Indian Hills Club Homeowner's Assn., Inc. v. Clayton L. and Cindy Cooper - Concurring ( 1995 )


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  •                                                                           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.
    
    
    
    CONCUR:
    
    
    
    
    CRAWFORD, P.J., W.S.
    
    
    
    
    WILLIAMS, SR. J.
    
    
    
    
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