Master v. Country Club of LandfallÂ

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA18-215
Filed: 18 December 2018
New Hanover County, No. 15 CVS 3664
MICHAEL C. MASTER, and Wife, VIRGINIA A. MASTER, Plaintiffs,
v.
COUNTRY CLUB OF LANDFALL, a North Carolina Non-Profit Corporation,
Defendant.
Appeal by plaintiffs from judgments entered 16 August 2017 by Judge John E.
Nobles, Jr. in New Hanover County Superior Court. Heard in the Court of Appeals
6 September 2018.
Shipman & Wright, LLP, by Gary K. Shipman, for plaintiffs.
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., by Steven M.
Sartorio and Ward and Smith, P.A., by Ryal W. Tayloe, 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
MASTER V. COUNTRY CLUB OF LANDFALL
Opinion of the Court
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.
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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
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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
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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
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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.
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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 summary judgment to dismiss all claims against the Club. After hearing
arguments on the parties’ cross-motions for summary judgment, the trial court
entered an order on August 16, 2017, denying Plaintiffs’ motion and granting
summary judgment in favor of the Club. Plaintiffs timely appealed.
Standard of Review
“We review a trial court’s order granting or denying summary judgment de
novo.” Variety Wholesalers, Inc. v. Salem Logistics Traffic Services., LLC, 365 N.C.
520, 523, 723 S.E.2d 744, 747 (2012) (citation omitted). Summary judgment is
appropriate “if the pleadings, depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any, show that there is no genuine issue as to
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any material fact and that any party is entitled to a judgment as a matter of law.”
N.C. R. Civ. P. 56(c). “A genuine issue of material fact has been defined as one in
which the facts alleged are such as to constitute a legal defense or are of such nature
as to affect the result of the action . . . .” Smith v. Smith, 65 N.C. App. 139, 142, 308
S.E.2d 504, 506 (1983) (citation and quotation marks omitted). “All facts asserted by
the adverse party are taken as true, and their inferences must be viewed in the light
most favorable to that party.” Variety Wholesalers, Inc., 365 N.C. at 523, 723 S.E.2d
at 747 (citation and quotation marks omitted).
Analysis
Plaintiffs argue 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.
North Carolina’s Nonprofit Corporation Act states that “[n]o member of a
corporation may be expelled or suspended, and no membership may be terminated or
suspended, except in a manner that is fair and reasonable and is carried out in good
faith.” N.C. Gen. Stat. § 55A-6-31(a) (2017). However, Section 55A-6-31(a) “does not
require a country club’s board of directors, in all situations, to provide a member with
prior notice and an opportunity to be heard regarding the termination of a
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membership.” Emerson v. Cape Fear Country Club, Inc., ___ N.C. App. ___, ___, 817
S.E.2d 402, 404 (2018).
Moreover, “[i]t is well established that courts will not interfere with the
internal affairs of voluntary associations. A court, therefore, will not determine, as a
matter of its own judgment, whether a member should have been suspended or
expelled.” Wilson Realty & Constr., Inc. v. Asheboro-Randolph Bd. of Realtors, Inc.,
134 N.C. App. 468, 470, 518 S.E.2d 28, 30 (1999) (purgandum1). Thus, “when a
plaintiff challenges a voluntary organization’s decision, the case will be dismissed as
non-justiciable unless the plaintiff alleges facts showing (i) the decision was
inconsistent with due process, or (ii) the organization engaged in arbitrariness, fraud,
or collusion.” McAdoo v. Univ. of N.C. at Chapel Hill, 225 N.C. App. 50, 72, 736 S.E.2d
811, 825 (2013) (citation and quotation marks omitted). Here, Plaintiffs have not
argued that the Club’s decision to terminate their family membership was arbitrary,
fraudulent, or collusive. Therefore, our review is limited to whether the Club’s
decision was inconsistent with due process.
“Private voluntary organizations are not required to provide their members
with the full substantive and procedural due process protections afforded under the
1 Our shortening of the Latin phrase “Lex purgandum est.” This phrase, which roughly
translates “that which is superfluous must be removed from the law,” was used by Dr. Martin Luther
during the Heidelberg Disputation on April 26, 1518 in which Dr. Luther elaborated on his theology
of sovereign grace. Here, we use purgandum to simply mean that there has been the removal of
superfluous items, such as quotation marks, ellipses, brackets, citations, and the like, for ease of
reading.
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United States and North Carolina constitutions.” McAdoo, 225 N.C. App. at 72, 736
S.E.2d at 825-26 (emphasis added); see also NCAA v. Tarkanian, 488 U.S. 179, 191
(1988) (“Embedded in our Fourteenth Amendment jurisprudence is a dichotomy
between state action, which is subject to scrutiny under the Amendment’s Due
Process Clause, and private conduct, against which the Amendment affords no shield,
no matter how unfair that conduct may be.” (citation omitted)). Rather, private
associations are usually only required to “(i) follow their own internal rules and
procedures, and (ii) adhere to principles of fundamental fairness by providing notice
and an opportunity to be heard.” McAdoo, 225 N.C. App. at 72, 736 S.E.2d at 826
(citations and quotation marks omitted).
First, to determine whether a private association followed its own internal
rules and procedures, courts look to the association’s “duly adopted laws.” Id. at 71,
736 S.E.2d at 825. Because “the charter and bylaws of an association may constitute
a contract between the organization and its members wherein members are deemed
to have consented to all reasonable regulations and rules of the organization,”
traditional rules of contract interpretation apply when assessing whether the
voluntary association followed its own internal rules and procedures. Gaston Bd. of
Realtors, Inc. v. Harrison, 311 N.C. 230, 237, 316 S.E.2d 59, 63 (1984). “[W]hen the
language of a contract is clear and unambiguous, the court must interpret the
contract as written. . . .” Root v. Allstate Ins. Co., 272 N.C. 580, 583, 158 S.E.2d 829,
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832 (1968) (citation omitted). “The heart of a contract is the intention of the parties,”
so the trial court must “seek to determine the intention of the parties as shown by the
whole written instrument.” Id. (citation and quotation marks omitted).
Second, when assessing whether the voluntary association “adhere[d] to
principles of fundamental fairness by providing notice and an opportunity to be
heard,” it is vital to remember that “[p]rivate voluntary organizations are not
required to provide their members with the full substantive and procedural due
process protections afforded under the United States and North Carolina
constitutions.” McAdoo, 225 N.C. App. at 72, 736 S.E.2d at 825-26 (emphasis added).
As previously discussed, this Court recently “decline[d] to hold that prior notice
or a participatory hearing is a per se requirement in all cases in order for a nonprofit
corporation to comply with the ‘fair and reasonable and . . . good faith’ requirement
of N.C.G.S. § 55A-6-31(a).” Emerson, ___ N.C. App. at ___, 817 S.E.2d at 408.
However, prior notice and an opportunity to be heard may be required if set forth in
the organization’s governing documents.
Moreover, while it is true that “[a]n unbiased, impartial decision-maker is
essential” when full due process protections apply, Crump v. Board of Education of
Hickory Administrative School Unit, 326 N.C. 603, 615, 392 S.E.2d 579, 585 (1990),
it is not always necessary for private associations to utilize an impartial decision
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maker when making disciplinary determinations. Again, the terms of the
organization’s governing documents control.
Here, Plaintiffs first argue that the record evidence demonstrated the Club’s
failure to follow several provisions of the Bylaws and Rules & Regulations. However,
our review of the record and the Club’s governing documents reveal that the Club
properly followed its Bylaws and Rules & Regulations. Moreover, Plaintiffs contend
that the Club did not adhere to the disciplinary process outlined in the R&M
Committee’s Operating Procedures. However, because these Operating Procedures
were never approved by the Board or made a part of the governing documents of the
Club, the Operating Procedures were not duly adopted rules. As a result, the Club
was not required to comport with the R&M Committee’s Operating Procedures here.
Plaintiffs next argue that the record evidence demonstrates that Plaintiffs
were entitled to, but did not receive adequate notice and an opportunity to be heard
by an impartial tribunal.
The plain, clear and unambiguous language of the Club’s Rules & Regulations
expressly entitled Plaintiffs to written notice and an opportunity to be heard. Neither
the Club’s Bylaws nor Rules & Regulations state that disciplinary actions would be
heard by an impartial tribunal. The Club’s Rules & Regulations plainly state that
disciplinary matters will be determined by a Hearing Panel consisting of four
members from the Board and three members from the R&M Committee. There is no
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provision in the Club’s governing documents that would guarantee an impartial,
third-party tribunal to determine internal disciplinary matters.
We conclude that the Club complied with the notice and hearing requirements
of the Rules & Regulations when it assessed Mr. Master’s disciplinary matter. The
undisputed evidence illustrates that the Club held a hearing on May 8, 2015, in which
the Plaintiffs were represented by their attorney. Although Plaintiffs’ counsel did not
present any evidence and Plaintiffs did not personally attend the hearing, the Club
provided them with the opportunity to do so.
Additionally, Plaintiffs do not contest that Conway, on behalf of the Club, sent
Mr. Master a letter on April 2, 2015, notifying him of his alleged violations and
hearing date. That letter explained to Mr. Master that several members had
complained to the Board regarding the series of emails that Mr. Master had sent to
hundreds of club members; identified Mr. Master’s conduct as “detrimental to the
well-being and harmony of the Club to an egregious degree”; informed Mr. Master
that a hearing would be held on April 15, 2015 to assess the matter and impose any
applicable sanctions; and invited Mr. Master to present evidence to defend himself
against his alleged violations. In response to scheduling conflicts, the Club
rescheduled the hearing to May 8, 2015, and Conway communicated this change to
Mr. Master by mail and email.
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Although the hearing was rescheduled twice, this fact alone does not impact
our conclusion that Mr. Master received proper notice. The Club’s governing
documents only require members to be notified at some unspecified time prior to the
hearing, and Mr. Master received notice about the rescheduled hearing prior to May
8, 2015. Therefore, the Club properly notified Mr. Master about his alleged violations
and provided an opportunity to present evidence.
Moreover, the Club’s Bylaws dictate that when spouses jointly own a single,
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.” Therefore, Plaintiffs were properly notified as
the Club was not obligated to also individually notify Mrs. Master regarding her
husband’s alleged violations and hearing date.
Because the Club adhered to its own internal rules and provided Plaintiffs with
prior notice and an opportunity to be heard, “there is no justification for judicial
intervention” on Plaintiffs’ behalf. Arendas v. N.C. High Sch. Athletic. Ass’n Inc., 217
N.C. App. 172, 174, 718 S.E.2d 198, 200 (2011). Thus, when this undisputed evidence
is viewed in the light most favorable to Plaintiffs, we conclude there is no genuine
issue of material fact.
Conclusion
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We affirm the trial court’s grant of summary judgment in the Club’s favor and
denial of Plaintiffs’ motion for partial summary judgment.
AFFIRMED.
Judges TYSON and INMAN concur.
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