R. Douglas Hughes v. New Life Development Corporation

Summary

The Tennessee Supreme Court reviewed the validity and effect of amendments to restrictive covenants and to the charter and bylaws of a homeowners’ association serving the Cooley’s Rift residential development. The Court held that the amendments were properly adopted and that neither a general plan of development nor the subdivision plat created implied restrictive covenants applicable to the successor developer’s surrounding property.

Holdings

1. New Life acquired Raoul Land Development’s rights and interests as the Developer of Cooley’s Rift under the purchase and sale agreement, deed, declaration, charter, and bylaws.
2. Uniform amendments to the declaration adopted in conformity with the declaration’s 75% super-majority procedure are valid and are subject principally to judicial review under an arbitrary-and-capricious standard, not the reasonableness test adopted by the Court of Appeals.
3. The homeowners lacked standing to bring derivative claims because they held less than the required 5% of the association’s voting power.
4. The amended declaration did not support implied restrictive covenants, based on a general plan or scheme, affecting New Life’s property outside the platted lots.
5. The 2002 plat did not create implied restrictive covenants concerning the purported East and West forest preserves because it contained no clear, legible designation of those preserves and did not place New Life on inquiry notice of them.

Questions Presented

1. Whether New Life acquired Raoul Land Development’s rights and interests as the Developer under the purchase agreement, deed, declaration, charter, and bylaws.
2. Whether the association’s amendments to its charter and declaration were validly adopted and subject to judicial review under a reasonableness standard or an arbitrary-and-capricious standard.
3. Whether the homeowners had standing to bring derivative claims on behalf of the homeowners’ association.
4. Whether the amended declaration supported implied restrictive covenants based on a general plan or scheme of development affecting New Life’s property outside the platted lots.
5. Whether the 2002 plat provided a basis for implied restrictive covenants concerning purported East and West forest preserves.

Disposition

reversed_and_remanded