### IN THE COURT OF APP EALS OF TENNESS EE AT NAS HVILLE Marc h 19 , 200 4 S es sio n
J.C. KI NG, ET AL 

### . v. GATL INB URG SPORTSM AN’S CLUB, I NC.

Appeal f romthe Chancer y Court for Sevier C ounty No. 00-5-182 Te lf

ord E. For gety, Jr ., Chancellor

No. M2002- 02949-COA-R 3-CV - F iled - July 20, 2004

L essors, who a

re d es ce n d ants of the origina l lessor, filed suit ag ainst the Gatlinburg Spo rt sma n’ s Cl ub , Inc ., to d e c lare that the re a l est ate le a se ha d be e n bre a c he d by the Clu b due to i ts failure to build a clubhouse as re quired by the lease . The Club arg ued that it built a clubhouse that
s a t i s fi ed t h e l ea s e f

o r t h e l ea s e d i d n o tco n t ai n s p ec i fi ca t i o n s fo r t h e t yp e o r s i z e o f c l u b h o u s e. It fu rthe r a rg ue d th a t it

wa s n ot i n b re a c h f

or the le sso rs ha d exte nd e d th e de a dli ne ind e fi nit e ly to b uil d
a mo r e s u b s tan ti a l c lu b h o u s e

. T h e Cl u b a ls o ar g u e d th a t th e le s s o r s ’ c laim w a s b arr e d b y

th e s ixy ear statute o f l imitations , equitable e stoppel, waiver and lac hes and that the lessors’ violated the Clu b’ s r ig ht o f f

ir st r e fu sa l to pu rc ha se the pr op e rt y by no t se lli ng the pr op e rt y

a s th e de c e de nt’ s w ill direc ted and for making transfe rs of partial intere sts in the property among st the benef

iciarie s and desce ndants of the origina l lessor. The tria l court ruled that the parties mutually s u s p en d ed the deadline by

which the Club was to build a clubhouse, that the C lub failed to build a clubhouse , that the Club was in materia l brea ch and, there fore , the lease was terminated. We r ever se in part finding t h at the parties did not mut ually suspend the oblig ation or dea dline to build a clubhouse, that the completion date f

or the c lubhouse was J une 30, 1990, and that the lessors did not file suit unt il May 5, 2 0 0 0 ; theref

ore, the lessors ar e bar

red by the six -y ear

statute of limitations. W e af firm the trial
c o u r t ’ s ru l i n g t h a tt h e l e s s o r s d i d n o tv i o l a t e t h e C l u b ’ s r i g h to f f i r s tr e f u s a l t o p u r c h a s e t h e p r o p e r t y, fi nd ing that th e int e r- famil y tr a ns fe rs didno t vi olate the Clu b’ s rig ht o f f ir st r e fu sa l.
Tenn. R. App . P . 3 Appeal as of Right; Judgme nt of th e Chancer y Court Aff irm ed in Par t and Rever sed in Part

F RAN K G. C L EME NT , J R ., J ., delivere d the opinion of the court, in w hich W I L L I AM C. K O CH , J R ., P.J ., M.S., and W I L L I AM B. C A IN , J ., joined.

J ohn B. W ater s I I I and Ga rre tt P. S wartwood, Knoxvi lle, Tenne ssee, f or the a ppellant, Gatlinburg Sportsman’s Club, I nc.
C y n t h i a R i ch ar d s o n W yri ckan d J am es L

. Ga s s , S ev i er v i l l e, T en n es s ee , fo r t h e a p p el l ee s , J

. C

. Ki n g, Roy King , Kathy

Huskey , Peg g y

Roberts, Mary

King , and Ga il Reag an.M a r y Ki n g a l s o s i g n e d t h e l e a s e a n d a dd e n du m a s l e s s or a l on g w i t h h e r h u s ba n d, N. C. Ki n g ; h ow e v e r , N. C. 1
K ing w a s the so le o w n e r o f t h e p ro p e rty.
-2- OP IN ION This lease dispute pe rtains to an 80 ac re tra ct of land formerly owned by

N.C. King , which he lease d to the Gatlinburg Sportsman’s Club, Inc. (the “Club”) in 1984. The lease authorized the 1 Club to use the property

as a “ sportsman’s club” and any o t h er l ega lly permitted business. The
v ar i o u s ac t i v i t i es t h e m em b er s o f t h e C l u b en j o y ed i n cl u d ed ca m p i n g, fi s h i n g, t ar gets h o o t i n g, arc hery and tra p and skee t shooting. The initial lea se term was twe nty y ear s with an option to renew for a nother twe nty

y ear s.

I n 1985, N.C. King and the Club enter ed into an adde ndum which provided that the Club would make substantial improveme nts to the property , and if an offer to purcha se t he property was ma de , th e Clu b w ou ld h a ve the ri g ht to mat c h th e of fe r. I f the Clu b p ur c ha se d th e pr op e rt y it w ou ld be g iv e n c r e d it a g a in s t th e p u r c h a s e p r ic e f o r th e v a lu e o f th e imp r o v e me n ts to th e p r o p e r ty . The addendum f

urther provided t hat i f t he C lub did not purcha se t he property and the pr operty was sold, the lessor would reimburse the Club for 50% of the value of the improvements. T h e m ore substantial improvements to be buil t by the Club were a dam, lake and clubhouse . The Club ag ree d to build a dam and lake by October 31, 1986, and a clubhouse by J une 30, 1990. The dam and lake
wer e built and there is no dispute as to the dam or lake . The primary dispute pertains to the construction of a

clubhouse.
Mr. King died in 1988. His will provided that the lease d p ro p er t y was to be sold with the pr oc e e ds div ide d a mon g fi ve be ne fi c iari e s; how e ve r, the be ne fi c iari e s ag re e d amo ng the mse lve s to reta in the property as co-te nants. As a result, N.C. King ’s wife , Mary King , and four

of his children, J.C. K ing , Lind a

Re a g a n, Pe g g y

Rob e rt s, a ndKathy

Hu sk e y , e a c h in he ri te d a on e-f if th i nte re st i n t h e p ro p er t y

. L at er , M ar y Ki n g tra n s fe rr ed h er o n e- fi ft h i n t er es t t o o n e o f t h e co -t en an t s , J

. C

. Ki n g. L inda Reag an later

transfe rre d her one-f

ifth interest to he r brother Roy King by quitclaim de ed. The prese nt owners of

the prope rty

are four of

N.C. King ’s children, J .C. King, Roy King , Kathy

Huskey and Peg g y

Roberts (L essors).

L e sso rs fi le d th is a c tio n a g a ins t th e Clu b in 2000 a lle g ing that the Clu b b re a c he d th e le a se by failing to construct a c lubhouse. I n their complaint, L essors soug ht a judg ment decla ring that the lease was null and void and that the club be e njoined from any further construction on the tra ct. The Club answere d deny ing it wa s in br eac h beca use it ha d built a clubhouse. The Club further de fende d
arg uin g that L e sso rs ’ c la im w a s b arr e d b y the six- y e ar s ta tut e of

lim itatio ns , e qu ita

ble e stoppe l, waiver , and lac hes.

B y c ou nte rc la im a nd thi rd -p art y c omp la int , the Clu b furthe r as se rt e d tha t L e sso rs a lon g wi th Ma ry Ki ng a ndGa il Re a g a n, wh o h a d in he ri te d a n in te re st i n th e pr op e rt y bu t late r t rans fe rr e d th e ir inte r e s ts , b r e a c h e d th e le a s e b y d e p r iv in g th e Cl u b o f it ’ s r ig h t o f f ir s t r e f u s a l to p u r c h a s e the property

.-3-

F oll ow ing a

le ng thy tr ia l, the tr ia l c ou rt ru le d that the Clu b ha d no t c on str uc te d the c lub ho us e in compliance with the lease but it was not y et in de fault and there fore denied L essors’ r equest that the Club forfe it the property immediately

. The trial court further r uled that the clubhouse must be constructe d within one y ear of t he trial court’s order to avoid a de fault under the lease . Further, the tr ia l cou rt dis mis se d th e c ou nte rc la im a ndthi rd -p art y c omp la int , th e reby

de nying the Clu b’ s c la im fo r b re a c h o f the ri g ht o f f ir st r e fu sa l.

Four issues are prese nted for revie w. The f irst three pe rtain to L essors’ a lleg ation that the Club brea ched the lease by failing to build a clubhouse as r equire d by the adde ndum to the lease. Th e fi rs t is wh e the r L e sso rs ’ c a us e of a c tio n fo r br e a c h of the le a se is b arr e d b y

the six- y e ar s ta tut e of limitations. The second is w hether L essors’ cause of action is barr ed by the equitable de fense s of la c he s, wa ive r a nd

/or e sto pp e l. Th e thi rd is wh e the r the Clu b s a tis fi e d th e le a se pr ov isi on to b uil d
a c lub ho us e wh e n it

ide nti fi e d a

mod e st str

uc ture a s “ the c lub ho us e .” Th e fo urth i ssu e pe rt a ins to the Club’s alleg ation that L essors and two benef iciarie s of N. C. King violated the Club’s rig ht of first ref usal to purcha se the prope rty by not selling the pr operty

as direc ted in the will of N. C. King
a n d t h e r e a f

t e r b y tr a n s f e rr i n g o w n e r s h i p i n t e r e s t s w i t h i n t h e f a m i l y.

F a c ts

T h e C l u b b e g a n m ak i n g i m p r o v e m e n t s t o t h e p r o p e r t y s h o r t l y a f t e r t h e 1 9 8 5 a d d e n d u m

. In 1986, the Club be g an g rading and excavation to build roads, the dam a nd lake, the va rious rang es a ndthe sk e e t a ndtr ap s ho oti ng are a s. At thi s ti me the Clu b als o pre pa re d a site fo r the c lub ho us e wh ic h in c lud e d p la c ing se pti c ta nk s a ndins ta lli ng fi e ld l ine s.
Whil e these eff

orts wer e under way , N.C. King , who was a member of the Club, participated in Club activiti es and took part in Club meeting s. The gra ding contrac tor testified that N.C. King was pre sent much of the time the g rading work was being done. N.C. King ’s son, J .C. King, te stified that hi s f a the r w a s exci te d ab ou t the bu ild ing of the la ke a ndc lub ho us e a ndwh e ne ve r h e wo uldvis it h i s f a t h e r , h i s f

a t h e r w o u l d w a n tt o v i s i tt h e p r o p e r t y. The Club completed the dam and lake in 1986; howeve r, other than working on the site and septic sy stem, construction on the c lubhouse had not beg un.

L loy d L ee, w ho serve d as th e building c ommitt ee c hairman f or the Club, testified that the Club did not commit to buil d any particula r ty pe of c lubhouse and that N.C. King did not insist on a particular type of clubhouse. Further, L ee testified that the Club made no promises to N.C. King
or his wife at a ny time. J .C. King, te stified that while no spec ifics wer e re quired for the clubhouse, the Club led his father to be lieve that the c lubhouse would be “ substantial.”

I n order to obtain a loan for

the completion of t h e cl u b h o use and othe r projec ts, the Club prepa red c ost and reve nue estimates a nd approa ched a l ocal ba nk for f inancing . Howeve r, ac cording to L ee, be fore a loan was obtained, chang es with r espec t to state law conce rning lotteries and g ames such as bing o made suc h g ames illeg al. This cha n ge i n t h e l aw had a sig nificant impac t on the-4-

Club’s abilityto ge nerate income f rom such eve nts which had be en expected to be a major sour ce of income f

or the Club.

L ee testified that by 1987, the plan to build a clubhouse wa s abandone d and this was known by a ll Cl ub me mbe rs , in c lud ing N. C. King

. L e e state d tha t memb e rs of the Clu b disc us se d w ithN. C. King that the Club was no long er in a position t o take out a loa n and build the c l ubhouse. L ee fu rthe r i nd ic a te d th a t he wa s n ot a wa re of N.C. Ki ng vo ic ing a ny ob je c tio n to the Clu b’ s in abil ity to build a clubhouse. L ee, how ever , acknow ledg ed that N.C. King did not ex pressly relieve the Club of the oblig ation to build the clubhouse.
The June 30, 1990 completion date for the clubhouse pa ssed without the Club constructing
a c l u b h o u s e

. O n M a y 1 6 , 1 9 9 1 , a n a t t o r n e y f o r t h e E x e c u tr i x o f

N

. C

. K i n g ’ s e s t a t e , K a t h y H u s k e y, sent a letter

to the Club a dvising that the clubhouse ha d not been c ompleted as re quired unde r the le a se a ndthat th e de c e de nt’ s est a te wo uld no t be re sp on sib le fo r the va lue of a ny imp ro ve me nts to the prope rty

. Ms. H uskey testified that she along with J.C. King and Roy King visited the Club and
sa w a sig n atta c he d to a

small sh e d- lik e bu ild ing ind ic a tin g it t o b e the Clu b’ s “ c lub ho us e .” Ms. Huskey stated that she did not demand that the sign be taken down, nor did she dema nd that the Club leave the prope rty

or that the Club build another c lubhouse.

I n 1999, the Club a nd L essors met to discuss the Club’s proposal to build a “ne w” c lubhouse. Danny Thomas, pre sident of the Club at the time of the mee ting, state d that his presentation of the b u i l d i n g p l an for

the “ne w” c lubhouse was c ut short by Kathy Huskey ’s statement to the Club, “that’s a ll fine and da ndy , but we want y ou out.” Thom as i ndicated that Huskey ’s re marks we re a “b o m b s h el l re v el at i o n ” a s t h e C l u b wa s n o taw ar e t h at L es s o rs we re an gryab o u tan y t h i n g. Ac c or din g to T ho ma s, Hu sk e y fu rthe r s ta te d th a t L e sso rs tho ug ht the Clu b h a d b re a c he d th e le a se by not building the clubhouse y ear s ag o.
Standard of Re view

An app e llate c ou rt ’s re vie w of a tr ia l c ou rt ’s fi nd ing s o f f a c t is de novo upon the re cord of the trial cou rt acc ompanied by a pre sumption of the corre ctness of the finding s, unless the preponde ranc e of the evidenc e is otherwise . Tenn. R. App. P. 13(d). Unless thereis an err or of law , we must aff

irm the trial court’s decision as long as the evidence does not preponde rate ag ainst the finding s. Umstot v. Umstot , 968 S.W .2d 819, 821 (Tenn. Ct. App. 1997).

The we ight, f

aith and cr edit to be g iven to a witness’ testimony lies with the trial judge in a non-jury case beca use the trial judg e had an opportunity to obse rve the manner and deme anor of

the witness during their testimony

. Ro be rts v . R ob e rts , 827 S.W .2d 788, 795 (Tenn. Ct. App. 1991); W eave r v. Nelms , 750 S.W .2d 158, 160 (Tenn. Ct. App. 1987). There is no presumption of
corr ectne ss with r espec t to the trial court's c onclusions of law. Campbell v. Florida Steel Corp., 919 S.W .2d 26, 35 (Tenn.1996) and Te nn. R. App. P. 13(d).-5- Th e Clu bh ou se
The Club a

rg ues that L essors’ claim that the Club bre ache d the lease is barre d by the six - y ear statut e of lim itatio ns be c a us e the c omp le tio n date fo r the c lub ho us e wa s June 30 , 19 90 , y e t th e c ivi l action wa s not br oug ht until May 5, 2000. The Club a rg ues that the limitations period be g an to run
a t th e tim e of

the br e a c h whi c h all e g e dly oc c ur re d on J un e 30 , 199 0, the date the c lub ho us e wa s to be complete d.

L e sso rs arg ue that th e statut e of lim itatio ns do e s no t app ly be c a us e of sp e c if ic la ng ua g e in Para g ra ph 13 of the le a se wh ic h p ro vid e s:
On e or more wai ve rs of

a ny c ov e na nt o r c on dit ionor a g re e me nt h e re in
c on ta ine d s ha ll no [ si c] be c on str ue d a s a waive r o f a

fu rthe r b re a c h o f the sa me covenant or condition or ag ree ment, and the consent or appr oval by the L essor to or of any act by the L essee requiring L essor’s consent or approva l shall not be dee med to waive or

rende r unnec essary

L essors’ c onsent or appr o v al t o any subsequent simil ar a ct by

the L essee

.
L essors asse rt this provis i o n al l owed them to wa ive ce rtain terms or c onditions wit hout waiving the terms or c onditions permanently . The Cl ub counter s that Parag raph 13 doe s not defeat the application of the statute of limitations because the provision addre sses the def ense of waiver which is distinct from the issue of whe ther the statute of limit ations bars L essors’ claim of bre ach. Such a provision, the Club cl aim s is not applicable to the one time r equire ment to build the clubhouse, but is instead applicable i n a si tuation such as acce pting a late re ntal pay ment, without
wa ivi ng the tim e lin e ss o f f urthe r r e nta l pay me nts

. The trial c ourt found that the oblig ation to build the clubhouse wa s mutuallysuspended by the parties. The Club contends that the tria l court er red by basing its ruling that the obligation was suspended on the inf

ormal re lationship between t h e p ar t i es rathe r than on the f act that if a

brea ch
occur red, it occ urre d on J une 30, 1990, the date specifie d for c ompletion. Further , the Club arg ues that th e tr ia l c ou rt ’s ru lin g wo uld al lo w L e sso rs to t oll the statut e of lim itatio ns simply

by the ir failure to act.
Tenn. Code Ann. § 28- 3-109 provides that actions for the use a nd occupation of land and for
re nt an d ac tio ns on c on tr a c ts not oth e rw ise e xpre ssl y pr ov ide d f

or sh a ll b e c omm e nc e d w ith in s ix (6) y ear s after

the cause of a ction acc rued.

L e sso rs ’ c omp la int

in thi s ac tio n see ks a

de c laratio n th a t th e le a se is n ull a ndvo id b e c aus e the Club did not construct the clubhouse in acco rd an ce with the lease . The g ravamen of the complaint determines the proper statute of limitations and this determination is made by assessing t h e ty pe of injuries c laimed and the damag es soug ht. Mackey v . Judy’ s Foods, Inc. , 6 5 4 F

. Su p p. 1465, 1471 ( M

. D

. T e n n

. 1 9 8 7 )

. T h e f o r m o f r e li e f h e r e is g o v e r n e d b y th e s ix- y e ar s tatute of lim itatio ns

.-6-

Statu t es of limitation prescribe the time, af ter whic h no action at law or equity can be maintained. 18 Te nn . J

ur is. , L imitation of Actions, § 2. Such statutes are looked on with favor by the courts. Applewhite v. Me mphis State Univ. , 495 S.W .2d 190, 195 (Tenn. 1973) . I n W o o d v. Car pe nte r the United States Supreme Court state d:

Statutes of limit ation are vital to the welfa re of society and are favor ed in the law. The y are found and a

pproved in a ll sy stems of enlig htened jurisprude nce. T hey pr omo te re po se by

g ivi ng se c urity

a ndsta bil ity to hu ma n a ff

a ir s. An imp orta nt p ub lic policy lies at their foundation. T h ey stimul ate to ac tivityand punish neg lige nce. Whil e time is constantly

destroying the evidenc e of rights, they supply its place by
a pr e su mpt ion wh ic h re nd e rs pr oo f unn e c e ssa ry . Mer e de la y , exte nd ing to the lim it presc ribed, is itself a c onclusive bar . The ba ne and antidote go tog ether

. 101 U.S. 135, 139, 25 L . Ed. 807, 808 (1879).

I t is clear unde r Tenne ssee law that the statute of limitations beg ins running as to a contra ct when the cause of action acc rues. Colli ns v. Summe rs Hardware and Supply Co. , 88 S.W . 3d 192, 19 7 ( Te nn . Ct . A pp . 2 00 2) . B re a c h o f a c on tr a c t g ive s r ise to a

c a us e of a c tio n by the pa

rt y that is ag g rieve d, and the statute of limit ations beg ins to run as of the date of the br eac h. Chu rc h o f Ch ris t Home for Age d, Inc. v. Nashville Trust Co. , 202 S.W . 2d 178, 183 (Tenn. 1947) . Also, a cause of action arises wh en a p ar t y ’s ac ts and conduc t evince an intention to no longer be bound by

the contra ct. Id

. at 1 8 3

. Abandonment, repudiation, or other brea ch of a

contra ct, g ives rise to and
cre ates the occa sion for, an action on the contract. Gillespie v. Broadway National Bank , 6 8 S. W. 2d 479, 482 (Tenn. 1934)

.
I n this case, t h e Club and N.C. King e njoy ed a r elationship that ext ended be y ond one of
mere ly landlord and te nant with N.C. King being a Club member hi m s el f an d p articipating in the Club’s activities. Whi le such a relationship could lead to a c ourse of dealing and conduc t in which the obligation to buil d the clubhouse was suspended, our re view of the rec ord does not show that the obligation was eve r suspende d by N.C. King

. No written e vidence that the obligation was suspended is f ou ndin the re c or d, a nd wh ile L loy d L e e te sti fi e d that he inf orme d N. C. Ki ng that th e Clu b c ou ld not affor d to build the clubhouse, Mr. L ee c larified that N.C. King did n o t s pecif ically relieve the Club from the obligation. Testimony indicates that the N .C. King w as not upset or pushy about the Club’s lack of pr og ress with the c lubhouse; howeve r, it is releva nt to note that N.C. King die d on De c e mbe r 25 , 19 88 a nd the de a dli ne fo r b uil din g the c lub ho us e wa s n ot u nti l June 30 , 1 99 0. N. C. King ’s attitude may , or may not, have be en diffe rent if the de adline wa s closer in time or ha d alre ady passed.

The Club had bee n vigilant to prote ct its interests and this vig ilance drove the Club to see k the adde ndum to the l ease

. Given thi s vigilanc e, and the cost of t he clubhouse and its signific ance to the Club and N.C. King, it would see m that if there wa s a s u s p ension of the oblig ation or an
e xten sio n o f t ime to b uil d th e c lub ho us e su c h wou ld ha ve be e n d oc ume nte d inwriti ng , y e t th e re isT h e re c o rd is un c le a r a s to w h e the r M s. V a le n tine w a s a n o ff ic e r o f t h e C lub

. 2

-7- no written ag ree ment to suspend the obligation or ext end the tim e period for completion. Furthermore , Mr. L ee indicated that N.C. King did not specifica lly waive the obligation and no one ha s te sti fi e d th a t th e de a dli ne wa s e xten de d to so me fu tur e tim e . M or e ov e r, t he Cl ub ’s ac tio n in placing the sign on the door of the shed- like structure , identify ing it as the clubhouse, is inconsistent with an extension of the deadline or suspension of the obligation to build th e c lubhouse. Acc ording ly , we f

ind the Club’s actions inconsistent with the finding that the obligation was suspended.

Whil e N.C. King ’s re latio n s h i p wi t h the Club may have be en close and informa l, the
re la tio ns hip wi th N. C. Ki ng ’s be ne fi c iari e s w a s n ot. Kathy Hu sk e y te sti fi e d th a t th e famil y

wo uld have liked to ha ve enjoy ed the pr operty as did the m em b er s an d visitors to t he Club, but that the family was ne ver a

ble to do so because they did not fee l w elcome. Simi larly , J . C. King te stified that t h e C l u b d i d n o tw e l c o m e t h e K i n g f a m i l y o n t o t h e p r o p e r t y.

Ms. Hus k ey t es t i fied that she w as aw are of the June 30, 1990 completion date for the clubhou s e a n d w a s a w ar e th a t th e Cl u b h a d n o t b u il t th e c lu b h o u s e

. A r o u n d 1 9 9 1 , L e s s o r s wer e awa re that the Club had not met its obl igation to buil d the clubhouse and that the Club was ide nti fying the sh e d- lik e str uc tur e a s the c lub ho us e

. Ms. Hu sk e y re c ou nte d a dis c us sio n s he ha d w ith Mike Stevenson who wa s president of the Club during this time period:
Q. Ha ve y ou ha d a ny c on ve rs a tio ns wi th M ike Ste ve ns on abo ut the c lub ho us e in particular ? A. Ye s. Q. Te ll m e abo ut that. A. Well, he made the comment back in 1990 when I asked him w h yi t hadn’t been built, he made the comment that they didn’t have the money for it. And I told, I said, well, y ou understand that every body ’s g oing to be upset if y ou all don’t do something. A nd that’s when he said they could hang a sig n on an y t h i n g t h eywa n t e d t o a n d c al l i ta c l u b h o u s e. An d t h at ’s wh en t h e s i gn went up on the little shed.
Huskey also testified about a

conver sation with Shelia Valentine, a Club member, in 1990 or 1991: 2
Q. What about Sheila Valentine? What did she say to y ou about the clubhouse -
- or a bout a clubhouse? A. Th a t th e y

c ou ld h a ng a

sig n o n a nythi ng the y

wante d to and cal l it

a clubhouse. That’s basica lly the only conver sations that stand out in my mind. Q. So, was it Mr. Stevenson’s position t h at the Club did not have to build any particula r structure as a c lubhouse under the terms of t he lea se and
a dd e nd um? A. I g ue ss.-8-

Q. An d th a t’ s w hat Ms . V a le nti ne said t oo , rig ht? A. Ye s. Also, in May

of 1991, Ms. Huskey ’s attorne y sent a letter to the C lub informing the C lub that it had not built the clubhouse as require d and that the fa milywould not be re sponsible for any further improvements on the prope rty . The letter howeve r did not indicate that the C lub was in def ault for failing to build the clubhouse, but did state that the Club may be in def ault if it continued to make late payments. At trial, Danny Thomas who serve d as president of t he Club in 1999, indicated that he neve r saw the letter. Further, T homas testified t hat he asked other m ember s whether they had see n the l etter or hear d about it, and re ported that no one had. Mr. Thoma s further stated that the letter was not sent to the Club’s post office box wher e it r ece ived mail, but instea d to the phy sical location of the Clu b w he re it d id n ot r e c e ive ma il.

Re g ard le ss o f w he the r the le tte r w a s r e c e ive d b y the Clu b, Ms. Hu sk e y

a dmi tte d th a t sh e did
no thi ng to f

oll ow -u p o n th e le tte r o r the Clu b’ s f a ilu re to b uil d th e c lub ho us e : Q. You neve r did follow up on this letter, did y ou? A. No. Q. Ne v erd i d d o an yt h i n g? A. No. Q. Ne ve r d id s e ndthe Clu b a ny oth e r n oti c e s, or

a nythi ng lik e that? A. No. Q. I n fac t, y ou let it ride then for rea lly for a nother e ight y ear s or so - - A. Ye s. Q. – u nti l y ou me t w ith the Clu b at D a nn y B la loc k’ s o ff

ic e [199 9]; is that r ig ht? A. Uh-huh. Q. Neve r did take a ny eff orts to enforc e whateve r rig hts y ou might have under the le a se ; r ig ht? A. Right Q. Continued to acce pt rent during all that time? A. Ye s, wh e n I

c ou ld g e t it

.
I t is e vid e nt that th e Clu b f a ile d to bu ildthe su bs ta nti a l c lub hous e c on te mpl a te d b y N. C. King and L essors. More over, at least one of the Club’s office rs openly challeng ed L essors’ a ssertion that th e Clu b h a d a duty to bui ld a sub stanti a l clu bh ou se by statin g , in ess e nc e , th a t th e Clu b c ou ld identify whateve r structure it wanted as “ the clubhouse” and that is exactly what the Club did. I nd e e d, de sp ite ha vin g a c tua l kn ow le dg e that th e Clu b w a s r e fu sin g to b uil d a “ su bs ta nti a l”
c lub ho us e , a ndtakin g the po sit ion that the Clu b wa s in bre a c h of the a dd e nd um by faili ng to b uil d
a more sub s tan ti a l c lu b h o u s e , L e s s o r s d idn o t f il e th e ir a c ti o n u n ti l M a y

5 , 2 0 0 0 , n e ar ly

te n (10) y ear s after

the alleg ed bre ach.
Having determined that the statute of limitation for L essors’ a ction is six y ear s, and finding that more th an s i x y ear s transpired f ollowing the a lleg ed bre ach be fore the ac tion was filed, weT he p ert i nent pa rt of N

. C

. K i ng’ s wi l l t he C l ub rel i es on p rovides: A f te r fulfil lm e n t of t he p reced i ng 3
p a ra g ra p h s o f t h is W ill , I he re b y d ire c t t h a t t h e re st, re sid u e a n d re m a ind e r o f m y e s ta te , w h e the r th e sa m e b e re a l, pers onal or mi xed pr op er t y t o be s ol d by m y E xec ut r i x, her ei naf t er named, at p ubl i c sa l e, upo n s uch t er ms a s s he may d ee m f ea si b l e a nd p rac t i ca b l e, as so o n a f t er m y d ea t h as she sh all d ee m p ro p er, a nd fro m sa i d sa l e I h ere b y give , d ev i se
an d b eq ue ath the p ro ce ed s t he refro m as fo l l o w s: A

. T o m y b e lo v e d w ife, M a ry M o tt K ing , 1 /5 the re o f; B

. T o m y so n , J.C . K ing , 1 /5 the re o f; C

. T o m y d a u g h te r, L ind a G a il R e a g a n , 1 /5 the re o f; D

. T o my da u g h t er , Peg g y Su e Rober t s , 1/ 5 t h er eof ; a n d E

. T o m y d a u g h te r, K a thy M a rie H u sk e y, 1 /5 the re o f.
-9- there fore conclude that L essors’ c ause of action fo r brea ch due to the Club’s failure to build a clubhouse is time barr ed.

Sin c e we ha ve c on c lud e d th a t L e sso rs ’ c aus e of a c tio n is bar re d by the statut e of

lim itatio ns , it i s n o t n ecessary

to addre ss the Club’s affirmative defe nses of lac hes, wa iver, a nd estoppel, or whether the Club was in default for not building a more subs tantial clubhouse, for these issues ar e moot. Right of F irst Refusal

The Club’s final is s ue is whethe r L essors bre ache d the Club’s rig ht of first re fusal in the Ad de nd um. Th is c ha lle ng e is b a se d upo n two the orie s, the fi rs t of wh ic h is that Clu b’ s rig ht o f f ir st ref usal was violated be cause N.C. King’s wi l l d irec ted the executrix to sell t he land lea sed by the Club at public sale; y et, i nstead of selling the property in acc ordanc e with t he will, the bene ficiaries enter ed into an ag ree ment to hold the property as tena nts in common. The Club does not cite a ny 3 authorit y to s u p p o r t th is c o n te n ti o n a n d w e ar e u n a w ar e o f a n y a u th o r it y th a t s u p p o r ts s uch a contention. Moreove r, the Club does not cite a ny authority and we are unable to asc erta in how the Club would have standing , as a me re te nant of lea sed prope rty who or whic h is not an heir, benef iciary or cr editor of the dece dent, to c halleng e the distribution of bequests and/or de vises under the dec edent’ s will absent a contr actua l rig ht to do so.

Sta nd ing is a

jud ic ia l do c tr ine that limits c ou rt a c c e ss t o th os e wh o h a ve a jus tic ia ble c la im. These a re c laims in which the law rec og nizes a reme dy and parties who ha ve a r eal inter est in that
reme dy

. Knierim v. Leatherwood , 542 S.W .2d 806, 808 (Tenn.1976) . This doctrine is base d on the
conce pt that “' [a] court may and prope rly

should refuse to enterta in an ac tion at the [i nsistence] of
on e wh os e ri ghts hav e no t b een i nv aded or i nfr in ged.’" Mayhe w v. W ilder , 46 S.W .3d 760, 767 (Tenn. Ct. App. 2001) (quoting 59 Am.J ur.2d P arties § 30 (1987))

. I n order for a party to show that he has standing , he must demonstrate " a distinct and palpa ble injury ," a

causa l connec tion between the injur y an d t h e ch all eng ed conduc t, and a r emedy available to addre ss the injury

. In re Y oungblood , 8 95 S.W. 2d32 2, 32 6 ( Te nn .1 99 5) ; Metro. Air Rese arch Testing Auth., I nc. v. M etro. Gov't of Nashvill e, 842 S.W .2d 611, 615 (Tenn. Ct. App. 1992).T h e lea se a n d a d d e n d u m d e sc rib e the lea se d p ro p e rty a s “th e d e m ise d p re m ise s” a n d “the p re m ise s.” 4

-10- Her e, the Club is attempting to do indirectly that which it did not do directly – challeng e the
a dmi nis tr a tio n o f the e state of N. C. King . Mor e ov e r, the Clu b’ s rig ht of fi rs t r e fu sa l is su bje c t to
a condition pr ece dent, L essor rec eiving “a bona fide offe r to pur chase said property .” I ronica lly , the Club’s complaint is that the premises was not off ere d for sa le and that a

bona fide offe r wa s not 4

rec eived. Ne ither the lease nor the addendum aff ord the Club the rig ht to forc e L essors to of fer the p re m i s es fo r s al e o r t o s o l i ci tb o n a f i d e o ff er s

. Ac co rd i n gl y , we fi n d n o m er i tt o t h e C l u b ’s ch al l en ge of the de cision of the executrix and bene ficiaries to not sell the premises and/or to not see k bona fide offe rs.
Th e se c on d b a sis of the Clu b’ s c on te nti on th at L esso rs br e a c he d th e Clu b’ s rig ht o f f ir st ref usal is that Mary

King and Gail Reag an tra nsfer red the ir respe ctive one- fifth intere sts without aff ording the Club the rig ht of first re fusal. Mary King transfe rre d her one -fifth intere st to her brother J.C. King by

g ener al war

ranty deed. G ail Reag an tra nsferre d h er one-fifth inter est to her brother Roy

King by quitclaim deed.

Th e pe rt ine nt p art

of N. C. Ki ng ’s wi ll the Clu b re lie s on state s, “ I he re by dir e c t that the re st, residue and rema inder of my estate,

. . . to be sold by my Ex ecutrix , . . . at public sale, upon suc h terms as she may

deem f easible a nd prac ticable, a s soon after my death a s she shall dee m proper” with the proce eds to g o to Mary Mott King, J.C . King , L inda Gail Rea g an, Peg g y Sue Roberts, and Kathy Ma ri e Hu sk e y , in e qu a l sh are s.
Th e le a se de sc ri be s th e le a se d pro pe rt y a s “ the de mis e d p re mis e s. ” Th e a dd e nd um s imi larl y de sc ri be s th e le a se d tr a c t a s “ the pr e mis e s. ” Th e pe rt ine nt p art of the a dd e nd um p ro vid e s:
4. L e sso r a g re e s th a t in the e ve nt L e sso r d e c ide s to se ll the pr e mis e s su bje c t to the le a se ho ld i nte re st , sai d s a le wo uldbe su bje c t to L e sse e ’s le a se ho ld interest ther ein. L essor further a g ree s that in the event L essor re ceive s a bona fide off er to purcha se said property , L essor will offe r said prope rty to L essee a t th e pric e of

the of fe r. At su ch ti me th e pa rt ie s to thi s a g re e me nt s ha ll
e mpl oy the se rv ic e s o f 3 ind e pe nd e nt, qu a lif ie d a pp raise rs wh o s ha ll a

pp raise the va lue of the imp ro ve me nts wh ic h le sse e ha s a dd e d to the pr op e rt y , a s w e ll
a s th e e nh a nc e me nt of va lue wh ic h the e xiste nc e of sa id i mpr ov e me nts sh a ll h a v e m a d e t o t h e p r o p e r t y.
The trial c ourt found that Mary King ’s transf

er of her one -fifth interest to J.C. King did not tri ggert h e r i gh to f f

i rs tre fu s al , ci t i n g Koella v. McH argue , 976 S.W .2d 658 (Tenn. A pp. 1998) as controlling on this iss ue. I n Koe lla , the court found that a tra nsfer betwee n co-te nants did not trigg er a rig ht of first re fusal. Id . at 660.
Our duty is to construe the lea se and addendum from the four corne rs of the documents. The addendum be g ins with the provision, “in the event L essor de cides to sell the pre mises subject to the-11-

le a se ho ld i nte re st,

. . . ” I t th e n p ro vid e s, “ in the e ve nt L e sso r r e c e ive s a bo na fi de of fe r t o p ur c ha se sa id p ro pe rt y , . . . ” I t f

urthe r p ro vid e s th a t in su c h e ve nt(s ), the pa rt ie s sh a ll e mpl oy

app raise rs to
va lue the imp ro ve me nts a ndthe e nh ancem ent of va lue ma de to the pr op e rt y . Re a din g the se provisions toge ther, it is appar ent that the part i es i n t en d ed for the rig ht of ref

usal to apply

when L essors off

ere d the premises for

sale, meaning the entire pr emises, and/or w hen L essor re ceive d a bo na fi de of fe r t o p ur chas e th e premis e s, me a nin g the e nti re pr e mis e s, no t a c o- te na nt’ s in te re st. Construing the intent of the parties a s stated in the lease and the a ddendum, we f ind that the transfe r by Mary King and Ga il Reag an of their re spective one -fifth intere sts to other benef iciarie s did not activate the rig ht of first re fusal provisions under pa rag raph 4 of t he addendum and therefor e did not violate said provisions.

Th e Clu b a lso a tta c ks the tr ia l c ou rt ’s ru lin g that it wo uldde c lin e to e nf

or c e the ri g ht o f f

ir st ref usal based upon the doctrines of l ache s, estoppel, waive r and a cquiesc ence beca use the tra nsfer s at issue had be en a matter of public r ecor d since 1990. I n that our ruling is based on the f act that the transfe rs only

involved transfe rs of partial int ere sts and that the rationale of the Koe lla case s applies t o t h es e t ra n s fe rs , we d o n o tfi n d i tn ec es s ar y t o ev al u at e t h i s as p ec to f t h e t ri al co u rt ’s ru l i n g.
Costs of appea l a

re assessed ag ainst the appellee s, J

. C. King, Roy King , Kathy

Huskey and Pe g g y Rob e rt s.

___________________________________ FRANK G. CLEMENT, JR ., J UDGE