State Supreme Court Permits Continued Development Of Franklin County Subdivision

Monday, November 19, 2012

The Tennessee Supreme Court on Monday upheld a decision of the Chancery Court for Franklin County to permit the continued development of Cooley’s Rift, a 1,400-acre residential development near Monteagle, despite objections from some original homeowners to changes in the development plan.

In 2005, after the president of the original developer of Cooley’s Rift died, New Life Development Corp. purchased the real property and the rights to develop Cooley’s Rift.  Several existing property owners objected to New Life Development’s revised plans for the property and filed suit in the Chancery Court for Franklin County.  The trial court dismissed property owners’ suit, but in 2009, the Court of Appeals instructed the trial court to decide whether the revised plans were contrary to implied restrictions in the subdivision plat or the development documents.

After the case was returned to the trial court, most of the homeowners in Cooley’s Rift approved changes in the restrictive covenants and the charter of the homeowners’ association that resolved the issues raised by the Court of Appeals.  However, the dissatisfied property owners filed a second suit challenging the validity of these changes.  The trial court again upheld the actions of New Life Development and the majority of the property owners.  The property owners who objected to New Life Development’s plans again appealed to the Court of Appeals. 

In 2011, the Court of Appeals decided that New Life Development and the homeowners’ association had followed the correct procedures to amend the restrictive covenants and the charter of the homeowners’ association.  However, the court also decided that the trial court should conduct another hearing to determine whether these amendments were reasonable.  In addition, the court ordered the trial court to determine whether any information on the development’s recorded plats provided a basis for imposing restrictions on the development.  New Life Development appealed this decision to the Supreme Court.

In a unanimous opinion, the court ruled that the homeowners’ association had validly adopted the amendments.  In addition, the court decided that Tennessee law did not require the courts to inquire into the reasonableness of the amendments to the restrictive covenants approved by a super-majority of the property owners.  Instead, the court held that the amendments should be evaluated under an arbitrary and capricious standard and that the Cooley’ s Rift amendments were neither arbitrary nor capricious.  Lastly, the court decided that the recorded plat did not provide a basis for implied restrictions on development. 

To read the R. Douglas Hughes v. New Life Development Corp. opinion, authored by Justice William C. Koch, Jr., visit TNCourts.gov.


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