A North Carolina court has dismissed a lawsuit filed by homeowners against their property owners’ association regarding special assessments to cover damages caused by Hurricane Helene. The decision affects property owners in the planned community known as The Settings of Black Mountain, who were challenging the legality of the fees imposed by the association's board.
The case, Brock v. Kyryk, was filed in the North Carolina Business Court under docket number 25-CVS-5368. It involved plaintiffs Douglas M. Brock, Lorraine M. Connolly, and SBM Realty, LLC, who are property owners in the development. They claimed that the board of directors of The Settings of Black Mountain Association, Inc. acted improperly in levying a special assessment following the hurricane's damage to common areas of the development.
The dispute began after Hurricane Helene caused significant damage to the community in September 2024. The board estimated repair costs at $2.7 million and planned to fund this through a combination of FEMA grants and a special assessment of approximately $1.45 million. The plaintiffs contended that the board misrepresented the assessment process and failed to properly notify all members about the special meeting where the assessment was voted on.
After the board held a meeting in August 2025, where the special assessment was approved, the plaintiffs filed a complaint in September 2025, asserting claims for breach of fiduciary duty, negligent misrepresentation, and seeking a preliminary injunction. They argued that the board's actions were intended to intimidate members and discourage them from voting against the assessment.
Judge Matthew T. Houston presided over the case and ruled on the defendants' motion to dismiss the lawsuit. The court noted that the plaintiffs did not respond to the motion or provide the necessary legal arguments to support their claims. As a result, the court struck the plaintiffs' attempt to voluntarily dismiss the case and proceeded to evaluate the motion to dismiss based on the existing filings.
In his ruling, Judge Houston stated, "The court grants Defendants’ motion to dismiss as set forth below." He emphasized that the plaintiffs failed to demonstrate standing to bring a derivative action on behalf of the association, as required by North Carolina law. The judge explained that the plaintiffs did not adequately plead facts showing that the board's actions harmed the association itself, rather than just the individual plaintiffs.
Furthermore, the court found that the plaintiffs did not establish a clear claim for breach of fiduciary duty or negligent misrepresentation. The judge highlighted that the relationship between the board members and the homeowners is generally contractual, not fiduciary, unless specific facts indicate otherwise. Additionally, the court noted that the plaintiffs did not provide sufficient evidence of reliance on any misrepresentations made by the board.
As a result, the court dismissed the plaintiffs' claims without prejudice, meaning they could potentially refile the case if they address the issues identified by the court. The ruling underscores the importance of proper legal standing and the necessity for plaintiffs to clearly articulate their claims in accordance with the law.
This decision has significant implications for homeowners associations in North Carolina, as it clarifies the legal standards for bringing derivative actions and the requirements for asserting claims against boards of directors. The ruling may influence how associations communicate with their members and handle special assessments in the future.
Looking ahead, it remains to be seen whether the plaintiffs will appeal the court's decision or if they will attempt to refile their claims with additional supporting evidence. The outcome of this case may set a precedent for similar disputes involving homeowners associations and their governance.