Linda Bush, a homeowner in the Walnut Grove Woods Subdivision, filed a lawsuit against Adworks Advertising Outdoor, LLC regarding a restrictive covenant related to billboard usage on a property across the highway from her subdivision. The covenant, established on December 15, 1995, prohibits billboards not already in place as of December 1, 1995. At that time, three billboards existed on the developer's property. After the defendant acquired easements for these sites and removed the original billboards, they erected three new structures, prompting Bush's legal action for injunctive and declaratory relief. The trial court granted summary judgment for Adworks, ruling that the covenant's language was unambiguous and only restricted the property use to the number of billboards present in 1995. Bush appealed the decision, which was affirmed by the Court of Appeals of Tennessee, confirming that the covenant limited use based solely on the prior existing billboards. Bush had been an active member of the homeowner's association prior to the lawsuit.
The agreement aimed to resolve disputes between Germantown Trinity and subdivision homeowners through restrictive covenants on Germantown Trinity’s property. Central to the case is a restrictive covenant in section 2.a., which limits permitted uses to those allowed in specific commercial districts, excluding off-premises advertising signs and billboards not in place before December 1, 1995. As of that date, Tanner Outdoor had four billboard structures on the property, with three at issue in this appeal. On November 22, 2004, Adworks Advertising Outdoor, LLC purchased easements for these billboard sites, which were leased to Clear Channel Outdoor, Inc. Adworks obtained building permits to "rebuild" the billboards on December 13, 2004, terminated Clear Channel’s leases, and Clear Channel removed its structures by May 15, 2005. Adworks then erected its own billboards shortly thereafter.
On January 20, 2005, homeowner Bush filed for injunctive relief against Adworks, claiming the restrictive covenant prohibited new billboard constructions. Her complaint was amended to seek declaratory relief regarding the covenant's interpretation. Adworks responded on February 22, 2005, asserting various defenses including laches, waiver, estoppel, and arguing that Bush's interpretation was incorrect. Adworks noted that prior owners had previously replaced billboards without objection and contended that adopting Bush's interpretation would reflect a mutual mistake, making the agreement unenforceable or subject to reformation. Additionally, Adworks argued that the covenant's language did not prevent them from rebuilding the billboards. Bush filed a motion in limine on February 3, 2005, asking the court to declare the covenant's language unambiguous, which led to a hearing on March 11, 2005.
On April 15, 2005, the trial court ruled that the language of the restrictive covenant was clear and unambiguous, preventing the introduction of parol evidence regarding the contract's formation. However, the court allowed for the application of the doctrine of practical construction, permitting the parties' subsequent conduct to interpret the contract differently from its literal wording. Following this ruling, Bush filed a motion for summary judgment, claiming that Adworks violated the covenant by erecting three new billboard structures on the property, which were not "in place" as of December 1, 1995, the date specified in the covenant. Bush argued that only original structures existing as of that date were permitted.
In response, Adworks filed a cross-motion for summary judgment, contending that the covenant referred to permissible uses of the property rather than specific structures. Adworks cited the introductory language of the agreement, emphasizing that it allowed continued use for billboard structures as long as the total did not exceed the number existing in 1995. Alternatively, Adworks argued that even if the covenant restricted certain structures, the parties’ conduct—such as relocating, enlarging, and repairing billboards—demonstrated a mutual interpretation that permitted such actions. Various related documents indicated terms supportive of rebuilding and relocating billboards post-agreement. During the March 3, 2006 hearing on the motions, the primary focus was on whether a billboard's relocation by Clear Channel constituted a factual dispute relevant to the summary judgment decision.
The trial court concluded that the case was straightforward, emphasizing that the signs were intended for use as agreed upon. It ruled in favor of Adworks, affirming that the restrictive covenant related to the general use of the property for billboard structures rather than prohibiting specific billboard structures. The court’s oral ruling was formalized in a final judgment on March 10, 2006, which denied Bush's motion for summary judgment and granted it for Adworks. On appeal, Bush argues that the trial court erred by not recognizing that the restrictive covenant clearly prohibited the erection of new billboard structures on the property and questions whether a billboard could be constructed in a different location than originally permitted. Adworks, in its cross-appeal, seeks clarification on the applicability of the doctrine of practical construction and whether the trial court wrongly excluded parol evidence if the covenant's language is deemed ambiguous. The appeal involves a de novo review of the summary judgment, which requires the absence of genuine issues regarding material facts. The court must consider evidence favorably towards the nonmoving party and only grant summary judgment if the facts lead to a single reasonable conclusion. Established principles of contract interpretation guide the analysis of the restrictive covenant, focusing on ascertaining the parties' intentions as expressed in the covenant's language.
Restrictive covenants are to be interpreted according to their ordinary meaning, and if their language is clear and reasonable, no external clarification is needed. Unambiguous terms of a covenant cannot be altered by parol evidence. Tennessee courts do not favor restrictions on property use; thus, such covenants are strictly construed against the limitation and in favor of reasonable property use. Any ambiguity or doubt regarding the applicability of a restrictive covenant is resolved against the restriction. Restrictions will not be implied beyond their explicit terms. Courts are obligated to interpret covenants reasonably while enforcing them according to the clear intentions of the parties involved.
In the case presented, Bush argues that the language in section 2.a. of the restrictive covenants specifically relates to personal property, such as billboards erected before a certain date, distinguishing it from other sections that outline general prohibitions. Bush interprets "billboard" as referring to specific, movable structures and contends that Adworks violated the covenant by removing and replacing billboards that were present on or before December 1, 1995. The relevant restrictive covenant stipulates that permitted uses must align with certain zoning ordinances, explicitly prohibiting off-premises advertising signs and billboards not in place by the specified date.
The introductory sentence of paragraph 2 establishes permitted uses according to the Ordinances for Highway Commercial C-H District and Planned Commercial C-P District, while also identifying specific uses that are prohibited. Billboards are explicitly categorized as a prohibited use under section 2.a. of the restrictive covenants agreement, but this prohibition is limited to those not in place as of December 1, 1995. It is acknowledged that three billboard structures existed on the property by that date, thereby permitting their continued use.
The court must determine if the restrictive covenant also prohibits relocating billboard structures after December 1, 1995. The trial court concluded that the covenant allows the three existing billboard structures to remain but deemed the relocation of a billboard structure immaterial to its interpretation. Bush's argument that the covenant prohibits relocation was rejected, as the language of the agreement focuses on the presence of structures as of the cutoff date rather than their specific locations.
The language of the covenant does not impose restrictions on the locations of the permitted billboard structures, leading to the affirmation of the trial court’s judgment in favor of Adworks. All other issues raised on appeal were not addressed, and the costs of the appeal were assigned to Petitioner/Appellant Linda Bush.
