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C.I.A. Hidden Forest, Inc v. Watson

Court of Appeals of Texas, Ninth District, Beaumont

March 29, 2018

C.I.A. HIDDEN FOREST, INC., Appellant
v.
DEBORAH WATSON AND LARRY HARRIS, Appellees

          Submitted on February 6, 2018

          On Appeal from the 284th District Court Montgomery County, Texas Trial Cause No. 15-04-04197-CV

          Before McKeithen, C.J., Kreger and Johnson, JJ.

          MEMORANDUM OPINION

          STEVE McKEITHEN Chief Justice.

         C.I.A. Hidden Forest, Inc. ("C.I.A.") appeals from a summary judgment in favor of Deborah Watson and Larry Harris (collectively "appellees") in a declaratory judgment action regarding C.I.A.'s authority to assess fees and obtain liens. In two appellate issues, C.I.A. challenges the trial court's granting of summary judgment in favor of appellees and the trial court's denial of C.I.A.'s motion for summary judgment. We reverse the trial court's summary judgment in favor of the appellees and remand the cause for further proceedings consistent with this opinion.

         BACKGROUND

         Appellees filed a declaratory judgment action against C.I.A., in which they asserted that they own six lots in section one of Hidden Forest Estates subdivision in Montgomery County. According to appellees, none of the deed restrictions applicable to their property impose a maintenance assessment or grant authority for a lien against the property. Appellees alleged that C.I.A.'s attempt to enforce an implied assessment lien against their property was invalid because C.I.A. "was never properly formed or adopted by Hidden Forest property owners as a property owners association." According to appellees' petition, C.I.A. "has attempted to impose rules, regulations, and assessment charges against [appellees]."

         Appellees asserted that in September 2011, they received an initial demand from C.I.A. for $277.00, in which C.I.A. threatened to pursue a lawsuit for nonpayment. Appellees pleaded that they advised C.I.A. that (1) no valid restrictions imposed a maintenance assessment or lien on their property, and (2) C.I.A. was not properly formed in accordance with the Texas Property Code and, therefore, lacked authority over appellees' property. According to appellees, C.I.A. demanded an additional $158.00 in February 2012, and asserted that appellees were bound by a 1997 judgment against another property owner, which permitted C.I.A. to collect maintenance fees and to impose a lien. Appellees state that they responded by informing C.I.A. that they were not parties to the 1997 case. Appellees further pleaded that they requested an inspection of C.I.A.'s records, and that said inspection "provided nothing that authorized a maintenance assessment or lien and produced no statements, invoices, or other documents showing that [appellees] owed a debt or the amount of that debt." In addition, appellees alleged that C.I.A. sent another letter demanding $556.43 in fees and assessments in September 2014, followed by another letter demanding payment of legal fees in the amount of $785.94.

         Appellees requested that the trial court declare that C.I.A. is not a valid property owners association under Texas law and therefore lacks authority to assess any sums against appellees' property or to impose liens on their property. Appellees also sought to recover attorney's fees and costs.

         APPELLEES' MOTION FOR SUMMARY JUDGMENT

         Appellees filed a traditional motion for summary judgment in which they asserted that no genuine issue of material fact exists as to their claim that C.I.A. is not a valid property owners association and therefore lacked the right to impose maintenance fees. Appellees also asserted that C.I.A.'s contention that implied rights and implied covenants allow it to charge maintenance fees is without merit, as is C.I.A.'s assertion that a twenty-year-old holding in a case to which appellees were not parties grants C.I.A. the authority to impose assessments and fines. According to the appellees' motion for summary judgment, none of the deed restrictions applicable to the appellees' property imposed a maintenance assessment or granted authority for a lien against the property. Appellees stated that they had inspected C.I.A.'s records, checked public filings, and concluded that C.I.A. had not taken the required steps to become a valid property owners association.

         Attached to appellees' motion for summary judgment as an exhibit was the affidavit of Larry Harris. In his affidavit, Harris averred that he and Watson own six lots in section one of Hidden Forest Estates. Harris averred that prior to September 2011, C.I.A. "had never sent us a statement purporting to charge us maintenance or other fees in connection with our ownership of property in Hidden Forest." Harris acknowledged that he and Watson paid a pool usage fee of $100 per year between 1993 and 2005. According to Harris's affidavit, he and Watson investigated records of public agencies, including Montgomery County and the State of Texas, to determine whether C.I.A. had taken the proper steps to become a property owners association, and they determined that C.I.A. had not done so. Harris averred that he and Watson have never been asked to sign a petition to create a property owners association in Hidden Forest and are unaware of such a petition being circulated during the time they have owned property or lived there. In addition, Harris averred that he and Watson were not parties to the 1997 litigation between C.I.A. and another homeowner.

         Appellees also attached as an exhibit excerpts from Watson's deposition. During the deposition, Watson testified that nothing in her deed restrictions allows C.I.A. to assess dues or maintenance fees, and the deed restrictions do not mention a homeowners association. Watson testified that she had never paid dues, but only paid $100 annually to use the pool from 1996 until 2005. Also attached as exhibits were fee statements from C.I.A. to Watson. In addition, appellees attached as an exhibit a chain of title summary for the six lots. Furthermore, appellees included as an exhibit a letter from C.I.A.'s counsel, in which C.I.A.'s counsel explained that since the 1997 lawsuit, "it has been the position of [C.I.A.] . . . that it has the good faith, right and obligation to collect assessments [on] behalf of the property owners in the Subdivision . . . [C.I.A.] represents." Counsel's letter also stated that counsel was enclosing C.I.A.'s certificate of account status with the Texas Comptroller of Public Accounts, "which confirms that [C.I.A.] is in good standing with the State of Texas."

         C.I.A. filed a motion to strike Harris's affidavit, the chain of title summary, and the letter from counsel. The trial court signed an order striking only appellees' chain of title summary. C.I.A. also filed a response to appellees' motion for summary judgment, in which it argued that it was incorporated in 1977, twenty years before appellees bought their first lot in the subdivision. C.I.A. asserted that it "gleaned the legal right, duty, and obligation to collect reasonable maintenance fees from subdivision lot owners based on the contracts entered into ...


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