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Molloy v. Hrisko

Court of Appeals of Tennessee, Nashville

July 14, 2015


Session Date: April 17, 2015

Appeal from the Circuit Court for Giles County No. CC11145 Robert L. Jones, Judge

Jonathan L. Miley, Nashville, Tennessee, for the appellant, Carol A. Molloy.

Darrell G. Townsend, Nashville, Tennessee, for appellees Stephen K. Heard and Stewart, Estes & Donnell, PLC.

Samuel B. Garner, Jr., Pulaski, Tennessee, for appellees Michael J. Hrisko and Jessica L. Hrisko.

Stanley K. Pierchoski, Pulaski, Tennessee, for appellee Stephen R. Savage.

Andy D. Bennett, J., delivered the opinion of the court, in which Frank G. Clement, P.J., M.S., and W. Neal McBrayer, J., joined.



Factual and Procedural History

Carol A. Molloy ("Molloy") owned 38.29 acres of land in Giles County, Tennessee on Buford Station Road. She purchased the property in October 2005. During the pertinent time period, Michael and Jessica Hrisko ("the Hriskos") owned fifty acres that adjoined Molloy's property. Stephen Savage ("Savage") previously owned property that included the property owned by Molloy and the Hriskos.

Molloy decided to sell two five-acre parcels of property and retained Lisa Miller, who was associated with Grassland Real Estate, as her agent. Prospective purchasers placed an offer on the two parcels sight unseen, and a purchase and sale contract was signed on January 3, 2008, with a closing date of February 28, 2008. When Mr. Hrisko learned that the property was under contract, he expressed disappointment to Molloy that he could not buy it. At a social event, Savage informed Ms. Hrisko that he had put a restriction on the property allowing only one house per twenty acres. Savage and Ms. Hrisko then conferred with attorney Stephen Heard ("Heard"), who advised writing a letter to Molloy's real estate agent, whom he mistakenly believed was Melinda Barrington.

Heard's letter states:

I represent certain parties interested in the preservation of and adherence to restrictive covenants attendant to certain land parcels sold several years ago by Dr. Stephen Savage. I have been advised that you are representing Ms. Carol Molloy and, in fact, have obtained a contract for sale of some 11 or so acres which she intends to subdivide from the 38.29 acres Ms. Molloy purchased from David Gibson and Lisa A. Gibson. Please be advised that there is a restrictive covenant on the 38.29 acres owned by Ms. Molloy. This restriction is as follows:
There shall be only one house per 20 acres on the subject property, so that no more than a total of two (2) houses can be built on the subject property, containing 40 acres.
This restrictive covenant was applicable to 40.44 acres transferred from Stephen Savage to Ronnie Lee, but was also referenced as a restrictive covenant in the transfer of property from Stephen Savage to David Gibson. Because Ms. Molloy does not own 40 acres, the only house that can legally exist on her 38.29 acres is the house in which she resides.
I am enclosing the deeds applicable to Ms. Molloy's property for your perusal.
If, in fact, Ms. Molloy has entered into a contract for the sale of a portion of her property to individuals who have the intention of building a house on that property, such building would be impermissible because of the attendant restrictive covenant.

After the prospective buyers saw this letter, they agreed to grant an extension of the purchase and sale agreement through March 28, 2008. On February 22, 2008, Heard received a letter from attorney James Freeman, on behalf of Molloy, in which he stated that the "certain parties" referenced in Heard's letter lacked standing to challenge Molloy's property sale. Freeman further posited that Heard's letter was written "in an attempt to cause the sale to fail." He went on to give his analysis of the law, from which he concluded that the restrictive covenant did not apply to Molloy's property. Freeman requested that Heard send him a letter "withdrawing your claims and releasing Ms. Molloy, her heirs, successors and/or assigns from any cause of action regarding the alleged restrictions on the 38.29 acres owned by Ms. Molloy."

Heard replied to Freeman's letter on February 26, 2008. He discussed the reasons why his sending the original letter did not constitute tortious interference with contract and stated that the purpose of the letter "was to provide information that is a matter of public record." He contended that his letter did not threaten suit; he interpreted Freeman's request for a letter withdrawing claims and releasing Molloy as a request for either "(1) some sort of title opinion letter from me, or (2) some advance assurance that no party on whose behalf the letter was written will ever seek to enforce the restrictive covenant, assuming it is indeed enforceable by any such party; neither of these actions will be forthcoming."

On March 21, 2008, Heard sent a letter to the Hriskos stating that he was closing his file. He recommended that, if Molloy proceeded with the sale, they see Sam Garner, another attorney. On March 26, 2008, the prospective buyers refused to extend the purchase and sale agreement.

On February 13, 2009, Molloy filed suit against Mr. Hrisko alleging that, "[b]ased on the pronouncements, allegations and accusations in the [February 15, 2008] letter, the title company that was to perform the closing refused to issue a title insurance policy due to the fact that the letter made the property unmarketable, resulting in significant loss to Plaintiff." Molloy asserted causes of action for tortious interference with contract/inducement of breach of contract pursuant to Tenn. Code Ann. § 47-50-109 and common law principles; intentional interference with business relationship; and libel of title.

In January 2010, Molloy filed a motion for partial summary judgment seeking a holding as a matter of law that there was "no restriction in her chain of title that runs with the land restricting her heirs or assigns to a requirement that only one house can be built on each twenty acres." The court denied Molloy's motion in an order detailing some of the pertinent background in its findings of fact:

2. . . . The Savages retained 38.29 acres constituting the western one-half approximately of their property on Buford Station Road, which they conveyed to Mr. & Mrs. David Gibson in 2001.
3. Even though the Savages imposed no restrictions on the fifty acres conveyed to the Coles in 1998, they attempted to restrict the 40.44 acres conveyed to the Lees in 1999 to residential or agricultural purposes with only one house per twenty acres and with any house having a minimum square footage of 1, 800 square feet. The attempted restriction did not say that it would "run with the land" or that it was binding upon "heirs and assigns" of the Grantors or the Grantees. In the 2001 deed to the Gibsons, the Savages attempted to place the same restrictions upon the 38.29-acre conveyance by referring to the book and page number where the Lee deed was recorded, placing a handwritten star near the deed reference and then attaching below the signatures and acknowledgment the express language from the deed to the Lees as to use, density, and square footage of any residence.
4. The Plaintiff, Carol Molloy, has since acquired the 38.29 acres previously owned by the Gibsons. The Defendant, Mike Hrisko, now owns the fifty acres conveyed to the Coles without any attempt to impose restrictions.
5. In 2001 Mr. and Mrs. Lee conveyed their forty-acre tract to Mr. and Mrs. T.C. Holley, who in 2004 retained twenty acres and conveyed twenty acres to Mr. and Mrs. James Beall. The Holley twenty acres and the Beall twenty acres each is improved by a residence in apparent compliance with the attempted restrictions included in the 1999 deed to the Lees.
6. After the Plaintiff attempted to sell 11.2 acres of her 38.29 acres and after the Defendant communicated to the prospective purchasers his belief about the restrictions of one house per twenty acres, that proposed transaction failed to close. . . .
7. The Court denies the summary judgment relief sought by the Plaintiff for several reasons. First, the land owned by the Defendant, as a successor to the Coles, was never subjected to the restrictions. The Defendant probably has no standing to enforce such restrictions and is not a proper party against whom the Plaintiff could litigate for the purpose of having the alleged restrictions declared invalid. The Holleys and Bealls [current owners of Lee property] are necessary parties in any litigation to determine the validity of the restrictions. If there was an attempt by the owners to remove the restrictions by an agreed document to be recorded in the Register's Office, it now appears to the Court that the Holleys, the Bealls, and the Plaintiff would need to join in the execution and recording of such document.
8. Second, when the Savages conveyed approximately forty acres to the Lees and imposed restrictions, the doctrine of negative reciprocal easement may have made the same restrictions applicable to the tract of approximately forty acres being then retained by the Savages. In fact, when the Savages conveyed to the Gibsons the remaining 38.29 acres, they expressly, even if inartfully, attempted to impose those same restrictions upon the 38.29 acres now owned by the Plaintiff. Even if the deed from the Savages to the Gibsons was not fully effective in causing such restrictions to "run with the land, " the intent of the parties may have established an equitable servitude in accordance with the authorities cited by the Defendant.
9. Third, though the parties suggest the facts are essentially undisputed, the intent of the parties to previous deeds is material and may be disputed, so that summary judgment would be inappropriate.

In June 2010, Molloy filed an amended complaint adding Ms. Hrisko and Savage as defendants. In October 2011, she was granted leave to file a second amended complaint adding Heard as a defendant and adding a cause of action for civil conspiracy. In November 2012, Molloy was granted leave to file a third amended complaint naming Stewart Estes Donnell, PLC ("Stewart Estes"), Heard's law firm, as a defendant and adding a cause of action for respondeat superior liability as a basis for liability of the Hriskos for the actions of their agent, Heard, and of Stewart Estes for the actions of its agent, Heard. Plaintiff also added Bank of America, N.A. ...

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