Master v. Country Club of Landfall

823 S.E.2d 115

Michael C. MASTER, and Wife, Virginia A. Master, Plaintiffs,

v.COUNTRY CLUB OF LANDFALL, a North Carolina Non-Profit Corporation, Defendant.

No. COA18-215

Court of Appeals of North Carolina.

Filed: December 18, 2018

Shipman & Wright, LLP, by Gary K. Shipman, Wilmington, for plaintiffs.

Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., by Steven M. Sartorio, Raleigh, and Ward and Smith, P.A., by Ryal W. Tayloe, Wilmington, for defendant.

BERGER, Judge.

Michael Master ("Mr. Master") and Virginia Master ("Mrs. Master") (collectively, "Plaintiffs") sued Country Club of Landfall (the "Club") for terminating Plaintiffs' country club membership. Plaintiffs appeal from the trial court’s denial of their motion for partial summary judgment and grant of the Club’s motion for summary judgment, which dismissed all of Plaintiffs' claims with prejudice. Plaintiffs contend that the trial court erred in granting summary judgment in the Club’s favor because the Club failed to follow its own internal rules and provide Plaintiffs with adequate notice and an opportunity to be heard before an impartial panel. We disagree and affirm the trial court.

Factual and Procedural Background

The Club is a private golf club, organized as a nonprofit corporation under North Carolina law, with the majority of its members residing and owning property within the Landfall community. Plaintiffs purchased property in the Landfall community because of the Club and became members in 2013. Plaintiffs acknowledged that they held a single, family membership rather than two individual memberships and that they were subject to the Club’s governing bylaws (the "Bylaws") and rules and regulations (the "Rules & Regulations").

According to the Club’s Bylaws, when spouses jointly own a family club membership, "[t]he action of either spouse with respect to the Membership shall be binding on the other" and the Club is not required to "notify or obtain the consent of both spouses." Section 3.12 of the Bylaws, states, in relevant part, that the Club’s Board of Directors (the "Board") "may institute disciplinary action against any Member ... for Good Cause." "Good Cause" is defined as

conduct by a Member ... which the Board or its designee determines, in its sole discretion, to be detrimental to the interests, welfare, safety, well-being and harmony of the Club, its Members or employees; breach of the Club Rules; harassment or abuse, verbal or physical, of Club personnel or other person using the Club Facilities; and such other reasons as the Board shall determine to constitute Good Cause.

The Bylaws further state that the Board

shall establish in its Rules and Regulations a procedure for disciplinary action which shall include a written notice to the Member ... setting forth the charges, provisions for a fair hearing by the Board or a Committee appointed by the Board, and a written notice of the Board’s final determination. The Board upon a vote of at least sixty percent (60%) may impose such sanctions as it deems appropriate, including, but not limited to, monetary fines, reprimand, temporary suspension of privileges, or termination of Memberships.

The Club’s Rules & Regulations dictate the procedural rules for conducting a disciplinary action against a member. Article VII of the Rules & Regulations state, in relevant part:

7.1 The General Manager and the staff are responsible to the Board of Directors for implementing and administrating the Club Rules & Regulations and reporting rules violations to the Rules and Members Committee [ (the "R & M Committee") ] as appropriate. The [R & M] Committee shall investigate each violation of Club Rules & Regulations presented to it by the Club staff or a Member.

7.2 If there is sufficient evidence of a violation of Club Rules & Regulations, and/or By-Laws, the [R & M] Committee may, by majority vote, issue a warning letter to the member or recommend to the Board such appropriate disciplinary action as it sees fit, including but not limited to ... termination of the offending Member’s membership at the Club.

7.3 Should the [R & M] Committee recommend to the President of the Board any one or more of the following disciplinary actions: ... [including] termination of the offending Member’s membership at the Club; or any other disciplinary action, other than a warning letter, a Hearing Panel shall be formed to consider the report and recommendations of the [R & M] Committee; hold a hearing to receive both oral and written evidence and comment from the offending member; and render a final decision on the appropriate disciplinary action the offending member will receive. The Hearing Panel shall be composed of four (4) members of the Board appointed by the President and three (3) members of the [R & M] Committee appointed by the Committee Chairman. The President shall appoint the Chairman of the Hearing Panel from one of the Board members appointed to the Panel. The Chairman shall, as soon as practicable, notify the offending member, by mail or email, of the alleged violations to be considered by the Hearing Panel and the date of the hearing before the Hearing Panel when he or she may present both oral and written evidence and comment regarding the alleged violations. After considering the report and recommendations of the [R & M] Committee; the evidence and comment from the offending member; and any and all other evidence which the Hearing Panel may consider relevant, the Hearing Panel shall by a vote of at least 60% approval impose such disciplinary actions as it deems appropriate. The decision of the Hearing Panel is final and the President shall provide written notice of the decision to the member.

While the R & M Committee members were selected from the Club’s active members, no R & M Committee member simultaneously served as both a member of the Board and R & M Committee at the relevant time.

When read together, it appears that Section 3.12 of the Bylaws and Section 7.3 of the Rules & Regulations seems to conflict. Section 3.12 of the Bylaws state that the Board makes the final disciplinary determination, while Section 7.3 of the Rules & Regulations dictate that a disciplinary "decision of the Hearing Panel is final." However, the parties agree that later-adopted Rules & Regulations, which substituted the Hearing Panel for the Board as the final arbiter in disciplinary decisions, governed.

In addition to the Club’s Bylaws and Rules & Regulations, Plaintiffs contend that the Club was also governed by the R & M Committee’s Standard Operating Procedures (the "Operating Procedures"). However, these Operating Procedures were never approved by the Board or made a part of the governing documents of the Club.

In the fall of 2014, the Board decided to make significant changes to the Bylaws, some of which would monetarily affect certain members. From February 14, 2015 until the proposed changes were ultimately defeated on April 2, 2015, Mr. Master sent a series of emails to other club members, arguing the proposed changes were unethical and immoral.

After several club members complained to the Board and the Club’s General Manager regarding Mr. Master’s emails, his actions were referred to the Club’s R & M Committee. According to the affidavit of Ron Conway ("Conway"), who was a member of the Board and served as the liaison between the Board and the R & M Committee, the R & M Committee reviewed Mr. Master’s emails during their March 2015 meeting and concluded that

Mr. Master had engaged in a pattern of sending emails using nasty, insulting, mean-spirited and inflammatory language that was calculated to create confrontation and turmoil between Club members and to undermine the membership’s trust in its Board.... [and] that Mr. Master’s references to Hitler, Barabbas, Jesus and slavery were insulting and inappropriate and had no place within the Club.

At the conclusion of their March 2015 meeting, the R & M Committee communicated to the Club’s President, Mike Giblin ("President Giblin") their unanimous recommendation to terminate Mr. Master’s family membership.

Based on this recommendation and in accordance with the Club’s Rules & Regulation, President Giblin referred the matter to a hearing panel (the "Hearing Panel"). He also appointed members to the Hearing Panel in accordance with the Club’s Rules & Regulations.

On April 2, 2015, Conway sent a letter to Mr. Master informing him that several members had complained to the Board regarding Mr. Master’s emails. Conway’s letter claimed that Mr. Master’s emails and conduct were "detrimental to the well-being and harmony of the Club to an egregious degree," and informed Mr. Master that a hearing would be held on April 15, 2015 to assess the matter and impose any applicable sanctions. The letter also invited Mr. Master to present evidence to defend himself at the hearing.

Mr. Master requested the hearing be rescheduled for personal reasons, and the date was changed to May 25, 2015. However, on April 28, 2015, Conway notified Mr. Master by mail and email that his hearing date would have to be rescheduled again to May 8, 2015. Mr. Master claimed that he first learned that the May 8, 2015 hearing was rescheduled on May 5, 2015.

Plaintiffs did not attend the May 8, 2015 hearing, but their attorney did attend. After stating that he was prepared to move forward with the hearing in Plaintiffs' absence, Plaintiffs' counsel did not ask any members to recuse themselves, but argued for suspension of privileges rather than termination of membership. The Hearing Panel voted to terminate Mr. Master’s family membership, and Mr. Master was mailed a letter notifying him of the decision.

Plaintiffs brought this action against the Club on October 12, 2015, claiming breach of contract and seeking a declaratory judgment. The Club filed its answer along with a motion to dismiss on December 16, 2015. On July 6, 2017, Plaintiffs moved for partial summary judgment. The Club filed an amended answer and moved for...