Summary:
The Hedgepeths own a home in the Smokey Mountain Country Club, which is subject to the Declarations governing the Smokey Mountain Country Club Association requiring (certainly among innumerable other homeowner association expectations, demands and such) that member pay monthly dues. The Association stopped collecting dues after a fire damaged the clubhouse and after the developers obtain a judgment against it for $7 million, the Association filed bankruptcy. In that bankruptcy, the Association agreed to collect overdue and future dues. The Hedgepeths, apparently representing themselves, then, while the bankruptcy was still pending and without obtaining relief from the automatic stay, commenced a state court action seeking a declaratory judgment that they should be absolved from payment of their overdue amounts. The state court granted the 12(b)(6) motion to dismiss that action due to lack of subject matter jurisdiction and the Hedgepeths appealed.
The Court of Appeals restated that pursuant to 28 U.S.C. § 1334(a) (2020), the bankruptcy court “shall have original and exclusive jurisdiction of all cases under title 11.” Accordingly, the dismissal of the state court action was required.
Commentary:
It would seem unlikely that under the applicable Statute of Limitations the Hedgepeths would owe dues going back until 2014. It would, however, certainly be advisable that they hire counsel to seek a declaratory judgment in bankruptcy court.
For a copy of the opinion, please see:
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