Dailey v. Ayers Land Development, LLC

Facts

Roger Ayers (D) and Jerry Ayers (D) are brothers engaged in the business of real estate development and construction of residential homes. They have formed multiple limited liability companies and corporations. All with family holding the ownership. Michael Frye is also a real estate developer and home builder. His business is Frye Construction, Inc. In November 2004, Ayers Holdings and Michael Frye formed RJM to develop a 117-acre tract of land into a residential subdivision known as Brookside. Michael Frye has a fifty percent interest in RJM, and Ayers Holdings owns the other fifty percent. RJM secured a $2.4 million dollar bank loan, which Roger Ayers, Jerry Ayers, and Michael Frye personally guaranteed. On May 30, 2007, RJM recorded a series of final plats for Brookside that created thirty-eight individual single-family lots. Brookside was marketed as a 'premier, upscale subdivision.' RJM recorded a 'Declaration of Covenants, Conditions and Restrictions for Brookside' in 2007. The 2007 Covenants set forth requirements: All one-story Dwellings shall contain a minimum of 2,800 square feet. All multiple-story Dwellings shall contain a minimum of 3,000 square feet, with at least 1,500 square feet on the first floor. Dimensions stated shall be exterior wall dimensions excluding basements, garages, decks, porches, eaves, and other similar extensions and overhangs. The exposed surface of all exterior walls of any building constructed upon any Lot may be clad with only the following materials: brick, stone, solid wood, or stucco. Without limitation of the foregoing, no vinyl or aluminum siding shall be permitted on any exterior wall, and no concrete shall be exposed. Travis and Scarlett Hill purchased Lot No. 17 for $154,900. James and Nicole Dailey purchased Lot No. 18 in Brookside for $154,900. They began construction of a home in August 2013 in accordance with the 2007 Covenants. Between 2008 and 2011, RJM only sold one lot in Brookside. RJM began discussing amending the 2007 Covenants. RJM executed a Supplementary Declaration of Covenants, Conditions, and Restrictions ('the 2013 Covenants') for Brookside which amended the 2007 Covenants by decreasing the required minimum square footage for homes and permitting the use of vinyl siding. Ps were not informed that the 2007 Covenants were going to be amended. In 2015, Ps sued RJM and Ayers and Ayers Holdings alleging, inter alia, civil conspiracy, fraud, and breach of the covenants. Ps sought a declaratory judgment, asking the court to find that the 2013 Covenants 'destroy[] the Community Standard and [are] void ab initio.' Ps also sought monetary damages. Ps alleged that Ds were members of a joint venture with RJM making them 'jointly and severally liable for all acts and omissions of individual co-venturers as they relate to Brookside.' Ps also sought to pierce the veil of Ds' corporations and limited liability companies to hold Roger Ayers, Jerry Ayers, and Michael Frye personally liable. Ds filed a motion for summary judgment seeking dismissal of the claims brought against it because of its status as a member of RJM. Eventually, the circuit court granted summary judgment on November 7, 2017, through separate orders to (1) the Ayers respondents; (2) Michael Frye; and (3) Frye Construction and dismissed them from the case. Ps appealed. Ps argue in part that the circuit court erred by finding that they failed to produce sufficient evidence to pierce the veil of the corporations and limited liability companies to hold Jerry Ayers, Roger Ayers, and Michael Frye personally liable.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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