Phillips v. Hatfield

Citation624 S.W.3d 464
Decision Date01 June 2021
Docket NumberNo. E2019-00628-SC-R11-CV,E2019-00628-SC-R11-CV
CourtSupreme Court of Tennessee
Parties Ritchie PHILLIPS et al. v. Mark HATFIELD

Edward T. Brading, Johnson City, Tennessee, for the appellant, Mark Hatfield.

Ricky A.W. Curtis, Blountville, Tennessee, for the appellees, Ritchie and Roma Phillips.

Jeffrey S. Bivins, C.J., delivered the opinion of the Court, in which Cornelia A. Clark, Sharon G. Lee, Holly Kirby, and Roger A. Page, JJ., joined.

Jeffrey S. Bivins, C.J.

The issue in this case is whether restrictive covenants executed and recorded by the developers of a subdivision after they had sold the parties’ lots apply to the Defendant's property. The developers platted a subdivision and sold the vast majority of lots with time-limited restrictions against non-residential use expressly stated in the deeds that conveyed the lots. Thereafter, the developers recorded a declaration of more fulsome, non-time-limited restrictive covenants—including a restriction against non-residential use—that purported to apply to all lots in the subdivision. Decades later, well after the expiration of the time-limited deed restrictions, the Defendant purchased lots and proposed to build a structure for the operation of a retail business. The Plaintiffs, who reside in a home on lots adjacent to the Defendant's property, brought a declaratory judgment action to enforce the non-time-limited restriction against non-residential use contained in the recorded declaration. The trial court enjoined the Defendant's proposed commercial use, concluding that the Defendant's property was—through the declaration—subject to an implied negative reciprocal easement that prohibited non-residential use. The Court of Appeals affirmed. We hold that the developers lacked the authority to impose the declaration's restrictions upon the Defendant's property because they did not own those lots when they executed and recorded the declaration. We further hold that the developers’ mere re-acquisition and re-sale of some of the Defendant's lots after the recording of the declaration did not retroactively restrict the Defendant's property through the declaration. Accordingly, we reverse the decision of the Court of Appeals.

I. FACTUAL AND PROCEDURAL BACKGROUND

Mark Hatfield ("the Defendant") owns land in Bristol, Tennessee along U.S. Highway 11E, a divided highway known at that location as Volunteer Parkway.2 The Defendant purchased the land through two transactions, one in late 2016 and the other in early 2017. The local property assessor has classified the land as commercial since the early-to-mid 1990s. The City of Bristol has zoned the property as "General Business," which permits retail business. Having purchased the property, the Defendant proposed to raze an existing structure, construct a new building and parking lot, and open a retail business known as Intimate Treasures. The business would offer for sale at least some percentage of "adult novelty items."

Ritchie and Roma Phillips ("the Plaintiffs") own land in Bristol at 104 Sunnybrook Drive. The Plaintiffs reside in a home on this property. Sunnybrook Drive intersects Volunteer Parkway. The Defendant's property is situated at the intersection, abutting both Volunteer Parkway and Sunnybrook Drive. The Plaintiffs’ property abuts Sunnybrook Drive and lies immediately up the street from the Defendant's property. The Plaintiffs’ property shares a property line with a portion of the Defendant's property.

The Plaintiffs’ property and the Defendant's property are comprised of various platted lots, or portions thereof, in a subdivision known as Sunnybrook Addition.3 Sunnybrook Addition was platted in 1953 by the then-owners of the land comprising the subdivision, J.C. and Mary Virginia Chambers ("the Chambers"). Sunnybrook Drive is a path of ingress into the subdivision from Volunteer Parkway.

Aggrieved by the Defendant's plan to open a retail business on his property, the Plaintiffs filed suit seeking an injunction and a declaratory judgment that certain restrictive covenants prohibit non-residential structures on the Defendant's land.4 According to the Plaintiffs, the Chambers recorded "Protective Covenants" in 1955 ("the 1955 Restrictive Covenants") that purported to cover all lots in the subdivision and to "run with the land," in other words to bind remote grantees or successive purchasers. The 1955 Restrictive Covenants consisted of fourteen paragraphs that specified a variety of restrictions, from building setbacks, to minimum dwelling sizes, to prohibitions on the keeping of livestock and poultry. Chief among them for purposes of this appeal was a provision governing "land use and building type." The provision designated all lots as residential and prohibited the erection of any structure other than a single-family dwelling. In their Complaint, the Plaintiffs alleged that the Defendant's proposed construction would violate this covenant.

At a hearing on the Plaintiffsrequest for a temporary injunction and later again at trial, the parties presented copious proof—much of it documentary—on the history of Sunnybrook Addition, other related subdivisions, the Defendant's property, conveyances of various lots in Sunnybrook Addition, and restrictive covenants. We will endeavor to simplify the proof.

The Chambers acquired a 417-acre tract of land in 1946. On a portion of that land, the Chambers set out to develop the subdivision known as Sunnybrook Addition. To that end, the Chambers recorded a plat for Sunnybrook Addition in 1953, dividing the subdivision into eight sections or blocks, ranging in size from five to sixteen lots. The subdivision contained a total of seventy-nine lots. The plat did not restrict the lots to residential use.

Over the course of 1953 and 1954, the Chambers sold sixty-seven of the seventy-nine lots.5 Included in the deeds conveying the vast majority of those lots were four expressly stated restrictive covenants ("the Original Restrictive Covenants"):

(1) The property was to be used for residential purposes only;
(2) Any dwelling house was subject to a minimum square footage requirement;
(3) No outside toilets were permitted; and
(4) There were setbacks for the building of homes in reference to various property lines.

The language of the deeds provided that the covenants ran with the land. The deeds also contained a statement that the covenants were binding for a period of only twenty years.6

Sunnybrook Addition section B-2 is comprised of eight lots. The Plaintiffs own a portion of lots seven and eight. The Defendant owns lots one, two, three, and a portion of lot four. All of the parties’ lots were among those conveyed by the Chambers during the course of 1953–54.7

The initial deeds for all of the parties’ lots—from the Chambers as grantors to the various initial grantees in 1953—contained the Original Restrictive Covenants. However, by the terms of the deeds, the covenants were binding for a period of only twenty years. Thus, it is uncontested that the express residential-use restriction contained in the deeds for the Defendant's property terminated by its own terms long ago.

Each of the Defendant's lots was conveyed multiple times between the initial sale in 1953 and when the Defendant purchased it. Lot one was sold by the Chambers in 1953 and remained in the hands of that purchaser until August 8, 1956, when the purchaser sold the lot back to the Chambers. Lot two was sold by the Chambers in 1953, and was sold three more times before it also was sold back to the Chambers on May 21, 1956. After the Chambers reacquired lots one and two in 1956, the lots were always conveyed together. The Chambers re-sold lots one and two in 1960, and the lots were conveyed four more times before the Defendant bought them in 2016.

The Chambers sold lots three and four to Standard Advertising Corporation in 1953.8 They remained in the hands of the corporation until 1983, when the corporation dissolved and sold lot three and a portion of lot four together. Thereafter, lot three and the portion of lot four were sold together three more times before the Defendant purchased them in 2017.

The crux of the controversy in this case involves the 1955 Restrictive Covenants. On May 3, 1955, the Chambers recorded the 1955 Restrictive Covenants,9 even though by then they had already sold the vast majority of lots in Sunnybrook Addition.10 Nevertheless, the 1955 Restrictive Covenants purported "to cover the Sub-division Plot as to lots in the entire Sub-division, but no further or otherwise," and they specifically stated they were to "run with the land." As previously mentioned, among the covenants was a restriction as to "land use and building type:"

All lots in the tract shall be known and designated as residential lots. No structure shall be erected, altered or placed or permitted to remain on any lot other than one detached single family dwelling not to exceed two stories in height and a private garage for not more than two cars and usual domestic servants quarters.

By their terms, the 1955 Restrictive Covenants were to be binding for a definite period of time but were to renew automatically for successive ten-year periods unless a majority of the then-owners of the lots agreed to change the covenants.11

None of the deeds that conveyed the Defendant's property after May 3, 1955, incorporated or referred to the 1955 Restrictive Covenants. Some of the deeds involving the Defendant's predecessors-in-title contained no restrictive language at all. In fact, the deed by which the Chambers re-sold lots one and two in 1960 after they had reacquired the lots in 1956 contained no restrictive language whatsoever. On the other hand, some of the deeds involving the Defendant's predecessors-in-title contained general language that the conveyance was subject to valid restrictive covenants of record, if any. In fact, the 2016 and 2017 deeds conveying the properties to the Defendant stated: "This conveyance is made...

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    • United States
    • Court of Appeals of Tennessee
    • 29 Abril 2022
    ...Amendment. We will discuss each argument in turn. Plaintiff contends that our Supreme Court's recent decision in Phillips v. Hatfield, 624 S.W.3d 464 (Tenn. 2021) "breathed new life into the issue of time-limited covenants, such as the 1967 and 1974 covenants at issue here." We find Plainti......
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    ...and in a manner that advances the unrestricted use of the property. Id. (citing Williams , 219 S.W.3d at 324 ). Phillips v. Hatfield , 624 S.W.3d 464, 475 (Tenn. 2021).In Williams v. Fox , the Tennessee Supreme Court reversed the Court of Appeals and the trial court's holding that language ......
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    ...appellate courts afford deference to the trial court's credibility assessments of live, in-court testimony." Phillips v. Hatfield, 624 S.W.3d 464, 474 (Tenn. 2021) (citing Kelly v. Kelly, 445 S.W.3d 685, 692 (Tenn. 2014); Wells v. Tenn. Bd. of Regents, 9 S.W.3d 779, 783-84 (Tenn. 1999)). Gi......
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    ...appellate courts afford deference to the trial court's credibility assessments of live, in-court testimony." Phillips v. Hatfield, 624 S.W.3d 464, 474 (Tenn. 2021) (citing Kelly v. Kelly, 445 S.W.3d 685, 692 (Tenn. 2014); Wells v. Tenn. Bd. of Regents, 9 S.W.3d 779, 783-84 (Tenn. 1999)). Gi......
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