Phillips v. Hatfield

Facts

D owns land in Bristol, Tennessee along a divided highway. D 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. D wanted 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 (Ps) own land in Bristol at 104 Sunnybrook Drive. D's property is situated at the intersection, abutting both Volunteer Parkway and Sunnybrook Drive. Ps' property abuts Sunnybrook Drive and lies immediately up the street from D's property. Ps' property shares a property line with a portion of D's property. Both of the properties are comprised of various platted lots, or portions thereof, in a subdivision known as Sunnybrook Addition. The Addition was platted in 1953 by the then-owners of the land comprising the subdivision, J.C. and Mary Virginia Chambers (Chambers). Sunnybrook Drive is a path of ingress into the subdivision from Volunteer Parkway. Ps filed suit seeking an injunction and a declaratory judgment that certain restrictive covenants prohibit non-residential structures on D's land. The Chambers recorded 'Protective Covenants' in 1955 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 Covenants designated all lots as residential and prohibited the erection of any structure other than a single-family dwelling. The Chambers recorded a plat for the 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. The Chambers sold sixty-seven of the seventy-nine lots. Included in the deeds conveying the vast majority of those lots were four expressly stated 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 covenants ran with the land. The deeds also contained a statement that the covenants were binding for a period of only twenty years. The Addition section B-2 is comprised of eight lots. Ps own a portion of lots seven and eight. D 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. The initial deeds for all of the parties' lots contained the Original Restrictive Covenants. 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 D's property was terminated by its own terms long ago. On May 3, 1955, the Chambers recorded the 1955 Restrictive Covenants after they had already sold the vast majority of lots in the Addition. 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.' Among the covenants was a restriction as to 'land use and building type.' 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. None of the deeds that conveyed D's property after May 3, 1955, incorporated or referred to the 1955 Restrictive Covenants. Some of the deeds involving D's predecessors-in-title contained no restrictive language at all. Some of the deeds contained general language that the conveyance was subject to valid restrictive covenants of record, if any. The 2016 and 2017 deeds conveying the properties to D stated: 'This conveyance is made subject to valid restrictive covenants and easements, if any, appearing of record.' D offered evidence that the 1955 Restrictive Covenants did not appear in the chain of title to his property. The trial court concluded that D's property was restricted to residential use and entered a declaratory judgment in favor of Ps. It ruled that D's property was subject to an implied negative reciprocal easement through the 1955 Restrictive Covenants. The trial court enjoined D from constructing any retail business or commercial enterprise on his property. The Court of Appeals affirmed the establishment of an implied negative reciprocal easement in that: (1) the parties derived their titles from a common grantor; (2) the common grantor had a general plan for the property involved; (3) the common grantor intended for the restrictive covenant to benefit the property involved; and (4) the grantees had actual or constructive knowledge of the restriction when they purchased their parcels. D appealed. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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