Forrest Construction v. Milam, et al, 00-830

Decision Date17 May 2001
Docket Number00-830
Citation43 S.W.3d 140
PartiesFORREST CONSTRUCTION, INC., APPELLANT, VS. JOHN AND CLAUDIA MILAM, et al., APPELLEES. 00-830 17 May 2001 APPEAL FROM THE SEBASTIAN COUNTY CHANCERY COURT, NO. E98-305G, HON. HARRY A. FOLTZ, JUDGE, AFFIRMED IN PART; REVERSED IN PART. ARKANSAS COURT OF APPEALS AFFIRMED IN PART; REVERSED IN PART. W.H. "Dub" Arnold, Chief Justice. This appeal comes from a chancery decree enjoining appellant from subdividing certain lots and from selling certain lots that had already been subdivided in the Meadowbrook South Addition in the city of Greenwood. The chancellor also refused to enforce a sewer easement over land owned by appellees Donnie and Carol Whitson, and awarded appellees $23,579.65 in attorney fees. Appellant contends on appeal that the chancellor's rulings were erroneous; appellees ask that we dismiss the appeal on the grounds of mootness and lack of standing. We affirm the trial court as to the easement issue but reverse the trial court's interpretation of the restrictive covenants; as such, the court of appeals is affirmed in part and reversed in part. The appeal was originally heard by the Arkansas Court of Appeals, which denied the motion to dismiss and reversed and remanded the case. See Forrest Construction, Inc. v. Milam, et al., 70 Ark. App. 466, 20 S.W.3d 440 (2000). Appellees then petitioned this Court for review, asserting that the decision rendered by the court of appeals was arguably in conflict with prior holdings of this Court. We granted petition for review pursuant to Ark. Sup. Ct. R. 1-2(e)(ii). When we grant review following a decision by the court of appeals, we review the case as though it had been originally filed with this court. Freeman v. Con-Agra Frozen Foods, 344 Ark. 296, ___ S.W.3d ___ (2001); White v. Georgia- Pacific Corp., 339 Ark. 474, 6 S.W.3d 98 (1999). In 1993, Forrest Griffith and his wife Gloria acquired title to over 100 acres of land in Sebastian County. The land was later annexed to the city of Greenwood. In 1994, Griffith began
CourtArkansas Supreme Court

17 May 2001

APPEAL FROM THE SEBASTIAN COUNTY CHANCERY COURT, NO. E98-305G, HON. HARRY A. FOLTZ, JUDGE, AFFIRMED IN PART; REVERSED IN PART.

ARKANSAS COURT OF APPEALS AFFIRMED IN PART; REVERSED IN PART.

W.H. "Dub" Arnold, Chief Justice.

This appeal comes from a chancery decree enjoining appellant from subdividing certain lots and from selling certain lots that had already been subdivided in the Meadowbrook South Addition in the city of Greenwood. The chancellor also refused to enforce a sewer easement over land owned by appellees Donnie and Carol Whitson, and awarded appellees $23,579.65 in attorney fees. Appellant contends on appeal that the chancellor's rulings were erroneous; appellees ask that we dismiss the appeal on the grounds of mootness and lack of standing. We affirm the trial court as to the easement issue but reverse the trial court's interpretation of the restrictive covenants; as such, the court of appeals is affirmed in part and reversed in part.

The appeal was originally heard by the Arkansas Court of Appeals, which denied the motion to dismiss and reversed and remanded the case. See Forrest Construction, Inc. v. Milam, et al., 70 Ark. App. 466, 20 S.W.3d 440 (2000). Appellees then petitioned this Court for review, asserting that the decision rendered by the court of appeals was arguably in conflict with prior holdings of this Court. We granted petition for review pursuant to Ark. Sup. Ct. R. 1-2(e)(ii). When we grant review following a decision by the court of appeals, we review the case as though it had been originally filed with this court. Freeman v. Con-Agra Frozen Foods, 344 Ark. 296, ___ S.W.3d ___ (2001); White v. Georgia- Pacific Corp., 339 Ark. 474, 6 S.W.3d 98 (1999).

In 1993, Forrest Griffith and his wife Gloria acquired title to over 100 acres of land in Sebastian County. The land was later annexed to the city of Greenwood. In 1994, Griffith began developing the majority of the land into a subdivision called Meadowbrook South. He planned to divide the property into thirty-nine lots. However, before he could plat the subdivision, he sold two tracts by metes and bounds description. One tract was sold to appellees John and Claudia Milam; the other was sold to Melissa and Nelson Brock. Thereafter, Griffith platted the subdivision into lots. On May 4, 1994, he filed a plat with the circuit clerk reflecting thirty-seven lots1 ranging in size from 1.05 acres to 5.52 acres. The plat was signed by the Griffiths, Milams, and Brocks.

On May 9, 1994, five days after the plat was filed, Forrest Griffith filed a document containing ten restrictive covenants pertaining to the subdivision. The covenants provided, inter alia, that all lots were to be used for residential purposes only, that all residences were to have a minimum of 1,600 square feet of living area, and that all lots were to be used for single family dwellings. The document was signed only by Forrest Griffith.

After filing the plat and covenants, Griffith began to market the subdivision as one having estate-sized lots and offering "country living in the city." A few lots were sold in the summer of 1994 by Forrest and Gloria Griffith to various buyers, including appellees John and Claudia Milam and appellees Bill and Donna Dennis. In August 1994, the remaining property in the subdivision was transferred from the Griffiths to appellant Forrest Construction, Inc. After that time, the remaining appellees Maverick and Wendy Trozzi, Rushand Marcia West, Dean and Lena King, Rod and Sherry Hower, Ed and Andria Hawkins, Chris and Debra Honaker, Kenneth and Ann Hamilton, Donnie and Carol Whitson, and Charles and Kathryn O'Brien, purchased various lots in the subdivision.

In June 1996, Forrest Griffith, as president of Forrest Construction, Inc., decided to replat the subdivision by splitting nine of the unsold lots into twenty-two smaller lots. Lot 19 was split into eight lots approximately one-half acre in size, Lots 21 and 22 into three lots approximately three-quarters of an acre in size, Lots 31 and 32 into three lots approximately one and one-half acres in size, and Lots 34, 35, 36, and 37 into eight lots ranging in size from .63 acres to 1.2 acres. The Greenwood City Council approved the replatting in September 1996. Thereafter, appellant began making improvements on the lots.

Griffith did not inform the appellee homeowners of his plan to split lots. However, they discovered his intention to do so; and, on February 18, 1997, a number of homeowners, including many of the appellees in this case, filed suit in Sebastian County Chancery Court to enjoin the splitting of lots. Within a few days thereafter, the Greenwood City Council withdrew its approval of the replatting. As a result, the homeowners voluntarily dismissed their chancery action without prejudice. Griffith, meanwhile, pursued judicialreview of the city council's withdrawal of its approval. He ultimately obtained relief on May 8, 1998, when the Sebastian County Circuit Court found that the city council's withdrawal of approval had been wrongful.

Following the circuit court's ruling, Griffith began to sell the replatted lots. On August 19, 1998, appellees filed the suit that is the subject of this appeal. They alleged that appellant had split the lots in violation of the restrictive covenants filed in 1994, and they asked that appellant be enjoined from further violations. Appellant defended primarily on the grounds that none of the restrictive covenants expressly prohibited splitting the lots and that appellees' request for relief should be barred by the equitable doctrines of laches, waiver, estoppel, and unclean hands. The case went to trial, and the chancellor found that the restrictive covenant which stated that "all lots are to be used for single family dwellings" prohibited appellant from splitting the originally platted lots. He also found that there was no basis for the application of appellant's equitable defenses. Appellant was permanently restrained from any further splitting of the originally platted lots and from allowing any of the lots already split to be sold unless the lots already had substantial construction on them. It is from this ruling that appellant now appeals.

I. Appellees' Motion to Dismiss

We must first address an issue originally presented by appellees in a motion to dismiss the appeal. The motion concerns events that occurred after the notice of appeal was filed in this case. On September 14, 1999, a decree of foreclosure was entered as the result of a complaint filed by Farmers Bank of Greenwood against appellant. The decree ordered the sale of certain secured property owned by appellant in order to repay over $1,000,000 owed to the bank. Among the properties that had been pledged as security were Lot 23 in the Meadowbrook South subdivision and seventeen of the twenty-two split lots in the subdivision. On or about October 26, 1999, those lots were in fact sold to Farmers Bank. Appellees argue that, because of the foreclosure sale, the issues in this case are now moot, and appellant has no standing to prosecute this appeal. We disagree.

A. Mootness

We have held that a case becomes moot when any judgment rendered would have no practical legal effect upon a then-existing legal controversy. Dillon v. Twin City Bank, 325 Ark. 309, 924 S.W.2d 802 (1996). As a general rule, an appellate court will not address moot issues. Id. However, we may elect to address moot issues when they raise considerations of public interest or when addressing them willprevent future litigation. See Stair v. Phillips, 315 Ark. 429, 867 S.W.2d 453 (1993).

Obviously, this case involves considerations of public interest in that the case involves the use of property in a large subdivision, and the rights of a substantial number of persons will be affected. A ruling on the merits will have the practical legal effect of determining what actions may or may not be taken with respect to the subdivision lots. Additionally, although appellant has purportedly filed a lawsuit in federal court against the City of Greenwood and the Whitson appellees and, according to him, that case has been stayed pending our resolution of this appeal, there is no evidence in the record as to foreclosure by any bank against Forrest Construction nor of the federal lawsuit. As such, we deny the motion to dismiss on mootness grounds.

B. Standing

The appellees further assert that appellant's appeal should be dismissed for lack of standing to prosecute this appeal. We have held that a party has no standing to raise an issue regarding property in which he has no interest. Nash v. Estate of Swaffar, 336 Ark. 235, 983 S.W.2d 942 (1999). However, we have also held that a party is an aggrieved party and thus has standing to appeal if the trial court's order has impaired his economic interests. Sebastian Lake Pub. Util.Co. v. Sebastian Lake Realty, 325 Ark. 85, 923 S.W.2d 860 (1996).

Even though appellant may have no present property interest in the lots that were replatted, he remains aggrieved by virtue of his liability for attorney fees in the amount of $23,579.65. The chancellor awarded those fees because he found that appellees were the prevailing party below. A reversal of that finding will necessarily entail a reversal of the attorney fee award against appellant. Therefore, we hold that appellant does have standing to prosecute the instant appeal.

II. Merits of the Appeal
A. Interpretation of Restrictive Covenant

Appellant raises several points of error regarding the chancellor's finding that the subdivision covenants prohibit the splitting of the originally platted lots. Chancery cases are reviewed de novo on appeal. Holaday v. Fraker, 323 Ark. 522, 915 S.W.2d 280 (1996). We do not reverse a chancellor's findings of fact unless they are clearly erroneous. Id. A finding is clearly erroneous...

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