Appeal from the 269th District Court Harris County, Texas
Trial Court Cause No. 2012-72213
consists of Justices Christopher, Brown, and Wise.
W. Brown Justice
case involves the attempted enforcement of a deed restriction
against building more than a single one-car or two-car garage
on a property located in the Garden Oaks, Section 3,
Subdivision (the "Subdivision"). Appellant Garden
Oaks Maintenance Organization ("GOMO") filed suit
against appellees Peter S. Chang and Katherine M. Chang
seeking a permanent injunction to have the Changs remove
"the additional two-car garage" they constructed on
their property in the Subdivision and seeking civil damages
for each day they violated the garage deed restriction. The
Changs brought counterclaims for declaratory relief based on
GOMO's lack of authority to enforce deed restrictions as
a property owners' association under sections 201.005 and
204.006 of the Texas Property Code and under GOMO's
trial, the jury found that the Changs failed to comply with
the garage deed restriction. Additionally, the jury found:
such failures were excused by abandonment; the deed
restriction was waived; GOMO's exercise of authority to
enforce the restriction was unreasonable; and GOMO should be
awarded no civil damages. The jury further found that a
reasonable fee for the necessary services of the Changs'
attorneys in the case was $80, 000. In its final judgment,
the trial court rendered judgment against GOMO and in favor
of the Changs. The trial court issued four declarations and
did not award attorney's fees to the Changs.
presents two issues on appeal: (1) whether the trial court
erred by failing to dismiss the Changs'
declaratory-judgment counterclaims and (2) whether the
declarations are erroneous. The Changs present one issue on
cross-appeal: whether the trial court should have awarded the
Changs their attorney's fees.
conclude that the Changs' declaratory-judgment
counterclaims were permissible because they related to an
actual, justiciable controversy and had and continue to have
practical consequences. However, we conclude that the trial
court erred in making declarations three and four. We also
conclude that the trial court did not abuse its discretion by
not awarding the Changs attorney's fees. Accordingly, we
modify the trial court's judgment to delete the erroneous
declarations and affirm the judgment as modified.
Oaks Co. was the original owner of the lots forming Garden
Oaks, Section Three, Subdivision. In 1939, Garden Oaks Co.
recorded a set of deed restrictions applicable to the
Subdivision, which provided that Garden Oaks Co. had the
right to enforce the restrictions. The deed restrictions
All lots in the tract shall be known and described as
residential lots, and no structure shall be erected on any
residential building plot other than one detached single
family dwelling not to exceed two stories in height and a one
or two car garage.
Garden Oaks Co. no longer exists and did not exist at the
time that the instant dispute arose.
2000, three property owners within the Subdivision filed a
notice of formation of petition committee in order to create
and operate a property owner's association
("POA") pursuant to sections 201.005 and 204.006 of
the Texas Property Code. The May 2000 petition committee
failed to file a successful petition within one year of the
notice, and the committee was dissolved by operation of law.
2001, three property owners within the Subdivision filed
another notice of formation of petition committee in order to
create and operate a POA pursuant to sections 201.005 and
204.006 of the Texas Property Code. The notice attached an
exhibit captioned, "Amendment of Deed
Restrictions." In June 2002, the three individuals who
filed the July 2001 notice filed a petition to amend
restrictions to create a homeowners association and
certificate of compliance with Texas Property Code, section
204. The petition attached the amendment exhibit and stated
that it would be incorporated into the deed restrictions.
2010, GOMO filed a subdivision management certificate. In
2011, Peter and Katherine Chang planned to build a new home
on a lot in the Subdivision. The Changs through their builder
submitted their proposed construction plans for the home to
GOMO for approval. GOMO rejected the Changs' plans
several times because the deed restrictions did not allow for
more than a single one-car or two-car garage per lot. GOMO
finally approved the Changs' plans with the caveat that
the "'garage' label be removed from the attic
space over the studio" due to "concern that the
studio could be converted to a garage in the future."
The Changs built their home. After the Changs moved in, they
replaced one of the studio walls with a garage door.
December 2012, GOMO filed suit against the Changs for
injunctive relief and for civil penalties under section
202.004(c) of the Property Code based on an alleged violation
of the garage deed restriction. The Changs answered,
asserting a general denial, a plea to the jurisdiction,
verified pleas, and various affirmative defenses. In
addition, the Changs filed counterclaims for declaratory
trial, the jury returned these findings:
• The Changs both failed to comply with the deed
• The failure to comply was excused by abandonment;
• The deed restriction in question had been waived;
• GOMO's exercise of authority to enforce the deed
restriction in question was unreasonable;
• GOMO should be awarded $0 against the Changs as civil
damages for the failure to comply with the deed restrictions;
• A reasonable fee for the necessary services of the
Changs' attorneys in this case was $80, 000.00.
Changs moved for entry of judgment. GOMO filed objections and
a motion for JNOV and to disregard jury findings. The trial
court denied GOMO's JNOV motion. The Changs filed a
motion for declaratory relief and final judgment. On June 8,
2016, the trial court signed an order on the Changs'
motion for declaratory relief and for final judgment. The
trial court concluded that "it should grant judgment on
the verdict and for declaratory relief, but that it should
deny judgment for attorneys' fees."
same day, the trial court also signed its final judgment. In
its final judgment, the trial court stated that:
• The Changs' failure to comply with the garage deed
restriction was excused by abandonment;
• The garage deed restriction had been waived;
• GOMO's exercise of authority to enforce the garage
deed restriction was unreasonable;
• GOMO should take nothing on its claims against the
• The Changs should recover on their claims for
declaratory relief; and
• The Changs should take nothing on their claims for
trial court further rendered these declarations:
1. The Notice of Formation of Petition Committee filed on
July 23, 2001 under Harris County Clerk's File No.
V191699 (and the amendment attached thereto) is invalid,
ineffective, and of no force and effect with respect to
Defendants Peter S. Chang and Katherine M. Chang;
2. The Petition to Amend Restrictions filed on June 3, 2002,
under Harris County Clerk's File No. V842579 is
ineffective and of no force and effect with respect to
Defendants Peter S. Chang or Katherine M. Chang;
3. The By-Laws of Garden Oaks Maintenance Organization have
no force and effect against Defendants Peter S. Chang or
Katherine M. Chang; and
4. Garden Oaks Maintenance Organization has no authority or
standing to pursue any legal action against Defendants Peter
S. Chang or Katherine M. Chang for violations of any alleged
deed restrictions in the Garden Oaks Section Three.
GOMO and the Changs appealed the trial court's final
The Changs' declaratory-judgment counterclaims
first issue, GOMO argues for reversal of the trial
court's declarations because the Changs'
declaratory-judgment counterclaims impermissibly repeated
their affirmative defenses.
Declaratory Judgments Act (the "Act") is based upon
the Uniform Declaratory Judgments Act. See Tex. Civ.
Prac. & Rem. Code Ann. § 37.001 et seq.
(West 2015). The Act's "purpose is to settle and to
afford relief from uncertainty and insecurity with respect to
rights, status, and other legal relations." Id.
§ 37.002(b). The Act "is to be liberally construed
and administered." Id. Under the Act:
A person interested under a deed, will, written contract, or
other writings constituting a contract or whose rights,
status, or other legal relations are affected by a statute,
municipal ordinance, contract, or franchise may have
determined any question of construction or validity arising
under the instrument, statute, ordinance, contract, or
franchise and obtain a declaration of rights, status, or
other legal relations thereunder.
Id. § 37.004(a). A contract may be construed
either before or after a breach. Id. §
37.004(b). "A court of record within its jurisdiction
has power to declare rights, status, and other legal
relations whether or not further relief is or could be
Id. § 37.003(a).
the Act generally is not available to settle disputes already
pending before a court, the Supreme Court of Texas has
recognized that "[i]n certain instances, . . . a
defensive declaratory judgment may present issues beyond
those raised by the plaintiff, " such as where
"there is an ongoing and continuing relationship."
BHP Petroleum Co. Inc. v. Millard, 800 S.W.2d 838,
841-42 (Tex. 1990) (where plaintiff sued for breach of
take-or-pay obligations of gas-purchase contract, because
defendant's declaratory-judgment counterclaim seeking
interpretation of contract would define parties' future
obligations and had "greater ramifications, " it
was permissible); Drexel Corp. v. Edgewood Dev.,
Ltd., 417 S.W.3d 672, 678 (Tex. App.-Houston [14th
Dist.] 2013, no pet.) ("[I]n certain instances a
'defensive' declaratory judgment will survive a
nonsuit when there are continuing obligations between the
parties." (citing Millard, 417 S.W.3d at 841
& n.8)). To qualify as a claim for affirmative relief, a
defensive pleading must allege that the defendant has a cause
of action, independent of the plaintiff's claim, on which
he could recover benefits, compensation or relief, even if
the plaintiff abandons his cause of action or fails to
establish it. Millard, 417 S.W.3d at 841.
to GOMO, the Changs merely "recast their affirmative
defenses as a declaratory-judgment counterclaim." GOMO
relies on the Changs' "pleading history." GOMO
first argues that the Changs asserted their defenses prior to
bringing their counterclaims. However, the timing of a
defendant's declaratory-judgment counterclaim alone does
not dictate whether the claim is a permissible one. See
Friedman v. Rozzlle, No. 13-12-00779-CV, 2013 WL
6175318, at *10 (Tex. App.-Corpus Christi Nov. 21, 2013, pet.
denied) (mem. op.) (rejecting timing-based argument where
defendant POA did not assert declaratory-judgment
counterclaim until after plaintiff homeowners made their
claims). GOMO also asserts that the Changs' defenses and
the headings in their counterclaims "mirror" each
other. The use of "creative pleading" by merely
restating defenses in the form of a declaratory-judgment
action cannot deprive the plaintiff of its right to take a
nonsuit. Millard, 800 S.W.2d at 841. Nor can mere
repleading of claims or defenses serve as the basis for
declaratory judgment or attorney's fees thereunder.
See Etan Indus., Inc. v. Lehmann, 359 S.W.3d 620,
624-25 (Tex. 2011) (per curiam) (citing MBM Fin. Corp. v.
Woodlands Operating Co., 292 S.W.3d 660, 669 (Tex.
2009)). At the same time, we also must look to the substance
of a plea for relief, not merely its titles and headings, to
determine the nature of relief sought. See Surgitek,
Bristol-Myers Corp. v. Abel, 997 S.W.2d 598, 601 (Tex.
1999); State Bar of Tex. v. Heard, 603 S.W.2d 829,
833 (Tex. 1980).
its live pleading alleged that the Changs violated the garage
deed restriction. According to GOMO, it therefore was
entitled to a permanent injunction that the Changs remove the
additional two-car garage and to civil damages under section
202.004(c) for each day the Changs were in violation of the
restriction. The Changs raised eleven affirmative defenses,
including lack of standing and lack of authority. The Changs
also brought declaratory-judgment counterclaims. In their
request for declaratory relief, the Changs sought
declarations about the invalidity and ineffectiveness of the
July 2001 notice of formation of petition committee and
attached amendment exhibit and of the June 2002 petition that
purported to establish GOMO as the POA for the Subdivision
with powers under section 204.010 of the Property Code. In
addition, the Changs sought a declaration that the by-laws of
GOMO have no force and effect against them. Finally, the
Changs sought a declaration that GOMO has no authority or
standing to pursue any legal action against the Changs for
violations of any deed restrictions.
Indian Beach Property Owners' Association v.
Linden, 222 S.W.3d 682 (Tex. App.-Houston [1st Dist.]
2007, no pet.), instructive. In Indian Beach, Indian
Beach Property Owners' Association brought suit against
Mary and B.J. Linden after the Lindens built a chain-link
fence on Mary's property. 222 S.W.3d at 688-90. Indian
Beach POA asserted that the Lindens had violated certain deed
restrictions in building the fence without first obtaining
approval. Id. at 690. The Lindens then filed
counterclaims against Indian Beach POA, seeking a declaration
from the trial court that the construction of the fence was
in compliance with the deed restrictions applicable to
Mary's property. Id.
appeal, our sister appellate court addressed the issue of
whether the Lindens' counterclaims for a declaratory
judgment constituted claims for affirmative relief.
Id. at 700-02. In holding that they did, the
Indian Beach court explained that the Lindens'
counterclaims sought a declaration that they were "in
compliance with the contractual deed restrictions regarding
the construction of their fence." Id. at 702.
Further, the deed restrictions on the property involved the
Lindens' "ongoing and continuous relationship with
Indian [Beach POA]." Id. Because the
Lindens' claims for declaratory relief "involve[d]
the interpretation of deed restrictions" and, therefore,
the parties' future obligations under those restrictions,
the Lindens had "stated a cause of action on which they
could recover benefits, compensation, or relief [even] if
Indian [Beach POA] abandoned or failed to establish its cause
of action." Id. (citing Millard, 800
S.W.2d at 842; and Tex. Civ. Prac. & Rem. Code §
we find Friedman v. Rozzlle instructive. In
Friedman, homeowner Rozzlle who operated a
cottage-rental business filed a declaratory-judgment action
against the Sun Harbour Cottages Unit 1 Owners'
Association and other homeowners, including Friedman. 2013 WL
6175318, at *1. Rozzlle sought a declaration that a certain
deed restriction involving short-term rentals should not be
enforced as void and waived. Id. Friedman filed
counter- and cross-claims that Rozzlle and other homeowners
had violated the short-term rental restriction and that Sun
Harbour was required to take steps to stop these violations.
Id. Sun Harbour filed a cross-claim against Friedman
seeking declaratory-relief that Sun Harbour had no duty to
enforce the deed restrictions. Id.
appellate court considered Friedman's challenge to Sun
Harbour's award of attorney's fees under the Act and
whether Sun Harbour's declaratory counterclaim was
permissible. Id. at *10-11. Because Sun Harbour
sought a declaration of its rights that went beyond a mere
defense to Friedman's claim for specific relief that Sun
Harbour had a duty to enforce the short-term rental
restriction and would have "the effect of settling
future disputes as to the duty of [Sun Harbour] to enforce
all restrictions, " the Friedman court
concluded that Sun Harbour's declaratory-judgment cause
of action was cognizable under section 37.004(a) of the Act.
Id. at *11 (citing Millard, 800 S.W.2d at
841-42). The Friedman court noted that even if
Friedman had nonsuited her cross-claim, Sun Harbour
"could have pursued its request for a declaration that
it had no general duty to enforce the conditions and
covenants of the Declaration." Id. (citing
Indian Beach, 222 S.W.3d at 702); see also
Castille v. Serv. Datsun, Inc., No. 01-16-00082-CV, 2017
WL 3910918, at *7-8 (Tex. App.-Houston [1st Dist.] Sept. 7,
2017, no pet. h.) (mem. op.) (where plaintiff property owners
brought claim that defendant Service Datsun's operation
of RV park on its property violated two deed restrictions,
Service Datsun's declaratory-judgment counterclaim which
sought declaration about "the validity, or legal effect,
of the [Gulfview subdivision deed] restrictions" and
that "the continued operation of [its RV] park is not
prohibited or restricted by" any deed restrictions
constituted "cause of action on which [defendant] could
recover benefits, compensation, or relief even if appellants
had abandoned or failed to establish their own cause of
action" (citing Indian Beach, 222 S.W.3d at
702; and Friedman, 2013 WL 6175318, at *10-11)).
attempt to distinguish Indian Beach fails. GOMO
contends that, unlike the homeowner defending against a fence
deed restriction in Indian Beach, the Changs did not
seek an interpretation of the deed restrictions or a
declaration that their additional garage was in compliance
with all the deed restrictions. See id. However, the
Act does not limit the subject matter of relief only to
declarations of rights or status under deed restrictions, but
instead reaches "any question of construction or
validity arising under the instrument, statute, ordinance,
contract, or franchise" at issue. See Tex. Civ.
Prac. & Rem. Code Ann. § 34.004(a). Here, the Changs
requested declarations regarding the invalidity of documents
purportedly establishing GOMO as a POA under sections 201.005
and 204.006 of the Property Code and regarding the invalidity
of GOMO's by-laws. The requested declarations would
affect the ongoing future relationship of the parties
concerning all the deed restrictions, not only the garage
deed restriction at issue in GOMO's lawsuit. If the
Changs were able to establish that GOMO was not a properly
formed POA under sections 201.005 and 204.006 and could not
rely on its by-laws for purposes of enforcement, then this
would defend against GOMO's "garage" cause of
action, but also would establish that GOMO was unable to
enforce all of the other deed restrictions against
the Changs. Since the Changs sought this additional relief,
their counterclaims had "greater ramifications"
than GOMO's original suit and "practical
consequences" for the parties' ongoing relationship.
See Millard, 800 S.W.2d at 842; Transp. Ins. Co.
v. WH Cleaners, Inc., 372 S.W.3d 223, 231 (Tex. App.-
Dallas 2012, no pet.) ("[A] declaration of rights under
the circumstances presented has practical
cited cases do not persuade us otherwise. In Anderson v.
The NewProperty Owners' Association of Newport,
Inc., 122 S.W.3d 378, 383 (Tex. App.- Texarkana 2003,
pet. denied), the New POA of Newport (NPOAN) filed suit
against property owner Anderson to stop the construction of a
driveway. Anderson entered a verified denial challenging
NPOAN's standing and capacity and, apparently, filed a
counterclaim for declaratory relief. See id. After a
bench trial, the trial court ordered Anderson to remove the
driveway and awarded NPOAN attorney's fees. Id.
The appeals court reversed and rendered judgment in favor of
Anderson, determining that although NPOAN had standing and
capacity to sue Anderson, it did not have authority to
approve or reject her driveway plans either pursuant to
assignment or under the Property Code. Id. at 385,
388-90. The appeals court concluded that Anderson could not
receive attorney's fees under section 37.009 of the Act
because NPOAN's cause of action involved "the same
parties and same issues as alleged in Anderson's
counterclaim."Id. at 390-91 (refusing to apply
Millard). In that case, however, ...