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Pinehurst Village Chapel Congregation Bitterly Divided

By Jim McGillan for the Editorial Board, in Public Forum

Recently, the Pinehurst Village Council approved the building of a Learning Center on the grounds of the Village Chapel in ostensible violation of a restrictive covenant contained in the deed granting the property to the Village Chapel. This approval has generated considerable controversy among the people of Pinehurst, including a searing rift in the congregation of the Village Chapel. In an effort to quiet the controversy, a local newspaper published an article by the attorney for the Pinehurst Village Council purporting to settle one of the critical legal issues that went unanswered and unheeded at the Hearing on the matter and in the deliberations of the Council. That article by the Village attorney is reprinted below and is followed by an article written by another attorney, himself an interested party, who espouses a totally contrary view. It is indeed unfortunate that the local newspaper refused to print an un-edited version of this letter that provided the other side to this important controversial issue of public importance.

In his advice to the Village Council on the criteria which the Council was to use to evaluate the merits of granting the special use permit to build the Learning Center, Michael Newman, Esq. of Van Camp & Newman, counsel for the Village, advised the Council, in essence, that the Council was not allowed to consider whether it was legal to build the Learning Center there, but only whether it was objectionable or undesirable to build the Learning Center there based upon ten certain criteria and the evidence of record that was presented by interested parties at the Hearing. Substantial evidence was presented to the Village Council that apparently complied with the criteria provided to it. Based upon this evidence, the Council, believing it had no choice, voted to allow the building of the Learning Center.

The Council did not consider any evidence regarding the issue of whether the restrictive covenant that is contained in the deed that conveyed the property to the Village Chapel, prohibited the erection of any building on the Village Chapel grounds or whether it was legally waived. Also, the Council was not allowed to consider any other NC law that might prohibit such a building at that location based on the purported waiver of the restrictive covenant.

Both sides of this issue are being presented here in our Public Forum and we invite others to comment on the conflicting presentations by the two attorneys.

By Michael J. Newman, Esq.

Special to The Pilot

The village of Pinehurst is concerned about some unfounded rumors regarding the use and preservation of the acreage commonly known as the Village Green. These rumors range from plans to “clear-cut” trees, to secret intentions of the ¬village to construct massive structures on the Green.

One rumor even claims that the village can never make improvements to the Village Green without the consent of a corporation which was dissolved decades ago.

It appears that much of this confusion stems from a misunderstanding of what the Village Green is, where it is located, and how it can properly be used by its owner, the village of Pinehurst.

Here are the relevant facts which, hopefully, will put the rumors to rest.

As a basic orientation matter, assume you are standing in the parking lot of the Theatre Building looking across the street (Village Green West) toward the sand parking lot and grove of pine trees.

Several hundred yards to your left will be the Given Memorial Library. Several hundred yards to your right will be The Village Chapel. The Village Green is located between the library and The Village Chapel. However, not all of the acreage between the library and the Chapel is part of the Village Green.

For many years, the acreage between the library and the Chapel was owned by Pinehurst, Incorporated. That corporation also owned Pinehurst Country Club, Inc., which operated the Pinehurst Country Club.

In the late 1970s, Diamondhead Corporation purchased Pinehurst, Incorporated and became the owner of the Pinehurst Country Club. Pinehurst, Incorporated later merged into Diamondhead’s affiliated corporation, with all assets (including the Village Green) being transferred to a new corporation called “Pinehurst Inc.” (no comma). After transferring its assets, Pinehurst, Incorporated was dissolved.

The Village Chapel has been in its current location since the late 1920s. In October 1982, Pinehurst Inc., by deed of gift, gave the Chapel an additional two acres, located on the back side of the chapel. This two-acre tract is not part of the Village Green.

This 1982 deed of gift contained a provision prohibiting the Chapel from placing structures on the two-acre lot. However, under the plain language of that restriction, only the grantor (Pinehurst Inc.) and its successors have the right to enforce the restriction.

In January 1983, Pinehurst Inc., again by deed of gift, gave to the village of Pinehurst the 7.31-acre tract known as “The Village Green.” This 1983 deed to the village contained an identical restriction prohibiting the village from placing structures on the Green. This restriction, too, is enforceable only by the grantor (Pinehurst Inc.) and its successors.

The ClubCorp affiliate, Resorts of Pinehurst Inc., purchased the Pinehurst Country Club in 1984 from Pinehurst Inc., and succeeded to the interests of the ¬original owners of the club. Resorts of Pinehurst Inc. changed its name to Pinehurst, Inc. in 1998, and to Pinehurst, LLC in 2006.

It is important to note that the North Carolina Court of Appeals has already (twice) judicially determined that Pinehurst, Inc. (now Pinehurst, LLC) is the successor in interest to the corporations that owned the club and the Village Green back in the 1970s and early 1980s. Stated differently, Pinehurst, LLC is the successor to Pinehurst Inc. — the corporation which originally conveyed the Village Green to the village in 1983. As such, Pinehurst, LLC is the only entity which has the right to enforce, or not enforce, the deed restrictions.

With these facts in place, the current rumors about improper or unlawful ¬construction taking place on the Village Green are easily addressed.

One such rumor is that The Village Chapel plans to ¬construct its anticipated Learning Center on The Village Green. This is simply untrue. The Learning Center is to be constructed on the Village Chapel’s property — including a portion of the two-acre tract conveyed to it by Pinehurst Inc. in 1982. All restrictions on the placement of structures on that two-acre tract were properly removed by Pinehurst, LLC, in December 2008.

Likewise, rumors that the village of Pinehurst plans to improperly alter or “clear-cut” the Village Green are simply false. In 2009, the council appointed a commission (the Village Green Commission) to study ways in which the Village Green might be improved to become more attractive for residents and guests of the resort. Several landscape architects submitted proposals to the village in public hearings.

However, no action has been taken by the village. The restrictions contained in the village’s 1983 deed were properly removed by Pinehurst, LLC, in June 2009.

The Village Council has taken and will continue to take appropriate actions to protect the ambience of the village, including the Village Green.

The council and village staff will also continue to work cooperatively with all historic commissions, as well as National Historic Landmark personnel, regarding any future efforts to ¬protect the Village Green.

And, of course, any and all future plans regarding the use of the Village Green will be openly discussed and considered in public hearings.

Biographical Sketch:

Mr. Newman is practicing attorney and member of the bar of North Carolina. He is Attorney for the Village of Pinehurst Council.

By: Michael J. McCrann, Esq.

The Village Chapel with the hearty and unanimous vote of the present Village Council is attempting to circumvent the rights of the citizens of Pinehurst. The intention of the developers of Pinehurst was to preserve the Village Green as a common area for the use and enjoyment by the citizens of Pinehurst.

This article is provided by those opposed to development of the Pinehurst Village Green. It rebuts the Special to The Pilot dated March 13. 2011 submitted by Mr. Michael Newman, attorney for the Village of Pinehurst as well as attorney for Pinehurst, LLC. Mr. Newman’s article addressed “unfounded rumors” which he heard about the use and preservation of the Village Green. A similar unattributed article was placed in the April 2011 Pinehurst Village Newsletter.

The historical facts are well known. The Tufts family owned Pinehurst. They developed Pinehurst as a Planned Community. Part of the common plan or scheme was the Village Green. A succession of corporations owned all or portions of the Tufts property through several years and continuing financial travail. Pinehurst (no comma) Inc. owned at least 9.3 acres of the original 15 acre Village Green on January 1, 1982. On November 15, 1982, Pinehurst (no comma) Inc. gifted by deed two acres to the Village Chapel, Inc. as a “buffer”. The deed included the following restrictive covenants:

“Grantee [the Village Chapel, Inc.] may not erect any building or permanent structure on the above described property and Grantee shall only use the property for access purposes, unpaved parking or as a naturally landscaped area, which conditions shall be appurtenant to and pass with the title to the property and for which any violation may be enforced by Grantor through injunctive relief.”

On February 28, 1983, the same corporation gifted the remaining 7.3 acres to the newly formed Village of Pinehurst by deed with similar restrictions.

The two fundamental legal questions to be answered are:

First, can the restrictive covenants placed in the 1982 and 1983 deeds of gift in the Village Chapel, Inc. and the Village of Pinehurst be “waived” or “removed” by Pinehurst, LLC in documents filed with the Moore County Register of Deeds? These “waivers” or “removals” were prepared by Village Chapel members Mr. Tracy Parks and Mr. Toby Wells for the Village Chapel in 2008 and by Mr. Newman in 2009 for the Village of Pinehurst. Both waivers were signed by Mr. Donald E. Padgett, II, a Pinehurst, LLC executive.

Second, under North Carolina law, what parties have the legal authority to enforce and/or waive these restrictive covenants?

To begin, Mr. Newman’s Special to The Pilot states that Pinehurst, LLC, the current owner of the hotel and country club, is the proper successor to Pinehurst (no comma) Inc. and therefore has authority to waive the restrictive covenants placed on the Village Green. Our research reveals and we will contend that this assumption is simply not the case.

We found it difficult in our investigation to travel through the “corporate fog” here. Remember that there is a distinct difference between Pinehurst (no comma) Inc. and Pinehurst, Inc. They are separate corporations. Resorts of Pinehurst, Inc. which was incorporated in 1984 (later renamed Pinehurst, Inc. and then converted to Pinehurst, LLC) purchased only the country club and hotel from Pinehurst (no comma) Inc. This purchase did not include any of the common areas of the Village of Pinehurst, including the Village Green, as Mr. Newman contends in his article. Pinehurst, LLC (successor to Resorts of Pinehurst, Inc.) did not have any special rights concerning other property of Pinehurst (no comma) Inc., which rights remained with Pinehurst Enterprises, Inc. the successor to Pinehurst Incorporated and Pinehurst (no comma) Inc.

Authority to waive restrictive covenants must have a legal basis. The person or corporation must either be a corporate successor or a real property successor in interest. We will contend that under North Carolina law, Pinehurst, LLC is neither a corporate successor nor a real property successor in interest such that it possesses any rights concerning the Village Green property. It is our contention that the Court of Appeals has not held that Pinehurst, LLC is a successor of any kind to Pinehurst (no comma) Inc. Please note that Mr. Newman’s article refers only to Pinehurst, Inc. when referring directly to the Court of Appeals. Pinehurst (no comma) Inc. is not Pinehurst, Inc. Part of the “corporate fog” is to confuse the two corporate names. More plainly, we allege that Pinehurst, LLC has no legal right whatsoever to execute and file the 2008 and 2009 waivers of the above restrictive covenants.

The question remains: What parties may legally enforce and what parties may legally remove or waive restrictive covenants under these facts?

We believe and contend that (i) Pinehurst is a Planned Community based on the surveys and maps recorded in the Moore County Register of Deeds; (ii) the Village Green is a portion of the Planned Community; and (iii) the Restrictive Covenants in the deeds of gift to the Village Chapel and the Village of Pinehurst cannot be removed nor waived by Pinehurst, LLC as the developer of the Planned Community or any other single individual under North Carolina law. The Village Green was reserved for all of the residents of Pinehurst. Therefore, under North Carolina law, formal consent of all affected landowners within the Planned Community is required to waive or remove the restrictive covenants on the Village Green property.

Of equal significance is the well settled existing North Carolina law that any single property owner in the chain of title affected by a proposed violation of the restrictive covenants has legal authority to challenge any violation of the covenants in the chain of title of the planned community. This position is supported by ample, well settled North Carolina Supreme Court case law.

In conclusion, though it appears that the present Village Council and Pinehurst, LLC affirm that all is politically palatable and legally correct, we are confident that this is a matter of property rights under existing North Carolina law. We are satisfied that we will prevail when seeking injunctive relief upon violation of the existing Village Green restrictive covenants.
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Permission to reprint this article in whole or in part is hereby granted, provided the following credit line is used: “Reprinted by permission from The Voice of North Carolina, Ltd., a publication of the Voice of North Carolina, Ltd. and Charles Saint James Publishing.”

Biographical Sketch:

Mr. McCrann is a homeowner living across the street from the Village Green where the new “Learning Center” is proposed to be built. He is a practicing attorney and member of the bar of North Carolina.

7 Responses to “Pinehurst Village Chapel Congregation Bitterly Divided”

  • John Marcum, Pinehurst says:

    Well researched and crafted. If the courts eventually rule in your favor, it would greatly complicate any further “enhancements” on the Green including the Library expansion. Of course there is also a different set of obligations the Village Council adopted when it obtained its historic status and National Landmark designation from the NC Historical Commission and the Dept of Interior. What is the likely timetable for your appeal?

  • John Owen , Pinehurst says:

    This article was presented in a professional way, and brings a new dimension to reporting standards; it is a fair and balanced presentation.

  • Ed says:

    The Village Chapel has been in its current location since the late 1920s. In October 1982, Pinehurst Inc., by deed of gift, gave the Chapel an additional two acres, located on the back side of the chapel. This two-acre tract is not part of the Village Green.”

    I’d like clarification of the above statement…from a purely legal standpoint are these two acres part of the Village Green or not.

    Is the Green covered by historical landmark status and all the restrictive covenants imposed with the granting of that status?

    I can’t form an opinion without further clarification about this so called “buffer” property….thanx….

    Reply, The rear two acres are owned by the Village Chapel, but the deed granting the property to the Chapel contained a covenant prohibiting the erection of any building on the property. The purported waiver of that covenant by Pinehurst LLC is the subject of the controversy.
    The Editors

  • joan, pinehurst says:

    The “searing rift in the congregation” was not, as I understand it, caused by the possible extension of the chapel.

  • Lydia Boesch Pinehurst says:

    Jim McGillan’s article thankfully presents a well-reasoned approach to this controversy. Also important, and not to be ignored, is the effect that any development on the Village Green will have on Pinehurst’s landmark status.

  • Tom, Charlotte says:

    What then caused ‘the searing rift’ in the congregation?

  • Matt, Pinehurst. says:

    Turns out Mr. McGillan was wrong, and the village was right after all.
    Editor’s Note: Mr. McGillan passed away on June 8, 2013.

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