Court Opinion

ID: 2774823
Source: CourtListenerOpinion
Date Created: 2015-01-29 22:06:45.195506+00
Date Added: 2024-06-11T11:52:42.326952
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                           AT KNOXVILLE
                                 October 2, 2014 Session

            STATE EX REL. COMMISSIONER, DEPARTMENT OF
               TRANSPORTATION v. ILYA DYSKIN ET AL.

                  Appeal from the Circuit Court for Hamilton County
                     No. 11C748      Jacqueline S. Bolton, Judge

              No. E2013-02286-COA-R3-CV-FILED-JANUARY 29, 2015

The question presented on this appeal is whether a covenant, i.e., a promise, by a grantor to
pay – in a deed conveying an undivided one-third interest in a piece of property – all property
taxes and other expenses associated with the 100% interest in the property is binding on
successor grantees of her remaining two-thirds interest. Sonja Taylor conveyed an undivided
one-third interest in the property to Fred T. Hanzelik. Taylor agreed to pay “all taxes,
expenses and obligations regarding” the property, including those on Hanzelik’s portion.
Taylor later conveyed her remaining two-thirds interest to Shane Coughlin, who later
conveyed it to Fifth Project, LLC, which later conveyed it to defendants Ilya Dyskin and
Tatiana Dyskin. Hanzelik argues that Taylor’s covenant to pay property taxes for the entire
ownership interest, including Hanzelik’s one-third interest, is binding on the Dyskins. The
trial court agreed and ordered the Dyskins to pay the entire property tax bill. After examining
the deeds in the chain of title, we find no evidence of an intention that Taylor’s covenant
would run with the land and bind successor grantees of the two-thirds interest. Accordingly,
we reverse the judgment of the trial court.

        Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
                            Reversed; Case Remanded

C HARLES D. S USANO, J R., C.J., delivered the opinion of the Court, in which D. M ICHAEL
S WINEY and T HOMAS R. F RIERSON, II, JJ., joined.

Kyle Weems, John P. Konvalinka, and Mark W. Litchford, Chattanooga, Tennessee, for the
appellants, Ilya Dyskin and Tatiana Dyskin.
Fred T. Hanzelik, Chattanooga, Tennessee, appellee, pro se.1

                                              OPINION

                                                    I.

      The real property at issue is a 9.843 acres parcel located along Shallowford Road in
Hamilton County. On June 9, 1995, Taylor executed a quitclaim deed to Hanzelik that
provides, in pertinent part, as follows:

                I, SONJA TAYLOR, . . . do hereby sell, transfer, convey and
                quitclaim unto FRED T. HANZELIK, an undivided one-third
                (1/3) interest in the following described real estate . . .

                                        *       *         *

                The grantor shall be responsible for all taxes, expenses and
                obligations regarding the property. The rents shall be divided
                equally until the property is sold.

(Emphasis added.)

       On July 15, 2005, Taylor executed a quitclaim deed conveying all of her remaining
undivided two-thirds interest in the property to Shane Coughlin. This deed provides, in
pertinent part, as follows:

                For prior title see Quitclaim Deed from Sonja Taylor as to an
                undivided one third (1/3) Interest to Fred T. Hanzelik, dated
                June 9th 1995, filed for record August 20, 1996 in Book 4732,
                page 414, in the Register’s Office of Hamilton County,
                Tennessee.

                                        *       *         *

                Taxes for the year 2005 will be assumed by and [sic] Grantees

        1
         On October 24, 2014, after this appeal had been fully briefed and orally argued, attorney and pro
se party Fred T. Hanzelik died. This Court entered an order on November 17, 2014, directing that a proper
party be appointed in his stead pursuant to Tenn. R. App. P. 19(a). That was later accomplished. For ease
of reference, we will refer to the estate as “Hanzelik.”

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                herein.

      On January 18, 2008, Coughlin sold his interest to Fifth Project, LLC, executing a
warranty deed that states in pertinent part:

                Shane Coughin, married, (an undivided 2/3 interest),
                hereinafter referred to as Grantor(s), hereby sell(s), assign(s),
                transfer(s) and convey(s) unto Fifth Project, LLC, a Tennessee
                Limited Liability Company, hereinafter referred to as
                Grantee(s), the following described real estate . . .

                                         *       *         *

                TAXES for the year 2008 are to be prorated between the
                grantor(s) and grantee(s) of even date herewith.

(Bold font in original.)

       On December 30, 2010, Fifth Project, LLC, conveyed all of its interest in the property
to the Dyskins via a quitclaim deed. The deed provides that “[a]ll taxes are to be assumed
by the grantee(s).”

      On June 13, 2011, the State of Tennessee filed a petition for condemnation against the
Dyskins and Hanzelik, in conjunction with the State’s effort to take a portion of the property,
by eminent domain, for construction of a road project along Shallowford Road. The
landowners and the State reached a settlement as to the amount of compensation to be paid.
On May 23, 2013, the Dyskins filed a “motion for determination of correct allocation of taxes
among adverse claimants” that states as follows in pertinent part:

                [The Dyskins] hereby move[] the Court in accordance with
                T.C.A. § 29-17-9082 to allocate the responsibility to pay the
                unpaid real property tax two-thirds (2/3) to Defendants Dyskin
                and one-third (1/3) to Defendant [Hanzelik].

                A settlement on the amount of compensation to be paid

        2
         Tenn. Code Ann. § 29-17-908 provides that in certain eminent domain cases, “[t]he only issue or
question that shall be tried upon exception shall be the amount of compensation to be paid for the property
or property rights taken, but in case of adverse claimants of such compensation, the court may require the
adverse claimants to interplead, so as to fully determine the rights and interests of such claimants.”

                                                     -3-
              Defendants Dyskin and Defendant Hanzelik has been reached
              with the State of Tennessee pending approval of the Governor.
              Defendant Hanzelik incorrectly maintains he has no
              responsibility to pay one-third (1/3) of the unpaid taxes.

              The allocation of the real property taxes by the Court is
              necessary to the distribution of the agreed compensation when
              approval is received by the Governor.

(Footnote added.)

      On June 24, 2013, the trial court entered an order providing that the Dyskins are
responsible for all unpaid taxes on the 100% interest in the property, including Hanzelik’s
undivided one-third interest. The order provides:

              The Court is construing the original Motion as that of a
              Summary Judgment Motion although neither of the parties has
              correctly complied with Rule 56 as to the filing of Summary
              Judgments. If either party is aggrieved of the Court’s
              determination of the original Motion before strict compliance
              with Rule 56, then either party may have 30 days from the date
              of this Order to supplement the original Motion which the Court
              is deeming a Motion for Summary Judgment.

              It is apparent from a review of the Successor Deeds that the
              Dyskins should be responsible for all taxes on said property,
              including the one-third interest held by Defendant, Hanzelik.

              The Court determines that the language in the deeds taken as a
              whole, requires the Dyskins pay all the taxes.

       The Dyskins timely filed a notice of appeal.

                                              II.

       The issue before us, as stated by the Dyskins in their brief, is

              [whether] the trial court incorrectly ruled that the covenant to
              pay taxes contained in the quitclaim deed from Sonja Taylor
              (grantor) of an undivided one-third (1/3) interest in [her] real

                                             -4-
              property to Fred Hanzelik (grantee) was not a personal covenant
              by Ms. Taylor but, instead, was a covenant that ran with the land
              that became an obligation of the successors, heirs and assigns of
              Ms. Taylor.

       The parties agree that there are no genuine issues of material fact and that the legal
issue presented is suitable for summary judgment. “We review a trial court’s decision on a
motion for summary judgment de novo with no presumption of correctness.” Harris v.
Haynes, 445 S.W.3d 143, 146 (Tenn. 2014).

                                            III.

       Hanzelik argues that Taylor’s covenant to pay “all taxes, expenses and obligations
regarding the property” in her 1995 deed granting him an undivided one-third interest should
be construed as one that runs with the land and therefore binds Taylor’s successors,
assignees, and heirs. Hanzelik further argues that the provision in the deed from Fifth
Project, LLC, to the Dyskins stating that “[a]ll taxes are to be assumed by the grantee(s)”
should be construed as requiring them to pay property taxes on his one-third interest in the
property as well as the two-thirds interest conveyed by the Dyskins’ deed. The Dyskins
argue that Tennessee law holds that in order for a covenant to be binding on remote grantees,
the deed must expressly provide that the covenant is binding on them, citing Lowe v. Wilson,
250 S.W.2d 366. 367 (Tenn. 1952), among other cases. They note that the Taylor-to-
Hanzelik deed does not contain such an express provision. The Dyskins further assert that
there is nothing in the language of any of the deeds involved here that supports the
conclusion that Taylor, or any successor owner of the two-thirds interest, intended that the
covenant would bind successors of the two-thirds interest. We agree with the Dyskins.

        Almost a century ago, the Supreme Court addressed a similar question and reiterated
the following rule:

              The question then arising is whether the said covenant runs with
              the land, or was personal to the grantees under the deed. This
              court has in several decisions adhered to the second resolution
              in Spencer’s Case, 5 Co. 16, [77 Eng. Rep. 72 (Q.B. 1583)] and
              held that a covenant in respect to something not in esse must
              specifically bind the assignees of the covenantor in order for
              such covenant to run with the land.

Carnegie Realty Co. v. Carolina, C. & O. Ry. Co., 189 S.W 371, 372 (Tenn. 1916). The
High Court has reaffirmed and applied this rule several times. Farrar v. Nashville, C. & St.

                                             -5-
L. Ry., 36 S.W.2d 95, 98 (Tenn. 1931); Lowe, 250 S.W.2d at 367. This Court has done
likewise. See Essary v. Cox, 844 S.W.2d 169, 171 (Tenn. Ct. App. 1992); Hillis v. Powers,
875 S.W.2d 273, 275 (Tenn. Ct. App. 1993); Tennsco Corp. v. Attea, No. M2001-01378-
COA-R3-CV, 2002 WL 1298808 at *2 (Tenn. Ct. App. M.S., filed June 13, 2002).3

        The issue of whether a covenant should be construed as running with the land is most
often raised in the context of restrictive covenants contained in a deed. See, e.g., Gambrell
v. Nivens, 275 S.W.3d 429, 437 (Tenn. Ct. App. 2008); General Bancshares, Inc. v.
Volunteer Bank & Trust, 44 S.W.3d 536, 540 (Tenn. Ct. App. 2000). We have recently
observed that “[t]he Restatement (Third) of Property defines a ‘restrictive covenant’ as ‘a
negative covenant that limits permissible uses of land.’ ” Bernier v. Morrow, No. M2012-
01984-COA-R3-CV, 2013 WL 1804072 at *5 (Tenn. Ct. App. M.S., filed Apr. 26, 2013).
It is not entirely clear that a covenant to pay “all taxes, expenses and obligations regarding
the property” fits the “restrictive covenant” definition, although this Court has, in a pair of
related cases, construed a covenant to pay homeowners’ association dues resulting from
property ownership as a “restrictive covenant.” Grand Valley Lakes Prop. Owners Ass’n
v. Cary, 897 S.W.2d 262, 269 (Tenn. Ct. App. 1994); Grand Valley Lakes Prop. Owners
Ass’n v. Burrow, 376 S.W.3d 66, 70 (Tenn. Ct. App. 2011). Regardless of whether the
covenant at issue here is properly characterized as a “restrictive covenant,” we are of the
opinion that the general rule still applies, for the Supreme Court phrased it this way in
Carnegie Realty, Farrar, and Lowe: “a covenant in respect to something not in esse must
specifically bind the assignees of the covenantor in order for such covenant to run with the
land.” Lowe, 250 S.W.2d at 367.4 The Latin phrase “in esse” is defined as “in actual

        3
         We have also twice observed that “[w]hile this result has been criticized, see Case Comment, 22
Tenn. L. Rev. 971 (1953), this court has consistently followed the rule, and the Supreme Court so far has
refused to review it.” Tennsco Corp., 2002 WL 1298808 at *2; see also Leach v. Larkin, No. 919193, 1993
WL 377629 at *5 n.8 (Tenn. Ct. App. M.S., filed Sept. 24, 1993). Thus, “the rule requiring specific language
in the deed remains intact.” Tennsco Corp., 2002 WL 1298808 at *2.
        4
         A somewhat different analysis applies in cases involving a common development plan pertaining
to multiple parcels of land, such as a planned subdivision, as observed in Essary:

                In cases involving a common development plan, . . . the courts have
                demonstrated a willingness to enforce restrictive covenants, in the form of
                equitable servitudes, under the rationale that a remote grantee’s knowledge
                of such restrictions may be imputed from the existence of a common plan
                as evidenced in deeds or on the plat itself. The principle behind these cases
                is that, when grantees purchase land within a development in reliance on
                the general scheme or plan as expressed by the developer, equity requires
                that the grantees be able to mutually enforce the restrictions. Ridley [v.
                                                                                                (continued...)

                                                    -6-
existence; in being.” Black’s Law Dictionary (9th ed. 2009).

        The deed from Taylor to Hanzelik contains no language stating or evincing any intent
that the covenant to pay all taxes, expenses and obligations regarding the property would
bind successor grantees. This being the case, we construe it as a personal covenant that does
not run with the land. Regarding the quitclaim deed from Fifth Project, LLC, to the Dyskins
of the undivided two-thirds interest in the property, we construe it under the following well-
established principles:

                  In interpreting a deed, courts are primarily concerned with
                  ascertaining the intention of the grantor. Griffis v. Davidson
                  Cnty. Metro. Gov’t, 164 S.W.3d [267,] 274 [Tenn. 2005];
                  Rutherford Cnty. v. Wilson, 121 S.W.3d 591, 595 (Tenn. 2003);
                  Hall v. Hall, 604 S.W.2d 851, 853 (Tenn. 1980). Courts
                  ascertain the grantor’s intent from the words of the deed as a
                  whole and from the surrounding circumstances. Griffis v.
                  Davidson Cnty. Metro. Gov’t, 164 S.W.3d at 274; Ottinger v.
                  Stooksbury, 206 S.W.3d 73, 79 (Tenn. Ct. App. 2006); Shew v.
                  Bawgus, 227 S.W.3d 569, 576 (Tenn. Ct. App. 2007); Cellco
                  P’ship v. Shelby Cnty., 172 S.W.3d 574, 586 (Tenn. Ct. App.
                  2005).

Hughes v. New Life Dev. Corp., 387 S.W.3d 453, 466 (Tenn. 2012). In Adkins v. Bluegrass
Estates, Inc., 360 S.W.3d 404, 411 (Tenn. Ct. App. 2011), we reviewed “the rules applicable
to construction of written documents such as deeds,” stating the following:

                  “The central tenet of contract construction is that the intent of
                  the contracting parties at the time of executing the agreement
                  should govern.” Planters Gin Co. v. Fed. Compress &
                  Warehouse Co., Inc., 78 S.W.3d 885, 890 (Tenn. 2002). The

       4
           (...continued)
                   Haiman], 164 Tenn. at 252–53, 47 S.W.2d [750,] at 755 [1932]. Outside
                   the context of restrictions which evidence a common development plan,
                   however, Plaintiffs have cited no authority in this jurisdiction for the
                   proposition that restrictive covenants may be imposed on remote grantees
                   based upon their knowledge of the existence of a prior restriction.
844 S.W.2d at 172; see also Gambrell, 275 S.W.3d at 440. The present case does not involve a common
development plan.

                                                     -7-
              court’s role in resolving disputes regarding the interpretation of
              a contract is to ascertain the intention of the parties based upon
              the usual, natural, and ordinary meaning of the language used.

        We now apply these principles to the deed to the Dyskins. We construe the agreement
in the Dyskins’ deed providing that all taxes are to be assumed by the “grantee[s]” to mean
that the Dyskins agreed to pay all taxes on the property interest conveyed by the deed – the
undivided two-thirds interest in the property. There is nothing in the deed to suggest that the
subject language pertains to anything beyond that which is conveyed by the deed. There is
no specific agreement that the Dyskins would pay taxes on Hanzelik’s one-third ownership
interest. Hanzelik is responsible for paying taxes and expenses on his interest in the property.

                                              IV.

       The judgment of the trial court is reversed, and the case is remanded for entry of a
judgment in accordance with this opinion. The trial court’s judgment will tax court costs at
that level to Hanzelik. Costs on appeal are assessed to the appellant, the substituted party
appointed in Hanzelik’s stead pursuant to Tenn. R. App. P. 19(a).

                                            _____________________________________
                                            CHARLES D. SUSANO, JR., CHIEF JUDGE

                                              -8-