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Roberts v. Holiday Island Suburban Improvement District #1

Court of Appeals of Arkansas, Division I

September 5, 2018

BILLY K. ROBERTS, KELLY L. ROBERTS, HOLIDAY ISLAND DEVELOPMENT CORPORATION, and TABLE ROCK LANDING OWNERS ASSOCIATION APPELLANTS
v.
HOLIDAY ISLAND SUBURBAN IMPROVEMENT DISTRICT #1 APPELLEE

          APPEAL FROM THE CARROLL COUNTY CIRCUIT COURT, WESTERN DISTRICT [NO. 08WCV-15-90] HONORABLE SCOTT JACKSON, JUDGE

          RMP, LLP, by: Timothy C. Hutchinson and Larry McCredy, for appellants.

          Bishop Law Firm, by: Matt Bishop, for appellee.

          PHILLIP T. WHITEAKER, JUDGE

         Appellants Billy K. Roberts, Kelly L. Roberts, Holiday Island Development Corporation, and Table Rock Landing Owners Association (TRL) filed a declaratory judgment action in the Carroll County Circuit Court against the appellee Holiday Island Suburban Improvement District #1 (HISID), seeking a determination of their rights as timeshare owners in the election of HISID commissioners. The circuit court found that the timeshare owners were not property owners as contemplated by Arkansas Code Annotated section 14-92-201(3)(Repl. 1998) and therefore were not entitled to receive individual notice of upcoming elections for commissioners or to receive individual ballots to vote in the election. Instead, the circuit court found each unit was entitled to only one vote in the election of HISID commissioners. The court further found that HISID's added requirements that an owner be current in his or her assessments in order to be nominated for commissioner or to receive a ballot were reasonable, related to the business of the HISID, and not invalid. Appellants appeal, arguing that the circuit court erred in interpreting the relevant statutes. We agree; therefore, we reverse and remand for entry of an order consistent with this opinion.

         I. Facts

         Holiday Island is a planned community along Table Rock Lake, located in Carroll County. In July 1970, Carroll County formed the appellee HISID to acquire, construct, operate, and maintain public improvements within the boundaries of Holiday Island. Holiday Island consists of, among other things, roughly 5000 platted lots. It also includes twenty-eight separate timeshare units, each divided into fifty-one individual fractional-ownership interests, for a total of 1428 potential timeshare interests. Appellants Billy K. Roberts, Kelly L. Roberts, and Holiday Island Development Corporation are owners of timeshare interests in property located within the HISID. As timeshare owners, they each received separate deeds evidencing their timeshare-ownership interests, which were then recorded in the Carroll County land records. Appellant TRL manages the timeshare units on behalf of all the owners of timeshare property, including the Robertses and Holiday Island Development Corporation, and represents their interests. As manager, TRL receives the annual property-tax bill for the timeshare units from the county collector. TRL also receives HISID assessments for each timeshare unit. TRL then collects payments from the individual timeshare owners, including the Robertses and Holiday Island Development Corporation, based on their proportional shares and remits those payments to HISID and the county collector.

         In September 2015, HISID sent notice announcing an October 19, 2015 deadline for commissioner nominations and a December 1, 2015 date for commissioner elections. HISID sent the notice only to certain property owners in HISID. More specifically, HISID did not mail the notice to the individual owners of the timeshare units (unless the timeshare owner owned an additional and separate lot within the district). In the notice, HISID set forth the requisite qualifications for commissioner and the requirements for the eligibility to vote in the upcoming commissioner elections. HISID specified that a nominee for the position of commissioner must be a resident property owner current on his or her HISID assessments. As for voting rights, HISID stated that each individual property owner would have one vote, regardless of the number of properties owned; that a property owned by a trust would receive two votes; and that, in the case of multiple ownership of a single lot, only the first two names listed on the deed would be eligible to vote. HISID then specified the procedures for obtaining an absentee ballot.

         On November 20, 2015, TRL, as an agent for the timeshare owners, requested 56 absentee ballots (representing two votes for each of the 28 timeshare units) from HISID. HISID denied the request. HISID informed TRL that no absentee ballots would be provided for the individual timeshare owners, and only one absentee ballot would be provided to TRL on behalf of all timeshare owners.

         II. Procedural History

         Appellants filed a declaratory-judgment action against HISID alleging that HISID's notice and balloting procedures for the election of its commissioners violate Arkansas law and requesting that HISID be ordered to conduct its elections in a manner that conforms to Arkansas law. They also sought a temporary restraining order (TRO). The circuit court denied the request for a TRO.

         On the merits of the declaratory-judgment action, the parties submitted stipulated facts in lieu of a trial. Thus, the court decided the issues based on the pleadings, the stipulated facts, and the arguments of counsel.

         Appellants essentially asserted three arguments. First, they argued that HISID had violated their statutory right to notice. They argued that timeshare owners are "property owners" under the statute governing the election of commissioners. As such, HISID was required to provide notice to each timeshare owner under Arkansas Code Annotated section 14-92-240(c)(1)(C) and failed to do so.

         Second, appellants argued that HISID had violated their right to vote under the statute. Appellants argued that each timeshare owner was entitled to vote in the election of commissioners and that the statute was subject to only two possible interpretations of how this vote should occur: (1) TRL had the right to vote the collective interest of the timeshare owners with each timeshare unit being entitled to 2 votes, for a total of 56 votes; or (2) each individual timeshare owner (all 1428 of them) had the right to vote. With regard to the position that all 1428 timeshare owners had an individual right to vote, appellants referenced an attorney general opinion that supported this conclusion. Thus, they concluded that HISID had failed to provide absentee ballots to each timeshare owner as provided by statute and had improperly restricted their voting rights to one collective vote.

         Third, appellants argued that HISID improperly imposed additional requirements for commissioner nominations and elections. They contended that HISID lacked statutory authority to require that nominees and voters be current on their HISID assessments and utility bills or to limit eligible voters to the first two names on the deed in the case of multiple ownership.

         With regard to appellants' notice arguments, HISID asserted that notification to the timeshare owners was not required nor feasible. HISID argued that timeshare owners are not "property owners" entitled to notice. It further noted that there is no public record of contact information for timeshare owners; therefore, HISID lacked the ability to obtain or verify the addresses of the timeshare owners.

         In response to the appellants' arguments on the statutory right to vote, HISID argued that the statute endowed voting rights only on property owners. According to HISID, land and real property is defined under the statute as all property subject to taxation. HISID argued that timeshare owners are neither assessed nor taxed individually; therefore, the timeshare owners and the timeshare association were not property owners as contemplated by the statute. HISID further argued that appellants' position results in an absurdity-the district is made up of approximately 5000 lots, and under appellants' theory, the timeshare owners, who collectively own less than 10 lots and have only one-week-a-year interests in those lots, would command nearly 1/3 of the votes in the election. HISID further argued that the attorney general opinion cited by appellants contradicts a previous attorney general opinion, which focused on the taxable nature of the property in determining whether voting rights attached.

         Finally, HISID argued that it is authorized to place additional requirements on the qualifications of commissioner nominees and its voters pursuant to Arkansas Code Annotated section 14-92-210 as an action "useful to carry out the purposes of this subchapter" and as a rule or regulation "for the transaction of the district's business." Moreover, HISID took the position that nothing in the statute prohibits the enacting of those restrictions.

         After hearing the arguments of counsel, the circuit court entered an order. The court held that timeshare owners were not property owners as contemplated by Arkansas Code Annotated section 14-92-201(3). Thus, the court ruled that the individual timeshare owners were not entitled to receive individual notice of upcoming elections for commissioner, and they were not entitled to receive individual ballots to vote in the election. With regard to voting rights under the statute, the court found the statute to be "confusing and ambiguous." The court noted the legislature's apparent use of two separate rules to govern different elections; attributed the two separate rules to a drafting error; and interpreted the statute to apply the same set of rules to both elections. The court then held that each property in the district was entitled to receive up to two votes if the property was jointly owned. Although it had previously found that the individual timeshare owners were not entitled to receive ballots to vote, the court found that the 28 timeshare units were subject to taxation and constituted real property as that term was defined by the statute. As such, the court concluded that TRL was a single entity, and as a result, each unit was entitled to ...


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