Heatherwood Holdings, LLC. v. HGC, Inc.

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
___________________________
No. 12-16020
___________________________
D.C. Docket Nos. 2:11-cv-02902-CLS, 2:09-bk-00076-TOM
In Re: HEATHERWOOD HOLDINGS, LLC,
Debtor.
______________________________________
HEATHERWOOD HOLDINGS, LLC,
Plaintiff-Appellant,
versus
HGC, INC.,
Defendant-Appellee.
___________________________
No. 12-16021
___________________________
D.C. Docket Nos. 2:11-cv-02903-CLS, 2:09-bk-00076-TOM
HEATHERWOOD HOLDINGS, LLC,
Debtor.
_________________________________
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CRIMSON PORTFOLIO, LLC,
Plaintiff-Appellant,
versus
HGC, INC.,
Defendant-Appellee.
______________________
Appeals from the United States District Court
for the Northern District of Alabama
______________________
(March 27, 2014)
Before CARNES, Chief Judge, TJOFLAT, Circuit Judge, and MARRA,∗ District
Judge.
MARRA, District Judge:
I. INTRODUCTION
This is an appeal by Heatherwood Holdings, LLC (AHeatherwood@) and First
Commercial Bank (AFCB@) (hereinafter, AAppellants@) of the affirmance by the
United States District Court for the Northern District of Alabama of a final amended
judgment entered by the United States Bankruptcy Court for the Northern District of
Alabama in favor of Appellee HGC, Inc. (AHGC@) (hereinafter, AAppellee@).
∗ Honorable Kenneth A. Marra, United States District Judge for the Southern District of
Florida, sitting by designation.
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Appellants challenge the bankruptcy court’s determination that there was an implied
restrictive covenant limiting the use of real property at issue to a golf course.
II. BACKGROUND
A. Facts
United States Steel (AUSX@) began developing the Heatherwood subdivision
in the 1970s in Shelby County, Alabama. The centerpiece of the subdivision was
an eighteen-hole golf course. The plat maps for the subdivision=s first three sectors
showed a golf course at the heart of the subdivision and indicated that all the
subdivision=s roads would have golf-themed names, such as AMasters Lane@ or
AOakmont Road.@ The first set of general covenants, restrictions and easements for
the subdivision also referenced a golf course, requiring each residential lot to have a
Agolf cart storage area@ and barring fences Aadjacent to the golf course fairways, tees
or greens.@
USX began selling residential lots in the subdivision in 1984. The initial
purchasers of the subdivision homes had to become members of the Heatherwood
Golf Club which USX ran through a subsidiary company, Heatherwood Golf Club,
Inc.1 USX=s advertisements emphasized the benefits of membership, inviting
prospective purchasers to A[i]magine returning home every day to play
Heatherwood=s 18-hole golf course,@ or imagine living in a Abeautiful home@ with a
1
This is not the same entity as HGC.
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Agorgeous golf course included.@
USX provided more details about the golf course's role within the subdivision
in the promotional materials it provided to prospective buyers. USX tried to
provide these materials–the "Heatherwood Documents"–to all prospective buyers.
The documents included descriptions of: the Club's amenities; the covenants,
restrictions, and easements for the lots surrounding the course; and the requirement
that any successive purchaser of a home in the subdivision must become a member
of the Club. They also announced USX's intention to eventually sell the Club,
outlining three ways the sale could occur. Those three ways centered around an
option USX granted the Club's membership and an escrow agreement it set up to
facilitate the members exercising that option. The option gave the members the
right to buy the Club for $1.5 million by October 1, 1999, after which the option
would expire. To help make that purchase possible, the documents explained, the
subdivision's homebuyers and other select members of the Club would enter into an
escrow agreement, whereby they paid certain amounts into an escrow account held
by USX. Put another way, the Club's members would exercise the option to buy the
club, or if the members did not exercise the option, USX could "sell the facilities to
others," or USX could exercise its option to sell the facilities to the Club members in
as-is condition for the amount in the escrow account, including accumulated interest.
USX completed the Club in 1986. During that time, USX recorded a second
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set of general covenants, restrictions, and easements for the subdivision's fourth
sector. Like the first set of filings, the fourth sector's filings required each lot to
have a "golf cart storage area," and barred fences, walls, or hedges "adjacent to the
golf course, fairways, tees, or greens." The fourth sector's filings also included
easements on the lots next to the golf course that would "permit the doing of every
act necessary and proper to the playing of golf on the golf course adjacent to the
lots." USX proceeded to install ten more sectors in the Heatherwood subdivision,
filing the same or similar sets of general covenants, restrictions, and easements with
each new sector. Some of the lots in these sectors included easements for golf carts
to cross homeowner's property to reach the golf course. The golf-cart easements
specified that they were "granted [to] benefit the Grantee's land and shall be
perpetual and shall run with the land."
USX continued to own and operate the Club until 1999. That May, the
Heatherwood Homeowners Association Steering Committee offered to purchase the
Club for the amount in the members' escrow account. 2 Mike Wesler testified that
purchasing the Club was to ensure control over upgrades to the course and thereby
prevent membership losses. In contrast, William Thompson testified that the
purchase was to prevent a third party from converting the golf course into housing.
2
The parties disagree on what the Committee's motivation for purchasing the Club was
and presented conflicting testimony at the trial from individuals who were members of both the
Homeowners Association and the Club.
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In June, equity members of the Club, which included some individuals who did not
live in the subdivision, formed HGC in order to purchase, operate, and maintain the
Club. On October 8, 1999, a special warranty deed transferred the Club to HGC.
While the special warranty deed included numerous exceptions, none of them
restricted HGC or any subsequent owner's use, maintenance, or development of the
golf course. By contrast, when USX transferred golf course properties in other
subdivisions it was developing, it included covenants limiting the real property to
use as a golf course. The deed did, however, restrict USX=s right to utility
easements. It specified that any new easements should be "selected and located" to
avoid "unreasonably interfer[ing] with the operation of the golf course" and required
USX to "minimize any disruption of the golf course" when constructing and
installing the utilities.
HGC's ownership of the Club would not last long. The club needed at least
$2 million in capital improvements to attract new members and continue operating
the Club, but HGC's members were not willing to contribute their own money. As a
result, HGC began soliciting proposals from various golf club management
companies for assuming operation and management of the Club. HGC ultimately
decided to transfer the Club to Pine Cone Capital, Inc., run by Jonathan Kimerling
and William Ochsenhirt. HGC chose Pine Cone Capital because of its reputation
for running golf courses, its commitment to making capital improvements, and its
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willingness to agree to commit to operating the property as a golf course for at least
twenty-five years. Over the next few weeks, HGC and Pine Cone Capital would
negotiate the terms of the asset purchase agreement. Numerous drafts of the
agreement were exchanged. The final version of the agreement committed Pine
Cone Capital to spending at least $2.5 million on capital improvements to the Club
and operating the property as a golf course for the next twenty-five years.
Though Pine Cone Capital was purchasing the Club, it assigned its rights to
Heatherwood. Kimerling and Ochsenhirt formed Heatherwood for the purpose of
owning, operating, and managing the Club. On July 5, 2000, HGC and
Heatherwood entered into a side agreement that committed Heatherwood to
operating the Club for the next twenty-five years. That same day HGC conveyed
the real property to Heatherwood. Like the 1999 deed transferring the Club to
HGC, the 2000 deed lacked any express restriction limiting the real property to use
as a golf course. The parties recorded both the side agreement and the deed in the
Shelby County Probate Court on July 10, 2000.
Heatherwood promptly closed the Club and began renovations. To secure
additional money for its renovations, Heatherwood obtained a $4 million loan from
FCB. Heatherwood secured the loan with, among other things, a first mortgage on
the golf course property and Kimerling's personal guarantee of $1 million of the
loan. At trial FCB's representative, Thomas Genetti, testified that FCB agreed to
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these terms on the assumption that if Heatherwood could not rehabilitate the Club,
then FCB could redevelop the land as residential property. FCB made that
assumption despite the fact that Genetti visited the property and saw the subdivision
built around the golf club, as well as the signs indicating that the subdivision was a
golf community. Genetti testified he was unaware of the asset purchase agreement
and the side agreement's 25-year operation guarantee, and that FCB would have
required more collateral if it had known that the property was limited to use as a golf
course. On May 4, 2001, Heatherwood executed: (1) a promissory note for $4
million; (2) a mortgage and security agreement securing the note; and (3) an
assignment of rents and leases. The mortgage was recorded on May 7, 2001.
Heatherwood completed the renovations several months later and reopened the Club
in October 2001.
Despite the renovations, the Club did not fare well. It lost money every year
from 2002 to 2008, with six-figure losses in six of those years, and losses exceeding
$400,000 in four of them. Heatherwood's management testified that these losses
came from the Club's inability to retain and expand its membership, and that the
Club's struggles with membership came from "playability issues," which included
the narrowness of the fairways.
In January 2005, Pine Cone Capital acquired Inverness Country Club. Once
Ochsenhirt and Kimerling, the principals of both Pine Cone and Heatherwood,
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acquired Inverness, they lost interest in the Club's success. Memos from FCB
showed that several months after buying Inverness, Ochsenhirt began exploring the
option of selling the Club and transferring its members to Inverness. While
Heatherwood never tried to transfer the Club's members, it did transfer the Club's
furniture–swapping it for less expensive furniture in the Inverness clubhouse.
Other facts indicated that Ochsenhirt and Kimerling's commitment to Heatherwood
was diminishing, such as the steadily declining totals spent on maintenance for the
Club, and the men's locker room losing hot water for some time.
After struggling through several more years of operating the Club,
Heatherwood sent a letter to members in December 2008 announcing that it would
cease operations at the end of the year. The letter blamed the closure on "some
insurmountable obstacles" created by the "recent economic recession."
B. Procedural History
Heatherwood, the owner, operator and manager of the Heatherwood Golf
Club, filed for Chapter 11 bankruptcy on January 6, 2009. Later that month, it filed
the adversary proceeding that led to this appeal. The complaint sought a
determination of the extent, priority and validity of any liens, interests and
encumbrances on the golf course property and a determination that Heatherwood
could sell the real property free and clear of all liens, encumbrances and restrictions.
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The complaint was brought against FCB, Jonathan Kimerling 3 and HGC. HGC
responded to the complaint by asserting that the golf course property was subject to
an implied covenant running with the land and restricting its use to operating as a
golf course.4 In making this claim, HGC relied upon a decision from the Arizona
Court of Appeals, Shalimar Ass=n v. D.O.C. Enterprises, Ltd., 688 P.2d 682 (Ariz.
Ct. App. 1984).
The bankruptcy court agreed with HGC that the facts in Shalimar were similar
to the facts before it and observed that no Alabama state court cases had similar
facts. Based on the lack of clear Alabama precedent, the bankruptcy court certified
the following three questions to the Supreme Court of Alabama:
1. Whether Alabama law recognizes or will imply a restrictive covenant as
to a golf course constructed as part of a residential development consistent
with a case with similar facts, Shalimar Ass=n v. D.O.C. Enters., Ltd., 688
P.2d 682 (Ariz. Ct. App. 1984)?
2. Whether Alabama law recognizes an implied restrictive covenant that
runs with the land when the Deed conveying the property did not contain an
express covenant or restriction but a separate Agreement recorded
simultaneously with the Deed and recorded immediately thereafter provided
that Buyer covenants that it will operate the purchased assets [the real
property] as a golf course for the twenty-five (25) years from the date of
execution of this Agreement?
3. Whether Alabama law permits the owner of real property to re-sell that
3
The issues related to Kimerling are not before the Court.
4
HGC also asserted various counterclaims against Heatherwood and crossclaims against
FCB and Kimerling.
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property for any use, not limited to the use of a golf course, when the Deed
conveying the property did not contain an express covenant or restriction but a
separate Agreement recorded simultaneously with the Deed and recorded
immediately thereafter provided that Buyer covenants that it will operate the
purchased assets [the real property] as a golf course for the twenty-five (25)
years from the date of execution of this Agreement?
Heatherwood Holdings, LLC v. First Commercial Bank, 61 So. 3d 1012, 1014 (Ala.
2010) (quotation marks omitted).
The Supreme Court of Alabama chose to answer the first question because
Athe facts in the present matter, when construed in favor of the nonmovants for a
summary judgment in the bankruptcy action, are sufficiently similar to the facts in
Shalimar for us to decide, as an abstract question of law, whether the rationale
employed in the Shalimar decision is consistent with Alabama law regarding
implied restrictive covenants.@ Id. at 1021. The Supreme Court of Alabama noted
that the similarity of those facts pertain to the Amatters surrounding the initial
development of the property@ and Athere are a number of questions–e.g., questions of
economic feasibility, estoppel, notice, etc.–pertaining to the continuing
enforceability or vitality of the implied restrictive covenant that may exist in this
case.@ Id. at 1021 & n.5. The Supreme Court of Alabama went on to explain that:
our caselaw has recognized at least five methods of establishing that an
original grantor of property to be developed as a subdivision intended a
common scheme of development. Thus, a party seeking to prove that an
original grantor intended a common scheme of development may do so by
offering evidence of one or more of the following: 1) universal written
restrictions in all of the deeds of the subdivision; 2) restrictions in a
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substantial number of such deeds; 3) the filing of a plat showing the
restrictions; 4) actual conditions in the applicable subdivision; or 5)
acceptance of the actual conditions by the lot owners.
Id. at 1022 (citing Hun Es Tu Malade? # 16, LLC v. Tucker, 963 So.2d 55, 66 (Ala.
2006)) (internal quotation marks omitted).
Next, after summarizing the undisputed facts before the bankruptcy court, the
Alabama Supreme Court stated that the evidence is Asufficiently similar@ to these
methods for Aproving the existence of an intent… for a common scheme of
development; in particular, the evidence summarized above falls under methods (3)
(Athe filing of a plat showing restrictions@) and (4) (Aactual conditions in the
applicable subdivision.) Id. at 1022. In making this statement, the Alabama
Supreme Court expressly disagreed with Heatherwood=s suggestion that Aan express
unambiguous restriction must exist in some of the documents of record in order for a
common plan or scheme and an implied covenant to exist.@ Id. at 1022 n.7.
The Alabama Supreme Court then noted the evidence presented to the
bankruptcy court which included: (1) recorded plat maps; (2) recorded restrictive
covenants; (3) general information documents that included references to the
property as a golf course and which explained that each owner of a residence would
be required to be a member of the golf club and (4) marketing materials,
advertisements and a sign describing the subdivision as a golf-course community.
Id. at 1023-24. In considering the record before the bankruptcy court, the Alabama
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Supreme Court found there was Asubstantial evidence indicating that the original
grantor intended a common scheme of development that included the golf-course
property as an integral part of that development and as an inducement to purchasers
of the residential lots.@ Id. at 1024. Based on this finding, the Alabama Supreme
Court answered the first certified question in the affirmative. Id.
The Alabama Supreme Court, however, was careful to note that A[i]n doing
so, however, we emphasize that our answer should not be construed as an expression
of an opinion on the merits of the underlying case, because it appears that a number
of factual disputes remain to be developed.@ Id. Examples of those disputes
included: (1) Athe extent to which the subsequent purchaser of the property at issue
would be bound by the implied restriction that the property be used as a golf course
may turn on the extent to which the purchaser had notice of the implied restriction;@
(2) Athe duration of the implied restrictive covenant and whether changed economic
circumstances would warrant a judicial declaration terminating the implied
restrictive covenant;@ and (3) whether Aeconomic frustration rendered the golf
course restriction unenforceable.@ Id. Finally, while the Alabama Supreme Court
did not answer the second and third certified questions, it did observe that they
Aappear[ed] to be centered on issues of estoppel and notice under Alabama law.@ Id.
at 1026.
Subsequently, the bankruptcy court held a three day trial to determine whether
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there was an enforceable express or implied restrictive covenant. On July 26, 2011,
the bankruptcy court entered its amended memorandum opinion. Heatherwood
Holdings, LLC v. First Commercial Bank (In re Heatherwood Holdings, LLC), 454
B.R. 495 (Bankr. N.D. Ala. 2011). The bankruptcy court found that the Ainitial
development and marketing of the Heatherwood subdivision, as well as the sign,
street names, easements, plat maps and actual use created an implied restrictive
covenant restricting the use of the golf course property to use as a golf course.@ Id.
at 527. The bankruptcy court also found Aample evidence that [Heatherwood] had
actual as well as constructive and inquiry notice of the implied restrictive covenant
restricting the property at issue to use as a golf course.@ Id. at 528. Next, the
bankruptcy court rejected the estoppel by deed defense based on the Aavailability of
information in open view and for public viewing.@ Id. at 530. The bankruptcy
court also rejected claims that the doctrine of integration destroyed an implied
restrictive covenant, that the implied restrictive covenant was terminated due to
changed economic circumstances, that there was a express restrictive covenant that
runs with the land, that the 25-year operation provision was merged into the deed
and that an accounting or constructive trust was appropriate. Id. at 530-36. In
sum, the bankruptcy court denied Heatherwood=s application to sell the real estate
free and clear of liens, interests and encumbrances. 5
5
The bankruptcy court’s Order did not dispose of all the issues and parties in the adversary
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III. STANDARD OF REVIEW
In exercising appellate jurisdiction under 28 U.S.C. § 158(d), the Court
Aindependently examine[s] the factual and legal determinations of the bankruptcy
court and employ[s] the same standards of review as the district court.@ IBT Int’l,
Inc v. Northern (In re Int’l Admin. Servs., Inc.), 408 F.3d 689, 698 (11th Cir. 2005)
(internal quotation marks omitted). Questions of law are subject to de novo review,
and findings of fact are subject to a clearly erroneous standard. Id.; see also Spies v.
Atl. Gulf Cmyts. Corp. (In re General Dev. Corp.), 84 F.3d 1364, 1367 (11th Cir.
1996) (AWhile the Bankruptcy Court's factual findings are subject to a clearly
erroneous standard, that standard does not apply when determining the propriety of
the Bankruptcy Judge's conclusions of law, (i.e.) determination of what law applies
or determination of the ultimate legal conclusions resulting from the application of
the law to the facts. Legal conclusions made by the Bankruptcy Judge may not be
approved by the District Court without an independent determination.@)
This Court reviews de novo questions of subject matter jurisdiction. Walden
v. Walker (In re Walker), 515 F.3d 1204, 1210 (11th Cir. 2008).
proceedings. On August 10, 2011, the bankruptcy court entered an order certifying its amended
order and judgment as a final judgment pursuant to Rule 54(b) of the Federal Rules of Civil
Procedure. As such, the Court has jurisdiction to review the district court’s October 24, 2012
final order affirming the bankruptcy court’s decision. Dzikowski v. Boomer’s Sports &
Recreation Center, Inc. (In re Boca Arena, Inc.), 184 F.3d 1285, 1286 (11th Cir. 1999).
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IV. DISCUSSION
A. Jurisdiction over this Appeal.
The Court begins its analysis by assessing its subject matter jurisdiction.
A[P]arties cannot waive subject matter jurisdiction, and we may consider subject
matter jurisdiction claims at any time during litigation.@ Belleri v. U.S., 712 F.3d
543, 547 (11th Cir. 2013) (quoting Scarfo v. Ginsberg, 175 F.3d 957, 960 (11th
Cir.1999)). Appellees now challenge this Court’s subject matter jurisdiction over
FCB=s appeal, claiming that FCB does not meet the standing requirements of the
bankruptcy law=s person-aggrieved doctrine and Article III.
The person aggrieved doctrine is a prudential standing requirement courts
apply in light of the fact that the bankruptcy code does not define who can appeal a
bankruptcy court order. Westwood Cmty. Two Ass’n, Inc. v. Barbee (In re
Westwood Cmty. Two Ass=n, Inc.), 293 F.3d 1332, 1334-35 (11th Cir. 2002).
ABankruptcy's person aggrieved doctrine restricts standing more than Article III
standing, as it allows a person to appeal only when they are >directly and adversely
affected pecuniarily by the order.=@ Id. at 1335 (quoting Harker v. Troutman (In re
Troutman Enters., Inc.), 286 F.3d 359, 364 (6th Cir. 2002)). This doctrine limits
standing to Athose individuals who have a financial stake in the order being
appealed,@ such as when that order Adiminishes their property, increases their
burdens or impairs their rights.@ Id.16
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Here, there is no question that the bankruptcy court’s order burdens FCB and
impairs its rights. FCB holds title to the real property as mortgagee and the
bankruptcy court’s order restricts that property to use as a golf course. See Baldwin
Mut. Ins. Co., Inc. v. Henderson, 580 So. 2d 574, 575 (Ala. 1991) (Alabama is a
Atitle theory@ state, meaning upon execution of a mortgage legal title passes to the
mortgagee). That restriction clearly impacts the resale value of the property.
Because FCB satisfies the person-aggrieved person doctrine, FCB also meets Article
III standing requirements. In re Westwood Cmty. Two Ass=n, Inc., 293 F.3d
1335-36.
B. The Merits.
The Court will now address the challenges by FCB and Heatherwood to the
bankruptcy court’s determination6 that an implied restrictive covenant exists to
restrict the use of this property to use as a golf course. The bankruptcy court made
numerous factual findings in support of this legal conclusion which bear
highlighting. The bankruptcy court found that USX recorded numerous plat maps
which identified the property as a golf course and listed the names of the roads in
these maps, all of which were derived from the names of golf courses and
tournaments. Moreover, the deeds to each residential lot in the subdivision makes
6
The district court adopted the bankruptcy court’s reasoning, therefore the reference to the
Abankruptcy court’s determination@ includes both the district court and bankruptcy court’s orders.
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reference to the various covenants and easements which note that the Heatherwood
subdivision is a planned residential and golf community. The deeds required
owners of residential lots to construct a golf cart storage area and prohibit the
construction of a fence on those lots adjacent to a fairway, tee or green on the golf
course property. Prospective lot purchasers were told that every homeowner must
be a member of the Heatherwood Golf Club. USX created various marketing
materials highlighting the benefits of living in a golf course community and erected
a sign at the entrance of the development noting that the Heatherwood subdivision is
a Agolf course community.@ Notably, the community was used exclusively as a golf
course community since it began operating in 1986. Lastly, based on testimony
from witnesses, the bankruptcy court determined that most, if not all, Heatherwood
homeowners were induced to buy based on the inclusion of a golf course in the
subdivision and that USX always intended for the Heatherwood subdivision to be a
golf course community. The Court sees no basis to disturb these factual findings.
Appellants primarily challenge the bankruptcy court’s determination that,
based on these facts, there was an implied restrictive covenant. The bankruptcy
court correctly followed the law as articulated by the Alabama Supreme Court, and
applied the aforementioned facts to that law. Indeed, in addressing the certified
questions from the bankruptcy court, the Alabama Supreme Court identified several
facts surrounding the initial development of the property that made the instant case
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similar to the facts in the Shalimar case. As such, the Alabama Supreme Court
decided Aas an abstract question of law@ that the rationale employed in the Shalimar
case was consistent with Alabama law regarding implied restrictive covenants. The
Alabama Supreme Court went further to find that the various marketing materials
and the recorded plat map and recorded restrictions were substantial evidence that
the original grantor intended a common scheme of development that included the
golf course community as an integral part of the development. Thus, FCB and
Heatherwood=s arguments that USX did not intend to restrict the golf course
property=s use and there is no implied restrictive covenant is nothing more than an
attempt to second-guess the Alabama Supreme Court’s answer to the certified
question. 7
The remainder of FCB and Heatherwood=s arguments attack factual
determinations by the bankruptcy court which this Court concludes should not be
disturbed. The Court will take each in turn. 8 First, as to the question of whether
the bankruptcy court’s finding that FCB and Heatherwood were on notice of the
implied restrictive covenant, and therefore could not be considered bona fide
7
Nor does the Court find persuasive FCB and Heatherwood=s argument that USX did not
intend for the community to continue to be operated as a golf course. There was adequate
evidence before the bankruptcy court that USX always planned to sell the property as a golf
course.
8
The Court notes that the Alabama Supreme Court left open several of these issues,
including the issue of notice, the defense of estoppel and changed economic circumstances.
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purchasers for value, the bankruptcy court found that FCB and Heatherwood had
notice. The finding was well supported by evidence in the record including the
testimony of the vice-president of Pine Cone Capital, Inc. and a representative of
FCB, both of whom visited the property. The bankruptcy court did not err when it
held that FCB and Heatherwood had actual, constructive and inquiry notice of the
implied restrictive covenant. See Ex Parte Frazer, 587 So. 2d 330, 331-32 (Ala.
1991) (to enforce an implied restrictive covenant, there must be evidence of
knowledge of restriction at time of purchase); Wallace v. Frontier Bank, N.A., 903
So. 2d 792 (Ala. 2004) (ANotice sufficient to preclude a bona fide purchase may be
actual or constructive or may consist of knowledge of facts which would cause a
reasonable person to make an inquiry which would reveal the interest of a third
party.@ (citing Hill v. Taylor, 235 So. 2d 647, 649 (Ala. 1970)).
Next, the bankruptcy court did not err in finding that most, if not all, of the
homeowners within the Heatherwood subdivision bought their home with the
expectation that the golf course property would remain a golf course. See FTC v.
Abbvie Prods. LLC, 713 F.3d 54, 69 (11th Cir. 2013) (AFor us to conclude that those
findings were clearly erroneous, we must be left with the definite and firm
conviction that a mistake has been committed after reviewing the evidence as a
whole.”) (internal quotation marks omitted). Third, the bankruptcy court did not
err in holding that the doctrine of estoppel by deed precluded the enforcement of the
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covenant. Again, after reviewing the evidence, the bankruptcy court determined
that, based on the availability of information in open view and for public viewing,
the estoppel by deed defense fails for both FCB and Heatherwood. See
Jacksonville Pub. Serv. Corp. v. Calhoun Water Co., 219 Ala. 616, 123 So. 79,
81-82 (Ala. 1929) (estoppel by deed requires knowing representation or
concealment relied upon by the other party to his or her detriment). Fourth, with
respect to FCB and Heatherwood=s argument that the doctrine of integration in the
Agreement between HGC and Heatherwood serves to destroy any implied covenant,
the bankruptcy court did not err in finding integration does not apply under the facts
of this case. Specifically, the bankruptcy court concluded that, because HGC did
not represent every Heatherwood homeowner at the time the Agreement between
HGC and FCB was entered, the implied restrictive covenant could not have been
destroyed by the Agreement. See McCown v. Gottlieb, 465 So. 2d 1120, 1123
(Ala. 1985) (a deed from one lot owner in a six-lot subdivision could not void the
covenant held by the other five lot members). Fifth, in considering the doctrine of
changed circumstances, the bankruptcy court relied on various factual findings in
determining that the homeowners=s benefit from the continued existence of the
covenant outweighed the detriment borne by FCB and Heatherwood.
Lastly, the Court rejects FCB and Heatherwood=s argument that HGC had no
standing to enforce the implied restrictive covenant because HGC owned no
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property. As correctly noted by the bankruptcy court, the homeowners were
brought into the adversary proceeding as indispensable parties and asserted the
implied restrictive covenant. Additionally, all members of HGC are members of
the golf club and some own residential lots in the subdivision. Thus, there was no
error in finding that HGC had standing.
V. CONCLUSION
For the foregoing reasons, the judgment of the district court is AFFIRMED.
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