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Gambrell v. Nivens - 275 S.W.3d 429 (Tenn. Ct. App. 2008)

Rule:

The equitable doctrine of estoppel by deed prevents a plaintiff/grantor from enforcing restrictive covenants that contravene the deed's recital that the land is unencumbered. Estoppel by deed is a bar which precludes one party to a deed and the party's privies from asserting as against the other party and that party's privies any right or title in derogation of the deed or from denying the truth of any material facts asserted in it.

Facts:

After subdividing their property, imposing restrictions on the three lots they sold, and retaining the remaining land, Plaintiffs Joe and Jeri Gambrell sold a lot to Foshee. In the deed to Foshee, the Gambrells left blank the space reserved for reciting encumbrances on the property. Instead, they attached to the deed an untitled, undated, and unsigned page listing the restrictions and recorded it along with the deed.  Foshee then conveyed his lot to defendants Sonny and Carrie Nivens by warranty deed in May of 1996. The deed affirmatively recited that there were no encumbrances; however, the Nivenses were provided with a copy of the restrictions. The Nivenses had begun to build a large wedding chapel and facility, known as Carahills Estate, when the Gambrells filed suit to enforce the purported restrictions and enjoin the Nivenses from completing the chapel’s construction and using it for commercial purposes. The Gambrells sought injunctive relied and $50,000 in damages. The Nivenses filed their answer, contending that the lot they purchased was unencumbered, that the "protective covenants" did not run with the land, and that they had no notice of the protective covenants when they took title to the property. The trial court found that the Gambrells were entitled to enforce the restrictions because the Nivenses had actual notice of them prior to the transfer of title. Moreover, the trial court found that the attachment was stamped as part of the warranty deed when recorded and, at least, constituted a cloud on title. Thus, the trial court issued a permanent injunction prohibiting the Nivenses from operating the chapel or any other commercial enterprise on their property. The Nivenes sought appellate review.

Issue:

Were the Gambrells entitled to enforce the restrictions, which were not included on the deed but were instead included in an attachment to the deed?

Answer:

Yes.

Conclusion:

The appellate court affirmed the judgment of the trial court, holding that the Gambrells were entitled to enforce the restrictions because the Nivenses, who had actual notice of the restrictions, could not have reasonably relied on the absence of listed encumbrances on the face of the Gambrell-Foshee deed. According to the appellate court, although the deed and its attached restrictions were deficient in form, the restrictive covenants were enforceable as an equitable servitude, regardless of whether there had been a common plan of development, because the language of the covenants expressly stated that the parties intended to bind the purchaser's successors and assigns.

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