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BCH Development, LLC v. Lakeview Heights Addition Property Owners' Association

Court of Appeals of Texas, Fifth District, Dallas

May 21, 2019


          On Appeal from the County Court at Law No. 1 Dallas County, Texas Trial Court Cause No. CC-13-05900-A

          Before Justices Myers and Brown [1]



         BCH Development, LLC appeals a permanent injunction, granted on motion for summary judgment, prohibiting it from building, on any lot in the Lakeview Heights Addition, a dwelling that has more than one above-ground level or floor of living space or that has a "habitable attic." BCH also challenges a summary judgment against it on its counterclaims against homeowners in the Addition for alleged violations of deed restrictions. BCH raises six issues. For reasons that follow, we affirm in part and reverse and remand in part.


         The Lakeview Heights Addition is a residential neighborhood comprised of the 6100-6300 blocks of Monticello Avenue and the north side of the 6100-6300 blocks of Marquita Avenue in Dallas. There are 104 homes in the Addition and, with one exception, they are all one-story ranch-style houses. Fourteen restrictive covenants for the Addition were filed with the City in 1953. This appeal primarily concerns Covenant 1, which provides:

1. No plot shall be used except for residential purposes. No building shall be erected, altered, placed or permitted to remain on any lot other than one single family dwelling not to exceed one story in height and a private garage.

         BCH is a real estate developer. In June 2013, it purchased the property at 6148 Monticello Avenue. BCH demolished the existing home and posted a City of Dallas permit, issued on September 18, 2013, which indicated there were plans to build a two-story home on the lot. The original construction plans included a "2nd Floor Plan." This second floor living area was to be about 700 square feet and consist of a bedroom, bathroom, and game room.

         Shortly after BCH posted its permit, Barbara Wohlrabe, a resident of the Addition, wrote a letter informing BCH that its permit showed it intended to violate the Addition's restrictive covenants by building a two-story home. On October 10, 2013, Wohlrabe and about thirty other residents of the Addition formed the Lakeview Heights Addition Property Owners' Association.[2]A few days later, the Association and Wohlrabe (collectively the Association) filed suit to enjoin BCH from constructing a home with more than one level or floor of living space and asserted claims for breach, anticipatory breach, and repudiation of the restrictive covenants. The trial court granted temporary relief. After the Association questioned BCH's building plans, the plans were modified to refer to the second level of living space as a "habitable attic," rather than a second floor.

         BCH answered with a general denial and numerous affirmative defenses, including impossibility of performance, waiver, estoppel, and unclean hands. BCH asserted counterclaims against twenty-seven individual members of the Association for alleged breaches of deed restrictions other than Covenant 1. BCH also sought declaratory relief, including a declaration that its construction plans do not violate Covenant 1.

         In three separate motions for summary judgment, all twenty-seven individual homeowners moved for summary judgment on BCH's counterclaims for violations of the restrictive covenants. In February 2014, twenty individuals moved for a partial summary judgment, and later five other homeowners moved for a second partial summary judgment. All twenty-five of these homeowners asserted BCH's claims were barred by the statute of limitations. The remaining two counter-defendants, Christopher and Sandy Stillo, filed their own motion for summary judgment on BCH's claim against them. The Stillos asserted their violation had been corrected and BCH was not entitled to monetary damages or attorney's fees. The trial court granted all three motions.

         The Association also filed a motion for partial summary judgment. The Association asserted it was entitled to judgment as a matter of law on its claims for BCH's breach of the restrictive covenant. It alleged it was undisputed that BCH intends to construct a house with living space on more than one above-ground floor, in violation of the restrictive covenants. The Association further alleged there was no evidence to support some of BCH's affirmative defenses and that other affirmative defenses failed as a matter of law. The Association asserted that under the property code it was entitled to recover its attorney's fees and expenses. It also asserted it was entitled to a permanent injunction as a matter of law.

         In February 2015, the trial court granted the Association's summary judgment motion with the exception of its request for attorney's fees. The court also granted a permanent injunction prohibiting BCH from building a dwelling at 6148 Monticello with more than one above-ground level or floor of living space or with a habitable attic.

         In July 2015, BCH asked the court to reconsider its ruling on the Association's motion for partial summary judgment to the extent it rejected BCH's affirmative defense of impossibility. In October 2015, BCH argued it had obtained proof it was impossible for BCH to comply with an approval process set out in the restrictive covenants. BCH moved to dissolve the injunction due to changed circumstances. Covenants 8 through 10 are relevant to BCH's impossibility defense:

8. No building shall be erected, placed or altered on any lot until the construction plans and specifications and a plan showing the location of the structure have been approved by the Architectural Control Committee, as to quality of workmanship and materials, harmony of external design with existing structures, and as to location with respect to topography and finish grade elevation. . . . Approval shall be as provided in the following paragraphs.
9. The Architectural Control Committee is composed of Marshall Matson, M.I. Harris and M.I. Harris, Jr., all of Dallas, Texas. A majority of the committee may designate a representative to act for it. In the event of death or resignation of any member of the committee, the remaining members shall have full authority to designate a successor…. At any time, the then record owners of a majority of the lots shall have the power through a duly recorded written instrument to change the membership of the committee or to withdraw from the committee or restore to it any of its powers and duties.
10. The committee's approval or disapproval as required in these covenants shall be in writing. In the event the committee, or its designated representative, fails to approve or disapprove within 30 days after plans and specifications have been submitted to it, or in any event, if no suit to enjoin the construction has been commenced prior to the completion thereof, approval will not be required and the related covenants shall be deemed to have been fully complied with.

         BCH argued it had learned all members of the original Architectural Control Committee (ACC) are deceased and no replacements had been named. BCH sought the ACC's approval of its building plans and argued the fact that there were no living ACC members meant its plans were deemed approved. According to BCH, the injunction was improper and should be dissolved. The trial court denied both the motion to reconsider and the motion to dissolve.

         In June 2016, there was a jury trial on the Association's claim for attorney's fees. The jury determined the Association's reasonable attorney's fees through trial were $290, 000, with additional amounts for the appeals process. In January 2017, before entry of a final judgment, the Association moved to modify the permanent injunction to extend to all lots in the Addition. The trial court granted the request and amended the injunction in March 2017. In October 2017, the trial court entered a final judgment awarding the Association attorney's fees.[3] This appeal followed.

         A. Enforcement of Restrictive Covenant 1 against BCH

         BCH brings four issues which challenge the summary judgment and permanent injunction enforcing Covenant 1 against it. When a party seeks an injunction to enforce a restrictive covenant, the movant must prove that the defendant intends to do an act that would breach the covenant. Marcus v. Whispering Springs Homeowners Ass'n, 153 S.W.3d 702, 707 (Tex. App.-Dallas 2005, no pet.). We review the grant of a permanent injunction for an abuse of discretion. Lagos v. Plano Econ. Dev. Bd., Inc., 378 S.W.3d 647, 650 (Tex. App.-Dallas 2012, no pet.). The standard of review becomes somewhat more complex when, as here, the request for injunctive relief is granted pursuant to a grant of summary judgment. Id. With the standards of review for injunctive ...

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