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The Landing Community Improvement Association, Inc. v. Young

Court of Appeals of Texas, First District

May 22, 2018

PAUL T. YOUNG, Appellee

          On Appeal from the 56th District Court Galveston County, Texas Trial Court Case No. 13-CV-0293

          Panel consists of Chief Justice Radack and Justices Jennings and Bland.


          Terry Jennings, Justice

         Appellee, Paul T. Young ("Young"), has filed a motion for en banc reconsideration of our September 7, 2017 opinion and judgment. See Tex. R. App. P. 49.7. We deny Young's motion for en banc reconsideration, but withdraw our opinion of September 7, 2017, vacate our judgment of the same date, and issue this opinion and judgment in their stead.

         Appellant, The Landing Community Improvement Association, Inc. (the "Association"), challenges the trial court's judgment, entered after a jury trial, in favor of Young on his counterclaims against it for intentional infliction of emotional distress and a declaratory judgment. In five issues, the Association contends that the evidence is legally and factually insufficient to support the trial court's judgment, and the trial court erred in declaring "void" the Association's Exterior Maintenance Guidelines, awarding Young attorney's fees, applying settlement credits, assessing costs, and not dismissing Young's counterclaims as barred by the judicial-communications privilege.

         We affirm in part and reverse in part.


         The Association is a homeowners' association and non-profit corporation that governs The Landing, Section One, a residential subdivision located in League City, Texas. In its second amended petition and application for permanent injunction, the Association alleged that it was organized for the purpose of promoting the health, recreation, and welfare of all residents and owners within the subdivision; enhancing and protecting the value, desirability, and attractiveness of the land and improvements; managing and maintaining all common areas within the neighborhood; collecting maintenance assessments; providing common services for the subdivision; and enforcing the "Declaration of Covenants, Conditions, and Restrictions" (the "Deed Restrictions"), which govern each of the lots in the subdivision.

         The Association asserted that the Deed Restrictions, article III, "Use and Building Restrictions, " provides, in pertinent part, as follows:

Section 2. Architectural Control. No building or other structure shall be . . . altered on any Lot until the . . . specifications therefore . . . have been approved by the Architectural Control Committee ["ACC"] as to harmony with existing structures, with respect to exterior design and color with existing structures.
. . . .
Section 4. Type of Construction, Materials and Landscape.
. . . .
(b) No external roofing material other than 235# minimum
composition shingles of a wood tone color shall be constructed or used on any building in any part of the Properties unless the [ACC] shall, in its discretion, permit the use of other roofing materials, such permission to be granted in writing . . . .
. . . .
Section 7. Annoyance or Nuisances. (a) No noxious or offensive activity shall be carried on upon any Lot nor shall anything be done thereon which may become an annoyance to the neighborhood. . . .

         And article IV, "Architectural Control Committee, " provides, in pertinent part, as follows:

Section 1. Approval of Building Plans. No building shall be . . . altered on any Lot until the . . . specifications . . . have been approved in writing as to harmony of exterior design and color with existing structures . . . . A copy of the . . . specifications . . . together with such information as may be deemed pertinent, shall be submitted to the [ACC] . . . prior to commencement of construction. The [ACC] may require the submission of such other documents as it deems appropriate, in such form and detail as it may elect at its entire discretion.

         Further, article VI, "Covenant for Maintenance Assessments, " provides, in pertinent part, as follows:

Section 1. Creation of the Lien . . . . [E]ach owner of any Lot, by acceptance of a deed therefor, whether or not it shall be so expressed in such deed, is deemed to covenant and agree to pay to the Association annual maintenance charge assessments ["maintenance
assessments"]. . . . The [maintenance assessments], together with interest, costs, and reasonable attorney's fees, shall be a charge on the Lot and shall be a continuing lien upon the Lot against which each such assessment[s are] made. . . .
. . . .
Section 7. Effect of Nonpayment of Assessments . . . . If any
[maintenance assessments are] not paid within thirty (30) days from the due date thereof, the same shall bear interest from the due date until paid . . . . The Association may bring an action at law against the [o]wner personally obligated to pay the same, or foreclose the lien created hereby against the Lot.

         The Deed Restrictions further provide:

Upon any violation or attempt to violate any of the covenants herein, it shall be lawful for the Association . . . to prosecute any proceedings at law or in equity against the person or persons violating or attempting to violate any such covenant and either to prevent him or them from doing so or to recover damages or other dues for such violations.

         The Association further alleged that in 2001, its Board of Trustees (the "Board") adopted "Exterior Maintenance Guidelines" (the "Guidelines"), which it recorded in the real property records of the Galveston County Clerk's Office. The Guidelines provide, in pertinent part, that

All improvements on a lot must be maintained in a state of good repair and shall not be allowed to deteriorate. Repairs shall include, but [are] not limited to, the following:
1. All painted surfaces must be clean and smooth with no bare areas or peeling paint . . . .
2. All rotted and damaged wood must be replaced. . . .
. . . .
4. Roofs must be maintained in good repair with no missing or curling shingles.
. . . .
10. There shall be no storage of clutter and debris in public view.

         In 1992, Young purchased in The Landing subdivision a house, which was conveyed subject to "all restrictions, easements, covenants, and conditions of record." He subsequently allowed the roof of his house to deteriorate to such an extent as to be unsightly, with missing and curling shingles, and large bare and discolored areas. And, despite "numerous written requests" from the Association, its representatives, and its attorney to comply with the Deed Restrictions, Young had "failed and/or refused" to replace the roof of his house with ACC pre-approved roofing materials; remove a large tree stump from his front yard; re-paint the trim, fascia boards, and shutters of his house with an ACC pre-approved paint color; and repair his fence and gate, which had "been allowed to deteriorate to such a state as to become unsightly."

         After the Association filed the instant suit, Young cut down the tree stump. However, he continued to store the cut piece in open view against his fence. And although he did replace some of the shingles on the roof of his house, "it appear[ed] that [he] did not use the proper type of roofing shingles, " and the roof remained unsightly.

         The Association sought injunctive relief, asserting that the condition of Young's property constituted a "nuisance and annoyance to the surrounding neighborhood, and an eyesore to the community." And "unless [Young] is compelled to comply, the [Deed Restrictions] may become meaningless and potentially unenforceable, thereby adversely affecting property values within the neighborhood, and adversely affecting all present and future owners of property within The Landing community." It requested an order directing Young to "completely and fully replace the entire roof of . . . [his house], with roofing materials which have been pre-approved by [the Association]"; "fully repair and repaint the trim, exterior wood surfaces, siding, fascia boards, and shutters of [his] house . . . with a paint color which has been pre-approved by [the Association]"; "completely and fully remove the tree stump located in the front/side yard of [his] property; and store the tree stump away from public view. The Association also requested statutory[1] damages in the amount of $200 per day for each day that Young was found to be, or to have been, in violation of the Deed Restrictions.

         The Association further alleged that, despite its written requests, Young had "failed and refused" to pay the maintenance assessments and charges that had accrued against his property. Although Young had submitted one or more personal checks, he made notations on each as follows: "paid in full" or "full payment of account." The Association did not accept his checks because they did not "constitute a payment, in accordance with Texas Law." Thus, it sought a judgment against Young in the amount of $1, 603.99 for delinquent maintenance assessments, interest, and costs. The Association further, in response to Young's unpaid annual maintenance assessments, sought, as provided for in the Deed Restrictions, a judgment foreclosing its continuing lien against his property.

         In his answer, Young generally denied the Association's claims, and he brought counterclaims against it.[2] In his third amended counterclaims, Young alleged that since 1992, when he purchased his house in The Landing, he has attempted to abide by each of the covenants, outlined in the Deed Restrictions, and timely paid his annual maintenance assessments to the Association. In 2003, he replaced the roof of his house; re-painted his house, changing it from a chocolate-brown color to a cream color; replaced all of his siding, windows, and exterior doors; replaced and added new light fixtures to the exterior; and replaced his garage doors. Subsequently, after some of the shingles were blown off of his roof during a storm, he replaced them using spare shingles that he had purchased when he replaced his roof.

         In January 2012, Michael Treece, the Association's attorney, sent to Young a letter ordering him to "completely re-roof his home." The Association required that he return a completed ACC form, along with documentation of the proposed roofing material, including style, strength, and color, within ten days of the date of the letter. It further required that he replace his roof within twenty days after receiving notice of ACC approval of the roofing materials. Young, in a letter to Treece, explained that he "faced physical and financial limitations due to disability and being out of work."

         In February and May 2012, Treece sent to Young letters, again requiring that he replace his entire roof with materials preapproved by the ACC. Although Treece acknowledged Young's concerns and offered a "few months" to comply, "[n]o hearing or appeal was offered, " and Young was "told [it] was his 'final notice.'"

         In September 2012, Treece sent to Young a letter, demanding that he replace his roof with ACC pre-approved materials. Noting that the paint on Young's house was faded and peeling, the Association also demanded that he re-paint its trim, fascia boards, and shutters. However, according to Young, his house had no faded, peeling, or bare paint; "only [a] relatively small number of shingles were missing" from his roof; other houses in The Landing had weathered, discolored, or missing shingles, or had replacements made with shingles of mixed colors; and he had replaced individual shingles on his house with shingles left over from the 2003 roof replacement. He asserted that the Deed Restrictions did not require him to completely re-paint or re-roof his house; it would take time for the replacement shingles to weather and match the rest of the roof; and the Association's demand that he replace his entire roof was "arbitrary, capricious, and discriminatory" and "part of a plan to force [him] from the subdivision."

         Also, "sometime in 2012, " the Association sent to Young a letter, "request[ing]" that he remove a tree stump from his front yard. Although he complied, he noted that there were tree stumps in other yards in The Landing and the Association did not send violation letters to those homeowners.

         Young further alleged that the Association had "deliberately and knowingly misapplied" his checks for maintenance assessments for "the years of 2007 through 2011." And in May 2011, Margaret Eckhardt of AVR Management Consultants, Inc. ("AVR"), [3] a property management company representing the Association, notified him that he was delinquent in paying his 2011 maintenance assessments. Young responded that he had timely "dropped [payment] in the mail slot at the club house the last weekend of January, " as he "ha[d] done many times over 19 years." Eckhardt, in a letter dated May 10, 2011, wrote to Young:

We are in receipt of your letter informing us of the payment made for your 2011 Maintenance Fees in January. In reviewing your account I do see where you have always made payments on time and I apologize for this inconvenience.

         And Eckhardt noted that his payment may have been "thrown away by mistake." Young provided Eckhardt with a replacement check, marked "paid in full, " and he included a letter stating that his check would pay his account "in full in its entirety." And the Association accepted and cashed his check. According to Young, he has "always" written "paid in full" on the checks that he sent to the Association to pay his maintenance assessments.

         In 2012, after Young submitted a check to pay his 2012 maintenance assessments, Treece sent to him a letter, returning the check and claiming that his account had a balance of $487.31 outstanding from 2011. In March 2013, Young re-issued a check for his 2012 maintenance assessments and submitted it and another check to pay his 2013 maintenance assessments. On September 18, 2013, however, the Association returned both checks.

         Young further alleged that "[f]or years, he has been assessed fees, fines, and charges by the [Association] . . . for allegedly violating [the] Deed Restrictions, which [he] has never violated." He has "undergone continued threats and harassment by [the Association] . . . to intentionally instill fear in [him] that he might lose his homestead of over twenty years." Young has been "victimized by . . . deliberate, knowing, and intentional unlawful enforcement [of the Deed Restrictions], when there was no proper basis for enforcement actions against him before and during this lawsuit." And Eckhardt had driven by his house "several times on one day to taunt him."

         Young brought counterclaims against the Association for breach of fiduciary duty, breach of contract, intentional infliction of emotional distress, and a declaratory judgment. In his claim for intentional infliction of emotional distress, Young asserted that the Association, after having been informed of his financial hardship, refused his checks for maintenance assessments and charged him "unlawful fees." And it required that he make over $13, 000.00 in repairs to his house that were not required under the Deed Restrictions. The Association's conduct was extreme and outrageous, and it intended to harm Young financially and personally by forcing him to move from the subdivision. He further asserted that the fear of losing his house caused him extreme emotional distress; he was, at the time, in pain from multiple surgeries and particularly susceptible to emotional distress; he could not sleep, "especially on days when a letter came from Treece or Eckhardt"; the "continued harassment" by the Association caused him to be depressed and in "constant fear and worry of losing his home, " which would subside only until the next letter came; and he has "not had any peace" since the Association filed its lawsuit. Young generally sought damages in the amount of at least $95, 190.00. Young further sought declarations that

• the Deed Restrictions have an express designation . . . that provides for the extension of, addition to, or modification of the existing restrictions by a designated number of owners of real property in the subdivision[;]
• the Deed Restrictions . . . prevail over the provisions of Texas Property Code Chapter 204[4];
• the Deed Restrictions do not have exterior maintenance guidelines and that the homeowners have not approved any extension of, addition to, or modification of the Deed Restrictions by a vote of the majority[;]
• the Deed Restrictions do not allow the [Association] to impose a $200 punitive per diem fine for alleged deed restriction violations but only allow for the recovery of costs and attorney fees[;]
• [Texas Property Code section 202.004[5], which purports to allow the [Association] to charge a $200 punitive per diem fine is unconstitutional, violates public policy, is inequitable and contrary to Texas common law[;]
• the [Association] ha[s] used the address at 1109 Landing Blvd., League City, Texas 77573 to conduct transactions between themselves and the homeowner's of the Landing Subdivision . . .[;]
• the [Association] ha[s] instructed the Landing subdivision residents to deposit "money in the drop box (below the mail box)" at 1109 Landing Blvd., League City, Texas 77573[;]
• when he deposited the payment for 2012 and 2013 assessments, respectively, in the "drop box" . . . and [the Association] acknowledged receipt of the payment, that Young had fulfilled his legal obligation to pay assessments under the Deed Restrictions requiring annual payment of his homeowner's fees[;]
• the [Association] [is] not entitled to extra fees, expenses, and attorney's fees over and above Young's Assessment payments if Young's payment was received but lost[;]
• the [Association] [is] not entitled to extra fees, expenses, and attorney's fees over and above Young's annual homeowner's fees if Young's payment was received but returned unprocessed (not cashed) . . . [;]
• the Deed Restrictions in Article III, Sec. VII, titled Annoyance or Nuisances is ambiguous[;]
• the [Association] failed to comply with all the requirements of the Tex. Prop. Code [ch.] 209[6] applicable to Young, which requires the [Association] to send Young a certified letter stating the exact violation, corresponding Tex. Prop. Code, corresponding Deed Restriction, charges, if any, and that Young had thirty (30) days in which Young could request a hearing, and Tex. Prop. Code [ch.] 209[7] wherein the [Association] was required to process and apply Young's Assessment payments for 2012, 2013 and 2014 to his [Association] account[; and, ]
• [he] had to hire an attorney to . . . prosecute [his claims].

         The Association filed an answer, generally denying Young's claims against it, and it asserted several affirmative defenses, including "absolute and litigation immunity."

         At trial, Young testified that he had in the past, as a member of Midtown Park Development Ltd., LLC, developed residential subdivisions of over 200 homes. He is familiar with the governing documents pertinent to residential real estate development, i.e., deed restrictions. And he agreed that his house is subject to The Landing's Deed Restrictions, which provide for the creation of an ACC. However, he had "one of the few homes in the neighborhood that has new siding, new paint, new front and back doors, new windows, new roof, new garage door, and new back porch in the last ten years." Thus, he did not understand why the Association was perpetually harassing him with violation letters.

         The trial court admitted into evidence a series of letters, dated from 1993 to 2013, between Young and the Association; its previous attorney, Charles A. Daughtry, and later, Treece; its previous property management company, Houston Community Management Services, and beginning in 2006, AVR. Each of the letters from the Association, and its property managers and attorneys, cites various violations of the Deed Restrictions. Young explained that, in each instance, he did not request a hearing on the complained-of matter because "[i]t wasn't necessary."

         On February 27, 2012, Treece sent to Young a letter, stating as follows:

The undersigned attorney has been retained by [the Association] to enforce the deed restrictions which govern the above-referenced property. Please be advised that the following conditions which exists on said property constitute direct violations of the deed restrictions: 1) the commercial vehicle (18 wheeler rig parked/stored on the driveway must be removed from the neighborhood, immediately and permanently; 2) the entire roof of the house must be replaced with new ACC pre-approved roofing materials; and 3) the tree stump must be removed, completely. . . .
Please note that all exterior improvements, including roofing materials must be pre-approved, in writing, by the Association's [ACC], prior to the start of such a project. Please complete the enclosed ACC application and return the document along with documentation of proposed roofing materials, including style, strength, and color of shingles to this office within ten (10) days. . . .
Accordingly, please accept this letter as the Association's formal demand that you remove the large commercial vehicle, permanently, from the neighborhood within (3) days of the da[te] of this letter and remove the tree stump within ten (10) days of the date of this letter. In addition, you must return the completed ACC form along with roofing material information within ten (10) days of the date of this letter. The entire roof of the house must be replaced within twenty (20) days, after receiving notice of the ACC approval of the roofing materials. Inasmuch as you have failed to respond to the Association's previous requests, if corrective actions are not completed as requested herein, my client may have no choice but to file a lawsuit, seeking a court order requiring you to ...

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