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Teal Trading and Development, LP v. Champee Springs Ranches Property Owners Association

Court of Appeals of Texas, Fourth District, San Antonio

July 5, 2017

TEAL TRADING AND DEVELOPMENT, LP, Appellant
v.
CHAMPEE SPRINGS RANCHES PROPERTY OWNERS ASSOCIATION, Appellee

         From the 216th Judicial District Court, Kendall County, Texas Trial Court No. 06-500A Honorable N. Keith Williams, Judge Presiding

          Sitting: Sandee Bryan Marion, Chief Justice, Marialyn Barnard, Justice, Patricia O. Alvarez, Justice

          OPINION

          Marialyn Barnard, Justice

         This appeal concerns the validity and enforceability of a property restriction - specifically a one-foot reserve strip ("the Non-Access Easement") - that if valid precludes ingress and egress across the strip. This court has previously reviewed this dispute, holding that neither side was entitled to summary judgment and remanding to the trial court for further proceedings. See Teal Trading and Dev., LP v. Champee Springs Ranches Prop. Owners Ass'n, 432 S.W.3d 381, 384 (Tex. App.-San Antonio 2014, pet. denied). Upon remand, the trial court granted partial summary judgment in favor of appellee Champee Springs Ranches Property Owners Association ("Champee Springs"), and the remaining issues were tried to the court. After trial, the trial court ruled the Non-Access Easement was valid and awarded attorney's fees and costs to Champee Springs. On appeal, appellant Teal Trading and Development, LP ("Teal Trading") raises three issues challenging the trial court's partial summary judgment, its findings, and the award of attorney's fees and costs.[1] We affirm the trial court's judgment.

         Background

         As noted above, we previously reviewed this matter. See id. In our prior opinion, we provided a detailed rendition of the facts. Accordingly, we have taken portions of the factual background from our prior opinion and then revised, updated, and supplemented it as necessary. See id.

         Teal Trading owns almost 2, 000 contiguous acres of land in the Texas Hill Country. The majority of its property lies in Kerr County, Texas, although some portion of its land spills into neighboring Kendall County, Texas. Champee Springs represents residents of the Champee Springs Ranches subdivision and The Quarry at Champee Springs Ranches subdivision, which are located in Kendall County. See Tex. Prop. Code Ann. § 204.004 (West 2014) (describing property owners' association).

         Six hundred and sixty acres of Teal Trading's property, and some or all of the land now comprising the subdivisions represented by Champee Springs, were originally owned by E.J. Cop, who purchased 9, 245.95 acres of land in Kendall and Kerr Counties on June 3, 1998. Cop platted and developed his property as Champee Springs Ranches. On June 4, 1998, Cop signed a "Declaration of Covenants, Conditions and Restrictions, " which was recorded in the deed records of Kendall and Kerr Counties. See Tex. Prop. Code Ann. § 202.001(1)(A) (defining dedicatory instruments, which includes restrictive covenants). The Declaration contains the restriction, i.e., Non-Access Easement, at issue. In pertinent part, the Declaration states:

DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS
** *
THAT WHEREAS, E.J. Cop, hereinafter called the Declarant, is the owner of all that certain 9245.95 acres, more or less, tract of land ("PROPERTY") located in Kendall and Kerr Counties, Texas as more particularly described on Exhibit "A" attached hereto and incorporated herein for all purposes.
WHEREAS, the Declarant will convey the PROPERTY, subject to certain protective covenants, conditions, restrictions and easements as hereinafter set forth;
NOW, THEREFORE, it is hereby declared that all of the PROPERTY shall be held, sold, and conveyed subject to the following easements, restrictions, covenants, and conditions, which are established for the purposes of creating and carrying out a uniform plan for the improvement, development and sale of the PROPERTY and for the further purpose of protecting the value attractiveness and desirability of the PROPERTY for the mutual benefit of the owners of same and accordingly shall run with the title to the PROPERTY or any part thereof and bind the Declarant, his heirs, successors and assigns and all owners and purchasers of the PROPERTY, or any part thereof, their, [sic] heirs, successors, executors, administrators and assigns.
** *
2. There is hereby reserved unto Declarant a one (1) foot easement for precluding and prohibiting access to the PROPERTY or Ranger Creek Road or Turkey Knob Road by adjoining property owners other than Declarant and Declarant's express assigns. This easement is inside of and contiguous to the perimeter of the PROPERTY as described in exhibit "A" hereto, provided that no easement is reserved over, across or upon any public road right-of-way which is dedicated by and shown on that certain Plat of Champee Springs Ranches, a subdivision in Kendall and Kerr Counties, Texas, of record in Volume 3, Page 69, of the Plat Records of Kendall County, Texas, and further provided Tract 4 of said Champee Springs Ranches subdivision shall be entitled to one access entrance across the restrictive easement along the southwestern boundary line of said Tract 4, but none other access without Declarant's express written consent thereto.

         The restriction in paragraph two is the "Non-Access Easement." The parties appeared to agree on original submission to this court and still seem to agree the Non-Access Easement prohibits any person - aside from Cop or his assignees - who owns land along the original edge of the Cop tract from permitting anyone else access across the edge of their property.[2]

         Ultimately, Cop began to sell lots from his property. The following is a summary of relevant events and conveyances in chronological order:

• June 3, 1998-E.J. Cop purchased 9, 245.95 acres of land in Kendall and Kerr Counties.
• June 4, 1998-Cop signed the Declaration containing the Non-Access Easement.
• July 9, 1998-Cop sold 1, 328 acres to C.R. Luigs.
• July 10, 1999-Luigs sold approximately 660 acres in Kerr County to Marrs and Marianne Bowman. The Bowmans platted the 660 acres as Privilege Creek Ranches, but did not sell any lots.
July 29, 1999-Michael Wall, owner of 2, 300 acres in Champee Springs Ranches, filed a replat, which decreased the size of the lots in Champee Springs Ranches and removed the Bowmans' 660 acres from Champee Springs Ranches.
• July 11, 2006-Mallard Royalty Partners[3] purchased the tract owned by the Bowmans, who executed separate deeds conveying their respective interests.
• July 12, 2006-Mallard Royalty Partners sold the 660 acres, and an additional 1, 173 acres that had not been owned by Cop, to BTEX Ranch, LP.
• July 17, 2006-BTEX Ranch, LP executed a deed of trust covering all of its property - the 1, 173 acre-tract and the 660 acre tract. BTEX attempted to develop its property as "Boerne Falls Ranch."
• November 12, 2009-Teal Trading acquired BTEX Ranch, LP's deed of trust and foreclosed on its interest.

         We will refer to the 660-acre tract sold by Luigs and now owned by Teal Trading as the "Privilege Creek Tract." All of the deeds in the chain of title from Cop to Teal Trading state, in some form or another, that the property conveyed is "subject to" the restrictions in the Declaration filed by Cop.

         When Cop acquired 9, 245.95 acres, the portion of his property that would later be sold as the Privilege Creek Tract was at the northwestern end of his tract. Thus, the Non-Access Easement runs along the edge of the Privilege Creek Tract to the extent that the edge of the tract was also the edge of the original Cop tract. The additional 1, 173 acres owned by Teal Trading adjacent to the Privilege Creek Tract were not part of Cop's original 9, 245.95 acres. Accordingly, Teal Trading's additional acreage is seemingly "divided" from the Privilege Creek Tract by the Non-Access Easement. In contrast, although the Champee Springs Ranches subdivision is directly adjacent to the Privilege Creek Tract, it was not "divided" from the tract by the Non-Access Easement because the property comprising the subdivision was also part of Cop's original tract. This is demonstrated by the following illustrative map:

         (IMAGE OMITTED)

         The area depicted in orange - also designated as "section "1" - is the 1, 173 acres owned by Teal Trading that was not part of the original Cop Tract. The acreage in yellow - also designated as "section 2"- is the Privilege Creek Tract. The Non-Access Easement, which is depicted by the bolded red line, [4] "divides" the properties owned by Teal Trading. The document shows how the Champee Springs Ranches subdivision is adjacent to the Privilege Creek Tract, but not "divided" from the tract by the Non-Access Easement.

         After BTEX Ranch, LP acquired its property from Mallard Royalty Partners, it began to develop the entire property as a single, contiguous residential subdivision. It then built a construction road that connected Turkey Knob Road to Lane Valley Road. Turkey Knob Road is located within the Privilege Creek Tract and the Champee Springs subdivisions and gives those tracts access to Interstate 10, but it does not otherwise cross the "dividing line" created by the Non-Access Easement. Lane Valley Road is on the other side of the "dividing line" created by the Non-Access Easement. To enforce the Non-Access Easement, Champee Springs intervened in a lawsuit filed by Kendall County against BTEX Ranch, LP relating to BTEX Ranch LP's development. The trial court denied the intervention, but severed Champee Springs's claims into a separate lawsuit. During the BTEX Ranch, LP/Champee Springs litigation, Teal Trading foreclosed on BTEX Ranch LP's interest and intervened.

         Champee Springs sought a declaratory judgment that BTEX Ranch, LP - and subsequently Teal Trading - was bound by the Non-Access Easement and estopped to deny its force, validity, and effect, and because Teal Trading was bound, the restriction was enforceable against it. Teal Trading denied it was bound by the restriction and sought a declaratory judgment that the Non-Access Easement was void as an unreasonable restraint against alienation and that Champee Springs waived the right to enforce the Non-Access Easement and was thus estopped from enforcing it. The parties filed competing motions for summary judgment. The sole ground raised in Champee Springs's motion was the "threshold" issue of whether Teal Trading was estopped by deed from challenging the validity and enforceability of the Non-Access Easement. Teal Trading's motion and supplemental motion, on the other hand, raised several grounds for summary judgment: (1) the Non-Access Easement was an invalid easement; (2) members of the Champee Springs subdivision had waived enforcement of the Non-Access Easement; and (3) the Non-Access Easement was void as against public policy. Ultimately, the trial court granted summary judgment in favor of Champee Springs and denied Teal Trading's motion. After a hearing, the trial court awarded attorney's fees and costs to Champee Springs. Teal Trading perfected an appeal to this court.

         On appeal, this court held Champee Springs failed to establish as a matter of law that Teal Trading was estopped by deed from challenging the Non-Access Easement's validity and enforceability because "none of the deeds within the chain of title from Cop to Teal Trading acknowledge the validity and enforceability of the non-access restriction." Teal Trading, 432 S.W.3d at 393. As to Teal Trading's motion, we held Teal Trading failed to prove as a matter of law that: (1) the Non-Access Easement was terminated by merger; (2) the signatories to the 1999 replat intended to waive enforcement of the Non-Access Easement; (3) the Non-Access Easement violates public policy; (4) the Non-Access Easement was an unreasonable restraint on alienation; and (5) the Non-Access Easement was an unreasonable restraint on use. Id. at 394-97. Finally, we reversed the trial court's award of attorney's fees to Champee Springs, holding that because we reversed the summary judgment in favor of Champee Springs, we were compelled to reverse the award of attorney's fees and allow reconsideration of the award after resolution on remand. Id. at 398 (citing Tex. Prop. Code Ann. § 5.006(a) (stating that "In an action based on breach of a restrictive covenant pertaining to real property, the court shall allow a prevailing party who asserted the action reasonable attorney's fees in addition to the party's costs and claim.")). We remanded the matter to the trial court for further proceedings consistent with our opinion. Id.

         On remand, Champee Springs - as a representative of its members - filed its Fourth Amended Original Petition. Therein, Champee Springs sought a declaration that the Non-Access Easement: (1) "is valid, binding on and enforceable against" BTEX Ranch, LP and Teal Trading, and (2) is enforceable as a covenant running with real property. Champee Springs also sought recovery of attorney's fees under section 5.006 of the Texas Property Code and section 37.009 of the Texas Civil Practice and Remedies Code, i.e., the Declaratory Judgment Act, as well as costs and interest. Teal Trading filed its Fifth Petition in Intervention. Teal Trading also sought a declaration, asking the court to declare the Non-Access Easement "void and unenforceable" because: (1) it violates the public policy of Kerr and Kendall counties; (2) Champee Springs members and other relevant land owners are estopped from contending the Non-Access Easement is valid; (3) Champee Springs members and other relevant land owners are on notice that the Non-Access Easement is not recognized; and (4) Champee Springs members and other relevant land owners waived enforcement of the Non-Access Easement is valid. Teal Trading also alleged several affirmative defenses - estoppel by deed, estoppel by record, and quasi-estoppel. It further alleged waiver, termination by merger, and void as an unreasonable restraint on alienation and as a prohibition on use.

         After filing its amended petition, Champee Springs filed a partial no evidence summary judgment motion and a partial traditional summary judgment motion. In its no evidence motion, Champee Springs alleged, as to Teal Trading's affirmative defenses:

Waiver:
(1) no evidence those who signed the 1999 replat unequivocally intended to waive the Non-Access Easement;
(2) no evidence the property owners affected by the Non-Access Easement signed the 1999 replat or otherwise intended to waive the Non-Access Easement;
(3) no evidence Cop signed the 1999 replat.
Estoppel:
(1) no evidence of deception by those who signed the 1999 replat;
(2) no evidence those who signed the 1999 replat made any false representation or concealed any material fact.
Public Policy:
(1) no evidence any subdivision regulations of Kendall and/or Kerr Counties, in effect at the time the Non-Access Easement was created, prohibited such a restriction;
(2) no evidence if any state or county public policy, in effect at the time the Non-Access Easement was created, prohibited such a restriction relative to access to private, gated subdivisions for purposes of emergency services;
(3) no evidence the Non-Access Easement prevented Kerr County from planning, specifying, and/or approving the road infrastructure of private roads within the Privilege Creek Ranches Subdivision;
(4) no evidence that on its face the Non-Access Easement, at the time it was created, violates any state or federal constitutional or statutory provision.
Unreasonable Restraint on Alienation:
(1) no evidence the Non-Access Easement restrains alienation of the Bowman Tracts or any part thereof, which are the only portions of Teal Trading's property burdened by the Non-Access Easement.
Prohibition on Use:
(1) no evidence the Non-Access Easement so severely limits Teal Trading's property use that it rendered the property valueless.
Termination by Merger:
(1) no evidence that all of the burdened and benefitted properties subject to the Non-Access Easement reverted back to ownership by a single entity.

         In its traditional motion for summary judgment, Champee Springs also challenged each of Teal Trading's affirmative defenses and asserted the Non-Access Easement was a valid easement. Teal Trading filed a response and Champee Springs filed a reply to the response. After a hearing, the trial court granted Champee Springs's motion. In its partial summary judgment, the trial court specifically stated the grounds upon which the motion was granted, ruling as a matter of law that the Non-Access Easement:

• is not an unreasonable restraint on alienation;
• does not amount to a prohibition as to the use of Teal's property;
• was not terminated by merger; and
• is a valid easement.

         The trial court specifically denied Champee Springs's motion as to Teal Trading's affirmative defenses of waiver and violation of public policy. The trial court did not rule on the affirmative defenses based on estoppel.

         After the trial court granted partial summary judgment, the parties proceeded to a bench trial on the remaining issues, i.e., waiver, estoppel, and violation of public policy. In its judgment, the trial court declared the Non-Access Easement: (1) valid, binding, and enforceable against Teal Trading; and (2) enforceable as a covenant running with Teal Trading's property. The trial court rejected Teal Trading's remaining affirmative defenses, i.e., waiver, estoppel by deed, estoppel by record, quasi-estoppel, and violation of public policy. It awarded attorney's fees for the trial phase, contingent fees through a possible appeal to the supreme court, costs, and interest. Thereafter, Teal Trading perfected this appeal.

         Analysis

         On appeal, Teal Trading challenges the trial court's partial summary judgment in favor of Champee Springs, as well as the trial court's findings and conclusions following the bench trial. In addition, Teal Trading challenges the trial court's award of attorney's fees and costs to Champee Springs. We will address each challenge separately, beginning with the partial summary judgment.

         Partial Summary Judgment

         As set out above, Champee Springs filed both no evidence and traditional motions for partial summary judgment challenging Teal Trading's affirmative defenses of waiver, estoppel, violation of public policy, unreasonable restraint on alienation, prohibition on use, and termination by merger. It also sought to disprove Teal Trading's allegation that the Non-Access Easement was not a valid easement. Although Champee Springs sought partial summary judgment as to all of Teal Trading's affirmative defenses, the trial court granted partial summary judgment on only three of the asserted defenses - unreasonable ...


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