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2007-UP-556 - RV Resort v. BillyBob’s Marina

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

RV Resort and Yacht Club Owners Association, Inc., Jean Littell, Kathy Fudge, Dwight Blakeslee, Herb Hook, Stan Bronson, Peg Bender, and Claudette Delpesco, on behalf of all members of the Association similarly situated Individually, Respondents,

v.

BillyBob’s Marina, Inc., d/b/a Outdoor RV Resort and Yacht Club, Appellant.


Appeal From Beaufort County
 Thomas Kemmerlin, Special Referee


Unpublished Opinion No. 2007-UP-556
Heard November 6, 2007 – Filed December 14, 2007


AFFIRMED IN PART, REVERSED IN PART


James B. Richardson, Jr., of Columbia, for Appellant.

John R. C. Bowen, of Hilton Head Island, for Respondents.

PER CURIAM:  In this action to enforce covenants, BillyBob’s Marina, Inc., d/b/a Outdoor RV Resort and Yacht Club (BillyBob), appeals the special referee’s order awarding, inter alia, damages and attorney’s fees to the RV Resort and Yacht Club Owners Association, Inc. (the Association).[1] We affirm in part and reverse in part.

FACTS

Outdoor Resorts RV Resort and Yacht Club (the Development) is a recreational vehicle (RV) resort and marina located on Jenkins Island in Beaufort County.  From the Development’s inception in 1981, it has consisted of several separate areas.  One of these areas is the Marina, which has 110 slips, a fuel dock, a launching ramp, a bath house, fuel storage facilities, an access road, a marina office, and several parking spaces.  The Marina is a completely separate entity from the rest of the Development.  Another area is the Resort, which includes 200 lots with parking pads for RVs (lots), swimming pools, tennis courts, a playground, a yacht club/clubhouse building, roads and open space, a maintenance area, and utilities, including a sewage treatment facility.  Many of the lots were owned by individuals.  A third area is a real estate and rental management business (Rental Office), which includes a building, check-in areas, and parking spaces.  Outdoor Resort R.V. Resort and Yacht Club, a South Carolina General Partnership, developed the Resort and owned the Marina and Rental Office.  In June 1981, the “Declaration of Covenants and Restrictions for Outdoor Resorts, R.V. Resort and Yacht Club and Provisions for the R.V. Resort and Yacht Club Owners’ Association, Inc.”  (Covenants) were recorded.   

The Covenants provide Developer has the exclusive right to rent lots belonging to the individual owners within the Resort when not occupied by the owner and his or her guest at the scheduled rate promulgated by Developer.  The Covenants further provide Developer shall retain fifty percent “of rental collected on any Lot” and remit the remaining fifty percent to the lot owner.  The definition section of the Covenants does not contain a definition relating to rent or rental.    

Article VIII, Section 8.11 of the Covenants provides: “Other reasonable rules and regulations governing use and occupancy and which do not alter or are not in contravention of any of the foregoing provisions may be made and amended from time to time by the Association, without the prior written consent of the Developer . . ..”  From 1981 to 1999 the Developer rented lots, splitting the rental fee 50/50 with the owners and collecting an additional fee of $2.00 for the use of electricity.  The Developer paid the electricity fee directly to the owner of the lot (electricity charge).  In 1999, Dwight Blakeslee, as President of the Association, requested an increase in rental rates.  First, Blakeslee requested Developer collect an additional $1.00 per night as a “road tax” to reserve for road resurfacing.  Next, Blakeslee requested the electricity charge be increased $1.00 per night to $3.00 due to the increase in size and technology of the vehicles renting lots.  On June 23, 1999, Developer agreed to the Association’s proposal.

On July 7, 1999, Blakeslee sent a letter on behalf of the Association to Linda Higgins, the Rental Manager of the Developer, accepting Higgins’ suggestion to implement the new charges beginning September 15, 1999.  The letter also requested, in the event of a sale of Developer’s interest, “the agreed upon rate increase and the allocation of those funds be made known to the buyer so that there will be no question as to the validity of the rate change.”

On August 31, 1999, BillyBob bought the Marina and rental management businesses, along with real estate Developer owned within the Development, Developer’s rights to rent lots, and the Lease.  The electricity charge was collected and remitted to the lot owners for a short time following BillyBob’s purchase. 

On October 17, 1999, BillyBob informed the Association by letter that it was cancelling the $3 electricity charge effective October 31, 1999.  BillyBob wanted to increase the nightly rental rate from $26.00 to $32.00.[2]  BillyBob sent a second letter the same day stating it would charge the $1.00 per night road tax retroactively from August 31, 1999, but only if the Association would pass a resolution or amendment committing the Association to maintaining and repairing Developer’s roads in the same manner and state of repair as the Association’s roads.

The Association rejected BillyBob’s demand to undertake maintenance and repairs of Developer’s roads and objected to BillyBob’s refusal to honor the previous Developer’s commitment to collect the $3.00 electricity charge and $1.00 road tax.

BillyBob initiated its proposed changes and further initiated a telephone fee, charging renters $2.00 for lots with telephone service and paying the owners $1.00 of this charge.  In addition, BillyBob claimed a right of first refusal on lot sales and established numerous new restrictions on the owners’ use of their lots including restrictions on owners leaving vehicles on the lots and renting to families with children. 

The Association and several lot owners filed this action alleging, inter alia, BillyBob’s violated the Covenants by failing to collect and remit all of the charges.  BillyBob counterclaimed asserting numerous violations of the Covenants including permanent residents living on their lots in the Resort.  Following a bench trial, the referee found the Covenants governed, the Association had the authority to adopt and modify rules and regulations as long as not in contravention of the Covenants, and BillyBob had no right to modify the Covenants or promulgate rules in contravention thereof.  The referee found BillyBob violated the Covenants by failing to collect the road tax, and failing to remit all of the money collected for electricity and telephone charges.  The referee also found BillyBob violated the Covenants in numerous other manners, including allowing marina guests to use the Association’s common areas and prohibiting guests with children to rent waterfront lots.  The referee ordered an accounting to determine sums due the Association.  The referee also found neither party entitled to attorney’s fees for the issues determined to date. 

After a hearing on the accounting and the remaining issues, the referee awarded the Association $48,447.50 for the road tax fund, $145,831.50 for electricity charges, and $1,048.50 for telephone charges.  Additionally, the referee awarded attorney’s fees of $52,212.50 and costs of $16,379.05.  BillyBob appeals.

STANDARD OF REVIEW

This court recently addressed the standard of review in an action to enforce restrictive covenants:

The character of an action as legal or equitable depends on the relief sought. Compare O’Shea v. Lesser, 308 S.C. 10, 14, 416 S.E.2d 629, 631 (1992) (holding an action for breach of restrictive covenants was at law, because relief sought was general damages for loss of view and invasion of privacy) [with] Kneale v. Bonds, 317 S.C. 262, 265, 452 S.E.2d 840, 841 (Ct. App. 1994) (“An action to enforce restrictive covenants by injunction is in equity.”); see also S.C. Dep’t of Natural Res. v. Town of McClellanville, 345 S.C. 617, 622, 550 S.E.2d 299, 302 (2001) (holding an action to enforce restrictive covenants by injunction is an equitable action). . ..  [If the] action is one to enforce restrictive covenants by injunction, it is in equity, and we may find facts in accordance with our own view of the evidence.  Brenco v. S.C. Dep’t of Transp., 363 S.C. 136, 142, 609 S.E.2d 531, 534 (Ct. App. 2005).  

Cedar Cove Homeowners Ass’n v. DiPietro, 368 S.C. 254, 258, 628 S.E.2d 284, 286 (Ct. App. 2006).  If the action for breach of covenants is at law, we will not disturb the trial court’s findings unless they are unsupported by the evidence.  O’Shea v. Lesser, 308 S.C. 10, 14, 416 S.E.2d 629, 631 (1992).

LAW/ANALYSIS

I.  Covenants

BillyBob contends the referee erred in finding it was required to collect the road tax for the benefit of the Association and to collect and remit the full electricity and telephone charges.  We disagree.

“Restrictive covenants are contractual in nature, so that the paramount rule of construction is to ascertain and give effect to the intent of the parties as determined from the whole document.”  S.C. Dep’t of Natural Res. v. Town of McClellanville, 345 S.C. 617, 622, 550 S.E.2d 299, 302 (2001). “The language of a restrictive covenant is to be construed according to the plain and ordinary meaning attributed to it at the time of execution.”  Hardy v. Aiken, 369 S.C. 160, 166, 631 S.E.2d 539, 542 (2006).  

BillyBob contends the charges constitute rent, which he has the exclusive right to set, and thus, they are subject to the equal division between BillyBob and the lot owners.  BillyBob relies in part on the Association’s letter discussing the changes in which they refer to the charges as part of the increase in “rental rates.”  However, as the letter described, these charges would not operate as the rental rate did, because the charges would pass directly to the lot owners instead of being subject to a split.  The Covenants grant the Association the right to promulgate rules and regulations without BillyBob’s permission.  We find BillyBob was required to collect the charges on behalf of the Association and therefore affirm the referee’s findings on this issue.

II.  Permanent Resident

BillyBob next contends the referee erred in failing to find Dwight Blakeslee, a lot owner, was permanently residing on his lot in violation of the Covenants.  We disagree.

Article VIII, section 8.1, of the Covenants state: “It is the specific intent of this Declaration to create and maintain a lu[x]ury resort for recreational vehicles and to prohibit permanent or semi-permanent structures as well as any structure or vehicle which is used as, or designed for use as, permanent living quarters on any Lot.”  The section further provides: “Lot Owners . . . are prohibited from erecting or placing on any Lot any permanent or semi-permanent structure or any vehicle which is designed as permanent living quarters . . ..”

BillyBob contends Blakeslee’s claim of the homestead exemption for tax purposes indicates Blakeslee is a permanent resident.  See S.C. Code Ann. § 12-37-250(A)(1)(Supp. 2006) (providing, for certain classes of people: “The first fifty thousand dollars of the fair market value of the dwelling place of a person is exempt from county, municipal, school, and special assessment real estate property taxes. . ..”).  “Dwelling place” is defined as the “permanent home and legal residence of the applicant.”  Id. at §12-37-250(A)(5). 

However, there is other evidence in the record that Blakeslee is not a permanent resident.  Jean Littell, a long time owner and board member, testified Blakeslee was not a permanent resident.  She testified he travels between three and six months out of the year and when he travels he usually takes his RV with him.  BillyBob did not present any testimony that Blakeslee actually permanently resided on his lot.  We find no reversible error in the referee’s finding that Blakeslee was not a permanent resident.

III.  Attorney’s Fees

BillyBob maintains the referee erred in awarding fees and costs to the Association instead of BillyBob.   We agree the Association was not entitled to attorney’s fees.

“An award of attorneys’ fees and costs is a discretionary matter not to be overturned absent abuse by the trial court.”  Donahue v. Donahue, 299 S.C. 353, 365, 384 S.E.2d 741, 748 (1989).  “An abuse of discretion occurs when the decision is controlled by some error of law or is based on findings of fact that are without evidentiary support.”  Degenhart v. Burriss, 360 S.C. 497, 500, 602 S.E.2d 96, 97 (Ct. App. 2004).  Generally, attorney’s fees are not recoverable unless authorized by contract or statute.  Baron Data Sys., Inc. v. Loter, 297 S.C. 382, 383, 377 S.E.2d 296, 297 (1989).  “Restrictive covenants are contractual in nature.”  Hoffman v. Cohen, 262 S.C. 71, 75, 202 S.E.2d 363, 365 (1974).

The Covenants and the Lease allow for the recovery of attorney’s fees for the prevailing party.  The South Carolina Supreme Court has defined a prevailing party as “one who successfully prosecutes the action or successfully defends against it, prevailing on the main issue, even though not to the extent of the original contention [and] is the one in whose favor the decision or verdict is rendered and judgment entered.”  Heath v. County of Aiken, 302 S.C. 178, 182-83, 394 S.E.2d 709, 711 (1990) (alteration in original).

In its first order, the referee found because each of the parties had prevailed on some issues, neither was entitled to attorney’s fees.  The referee stated: “I will consider attorney[’]s fees on the remainder of the case after a hearing on the merits of the remaining issues.”  The remaining issues involved an accounting and allegations by the Association of fraud by BillyBob.  In the final hearing, the referee found no fraud by BillyBob but awarded attorney’s fees to the Association of $52,212.50 and costs of $16,379.05.  Furthermore, the referee failed to make specific findings in support of the attorney’s fees.  “Our case law and court rules make clear that when a contract or statute authorizes an award of attorney’s fees, the trial court must make specific findings of fact on the record for each of the required factors to be considered.”  Griffith v. Griffith, 332 S.C. 630, 646, 506 S.E.2d 526, 534-35 (Ct. App. 1998).  Accordingly, we reverse the award of attorney’s fees and costs. 

BillyBob also contends it should have received attorney’s fees.  BillyBob likewise prevailed only on some of the issues and the record does not support an award of attorney’s fees.  Accordingly, the referee did not err in failing to award BillyBob attorney’s fees.

CONCLUSION

Based on the foregoing, the order of the trial court is

AFFIRMED IN PART AND REVERSED IN PART.

ANDERSON, SHORT, and WILLIAMS, JJ., concur.


[1] Several individual members of the Association are named plaintiffs.  We refer to all plaintiffs collectively as the Association.

[2] At the time of purchase, the rental rate was $26.00.  Owners received one-half of the rental, or $13.00, plus the $3.00 electricity charge for a total of $16.00 per night.  Developer received one-half of the rental, or $13.00 per night.  Under BillyBob’s proposed change, the rental rate was first $29, then $32, and both owners and BillyBob would receive $16.00 per rental night.