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LMV-AL Ventures, LLC v. Lakeway Overlook, LLC

United States District Court, W.D. Texas, Austin Division

May 30, 2017

LMV-AL VENTURES, LLC d/b/a The Harbor at Lakeway, Plaintiff,



         BE IT REMEMBERED on the 31 st day of March 2017, the Court held a hearing in the above-styled cause, and the parties appeared in person or through counsel. Before the Court are Plaintiff LMV-AL Ventures, LLC d/b/a The Harbor at Lakeway (Harbor) 's Motion for a Temporary Restraining Order and Preliminary Injunction [#2]; Defendants Lakeway Overlook, LLC and Lakeway Townline, LLC (collectively, Lakeway)'s Response [#7], Brief [#8], and Supplemental Brief [#16] in opposition; Harbor's Supplemental Brief [#17] and Reply [#18] in support; Harbor's Motion for Leave to Conduct Expedited Discovery [#3]; and finally Harbor's Motion to Compel [#11], Lakeway's Response [#12] in opposition, and Harbor's Supplement [#15] in support. Having reviewed the documents, the evidence presented at the hearing, the arguments of counsel, the relevant law, and the file as a whole, the Court now enters the following opinion and orders.

         This case concerns whether Lakeway's facility, purported to be an independent living facility, actually constitutes an assisted living facility thereby violating a deed restriction that favors Harbor (the Use Restriction). The parties' dispute turns on subtle distinctions in the spectrum of types of care available for the elderly. The parties agree an independent living facility is generally not an assisted living facility. But where, in the spectrum of care types, the classification "independent living facility" ends and the classification "assisted living facility" begins is ill-defined. Fortunately, the Court need not determine whether Lakeway's facility is an assisted living facility today as the only issue currently before the Court is whether to grant preliminary injunctive relief.

         Based on the evidence before the Court at this time, Harbor has not established a substantial likelihood of success on the merits. There is insufficient evidence for the Court to conclude Lakeway is likely marketing or preparing to operate an assisted living facility in violation of the Use Restriction. Therefore, because Harbor has not met its burden of proof, the Court DENIES Harbor's motion for a preliminary injunction. Additionally, in light of the denial of preliminary injunctive relief, the Court DISMISSES Harbor's motion for leave to conduct expedited discovery and motion to compel.


         I. The Parties

         A. Harbor

         Harbor is an assisted living facility licensed by the State of Texas and operating in Lakeway Regional Medical Center Condominium (Medical Center). Formed in 2010, the Medical Center is overseen by the Lakeway Medical Center Condominium Association (the Association) and governed by the Declaration of Condominium Regime for Lakeway Regional Medical Center (Condominium Declaration). See Compl. [#1-1] Ex. A (Condominium Declaration).

         Harbor purchased Unit 4, a condominium plat, of the Medical Center in 2012. Defs.' Suppl. Br. [#16-4] Ex. C (Timeline) at 1. As part of its purchase of Unit 4, Harbor bargained for and obtained the Use Restriction, a deed restriction on the Medical Center's other plats. The Use Restriction specifies that property other than Harbor's "may not be used, operated, or marketed as an Assisted Living Facility (as that term is defined in the Condominium Declaration) or a Memory Care Facility. For avoidance of doubt, the term 'Assisted Living Facility' shall include facilities furnishing services to either a Type A or Type B assisted living facility as such terms are defined in Rule 92.3 of the Texas Administrative Code. Title 40, Part I, Chapter 92." Compl. [#1-2] Ex B (Use Restriction) at 1. With a term of twenty years, the Use Restriction runs with the land, benefits all future owners of the Harbor, and binds all future owners of the restricted property. Id. at 1-2.

         The Condominium Declaration defines Assisted Living Facility to mean:

a facility that: (i) furnishes, in one or more buildings, food and shelter to long-term residents of such building(s) and (ii) is licensed as an Assisted Living Facility, if required under applicable state or federal law and regulations, and provides Personal Care Services (as hereinafter defined) to its residents.

         Condominium Declaration at 19. The Condominium Declaration subsequently defines personal care services to mean:

(i) assistance with meals, dressing, movement, bathing or other personal needs or maintenance to the residents; (ii) the administration of medication by a person licensed to administer medication or the assistance with or supervision of medication to the residents; or (iii) general supervision or oversight of the physical and mental well being of the residents who need assistance to manage the person's personal life regardless of whether a guardian has been appointed.

Id. Read together, the Condominium Declaration and Use Restriction prohibit a property within the Medical Center, other than the property owned by Harbor, from being used, operated, or marketed as an assisted living facility as it is defined in the Condominium Declaration.

         B. Lakeway

         In January 2013, the Condominium Declaration was amended to create Unit 2, which was designated as the Independent Living Unit (January 2013 Amendment). Defs.' Suppl. Br. [#16-15] Ex. N (Jan. 2013 Amendment) at 1. As Harbor is a member of the Association, Harbor's manager signed the January 2013 Amendment. Id. at 4.[1]

         Over a year later, on November 4, 2014, Lakeway purchased Unit 2. Timeline at 1. In July 2015, Lakeway began construction of its independent living facility, Lake Travis Independent Living (LTIL). Id. Lakeway intends to begin operating LTIL in June or July 2017. Defs.' Br. [#8] at 4.

         In preparation for opening LTIL, Lakeway hired Spectrum Retirement Communities (Spectrum) to serve as its agent and the operator of LTIL. Id. at 5. Spectrum owns and manages a variety of independent living, assisted living, and memory care facilities throughout the country. Id.

         At LTIL and through Spectrum, Lakeway plans to offer housing for individuals who are fifty-five years or older. Id. at 4. Lakeway also intends to equip LTIL with shared amenities such as a restaurant, organized group activities, a salon and day spa, a concierge service, and a wellness center housing a gym and fitness classes. Id. Lakeway has not been licensed by the State of Texas as an assisted living facility. Id.; Mot. Prelim. Inj. [#2] at 11.

         Although Lakeway has not yet begun operating, it expects to have each resident sign a Residency Agreement. Defs.' Suppl. Br. [#16] at 5. The Residency Agreement expressly informs residents that LTIL-referred to as the Community in the Residency Agreement-"does not provide staff to care for residents of the Community's independent living units." Id. [#16-11] Ex. J (Residency Agreement) at 4. The Residency Agreement reminds residents they "may obtain health care and personal care from outside service providers . . . ." Id. Moreover, the Residency Agreement emphasizes "[t]he Community does not supervise the activities of residents of the independent living units[and] is not licensed to provide and will not provide the Resident with assisted living services or skilled nursing services of any kind (including but not limited to, assistance with the tasks of daily living; the services of private duty aides, physicians, and nurses; medications; and items and services for which a license is required)." Id. at 6.

         Additionally, Lakeway intends to pre-screen various healthcare and in-home care providers to ensure they are licensed and have proper insurance. See Defs.' Br. [#8] at 5. Lakeway plans to give residents the pre-screened providers list upon request but will not require residents to choose a provider from that list. Id. Certain third-party services, such as physical therapy or occupational therapy, may choose to perform their services in LTIL's wellness center, but future residents must contract separately for any such services. Id.

         In advance of LTIL's opening, Lakeway has been marketing the facility. LTIL's webpage previously proclaimed:

In-home care providers can come to your apartment when you need some extra assistance. Just contract with them separately for help with personal care, medication, health screenings and more-so you can maintain your independent lifestyle at Lake Travis Independent Living for as long as possible.*
*These providers are independent contractors and not legally related to or owned by Lake Travis Independent Living or Spectrum Retirement Communities, LLC [Lakeway's manager/operator].

Id. at 4.[2]

         II. Texas Law

         Texas's statutory framework provides important context. Texas law requires all assisted living facilities operating in Texas to be licensed. See Tex. Health & Safety Code § 247.021(a). A person establishing or operating a facility not licensed as an assisted living facility cannot use the term "assisted living" in referring to the facility or the services provided at the facility. Id. § 247.021(b).

         However, "[a] person establishing or operating a facility that is not required to be licensed but who elects to obtain a license under this chapter may use the term 'assisted living' in referring to the facility or the services provided at the facility." Id. § 247.021(c).

         Furthermore, Texas law defines assisted living facility to mean an establishment that:

(A) furnishes, in one or more facilities, food and shelter to four or more persons who are unrelated to the proprietor ...

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