Trost v. Sea Mark Tower Property Owners Association

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR. THE STATE OF SOUTH CAROLINA In The Court of Appeals Randall J. Trost, Respondent, v. Sea Mark Tower Property Owners Association, Inc., and The Noble Company of Myrtle Beach, Defendants, Of Whom Sea Mark Tower Property Owners Association, Inc., is Appellant. Appeal From Horry County J. Stanton Cross, Jr., Circuit Court Judge Unpublished Opinion No. 2004-UP-284 Submitted April 6, 2004 – Filed April 29, 2004 AFFIRMED Henrietta U. Golding, of Myrtle Beach, for Appellant. Randall J. Trost, of Lynchburg, Virginia, for Respondent. PER CURIAM: Sea Mark Tower Property Owners Association, Inc. (“Association”) appeals the Master-in-Equity’s decision ordering it to reinstall the awnings over the balconies of the penthouse units in the Sea Mark Tower Horizontal Property Regime (“Regime”). We affirm. FACTS The Regime was established in December of 1994 and Sea Mark Tower was built in 1985. At the time of building construction, awnings were installed over the balconies of the two penthouse units. There have been numerous problems with water intrusion into the building for years. In 1998, the Association hired Law Engineering and Environmental Securities, Inc. to assess the building’s structural integrity and identify the reasons for water leakage problems with the building. Although the Law Engineering reports revealed water leakage problems from roofs, windows, and the stucco, they did not state that the penthouse awnings were sources of any water leakage. Upon receiving the Law Engineering reports, the Association hired Glasstec, a waterproofing company, to correct the water leakage problems. In order to waterproof the walls and floors of the penthouse balconies, Glasstec removed the awnings and awning structures. Glasstec refused to provide a warranty on its work if the awning structures were replaced through its waterproofing. Randall Trost, the owner of penthouse unit 1201 demanded the awning be replaced. The Board offered to restore the awnings, but only if Trost took responsibility for any subsequent leakage. Trost refused. The awnings have not been restored to their original position. Trost filed this action against the Association seeking an injunction requiring the Association to replace the awning structures on the balconies and refrain from interfering with the awnings in the future. The master determined the penthouse awnings were limited common elements and their removal by the Association was an ultra vires act. The master ordered the Association to pay for all expenses and damages from the awnings’ removal and to pay for their reinstallation. This appeal followed. STANDARD OF REVIEW Actions for injunctive relief are equitable in nature. Godfrey v. Heller, 311 S.C. 516, 517, 429 S.E.2d 859, 860 (Ct. App. 1993). On appeal, in an action in equity, tried by a master alone, this court may find facts in accordance with its views of the preponderance of the evidence. Tiger, Inc. v. Fisher Agro, Inc., 301 S.C. 229, 237, 391 S.E.2d 538, 543 (1989); Townes Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976). This broad scope of review, however, does not require this court to disregard the findings of the master, who saw and heard the witnesses and was in a better position to evaluate their credibility. Tiger, 301 S.C. at 237, 391 S.E.2d at 543. LAW/ANALYSIS I. Limited Common Elements Designation Appellant argues the master erred in finding the penthouse awnings are limited common elements. We disagree. The master deed of a horizontal property regime should be strictly enforced. Kneale v. Bonds, 317 S.C. 262, 267, 452 S.E.2d 840, 842 (Ct. App. 1994). Under the Regime’s master deed, the Regime consists of units, general common elements, and limited common elements. The master deed defines each unit as “the interior cubic space, fixtures, appliances, furnishings, walls, floors, ceilings, and building material enclosed within” the unfinished surface of the structural slab of the ceiling and floor and the unfinished interior surface of the perimeter walls, except for load bearing walls, which are common elements. The unit also includes “all appurtenances which are integral and exclusive to the Unit, including but not limited to lamps attached to the exterior of the Unit . . .” The master deed does not include such a detailed description of what constitutes a limited common element. According to the Horizontal Property Act, limited common elements are “those common elements which are agreed upon by all the co-owners to be reserved for the use of a certain number of apartments to the exclusion of the other apartments . . .” S.C. Code Ann. § 27-31-20(g) (1991). Although the master deed does not include a definition of limited common elements, Exhibit B of the master deed provides that “the balcony or balconies adjacent to each unit, including the railing adjacent to the same, is a limited common area and is subject to the restrictions and requirements as are set out elsewhere in this master deed.” We find a strict construction of the master deed supports the master’s ruling the awnings are limited common elements. There is no language in the deed to support the Association’s contention that the awning is part of the unit. The deed confines the unit to the area within the four walls, ceiling and floor, with the exception of the specifically mentioned exterior lamp. In contrast, the deed does provide support for Trost’s assertion that the awnings are limited common elements by providing the balconies are limited common elements. It can hardly be said that the balconies are limited common elements, yet the awnings that hang over them are not. In addition, the testimony presented during trial supports the master’s conclusion that the awnings are limited common elements. Sandy Kelly, the president of the Association testified that in 1999 the Association’s Board of Directors had concluded the awnings were common elements of the Regime. Three witnesses involved in the development, design, and construction of Sea Mark Tower also confirmed the awnings were limited common elements. Kit Christopher, Sea Mark Tower’s developer and original owner of unit 1201 testified the awnings were intended to be an “architectural feature” of the building. George Howell, designer of Sea Mark Tower, testified the awnings were included as part of the original design on construction drawings for the building, and were intended to enhance the overall appearance and attractiveness of the building. Tom Roe, also an original developer of Sea Mark Tower, Roe testified it was the intent of developers that the awnings be common elements or limited common elements when they were installed. He declared, “I signed the Master Deed. I was on the original Board. I’ve served as Treasurer and President. And there was never any question in my mind . . . about the nature of those awnings.” Based on the above, we find the master properly concluded the penthouse awnings were limited common elements. II. Removal of the Penthouse Awnings The Association argues that because the master designated the penthouse awnings to be limited common elements, he erred in finding the removal of the penthouse awnings was beyond the Association’s authority. We disagree. The board of directors of a horizontal property regime may exercise only those powers that are granted to it by law, its master deed, and by any bylaws made pursuant thereto. See S.C. Code Ann. § § 27-31-100 and 37-31-150 (1991); Seabrook Island Prop. Owners Ass’n v. Pelzer, 292 S.C. 343, 347, 356 S.E.2d 411, 414 (Ct. App. 1987). Any act beyond the scope of the powers so granted is ultra vires. Seabrook, 292 S.C. at 347, 356 S.E.2d at 414. In addition, the allocation of a limited common element may not be altered without the consent of the unit owners whose units are affected. 15A Am. Jur. 2nd Condominiums § 30 (2000). Section XVIII of the master deed states: The Association shall have the right to make or cause to be made such alterations, modifications and improvements to the common elements, provided such alterations, modifications or improvements are first approved in writing by the Board of Directors of the Association; provided further that such alterations, modifications or improvements do not adversely affect the value of the Common Elements or Units in the Regime and the cost of such alterations, modifications or improvements shall be assessed as common expenses . . . . [1] Clearly, the master deed does not grant the Association express power to remove the awnings. As the awnings are limited common elements the Association only has authority under section XVIII of the master deed to alter, modify, or improve them. The master deed does not grant the Association the power to permanently remove a limited common element. In fact, Article XX of the master deed mandates that the Association shall be responsible for the maintenance, repair, and replacement of all the common elements. Furthermore, Article XVIII of the master deed only allows alterations, modifications, and improvements to common elements that do not adversely affect the value of the common elements or units. Removing the awnings rendered them completely worthless. In addition, other common elements and units were adversely affected. For example, removal of the awnings affected the architectural appearance of the building and the ability of the penthouse units’ air conditioning systems to adequately cool the units. Accordingly, the permanent removal of the awnings was in contravention of Article XVIII. The Association asserts it was fulfilling its obligation under the master deed to repair the regime property by deciding to not replace the awnings, which it claims were a source of water intrusion. There is no evidence in the record demonstrating the penthouse awnings were a source of water leakage. The Law Engineering reports did not indicate the penthouse awnings contributed to the water leakage. A previous Board member, Thomas Roe, testified that he and others attempted to locate water leaks by hosing down the balcony of unit 1201. However, they were unsuccessful in tracing any leakage to the awnings. In addition, although Ron Weaver of Glasstec testified the awning framework would jeopardize the integrity of the waterproofing, he acknowledged that proper sealing would have been sufficient to prevent any leakage. Thus, simple repair and maintenance, which is required under the master deed, was sufficient. As the master deed must be strictly enforced, we find the Association only had the power to repair and maintain, not permanently remove, the penthouse awnings. Accordingly, the Association was acting beyond the scope of its authority in deciding against reinstalling the awnings after work was completed on the balconies. III. Business Judgment Rule The Association argues its decision to remove the penthouse awnings is protected by the business judgment rule. We disagree. The business judgment rule only applies to intra vires acts, and not to ultra vires acts. Seabrook Island Prop. Owners Ass’n v. Pelzer, 292 S.C. 343, 348, 356 S.E.2d 411, 414 (Ct. App. 1987). The Association was only permitted to act in accordance with the law or the master deed; any act outside the scope of its power was an ultra vires act. See Kuznick v. Bees Ferry Assocs., 342 S.C. 579, 605, 538 S.E.2d 15, 28 (Ct. App. 2000). As we held above, the master deed did not grant the Association the power to permanently remove the awnings. As the removal of the awnings was an ultra vires act, the Association is not protected by the business judgment rule. CONCLUSION Based on the above, we find the penthouse awnings are limited common elements. We further find Appellant was without power to permanently remove the awnings and its decision to remove them was not protected by the business judgment rule. Accordingly, the decision of the lower court is AFFIRMED. HUFF, STILWELL, and CURETON, A.J., concur. [1] The master deed provides, “The General Common Elements and the Limited Common Elements are hereinafter occasionally collectively referred to as “the Common Elements.”