R. Douglas Hughes v. New Life Development Corporation
387 S.W.3d 453
| Tenn. | 2012Background
- Raoul Land Development originally developed Cooley’s Rift and created a homeowners’ association with a charter, bylaws, and covenants recorded in 2002.
- Raoul Land Development sold the property to New Life Development, transferring rights to develop and governance functions; deed and a Purchase and Sale Agreement are central to this transfer.
- Homeowners sued New Life alleging development violated the Declaration and Master Plan, including implied covenants from a general plan and from the 2002 plat.
- Court proceedings evolved through judgments on the pleadings, remands, and amendments adopted by the Association in 2009 to address Court of Appeals’ ambiguities.
- Court of Appeals remanded to assess reasonableness of amendments and implied covenants; Tennessee Supreme Court granted permission to review and held amendments valid and no basis for implied covenants outside the platted subdivision.
- Court ultimately rejected any implied covenants arising from a general plan or plat and vacated lower-court injunctions tied to New Life’s activities.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the amendments to the Charter and Declaration were validly adopted | Hughes argued amendments were improper due to developer status and flawed process | New Life contends amendment process valid under 75% super-majority and proper authority | Amendments properly adopted; valid under governing documents and procedures |
| Whether New Life became the Developer under the Charter and Bylaws | Homeowners contended Raoul Land Development retained Developer rights not transferred | Record shows transfer of Developer rights to New Life via Purchase and Sale Agreement and deed | New Life acquired Raoul Land Development’s rights and interests as the Developer |
| Whether the derivative claims had standing | Homeowners claimed 5% voting power to pursue derivative actions | Developer held majority voting power; homeowners lacked standing | Homeowners lacked standing; derivative claims dismissed |
| Whether the amended Declaration gave rise to implied covenants outside the platted subdivision | Amendments implied broad development covenants outside the platted lots | Amendments do not create implied covenants for undeveloped land; intended to clarify Developer’s role | Amendments do not support implied covenants; summary judgment for New Life affirmed |
| Whether the 2002 plat created implied covenants for undeveloped property outside the subdivision | Plat allegedly designated forest preserves creating implied restrictions | Plat shows no legible forest-preserve designations; no implied covenants | No legible references to East/West Preserve; no basis for implied covenants; affirmed a summary judgment for New Life |
Key Cases Cited
- Stracener v. Bailey, 737 S.W.2d 536 (Tenn. Ct. App. 1986) (plat-designated areas can create implied restrictions when designated on plat)
- Massey v. R.W. Graf, Inc., 277 S.W.3d 902 (Tenn. Ct. App. 2008) (covenants construed as contracts; equitable review principles apply)
- Armstrong v. Ledges Homeowners Ass’n, 633 S.E.2d 78 (N.C. 2006) (reasonableness in light of original intent for amendments by associations)
- LaBrayere v. LaBrayere, 676 S.W.2d 522 (Mo. Ct. App. 1984) (uniform amendments upheld when applied to all lots and proper voting)
- Apple II Condo. Ass’n v. Worth Bank & Trust Co., 659 N.E.2d 93 (Ill. App. Ct. 1995) (illustrates non-uniform amendments require different standards; contract framework)
- Bryant v. Lake Highlands Dev. Co. of Texas, 618 S.W.2d 921 (Tex. Civ. App. 1981) (uniform amendments permitted when declared; focus on scope of amendment power)