Knox Loudon Corporation v. Town of Farragut

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
KNOX LOUDON CORPORATION v. TOWN OF FARRAGUT, TENNESSEE
Direct Appeal from the Circuit Court for Knox County
No. 1-657-98 Dale C. Workman, Judge
No. E2000-00174-COA-R3-CV - Decided June 16, 2000
This is a suit seeking damages under the theory of inverse condemnation by Knox
Loudon Corporation against the Town of Farragut, in connection with Knox Loudon’s
improvement of certain property by erecting condominiums. The theory of the suit is that the
Town of Farragut, by insisting that the plan for the project include a dedication of one portion for
a roadway and another for a hiking and bike trail, was a taking entitling Knox Loudon to
compensation. The Trial Court sustained Farragut’s motion for summary judgment, resulting in
this appeal. We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed
GODDARD, P.J., delivered the opinion of the court, in which FRANKS and SWINEY, JJ.,
joined.
David L. Buuck of Knoxville, Tennessee, for the Appellant Knox Loudon Corporation
David E. Rodgers of Oak Ridge, Tennessee, for the Appellee, Town of Farragut, Tennessee
OPINION
This is a suit seeking damages under the theory of inverse condemnation by Knox
Loudon Corporation against the Town of Farragut, in connection with Knox Loudon’s
improvement of certain property by erecting condominiums. The theory of the suit is that the
Town of Farragut, by insisting that the preliminary plan for the project include a dedication of
one portion for a roadway and another for a hiking and bike trail, was a taking entitling Knox
Loudon to compensation. The Trial Court sustained Farragut’s motion for summary judgment.
Knox Loudon appeals, raising the following issues:
1. Where the municipality conditions approval of a preliminary and final
subdivision plat upon the property owner dedicating a right of way for a future
road extension and upon the building and dedicating a public bike path as part
of an extensive city owned bike path throughout the city, does this constitute a
“taking” by the government so as to require compensation to the owner under
Article 1, § 21 of the Tennessee Constitution and under the Fifth and
Fourteenth amendments to the United States Constitution?
2. Under the facts in the record, is the Plaintiff estopped to claim these
constitutional rights?
3. When all allowable inferences from the facts in the record are resolved in
favor of the Plaintiff, is there an absence of a genuine issue as to all material
facts so as to support a judgment as a matter of Law?
4. Were the Plaintiff’s allegations of disparate treatment by the Town as
compared to its treatment of its Mayor, immaterial and redundant so as to
subject them to being stricken under Rule 12.06, T.R.Civ.P.?
A recent opinion of the Supreme Court of Tennessee, Staples v. CBL &
Associates, Inc., 15 S.W.3d 83, 89 (Tenn. 2000), restates the standard of review as to summary
judgments:
The standards governing the assessment of evidence in the summary
judgment context are also well established. Courts must view the evidence in
the light most favorable to the nonmoving party and must also draw all
reasonable inferences in the nonmoving party’s favor. See Robinson v. Omer,
952 S.W.2d at 426; Byrd v. Hall, 847 S.W.2d at 210-11. Courts should grant a
summary judgment only when both the facts and the inferences to be drawn
from the facts permit a reasonable person to reach only one conclusion. See
McCall v. Wilder, 913 S.W.2d 150, 153 (Tenn.1995); Carvell v. Bottoms, 900
S.W.2d 23, 26 (Tenn.1995).
Farragut’s motion for summary judgment accurately sets out pertinent undisputed
facts relative to ownership and development of the property:
2. The subject dispute arises out of certain activities of the Plaintiff
taken in connection with the development and construction of the Turkey
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Creek Harbor/Bridgewater residential subdivisions within the Town of
Farragut. These developments were originally commenced by a third party,
Alan Houston who also did business under the name of H and S Homes. Mr.
Houston held options for the purchase of the subject land and based upon those
options filed the original applications with the Town of Farragut which
required having the property rezoned, submitting plans for the project for
approval, and having it approved as a special exception, which is not an
approval as a matter of right but one which goes through special processing.
Following the initial approvals including the site plan of the development Mr.
Houston assigned his options to Plaintiff. As part of the terms of the
assignment of option rights from Mr. Houston to Plaintiff, Plaintiff agreed to
and did generally develop the properties as approved by the Town of Farragut
pursuant to plans prepared by Richard LeMay & Associates with certain
subsequent modifications mutually agreed upon between Plaintiff and
Defendant.
3. The assignment of options occurred on February 17, 1995. Prior to
that time and while the property was still owned by Mr. Houston and on July
27, 1994, the Board of Zoning Appeals of the Town of Farragut approved the
request for a development under special exception for Turkey Creek Harbor
which contained the specific requirement and agreement that the
bikeway/pedestrian parkway shown on the plans would be constructed.
Accordingly, this was an obligation acquired by Plaintiff willingly at the time
of his purchase of the project.
4. The major road plan as adopted by the Town of Farragut reflects
thereon as future development a road to run from the Turkey Creek Road area
northwardly to the property of Brook Lawn Development and continuing
northwardly to intersect with roads to be constructed on that development
including an extension of Campbell Station Road. This proposed road lies in
part through the property involved in this subject development. The layout of a
road complying with the major road plan of Farragut insofar as it related to the
subject development was included in the original plans as finally presented by
Alan Houston for approval by the Town of Farragut and which were approved
in August of 1994 while Alan Houston still owned the project. This was
included within the obligations acquired by Plaintiff pursuant to the assignment
of options.
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5. Plaintiff owned the development through the construction phases but
not through the entire planning and approval process. The Town cooperated
with both Plaintiff’s predecessor and with Plaintiff in making changes to allow
the project to occur including approval of one year extensions to Plaintiff on
various permits and approvals, granting variances at Plaintiff’s request and as
previously stated rezoning the property and approving the development as a
special exception for Plaintiff’s predecessor, Mr. Houston.
6. In Paragraph 5 of the Complaint, Plaintiff complains the Town
required dedication of land for public purposes for streets and sidewalks and
common areas including the walkway/bicycle path and possible future road.
Both the bicycle path/walkway and roadway complained of had been agreed to
by Plaintiff’s predecessor, Mr. Houston, and were included in the plans
approved by the Town of Farragut and recorded on the plats of the
development which existed at the time Plaintiff voluntarily purchased the
project from Mr. Houston thereby acquiring responsibility voluntarily rather
than being required of Plaintiff by the Town of Farragut.
The Trial Court entered the following order:
The above captioned matter came on for hearing before the Honorable
Dale C. Workman, Circuit Judge, on August 27, 1999, upon the Motion of
Defendant for Summary Judgment, the statement of undisputed facts filed by
both parties, briefs, and oral argument presented by attorneys for both parties,
all in open Court from which the Court finds as follows:
1. From the record it appears the matters about which Plaintiff
complains were agreed upon by his predecessor in interest, Allen Houston, and
memorialized and reflected upon the original preliminary plat approved
pursuant to the special exception (use on review) procedures of the Town of
Farragut by its Board of Zoning Appeals and the same were substantially
unchanged upon the final plats of the subdivision. Subsequent to approval of
the preliminary plat, Mr. White/Plaintiff acquired Mr. Houston’s interests in
the project by recorded agreement committing Plaintiff to the completion of the
subdivision according to the plans agreed upon and approved by Farragut.
Plaintiff is estopped by this recorded Agreement (estoppel by deed) from
denying or complaining about the matters at issue. If Plaintiff’s principal
stockholder, Mr. Buddy White, was an undisclosed joint venturer of Allen
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Houston at the time the preliminary plat for the subdivision was negotiated and
approved, Mr. Houston was acting as the agent of the interests of Mr. White in
so doing and the result is the same.
2. The Court further finds that if Plaintiff had objected to the
developmental requirements jointly agreed upon, the time to have raised such
objections was at the time of the consideration and approval of the preliminary
plat and not when the subdivision was substantially complete. By accepting
the preliminary plat and by filing requests for modifications as the work
progressed, many of which requests were granted and approved by the Town of
Farragut, Plaintiff waived the right to contest at this late date the negotiated
approvals agreed to by the parties at the commencement of the project.
We agree with the foregoing findings by the Trial Court and emphasize
the fact that the time the preliminary plans were submitted, showing a dedication of the
roadway and bike trail, the property was not owned by the Plaintiff, but in reality by
third parties with the right of Mr. Houston to acquire it under options, which were
ultimately transferred to the Plaintiff and exercised by it. That transfer of the interest of
Mr. Houston to the Plaintiff contained the following provision:
3, SUBDIVISION OF PROPERTY. The property, which is the subject
of the Options ad this Agreement, is to be subdivided in accordance with the
general plans, specifications and requirements represented by the
developmental plans and plats prepared by Richard E. LeMay, of LeMay &
Associates Consulting Engineers, dated June 22, 1994, as revised, Job No.
3074, entitled “Turkey Creek Harbor”. KNOX/LOUDON shall be responsible
for the clearing, grading, road construction and utility line installation for the
subdivision.
We also note that at the very latest, when the final plat was recorded, on July 7,
1997, the appropriation occurred. Although not raised in the pleadings and not the basis of our
resolution of this appeal, it would appear that any claim for inverse condemnation would begin to
run on that date and the cause of action asserted in a complaint filed on October 23, 1998, would
be barred by T.C.A. 29-16-124, the one-year statute of limitations applicable thereto. Osborne
Enterprises v. City of Chattanooga, 561 S.W.2d 160 (Tenn. Ct. App. 1977).1
1
In Osborne Enterprises, we quoted from the Supreme Court case of Knox County v.
Moncier, 455 S.W.2d 153 (1970), which states “that the onus is on the property owner to institute
his suit within one year after he realizes or should reasonably realize that his property has
sustained an injury which is permanent in nature. At that time the ‘taking’ occurs and the statute
of limitations begins to run.”
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We also point out that the record does not contain any affidavit or testimony from
Mr. Houston, who negotiated the agreement with the Town of Farragut. There is proof in the
record by affidavit of James R. (Buddy) White, who is President of Knox Loudon, that he and
Mr. Houston did not agree to dedicate the property, but it would appear that his statement as to
Mr. Houston would be hearsay. Although Mr. White’s affidavit states that there was “no choice
except to agree” to the Town of Farragut’s demand, he obviously had the choice of not exercising
the option.
In conclusion, had the initial plans for the improvements met all of the zoning
requirements, we would agree with the Plaintiff that the requirement for dedication of the
property would have been a taking. However, it was necessary for the property to be rezoned to
provide for a higher density improvement desired by the Plaintiff. The owners of the option and
ultimately the Plaintiff were willing to make the dedication to receive approval of the planned
development.
In light of the foregoing disposition of this case, we find it unnecessary to address
issue number four.
For the foregoing reasons the judgment of the Trial Court is affirmed and the
cause remanded for collection of costs below. Costs of appeal are adjudged against Knox
Loudon and its surety.
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