Royalton Woods Homeowner Association, Inc. v. Phillip Soholt

01/29/2019
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
November 7, 2018 Session

ROYALTON WOODS HOMEOWNER ASSOCIATION, INC. V. PHILLIP
SOHOLT, ET AL.

Appeal from the Chancery Court for Maury County
No. 15-562 Stella L. Hargrove, Chancellor

No. M2018-00596-COA-R3-CV

This appeal arises from a dispute between a residential homeowner association and the
owners of a lot in the subdivision. The trial court granted partial summary judgment to
the association upon the determination that the subject property was encumbered by the
Declaration of Covenants, Conditions and Restrictions (“CCRs”), due in part to the fact
that the CCRs were expressly referenced and incorporated into the Special Warranty
Deed conveyed to the homeowners. The court also granted summary judgment upon the
finding it was undisputed that the challenged improvements made to the property by the
homeowners, the parking of commercial vehicles on the street in front of the house, and
operating a business out of the home were in violation of the CCRs. Following a hearing
on damages and injunctive relief, the trial court issued an injunction ordering the
homeowners to remove the unauthorized improvements, stop parking commercial
vehicles on the street in front of the home, and cease conducting their business out of the
home, and awarded unpaid assessments and attorney’s fees to the association. On appeal,
the homeowners argue that their lot is not encumbered by the restrictive covenants, the
association did not have standing or authority to enforce the restrictions, and the
homeowners did not violate the restrictions. Additionally, the homeowners take issue
with the court’s failure to apply the doctrine of laches, its decision to summarily dismiss
their slander of title claim against the homeowner association, and the award of attorney’s
fees. We have determined there is a genuine dispute of fact concerning whether the
homeowners were conducting their business out of the home in violation of the CCRs
which precludes summary judgment; therefore, we reverse the grant of summary
judgment on that claim. We affirm the trial court’s rulings in all other respects.

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

FRANK G. CLEMENT JR., P.J., M.S., delivered the opinion of the Court, in which ANDY D.
BENNETT and W. NEAL MCBRAYER, JJ., joined.
John A. Beam, III, Nashville, Tennessee, for the appellants, Phillip and Denise Soholt.

Cannon F. Allen, Memphis, Tennessee and Seth M. Lasater, Columbia, Tennessee, for
the appellee, Royalton Woods Homeowner Association, Inc.

OPINION

Defendants, Phillip and Denise Soholt (“the Soholts”), purchased Lot 60 in the
Royalton Woods subdivision in Spring Hill, Tennessee pursuant to a Special Warranty
Deed on September 30, 2009. The Soholts’ deed specified, in pertinent part, that Lot 60
was encumbered by the Declaration of Covenants, Conditions, and Restrictions for
Royalton Woods of record with the Maury County Register of Deeds in Record Book
1996, page 645, (“the 2007 CCRs”), and a Reinstatement of Covenants, Conditions and
Restrictions of record with the Maury County Register of Deeds in Record Book 2069,
page 714, (“the 2009 Reinstatement”). (The 2007 CCRs and the 2009 Reinstatement are
referred to collectively as the “CCRs.”) While this fact would normally be dispositive of
whether Lot 60 is encumbered by the CCRs, the convoluted history of this development
and its various developers requires us to review that history.

The genesis of this development occurred in January of 2006, when Royalton
Woods Development, Inc. (“RWDI”) purchased and began developing the subdivision,
which consisted of 65 lots. It then sold Lot 60 a year later, along with 11 other lots, to
Corinthian Custom Homes, and shortly following, filed and recorded the 2007 CCRs.

RWDI was administratively dissolved in February 2008, and Community First
Bank & Trust (“Community First”), the bank that financed the purchase, foreclosed on 36
lots owned by RWDI. However, Lot 60 was not among them, as it had already been sold
to Corinthian Custom Homes in January 2007. RW Development, LLC (“RW
Development”) subsequently purchased the 36 lots from Community First in March
2009. That same month, RW Development filed and recorded the 2009 Reinstatement
with the Maury County Register of Deeds, which re-encumbered the 36 lots it owned
with the 2007 CCRs and added other building restrictions.

In the meantime, Trace Development bought Lot 60 from Corinthian Custom
Homes, and subsequently quit claimed Lot 60 to Community First. On September 30,
2009, Community First sold Lot 60 to the Soholts pursuant to a Special Warranty Deed.
The deed stated that Lot 60 was encumbered by the “covenants, conditions and
restrictions as set forth in instrument of record in Book 1996, page 645 and Book 2069,
page 714, Register’s Office of Maury County, Tennessee,” which referenced the 2007
CCRs and the 2009 Reinstatement, respectively.

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 On October 11, 2007, the plaintiff, Royalton Woods Homeowner Association (the
“HOA”), a non-profit corporation, was organized and controlled by RWDI. RWDI
dissolved in February 2008. Thereafter, homeowners in Royalton Woods managed the
HOA.

In 2013, one of the homeowners discovered that the attorney who drafted the 2007
CCRs had also drafted, but omitted, the HOA’s Bylaws in the initial filing. After
executing a Scrivener’s Affidavit, which noted the omission, the Bylaws were filed and
recorded on November 19, 2013. Thereafter, the HOA elected a board of directors (the
“Board”) pursuant to the Bylaws, which has managed the HOA ever since.

In August 2015, the Board notified the Soholts that they owed HOA assessments.
The Soholts responded, stating they did not owe any assessments, because Lot 60 was not
encumbered by the CCRs, and they were not members of the HOA. Shortly following in
October 2015, the Soholts began a construction project on the exterior of their residence
without seeking HOA approval, which included paving their backyard, significantly
extending their fence, and enlarging their deck. One month later, the Board sent the
Soholts a cease and desist letter, but the Soholts continued the construction project
unabated.

On November 23, 2015, the HOA commenced this action by filing a Complaint
for Enforcement of Restrictive Covenants and Damages in the Maury County Chancery
Court.1 The Complaint alleged the Soholts violated the restrictive covenants by altering
the exterior of their home without HOA approval, failing to pay assessments, and parking
a recreational vehicle in the neighborhood for more than 48 hours. The HOA then filed an
amended complaint on July 5, 2016, which alleged the Soholts also violated the CCRs by
operating a business from the residence, parking commercial vehicles and trailers outside
of the garage, and keeping more than three dogs on the property. The HOA sought unpaid
assessments, removal of the exterior alterations, and the termination of all other
aforementioned activities on the property.

The Soholts filed an answer, denying the HOA’s claims and a counter complaint
for slander of title and failure to enforce restrictive covenants. In the answer, the Soholts
contended that Lot 60 was not bound by the CCRs. The answer also asserted, inter alia,
that the HOA did not have standing to bring a claim against the Soholts and that the
HOA’s claims were barred by the principle of laches.

Regarding the Soholts’ slander of title claim, the Soholts alleged that on February
28, 2011, the HOA improperly filed a Notice of Lien on Lot 60, seeking to recover

1
The HOA’s original complaint listed Philip Soholt as the sole defendant. The amended
complaint also added defendant, Denise Soholt, and referenced and attached the Soholts’ deed.

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assessments, though no assessments were owed because Lot 60 was not encumbered by
the CCRs. The Soholts also claimed, in the alternative, that they suffered damages as the
result of the HOA’s failure to enforce the restrictive covenants regarding the size and
quality of the homes in the development. The HOA filed an answer denying the Soholts’
claims.2

Following discovery, both parties moved for summary judgment. The HOA
moved for partial summary judgment as to the Soholts’ liability on the HOA’s claims
against them and for complete summary judgment on the Soholts’ claims against the
HOA. The HOA’s motion for partial summary judgment primarily argued that the
Soholts’ property was encumbered by the CCRs and the Soholts violated the CCRs. The
motion for complete summary judgment argued that the Soholts’ slander of title claim
should be dismissed because Lot 60 was encumbered by the CCRs, which allowed the
HOA to place a lien on Lot 60 for unpaid fees. It argued, inter alia, that the Soholts’
claim for failure to enforce restrictive covenants should be summarily dismissed because
the Soholts could not show they suffered damages.

The Soholts filed a response and a cross motion for summary judgment on the
HOA’s claims against them. In both the response and the summary judgment motion, the
Soholts argued that their property was not encumbered by the CCRs and that the HOA
did not have standing to bring its claims against them. In their cross motion for summary
judgment, the Soholts also argued that the HOA’s failure to consistently collect
assessments from 2009 to 2013 precluded the HOA from collecting those assessments
after 2013 under the equitable doctrine of laches.

The court heard the motions in November and December of 2017 and ruled in
favor of the HOA. The court granted the HOA’s motion for partial summary judgment,
ruling in pertinent part:

Plaintiff met its burden of proof by affirmatively showing the following:
Defendants are clearly bound by the CCRs that are referenced in their
Deed; they have violated the CCRs, and Plaintiff is entitled to damages.
Violations by Defendants include: failure to pay assessments, failure to
obtain approval of construction on their lot, failure to maintain their lot
consistent with the community wide standard, failure to comply with
parking restrictions, failure to comply with animal restrictions, and failure
to comply with removal of debris caused by construction. Plaintiff has
standing and the authority to enforce the CCRs which restrict Lot 60.

2
In July 2016, the HOA filed a motion for a temporary restraining order, which the trial court
granted, finding that Lot 60 was encumbered by the CCRs. The trial court ordered the Soholts to cease
construction on the exterior of their home.

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 Plaintiff also seeks partial summary judgment on the ground that
Defendants are conducting business activities out of their home in violation
of the trade/business restriction. Defendants fail to demonstrate the
existence of specific facts which could lead a rational trier of fact to find in
their favor. Indeed, in their response to partial summary judgment,
Defendants simply state that Defendants are not bound in any way by the
homeowner association restrictions, period.

The trial court also granted the HOA’s motion for complete summary judgment on
the Soholts’ claims. Considering the Soholts’ slander of title claim, the court found that
Lot 60 was encumbered by the CCRs, and therefore, the HOA properly placed a lien on
the title for unpaid assessments in 2011. As to the Soholts’ alternative claim that they
suffered damages as the result of the HOA’s failure to enforce the restrictive covenants,
the trial court ruled that the Soholts “failed to … identify their expert on damages and
provide their damage calculations by this Court’s deadline.”

On February 26, 2018, the court held a hearing on damages and entered a final
order awarding damages to the HOA, which included unpaid assessments and attorney’s
fees. The trial court also issued a mandatory injunction requiring the Soholts to remove
the exterior improvements constructed on or after October 1, 2015, and requiring the
Soholts to comply with the CCRs. This appeal followed.

ISSUES

The Soholts raise nine issues on appeal.3 Having assessed the issues as framed by
the Soholts in the context of their arguments, we find it necessary to rephrase and
consolidate their issues as follows to enable a more focused analysis:

3
The Soholts frame the issues as follows:

1. Whether the Appellee community association, organized in November 2013, has standing to
bring an action to enforce restrictions against the Appellant lot owners who purchased on
September 30, 2009?
2. Whether the plain language of Section 2.01 (Admission of Members) of the Bylaws makes
participation in the community association voluntary.
3. Whether the Appellee community association who filed unverified Bylaws in the public
record on or about November 19, 2013 is too remote in time under the Tennessee race notice
statute, T.C.A. 66-24-105, to bind Appellants, good faith purchasers for value, who acquired
their lot 60 on September 29, 2009.
4. Whether the limited reinstatement of restrictions filed on March 9, 2009 which excludes the
Defendant’s lot 60 evidences that the July 2, 2008 foreclosure on the deed of trust by
Community First Bank & Trust removed the Covenants, Conditions and Restrictions filed on
July 20, 2007, subsequent to the deed of trust that secured the development loan for Royalton
(continued…)
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 I. Did the trial court err in granting partial summary judgment to the HOA based
on its determination that Lot 60 is encumbered by the CCRs, the HOA has the
authority to enforce the CCRs, and the Soholts are in violation of the
restrictions?

II. Did the trial court err by failing to apply the affirmative defense of laches as a
basis for denying the HOA’s motion for partial summary judgment?

III. Did the trial court err by summarily dismissing the Soholts’ slander of title
claim against the HOA?

IV. Did the trial court err by awarding attorney’s fees to the HOA?

STANDARD OF REVIEW

This court reviews a trial court’s decision on a motion for summary judgment de
novo without a presumption of correctness. Rye v. Women’s Care Ctr. of Memphis,
MPLLC, 477 S.W.3d 235, 250 (Tenn. 2015) (citing Bain v. Wells, 936 S.W.2d 618, 622
(Tenn. 1997)). Accordingly, this court must make a fresh determination of whether the
requirements of Tenn. R. Civ. P. 56 have been satisfied. Id.; Hunter v. Brown, 955
S.W.2d 49, 50-51 (Tenn. 1997). In so doing, we consider the evidence in the light most

Woods Section 1 (and recorded subsequent to the initial conveyance of lot 60) from binding
the Defendant’s lot 60 as a matter of law.
5. Whether the trial court erred in issuing a mandatory injunction to remove improvements and
finding the Appellants improvements were in violation of the Covenants, Conditions and
Restrictions, where the Exhibit D design standards for Royalton Woods were not filed as part
of the Covenants, Condition[s], and Restrictions.
6. Whether the trial court erred in finding that Appellants use of their property was in violation
of the Covenants, Conditions and Restrictions where the Appellants did not receive the
required actual notice of the use restrictions as enforced by the Appellee community
association until after suit was filed.
7. Whether the affirmative defense of laches prevents enforcing Covenants, Conditions and
Restrictions against lot owners who purchased on September 30, 2009?
8. Whether the trial court erred in granting summary judgment on the Soholts claim of slander
of title claim requesting the removal of the Notice of Lien on Lot 60 filed by Royalton Woods
Homeowner Association of record in Book R2145 Page 611-612 in the Register’s Office of
Maury County, Tennessee.
9. Whether the trial court erred in awarding and allocating attorney fees to the Appellee in
violation of the legal standard in Tennessee the provides that attorneys fees may not be
recovered unless provided for by specific statute or by express contract provision between the
parties as stated in Cracker Barrel Old Country v. Epperson, 284 S.W.3d 303, 308, 309
(Tenn. 2009)

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favorable to the non-moving party and draw all reasonable inferences in that party’s
favor. Godfrey v. Ruiz, 90 S.W.3d 692, 695 (Tenn. 2002).

Summary judgment should be granted when “the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law.” Tenn. R. Civ. P. 56.04. A fact is material “if it must be
decided in order to resolve the substantive claim or defense at which the motion is
directed.” Byrd v. Hall, 847 S.W.2d 208, 215 (Tenn. 1993)). A “genuine issue” exists if
“a reasonable jury could legitimately resolve that fact in favor of one side or the other.”
Id.

“The moving party has the ultimate burden of persuading the court that there are
no genuine issues of material fact and that the moving party is entitled to judgment as a
matter of law.” Martin v. Norfolk S. Ry. Co., 271 S.W.3d 76, 83 (Tenn. 2008) (citing
Byrd, 847 S.W.2d at 215). Tennessee Rule of Civil Procedure 56.03 requires the moving
party to support its motion with “a separate concise statement of material facts as to
which the moving party contends there is no genuine issue for trial.” Tenn. R. Civ. P.
56.03. “Each fact is to be set forth in a separate, numbered paragraph” and “supported by
a specific citation to the record.” Id.

If the moving party makes a properly supported motion, “the nonmoving party is
required to produce evidence of specific facts establishing that genuine issues of material
fact exist.” Martin, 271 S.W.3d at 84 (citations omitted).

“[W]hen a motion for summary judgment is made [and] ... supported as
provided in [Tennessee Rule 56],” to survive summary judgment, the
nonmoving party “may not rest upon the mere allegations or denials of [its]
pleading,” but must respond, and by affidavits or one of the other means
provided in Tennessee Rule 56, “set forth specific facts” at the summary
judgment stage “showing that there is a genuine issue for trial.” Tenn. R.
Civ. P. 56.06. The nonmoving party “must do more than simply show that
there is some metaphysical doubt as to the material facts.” Matsushita Elec.
Indus. Co., 475 U.S. at 586, 106 S. Ct. 1348. The nonmoving party must
demonstrate the existence of specific facts in the record which could lead a
rational trier of fact to find in favor of the nonmoving party.

Rye, 477 S.W.3d at 265.

The nonmoving party may satisfy its burden of production by:

(1) pointing to evidence establishing material factual disputes that were
over-looked or ignored by the moving party; (2) rehabilitating the

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 evidence attacked by the moving party; (3) producing additional
evidence establishing the existence of a genuine issue for trial; or (4)
submitting an affidavit explaining the necessity for further discovery
pursuant to Tenn. R. Civ. P., Rule 56.06.

Martin, 271 S.W.3d at 84 (citations omitted).

The nonmoving party’s evidence must be accepted as true, and any doubts
concerning the existence of a genuine issue of material fact shall be resolved in favor of
the nonmoving party. Id. (citing McCarley v. W. Quality Food Serv., 960 S.W.2d 585,
588 (Tenn. 1998)). Furthermore, “[t]he court is not to ‘weigh’ the evidence when
evaluating a motion for summary judgment.” Byrd, 847 S.W.2d at 211 (citing Hamrick v.
Spring City Motor Co., 708 S.W.2d 383, 389 (Tenn. 1986)) (“Summary judgment is not
ordinarily the proper procedure for determining whether a prima facie case has or has not
been overcome by countervailing evidence.”); Rollins v. Winn Dixie, 780 S.W.2d 765,
767 (Tenn. Ct. App. 1989).

However, a party cannot create a genuine dispute of a material fact based on a
conclusory statement. See Lee v. Franklin Special Sch. Dist. Bd. of Educ., 237 S.W.3d
322, 331 (Tenn. Ct. App. 2007) (“Mere conclusory statements are insufficient to create a
dispute of fact when the moving party presents specific facts sufficient to support a
motion for summary judgment.”); see also Pryor v. Rivergate Meadows Apartment
Assocs. Ltd. P’ship, 338 S.W.3d 882, 887 (Tenn. Ct. App. 2009) (“A conclusory
statement, such as ‘[the movant] believes itself to have a good and valid defense,’ is
insufficient.”) (citation omitted).

ANALYSIS

I. PARTIAL SUMMARY JUDGMENT

The Soholts argue the trial court erred by awarding partial summary judgment to
the HOA on its claims against the Soholts. They base their argument on three
contentions: (1) Lot 60 is not encumbered by the CCRs; (2) The Board does not have
standing or authority to enforce the CCRs; and (3) The Soholts did not violate the CCRs.
We will address each in turn.

A. Encumbrance of Lot 60 by the CCRs

The HOA claims Lot 60 is bound by the CCRs, because the deed to Lot 60
references the restrictions. To the contrary, the Soholts argue that Lot 60 is not
encumbered by the CCRs, because RWDI did not own Lot 60 when it filed and recorded
the 2007 CCRs, Community Trust’s foreclosure “cut off” the 2007 CCRs, and the
subsequent 2009 Reinstatement does not reference Lot 60.

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 Property owners have a fundamental right to the free use and enjoyment of their
property. Hughes v. New Life Dev. Corp., 387 S.W.3d 453, 474 (Tenn. 2012). However,
land owners may voluntarily enter into agreements with other land owners to restrict the
use of their property in a way that is mutually beneficial. See id. at 475.; Carr v. Trivett,
143 S.W.2d 900, 903 (Tenn. 1940). Such agreements are commonly referred to as
restrictive covenants, and they are, in essence, contractual obligations between property
owners that can, and often do, arise when the deed to the property contains the
restrictions. Hughes, 387 S.W.3d at 475; Carr, 143 S.W.2d at 903. As our Supreme Court
explained:

Unquestionably it is an established rule of law that a person owning a body
of land may sell portions thereof and make restrictions as to its use for the
benefit of himself as well as those to whom he sells other portions of the
land, and he may invoke the remedy of injunction to prevent violation of
the same, in proper cases, provided of course the restriction is not against
some public violation. There is certainly good reason in this rule when
applied to the common practice of inserting in deeds a restriction such as
tends to create a residential section against those uses which would tend to
mar the beauty and detract from the value of property by uses inconsistent
with the uses intended. In such deeds the grantee does not acquire an
absolute and unqualified title, but it is a part of the title which he accepts,
that the use of the land shall be limited and be restricted in use as
provided by the deed.

Carr, 143 S.W.2d at 902-03 (emphasis added).

The Special Warranty Deed conveying Lot 60 to the Soholts states that Lot 60 is
encumbered by the “covenants, conditions and restrictions as set forth in instrument of
record in Book 1996, page 645 and Book 2069, page 714, Register’s Office of Maury
County, Tennessee,” which specifically refers to the 2007 CCRs and the 2009
Reinstatement, respectively. This fact is undisputed. Accordingly, Lot 60 is encumbered
by the CCRs as a matter of law.

B. Standing and Authority of the Board

The Soholts argue that because the HOA does not have the authority to enforce the
CCRs against the Soholts, the HOA does not have standing to prosecute this action. The
Soholts’ argument confuses two distinct legal concepts, that of standing and authority.

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 1. Standing

Standing is a doctrine of justiciability. West v. Schofield, 468, S.W.3d 482, 490
(Tenn. 2015). It “requires the court to determine whether the plaintiff has alleged a
sufficiently personal stake in the outcome of the litigation to warrant a judicial resolution
of the dispute.” City of Brentwood v. Metro. Bd. of Zoning Appeals, 149 S.W.3d 49, 55
(Tenn. Ct. App. 2004). Generally, a plaintiff establishes standing by showing that it has
sustained a redressable injury. Id. at 56.

Whether an association, like the HOA, has standing to prosecute an action on
behalf of its members requires a showing that “(a) its members would otherwise have
standing to sue in their own right; (b) the interests it seeks to protect are germane to the
organization’s purpose, and (c) neither the claim asserted nor the relief requested requires
the participation of individual members in the lawsuit.” Hunt v. Washington State Apple
Advert. Comm’n, 432 U.S. 333, 343 (1977). The United States Supreme Court further
explained:

Whether an association has standing to invoke the court’s remedial powers
on behalf of its members depends in substantial measure on the nature of
the relief sought. If in a proper case the association seeks a declaration,
injunction, or some other form of prospective relief, it can reasonably be
supposed that the remedy, if granted, will inure to the benefit of those
members of the association actually injured. Indeed, in all cases in which
we have expressly recognized standing in associations to represent their
members, the relief sought has been of this kind.

Id. (citations omitted).

Here, the first requirement of the test is met. Grantees in a subdivision who own
property subject to restrictive covenants may enforce the restrictions against any other
grantee in the subdivision. Land Developers, Inc. v. Maxwell, 537 S.W.2d 904, 912
(Tenn. 1976). It is undisputed that the HOA consists entirely of homeowners within the
Royalton Woods subdivision who, like the Soholts, are bound by the CCRs. Therefore,
the individual members of the HOA would each “have standing to sue in their own right.”
Hunt, 432 U.S. at 343.

The second requirement of the test is also met. In this case, the HOA is seeking to
enforce restrictive covenants against the Soholts in the interests of the other homeowners
in the subdivision. Pursuant to the CCRs, the HOA is to, inter alia, levy assessments
(Article X), ensure adherence to architectural standards (Article XI), and enforce use
restrictions (Article XII). Accordingly, by bringing this action against the Soholts, the
HOA is seeking to protect interests that are germane to the purposes of the organization.
See id.

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 Finally, the third requirement is met. The HOA’s claim is that the Soholts violated
the restrictive covenants, and it is seeking an injunction and unpaid assessments. Because
the court will not need to assess the individual damages of each homeowner, the HOA’s
claim does not require the participation of individual homeowners in the subdivision. See
id.

Accordingly, the HOA had standing to bring this action against the Soholts.

2. Authority

Completely distinct from standing, the Soholts also argue that the HOA did not
have the authority to enforce the CCRs, because (1) pursuant to the CCRs, only RWDI
had the authority to act on behalf of the HOA prior to January 1, 2017, not the Board; (2)
the HOA only has the power to enforce the CCRs against members of the HOA, and the
Soholts are not members pursuant to the Bylaws; (3) the late filing of the Bylaws
precluded the HOA from enforcing the CCRs; (4) prior to initiating this litigation against
the Soholts, the HOA did not obtain the requisite approval of 75% of the HOA’s voting
members; and (5) because the HOA did not give reasonable notice of the use restriction
violations, it cannot enforce those restrictions. Simply stated, these arguments concern
the HOA’s power to act pursuant to the CCRs and the Bylaws.

Because the HOA is a non-profit corporation, we address this issue by consulting
the Tennessee Non-Profit Corporation Act, Tennessee Code Annotated §48-51-101 to §
48-68-211. Relevant here, Tennessee Code Annotated § 48-53-104 states:

(a) Except as provided in subsection (b), the validity of corporate action
may not be challenged on the ground that the corporation lacks or
lacked the power to act.

(b) A corporation’s power to act may be challenged in a proceeding against
the corporation to enjoin an act….The proceedings may be brought by
the attorney general and reporter, a director, or by a member or
members in a derivative proceeding.

(Emphasis added).

As this court previously held, when the “argument goes directly to the
incorporated Association’s authority to act through its board of directors,” the Non-profit
Corporation Act “provides only one means of recourse—a derivative proceeding brought
in the right of the corporation.” Germantown Manor Homeowners Ass’n, Inc. v. GGAT
Dev. Corp., No. W2016-01461-COA-R3-CV, 2017 WL 3668926, at *5 (Tenn. Ct. App.
Aug. 24, 2017). Thus, pursuant to Tennessee Code Annotated § 48-53-104, the Soholts

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cannot challenge the HOA’s power to enforce the CCRs, unless the Soholts are members
of the HOA (and they argue, here, they are not), and they file a derivative action, which
they have not done.

Therefore, we affirm the trial court’s ruling that the HOA had both standing and
the authority to bring this action against the Soholts.

C. Violation of the Restrictive Covenants

The trial court found it was undisputed that the Soholts (1) altered the exterior of
their home without HOA approval; (2) failed to pay assessments; (3) kept more than three
dogs on the property, (4) parked a commercial vehicle, trailers, and a recreational vehicle
on the street, and (5) operated a business from the residence. The trial court then
determined that the foregoing actions and omissions violated the restrictive covenants.
The Soholts contend that some of the material facts are in dispute while conceding that
others are not in dispute. The Soholts also contend the trial court misinterpreted the
CCRs.

Rules governing the interpretation of restrictive covenants are generally the same
as those applicable to contracts. Bernier v. Morrow, No. M2012-01984-COA-R3-CV,
2013 WL 1804072, at *5 (Tenn. Ct. App. Apr. 26, 2013); Aldridge v. Morgan, 912
S.W.2d 151, 153 (Tenn. Ct. App. 1995). The primary task is to determine the intention of
the parties as expressed by the plain and ordinary meaning of the language in the
covenants. Bernier, 2013 WL 1804072, at *6. However, because restrictive covenants are
in derogation of the right to freely use and enjoy one’s property, they are strictly
construed. Williams v. Fox, 219 S.W.3d 319, 324 (Tenn. 2007). Therefore, courts resolve
any ambiguities “in a manner which advances the unrestricted use of the property.” Id.

With these principles in mind, we consider each alleged violation and the
applicable provisions in the CCRs.

1. Alterations to the Exterior of the Home

The HOA claimed the Soholts made extensive exterior alterations to their home
without seeking the HOA’s approval and in violation of the community-wide standard.
Those alterations included installing a large concrete parking pad in the backyard,
enlarging the deck, extending the fence in violation of setback requirements, and
installing a large sliding gate.

The Soholts contend they did not violate the CCRs for two principal reasons. First,
the community-wide standard did not apply. Second, while acknowledging they did not
seek approval for their construction project, they contend they were not required to do so
because the Board never appointed an Architectural Review and Design Committee.

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 a. The Community-Wide Standard

The community-wide standard is defined in the CCRs as “the standard of conduct,
maintenance, or other activity generally prevailing throughout the Properties.” It is
undisputed that the community-wide standard lacks specificity; nevertheless, “[t]he law
does not … require that the restrictive covenants be specific in their criteria.” Avalon
Sections 4, 6 & 7 Homeowners Ass’n v. Chaudhuri, No. M2013-02346-COA-R3-CV,
2014 WL 2949458, at *7 (Tenn. Ct. App. June 26, 2014). Here, the CCRs afford the
HOA the discretion to determine whether a homeowner’s activity meets the community-
wide standard. Generally, courts will not disturb a decision by the homeowner association
in that regard unless it is shown that the association acted unreasonably or in bad faith.
See id. Mr. Soholt conceded in his deposition testimony that he did not know of any other
home in the subdivision with alterations comparable to his, and the photographs
submitted by the HOA show that the Soholts’ alterations were considerable.

The foregoing notwithstanding, the Soholts contend the community-wide standard
does not apply because that provision is trumped by the Exhibit D design standards. We
find this argument is misplaced. The only reference in the CCRs to the Exhibit D design
standards is found in Article XI, section 6, which states:

Enforcement of the design standards as specified in Exhibit “D” may be by
proceedings at law or in equity against any person or persons violating or
attempting or threatening to violate a covenant or restriction, either to
restrain a violation or to recover damages.

Otherwise, the CCRs are completely silent regarding the Exhibit D design standards.
Consequently, this court cannot determine whether these design standards apply to
modifications, alterations, additions, new construction, or anything else for that matter.

To show that the community-wide standard applies, the HOA relied on Article IV,
section 2 of the CCRs, which provides in pertinent part:

Each owner shall maintain his or her unit and all structures, exterior
surfaces of the unit, parking areas, fences, and other improvements
comprising the unit in a manner consistent with the Community-Wide
Standard, unless such maintenance responsibility is otherwise assumed by
or assigned to the Association.

The Soholts argue that “maintain” or “maintenance” does not include construction
like theirs and merely means that property owners “should cut their grass and maintain
their house[s] in a manner consistent with the neighborhood.” By its plain and ordinary
meaning, “maintain” means to preserve something already existing. Maintain, American

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Heritage Dictionary of the English Language (5th ed. 2016). Therefore, this section
pertains to the preservation of existing improvements--e.g. decks, fences and parking
areas--in a manner consistent with the community-wide standard.

Consequently, we disagree with the Soholts’ contention that Article IV, section 2
of the CCRs does not apply to the Soholts’ alterations. The Soholts have expanded,
enlarged, and otherwise modified existing exterior improvements—a parking area, a
deck, and a fence. The Soholts do not dispute that these alterations are unlike any in the
subdivision. Therefore, the Soholts have not preserved these structures in a manner
consistent with the community-wide standard.4

Also significant here, the Soholts do not dispute the HOA’s photographic evidence
showing that their fence violated the clear setback requirements in Article XII, section 24
of the CCRs, which states, “No fence shall be erected on any lot or building site closer to
the street than the front corners of the house, and on corner lots, the front setback
requirements on both streets shall apply.”

b. Architectural Review or Modifications Committee

The Soholts acknowledge they did not seek approval for their construction project;
nevertheless, they contend the committee’s approval was not required because the
committee members were never appointed. We find this argument without merit because
the appointment of the Architectural Design Committee was not required under the
CCRs. Article XI, section 3 of the CCRs provides:

The Board of Directors may appoint an Architectural Review or
Modifications Committee (“ARC/MC”) to consist of at least three (3) and
no more than five (5) persons, all of whom shall be appointed by the Board
of Directors. The ARC/MC, if established, shall have exclusive jurisdiction
over modifications, additions, or alterations made on or to existing Units or
structures containing Units and the open space, if any, appurtenant thereto.

4
Such an interpretation and application is also in line with the purpose of the CCRs and the
overall purpose of restrictive covenants in general, which is “to promote a general plan or scheme for
uniform development.” Benton v. Bush, 644 S.W.2d 690, 692 (Tenn. Ct. App. 1982). The very definition
of “community-wide standard” suggests that it applies to a variety of activities (“conduct, maintenance, or
other activity generally prevailing throughout the Properties”) which would presumably include
modifications and alterations. Moreover, Article XI, section 3 of the CCRs indicates that modifications,
additions, or alterations must be compatible with other structures in the neighborhood, stating,
“[M]odifications, additions, or alterations, shall be submitted to the [Architectural Review
Committee/Modifications Committee] for approval…as to harmony of external design with existing
structures[.]”

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(Emphasis added).

Nevertheless, pre-approval for construction is mandated by the preamble of
Article XI, which states in relevant part:

No construction, which term shall include within its definition, staking,
clearing, excavation, grading, and other site work, and no plantings or
removal of plants, trees or shrubs shall take place except in strict
compliance with this Article, until the approval of the appropriate
committee has been obtained.

(Emphasis added). Because the Board did not appoint a separate Architectural Review
Committee, the Board was the “appropriate committee.” As a consequence, the Board
had “exclusive jurisdiction over modifications, additions, or alterations made on or to
existing Units or structures containing Units and the open space, if any, appurtenant
thereto.” It is undisputed the Soholts did not seek or obtain the Board’s approval for their
construction work; therefore, the Soholts violated the CCRs.

For the foregoing reasons, the trial court correctly ruled that the Soholts’
alterations violated the CCRs as a matter of law.

2. Assessments

It is undisputed that the Soholts did not pay assessments. Nevertheless, the Soholts
argue that, pursuant to the Bylaws, homeowners who are not members of the HOA are
not required to pay assessments. Because the Bylaws make membership in the HOA
voluntary, and the Soholts never joined, they argue they do not owe assessments. We
respectfully disagree.

Lot 60 is encumbered by the CCRs, not the Bylaws. Therefore, this court looks to
the CCRs to determine whether the Soholts are obligated to pay assessments. Article X,
section 1 of the CCRs provides in pertinent part:

There are hereby created assessments for Association expenses as may
from time to time specifically be authorized by the Board of Directors to be
commenced at the time and in the manner set forth in Section 7 of this
Article. There shall be two (2) types of assessments: (a) Base Assessments
to fund Common Expenses for the benefit of all Members of the
Association; and (b) Special Assessments as described in Section 4 below.
Base Assessments shall be levied equally on all Units…Each Owner, by
acceptance of his or her deed or recorded contract of sale, is deemed to
covenant and agree to pay these assessments.

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 . . .

No Owner may waive or otherwise exempt himself from liability for the
assessments provided for herein….The obligation to pay assessments is a
separate and independent covenant on the part of each owner.

(Emphasis added). Therefore, all owners in the subdivision are contractually obligated to
pay assessments.

Accordingly, the trial court correctly ruled that the Soholts violated the CCRs by
refusing to pay assessments.

3. Animals

It is undisputed that the Soholts own four dogs. Article XII, section 4 of the CCRs
provides that “[n]o animals, reptiles, livestock, birds, or poultry of any kind shall be
raised, bred, or kept on any portion of the properties, except that dogs, cats, or other usual
and common household pets not to exceed a total of three (3) may be permitted in a
Unit.” (Emphasis added). Therefore, the trial court correctly ruled that the Soholts are in
violation of this provision.

4. Street Parking

The HOA contends that the Soholts parked a commercial vehicle, trailers, and a
recreational vehicle on the street in violation of the CCRs.

Article XII, section 2 of the CCRs states in relevant part:

No parking shall be permitted on any street, except temporarily for social
gatherings. Commercial vehicles, tractors, mobile homes, recreational
vehicles, trailers (either with or without wheels), campers, camper trailers,
boats, and other watercraft, and boat trailers may only be parked for a
period of up to 48 hours to accommodate or allow owners time to find
storage or parking space other than the Royalton Woods community.

(Emphasis added). Simply stated, the CCRs prohibit parking on any street in the
subdivision with only two exceptions—temporary parking for social gatherings and
temporary parking (up to 48 hours) for the types of vehicles listed, which includes
commercial and recreational vehicles.

To prove the violation, the HOA submitted a number of photographs showing a
pick-up truck, two trailers (displaying the Soholts’ roofing business logo), and a
recreational vehicle parked on the street in front of the Soholts’ residence. The HOA also

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submitted an affidavit from Mark Spinney, a member of the HOA, stating he took the
photographs and that he frequently witnessed those vehicles parked on the street for more
than 48 hours. The Soholts responded by asserting that Mr. Soholt “typically” parked his
pick-up truck “in his driveway” and never parked his recreational vehicle at his home for
more than 48 hours.

The Soholts’ contention that Mr. Soholt “typically” parked his pick-up truck in his
driveway did not create a genuine issue for trial because it was not a “commercial
vehicle,” which would allow Mr. Soholt to park it on the street for up to 48 hours.

The CCRs do not define “commercial vehicle.” When interpreting restrictive
covenants, we are to give words their plain and ordinary meaning. According to
Merriam-Webster’s Dictionary, “commercial vehicle” is a vehicle “designed for
commercial use (as the transportation of cargo other than passengers).” Commercial
Vehicle, Merriam-Webster Online Dictionary, 2019. https://www.merriam-webster.com.
Based on this definition, there is a genuine dispute of fact concerning whether the
Soholts’ pick-up truck (without a trailer), even if it displays a company logo, is or is not a
vehicle designed for commercial use. However, it cannot be disputed that a pick-up truck
with a trailer constitutes a commercial vehicle. Therefore, the Soholts violated the
restriction by parking a pick-up truck with a trailer on the street for periods of time
exceeding 48 hours.

As for the question of whether the Soholts violated the parking restriction by
parking their recreational vehicle on the street for more than 48 hours, the Soholts agree
that the CCRs do not allow them to park a recreational vehicle on the street for more than
48 hours and do not contest the trial court’s order enjoining them from parking their
recreational vehicle on the street. Accordingly, the trial court correctly ruled that the
Soholts were in violation of this provision of the CCRs.

5. Conducting Business on the Property

The HOA claims the Soholts operate a roofing business out of their home in
violation of the CCRs. The Soholts contend they do not operate a business from their
home, and even if they did, the CCRs permit homeowners to operate a home business as
long as it is inconspicuous.

Article XII, section 25 of the CCRs states in pertinent part:

No trade or business may be conducted in or from any Unit, except that an
Owner or occupant residing in a Unit may conduct business activities
within the Unit so long as: (a) the existence or operation of the business
activity is not apparent or detectable by sight, sound or smell from outside
the Unit; (b) the business activity conforms to all zoning requirements for

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 the Properties; (c) the business activity does not involve persons coming
onto the Properties who do not reside in the Properties or door-to-door
solicitation of residents of the Properties; and (d) the business activity is
consistent with the residential character of the Properties and does not
constitute a nuisance, or a hazardous or offensive use, or threaten the
security or safety of other residents of the Properties, as may be determined
in the sole discretion of the Board.

(Emphasis added).

In Mr. Soholt’s deposition, he testified that he owns a roofing business and that he
and Mrs. Soholt are the only employees of the business. As stated above, the HOA
submitted photographs, taken by Mark Spinney, showing two work trailers displaying the
Soholts’ roofing business logo parked on the street outside of the Soholts’ home.
Furthermore, Mr. Spinney stated in an affidavit that these trailers were frequently parked
there.

The Soholts responded by testifying that they do not operate their business from
home; however, that testimony is put at issue by the documentary proof submitted by the
HOA showing evidence to the contrary. We therefore conclude that a genuine issue of
material fact exists concerning this claim. Accordingly, summary judgment is not
appropriate on the issue of whether the Soholts were operating a business in violation of
Article XII, section 25 of the CCRs.

For the foregoing reasons, we affirm the grant of partial summary judgment in
favor of the HOA on its claims against the Soholts, with the sole exception being whether
the Soholts were operating a business out of their home in violation of the CCRs.

II. LACHES

The Soholts contend that because the HOA did not collect assessments from 2009,
when the Soholts purchased the property, to 2015 when the HOA informed the Soholts
they owed assessments, the equitable doctrine of laches prevents the HOA from
collecting those assessments now.

This court has explained the doctrine of laches as follows:

“Unreasonable delay in pursuing rights calls the equitable doctrine of
laches into play to prevent assertion of stale claims.” However, delay, by
itself, is not sufficient to invoke the doctrine of laches. The determinative
test “is not the length of time that has elapsed, but whether, because of such
lapse of time, the party relying on laches as a defense has been prejudiced
by the delay.”

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Grand Valley Lakes Prop. Owners Ass’n v. Burrow, 376 S.W.3d 66, 83-84 (Tenn. Ct.
App. 2011) (citations omitted).

We fail to see how the Soholts were prejudiced by the HOA’s failure to collect
assessments prior to 2015 when the HOA is only seeking assessments from November
2013 (when the HOA Board was formed) to the present. If anything, the Soholts have
benefited from the HOA’s failure to collect assessments prior to 2013.5 However, we
need not apply the doctrine of laches here because Article X, section 1 of the CCRs
provides in relevant part:

No Owner may waive or otherwise exempt himself from liability for the
assessments provided for herein, including, by way of illustration and not
limitation, by non-use of Common Areas or abandonment of the Unit. The
obligation to pay assessments is a separate and independent covenant on the
part of each owner. No diminution or abatement of assessment or set-off
shall be claimed or allowed by reason of any alleged failure of the
Association or Board to take some action or perform some function
required to be taken or performed by the Association or Board under this
Declaration or Bylaws….

(Emphasis added). Additonally, the CCRs prevent the application of laches to any claim
related to the enforcement of the CCRs, as Article XI, section 6 provides in pertinent
part:

Failure by the Declarant, community association or owner to enforce any
restriction herein contained shall in no event be deemed a waiver of the
rights to do so thereafter nor constitute an acquiescence in or an estoppel to
any, actual or future, breaches or violations of these covenants and
restrictions.

Therefore, the trial court did not err in failing to apply the equitable doctrine of laches as
a basis for denying the HOA’s motion for partial summary judgment.

III. SLANDER OF TITLE

The Soholts argue that the trial court erred when it summarily dismissed the
Soholts’ counterclaim against the HOA for slander of title for improperly filing a lien on
Lot 60 for unpaid assessments in 2011.

5
As previously stated, the HOA did enforce assessments in 2011 when it filed a lien on Lot 60.

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 In their response to the HOA’s motion for summary judgment on the slander of
title claim, the Soholts’ argument rested solely on the contention that Lot 60 was not
encumbered by the CCRs; therefore, the Soholts did not owe assessments in 2011.6
However, we have determined that Lot 60 was encumbered by the CCRs, and
furthermore, the CCRs authorize the HOA to file a lien for unpaid assessments. Article
X, section 4 states:

Upon recording of a notice of lien on any Unit, there shall exist a perfected
lien for unpaid assessments prior and superior to all other liens except (1)
all governmental taxes and assessments and other levies which by law
would be superior thereto, and (2) the lien or charge or any first Mortgage
of record…made in good faith and for value. Such lien, when delinquent,
may be enforced by suit, judgment, and foreclosure. The sale or transfer of
any Unit shall not affect the lien of assessments.

Therefore, we affirm the trial court’s decision to summarily dismiss the Soholts’
slander of title claim.

IV. ATTORNEY’S FEES

The trial court awarded the HOA its attorney’s fees. The Soholts argue that the
CCRs limit the HOA’s entitlement to attorney’s fees to two situations: (1) when the fees
are incurred in collecting base assessments (Article X, section 1) and (2) when the fees
are incurred in enforcing the Exhibit D design standards (Article XI, section 6).
Therefore, the Soholts argue that the HOA is only entitled to the attorney’s fees it
incurred in enforcing Article X.

Tennessee follows the American Rule, which provides that litigants are
responsible for their own attorney’s fees unless a statute or contract states otherwise.
Cracker Barrel Old Country Store, Inc. v. Epperson, 284 S.W.3d 303, 308 (Tenn. 2009).

Article XI, section 6 of the CCRs reads:

Section 6. Enforcement in General

6
On appeal, the Soholts raise a new argument relating to a 2011 general sessions case. The
Soholts did not make this argument in their response to the HOA’s motion for summary judgment.
Because the trial court did not have the opportunity to consider it, we will not consider it. “[I]ssues not
raised in the trial court cannot be raised for the first time on appeal.” Simpson v. Frontier Community
Credit Union, 810 S.W.2d 147, 153 (Tenn. 1991).

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 (a) Enforcement of the design standards as specified in Exhibit “D” may be
by proceedings at law or in equity against any person or persons
violating or attempting or threatening to violate a covenant or
restrictions, either to restrain a violation or to recover damages. Failure
by the Declarant, community association or owner to enforce any
restriction herein contained shall in no event be deemed a waiver of the
rights to do so thereafter nor constitute an acquiescence in or an
estoppel to any, actual or future, breaches or violations of these
covenants and restrictions.

(b) In the event any cost or expenses including attorneys [sic] fees, are
incurred by the Declarant, community association or any lot owner or
occupant of a lot in connection with their action to correct or abate any
violation or breach of the provisions hereof, provided reasonable
notice to the owner or owners of the subject lot or lots to abate said
violation or breach had been given, such cost and expenses shall be a
lien against the owner or owners of the lot or lots committing such a
breach of violation and such charges shall be subject to the provisions
for lien when the nonexistence of a violation of breach hereof has been
established by a court of competent jurisdiction. The court shall
determine the method of handling a violation.

(Emphasis added).

The trial court stated in its final order:

The HOA has been required to incur attorney’s fees, expenses, and
discretionary (deposition) expenses, as stated above; those fees are
reasonable and the HOA is entitled to recover those as fees, expenses and
costs under the term of the CCRs, specifically under Article X, Sec. 1 and
Article XI, Sec. 6. The Court specifically finds that the HOA is entitled to
collect attorney’s fees and costs incurred in connection with pursuing its
claims against the Soholts and defending against their counter-claim and
that Art. XI, sec. 6 “Enforcement In General” is broad enough to cover
the recovery of fees for violation of Art. XI and “any violation or breach
of the provisions[”] of the CCRs.

(Emphasis added).

We agree with the trial court that the general enforcement provision in Article XI
is broad enough to cover an action to abate “any violation,” and we thus affirm the trial
court’s award of attorney’s fees to the HOA.

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 IN CONCLUSION

The judgment of the trial court is affirmed in all respects with the exception of the
claim regarding the operation of a business out of the home. This matter is remanded for
further proceedings consistent with this opinion. Costs of appeal are assessed against
Phillip and Denise Soholt.

________________________________
FRANK G. CLEMENT JR., P.J., M.S.

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