Belmont Ass'n v. Farwig

Citation: Not availableDocket: 214A21

Court: Supreme Court of North Carolina; June 17, 2022; North Carolina; State Supreme Court

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In the case of Belmont Association, Inc. v. Thomas Farwig and Rana Farwig, and Nancy Mainard, the North Carolina Supreme Court addresses an appeal from a divided Court of Appeals decision that affirmed a trial court's grant of summary judgment in favor of Belmont Association. The defendants, the Farwigs and Mainard, challenge the appellate court's interpretation of N.C.G.S. 22B-20. The Supreme Court reversed the appellate court's decision, ruling in favor of the defendants on the declaratory judgment claim and remanding the case for further proceedings consistent with its opinion.

The factual background indicates that on December 9, 2011, a Declaration of Protective Covenants was recorded for Belmont, establishing various property use restrictions. While the Declaration explicitly restricts several uses, such as home businesses and temporary structures, it does not mention the use of residential solar panels. The Declaration also outlines the role of an Architectural Review Committee (ARC) responsible for approving property improvements based on aesthetic considerations and harmony with surrounding structures, emphasizing the subjective nature of such decisions.

On 17 December 2012, defendants acquired Lot 42 at 4123 Davis Meadow Street, Raleigh, North Carolina, within the Belmont subdivision. On 5 February 2018, they installed solar panels on their home, costing over $32,000. Five months later, the Architectural Review Committee (ARC) notified them of an architectural violation and requested an architectural request form. On 20 July 2018, defendants submitted this form seeking approval for the solar panels, accompanied by a petition from twenty-two neighbors advocating for solar panels on the front roofs in Belmont, noting the necessity of southward-facing panels for efficiency.

On 5 September 2018, Belmont denied the application, citing aesthetic concerns and inconsistency with the development scheme, although the Declaration did not explicitly address solar panels. Belmont suggested relocating the panels to a less visible area, but defendants argued this would significantly decrease their energy production, supported by a shade report indicating the current location received optimal sunlight.

Defendants appealed the denial on 4 October 2018, which Belmont rejected on 2 November 2018, demanding the removal of the solar panels by 7 December 2018. When the panels remained, Belmont issued a notice of hearing. After a hearing on 30 January 2019, Belmont imposed a $50 daily fine starting 1 March if the panels were not removed. Defendants began paying the fines to avoid foreclosure.

On 1 April 2019, Belmont filed a Claim of Lien for $50 against Lot 42 and subsequently filed a complaint for injunctive relief and collection of fines. On 7 June 2019, defendants responded with an answer, motion to dismiss, and multiple counterclaims against Belmont for various alleged wrongs. Belmont countered with its motion to dismiss and for judgment on the pleadings, later filing for summary judgment on 5 November 2019.

After a hearing on 11 December 2019, the Wake County Superior Court, under Judge Graham Shirley, partially granted Belmont's motion for summary judgment regarding its claim for injunctive relief and the defendants' counterclaim for declaratory judgment. The court ruled that N.C.G.S. 22B-20(d) governed the case, establishing that the deed restriction prohibited solar collectors visible from the ground. The court deemed N.C.G.S. 22B-20(c) inapplicable. Defendants subsequently appealed the summary judgment ruling to the Court of Appeals.

Defendants appealed a trial court decision, claiming errors in the application of N.C.G.S. 22B-20 regarding solar panel restrictions in their Declaration. They contended that the Declaration did not explicitly address solar panels and argued that the trial court incorrectly determined it was not void under N.C.G.S. 22B-20(b). The Court of Appeals, in a divided opinion led by Judge Gore, upheld the trial court’s summary judgment favoring Belmont, asserting that N.C.G.S. 22B-20(d) applied since the Declaration effectively prohibited solar panel installations on sloping roofs facing common areas. Judge Jackson dissented, arguing that the majority misinterpreted the statute by overlooking the implicit prohibition on solar panels. Defendants then appealed to the higher court, asserting that the Court of Appeals misapplied N.C.G.S. 22B-20 in two respects: failing to invalidate restrictions that effectively ban solar panels and requiring an explicit deed restriction for the statutory exception to apply. The higher court agreed with the defendants, reversing the Court of Appeals’ decision. The case involves statutory interpretation, which prioritizes the plain language of the statute unless ambiguity necessitates further interpretation to discern legislative intent.

Section 22B-20(b) invalidates any deed restriction, covenant, or similar agreement that prohibits or effectively prohibits the installation of solar collectors for energy generation on residential properties, which are defined as properties primarily used for residential purposes, excluding certain condominiums. Importantly, the section allows for regulations regarding the location or screening of solar collectors, as long as they do not prevent reasonable use of the collectors. Additionally, subsection (d) permits restrictions on the visibility of solar collectors from public areas, specifically addressing placement on building facades and roof surfaces facing these areas. The defendants argue that the Court of Appeals misinterpreted this statute by not recognizing that restrictions imposed by the Architectural Review Committee (ARC) on solar panel installations can be deemed void if they effectively prohibit installation, despite not being explicitly stated as prohibitive. Exceptions exist if a restriction does not prevent reasonable use of solar collectors (subsection c) or if it regulates visibility in accordance with subsection (d).

The restriction in question prevents reasonable use of solar panels, thus the exception in subsection (c) is not applicable. Subsection (d) does not apply either, as it only provides exceptions to restrictions that explicitly prohibit solar panel installation, not those that merely have the effect of prohibiting it. The Court of Appeals incorrectly interprets subsection (d) to include restrictions that have such an effect, despite the absence of this language. Their interpretation is based on legislative history and the title of the statute, which contradicts the rule that clear statutory language should be applied as is, without further construction. Consequently, the Court of Appeals erred in affirming the summary judgment for Belmont, as the restrictions do not explicitly prohibit solar panel installation. Since no statutory exceptions apply, the restriction violates N.C.G.S. 22B-20(b). The decision is reversed and remanded for further trial court proceedings. Justice Morgan dissents, arguing that the majority's interpretation leads to an erroneous outcome and supports the Court of Appeals' decision in favor of Belmont.

The Belmont residential subdivision's Declaration of Protective Covenants grants the Architectural Review Committee the authority to reject improvement plans deemed unsuitable or undesirable. This includes criteria based on harmony with surrounding structures and aesthetic considerations. Owners recognize that such determinations can be subjective. The Court is tasked with examining this authority in light of N.C.G.S. 22B-20, which governs protective covenants related to solar panel installations.

In statutory interpretation, the Court prioritizes legislative intent, derived from the clear language of the statute. N.C.G.S. 22B-20(a) explicitly aims to protect public health, safety, and welfare by promoting solar resource use and prohibiting deed restrictions that could make home ownership financially burdensome. Interpretations must consider the statute in a contextual manner, aligning with its overall purpose, and each provision must be given effect wherever possible.

Furthermore, N.C.G.S. 22B-20(b) specifies that any deed restriction or covenant that prohibits or effectively prevents the installation of solar collectors for residential energy use is void and unenforceable, except as outlined in subsection (d). This reinforces the statute’s intent to facilitate solar energy adoption while maintaining cohesion among its provisions.

The phrase "except as provided in subsection (d) of this section" within N.C.G.S. 22B-20(b) indicates that this subsection is subordinate to subsection (d) in instances of conflicting content. To assess any incompatibility between subsections (b) and (d), subsection (c) must be examined first, as per the structured order intended by the Legislature. Subsection (c) clarifies that it does not prevent deed restrictions or similar agreements regulating solar collectors, provided they do not impede the reasonable use of such collectors. An owners' association may impose responsibilities on the title owner regarding damages from solar installations and may not be liable for maintenance unless explicitly agreed upon. While subsection (c) acknowledges the possibility of covenants like those in Belmont’s Declaration, it would invalidate such covenants if they hinder reasonable solar collector use. The language of the Declaration does not exceed this threshold, and the majority opinion confirms that subsection (c) does not affect the case concerning the defendants' solar panel installation.

Subsection 22B-20(d) preempts N.C.G.S. 22B-20(b) where the two subsections conflict, establishing that certain deed restrictions or covenants prohibiting visible solar collectors are permissible. Specifically, it allows prohibitions on solar collectors located on the façade or sloped roof surfaces facing public access areas. In contrast, N.C.G.S. 22B-20(b) renders any covenant that prohibits solar panel installation void and unenforceable. However, subsection (d) permits covenants that restrict the visibility of solar collectors as defined. The application of statutory interpretation principles suggests that the plaintiff had the authority to deny the defendants’ application without undermining the legislative intent behind the statute, which aims to prevent excessive restrictions on the use of solar resources. Summary judgment is appropriate when there are no genuine disputes of material fact, and it must favor the non-movant. The author agrees with the majority that summary judgment is warranted but argues it should favor the plaintiff rather than the defendants, affirming the Court of Appeals' decision. Justice Berger dissents, stating that an Architectural Review Committee's decision does not qualify as a deed restriction under the statute.

Defendants acquired a lot in a subdivision governed by a Declaration of Protective Covenants, which required homeowners to obtain approval from an Architectural Review Committee (ARC) before making property improvements. After five years, defendants installed solar panels on their roof without ARC approval, prompting a notice of violation from the ARC. Although the ARC rejected defendants’ late request, it offered an alternative to relocate the panels to a less visible area, which defendants declined, leading to the current legal action.

Defendants contend that the ARC's denial violated N.C.G.S. 22B-20, which renders unenforceable any deed restrictions prohibiting solar collectors. The statute specifies that while such agreements cannot prevent the installation of solar collectors, they can regulate their location or screening. Notably, the Declaration does not explicitly mention solar panels nor prohibit their installation. The court recognizes that the Declaration does not contain any restrictions against solar panels; the ARC's decision alone was the basis for prohibiting their installation.

A deed restriction, or restrictive covenant, is a private agreement in a deed limiting the use of real property, including specifications on lot sizes and architectural styles. A 'covenant' is a formal promise in a contract or deed regarding specific actions, while a 'covenant running with the land' binds future owners indefinitely. A decision by the Architectural Review Committee (ARC) does not qualify as a deed restriction, covenant, or binding agreement, as acknowledged by the defendants' counsel. The majority's ruling, which states that the ARC's decision prohibits solar panel installation, lacks authority and misinterprets the statute's clear language. Although the ARC's discretion allows for the approval or rejection of improvements based on aesthetic considerations, it does not inherently prevent such improvements. Even if the ARC's actions could be seen as prohibiting solar collectors under one statute subsection, the trial court found these collectors visible in a way that applies another subsection, which would allow for their installation despite the ARC's decision. The majority identifies the ARC’s restrictions as a binding agreement, acknowledging that this would then fall under the exception outlined in the statute, which allows for the prohibition of solar collectors in specific circumstances.

The dissent argues that the majority's interpretation of subsection (b) is overly broad while its reading of subsection (d) is excessively narrow. Subsection (d) should apply only to cases with explicit prohibitions against solar collectors in binding agreements, which is inconsistent with the General Assembly's intent. The dissent suggests that a more accurate interpretation would allow a restriction under subsection (b) to remain valid if it meets criteria in subsection (d). Additionally, even if the majority's readings were correct, granting summary judgment in favor of the defendants is inappropriate. Instead, the case should be remanded to the trial court to assess the applicability of subsection (c), as the trial court failed to evaluate whether the Architectural Review Committee's decision obstructed the reasonable use of a solar collector under that subsection. This factual inquiry is the responsibility of the trial court, necessitating a remand for further determination. Chief Justice NEWBY concurs with this dissenting opinion.