This case involved an issue as to whether or not two homeowners associations who brought suit against the City of Charlotte and others had standing to bring the action because the filing of the lawsuit had not been done in accordance with the associations’ governing documents. The two associations, representing the homeowners in two residential communities, filed the initial action in pursuit of a declaratory judgment that a zoning ordinance which permitted multifamily housing on parcels of land that abutted property owned by the associations was invalid.
Both the trial court and the court of appeals held that the associations lacked standing to bring the action because they had both failed to strictly comply with the corporate bylaws in connection with the filing of the action. Specifically, the lower courts determined that the authority of each of the two associations to file the action had not been explicitly authorized by action of the associations’ board s of directors acting at a valid meeting where a quorum of the directors had been present as required by the association’s bylaws.
The Supreme Court reversed the trial and appellate court decisions in holding that a showing of strict compliance by the associations with the provisions contained in their bylaws relative to authority for filing suit was not necessary to satisfy the court’s requirements of standing to commence the action. The Supreme Court stated that, “Nothing in our jurisprudence on standing requires a corporate litigant to affirmatively plead or prove its compliance with corporation bylaws and internal rules relating to its decision to bring suit.” The Court further stated that a defendant who is a stranger to an association cannot invoke the association’s own internal governance procedures as an absolute defense to subject matter jurisdiction in a suit filed by the association against the defendant. The proper parties to challenge such action by the association(s) would be the members of the association who are vested with the ability to seek a stay or dismissal of the action if they so choose. In short, the Supreme Court found that Non-Members cannot challenge HOA.
N.C. Supreme Court decision (March 2, 2018)
View Court Case Decision:Willowmere_Cmty._Ass’n_Inc._v._City_of_Hous._(N.C._2018)1