Court of Appeals of Texas, Ninth District, Beaumont
Submitted on July 11, 2017
Appeal from the 258th District Court Polk County, Texas Trial
Cause No. CIV30246
Kreger, Horton, and Johnson, JJ.
cause number 09-16-00393-CV, Ridgepoint Rentals LLC
("Ridgepoint" or "Appellant") filed an
interlocutory appeal of an order granting a temporary
injunction in favor of James W. and Bernadine L. McGrath
("the McGraths" or "Appellees"). In cause
number 09-17-00006-CV, Ridgepoint filed an appeal of an order
granting a summary judgment and a permanent injunction in
favor of the McGraths. The McGraths and Ridgepoint each own
property located in Oak Terrace Estates in Montgomery County,
Texas. The dispute between the parties relates to certain
deed restrictions for Oak Terrace Estates that were recorded
on February 1, 1971 (the "Deed Restrictions"). We
dismiss the appeal in cause number 09-16-00393-CV as moot,
and we affirm the trial court's order appealed in cause
September 29, 2016, the McGraths filed an original petition
against defendant Ridgepoint for alleged violations of the
Deed Restrictions. According to the original petition, on
March 22, 2010, Lot 18 of Section 4 of Oak Terrace Estates
("the Property") was conveyed to Susan and Stefan
Ractliffe. On the following day, Ridgepoint was formed as a
Texas limited liability company, with Stefan Ractliffe as its
sole member, and on April 21, 2010, the Ractliffes conveyed
the Property to Ridgepoint.
McGraths alleged that Ridgepoint was violating the Deed
Restrictions, and that the restrictions were covenants
running with the land. The Deed Restrictions stated in relevant
1. These covenants are to run with the land and shall be
binding upon all parties and all persons claiming under them
until December 31st., 2000, A.D., at which time said
covenants shall be automatically extended for successive
periods of Ten (10) years, unless an instrument signed by a
majority of the then owners of the tract has been recorded,
agreeing to change said covenants in whole or in part.
2. If the parties hereto, or any of them, or their heirs,
successors, or assigns, shall violate or attempt to violate
any of the covenants herein, it shall be lawful for the
undersigned owners, their heirs, administrators, or assigns
to enter and abate such violation without liability, or they,
their heirs, administrators, or assigns, and any other
persons owning any real property situated in said subdivision
shall have the right to prosecute any proceeding at law or
equity against the person or persons violating or attempting
to violate such restrictions and either to prevent him or
them from doing, or to cause to be removed such violation, or
to recover damage for such violation.
. . . .
10. The land to be conveyed hereunder shall be used for
residential purposes only, except those which are designated
on the official plat of said addition as being commercial
lots or reserves and except those lots which may from time to
time be designated by grantor, its successors or assigns, for
business, recreational or commercial purposes. The term
"residential purposes" as used herein shall be held
and construed to exclude hospitals, clinics, duplex houses,
apartment houses, boarding houses, hotels, and all other
commercial uses and all such uses of said property are hereby
expressly prohibited. No building shall be erected, altered,
placed or permitted to remain on any residence tract other
than one detached single family dwelling and a private garage
for not more than two cars.
. . . .
13. No structure of a temporary character, trailer, mobile
house, basement, tent, shack, garage, barn, or other
outbuilding shall be used on any tract any time as a
residence either temporarily or permanently.
McGraths alleged that Ridgepoint had violated the Deed
Restrictions by "operating a weekend/vacation rental of
the home situated" on the Property and by
"operation of a hotel" on the Property. The
McGraths sought a temporary and permanent injunction,
enjoining Ridgepoint from using the Property for weekend or
vacation rentals and enjoining Ridgepoint from advertising
the Property for rent for any period of time less than ninety
answer, Ridgepoint admitted the Ractliffes conveyed the
Property to Ridgepoint. Ridgepoint further alleged that the
Ractliffes use the Property as their own vacation home, that
Ridgepoint advertises and leases the Property "for
varying terms, generally less than 14 days[, ]" that
Ridgepoint pays "the Texas Hotel Tax for leases of
thirty days or less[, ]" and that "[h]ouses have
long been leased throughout the subdivision." Ridgepoint
counterclaimed for a declaratory judgment, asking the court
to declare that the Deed Restrictions permit "leasing
and leasing for any duration[.]" Ridgepoint also
asserted that the McGraths' claims were barred by waiver,
abandonment, and estoppel.
October 7, 2016, the court held a hearing on the
McGraths' motion for temporary injunction. Oscar Good
testified that he is a member of the Oak Terrace Estates
architectural committee that was established by the Deed
Restrictions for the subdivision. Good agreed he was aware
that Ridgepoint had used the Property for "weekend
rentals or vacation rentals" and he was not aware of any
other property in Section 4 of the subdivision used as a
hotel. According to Good, at times "four to five
cars" were at the Property on weekends, and the driveway
does not hold that many cars.
Ractliffe testified that he and his wife purchased the
Property in 2010 and subsequently conveyed it to Ridgepoint,
which is a business that he owns. Ractliffe agreed he had
file an application for a hotel occupancy tax on the Property
and that "we've obviously been renting it
out" in addition to staying there and allowing friends
to stay there. Ractliffe explained as follows:
Q. Okay. So you have charged for a short-term rental for a
weekend or a few days?
A. It's typically a weekend or over a week, a period of a
week, typically, yeah.
Q. Okay. And how many times have you rented it and reported
under this hotel occupancy tax, the use of this as a hotel?
A. Maybe 15 or 20 times.
. . . .
Q. So you're still renting the property to weekend