State EX REL. Appaloosa Bay, LLC v. Johnson County, Tennessee
E2016-01163-COA-R3-CV
| Tenn. Ct. App. | Jun 9, 2017Background
- Two lot owners in Charter Ridge Club sued after developer’s bankruptcy halted subdivision; the planning commission approved plat with escrowed bond for roads/utilities not completed.
- Development stalled; 451,000 bond funded escrow; subsequent 150,000 released, then a revised escrow of 301,000 executed.
- Developer defaulted; property largely sold to Nature Conservancy and then to the State, creating the Doe Mountain Recreation Area; remaining plaintiffs’ lots were unaffected by the bankruptcy sale.
- State created the Doe Mountain Recreation Authority; the State later used escrow funds toward acquiring the land; the remaining escrow funds were returned to Johnson County.
- Plaintiffs sought mandamus to compel County to complete infrastructure, water/electricity, and to accept the road as a public road; court granted summary judgment for defendants.
- Trial court held plaintiffs lacked standing as third-party beneficiaries and that mandamus could not compel discretionary planning decisions; appeal affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing as third-party beneficiary to the bond | Plaintiffs are intended beneficiaries of the bond | Bond terms designate only developer, County, and State; no intent to benefit plaintiffs | No standing; plaintiffs are not intended beneficiaries |
| Writ of mandamus to compel infrastructure completion | County has a ministerial duty to complete infrastructure under the bond/regs | Discretion in planning decisions; mandamus not appropriate here | Not warranted; discretionary planning decisions preclude mandamus |
| Gravel road as a county road | Road is a public road that must be paved/maintained by County | No express dedication or public acceptance; road not shown as public road | Declined to declare gravel road as a county road |
Key Cases Cited
- Willard v. Claborn, 419 S.W.2d 168 (Tenn. 1967) (intended-beneficiary requirement for contract enforcement)
- Moore Constr. Co. v. Clarksville Dept. of Elec., 707 S.W.2d 1 (Tenn. Ct. App. 1985) (third-party beneficiary criteria; intent to benefit must be clear)
- First Tennessee Bank Nat’l Ass’n v. Thoroughbred Motor Cars, Inc., 932 S.W.2d 928 (Tenn. Ct. App. 1996) (test for intended third-party beneficiary; focus on contract intent)
- Owner-Operator Indep. Drivers Assoc., Inc. v. Concord EFS, Inc., 59 S.W.3d 63 (Tenn. 2001) (three-part test for whether a third party is intended beneficiary)
- Foley v. Hamilton, 603 S.W.2d 151 (Tenn. Ct. App. 1980) (duty to roads depends on post-approval dedication/maintenance obligations)
- Foley v. Hamilton, 659 S.W.2d 356 (Tenn. 1983) (county duty to repair roads arises when roads are accepted/dedicated; developers’ ongoing obligation until acceptance)