Millstone Property Owners Association, Respondent/Cross-Appellant v. Nithyananda Dhyanapeetam of St. Louis, Appellant/Cross-Respondent, and Fogerty Farms, Respondent/Cross-Appellant.

• Court: Missouri Court of Appeals
• Decided: March 5, 2024
• Docket: ED110871
• Status: Published

Opinion

In the Missouri Court of Appeals Eastern District DIVISION FOUR

MILLSTONE PROPERTY OWNERS ) No. ED110871 ASSOCIATION, ) ) Respondent/Cross-Appellant, ) Appeal from the Circuit Court of ) Jefferson County, Missouri vs. ) 17JE-AC02497 ) NITHYANANDA DHYANAPEETAM ) Honorable Victor J. Melenbrink OF ST. LOUIS, ) ) Appellant/Cross-Respondent, ) ) FOGARTY FARMS, ) ) Respondent/Cross-Appellant. ) Filed: March 5, 2024

Before John P. Torbitzky, P.J., James M. Dowd, J., Michael S. Wright, J.

Opinion

On May 19, 2004, Essex Development platted and recorded the twenty-four lot Millstone

subdivision in Jefferson County, Missouri, which is now at the center of this dispute between

appellant Nithyananda Dhyanapeetam of St. Louis, a Missouri corporation and current owner of

three Millstone lots, and respondent/cross-appellant Fogarty Farms, the owner of the remaining

twenty-one lots, over Nithyananda’s non-conforming use of one of its lots in violation of the

Millstone subdivision’s covenant restricting the use to single-family dwellings.

Respondent/cross-appellant Millstone Property Owners Association (MPOA) is a Missouri non- profit corporation which serves as the subdivision’s governing body responsible for enforcing the

restrictions that Essex recorded in 2004.

In 2007, Essex sold to Ananda LLC, a Missouri corporation, all twenty-four Millstone

lots. Ananda then constructed on lot fourteen a warehouse to house statues considered to be

deities in the Hindu faith. 1 In December 2008, Ananda deeded to Nithyananda lots thirteen,

fourteen, and twenty-one. Since then, members of Nithyananda have worshipped at the

warehouse up to four times a day.

In October 2015, Fogarty acquired from Ananda the remaining twenty-one Millstone

lots, formed the MPOA, installed Fogarty Farms’ president Bill Fogarty as the MPOA president,

and began levying assessments against Nithyananda’s three lots which Nithyananda has failed to

pay. The MPOA then amended the restrictions to remove the “common ground” designation

from a lot on which the subdivision’s lake was located and transferred the lake lot to Fogarty.

Up to that time, Nithyananda had been using the lake lot for its religious practices.

On June 26, 2017, the MPOA sued Nithyananda for the unpaid assessments and the costs

of mowing Nithyananda’s overgrown lots. Nithyananda filed its counterclaim against the

MPOA and joined Fogarty as a third-party defendant alleging in both pleadings its theory that in

connection with the 2007 transaction between Essex and Ananda, Essex did not transfer its

developer rights to Ananda such that Fogarty could not have acquired developer rights from

Ananda in 2015 and therefore had no right to create the MPOA or otherwise to enforce any

restrictions including making any assessments against Nithyananda. In addition, at trial

Nithyananda claimed alternatively that Ananda’s conduct in spearheading the development of lot

1 Nithyananda testified that in 2007 a ceremony occurred which transformed the statues into Hindu deities.

2 fourteen, and the entirety of the subdivision for that matter, as a site for religious worship and

related retreat center, education center, and residential community, demonstrated that Ananda

intended to abandon the entirety of the Millstone restrictions on all lots.

Nithyananda now appeals the trial court’s judgment issued after a bench trial alleging the

trial court erred: (1) in finding that Essex transferred developer rights to Ananda in 2007; (2) in

failing to find that even if Ananda received developer rights from Essex, Ananda abandoned or

waived those restrictions as to all lots; and (3) in awarding Millstone $50,000.00 in attorneys’

fees. On cross-appeal, the MPOA and Fogarty allege the trial court erred: (1) by voiding under

estoppel principles MPOA’s deed of conveyance to Fogarty of the lake lot after the MPOA

amended the restrictions to remove the lot’s common ground designation; and (2) by not

awarding the MPOA the full amount of its attorneys’ fees. We affirm the trial court’s judgment

in all respects except with regard to Nithyananda’s second point which we grant in part and hold

that the single-family dwelling restriction has been waived for lot fourteen only and we reverse

the trial court’s injunction with respect to lot fourteen only including its restrictions on its use.

Background

Essex’s conveyance of Millstone to Ananda

On October 1, 2007, Essex, Millstone’s original developer, transferred the entirety of the

subdivision to Ananda by general warranty deed. Essex conveyed to Ananda “[a]ll of Millstone

Phase One, according to the plat thereof recorded in Plat Book 215 page(s) 1 and 2 of the

Jefferson County Records.” The property was transferred subject to deed restrictions, easements,

recorded rights of way, and zoning regulations. Although Essex did not separately nor

3 specifically assign its developer rights to Ananda, the deed’s habendum clause 2 states, “TO

HAVE AND TO HOLD the same, together with all rights and appurtenances to the same

belonging, unto the said party(ies) of the second part, and to the heirs and assigns of such

party(ies) forever.” Essex thereafter did not act as developer of Millstone or attempt to assert

any control over Millstone.

The Millstone restrictions

The restrictions serve “to preserve said tract of land [the subdivision] as a respectable and

attractive residential neighborhood and to protect against contrary uses for the mutual benefit of

all present and future residents of the [s]ubdivision.” The use of lots is limited to single-family

dwellings. Under the terms of the restrictions, Essex had the ability to assign its powers and

responsibilities as developer to another purchaser.

The restrictions also allow the developer to form a subdivision board to enforce the

restrictions and make assessments. In doing so, the board is entitled to recover attorneys’ fees in

the event it successfully defends a lot owner’s claim. The board also has the power to control

common areas, make assessments, and exercise reasonably necessary powers to promote and

maintain Millstone for the enjoyment of the owners and the protection of property values.

Ananda’s development of Millstone

Ananda, for its part, undertook efforts beginning in 2007 to develop the land into a

retreat, meditation, and educational center. Ananda built the warehouse on lot fourteen and

applied, as Millstone’s developer, to the Jefferson County Planning and Zoning Commission

with a proposed development plan and preliminary plat application to rezone the tract from a

2 A habendum clause is “[t]he part of a deed that describes the land being conveyed, as well as naming the parties and identifying relevant facts or explaining the reasons for the deed.” Premises, BLACK’S LAW DICTIONARY (11th ed. 2019).

4 residential development to a multi-use development. Ananda conducted a traffic impact study

for its proposed change and an Ananda representative presented the plan to the commission. The

commission denied the application.

In 2008, Ananda transferred lots thirteen, fourteen, and twenty-one to Nithyananda, but

retained the other twenty-one lots. Then in 2015, Ananda transferred to Fogarty its interest in

those lots through a general warranty deed which included an assignment of its developer rights.

The MPOA’s 2016 transfer of the lake lot to Fogarty

After Ananda disposed of its remaining Millstone lots to Fogarty and Fogarty formed the

MPOA, the MPOA transferred the common area known as the lake lot to Fogarty by way of

amending the restrictions to remove the lake lot as common ground and then deeding the lake lot

to Fogarty. On the original plat, the lake lot was common ground and Nithyananda’s members

had been using it in their religious practices. Thereafter, Fogarty maintained the lake.

Standard of Review

“[T]he decree or judgment of the trial court will be sustained by the appellate court unless

there is no substantial evidence to support it, unless it is against the weight of the evidence,

unless it erroneously declares the law, or unless it erroneously applies the law.” Murphy v.

Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).

Discussion

Point I

In Point I, Nithyananda asserts the trial court’s finding that Essex transferred developer

rights to Ananda as part of their 2007 transaction is against the weight of the evidence and

misapplies the law. We disagree and deny this point because the general warranty deed’s

habendum clause together with Essex’s and Ananda’s post-transaction conduct support the trial

5 court’s findings that Essex intended to transfer and Ananda intended to receive those developer

rights.

This Court’s decisions in Scott v. Ranch Roy-L, Inc., 182 S.W.3d 627 (Mo. App. E.D.

2005) (Scott I) and Scott v. Ranch Roy-L, Inc., 242 S.W.3d 401 (Mo. App. E.D. 2007) (Scott II)

guide our analysis in this context when the parties’ conveyance does not explicitly include the

transfer of developer rights but the parties’ intent to do so can be gleaned from other facts and

circumstances including their post-transaction conduct.

The Scott cases arose in part when subdivision developer Roy Longstreet attempted to

assign developer rights to Ranch Roy-L, a corporation Longstreet and his sons had formed, by

way of a warranty deed that conveyed the property in dispute “with all and singular the rights,

privileges appurtenances and immunities thereto” to Ranch Roy-L. Scott I, 182 S.W.3d at 630.

After the trial court granted summary judgment in favor of Ranch Roy-L based on its finding that

Longstreet’s conveyance to Ranch Roy-L included developer rights, this Court reversed in Scott

I holding that because “developer’s rights are personal and do not run with the land,” and “the

warranty deed did not contain a specific assignment” of the developer rights, “such rights were

not conveyed by the general language of the habendum clause of the deed.” Id at 633. We

remanded the matter because in the absence of such specific assignment, it was a genuinely

disputed fact whether Longstreet intended to assign his developer rights to Ranch Roy-L. Id. at

636. (emphasis added).

On remand, the trial court entered judgment in favor of Ranch Roy-L finding that both

parties intended to transfer the developer rights. Scott II, 242 S.W.3d at 403. This Court

affirmed based on the undisputed evidence in the record that by way of the warranty deed,

Longstreet intended to assign the developer rights and Ranch Roy-L intended to receive them

6 including the evidence that Ranch Roy-L “began to exercise those same rights” after receiving

the warranty deed. Id. at 406. Scott II relied on the principle that “‘[t]he intent to assign an

interest is key’ and an assignment is accomplished where ‘the circumstances show an intention

on one side to assign and on the other side to receive.’” Id. (quoting Scott I, 182 S.W.3d at 633)

(citing Keisker v. Farmer, 90 S.W.3d 71, 74 (Mo. banc 2002)).

With the foregoing principles in mind, we turn to the facts of this case which we

conclude support the trial court’s finding that Essex intended to transfer, and Ananda intended to

receive, the developer rights for the Millstone subdivision. First, the deed’s habendum clause, by

which Essex divested itself of “all rights and appurtenances” in the Millstone subdivision,

initially evinces Essex’s intent to assign its developer rights. Then, after October 2007, Essex

made no attempt to exercise any right as a developer of Millstone or take any action whatsoever

relative to Millstone. These facts show Essex intended to transfer its developer rights to Ananda.

Similarly, the record supports the trial court’s finding that Ananda intended to receive

Essex’s developer rights. After the transfer, Ananda exercised control over common areas by

renaming the streets, conducting a traffic study, preparing water and sewage plans, and soliciting

installations by utility, phone, and cable providers. Further, Ananda submitted development

plans to the Jefferson County Zoning and Planning Commission on two different occasions.

Thus, the trial court did not err in finding this evidence satisfied the standards put forth in the

Scott cases, specifically Scott II, which was reviewed under the same procedural posture as this

case, after a bench trial, and this determination was not against the weight of the evidence and

did not misapply the law. Murphy, 536 S.W.2d at 32.

7 Point II

In Point II, Nithyananda alleges the trial court erred by failing to find that Ananda

abandoned or waived the Millstone restrictions in their entirety while it owned all the lots and the

developer rights. We grant Point II but only in part. We disagree that Ananda waived the

restrictions as to all the lots but agree that it waived the single-family dwelling restriction as to

lot fourteen in light of Ananda’s widespread disregard for the restriction on that lot given that it

built the warehouse, installed the statues, and otherwise helped coordinate with Nithyananda the

development of lot fourteen as the focal point of its overall plan to turn Millstone into a retreat

and educational center.

“It is a well-established rule that restrictive covenants are not favorites of the law, and

when interpreting such covenants, courts should give effect to the intent of the parties as

expressed in the plain language of the covenant.” Blevins v. Barry-Lawrence Cty. Ass’n for

Retarded Citizens, 707 S.W.2d 407, 408 (Mo. banc 1986). “When there is any ambiguity or

substantial doubt as to the meaning, restrictive covenants will be read narrowly in favor of the

free use of property.” Id. (citations omitted).

However, restrictive covenants may be abandoned or waived. Dash v. Taylor, 668

S.W.3d 580, 586 (Mo. App. E.D. 2023). “No hard and fast rules dictate what acts or omissions

may constitute waiver or abandonment of a restrictive covenant.” Dierberg v. Wills, 700 S.W.2d

461, 465-466 (Mo. App. E.D. 1985) (citing Gibbs v. Cass, 431 S.W.2d 662, 668 (Mo. App.

1968)). Waiver of the right to enforce a valid restrictive covenant may occur after persistent,

obvious, and widespread violations thereof. Id. at 466 (citing Lake Saint Louis Community

Association v. Kamper, 503 S.W.2d 447, 449 (Mo. App. 1973)).

If restrictions apply to an entire area and redound to the benefit of all property owners in the restricted area, then waiver or abandonment occurs only when

8 violations of the restrictions are so general as to indicate an intention or purpose to abandon the plan or scheme intended to be maintained by the restrictions.

Id. (citing Eichelsbach v. Harding, 309 S.W.2d 681, 686 (Mo. App. 1958)).

Turning to the record here, as to lot fourteen only, the trial court’s judgment insofar as it

found the single-family dwelling restriction on lot fourteen had not been abandoned, is against

the overwhelming weight of the evidence. Ananda’s and Nithyananda’s development of lot

fourteen since 2007 in a manner wholly inconsistent with the single-family dwelling restriction

leads us to this conclusion. Ananda constructed the warehouse to house the religious statues

soon after acquiring Millstone from Essex in 2007 as part of Ananda’s intention to develop a

community to worship including building a temple and educational facilities. The seriousness of

its intention is evinced by its applications to the county to change the zoning, though the county

rejected both applications. Thus, we conclude that from the time of Essex’s 2007 transfer of

Millstone to Ananda until Ananda’s 2015 transfer of its remaining twenty-one parcels to Fogarty,

Ananda demonstrated its clear “intention or purpose to abandon the plan or scheme intended to

be maintained” by the single-family dwelling restriction as to lot fourteen. Dierberg, 700

S.W.2d at 466.

Nevertheless, with respect to all the other lots, we are unable to reach the same

conclusion as we have with respect to lot fourteen because the record does not demonstrate

persistent, obvious, and widespread violations such that the trial court’s ruling is against the

weight of the evidence.

Point III and Cross-Appeal Point II – Attorneys’ fees

In Point III, Nithyananda alleges the trial court erred in awarding MPOA attorneys’ fees

and late property assessments because it was against the weight of the evidence and misapplied

the law. In Point II of its cross-appeal on this issue, the MPOA asserts the trial court erred in

9 failing to award it the full amount of their attorneys’ fees because the court relied on irrelevant

factors in reducing the award. We deny both points because the trial court’s discretionary

determination of attorneys’ fees was not arbitrary or so unreasonable to reflect a lack of careful

consideration.

“The determination of reasonable attorneys’ fees is in the sound discretion of the trial

court.” Williams v. Trans States Airlines, Inc., 281 S.W.3d 854, 877 (Mo. App. E.D. 2009).

“This determination ‘shall not be reversed unless the amount awarded is arbitrarily arrived at or

is so unreasonable as to indicate indifference and a lack of proper judicial consideration.’” Id.

(quoting Brady v. Curators of University of Missouri, 213 S.W.3d 101, 114 (Mo. App. E.D.

2006)). “The trial court is considered an expert on the issue of attorneys’ fees such that, in the

absence of a contrary showing, the trial court is presumed to know the character of the attorneys’

services rendered in duration, zeal, and ability. Id. (citing Nelson v. Hotchkiss, 601 S.W.2d 14,

21 (Mo. banc 1980)). “[A] trial court may award attorney’s fees to a prevailing party if a

contract provides for the payment of attorneys’ fees and expenses incurred in the enforcement of

a contract provision.” Schnucks Carrollton Corp. v. Bridgeton Health & Fitness, Inc., 884

S.W.2d 733, 739 (Mo. App. E.D. 1994).

Although we have reversed the injunction the trial court granted in the MPOA’s favor as

to lot fourteen only, we nevertheless conclude that the MPOA under the terms of the restrictions

are still entitled to recover attorneys’ fees when enforcing assessments and restrictions, or when

a lot owner has brought an unsuccessful claim against the association. Here, the MPOA brought

suit to recover unpaid assessments and successfully defended Nithyananda’s claim that the

MPOA did not possess developer rights. Brooke Drywall of Columbia, Inc. v. Bldg. Constr.

Enters., Inc., 361 S.W.3d 22, 27 (Mo. App. W.D. 2011).

10 Turning to the amount awarded, we affirm because there is no indication that the trial

court, which is considered the expert on attorneys’ fees, abused its discretion. The trial court

found “$50,000.00 to be a reasonable attorneys’ fees award in light of the relevant competing

factors.” We will not second guess the trial court’s decision in this regard and neither

Nithyananda nor the MPOA have met their burden on appeal to entitle either to a change in the

amount of attorneys’ fees awarded by the court. Williams, 281 S.W.3d at 877.

Cross-Appeal Point I – The lake lot transfer

Respondents also allege in their cross-appeal that the trial court erred in voiding the

MPOA’s transfer to Fogarty of the lake lot. Respondents argue that the lake lot never became

part of the subdivision’s common area because no developer ever deeded the lake lot to the

MPOA, and the restrictions require common areas to be transferred by deed from the developer

to the MPOA. Respondents also argue the transfer to Fogarty was necessary to meet the

MPOA’s obligations to maintain common areas and property values under the restrictions. We

are unpersuaded and affirm under the principles of promissory estoppel given that the lake lot

was treated by Essex and Ananda as a common area when Nithyananda’s purchased lots in

Millstone and thereafter Nithyananda used the lake lot for approximately eight years before the

MPOA purported to remove its common area status and transfer it to Fogarty.

The four elements of a promissory estoppel claim under Missouri law are: (1) a promise;

(2) detrimental reliance; (3) the specific detrimental reliance was reasonably foreseeable; and (4)

injustice can only be avoided by enforcement of the promise. Chesus v. Watts, 967 S.W.2d 97,

107 (Mo. App. W.D. 1998). “[T]he doctrine of promissory estoppel should be used with caution,

sparingly and only in extreme cases.” Id. at 106. “Because promissory estoppel serves as an

equitable remedy where an express contract does not exist, the court must only apply the doctrine

11 in those situations where an unjust decision would otherwise result.” Id. Promissory estoppel is

not required to be strictly plead and can be awarded by a trial court when there is sufficient

evidence. Id. at 110.

Again, the record supports the trial court’s finding under promissory estoppel that

Nithyananda relied on the lake lot being a common area and that it would be unjust for the lake

lot to be transferred to Fogarty. When Nithyananda acquired its three parcels, the plat showed

the lake lot as a common area and the restrictions stated that common areas were to be

“controlled by the Board of Directors for the benefit of the lot owners of the Subdivision.”

These facts satisfy the promise element of promissory estoppel. Id. at 109. Moreover, it is

apparent on this record that Nithyananda relied to its detriment that the lake lot would remain

part of the Millstone common area and that it was foreseeable that Nithyananda would do so as

Nithyananda and Ananda were working to develop a religious retreat center in which a body of

water was necessary. Finally, Nithyananda has established that it would be unfair at this point

after so many years to remove from its use a key component of this subdivision making this the

type of extreme case that “dictate[s] that the court fashion an equitable remedy to prevent an

unjust result.” Id. at 110.

Conclusion

For the reasons stated above, the trial court’s judgment is affirmed in part and reversed in

part.

______________________________ James M. Dowd, Judge John P. Torbitzky, Presiding Judge, and Michael S. Wright, Judge concur.