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Shearon Farms Townhome Owners Ass’n II, Inc. v. Shearon Farms Dev., LLC: Associational Standing is a Tricky Business

In 2018, members of a homeowners’ association noticed issues with the siding on their houses. The homeowners’ association brought suit against several parties, but the claims at issue in this appeal were against the manufacturer of the windows installed in the homes. The Superior Court dismissed the claims against the window manufacturer on the basis that the homeowners’ association lacked standing to bring those claims. The Court of Appeals worked through the test for associational standing and affirmed the dismissal. This is a reminder that claims brought by an association on behalf of its members are evaluated differently and it can be helpful to get an independent assessment before attempting to bring such claims. 

The test for associational standing in North Carolina has three elements: [A]n association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization’s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit. River Birch Assocs. v. City of Raleigh, 326 N.C. 100, 130, 388 S.E.2d 538, 555 (1990). 

Under most circumstances, the third element is satisfied only when an association seeks declaratory or injunctive relief and not when an association seeks to recover damages on behalf of its members. The reason for this is that individual damages claims will not be shared equally by the members of the association—some members will have suffered greater harm. 

It is understandable that the members of the homeowners’ association wanted to litigate their claims collectively instead of individually, but now they face piecemeal litigation with some claims being litigated by the homeowners’ association and other claims being left to individual homeowners to bring on their own. This outcome is not favorable to the members of the homeowners’ association. It also could have been avoided through undertaking an analysis of associational standing in advance of filing the original lawsuit. When you find yourself considering bringing claims on behalf of an association, let this decision serve as a reminder that bringing in a second set of eyes to review your case before initiating it can save you and your clients time, money, and frustration. If you are looking for that second set of eyes, reach out and I will gladly assist you. 

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