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Long Branch Maint. Corp. v. Adams

Court of Appeals of Iowa

February 5, 2014

NICOLE ADAMS, Defendant-Appellee

Editorial Note:

This decision has been referenced in a "Decisions Without Published Opinions" table in the North Western Reporter.

Appeal from the Iowa District Court for Guthrie County, Martin L. Fisher, Judge. Long Branch Maintenance Corporation appeals the denial of its claim for membership dues from Nicole Adams.

Louis R. Hockenberg and Elizabeth N. Overton of Sullivan & Ward, P.C., West Des Moines, for appellant.

Joel Baxter of Wild, Baxter & Sand, P.C., Guthrie Center, for appellee.

Heard by Potterfield, P.J., and Doyle and Bower, JJ.



Long Branch Maintenance Corporation appeals[1] the denial of its claim for membership dues and assessments from Nicole Adams. Because the district court did not err in concluding a prior small claims ruling had no preclusive effect on the current small claims proceedings, and further, did not err in interpreting the corporation's bylaws and membership agreement, we affirm.

I. Background Facts and Proceedings.

Long Branch Maintenance Corporation (LBMC) is an entity organized " [t]o encourage the betterment, cleanliness, maintenance and beautification of the Diamondhead Lake Development situated in Guthrie County, Iowa, and to further the participation in enjoyment of recreational facilities and to promote other services for the benefit of the members of LBMC."

Nicole Adams purchased property in the Diamondhead Lake area in 2003. On February 20, 2003, Adams signed a membership agreement, which begins, " The undersigned, hereinafter referred to as " member," being an eligible member in the [LBMC] does hereby agree with corporation as follows, and by execution of this Agreement becomes a qualified member of the corporation pursuant to the Articles of Incorporation and By-Laws of the corporation." Adams further agreed to " participate as a qualified member in corporation [LBMC] pursuant to corporation's Articles and By-Laws." The membership agreement also provided:

Member agrees that the real estate of each member located in Happy Acres/Diamondhead Lake Development, described herein under the signature of member, shall be subject to an annual assessment and said assessment shall be a lien in favor of corporation on member's interest in and said real estate if not paid when due. Said annual assessment shall be due annually, payable at such time as the corporation By-Laws direct.

Article III, section 1 of the LBMC Rulebook & Bylaws provides:

All lot owners and all contract buyers in the Diamondhead Lake Development located in Guthrie County, Iowa shall be eligible for membership in this corporation. Said eligible members may become duly qualified members of the corporation upon their execution of the membership agreement, which agreement shall bind them in certain responsibilities to the corporation when recorded in Guthrie County, Iowa and all subsequent purchasers from said duly qualified members shall automatically become members in place of the member/seller upon recording in Guthrie County, Iowa of the instrument of sale. Within ten (10) days of property ownership change, written notice must be submitted to LBMC.

On October 17, 2011, LBMC filed a small claims action against Adams, demanding $3720.76 plus attorney fees and costs " based on [Adams's] failure to pay [her] delinquent dues, assessments, and other fees as required by Iowa Code Chapter 91A [(2011)]." [2] Adams filed an answer denying the claim and making a counterclaim.

LBMC Lake Director Ed Eustice testified at the small claims proceeding the litigation was based on Adams being a qualified member of LBMC. Eustice testified Adams had been delinquent in paying dues, fees, assessments, and late charges since July 2009. He stated the amount Adams owed LBMC as of April 1, 2012, was $4647. He also asked the court to assess interest and attorney fees as provided by the bylaws. Eustice stated LBMC had filed a prior small claims action for dues and Adams had countersued, which action was resolved in July 2010 in favor of LBMC. On cross-examination, Eustice testified Adams' membership agreement had not been recorded with Guthrie County. Eustice stated that because Adams was not current with payments, she did not have access to the amenities of the lake development, though she did use the roads maintained by LBMC.

Adams acknowledged signing the membership agreement. Adams testified she did not get LBMC statements like the one provided to the court. Adams acknowledged an earlier small claim proceeding had resulted in a judgment against her. However, when asked if the court in that earlier proceeding had found her to be a member since 2003, she stated, " I don't know, that was never argued." She testified she was not allowed to enter exhibits in the prior small claims action. Adams testified the LBMC Rulebook and Bylaws distinguishes between a member and a qualified member.[3] She also testified some of the charges that were included in the statement presented to the magistrate as exhibit 1 had already been included in the earlier judgment. She testified she did not receive information from LBMC about the budget, dues, and assessments other than an invoice, and she did not receive notice about member meetings.

The magistrate asked the parties to brief the issue of how a member became a duly qualified member of LBMC. In post-trial briefs, Adams argued the recording of the member's membership agreement was a condition precedent to becoming a qualified member; LBMC argued Adams was automatically a member as a subsequent purchaser. In rebuttal, Adams argued there was no evidence presented that she purchased property from a duly qualified member.

The magistrate ruled Article III, section 1 of the LBMC Rulebook and Bylaws contained a condition precedent to Adams becoming a qualified member of LBMC--the recording of her membership agreement. Because Adams's membership agreement was not recorded, Adams was not a qualified member of LBMC and, " therefore not subject to suit under the terms of the membership agreement or [LBMC's] Bylaws." The magistrate concluded it was " not bound by prior findings, ...

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