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Moore & Associates Memphis LLC v. Greystone Homeowners Association Inc.

Court of Appeals of Tennessee, Jackson

January 20, 2017


          Assigned on Briefs December 2, 2016

         Appeal from the Chancery Court for Shelby County No. CH-14-0268 Jim Kyle, Chancellor No. W2016-00721-COA-R3-CV

         This appeal involves the interpretation of a declaration of covenants for a homeowners' association. Appellant, the homeowners' association, filed liens on lots owned by Appellee for nonpayment of association fees. Appellee brought suit to quiet title and for damages for slander of title. The trial court dismissed the slander of title claim and interpreted the declaration of covenants to exempt Appellee from the payment of association fees. The trial court removed the liens filed against Appellee's lots, but assessed no monetary damages against Appellant. Appellant appeals. Discerning no error, we affirm.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed and Remanded

          Peter Baskind, Robin H. Rasmussen, and Megan Black Ross, Memphis, Tennessee, for the appellant, Greystone Homeowners Association, Inc.

          Lewis Clayton Culpepper, III, Memphis, Tennessee, for the appellee, Moore & Associates, Memphis, LLC.

          Kenny Armstrong, J., delivered the opinion of the court, in which Andy D. Bennett and Thomas R. Frierson, II, JJ., joined.



         I. Background

         In December of 2010, Moore & Associates, Memphis, LLC ("Appellee" or "Moore") purchased from the developer, Greystone General Partnership, twenty-seven lots in a gated, residential community near Memphis, Tennessee. Charles Moore is the managing member of Moore. Greystone Homeowners Association, Inc. ("Appellant" or "Greystone Association") is the homeowners' association for the Greystone residential development. Moore received title to the lots by warranty deed in lieu of foreclosure because the developer was facing bankruptcy and foreclosure by SunTrust Bank. Moore purportedly purchased the lots with the intention of building homes on the lots to sell to third parties.

         As a part of Greystone residential community, Moore's lots are subject to the "Declaration of Covenants, Conditions and Restrictions for Greystone, P.D." ("CCR"), which was drafted by one of the general partners and executed on July 16, 2001. The CCR provides that each lot owner becomes a member of the Greystone Association, and, as a member, each lot owner must pay assessments to Greystone Association, including regular assessments, special assessments, and emergency assessments. Article IX, section I of the CCR exempts two types of entities from paying the assessments:

The Developer-Declarant shall not be required to pay assessments on any lot owned by it. Any third party purchasing a lot from Developer-Declarant for the purpose of constructing a single-family residence for sale to the general public shall not be required to pay assessments so long as said third party does not occupy the property.

         Immediately following its purchase of the lots, Moore paid $25, 000.00 to Greystone Association. Charles Moore described this payment as a "goodwill gift, " but denied that the $25, 000.00 was paid as assessment fees.

         In furtherance of its plan to build homes on the lots before selling them, in July of 2013, Moore contracted with Cade Peeper, a licensed contractor, to build a single-family residence on one of its lots. The home was completed by the builder. For reasons it attributed to Greystone Association, Moore did not build additional homes in the Greystone development. Moore did sell two unimproved lots in June 2012 and April 2013, respectively.

         On January 31, 2014, Appellant filed liens on the remaining lots owned by Moore. The liens, which totaled $128, 100.00, were for alleged assessment arrears. On February 21, 2014, Moore filed an action in the Shelby County Chancery Court ("trial court"), seeking a declaratory judgment to quiet title relative to the liens filed by Appellant and seeking damages for slander of title. In its complaint, Moore averred that it was exempt, under the CCR, from paying assessments. Specifically, Moore argued that, pursuant to article IX, section 1 (supra), it was a third-party that had purchased lots from the developer with the purpose of constructing single-family residences for sale to the general public.[1]

         On April 4, 2014, Appellant answered the complaint, alleging that Moore did not qualify for an assessment exemption under the CCR and, therefore, Appellant was entitled to collect the assessment arrearage. Appellant also filed a counterclaim against Moore, asserting claims for breach of contract and unjust enrichment for Moore's failure to pay homeowners' association fees. On April 11, 2014, Moore answered the counterclaim, denying Appellant's allegations.

         On October 24, 2014, Moore filed a motion for summary judgment, reiterating its argument that it is exempt from paying association fees under the plain language of the CCR. On February 27, 2015, Appellant filed its response to Moore's motion for summary judgment, contending that Moore does not qualify for an exemption under the CCR. Specifically, Appellant argued that because Moore is not the developer or assignee of the developer and did not purchase the lots for the purpose of constructing homes on the lots for sale, Moore is not exempt from payment of association fees. As support for its position, Appellant cited Mr. Moore's deposition testimony, in which he stated that Moore is not a contractor and may not itself legally construct homes on the lots for sale to the public. Appellant also noted that Moore's real estate advertisement for its lots listed twenty-five unimproved lots for sale. The trial court denied Moore's motion for summary judgment by order dated April 24, 2015.[2]

         On March 8 and 9, 2016, the trial court heard the case. In its judgment, filed on March 22, 2016, the ...

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