Brock v. Eick
| Docket Number | E2023-00021-COA-R3-CV |
| Decision Date | 27 October 2023 |
| Parties | HOOPER RANDALL BROCK v. JONATHAN EICK |
| Court | Tennessee Court of Appeals |
Session June 21, 2023
Appeal from the Circuit Court for Meigs County No. 2021-CV-42 Michael S. Pemberton, Judge
In this declaratory judgment action between two real property owners in the same subdivision, the trial court dismissed the matter without prejudice, finding that the court lacked subject matter jurisdiction. The trial court declined to adjudicate the merits of the case concerning the issue of whether the defendant property owner's utilization of his home within the subdivision as a vacation rental violated neighborhood restrictive covenants, determining that the plaintiff property owner had failed to properly join all real property owners in the subdivision as required by Tennessee's Declaratory Judgments Act. Discerning no reversible error, we affirm.
Tenn R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed; Case Remanded
Andrew J. Brown, Cleveland, Tennessee, for the appellant, Hooper Randall Brock.
Ben M Rose, Brentwood, Tennessee, for the appellee, Jonathan Eick.
OPINION
This appeal arises from litigation concerning property located within a real estate development or subdivision in Meigs County, Tennessee, known as "Red Cloud Development" ("Red Cloud"). All real property situated within Red Cloud is subject to certain protective covenants and restrictions ("the Restrictions"), which are recorded in the Register's Office of Meigs County. The Restrictions include the following language, in pertinent part:
The defendant herein, Jonathan Eick ("Defendant"), a real property owner in Red Cloud, began advertising and renting his home in Red Cloud as a vacation rental to visitors on websites such as VRBO and Airbnb. The plaintiff, Hooper Randall Brock ("Plaintiff"), who was another property owner in Red Cloud, became aware of Defendant's use of the property as a vacation rental. Although Plaintiff made verbal requests for Defendant to cease the use of his property as a rental, claiming that such use violated the Restrictions, Defendant refused to terminate the rental activity. In August 2021, Plaintiff, through legal counsel, sent a demand letter to Defendant, advising him that he was in violation of the Restrictions and demanding that Defendant cease his actions in order to avoid litigation. According to Plaintiff, Defendant ignored the letter and continued to rent his home in Red Cloud.
On September 13, 2021, Plaintiff filed a "Complaint for Permanent Injunction" in Meigs County Circuit Court ("trial court") based on Tennessee Rule of Civil Procedure 65. Plaintiff generally alleged that Defendant was in violation of the Restrictions because the Eick property was not classified as commercial and was being used for "business purposes" through rental of the real property. Plaintiff further averred that Defendant received up to $392 per night of occupancy through the operation of what Plaintiff termed a "for-profit vacation rental available to the public." Plaintiff requested a permanent injunction to prohibit Defendant from using the property as a vacation rental as well as the award of costs, expenses, and damages predicated on the alleged violation of the Restrictions.
On October 29, 2021, Defendant responded to the complaint with a motion to dismiss and a motion for attorney's fees and costs, alleging that the trial court lacked subject matter jurisdiction. Defendant asserted that the action should have been filed in Meigs County Chancery Court. Additionally, Defendant alleged that Plaintiff had failed to state a claim upon which relief could be granted because the complaint merely sought a permanent injunction, which is a remedy and not a cause of action.
On November 4, 2021, Plaintiff responded to the motion to dismiss and also filed a motion seeking to amend the complaint to add a claim for declaratory relief. However, on December 3, 2021, Plaintiff filed a notice "striking" the motion to amend, arguing that he could amend his complaint as a matter of course any time before a responsive pleading was filed. Plaintiff concomitantly filed an amended complaint seeking declaratory relief and a permanent injunction, pursuant to Tennessee Code Annotated § 29-14-101, et seq. and Tennessee Rule of Civil Procedure 65, including substantially the same allegations as contained in the original complaint. Defendant responded to the amended complaint with a motion to strike, contending that Plaintiff had forfeited his amendment as of right when he filed his motion to amend.
On February 23, 2022, the trial court heard all of the pending motions, first addressing Defendant's motion to strike the amended complaint. In its analysis, the court reasoned that because Defendant's motion to dismiss was not a responsive pleading, Plaintiff had retained the right to file his amended complaint without seeking the court's permission. In addition, the court denied Defendant's motion to dismiss for lack of subject matter jurisdiction based on Tennessee Code Annotated § 29-14-102(a), which provides that circuit courts have subject matter jurisdiction to grant declaratory relief. The court determined that because the amended complaint sought declaratory relief, the court maintained jurisdiction over the claim.
In turn, Defendant filed a second "Motion to Dismiss and for Attorney's Fees and Costs" on June 21, 2022. By this motion, Defendant asserted that the Declaratory Judgments Act requires that all necessary parties be joined in the action. Defendant contended that in this case, all real property owners in Red Cloud, or those who had or claimed any interest that would be affected by the declaration, should be considered necessary parties. Defendant also averred that at a minimum, Red Cloud property owners were third party beneficiaries to the Restrictions, which required their joinder as necessary parties in order to support a grant of declaratory relief. In addition, Defendant posited that Plaintiff had failed to state a claim upon which relief could be granted because: (1) vacation rentals, or short-term rentals ("STRs"), were not a commercial business purpose; (2) Plaintiff had made an inadequate and improper request for injunctive relief; and (3) Plaintiff had failed to adequately plead his damages.
Plaintiff responded to the motion to dismiss on August 14, 2022. Plaintiff's main postulate was that not all property owners had to be joined as parties because he was seeking an injunction against a particular property owner rather than a declaratory judgment banning all STRs within Red Cloud.
On August 31, 2022, the trial court conducted a hearing concerning the motion to dismiss. In its resultant order entered on October 5, 2022, the court concluded that it lacked subject matter jurisdiction over the matter based on the requirements of the Declaratory Judgments Act, codified at Tennessee Code Annotated § 29-14-10, et seq. In so ruling, the court primarily relied on our Supreme Court's reasoning in Tennessee Farmers Mut. Ins. Co. v. DeBruce, 586 S.W.3d 901, 906 (Tenn. 2019). As the trial court noted, in DeBruce, the Supreme Court explained that the Declaratory Judgments Act defined necessary parties as, inter alia, those whose absence could cause recurring litigation because the judgment would not terminate the controversy or uncertainty that caused the proceedings. See id. The trial court found that in the absence of the other Red Cloud owners in this matter, repeated litigation related to whether STRs violated the Restrictions in the subdivision was likely. The court therefore ruled that Plaintiff had sixty days from October 5, 2022, the day upon which the order was entered, to join all remaining property owners. Otherwise, the motion to dismiss would be granted and the case dismissed with prejudice.
Plaintiff responded to the trial court's order by filing a motion to alter or amend on November 1, 2022. In this motion, Plaintiff stated that joining all 200 property owners was financially impossible as well as unnecessary. Plaintiff contended that because he was only seeking an injunction against one property owner, the interests of the other property owners would not be directly affected. Additionally, Plaintiff propounded that the court erred in granting the motion "with prejudice" and requested that the court amend its order to note that dismissal would occur "without prejudice."
The trial court entered a final order on December 15, 2022, following a hearing concerning the motion to amend conducted on November 16, 2022. In the final order, the court reiterated that it lacked subject matter jurisdiction respecting the action without joinder of all Red Cloud property owners. The court referenced and incorporated its October 5, 2022, order as a continuing order, with the modification that the dismissal would be without prejudice. Plaintiff timely appealed.
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