Hughes v. New Life Development Corp.

Cooley’s Rift was a new residential development set on 1,450 acres. It was promoted as including up to 80 homesites and 1,000 acres of land preserved as wilderness in perpetuity. Douglas and Lynne Hughes and Guy and Louise Hubbs (plaintiffs) bought homesites in the development. The original developer created an association for the homesite owners and a declaration governing the covenants for the community, which included a provision that the declaration could be amended by approval of 75 percent of the association. The promotional materials for the development referenced the large wilderness preserves but also stated that the plans were preliminary and subject to change by the developer without notice. After the Hugheses and the Hubbses had bought their lots, the unsold homesites and the surrounding land was sold to a new developer, New Life Development Corporation (defendant). New Life revised the development plans in a way that proposed to eliminate the majority of the originally planned wilderness, add a golf course, and include more than 500 additional homes. New Life succeeded in amending the original declaration in accordance with its amendment procedures to accommodate these changes. The Hugheses and the Hubbses sued New Life, alleging that New Life’s development plans violated the original declaration and that New Life had taken title subject to that original plan. Following a series of legal proceedings—including a grant of summary judgment to New Life by the lower court and two reversals and remands, with the last directing the lower court to apply a reasonableness review to the amendment of the declaration by the court of appeals—the matter came before the Tennessee Supreme Court.