Moore & Associates Memphis LLC v. Greystone Homeowners Association Inc.
W2016-00721-COA-R3-CV
Tenn. Ct. App.Jan 20, 2017Background
- Moore & Associates (Moore) bought 27 lots from the developer in a gated subdivision; lots are subject to Greystone Homeowners Association's (Association) Declaration of Covenants, Conditions, and Restrictions (CCR).
- CCR Article IX §1 exempts (1) the Developer-Declarant from assessments on lots it owns and (2) “any third party purchasing a lot from Developer-Declarant for the purpose of constructing a single-family residence for sale to the general public” from assessments so long as the third party does not occupy the property.
- Moore paid $25,000 to the Association after purchase (characterized by Moore as a gift), contracted a licensed builder to construct one house, sold two unimproved lots, and otherwise planned to build houses for sale.
- The Association filed liens totaling $128,100 for alleged unpaid assessments; Moore sued to quiet title and for slander of title; Association counterclaimed for unpaid assessments.
- The chancery court found Moore was not the Developer-Declarant but was a third party who purchased lots to construct single-family residences for sale, thus exempt under Article IX §1; the court removed liens, denied Moore damages for slander of title, and ordered costs against the Association.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Moore qualifies for CCR exemption as a third party "constructing" homes for sale | Moore: "Constructing" includes causing homes to be built (hiring licensed contractor); Moore purchased lots to build/sell, so exempt | Association: "Constructing" requires the purchaser to be a builder/contractor; Moore is a speculator not a builder, so not exempt | Court: Moore qualifies as a third party purchaser for the purpose of constructing homes for sale; exemption applies (no assessments) |
| Whether parol evidence was admissible to interpret CCR ambiguity | Moore: extrinsic evidence shows intent and purpose to build/sell | Association: CCR language should control; exemption intended for builders | Court: Contract language was sufficiently ambiguous on "constructing" to permit extrinsic evidence; credibility of Moore’s testimony supported the finding |
| Whether Moore proved damages or slander of title | Moore: Association’s liens harmed title and entitles to damages | Association: liens were valid if assessments owed; no malice shown | Court: Moore failed to prove damages or malice; slander of title claim dismissed |
| Whether Moore was entitled to return of $25,000 payment | Moore: payment not a gift; should be returned if liens invalid | Association: payment was a goodwill gift, not assessments | Court: $25,000 was a gift; Association not required to return it |
Key Cases Cited
- Maples Homeowners Ass’n, Inc. v. T & R Nashville Ltd. P’ship, 993 S.W.2d 36 (Tenn. Ct. App.) (CCRs construed as contracts; apply contract rules)
- Hughes v. New Life Dev. Corp., 387 S.W.3d 453 (Tenn. 2012) (primary rule: ascertain and give effect to contracting parties’ intent)
- McDonald v. Chaffin, 529 S.W.2d 54 (Tenn. Ct. App.) (give covenant words fair and reasonable meaning to effectuate purpose)
- Richards v. Abbottsford Homeowners Ass’n, 809 S.W.2d 193 (Tenn. Ct. App.) (court may not extend contract beyond its plain terms)
- Dog House Inv., LLC v. Teal Props., Inc., 448 S.W.3d 905 (Tenn. Ct. App.) (if contract ambiguous, interpretation is fact question for finder of fact)
- McCaleb v. Saturn Corp., 910 S.W.2d 412 (Tenn.) (trial court’s credibility findings get deference on appeal)