Smith v. First Sav. of Louisiana, FSA

• Decision Date: 11 January 1991
• Parties: Hugh V. SMITH, Jr. v. FIRST SAVINGS OF LOUISIANA, FSA, et al. 89-850.
• Court: Alabama Supreme Court

Page 1033

575 So.2d 1033

Hugh V. SMITH, Jr. v. FIRST SAVINGS OF LOUISIANA, FSA, et al.

89-850.

Supreme Court of Alabama.

Jan. 11, 1991.

Justice D. Smyth III of Robison & Belser, Montgomery, for appellant.

Charles W. Edmondson of Azar & Azar, Montgomery, for appellees.

JONES, Justice.

This action was commenced by First Savings of Louisiana, FSA ("First Savings"), and 48 individuals comprising the majority of the property owners in a subdivision development in Montgomery County, Alabama, against Hugh V. Smith, Jr., the original developer of the subdivision.

Challenging the trial court's rejection of his "covenants running with the land" argument, on which rejection the trial court based its summary judgment for the plaintiffs, Smith appeals. Because we hold that the covenants in issue, by their very nature, are personal and are not covenants running with the land, despite being explicitly characterized as the latter, we affirm.

During the early 1970's, defendant Hugh V. Smith, Jr., a Montgomery, Alabama, lawyer and real estate developer, was involved in the promotion, construction, development, and sale of a subdivision development known as Rolling Hills Golf And Racquet Club Plat No. 1 ("Rolling Hills"). (Although it is now known as "Oak Hills," the development will be referred to in this opinion as "Rolling Hills," as it was originally named.) Smith was the owner and principal developer of Rolling Hills during the initial promotion and development of the subdivision, which included a golf course, a tennis complex, and a country club.

On April 8, 1975, Smith and his wife recorded in the Montgomery County Probate Court a document containing covenants, easements, and restrictions pertaining to the Rolling Hills plat. Paragraph 10 of the recorded document, entitled "ARCHITECTURAL CONTROL," set out the guidelines for building construction and land use within the subdivision. Each guideline within Paragraph 10 specifically referred to an Architectural Control Committee as the authority for approving and disapproving actions authorized and governed by Paragraph 10. Paragraph 11 of the document reads: "MEMBERSHIP: The Architectural Control Committee is composed of Hugh V. Smith, Jr., or his designated representative."

Paragraph 12, "PROCEDURE," provides:

"The [Architectural Control] Committee's approval or disapproval as required in these covenants shall be in writing. Should the committee, or his designated representative, fail to approve or disapprove such plan, design, and location within thirty (30) days after such plans and specifications have been submitted to him, or his representative, or, in any event, if no suit to enjoin the construction has been commenced prior to the completion thereof, then such approval shall not be required, and the plans, specifications and plot plan shall be deemed to have been approved. However, all other covenants herein contained shall remain in full force and effect."

The introductory paragraph to a section of the document entitled "RESTRICTIONS" expressly states that the provisions contained therein are "to run with the land" and are to be binding on all parties for 25 years from the date of recording. According to the document, the initial 25-year period is to be followed by automatic extensions of the restrictions and covenants for successive 10-year periods "unless an instrument signed by a majority of the then owners of the lots has been recorded, agreeing to change said covenants in whole or in part."

In 1985 Smith and his wife divested themselves of their remaining proprietary and pecuniary interests in any of the real property located within Rolling Hills. The unsold and undeveloped portion of the Rolling Hills subdivision has been since owned by several developers, whose ownership, in every instance, has resulted from a foreclosure sale (including the sale of Smith's final interest in the property when Rolling Hills was sold to Linton Road Company, Inc., in 1985, as well as the 1987 sale that gave First Savings its current ownership).

In September 1988, First Savings requested that Smith designate a successor to himself as the sole member of the Architectural Control Committee, because, although Smith no longer held any right, title, or interest in any of the Rolling Hills property, he was able to "dictate" the way in which the owners of Rolling Hills property could use and enjoy their property. Further, said First Savings, Smith's divesting himself of any pecuniary or proprietary interest in the Rolling Hills property was a "significant change in circumstances" that would allow a revision of the plat restriction concerning membership on the Rolling Hills Architectural Control Committee.

Smith refused to vacate his position as sole member of the Architectural Control Committee or to designate a successor, claiming (1) that he had fully performed all the duties and responsibilities required of him as sole member of the Architectural Control Committee; (2) that there was no obligation upon him to name a successor as the Architectural Control Committee; and (3) that the provision making him the sole member of the Architectural Control Committee was a covenant "running with the land," and was not a personal covenant.

Upon Smith's refusal, First Savings notified all Rolling Hills property owners that a public meeting would be held to discuss Smith's removal as the sole member of the Architectural Control Committee. At that meeting, a majority of the Rolling Hills property owners signed a petition approving the amendment of the Rolling Hills plat covenants and restrictions so as to allow resident Rolling Hills property owners to elect an Architectural Control Committee, and they agreed to begin the instant litigation. First Savings and a majority of the owners of developed lots in Rolling Hills filed a complaint for equitable and declaratory relief.

In Count I of their complaint, the plaintiffs alleged that Smith had relinquished all right, title, and interest in Rolling Hills; that, as the sole member of the Architectural Control Committee, Smith had performed the duties of that committee only on "isolated and rare instances"; that the plaintiffs were in need of a "regular participating entity who owns property in [Rolling Hills] to conduct the Architectural Control Committee"; and that Smith had refused to relinquish control of the committee or to name a successor to the committee. The plaintiffs then asked the trial court to reform the Rolling Hills restrictions and covenants so as to allow the creation of an Architectural Control Committee comprised of the present owners of Rolling Hills property.

In Count II of their complaint, the plaintiffs contended that Smith's control of the Architectural Control Committee amounted to a restriction "against the free use and enjoyment" of their property. The plaintiffs further claimed that the provision establishing Smith as the sole member of the Architectural Control Committee was a personal covenant and thus not a covenant "running with the land." The plaintiffs then stated that as a result of Smith's relinquishing his interest in Rolling Hills while retaining control of the Architectural Control Committee, the plaintiffs were "in doubt as to the applicability" of the plat restriction establishing the membership of the Architectural Control Committee. Based on these allegations, the plaintiffs asked essentially that the trial court declare covenant number 11 (membership of the Architectural Control Committee) to be a personal covenant between Smith and his immediate grantees and not a covenant running with the land.

In his answer, Smith controverted the affirmative allegations made in the complaint, raised various affirmative defenses, and asserted a counterclaim for recognition of a particular property interest in Rolling Hills or, alternatively, for monetary damages for First Savings' refusal to honor that interest. Both Smith and the plaintiffs moved for summary judgment. The trial court granted the plaintiffs' motion for summary judgment, both as to their complaint and as to Smith's counterclaim, and entered a final judgment against Smith. Smith appeals.

Issue I

Smith first argues that the circuit court lacked jurisdiction to hear and decide the plaintiffs' claims, because the plaintiffs, says Smith, failed to follow the procedure set out in Ala.Code 1975, § 35-2-53, and because the plaintiffs "apparently" incorrectly relied on § 35-2-58 as the authority for their claims. We find, however, that neither § 35-2-58 ("Vacation and annulment...