Conditions, and Restrictions, (ECF Nos. 56.3, 73.3), also recorded on June 6, 1975,

(Compl. ¶ 11), (the Court refers to the Declaration and Supplementary Declaration

collectively as the “Covenants”).

18. The Covenants are to be administered through GHA, a nonprofit

corporation. (Compl. ¶ 2.) GHA is governed by its Board.

19. Property owners must obtain prior approval from the Board or ARC

before any construction or improvements take place on a lot within Quail Hollow.

(Compl. ¶ 15.) The Covenants provide:

No building, fence, wall or other structure shall be commenced, erected
or maintained upon the Properties, nor shall any exterior addition to or
change or alteration therein be made until the plans and specifications
showing the nature, kind, shape, heights, materials, and location of the
same shall have been submitted to and approved in writing as to
harmony of external design and location in relation to surrounding
structures and topography by the Board of Directors of the Association,
or by an architectural control committee composed of three (3) or more
representatives appointed by the Board. In the event said Board, or its
designated committee, fails to approve or disapprove such design and
location withing fifteen (15) days after said plans and specifications have
been submitted to it, approval will not be required, and this Article will
be deemed to have been fully complied with.

(Decl. 10–11.)

20. The Board formed the ARC in February 2014. (Dep. Kevin J. Roche

10:1–19, (“Roche Dep.”), ECF Nos. 56.7.) During the review of the Lebda-Greuling

Property design plans, the ARC consisted of five members, including Roche and Berg,

as well as Fred Woltz, Peter Hollett, and Merry Schoonmaker against whom the

Pittengers assert no claim. (Roche Dep. 11:4–8.)

21. The Covenants do not provide specific guidelines or a procedure the ARC

must follow to review plans.

22. The Covenants grant the ARC the right “to waive, in writing any

violation of the designated and approved building location line or either side lot line,

horizontal measurement only, provided that such violation does not exceed ten (10%)

per cent of the applicable requirements and the violation thereof was unintentional,”

(Suppl. Decl. 3), but are otherwise silent as to the ARC’s authority to waive certain

restrictions.

23. The ARC instituted a process to review construction or design plans

which calls for three separate stages of review: (1) final plans (exterior design and

floor plans, exterior elevations, setbacks from front, golf course, and interior lot lines);

(2) materials and colors for all exterior finishes (brick/siding/stucco, doors windows,

shutters, and roof); and (3) landscaping plan (driveway materials and color,

hardscape, and all other landscape design elements). (March 14, 2017 E-mail String

Hart to Roche 1, (“March 14, 2017 E-mails”), ECF No. 73.31.)
24. All ARC decisions are voted on and made by the group on a consensus

or majority basis. (Roche Aff. ¶ 7.)

25. The Pittengers contend the ARC improperly approved the Lebda-

Greuling Property plans by waiving restrictions that prohibit a residence from

exceeding two and one-half stories above ground level, to be located within ten feet of

the interior lot line, to have more than four garage bays, and from any use that

constitutes a nuisance. (Compl. ¶¶ 19, 30, 43–48.)

26. The Covenants neither define the terms “story” or “ground level” nor

incorporate any external source by which those terms are to be defined. The ARC

members have consistently interpreted the terms in a manner that measures the

height of the residence when viewed from street level.

C. The ARC’s Initial Approval of Construction Plans

27. Architect Harry Schrader (“Schrader”) and general contractor Arcadia

Builders spearheaded the design and construction of the Lebda-Greuling Property.

(Aff. Doug Lebda ¶¶ 5, 10–11, (“Lebda Aff.”), ECF No. 52.4.)

28. On March 14, 2017, Schrader contacted Roche to determine the process

for the plans to be reviewed by the ARC. (March 14, 2017 E-mails 2.) On March 15,

2017, Roche received the design package Schrader submitted for the Lebda-Greuling

Property. (Roche Aff. ¶ 10.) The design package included the final plans for the first

stage of approval, including model images of the house with a street view. (March

15, 2017 E-mail Schrader to Roche, ECF No. 73.23.) On March 16, 2017, consistent

with prior practice, Roche distributed the plans to the other members of the
Committee by email for their independent review. (Roche Aff. ¶ 10 and Ex. B; Berg

Dep. 44:22; Roche Dep. 13:2–21, 49:18–22; March 16, 2017 E-mail String Hollett to

Schoonmaker, ECF No. 73.21.) All ARC members reviewed the plans individually.

(Berg Dep. 44:22; Roche Dep. 49:18–22.)

29. On March 17, 2017, Roche e-mailed Schrader to confirm receipt of the

plans and to inform him that the minimum required setback per the Covenants was

ten feet from the interior lot line, whereas the plans had stated the setback as six to

eight feet. (Roche Aff. ¶ 11 and Ex. C.) Schrader responded to Roche’s inquiry and

confirmed that the plans adhered to the ten-foot setback. (Roche Aff. ¶ 11 and Ex.

C.)

30. Following votes of approval by four of the five ARC members, Roche sent

an approval letter to Schrader relaying that the ARC approved the conceptual design

and site placement of the Lebda-Greuling Property. (Aff. Peter Hollett ¶ 13 and Exs.

B–C, (“Hollett Aff.”), ECF No. 56.9; Roche Aff. ¶ 12 and Ex. D; Berg Dep. 24.)

31. Each of the ARC members who voted to approve the plans testified that

he or she was aware of and specifically considered the Covenants’ height limitation

prior to appoving the plans. Specifically, ARC members testified that they considered

the Lebda-Greuling Property to be within the two and one-half story height limitation

when viewed from the street and similar in structure to other homes in the

neighborhood with walkout basements, (Hollett Aff. ¶ 11; Aff. Merry Schoonmaker ¶

9, (“Schoonmaker Aff.”), ECF No. 56.10; Roche Dep. 49:8–51:6; Berg Dep. 37:20–

38:10). One member explained that the ARC “consistently applied and enforced [the
story] requirement” in the past—“by looking at the house from the street and

counting the number of levels seen from the street.” (Schoonmaker Aff. ¶ 9.)

32. The ARC members also testified that they considered the garage bay

covenant before voting to approve the plans. Schoonmaker testified that she was

aware that the Covenants limited a residence to four garage bays, but voted to

approve the plans having herself been previously approved for a fifth garage bay as

well as a porte cochere and because she believed the Covenants to be outdated based

on current trends in the neighborhood. (Schoonmaker Aff. ¶ 7.) Berg testified that

he examined the Lebda-Greuling Property plans in comparison to “the covenants and

the current situations in the neighborhood,” (Berg Dep. 44:24–25), and voted to waive

the garage restriction given where the neighborhood was trending and that other

homes in the neighborhood had previously been approved for five-car garages, (Berg

Dep. 45:1–15). Roche considered that the number of garage bays fit with the scale of

the Lebda-Greuling Property and seemed to be appropriate relative to what could or

could not be seen from the street. (Roche Dep. 27:8–28:16.)

D. ARC Involvement During Construction

33. In late 2017, construction began on the Lebda-Greuling Property. (Def.

Lebda Answer ¶ 17, ECF No. 11; Def. Greuling Answer ¶ 17, ECF No. 12.)

34. On December 1, 2017, Plaintiffs’ counsel by letter notified Lebda and

Greuling of the Pitteners’ contention that the proposed construction violated the

Covenants in spite of the ARC’s approval, referring specifically to the number of

allowed garage bays, the two and one-half story limitation, and the ten-foot interior
setback. (Am. Compl. ¶ 20; 1 Dec. 2017 Letter from Davies to Lebda & Greuling, ECF

No. 73.6.) On December 8, 2017 Plaintiffs’ counsel similarly by letter notified GHA,

Booth, and Roche, of the Pittengers’ contentions. (Compl. ¶ 21; 8 Dec. 2017 Letter

from Davies to Booth and Roche, ECF No. 73.7; Roche Aff. ¶ 13 and Ex. E.)

35. Lebda asked Schrader to consider the issues the Pittengers raised.

(Lebda Aff. ¶¶ 16–18.) Schrader advised Lebda that the allegations were incorrect

and that the house complied with the Covenants. (Lebda Aff. ¶ 18.)

36. Roche advised the other ARC members of the contentions in Plaintiffs’

letter. (Roche Aff. ¶ 14 and Ex. F.) On December 14, 2017, the ARC members and

Board met to address the issues the Pittengers raised and reached consensus that the

Lebda-Greuling Property “complied with the two and one half story requirement and

permission for the house to have five garage bays was reasonable considering the size

and scale of the home, the location of the garage bays, and no identified negative

impact on the neighborhood.” (Roche Aff. ¶ 15 and Ex. G.)

37. As construction proceeded, the ARC, GHA, Lebda, and Greuling learned

that a portion of the southern wing of the home contained a cantilever bay or bump-

out, which infringed on the required internal setback line. (Lebda Aff. ¶ 19;

Schoonmaker Aff. ¶¶ 13–14; Roche Aff. ¶ 16.) The ARC members reviewed the

infringement and did not favor granting a waiver for the bump-out. (Roche Aff. ¶¶

17, 19–20 and Exs. I, K–M.) Lebda requested an onsite meeting with the ARC

members to discuss the issue. (Roche Aff. ¶ 21.) Four of the five ARC members and

one member of the Board, Fred Wilkerson, attended a meeting held at the Lebda-
Greuling Property on February 9, 2018. (Roche Aff. ¶ 21.) On February 13, 2018,

four of the five ARC members met with all but one member of the Board to address

the setback violation arising from the bump-out. (Roche Aff. ¶ 22.) All attendees at

this meeting agreed that the bump-out violated the ten-foot setback, that the

violation was caused by a survey and building error, that the violation was fixable by

removing the bump-out on the southern side of the house, and that the ARC should

require the setback violation be cured by eliminating the bump-out. (Aff. Raboteau

T. Wilder, Jr. at Ex. 12, (“Wilder Aff.”), ECF No. 52.1; Roche Aff.¶ 22 and Ex. N.) The

ARC relayed this decision to Lebda and Schrader on February 13, 2018. (Roche Aff.

¶ 23 and Ex. O.) Lebda instructed Schrader to change the design on the southern

side of the house to comply with the ARC’s decision. (Lebda Aff. ¶ 19.)

38. The Pittengers also raised concerns that the windows on the side of the

Lebda-Greuling Property facing the Pittenger Property would allow members of

Lebda and Greuling’s household to see into the Pittengers’ backyard eliminating any

privacy formerly enjoyed by the Pittengers. (Lebda Aff. ¶ 21.) To address the concern,

Lebda directed Schrader to replace the originally designed full-size windows on that

side of the house with transom windows which are smaller and located higher on the

walls to allow light to enter the rooms but prevent occupants of the rooms from having

a direct view out of the windows. (Lebda Aff. ¶ 21.)

39. On March 7, 2018, Schrader submitted the proposed site plan for the

HVAC units, gas meter, and pool equipment to the ARC for review. (Roche Aff. ¶ 25

and Ex. Q.) Each ARC member reviewed the submission individually and voted to
approve the plans as long as the landscaping plan included shielding for the exterior

HVAC units. (Roche Aff. ¶ 25 and Ex. Q.)

40. On April 2, 2018, Schrader submitted the proposed exterior finishes to

the ARC for review and approval. (Roche Aff. ¶ 26.) The ARC voted to approve the

proposed finishes. (Roche Aff. ¶ 26 and Exs. R, S.)

41. Roche met with Lebda and Greuling’s builder, Robby Bowers, at the

Lebda-Greuling Property on April 5, 2018, to review samples of the external

materials. (Roche Aff. ¶ 26.) During this onsite meeting, Bowers alerted Roche to

another possible violation of the interior setback related to the installation of a 4-inch

thick limestone veneer around the foundation of the house, which when finished,

because of the surveying error, would encroach 2 to 2.5 inches into the ten-foot

setback on the southwest corner of the house. (Roche Aff. ¶ 27; Lebda Aff. ¶ 20.)

Roche brought this to the attention of the other ARC members. (Roche Aff. ¶ 27.)

The ARC voted to grant a waiver of the setback violation based on the previous

agreement of Lebda and Greuling to remove the bump-out as well as the authority

granted to the ARC in the Covenants to waive unintentional setback violations when

they do not exceed 10% of the applicable requirement. (Schoonmaker Aff. ¶ 15 and

Ex. D; Roche Aff. ¶¶ 27–28 and Exs. T–V.) Roche testified that he “did not believe

that a 2 to 2.5 inch encroachment on the back left corner of the [Lebda-Greuling

Property] would have any detrimental impact on the neighborhood and that the

setback requirement waiver contemplated such instances such as the one at hand.”

(Roche Aff. ¶ 27.)
42. On June 6, 2018, Plaintiffs filed their initial complaint.

43. On December 21, 2018, Robby Bowers submitted a proposed landscaping

plan for the Lebda-Greuling Property. (Roche Aff. ¶ 31 and Ex. W.) Roche distributed

the plan to the other ARC members as well as to Booth and GHA Board member Fred

Wilkerson. (Roche Aff. ¶ 31.) ARC members participated in a conference call to

discuss the proposed landscaping plan and unanimously voted to deny the plan as

submitted. (Roche Aff. ¶ 31.)

44. On January 7, 2019, all ARC members met onsite at the Lebda-Greuling

Property with the landscape architects and builder to communicate their concerns

with the submitted landscape design plan. (Roche Aff. ¶ 32.)

45. On February 12, 2019, the landscape architects submitted a revised plan

to the ARC. (Roche Aff. ¶ 33 and Ex. X.) On February 19, 2019, all members of the

ARC again met onsite on with the landscape architects and builder, after which they

voted to approve the landscaping plan. (Roche Aff. ¶ 34.)

46. Construction of the Lebda-Greuling Property was completed sometime

after May 15, 2019. (Wilder Aff. at Ex. 25.)

E. Expert Testimony

47. The Pittengers have offered expert testimony that focuses on the

contention that the Lebda-Greuling Property exceeds the two-and-one-half-story

height limitation. As mentioned, the ARC members interpreted the Covenants to

provide that a home could not exceed two and one-half stories as viewed from street

level, and that the Lebda-Greuling Property complies with the restriction pursuant
to this construction. Plaintiffs’ expert architects Gerard Peer and Donald Duffy

contend instead that the southern wing of the Lebda-Greuling Property is three and

one-half stories when measured from ground level as opposed to street level. (Aff.

Gerard W. Peer, FAIA, ¶ 8, ECF No. 73.10; Aff. Donald Leroy Duffy Architect ¶ 15,

ECF No. 73.11.) Defendants’ expert architects Robin Roberts and Josh Allison

contend the Lebda-Greuling Property is a two-story structure with a basement which

complies with the Covenants. (Aff. Josh Allison ¶¶ 11–18, ECF No. 52.2; Aff. Robin

Roberts, AIA, NCARB, ¶ 7(b), ECF No. 56.15.)

IV. STANDARD OF REVIEW

A. Summary Judgment

48. Summary judgment is proper “if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show that

there is no genuine issue as to any material fact and that any party is entitled to

judgment as a matter of law.” N.C. R. Civ. P. 56(c). “If findings of fact are necessary

to resolve an issue as to a material fact, summary judgment is improper.” Moore v.

Galloway, 35 N.C. App. 394, 396, 241 S.E.2d 386, 387 (1978).

49. “[A]n issue is material if the facts alleged are such as to constitute a

legal defense or are of such nature as to affect the result of the action, or if the

resolution of the issue is so essential that the party against whom it is resolved may

not prevail.” Kessing v. Nat’l Mortg. Corp., 278 N.C. 523, 534, 180 S.E.2d 823, 830

(1971). Thus, on summary judgment, the burden is on the moving party to

demonstrate either “an essential element of the opposing party’s claim is nonexistent”
or by “showing through discovery that the opposing party cannot produce evidence to

support an essential element of his or her claim.” Lowe v. Bradford, 305 N.C. 366,

369, 289 S.E.2d 363, 366 (1982) (citations omitted).

50. “If the moving party satisfies its burden of proof, then the burden shifts

to the non-moving party to ‘set forth specific facts showing that there is a genuine

issue for trial.’ ” Id. at 369–70, 289 S.E.2d at 366 (emphasis added in Lowe) (quoting

N.C. R. Civ. P. 56(e)). In deciding whether to grant a motion for summary judgment,

the Court “must view all evidence in the light most favorable to the nonmoving party.”

Osborne v. Hodgin, 98 N.C. App. 111, 114, 389 S.E.2d 629, 631 (1990) (citing Walker

v. Westinghouse Elec. Corp., 77 N.C. App. 253, 258, 335 S.E.2d 79, 83 (1985), disc. rev.

denied, 315 N.C. 597, 341 S.E.2d 39 (1986)).

51. Interpretation and construction of restrictive covenants may be

considered upon summary judgment “unless a material issue of fact exists as to the

validity of the contract, the effect of the covenant on the unimpaired enjoyment of the

estate, or the existence of a provision that is contrary to the public interest.” Page v.

Bald Head Ass’n, 170 N.C. App. 151, 155, 611 S.E.2d 463, 466 (2005).

V. ANALYSIS

52. Plaintiffs contend that the evidence viewed in their favor is sufficient to

allow a trier of fact to conclude that: (1) ARC members acted arbitrarily and

capriciously when waiving the height requirement without adequate guiding

standards and when waiving a manifest violation of the specific covenant precluding

a fifth garage bay; (2) ARC members owed Plaintiffs a fiduciary duty because of their
total control over property within the planned development, and the ARC’s approval

of the Lebda-Greuling Property plans breached that duty; (3) ARC members cannot

justify their approval based on matters they did not actually consider when approving

the plans; and (4) all things considered, the Lebda-Greuling Property constitutes a

nuisance.

53. Defendants contend that the Plaintiffs’ evidence supports nothing more

than a disagreement as to whether the Lebda-Greuling Property fits the scale of the

Quail Hollow subdivision and falls short of meeting Plaintiffs’ burden of showing that

the ARC’s approval was not reached reasonably and in good faith. Defendants further

contend that any fiduciary duty the Board or ARC members may have had was owed

to GHA and the property owners collectively rather than to the Pittengers

individually. Lebda and Greuling contend that they proceeded with the proper

approval process delineated in the Covenants and administered by the ARC, and such

approval bars the Pittengers’ claims.

54. The Court begins its analysis by determining the proper standard of

conduct owed by ARC members when reviewing plans submitted to them.

A. The ARC Was Required to Act Reasonably and in Good Faith

55. North Carolina case law establishes that “restrictive covenants are

contractual in nature, and that acceptance of a valid deed incorporating covenants

implies the existence of a valid contract with binding restrictions.” Moss Creek

Homeowners Ass’n v. Bissette, 202 N.C. App. 222, 228, 689 S.E.2d 180, 184 (2010)
(citing Rodgerson v. Davis, 27 N.C. App. 173, 178, 218 S.E.2d 471, 475, disc. review

denied, 288 N.C. 731, 220 S.E.2d 351 (1975)).

56. As a general matter, restrictive covenants may be enforced by and

against any grantee “[w]here the owner of a tract of land subdivides it and sells

distinct parcels thereof to separate grantees, imposing restrictions on its use

pursuant to a general plan of development or improvement.” Sedberry v. Parsons,

232 N.C. 707, 710, 62 S.E.2d 88, 90 (1950). The Covenants expressly grant a right to

both GHA and individual property owners to enforce the Covenants by court action.

(Suppl. Decl. 5.)

57. The Pittengers’ individual rights must be balanced against the authority

vested in the ARC to approve design and landscape plans for development within

Quail Hollow. Plaintiffs took their property subject to that authority. “A purchaser

of land has the duty to examine every recorded deed or instrument in his line of title;

he is conclusively presumed to know the contents of such instruments and is put on

notice of any fact or circumstance affecting his title which is disclosed in such

instruments.” Four Seasons Homeowners Ass’n v. Sellers, 62 N.C. App. 205, 212, 302

S.E.2d 848, 853 (1983) (citing Lamica v. Gerdes, 270 N.C. 85, 153 S.E.2d 814 (1967);

Turner v. Glenn, 220 N.C. 620, 18 S.E.2d 197 (1942)); see also Sedberry, 232 N.C. at

710–11, 62 S.E.2d at 90–91 (stating that deed restrictions in purchaser’s chain of title

are valid and enforceable against purchaser even if not appearing in purchaser’s

immediate deed).
58. As a general proposition, “North Carolina follows the rule of strict

construction when interpreting restrictive covenants. That is, any ambiguities will

be resolved in favor of unrestricted use. But this rule must not be applied to defeat

the plain and obvious purposes of the restriction.” Barber v. Dixon, 62 N.C. App. 455,

457, 302 S.E.2d 915, 916–17 (1983) (citing Long v. Branham, 271 N.C. 264, 268, 156

S.E.2d 235, 239 (1967)).

59. More often, cases challenging an architectural review committee’s

decision arise in the context of a homeowner contending that the committee refused

a homeowner’s request as to a particular use of the homeowner’s property, contrary

to the policy favoring unrestricted use. In that context, courts employ a standard of

review which defers to a committee’s determination that is made reasonably and in

good faith and conditions a judicial challenge to a demonstration that the committee

acted arbitrarily and capriciously.

When interpreting protective covenants requiring submission of plans
and prior consent to construction, this Court has affirmatively stated
such clauses, even if vesting the approving authority with broad
discretionary power, are valid and enforceable so long as the authority
to consent is exercised reasonably and in good faith. Importantly
though, the exercise of the authority to approve the house plans cannot
be arbitrary. There must be some standards. Where these standards
are not within the restrictive covenant itself, they must be in other
covenants stated or designated, or they must be otherwise
clearly established in connection with some general plan or scheme of
development. Consequently, most jurisdictions that have dealt with this
issue have found that these covenants are enforceable as long as the
determining body makes the decision reasonably and in good faith.

Pendleton Lake Homeowners Ass’n, Inc. v. Carnell, 2006 N.C. App. LEXIS 242, at *5–

6 (2006) (emphasis added in Pendleton) (internal quotation marks and citations

omitted); see also Raintree Homeowners Ass’n, Inc. v. Bleimann, 342 N.C. 159, 164,
463 S.E.2d 72, 75 (1995) (holding a committee acted reasonably where defendants

“produced no evidence that the ARC acted arbitrarily or in bad faith when reviewing

defendants’ application or when making its decision”); Smith v. Butler Mtn. Estates

Property Owners Ass’n, 90 N.C. App. 40, 48, 367 S.E.2d 401, 407 (1988); Boiling

Spring Lakes Div. of Reeves Telecom Corp. v. Coastal Services Corp., 27 N.C. App.

191, 195, 218 S.E.2d 476, 478 (1975) (noting that decisions that are arbitrary,

capricious, or made in bad faith are not found based on disagreement as to aesthetic

looks but rather on whether the ARC made appropriate considerations when

exercising its approval authority).

60. In contrast, this litigation arises from an architectural committee’s

approval of a use rather than its denial. The Court discerns no reasoned basis that

the standard by which to measure the committee’s decision is any different in this

context and remains an inquiry into whether Plaintiffs have forecasted evidence

sufficient to find that the ARC failed to act reasonably and in good faith but rather

acted arbitrarily and capriciously.

61. On the facts of this case, the inquiry does not turn on whether the

committee acted arbitrarily and capriciously by failing to consider the Covenants

upon which the challenge is made. To the contrary, Plaintiffs’ counsel brought each

of their contentions to the ARC before it approved the plans. The claims depend on

whether the ARC or its members acted arbitrarily and capriciously in the manner in

which they applied the specific covenants.
62. North Carolina courts recognize that a review committee can reasonably

consider how covenants have been applied in previous evaluations and in

consideration of the overall scheme of development. Raintree, 342 N.C. at 165, 463

S.E.2d at 75 (holding that an architectural review committee’s denial of an

application for vinyl siding was reasonable and made in good faith in part because

the committee’s decision was consistent with past denials where the committee found

vinyl siding inappropriate for the community); see also Pendleton, 2006 N.C. App.

LEXIS 242, at *8–9 (holding that, where there is evidence a homeowners’ association

considered the restrictive covenants at issue in light of the overall scheme of

development, this suggests the association acted reasonably and in good faith).

63. When reviewing the reasonableness of a committee’s decision, the

degree to which the committee paid specific attention to covenant requirements is

relevant. For example, the North Carolina Court of Appeals found relevant that a

review committee considered a homeowner’s proposal twice, visited the homeowner’s

lot personally to inspect the site of the proposed garage, consulted with other lot

owners in the subdivision, and suggested alternate sites for the proposed garage.

Pendleton, 2006 N.C. App. LEXIS 242, at *8.

64. The Pittengers contend that the Court should apply a stricter standard

of review based on their contention that the ARC members owed an individual

fiduciary duty to the Pittengers. They argue that such a fiduciary duty arises from

the total domination and control the ARC has over a property owner’s rights within

the Quail Hollow subdivision, and because homeowners are mandatory members of
the Association subject to the threat of foreclosure if assessments are not paid, the

Association “hold all the cards.” Of course, the Pittengers freely and voluntarily

purchased their property pursuant to the Covenants which expressly vest the

authority to review and approve design and construction plans on behalf of GHA in

the Board or the ARC to which it delegates authority and responsibility.

65. The Court finds no reasoned factual or legal basis to impose on the Board

or ARC members an individual fiduciary duty to individual homeowners beyond their

duty owed to the Association to implement the Covenants reasonably and in good

faith. Any fiduciary duty directors and officers of a homeowner’s association owe is

to the homeowner’s association they represent. Conleys Creek Ltd. P’ship v. Smoky

Mountain Country Club Prop. Owners Ass’n, Inc., 255 N.C. App. 236, 251, 805 S.E.2d

147, 157 (2017), appeal dismissed, review denied, 370 N.C. 695, 811 S.E.2d 596 (2018).

Having been delegated the authority to act on behalf of the Board, their duty is

delineated by N.C.G.S. § 55A-8-30, which requires that:

[A] director must discharge his duties in good faith, with the care an
ordinarily prudent person in a like position would exercise under similar
circumstances and in a manner the director reasonably believes to be in
the best interests of the corporation. In doing so, a director may rely on
information, opinions, and statements provided by legal counsel or other
professionals.

Taddei v. Vill. Creek Prop. Owners Ass’n, Inc., 220 N.C. App. 487, 493, 725

S.E.2d 451, 455 (2012) (citing N.C.G.S. § 55A–8–30(a), (b)(2) (2009)).

66. The Court concludes that the proper standard to be applied is whether

Plaintiffs can demonstrate that the ARC and Board members when reviewing the
Lebda-Greuling Property plans acted arbitrarily and capriciously rather than

reasonably and in good faith.

B. Adequacy of Evidence to Support a Finding that the ARC’s
Approval Was Arbitrary and Capricious

67. The Court separately addresses each Covenant provision on which the

Pittengers rely.

(1) The Fifth Garage Bay

68. The Covenants, recorded in 1975, include the height limitation and

garage limitation in the same provision which reads:

All lots shall be used for residential purposes only and no structure shall
be erected, placed or permitted to remain on any lot other than one
detached single-family dwelling not to exceed two and one-half stories
in height above ground level, a private garage or carport for not more
than four cars and other outbuildings incidental to residential use of any
lot.

(Suppl. Decl. 1.)

69. The evidence is uncontested that the ARC had voted on prior occasions

to waive the requirement that a garage be limited to four cars, and did so in light of

the evolving nature of the Quail Hollow community. The evidence does not include

any indication that the ARC’s determination in that regard had been previously

challenged.

70. Courts have recognized that architectural review committees may be

afforded broad authority, including to waive restrictive covenants, in order to act

consistently with the established principle of law that restrictive covenants should be

interpreted in favor of unrestricted use and development of land. Long, 271 N.C. at

268, 156 S.E.2d at 239 (citation omitted).
71. Berg testified that he believed the ARC could waive the garage

restriction given where the neighborhood was trending and that other homes in the

neighborhood already had over four garage bays. (Berg Dep. 44:22–45:25.) Roche

testified that he thought that the number of garage bays at the Lebda-Greuling

Property fit with the scale of the house and seemed to be appropriate relative to what

you could or could not see from the street. (Roche Dep. 27:9–28:16.)

72. ARC member Schoonmaker stated that:

While reviewing the proposed plans, I noticed the plans called for five
garage bays. The restrictive covenants call for no more than four garage
bays. However, my home has five garage bays and was approved by the
Board of Directors which was acting as the ARC at the time we
submitted plans for approval in or about 2009. I brought this to the
attention of the other members of the ARC and we considered whether
or not to approve plans with the proposed five garage bays. Considering
the size and scale of the house in the proposed plans, the layout of the
garages bays, the fact that there are other homes in the neighborhood,
including mine, with more than four garage bays, I determined that five
garage bays would not negatively impact the neighborhood and voted to
approve the plans.

(Schoonmaker Aff. ¶ 7.)

73. The Court concludes that the ARC is vested with discretion, within

reason, to conform its enforcement of the Covenants to the changing nature of the

overall development as it matures. The Court further concludes that the ARC

members reasonably considered their prior waiver of the garage restriction, and the

forecast of Plaintiffs’ evidence is not adequate to allow a fact finder to conclude that

the ARC or its members acted in bad faith or arbitrarily and capriciously when

approving the fifth garage bay for the Lebda-Greuling Property in consideration of
the development and evolution of the Quail Hollow community at the time of their

review.

(2) The De Minimis Setback Violation from Survey Error

74. Defendants acknowledge that a small portion of a thin layer of limestone

on the exterior of the Lebda-Greuling Property infringes into the setback area by

approximately two inches due to an unintentional surveying error.

75. The Covenants expressly grant the ARC the authority to waive “any

violation of the designated and approved building location line on either side lot line

. . . provided that such violation does not exceed ten (10%) per cent of the applicable

requirements and the violation thereof was unintentional.” (Suppl. Decl. 3.)

76. Accordingly, the Court concludes that the Pittengers have not forecasted

evidence upon which a court or jury could reasonably conclude that Defendants acted

arbitrarily or capriciously, unreasonably or without good faith when waiving the de

minimis setback violation.

(3) Two and One-Half Story Height Limitation

77. The evidence presents the contested issue of whether the ARC

reasonably and in good faith concluded that the Lebda-Greuling Property conformed

with the Covenants’ requirement that a property not exceed “two and one-half stories

in height above ground level.” Here, the ARC did not vote to waive the requirement

but rather concluded that the plans did not violate the restriction.

78. The experts offer differing opinions as to how the determination should

have been made when the Covenants did not define the terms “story” or “above

ground level.” When the ARC members made their determination, they were fully
aware of the height restriction, but considered their interpretation consistent with

the historical practice of measuring the number of stories as viewed from street level.

They had additionally been assured by Lebda and Greuling’s architect that the

Pittengers’ contention was not supported by the Covenants.

79. Each ARC member who voted to approve the Lebda-Greuling Property

plans testified that they expressly considered the height limitation. (Hollett Aff. ¶

11; Schoonmaker Aff. ¶ 9; Roche Dep. 49:8–51:6; Berg Dep. 37:21–24.)

80. Roche testified that prior to approving the Lebda-Greuling plans, Quail

Hollow had a number of homes that, due to ground slopes, appear to be three levels

from particular vantage points. (Roche Dep. 50:21–24.) However, the ARC or Board

had previously approved plans for those properties which appeared no higher than

two and one-half stories above ground level when viewed from the street. The ARC

members concluded that they should apply the same criteria to the Lebda-Greuling

Property. See Raintree, 342 N.C. at 164, 463 S.E.2d at 75 (“Plaintiff’s reliance on past

practices and policies does not suggest that the ARC was being unreasonable or

arbitrary . . . Reliance on this past finding was not an example of bad faith.”); Smith

v. Butler Mountain Estates Prop. Owners Ass’n, 90 N.C. App. 40, 48, 367 S.E.2d 401,

407 (1988) (holding a key inquiry in determining whether a review committee

exercised its authority reasonably and in good faith is whether the proposed structure

is consistent with the scheme of development of the rest of the neighborhood).

81. The Court concludes that when viewed most favorably to Plaintiffs, the

evidence, including expert testimony, demonstrates a difference of opinion as to how
the height restriction within the Covenants was to be applied but fails to forecast a

basis upon which a court or jury could reasonably conclude that Defendants acted

arbitrarily or capriciously, unreasonably or without good faith when approving the

Lebda-Greuling Property as consistent with the height restriction.

82. In sum, the Court concludes that Plaintiffs have failed to forecast

evidence upon which a court or jury could conclude that the Board, the ARC, or its

members acted arbitrarily and capriciously in approving the Lebda-Greuling

Property, either by reason of the restrictions as to garage bays, setback requirement,

or height.

C. Plaintiffs’ Nuisance Claim

83. The Covenants provide that: “No noxious or offensive activity shall be

conducted upon any lot or in any dwelling nor shall anything be done theron or

therein which may be or may become an annoyance or nuisance to the neighborhood.”

(Decl. 11.) This provision is contained within the section of the Covenants providing

“Use Restrictions,” rather than within the sections providing design restrictions.

84. The Pittengers do not bring a common law nuisance claim.

85. Plaintiffs’ nuisance claim is essentially that the covenant violations the

ARC endorsed have allowed Lebda and Greuling’s use of their home to invade

Plaintiffs’ privacy and enjoyment of their property. The claim fails to the extent it

depends upon an initial finding that the ARC did not approve the construction

reasonably and in good faith. Second, the record evidence reveals nothing further
about any actual noxious or offensive use of the Lebda-Greuling Property to which to

apply the Covenants.

86. The Court concludes that the Pittengers have not forecasted evidence

upon which a court or jury could reasonably conclude that the Lebda-Greuling

Property constitutes a nuisance as defined by the Covenants.

D. Negligence Claim Against Defendant GHA

87. Plaintiffs presented a negligence claim against GHA that essentially

restates the claim of breach of fiduciary duty and fails for the same reasons. To

succeed in negligence, “a plaintiff must establish that the defendant owed the

plaintiff a legal duty, that the defendant breached that duty, and that the plaintiff’s

injury was proximately caused by the breach.” Martishius v. Carolco Studios, Inc.,

355 N.C. 465, 473, 562 S.E.2d 887, 892 (2002) (citing Hunt v. N.C. Dep’t. of Labor,

348 N.C. 192, 195, 499 S.E.2d 747, 749 (1998)). Plaintiffs have not defined any duty

upon which a negligence claim would rest that is distinct from the ARC’s duty to act

reasonably and in good faith when approving the plans submitted to it for approval.

88. Accordingly, the Court concludes that Defendant GHA is entitled to

summary judgment on Plaintiffs’ negligence claim.

VI. CONCLUSION

89. For the foregoing reasons, the Court concludes that Plaintiffs have not

forecasted evidence upon which a court or jury could reasonably conclude that they

are entitled to relief on any claim presented by their Amended Complaint.
90. The Court GRANTS the Defendants’ Motions for Judgment on the

Pleadings and Motion for Summary Judgment, and Plaintiffs’ amended complaint

and each of its claims is DISMISSED WITH PREJUDICE.

This the 1st day of December, 2020.

/s/ James L. Gale
James L. Gale
Senior Business Court Judge