Timberlake Homeowners Association, Inc. v. Timberlake Development, LLC Et Al.

This is an appeal from the trial court’s order dismissing, for failure to state a claim upon which relief could be
granted, an action for declaratory judgment filed by the petitioner homeowners’ association against the respondent developer. The developer had formed the homeowners’ association to oversee the development of Timberlake Subdivision in Knox County and had executed a declaration of covenants and restrictions that provided, inter alia, that the developer retained the exclusive right to appoint a three-member review board to oversee construction of the subdivision until such time as the developer assigned its rights to the homeowners’ association. The declaration also included a waiver provision that enabled the developer to unilaterally amend and waive any portion of the declaration at any time. In October 2020, the developer and homeowners’ association executed and recorded a document assigning to the homeowners’ association the developer’s rights to appoint members to the review board, expressly excluding from the assignment any lots still owned by the developer or its affiliate company. The developer then executed a waiver document waiving its obligation to submit its remaining lots to board review. The homeowners’ association filed a complaint for declaratory judgment, seeking a declaration from the trial court that (1) the developer had assigned to the homeowners’ association all rights to appoint members of the oversight board; 2) there existed only one oversight board, which was now controlled by the homeowners’ association; and (3) the waiver document was null and void. Upon a motion to dismiss filed pursuant to Tennessee Rule of Civil Procedure 12.02(6) by the developer, the trial court dismissed the declaratory judgment action for failure to state a claim upon which relief could be granted, finding that the declaration, the assignment, and the waiver documents were unambiguous as a matter of law and that they granted the developer the power to retain oversight of its lots and to waive any portion of the declaration. The trial court further determined that because the president of the homeowners’ association had signed the assignment, the homeowners’ association was estopped from arguing that the developer had assigned all authority to appoint members to the review board to the association. The homeowners’ association filed a motion to alter or amend the judgment, arguing, inter alia, that dismissal of a declaratory 05/03/2024 2 judgment action based on a motion to dismiss pursuant to Tennessee Rule of Civil Procedure 12.02(6) is generally improper and that the trial court should instead have declared the rights and obligations of the parties with respect to the documents. The trial court denied the motion to alter or amend and the homeowners’ association timely appealed. Upon careful review, we find that the trial court improperly dismissed the declaratory judgment action for failure to state a claim after determining that the documents at issue were unambiguous as a matter of law and essentially declaring the rights of the parties. Accordingly, we vacate the trial court’s dismissal of the complaint and its award of attorney’s fees to the developer based on that dismissal, and we affirm that portion of the trial court’s order declaring certain rights and responsibilities of the parties.