Indian Hills Club Homeowner's Assn., Inc. v. Clayton L. and Cindy Cooper - Concurring

• Court: Court of Appeals of Tennessee
• Decided: December 29, 1995
• Docket: 01A01-9507-CH-00319
• Status: Published

Opinion

FILED December 29, IN THE COURT OF APPEALS OF TENNESSEE WESTERN SECTION AT NASHVILLE 1995

Cecil Crowson, Jr. Appellate Court Clerk INDIAN HILLS CLUB ) HOMEOWNER'S ASSN., INC., ) ) Plaintiff/Appellee, ) Sumner Chancery No. 94C-179 ) VS. ) Appeal No. 01A01-9507-CH-00319 ) CLAYTON L. AND CINDY ) COOPER, ) ) Defendants/Appellants. )

APPEAL FROM THE CHANCERY COURT OF SUMNER COUNTY AT GALLATIN, TENNESSEE THE HONORABLE CHARLES HILL BEATY, SPECIAL JUDGE

JAMES R. TOMKINS ROBERT H. JENNINGS, JR. JENNINGS AND TOMKINS Nashville, Tennessee Attorneys for Defendants/Appellants

GERALD C. WIGGER ORTALE, KELLEY, HERBERT & CRAWFORD Nashville, Tennessee Attorney for Plaintiff/Appellee

REVERSED AND REMANDED

ALAN E. HIGHERS, JUDGE

CONCUR:

W. FRANK CRAWFORD, P.J., W.S.

WILLIAM H. WILLIAMS, SR. J.

Indian Hills Club Homeowners' Association ("Plaintiff"), filed suit against Clayton and Cindy Cooper ("Defendants"), seeking an injunction prohibiting Defendants from building

a driveway extension/parking pad and walkway onto their property. The trial court granted

Plaintiff a permanent injunction, holding that the proposed construction would violate

certain restrictions of record that prohibited any construction or improvements without

approval from the Board of Directors of the Indian Hills Homeowners' Association.

Defendants have raised three issues for our consideration: (1) whether the Plaintiff's

denial of Defendants' application and approval rested upon a lawful and legitimate basis;

(2) whether the Board's decision to deny the application was an arbitrary and capricious

exercise of control; and (3) whether it would be unfair and inequitable to enforce the

restrictive covenant. For the reasons stated herein, we reverse the decision of the trial

court and order that the injunction be dissolved.

Defendants own a home located in Indian Hills Club Subdivision. The subdivision

is subject to various restrictions and covenants set forth in the "Declarations of Covenants,

Conditions, and Restrictions" on record at the Register's Office for Sumner County,

Tennessee. Article V, Section One of the Declarations requires that plans for proposed

construction or improvement be submitted in writing and approved by either the Board of

Directors or by a Board-appointed architectural committee. The Declarations also establish

standards for approval of proposed construction. Article V, Section 3 of the Declarations

provides in part:

C. For the purpose of assuring the maintenance of the Lots as a neighborhood of high standards, the Declarant hereby adopts the following standards for architectural control: The Committee shall have the right to disapprove any plans submitted hereunder because of failure to ... include any information required herein, objection to exterior design, or such other matter which would render the proposed structure or use thereof inharmonious with the structures located upon other lots within the neighborhood.

Prior to 1992, individuals from Phillips Builders comprised the architectural review

committee for Indian Hills Subdivision. In April 1992, the Board met and decided that the

Board of Directors of the Homeowners' Association would take control of the committee.

In October 1993, Defendants submitted a request for architectural approval to the Board of Directors of the Homeowners' Association for construction of a driveway

extension/parking pad and a walkway. Mr. Cooper described the proposed additions as

follows:

The proposal is to add a driveway parking extension onto the existing driveway. I call it an apron, some people call it a pad, but it's an extra area for parking which veers off the existing driveway, and from the point of the rear of that additional parking area, a sidewalk from that point around to the stairs of the rear deck.

Mr. Cooper testified that he wanted to add onto the driveway because parking was

inadequate in the neighborhood.

The Board denied Defendants' request and sent Defendants a letter, which stated:

Please be advised that the Board of Directors of Indian Hills Club are now serving in the capacity of the Architectural Committee.

At their last meeting, it was their decision to deny approval for your request until professional assistance can be obtained from the Architectural Committee. Once this assistance has been obtained and standards have been set, you may at that point be eligible to resubmit your application; however, at this time the application that your [sic] have submitted has been denied.

In May 1994, despite the Board's rejection, the Defendants began construction.

Plaintiff filed suit to enjoin the construction. Following a hearing on the matter, the trial

court permanently enjoined the Defendants from building a driveway extension/parking pad

or walkway because it found that Plaintiff proved by a preponderance of the evidence that

the proposed construction was inharmonious with the surrounding neighborhood.

At trial, the evidence showed that there existed 14 driveway pads and walkways in

the neighborhood that were similar to the Defendants' proposed driveway. In addition,

the Defendants adduced evidence of many other driveways in the neighborhood situated

close to boundary lines, leaving very little green space. Robert Payne, an experienced real

estate businessman, testified that the proposed improvements would not diminish the

value of any property in the neighborhood. Several additional witnesses testified that the

construction would not result in Defendants' lot being inconsistent or inharmonious with the

rest of the subdivision. The Plaintiff countered this evidence with the testimony of an architect, N. Mitchell

Barnett, who opined that the proposed improvement would be inharmonious with the

character of the subdivision, "that character being more green space, less concrete in the

fronts of yards." Barnett also testified that 10 of the 14 driveway extensions that the

Defendants alleged were similar to their proposal were situated on lots that are "physically

and materially different" in shape from the Coopers' lot.

As of November 1994, the Board had not yet established standards by which to

exercise architectural control.

In examining the case before us, we are confronted with several competing

principles of law. First, the general rule is that an injunction should not be granted except

in extreme cases where courts of law are unable to afford adequate redress. Smith v.

Rodgers, 677 S.W.2d 1, 3 (Tenn. App. 1984). Furthermore, although restrictive covenants

on real property are to be recognized and enforced according to their terms, such

restrictions are to be strictly construed with all doubts resolved in favor of the free use of

property. Parks v. Richardson, 567 S.W.2d 465 (Tenn. App.1977); Land Developers v.

Maxwell, 537 S.W.2d 901 (Tenn. 1976). As the court stated in Emory v. Sweat, 9 Tenn.

App. 167 (1927):

Restrictive covenants are in derogation of the right of unrestricted use of property, and are to be strictly construed against the party seeking to enforce them. They will not be enforced by implication, and will include anything not plainly prohibited...The burden rests upon the person relying on such covenants to bring himself within its terms. (citations omitted).

Id. at 176.

Conversely, restrictive covenants that condition the right of a lot owner to make

improvements upon the approval of an association of homeowners are generally valid and

enforceable. See, Association of Regency Park Condominiums v. Thomasson, 878

S.W.2d 560 (Tenn. App. 1994). This principle of validity holds true especially where the

covenants themselves regulate the extent of authority to approve by imposing standards

4 upon which disapproval may be based. Hollingsworth v. Szczesiak, 84 A.2d 816 (Del. Ch.

1951); Winslette v. Keeler, 137 S.E.2d 288 (Ga. 1964).

It does not appear that Tennessee courts have as yet had occasion to evaluate the

standard by which a committee's power of approval over construction in a residential

subdivision should be reviewed. In 1994, this Court addressed the situation with respect

to condominium owners. Both parties rely heavily on Association of Owners of Regency

Park Condominiums v. Thomasson, 878 S.W.2d 560 (Tenn. App. 1994), where the

defendant was a resident of a condominium unit who sought to build a deck and stairs onto

his unit. Id. at 561. The board of directors of the condominium complex had the authority

to approve any proposed construction pursuant to covenants contained in the master deed.

Id. The board rejected the defendant's request for construction and the trial court

permanently enjoined defendant from building the deck and stairs. Id. at 562. On appeal,

the Court of Appeals for the Middle Section discussed cases from several jurisdictions

reviewing the standards that other state and federal courts employ when determining

whether to uphold a board's denial of consent for proposed construction on a

condominium unit. Id. at 563-66. Ultimately , the Court held that the board's decision to

deny consent to the construction was not arbitrary, capricious, or unreasonable, and,

therefore, such decision would be enforced. Id. at 566. The Court was careful to note,

however, that because condominium owners live in close proximity to each other, "'each

unit owner must give up a certain degree of freedom of choice which he might otherwise

enjoy in separate, privately owned property.'" Id. at 563. Consequently, we do not find

Thomasson to be dispositive of the present case, which involves separate, privately owned

property.

There are essentially three views among the jurisdictions with respect to restrictive

covenants that require approval of construction. The majority view is that the restriction

will be enforced as long as the individual or entity exercises authority reasonably and in

5 good faith.1 Another position taken by several courts is that a discretionary approval

covenant prohibits the approving authority from imposing limitations that are more

restrictive than the specific restrictions on the lot owner's use of the property. See, e.g.,

Hollyhock Farms, Inc. v. Schoenlaub, 167 N.E.2d 128 (Ohio Ct. C.P. 1959); Lake Forest,

Inc. v. Drury, 352 So. 2d 305 (La. App. 1977). Finally, at least one court has held that

covenants requiring prior consent before construction are valid to the extent that they

furnish adequate notice to the property owner of the specific restriction sought to be

enforced. Davis v. Huey, 620 S.W.2d 561 (Tex. 1981).

We elect to adhere to the better-reasoned position of the majority of jurisdictions

that have addressed the issue and hold that the approving authority must exercise its

power both reasonably and in good faith. In Davis, the Supreme Court of Texas succinctly

stated the rule as follows:

The majority view with respect to covenants requiring submission of plans and consent prior to construction is that such clauses, even if vesting the approving authority with broad discretionary powers, are valid and enforceable so long as the authority to consent is exercise reasonably and in good faith.

Id. at 566.

Whether the exercise of approval of construction plans is reasonable is a factual

question to be determined in light of the circumstances. Trieweiller, 838 P.2d at 385. See

also, LaVielle, 412 S.W. 2d at 593; Snowmass American Corp. v. Schoenheit, 524 P.2d

645, 648 (Colo. Ct. App. 1974). There are several criteria that courts have established to

employ when evaluating the reasonableness of the exercise of power to consent. The

most important of these criteria, which indicate that disapproval of plans is reasonable, are

lack of compliance with the specific restrictions of the subdivision and construction that is

not consistent or harmonious with the overall plan of development or with neighboring

1 Rhue v. Cheyenne Homes, Inc., 449 P.2d 361 (Co lo. 1969); Levin v. Mountain Farms, Inc., 158 A.2d 493 (Conn. 1959); Shields v. W elshire Dev. Co., 144 A.2d 759 (Del. Ch.1958); Engvalson v. W ebster, 74 So. 2d 113 (Fla. 1954); Otwell v. W est, 137 S.E.2d 291 (Ga. 1964 ); McN am ee v. Bishop Trust Co. Ltd., 616 P.2d 205 (Haw . 1980); LaV ielle v. Seay, 412 S.W .2d 587 (Ky. Ap p. 1967); J one s v. N orthw est R eal Estate Co., 149 Md. 271, 131 A. 446 (Md. Ct. App. 1925); Donoghue v. Prynnwood Corp., 255 N .E.2d 326 (M ass. 1970 ); W est Bloomfield Co. v. Haddock, 40 N.W .2d 738 (Mich. 1950); LeBlanc v. Webster, 483 S.W .2d 647 (Mo. App. 1972); Trieweiler v. Spicher, 838 P.2d 382 (Mont. 1992); Friedberg v. Riverpoint Bldg. Com mittee, 239 S.E.2d 106 (V a. 1977).

6 property. LeBlanc v. Webster, 483 S.W.2d 647; LaVielle v. Seay, 412 S.W.2d 587;

Validity, Construction and Effect of Restrictive Covenant Requiring Consent of Third

Person to Construction on Lot, 19 A.L.R. 2d 1274, at p. 1294.

On the other hand, courts have held that when deviations were allowed in the past,

the consenting authority acted unreasonably in withholding consent. Boiling Springs Lakes

Division of Reeves Telecom Corp. v. Coastal Services Corp., 218 S.E.2d 476 (N.C. Ct.

App. 1975); LeBlanc, 483 S.W.2d at 652; Donoghue, 255 N.E.2d 326.

For example, in LeBlanc, 483 S.W.2d 647, the defendants sought approval of

construction plans providing for a driveway on the north side of their house. Id. at 651.

The plaintiffs, who were the developers of the subdivision, had the right to approve or

disapprove any plans pursuant to recorded restrictions. Id. at 648. The plaintiffs did not

approve defendants' proposal, reasoning that the driveway would be unsightly and would

devalue other lots. Id. at 652. The Missouri Court of Appeals held that the plaintiff's

refusal to consent was unreasonably exercised because there was no evidence of

diminution of property value, no violation of basic restrictions, and the proposed

construction was common in the area. Id. at 652.

Similarly, in Donoghue, 255 N.E.2d 326, the Supreme Court of Massachusetts held

that the corporate officer's disapproval of the homeowner's proposed construction was

unreasonable because similar covenants against other homeowners had not been

enforced. See accord, Boiling Springs Lakes, 218 S.E.2d 476.

In applying the test of reasonableness and good faith to the case before us, we

must consider the surrounding circumstances and general scheme of development that

has been established up to the time that Defendants submitted their plans for approval to

the Board.

7 Where, as here, the covenant imposes standards for approval, the respective rights

of the parties are clearly established and provide the framework within which the board

has the discretion to reject proposed construction. That discretion is limited by the express

confines of the covenant. The board is "purely a creature of contract, and possesses only

such authority as may be found in the written instrument creating it." Johnson v. Dick, 281

S.W.2d 171, 175 (Tex. Ct. App. 1955).

In the present case, the Board's refusal of Defendants' application was not based

on reasons bearing a relation to the general plan of development of the community.

Rather, the Board's reason for disapproving Defendants' application was that the Board

did not have professional assistance to aid them in evaluating proposed construction. This

basis for denial was not a proper basis pursuant to the standards established in the

Declarations, which allows the Board to deny a request when there is an objection to

exterior design or the construction would be inharmonious with the neighborhood.

The existence and extent of waiver or abandonment is another factor that should

be considered in evaluating the reasonableness of the Board's actions. See, e.g., LaVielle,

412 S.W.2d at 593. Waiver can occur when a party that is attempting to enforce a

subdivision restriction previously acquiesced to violations on another restricted lot. See,

Waiver of Right to Enforce Restrictive Covenant by Failure to Object to Other Violations,

25 A.L.R. 5th 123. Abandonment of a restrictive covenant occurs when there is

"community acquiescence" to continued violations of restrictions. Scandlyn v. McDill

Columbus Corp., 895 S.W.2d 342, 349 (Tenn. App. 1994). In addition, the right to enforce

a subdivision restriction may be lost by a general change in the character of the

neighborhood. "Restrictions lose their force when they fail to serve any useful purpose."

Elm Hill Homes, Inc. v. Jessie, 857 S.W.2d 566, 571 (Tenn. App. 1993). When there

occurs a material change in the character of restricted property that renders the

enforcement of restrictive covenants unfair or inequitable, courts may properly refuse to

enforce them. Land Developers, Inc. v. Maxwell, 537 S.W.2d 904 (Tenn. 1976); Oliver v.

8 Marbut, 123 S.W.2d 859 (Tenn. App. 1938).

Although the architectural review committee was comprised of different individuals

when 13 of the 14 driveway extensions were constructed, the Board acquiesced to the

construction of those driveways. We do not find the fact that the committee was not

comprised of homeowners when those deviations were permitted to be relevant.

Other pertinent circumstances include that Plaintiff produced an expert, who was

hired nine months after the Board's denial of Defendants' request, who testified that the

construction would be inharmonious, while Defendants produced several witnesses who

testified that there already existed several lots with similar driveways and thus, the

construction would be in harmony with the neighborhood. Moreover, Defendants' expert

testified that there would be no devaluation of other property in the subdivision. Other

notable evidence revealed at trial was that the Coopers live next door to the president of

the Homeowners' Association.

The record discloses that the Board unreasonably rejected Defendants' plan without

proof of diminished property value or a disturbed general plan. Here, the Defendants' plan

does not violate a specific restriction of the covenants, is not in conflict with other homes

in the subdivision, and does not diminish the value of the subdivision. Moreover, the

Board previously acquiesced to the construction of similar driveways. In cases dealing with

restrictive covenants, we strive to adopt an interpretation that will assure reasonable use

of property for legitimate purposes. White v. Gulf Refining Co., 2 S.W.2d 414 (Tenn.

1928). We deem a relatively minor driveway extension designed to ensure adequate

parking space and a walkway to be a reasonable and legitimate use of property.

The evidence, considered in its entirety, does not establish Plaintiff's right to

injunctive relief. Plaintiff's request for discretionary costs and attorney's fees is denied.

The trial court's injunction is hereby dissolved and the case is remanded with instructions

9 to enter judgment for Defendants. Costs on appeal are taxed to Plaintiff.

HIGHERS, J.

CRAWFORD, P.J., W.S.

WILLIAMS, SR. J.