Millstone Property Owners Association v. Nithyananda Dhyanapeetam of St. Louis

Hillsboro, Missouri real property lawyer represented the Plaintiff seeking to eliminate restrictive covenants.

In May 2004, Essex Development Inc. executed and recorded restrictions for a tract of land in Jefferson County known as Millstone Subdivision ("the subdivision"). The stated purpose of the restrictions was to preserve the land "as a respectable and attractive residential neighborhood." In pursuit of that purpose, the restrictions established governance for the subdivision, outlined a process for levying assessments, set forth a list of restrictions applicable to lots, and provided for enforcement of the restrictions. The lots in the subdivision were expressly "restricted to single family residence usage only." As to enforcement of the covenants, the restrictions stated "[f]ailure or forbearance to enforce any covenant or restriction shall not be deemed a waiver of the right to do so thereafter."



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Another restriction discussing severability provided: "Nor shall the failure to enforce a covenant or agreement herein act as a waiver or prohibit the enforcement of same in the future."



The restrictions discussed certain rights of Essex or the owner of the subdivision. The restrictions declared:



Owner shall have the right to assign all or a portion of its powers and responsibilities under these Restrictions to a subsequent purchaser or developer of unsold lots of the subdivision as Owner sees fit. After said assignment, the assignee purchaser or developer shall have all the powers and responsibilities of Owner under these Restrictions subject to any limitations set forth in said assignment by Owner.



Additionally, Essex or its "successors or assigns" had a broad power to amend the restrictions while they retained ownership of any lot in the subdivision. Any such amendments had to be recorded.



The subdivision's first phase, as reflected on a recorded plat, consisted of 21 numbered lots. An unnumbered lot on the plat containing a lake was labeled as common ground.[1] The plat noted "[t]he common ground area as shown hereon shall remain with and be maintained by all present and future lot owners of [the subdivision] and all future plats of [the subdivision]." Under the restrictions, delineated common areas were to be used "for the benefit of the lot owners of the Subdivision" and common areas had to "be transferred by deed of conveyance from Owner to the Millstone Property Owners Association to be created as set forth below at such time as Owner deems proper and in the sole discretion of Owner."



In October 2007, Essex transferred the entire subdivision to Ananda LLC by general warranty deed. The general warranty deed contained a habendum clause[2] providing: "TO HAVE AND TO HOLD the same, together with all rights and appurtenances to the same belonging, unto [Ananda], and to the heirs and assigns of such party(ies) forever." Essex did not execute a separate assignment of its developer rights in the subdivision. Contemporaneously with transferring of the subdivision to Ananda, Essex liquidated its interest in surrounding real estate. Since transferring the subdivision, Essex has taken no action whatsoever with respect to the property.



Ananda initiated a plan to transform the land within the subdivision into a mixed-use development to be known as Ananda Temple. The proposed development was to include a community center/temple, an educational center, and housing to consist of singlefamily homes, condominiums, and townhouses. Ananda submitted plans to the Jefferson County planning division in an attempt to rezone the property to allow the development to move forward. The plans ultimately failed.



While Ananda was pursuing its plans for Ananda Temple, it constructed a utility building to house carved stone deities on one of the subdivision's lots. In December 2008, Ananda transferred the lot containing the utility building and two adjacent lots to Nithyananda Dhyanapeetam of St. Louis ("Nithyananda") by quit claim deed. Nithyananda members visited the carved stone deities daily until sometime in 2016 and used the lake lot, which was adjacent to Nithyananda's lots, for spiritual purposes.



In October 2015, Ananda transferred the remaining subdivision lots to Fogarty Farms LLC by general warranty deed. At the same time, Ananda executed an "Assignment of Developer Rights" to Fogarty Farms. Pursuant to the restrictions, Fogarty Farms then incorporated the Millstone Property Owners Association ("the association"). The association was tasked with maintaining the subdivision's streets and common areas and enforcing the restrictions. A board of directors managed the association and, among other duties, possessed the power to levy assessments.



In June 2016, Fogarty Farms adopted a "First Amendment to Millstone Subdivision Restrictions." The amendment purported to remove the lake lot as common ground to make it available for use as a saleable lot. The amendment also changed restrictions applicable to lots. In May 2017, the association deeded the lake lot to Fogarty Farms.



In June 2017, the association sued Nithyananda. The association alleged breach of the restrictions for failure to pay assessments and failure to maintain the three lots. The association sought foreclosure of the related liens. Nithyananda filed a counterclaim for declaratory relief, claiming Fogarty Farms had no valid assignment of developer rights from Essex and, consequently, had no authority to establish a board of directors capable of levying an assessment. Nithyananda also argued the circuit court should set aside the transfer of the lake lot to Fogarty Farms and joined Fogarty Farms as a defendant to the litigation.



Following a two-day bench trial in April 2021, the circuit court held, as relevant to this appeal: (1) Fogarty Farms lawfully possessed the subdivision's developer rights; (2) the subdivision's restrictions had not been abandoned; (3) Nithyananda had to comply with the restrictions, including all assessments and lot maintenance requirements;[3] and (4) the lake lot remained common ground. The circuit court ordered Nithyananda to pay the association $50,000 in attorney fees and costs.



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PROPERTY LAW. DEVELOPER RIGHTS. The case addresses whether developer rights for a subdivision were successfully transferred from the original owner to a subsequent purchaser without an express assignment and whether those rights were appropriately passed on again, focusing on the provisions contained within the habendum clause of the deed.



PROPERTY LAW. RESTRICTIVE COVENANTS. The court had to determine if the restrictions placed on a subdivision for single-family residential use were abandoned due to actions taken by various property owners, including attempts to rezone and use the land for non-residential purposes.



PROPERTY LAW. COMMON AREAS AND PROMISSORY ESTOPPEL. The court analyzed whether a lake lot designated as common ground in a subdivision could be validly removed from common status, considering the reliance of adjacent property owners on the original subdivision plat.



CONTRACT LAW. ATTORNEY FEES AND ENFORCEMENT OF RESTRICTIONS. The judgment discusses the award of attorney fees to a property owners association for enforcing subdivision restrictions, addressing the contractual basis for such awards within the regulatory framework of the subdivision.

Key Phrases Single-family residential use. Developer rights transfer. Property owners association. Restrictions not abandoned. Lake lot common ground.

Affirmed