Dianne Elizabeth Lutzak, Trustee Of The Dianne Elizabeth Lutzak Family Revocable Trust v. Phoenix American Development Partners, L. P.
M2015-02117-COA-R3-CV
| Tenn. Ct. App. | Oct 18, 2017Background
- Spring Hill Partners developed Spring Hill Place on a 168-acre tract (Tract 4.0) with plats and a recorded Declaration of Covenants, Conditions and Restrictions (the Declaration) covering identified platted property; the Declaration reserved the developer the right to add adjacent property by recorded Supplemental Declaration.
- Saturn I conveyed portions of Tract 4.0 to Spring Hill Partners by deed; those deeds referenced the Declaration of record, but the Declaration’s Exhibit A did not describe the Trust’s 62-acre undeveloped parcel.
- After defaults and financing transfers, Spring Hill Partners conveyed 62 acres of undeveloped, unplatted property to the Lutzak Trust in 2011 by a deed that did not expressly reference the Declaration (conveyance was subject only to matters of record).
- The Trust submitted a subdivision plan in 2014 proposing covenants different from Spring Hill Place; Spring Hill Partners and the HOA objected and sought a declaration that the Declaration applied to the Trust’s land and sought fees.
- On cross-motions for summary judgment the chancery court held (1) the Declaration, by its express terms, did not apply to the Trust’s property, and (2) a negative reciprocal easement (common-plan implied covenant) should not be imposed because the developer reserved the right to alter the plan; the Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument (Lutzak Trust) | Defendant's Argument (Developer/HOA) | Held |
|---|---|---|---|
| Whether the Declaration’s restrictive covenants expressly bind the Trust’s undeveloped land | Deed did not reference the Declaration; property not described in Exhibit A; covenants do not apply | The chain-of-title deeds to Spring Hill Partners referenced the Declaration, so the restrictive covenants run with the remainder of Tract 4.0 and bind the Trust’s parcel | Held: No. The Declaration’s express terms limit coverage to described platted property and the Trust’s deed did not add the parcel to the Declaration in the required manner |
| Whether restrictive covenants should be implied as negative reciprocal easements under a common plan of development | Even if no express covenant, a common master plan (168-acre master site plan/sketch plat) supports implication of covenants to the Trust’s parcel | There was a common development plan shown by the master plan and deeds; purchasers had notice, so equity should impose implied restrictions | Held: No. Developer expressly reserved the right to amend or deviate from the master plan and add/remove property; that reservation defeats application of the common-plan doctrine |
Key Cases Cited
- Martin v. Norfolk S. Ry. Co., 271 S.W.3d 76 (Tenn. 2008) (summary judgment standard on appeal)
- Bain v. Wells, 936 S.W.2d 618 (Tenn. 1997) (evidence viewed favorably to nonmoving party on summary judgment)
- Hughes v. New Life Dev. Corp., 387 S.W.3d 453 (Tenn. 2012) (restrictive covenants strictly construed; resolve ambiguity against restrictions)
- Shea v. Sargent, 499 S.W.2d 871 (Tenn. 1973) (plain language of covenant controls construction)
- Land Developers, Inc. v. Maxwell, 537 S.W.2d 904 (Tenn. 1976) (courts apply negative reciprocal easements with caution)
- Arthur v. Lake Tansi Vill., Inc., 590 S.W.2d 923 (Tenn. 1979) (recognizing circumstances in which implied covenants arise)
- Massey v. R.W. Graf, Inc., 277 S.W.3d 902 (Tenn. Ct. App. 2008) (developer’s implied representation of similar restrictions under a general plan)