Double Branches Association, Inc. v. Andrew R. Jones

• Court: Court of Appeals of Georgia
• Decided: March 12, 2015
• Docket: A14A2069
• Status: Published

Opinion

SECOND DIVISION ANDREWS, P. J., MCFADDEN and RAY, JJ.

NOTICE: Motions for reconsideration must be physically received in our clerk’s office within ten days of the date of decision to be deemed timely filed. http://www.gaappeals.us/rules/

March 12, 2015

In the Court of Appeals of Georgia A14A2069. DOUBLE BRANCHES ASSOCIATION, INC et al. v. JONES et al.

RAY, Judge.

Double Branches Association, Inc., a homeowners association of the Double

Branches Subdivision in Greene County, along with several of the subdivision’s

residents (collectively, the “Association”), sued Double Branches Water, LLC, a

private water company, and its past owners (collectively, “Double Branches Water”)

for alleged breaches of a 1991 Trust Indenture Water Services Agreement (the

“Agreement”) entered into between the developer of the Double Branches subdivision

and Double Branches Water. The Association claimed that these breaches occurred

when Double Branches Water added certain fees and raised the rates for water service

to the subdivision’s homes above the maximum amount allowed by the Agreement. Double Branches Water filed a motion for summary judgment and a petition for

declaratory judgment. The trial court granted Double Branches Water’s motion for

summary judgment without making findings of fact or conclusions of law. Finding

that the Agreement constituted a “covenant running with the land,” the trial court

granted the petition for declaratory judgment on the grounds that the terms of the

Agreement were no longer enforceable under OCGA § 44-5-60. For the following

reasons, we affirm.

Summary judgment is warranted if the pleadings and evidence “show that there

is no genuine issue as to any material fact and that the moving party is entitled to a

judgment as a matter of law.” (Punctuation and footnote omitted.) Calhoun, GA NG,

LLC v. Century Bank, 320 Ga. App. 472, 472-473 (740 SE2d 210) (2013).

The record shows that in 1991, the developers of the Double Branches

Subdivision entered into a Trust Indenture/Water Services Agreement with Andrew

Jones d/b/a Jones Water Systems,1 a private water supplier. The Agreement was for

the purpose of providing water to the homes built in the Double Branches

1 Jones d/b/a Jones Water Systems subsequently assigned his interest in Double Branches Water to Double Branches Water, LLC. For the purposes of this opinion, we shall refer to both organizations as “Double Branches Water.”

2 subdivision. The Agreement was then recorded in the deed book in the office of the

Clerk of the Superior Court of Greene County.

Pertinently, the Agreement provides that “the benefits and obligations

identified [in the Agreement] become an appurtenance to and run with the land

described . . . and inure to the benefit of the successors in title[.]” The Agreement

notes that Double Branches Water constructed two wells and infrastructure related

to providing private water service to the subdivision and that it “covenants and agrees

to furnish water” to the homes “until the operation of said system is otherwise made

available to the property by a municipality, or other governmental agency . . . or

public utility.” In exchange for the “privilege and right” to use the water, lot owners

“will be responsible for the installation, maintenance, and expense of their own water

lines” as well as pay applicable fees. Additionally, the Agreement bound each lot

owner to pay for water consumed on its premises as follows: “[Double Branches

Water] shall have the right to . . . charge a minimum rate for the first 3,000 gallons

used per month based on the highest rate charged for such amounts by any

municipality . . . within a fifty (50) mile radius.” It further provides that Double

Branches Water has the right to adjust the minimum rate from “time to time,” but that

such rate should not exceed the highest amount charged by a municipality within a

3 fifty mile radius. Finally, the Agreement provides that “this agreement shall constitute

a restriction against private well systems.”

The Complaint alleges that in 2012, Double Branches Water informed lot

owners that the monthly minimum rates would increase to $45, that there would be

an additional monthly testing fee of $2.50, and that the rates for setup fees, late fees,

and reconnection fees would be increased. The Complaint alleges that these changes

violated the Agreement.

In its motion for summary judgment and petition for declaratory judgment,

Double Branches Water argued, inter alia, that the Agreement constituted a restrictive

covenant, and thus, it expired after 20 years because the homeowners failed to renew

the covenant pursuant to former OCGA § 44-5-60 (d). The trial court granted relief

in favor of Double Branches Water on the grounds that the Agreement constituted a

“covenant running with the land” and became unenforceable 20 years after its

enactment pursuant to OCGA § 40-5-60.

1. We first note that the Association raises several arguments for the first time

on appeal: namely, that the Agreement constitutes an “easement,” and that Double

Branches Water is estopped from raising its rates under the theory of promissory

estoppel. We will not consider such arguments. See Kahn v. Britt, __ Ga. App. __ (3)

4 (d) (765 SE2d 446) (2014). To the extent that the Association presents arguments on

appeal that were considered by the trial court, however, we will consider its

enumerations of error.

2. The Association contends that the trial court erred in concluding that OCGA

§ 40-5-60 (b) applied to the Agreement as it did not constitute a restrictive covenant.

We disagree.

Our application of the rules of construction to the Agreement is de novo.

Crabapple Lake Parc Community Assn., Inc. v. Circeo, 325 Ga. App. 101, 104 (1)

(751 SE2d 866) (2013). In construing the Agreement,

we interpret its terms using their plain, ordinary, and popular sense. Additionally, with respect to this particular [Agreement], we must bear in mind the general rule that the owner of land has the right to use it for any lawful purpose and that Georgia law does not favor restrictions on private property.

(Citations and punctuation omitted.) Davista Holdings, LLC v. Capital Plaza, Inc.,

321 Ga. App. 131, 133 (741 SE2d 266) (2013).

OCGA § 44-5-60 (a) provides, generally, that covenants running with the land

go to the purchaser of the land. OCGA § 44-5-60 (b) provides, in pertinent part, that,

5 Notwithstanding subsection (a) of this Code section, covenants restricting lands to certain uses shall not run for more than 20 years in municipalities which have adopted zoning laws nor in those areas in counties for which zoning laws have been adopted. . . .2

(Emphasis supplied.)

The trial court, in its order, correctly concluded that the Agreement constitutes

a covenant that runs with the land as access to water affects the use of and enjoyment

of each lot owners’ parcel. See Tenstate Distribution Co. v. Averett, 397 F. Supp.

1227, 1231 (N. D. Ga. 1975) (applying Georgia law) (“A covenant will run with the

land if it affects the value of the property or the mode of enjoyment of the property”)

(citation omitted). Further, the Agreement specifically provides that “the benefits and

obligations identified [in the Agreement] become an appurtenance to and run with

2 OCGA § 44-5-60 was amended in 1993 to revise subsection (d), to provide for an automatic 20-year renewal of a covenant (in subdivisions containing 15 or more individual plots) unless 51 percent of the record owners of plots affected by the covenant execute a document in proper form stating their wish that the covenant be terminated. This automatic renewal provision of the current version of “OCGA § 44- 5-60 (d) cannot, however, be applied retroactively to covenants recorded before 1993, such as the ones here.” (Footnote omitted.) Britt v. Albright, 282 Ga. App. 206, 208 (1) (638 SE2d 372) (2006). Accord Bickford v. Yancey Dev. Co., Inc., 276 Ga. 814, 814-817 (1)-(2) (585 SE2d 78) (2003). The version of OCGA § 44-5-60 (d) in effect at the time the covenants at issue were recorded contains no such automatic renewal provision, and instead required lot owners to take certain affirmative steps to renew the restrictive covenant. See Laws 1991, p. 334, §1.

6 the land described . . . and inure to the benefit of the successors in title.” See Lincoln

Land Co. v. Palfery, 130 Ga. App. 407, 413 (3) (a) (203 SE2d 597) (1973) (that

subdivision developer entered into contracts with lot owners to pay monthly fees for

provision of adequate, potable water through a private water company constituted a

covenant running with the land because the contract contemplated that the rights set

forth in the contract shall succeed to new purchaser).

However, OCGA § 44-5-60 (b)’s 20-year automatic termination period, by its

express terms, does not apply to all covenants running with the land. Instead, OCGA

§ 44-5-60 (b)’s application is limited only to “covenants restricting lands to certain

uses[,]” i.e., a restrictive covenant. See RESTATEMENT 3D PROPERTY (Servitudes) §1.3

(3) (2000) (“A ‘restrictive covenant’ is a negative covenant that limits permissible

uses of land”); see also comment (e). Accord Davista Holdings, supra at 134. “The

scope of OCGA § 44-5-60 (b) is meant to apply to both ‘use restrictions’ and, further,

to ‘building restrictions’ as these appear in restrictive covenants. . . .” (Citation

omitted.) Matera Investors, Inc. v. Sunset Lake Fishing and Hunting Club, 696

F.Supp. 1510, 1515 (III) (M.D. Ga. 1988) (applying Georgia law).

Here, although the Agreement contains no specific language stating that the lot

owners must utilize their land for a particular use, it does restrict the method by which

7 they may obtain water, which is necessary for the use and enjoyment of the property.

The Agreement acknowledges that water is not available to the subdivision through

a municipality, other governmental agency or public utility. It further specifically

provides that “this [A]greement shall constitute a restriction against private well

systems on the . . . lots of Double Branches Subdivision.” Because the Agreement’s

restriction against wells effectively prohibits the subdivision’s lot owners from

obtaining water from other sources until a public utility becomes available to the

property and obligates lot owners to pay the established rates, it constitutes a

restrictive covenant affecting the use of the lots within the subdivision. See Murawski

v. Roland Well Drilling, Inc., 188 Ga. App. 760, 763 (2) (374 SE2d 207) (1988)

(finding that a contract between a subdivision developer and a private water company

preventing lot owners within a subdivision from digging a well, accessing public

utility water, constructing an alternate private water system, or otherwise obtaining

water from a source other than the private water company constituted a restrictive

covenant). Compare Argyle Realty Co. v. Cobb County School Dist., 259 Ga. 654

(386 SE2d 161) (1989) (OCGA § 44-5-60 (b)’s time limitation did not apply to deed

under which grantor specified that school building erected on property must be

operated under certain name; restriction applied only to uses of land and name of

8 school was not a use); Matera Investors, Inc., supra.at 1515 (III) (20-year statutory

limitation in OCGA § 44-5-60 (b) does not render any of grantor hunting club’s

reserved rights or interest in parcel unenforceable, where deed contained no language

which stated that fee owner had to use land for any particular purpose, but rather fee

owner could put land to any use whatsoever so long as it did not violate club’s rights

under the deed).

The Association cited Davista Holdings, supra, for the proposition that to the

extent the Agreement’s prohibition against private wells could be construed to be a

restrictive covenant, it should be considered separately from the rest of the

Agreement. We find this unavailing. In Davista Holdings, the easement agreement

set forth easements for pedestrian and vehicular access and a restrictive covenant

limiting the landowner from using a portion of its property for anything other than a

driveway, thoroughfare, or parking lot. Id. at 132-133. However, unlike the easement

agreement in Davista Holdings, the Agreement in the present case does not “consist[]

of two distinct parts,” Id. at 134, but instead all of the provisions relate to the method

by which lot owners in the Double Branches subdivision can obtain water.

Based upon the above, we find that the Agreement constituted a restrictive

covenant limiting each lot owner’s options for obtaining water necessary for the use

9 and enjoyment of his or her property. Accordingly, we find that the terms of the

Agreement ceased to be enforceable in 2011 pursuant to OCGA § 44-5-60 (b) when

because the homeowners failed to renew the covenant as required by OCGA § 44-5-

60 (d). Accordingly, we affirm the trial court’s judgment.

Judgment affirmed. Andrews, P. J., and McFadden, J., concur.