Buena Vista Lakes Maint. Ass'n, Inc. v. Jones

378 So.3d 982

BUENA VISTA LAKES MAINTENANCE ASSOCIATION, INC., Appellant

v.Kyle R. JONES, Appellee

NO. 2022-CA-01153-COA

Court of Appeals of Mississippi.

01/23/2024

DESOTO COUNTY CHANCERY COURT, HON. VICKI B. DANIELS, JUDGE

ATTORNEY FOR APPELLANT: DEREK EVAN WHITLOCK

ATTORNEY FOR APPELLEE: M. W. ZUMMACH, Walls

BEFORE WILSON, P.J., LAWRENCE, AND McCARTY, JJ.

LAWRENCE, J., FOR THE COURT:

¶ 1. The Buena Vista Lakes Maintenance Association Inc. (Buena Vista) is a nonprofit organization in DeSoto County, Mississippi, that is governed by its homeowner’s association (HOA). The HOA is governed by its bylaws, which provide that the bylaws may be amended by a two-thirds majority vote. On October 4, 2021, the HOA held its annual meeting where it was to vote on an amendment to the bylaws. The effect of this proposed amendment, Article XX, was to ban property owners from leasing their property for any duration. On the day of the meeting, there were 399 eligible votes, but only 206 of those votes were represented at the meeting, either in-person or by proxy. After determining that a quorum was present, the board proceeded with the meeting and discussed Article XX. During this discussion, plaintiff Kyle Jones, a property owner and member of the HOA, voiced his opposition to the board’s interpretation of the bylaws and argued that a vote to amend the bylaws required a two-thirds majority of all eligible votes and not a two-thirds majority of those votes cast at the meeting. The board disagreed and maintained that a two-thirds majority, as provided in the bylaws, was two-thirds of the eligible votes cast. Out of 206 total votes cast, 138 votes were cast in favor of Article XX, and 68 were cast against it. The board declared that 138 was exactly two-thirds of 206, and Article XX was adopted as Amendment XX.

¶2. Shortly thereafter, Jones filed a complaint in DeSoto County Chancery Court requesting a declaratory judgment that the voting procedure the board used was invalid. Jones argued that Amendment XX required a two-thirds vote of all votes eligible to be cast, not merely a two-thirds vote of those cast at the meeting. After a trial, the chancellor found the vote was invalid because the bylaws were ambiguous and determined that the intent of the drafters of the bylaws was to require a two-thirds majority of all votes eligible to be cast, not just those cast at the meeting. She further found that Amendment XX was invalid for public policy reasons. Buena Vista appeals arguing that the chancellor erred in finding the bylaws ambiguous and in finding Amendment XX violated public policy. We conclude the bylaws are not ambiguous, and their plain language comports with Buena Vista’s interpretation. Accordingly, we reverse the chancellor’s order and remand the case.

FACTS AND PROCEDURAL BACKGROUND

¶3. Buena Vista is a residential subdivision with an active HOA and bylaws,¹ which were enacted upon the HOA’s incorporation in 1968. Amendments to the bylaws are addressed in Article V, Section 3 of the bylaws, which provide the following:

At all meetings of the members, 25% of the votes eligible to be cast shall constitute a quorum, and a majority of the members present shall decide any questions at all meetings except on the question of:

1. Change of lot Assessments, which requires a favorable vote of a majority of the votes eligible to be cast by the members of the Association,

2. Expulsion of members for any reason, and

3. Amending By-Laws, requires a two-thirds (2/3) vote.

(Emphasis added). Amendments are further discussed in Article XV of the bylaws, which provides:

By-Laws may be amended by a two-thirds (2/3) vote, a quorum being present, at any annual or special meeting called for that purpose.

(Emphasis added). The front page of the bylaws notes the following for guidance:

NOTE: "Two-thirds (2/3) vote" - as per Robert’s Rules of Order and as required by the U.S. Constitution and used by Congress.

(Emphasis added). Robert’s Rules of Order ("Robert’s Rules) provides the following clarification:

Two-thirds Vote. A two-thirds vote means two-thirds of the votes cast, ignoring blanks which should never be counted. This must not be confusedwith a vote of two-thirds of the members present, or two-thirds of the members, terms sometimes used in bylaws. To illustrate the difference: Suppose 14 members vote on a question in a meeting of a society where 20 are present out of a total membership of 70, a two-thirds vote would be 10; a two-thirds vote of the members present would be 14; and a vote of two-thirds of the members would be 47.

(Emphasis added). The footnotes contained in the bylaws illustrate past examples of bylaw amendments and how previous boards have interpreted this "2/3 vote" requirement. For example, page 3 of the bylaws indicates that a deletion of a provision regarding corporate ownership was approved by "2/3 of votes cast (206 of 303 votes)." (Emphasis added). Another amendment, which changed the day for the annual meeting from Friday to Monday, was approved by "2/3 of votes cast (265 of 312 votes)." (Emphasis added). Page 4 of the bylaws indicates that an amendment as to who is eligible to serve on the board of directors was approved by "2/3 of votes cast (280 of 295 votes)." (Emphasis added). Page 5 shows an entire provision regarding corporate membership was deleted by "2/3 of votes cast (273 of 295 votes)." (Emphasis added). Page 10 contains an amendment that deleted a portion of the provision pertaining to a waiver of dues for lots A, B, and C, which was approved by "2/3 of votes cast (276 of 295 votes)." (Emphasis added).

¶4. On August 31, 2021, the HOA mailed notices of its annual meeting to take place on October 4, 2021. Each notice indicated that the meeting agenda included a vote on three individual items. One of those items was the proposed amendment to the bylaws at issue, Amendment XX, or the "Property Value Protection Bylaw," which would ban new rentals in the Buena Vista subdivision. The notice provided that per the bylaws, 25% of all eligible votes would constitute a quorum. The notice also included the following language:

A majority of the members present shall decide any questions at all meetings, except (1) Change of lot assessments, which requires a favorable vote of a majority of the votes eligible to be cast by members of the Association (2) expulsion of members for any reason and (3) amending bylaws, which requires a two-thirds (2/3) vote.

(Emphasis added).

¶5. On October 4, 2021, the annual meeting took place. On this day, testimony showed there were 399 eligible votes.² Of them, 206 votes were represented at the meeting either in-person or by proxy. A quorum was established per the bylaws because 206 votes were well over the requisite 25% of the 399 eligible votes. Before the vote on Amendment XX, the HOA president, Nevill Plunk, led a "robust" discussion during which plaintiff Kyle Jones voiced his opposition to the HOA board’s interpretation of the bylaws and argued that a vote to amend the bylaws required two-thirds majority of all votes eligible to be cast, not a two-thirds majority of those actually cast at the meeting. The board found otherwise and, in doing so, relied on a legal opinion from its attorney, dated January 20, 2012, stating that a two-thirds majority as provided in the bylaws was understood to be two-thirds of the eligible votes cast. One hundred thirty-eight votes were cast in favor of Amendment XX, and 68 votes were cast against it. Finding that 138 was exactly two-thirds of 206 (the number of eligible votes cast) the board declared that Article XX had passed.

¶6. On or about October 18, 2021, Jones filed suit in the DeSoto County Chancery Court. In his complaint, Jones asserted "that there was an illegitimate and void vote of the HOA as a result of a misinterpretation of the Bylaws of the HOA" and that the vote required "two-thirds (2/3) vote of all eligible votes of members of the HOA, and not two-thirds (2/3) of those present and comprising a quorum at a meeting." Jones asked the court to "issue a Declaratory Judgment that the proper voting procedure for any matters which may become before the HOA pursuant to the HOA’s By-Laws require the affirmative vote of two-thirds (2/3) of all members and owners of the HOA and not only the affirmative vote of two-thirds (2/3) of those members who may be present at a meeting in which a quorum may be present."³ Jones attached a copy of the bylaws to his complaint. Buena Vista filed a motion to dismiss, which the court denied.⁴ On October 7, 2022, Buena Vista filed its answer to Jones’s complaint, denying all allegations.

¶7. On October 12, 2022, the trial was held. Jones called his first witness, Nevill Plunk. Plunk testified he was the president of the HOA and that he had been serving in this capacity since 2017. Jones’s counsel asked Plunk if he was familiar with Buena Vista’s website. He responded, "Somewhat." Jones’s counsel handed Plunk a printed page from Buena Vista’s website. Plunk indicated he had read the contents of that page in the bylaws. The website printout was then marked as an exhibit and entered into evidence.

¶8. Jones’s counsel asked Plunk about the notice that was mailed to homeowners regarding the October 4, 2021 annual meeting. Plunk stated that this notice was mailed to all 447 lot owners to "provide a synopsis of what will take place at the meeting" and to set forth the voting standards for whatever issue was being voted on "per the [bylaws]." Plunk confirmed that an "eligible voter," as stated in the notice, was a "paid-up member" and that this member was "entitled to one vote for each lot in which they hold the interest required for membership." The notice further provided that "Amending [the] bylaws … requires [a] two-thirds vote." The notice was then marked as an exhibit and entered into evidence.

¶9. Plunk testified that the amended⁵ meeting minutes indicated that there were "399 eligible members with 206 eligible...