RITCHIE PHILLIPS ET AL.
Session October 17, 2019
from the Chancery Court for Sullivan County No.
17-CB-25948(C) E. G. Moody, Chancellor
declaratory judgment action involving neighboring landowners
in a residential development, the trial court determined that
the restrictive covenants applicable to the development would
prevent the defendant from constructing a commercial business
on his property. The trial court accordingly entered an
injunction preventing the defendant from constructing a
business on his real property. The defendant has appealed.
Discerning no reversible error, we affirm.
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Court Affirmed; Case Remanded
T. Brading, Johnson City, Tennessee, for the appellant, Mark
A.W. Curtis, Blountville, Tennessee, for the appellees,
Ritchie Phillips and Roma Phillips.
R. Frierson, II, J., delivered the opinion of the court, in
which Charles D. Susano, Jr., and John W. McClarty, JJ.,
R. FRIERSON, II, JUDGE.
Factual and Procedural History
April 20, 2017, the plaintiffs, Ritchie and Roma Phillips,
filed a "Complaint for Declaratory Judgment and Motion
for Immediate, Temporary Injunction" against Mark
Hatfield in the Sullivan County Chancery Court ("trial
court"). The Phillipses alleged that they owned two
parcels of real property in Sunnybrook Addition Subdivision
("Sunnybrook Addition") and that Mr. Hatfield also
owned four lots within Sunnybrook Addition. Three of Mr.
Hatfield's parcels had road frontage on Highway 11E. The
Phillipses further alleged that Mr. Hatfield also owned an
adult bookstore, Intimate Treasures, and that he planned to
build a new 4, 000-square-foot structure to house this
business upon one or more of his parcels in Sunnybrook
Addition that abut Highway 11E.
Phillipses claimed that Sunnybrook Addition was subject to
protective covenants and restrictions mandating that the lots
be used for residential purposes only. According to the
Phillipses, the covenants and restrictions also provide that
any lot owner maintains standing to enforce the restrictions
by way of private action and that the restrictions would
renew every ten years until the majority of property owners
chose to rescind or modify them. The Phillipses thus sought
to have construction of Mr. Hatfield's nonconforming
trial court conducted a hearing regarding the temporary
injunction on May 2, 2017, and subsequently entered an order
granting the injunction on May 24, 2017. The court
specifically found in its order that the protective covenants
for Sunnybrook Addition applied to the lots owned by Mr.
Hatfield and that he had notice of same when he purchased the
lots because the protective covenants had been recorded prior
to his purchase. The court also found that Sunnybrook
Addition was subject to a general plan of development.
Furthermore, it found, despite Mr. Hatfield's
protestations to the contrary, that the nature of the
neighborhood had not radically changed in recent years such
that the covenants should be vacated. Moreover, the court
determined that the Phillipses would be harmed by
construction of Mr. Hatfield's proposed retail
establishment on his lots. The court therefore issued a
temporary injunction halting construction.
25, 2017, Mr. Hatfield filed a motion seeking to dissolve the
temporary injunction. Mr. Hatfield also sought,
alternatively, an interlocutory appeal to this Court. On May
30, 2017, Mr. Hatfield filed an answer and counterclaim,
wherein he denied that the restrictive covenants applied to
all of the lots in Sunnybrook Addition or to his lots
specifically. Mr. Hatfield raised several affirmative
defenses, including failure to state a claim upon which
relief could be granted, unclean hands, lack of standing,
failure to join indispensable parties, estoppel, and waiver.
Mr. Hatfield further stated a counterclaim for damages for,
inter alia, lost profits and attorney's fees.
21, 2017, the trial court entered an order denying Mr.
Hatfield's motion to dissolve the temporary injunction
and his request for an interlocutory appeal. The court
ordered that the temporary injunction would remain in place
and that the Phillipses would file a $5, 000 bond, which they
accomplished on June 23, 2017. The Phillipses subsequently
filed an answer to Mr. Hatfield's counterclaim, denying
that he was entitled to any relief.
trial court conducted a bench trial on January 3, 2019. On
April 3, 2019, the court entered an order finding that the
Phillipses owned Lots 7 and 8 in Sunnybrook Addition and that
Mr. Hatfield owned Lots 1, 2, 3, and a portion of Lot 4. The
court determined that Mr. and Ms. J.C. Chambers were the
original developers of the "Sunnybrook"
neighborhood, which was comprised of three platted
developments: Sunnybrook Addition, Sunnybrook Heights, and
Sunnybrook Acres. The court further found that Mr. and Mrs.
Chambers recorded identical protective covenants for all
three developments comprising the Sunnybrook neighborhood in
1955 and 1956. These covenants provided in relevant part that
the lots would be designated as residential and would only
contain single-family dwellings.
support of its order, the trial court found that although
Lots 1 and 2 had been sold by Mr. and Ms. Chambers prior to
the recording of the covenants, Mr. Chambers reacquired those
lots in 1955 and 1956. The court further found that since the
recording of the protective covenants, Lots 1 through 4 had
been sold numerous times and were ultimately purchased by Mr.
Hatfield on October 12, 2016. The court specifically noted
that Mr. Hatfield's deeds to his lots stated that the
conveyances were subject to "valid restrictive covenants
and easements, if any, appearing of record."
trial court found that Lots 1 through 4 had not been used for
a non-residential purpose since the inception of Sunnybrook,
although a billboard had been erected on Lot 3. The court
determined that Mr. Chambers was the original, common grantor
for all of Sunnybrook neighborhood, including Sunnybrook
Addition, and that he maintained a general plan of
development, intending for the restrictive covenants to apply
to all of Sunnybrook Addition. The court also found that Mr.
Hatfield had constructive notice of the restrictions because
they were publicly recorded. The court therefore declared
that an implied negative reciprocal easement existed, which
applied to Mr. Hatfield's property, and that a retail
shop would be in violation of those covenants. The court
accordingly ordered that the temporary injunction against Mr.
Hatfield be made permanent. Mr. Hatfield timely appealed.
Hatfield presents the following issues for our review, which