the origin of the aphorism that “No Good Deed Goes Unpunished” is difficult, but
understanding its meaning is instantaneous.
When doing a good act, do not expect a reward. In fact, the “reward” may be a
In the case
of Sanchez v. Cobblestone Homeowners
Ass’n of Clayton, Inc. 2016WL4598554 (September 6, 2016), the defendant Cobblestone
HOA (HOA) informed plaintiff that her property was not included in the HOA declaration. Accordingly, she was not required to pay
association fees and she was not entitled to use of the amenities owned by the
HOA, such as a pool and tennis courts.
The HOA offered to incorporate plaintiff’s property into the declaration
so she could continue to pay dues and have access to the HOA amenities.
plaintiff declined the HOA’s offer and requested a refund of the dues she had
paid for the last 12 years. A divided
North Carolina Court of Appeals affirmed the District Court’s judgment that plaintiff
was entitled to a refund. No Good Deed
Sanchez v. Cobblestone Homeowners Ass’n
In 2002, plaintiff
purchased her home and was informed that her home was subject to the HOA
declaration. Plaintiff believed that she
was required to pay dues to the HOA. In
2014, the HOA informed plaintiff that, because of an earlier mistake, her home
was not subject to the declaration. The
HOA informed plaintiff that if she wanted to enjoy the HOA amenities of a pool
and tennis courts, she needed to sign a supplemental declaration.
stopped paying dues, declined to execute a supplemental declaration and
requested reimbursement of the dues she had paid from 2002-2014. The HOA refused to reimburse plaintiff. Plaintiff sued the HOA in small claims court
and prevailed. The HOA appealed to
conducting a bench trial, the District Court entered a judgment in favor of the
plaintiff. The District Court found that
(1) plaintiff was informed and believed when she purchased her property
that her property was subject to the HOA covenants, (2) the HOA rules
required plaintiff to pay dues and she paid the dues; (3) plaintiff
“rarely, if ever,” used the main amenities offered by the HOA, and (4) plaintiff
was not aware of nor “had any reasonable way of knowing” that she had no legal
obligation to pay dues. Accordingly, the
District Court concluded that no contract existed between plaintiff and the
HOA, the HOA had been unjustly enriched and plaintiff was entitled to the
reimbursement she sought. The HOA
appealed the District Court’s Judgment to the North Carolina Court of
The North Carolina Court of
The Majority’s Opinion
the North Carolina Court of Appeals, Chief Judge McGee noted that the HOA was
not contesting the facts found by the District Court. Instead, the HOA limited its appeal to its
arguments that (1) the facts found by the District Court proved that there was
a contract implied in fact between
Ms. Sanchez and the HOA and (2) plaintiff was estopped. The HOA relied upon two prior North Carolina
Court of Appeals cases where the Court of Appeals had found a contract implied
in fact between a property association and a lot owner.
The Court of
Appeals agreed with the HOA that when a contract implied in fact exists,
applying the equitable remedy of unjust enrichment is improper, but the Court
of Appeals concluded that the facts found by the District Court did not
establish a contract implied in fact.
implied in fact…arises where the intention of the parties is not expressed, but
an agreement, in fact creating the obligation is implied or presumed from their
acts.” p.3 (quoting Lake Toxaway v.
RYF, 226 N. C. App. at 488). Unlike Lake
Toxaway or Miles v. Carolina Forest, 167 N.C. App. 28, both of which
involved maintaining access roads to lots, the District Court did not find that plaintiff
had benefited directly by the association maintaining recreational
amenities. Further, the Court of
Appeals noted that the HOA had stated there was no contract in its
communications to the plaintiff and plaintiff immediately stopped paying fees
when she learned she did not have an obligation to pay them. Therefore, the District Court’s findings
fell short of showing a contract implied in fact and the majority of the North
Carolina Court of Appeals affirmed the District Court.
As for the
HOA’s contention that plaintiff was estopped to seek reimbursement, the Court
of Appeals noted that equitable estoppel requires acceptance of the
benefits. Here, the District Court found
that plaintiff, rarely, if ever used the recreational amenities. Accordingly, the Court of Appeals concluded
that the District Court did not err by entering judgment in plaintiff’s favor.
The Minority’s Opinion
dissented. Judge Dillon concluded that
the District Court’s findings showed that a contract implied in fact existed
and the HOA was not unjustly enriched.
reasoned that whether plaintiff had used the HOA amenities was irrelevant. By paying dues, plaintiff gained access to
these amenities. Even if plaintiff lacked
actual notice that her property was not subject to the HOA declaration, she had
record notice that her property was not subject to the HOA declaration. Under the law, plaintiff was charged with
noted that the North Carolina Supreme Court’s description of unjust enrichment was
that unjust enrichment applied when one party had performed and the other party
had not performed an unenforceable contract.
Here, the plaintiff had performed by paying dues and the HOA had performed by providing access to its recreational
amenities. Therefore, the HOA was not
unjustly enriched. Accordingly, Judge Dillon believed the District Court’s
decision should be reversed.
1. From the HOA’s perspective, this case
illustrates that “No Good Deed Goes Unpunished.” According to the District Court,
“[p]laintiff was not aware of nor had any reasonable way of knowing that there
was no legal obligation to pay periodic fees.” p. 3. If the HOA had not notified the plaintiff
that her property was not subject to the HOA declaration, she would have
continued to pay dues. Of course, this observation does not suggest
that the wise or ethical course for the HOA was to remain silent. In other words, there may have been harsher
outcomes to the HOA had it remained silent when it learned plaintiff’s property
was not subject to the HOA declaration.
2. The case highlights the uncertainties and
difficulties that a court encounters when asked to “make a contract.” Generally,
courts do not make contracts – contracting parties make contacts and courts
enforce them. A difficult aspect of this
case is that all of the District Court’s findings suggest that plaintiff would
not have formed a contract with the HOA voluntarily because the benefits, from
her perspective, were small. This is a
different situation than when lot owners must use roads maintained by an
association to access their property.
3. The dissent fairly raises the point – but was
the HOA unjustly enriched? The District
Court did not find facts that the HOA knew when receiving dues from the
plaintiff that plaintiff had no duty to pay dues or that the HOA had not
performed. An important question is the
basis for the District Court’s finding that plaintiff did not have “any
reasonable way of knowing that there was no legal obligation to pay periodic
dues.” Lawyers would assume that the record title of
plaintiff’s property would have shown that her property was not subject to the
HOA’s declaration. But, as noted by the
majority of the Court of Appeals, the HOA did not challenge this finding.