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Roddy v. Holly Lake Ranch Association, Inc.

Court of Appeals of Texas, Twelfth District, Tyler

December 11, 2019


          Appeal from the 402nd District Court of Wood County, Texas Tr.Ct.No. 2017-523

          Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.


          Brian Hoyle, Justice.

         Ronald Roddy, Jay Blint, Patsy Jones, Kenneth Mangham, and Shonna L. Mulkey (collectively Appellants) appeal the trial court's declaratory summary judgment and award of attorney's fees rendered in favor of Appellee Holly Lake Ranch Association, Inc. Appellants raise three issues on appeal. We reverse and render in part, remand in part, and affirm in part.


         Holly Lake Ranch is a planned community with multiple subdivisions located in Wood County, Texas. Its amenities include a golf course, a clubhouse, and a restaurant. The community has grown in phases since it originated and, now, has thirty-two subdivisions, each with its own deed restrictions.

         The Holly Lake Ranch Association (HLRA) is an incorporated nonprofit entity that serves as the homeowners' association for the community. According to its articles of incorporation, HLRA was formed for the purpose of "holding, maintaining[, ] and developing the common or recreational facilities which have been installed or are to be installed for the beneficial use and enjoyment of the owners of lots" in the community. The articles further set forth HLRA's purposes as "charging fees and assessments of the members of the corporation for any purpose" and "adopting such rules and regulations for the use of property held by the corporation as may be necessary." Each owner in the community is required to be a member of HLRA and is subject to its bylaws[1] in addition to the deed restrictions of the subdivision in which the lot is located.

         HLRA's bylaws set forth its purpose of facilitating the fulfillment of the purposes provided in HLRA's articles of incorporation and state that they are subject to the deed restrictions. The bylaws further set forth that member voting rights follow the rule of one vote per member regardless of the number of lots owned. But the bylaws also specify that in a property owner vote to amend deed restrictions, the rule stated in the deed restrictions of one vote per lot owned shall be followed.

         The bylaws set forth the authority of HLRA's board of directors, in pertinent part, as follows:

The business and affairs of the association shall be managed by its Board of Directors, who may exercise all such powers of the Association and do all such lawful acts as are permitted by the Texas Business Organizations Code, the Texas Property Code, other governing statutes, the Articles of Incorporation, the Deed Restrictions, and these Bylaws, subject however, to the prohibitions stated herein. The board of directors may not[, ] . . . without the approval of fifty-one percent (51%) of the members voting in a binding referendum [impose] [a]ssessments of any kind.

         The bylaws further place the authority in the board of directors to alter, amend, or repeal the bylaws, subject to the members' right to modify or divest the board of directors of this authority by a majority vote.

         The instant case concerns amendments to the deed restrictions passed in several of the subdivisions. Paragraph 18 of the deed restrictions sets forth, in pertinent part, as follows:

[M]embership shall also be conditioned upon payment, when due, of such dues, fees, and maintenance charges as the Association shall find necessary for the maintenance of the Association facilities and services, including but not limited to the maintenance of lanes, roads, parks, club house and lakes and any other services and benefits which said Association may provide for the benefit of the lots, Association facilities, and Members.

         Paragraph 18 further sets forth that members are to be subjected to an annual fee and maintenance charge per lot, which is secured by a vendor's lien on the lot. It further states that the developer may waive, either temporarily or permanently, the fee and maintenance charge against any lot or tract if its owner has purchased another lot or tract within the subdivision which is subject to such charges.

         Moreover, Paragraph 26(c) of the deed restrictions sets forth as follows:

Any or all of the restrictions, covenants[, ] and conditions herein contained may be repealed, amended[, ] or modified at any time by a majority vote of the lot owners in the Subdivision, each then existing lot entitling its owner to one(1) vote. Such repeal, amendment[, ] or modification shall be effected by an instrument in writing executed by such majority of said lot owners, and filed of record in the Office of the County Clerk of Wood County, Texas.

         Between 2014 and 2017, property owners from multiple subdivisions voted to amend their respective deed restrictions. Although the outcome and number of amendments varied by subdivision, the resulting amendments relevant to this matter are summarized as follows:

• Addition of a 51% voting requirement for dues, assessments, or fees.
• Confirms that each lot entitles owner to one vote.
• Provides mandatory waiver of duplicate dues, fees, and/or assessments for additional lots. Waiver applies to subsequent buyers with multiple lots.
• Amount of monthly dues changed.
• Restricts lien to dues, fees, or assessments for construction or repair.

         HLRA filed the instant suit on August 30, 2017, seeking a declaratory judgment that the amendments are void. It further alleged breach of contract and sought monetary relief, injunctive relief, and attorney's fees. Thereafter, it filed a traditional motion for summary judgment, to which Appellants responded.

         The trial court granted HLRA's motion for summary judgment and, ultimately, rendered a declaratory judgment that (1) the amendments to the subdivision restrictions at issue are void and of no further legal effect and (2) votes cast by members of the Holly Lake Ranch subdivision members in the future will be allocated as follows: "each member who owns a lot is entitled to one vote, regardless of how many lots that member might own, and regardless of how many persons, or entities, might share the ownership rights to that member's lot." The trial court also awarded attorney's fees to HLRA. This appeal followed.

         Declaratory Judgment

         In their first issue, Appellants argue that the trial court erred in granting summary judgment in favor of HLRA and rendering a declaratory judgment that the amendments at issue are void. In their second issue, Appellants argue that the trial court erred in granting summary judgment in favor of HLRA and rendering a declaratory judgment that the deed restrictions allocated votes for an amendment at one vote per member regardless of the number of lots owned by that member.

         Standards of Review

         To prevail on a traditional Rule 166a(c) summary judgment motion, a movant must prove that there is no genuine issue regarding any material fact and that it is entitled to judgment as a matter of law. See Tex. R. Civ. P. 166a(c); Little v. Tex. Dep't of Criminal Justice, 148 S.W.3d 374, 381 (Tex. 2004). A plaintiff moving for a traditional summary judgment must conclusively prove all essential elements of its claim. See Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999).

         On appeal, we review de novo a trial court's summary judgment ruling. See Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). In our review, we consider all the evidence in the light most favorable to the nonmovant, crediting evidence favorable to the nonmovant if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not. See Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006); English v. B.G.P. Int'l, Inc., 174 S.W.3d 366, 370 (Tex. App.-Houston [14th Dist.] 2005, no pet.).

         In reviewing a declaratory judgment, we refer to the procedure for resolution of the issue at trial to determine the applicable standard of review on appeal. See Tex. Civ. Prac. & Rem. Code Ann. § 37.010 (West 2015); English, 174 S.W.3d at 370; see also Gen. Agents Ins. Co. of Am. v. El Naggar, 340 S.W.3d 552, 557 (Tex. App.-Houston [14th Dist.] 2011, pet. denied). Here, because the trial court resolved the declaratory judgment issues by ruling on motions for summary judgment, we review the propriety of the trial court's grant of the declaratory judgment under the same standards applicable for review of summary judgments. See English, 174 S.W.3d at 370. Therefore, we must determine whether the trial court properly granted HLRA's declaratory judgment requests and, if not, render the judgment which should have been rendered by the trial court. See id.

         Construction of Section 26(c)

         We first consider whether the trial court correctly construed Section 26(c). A restrictive covenant is a contractual agreement between the seller and the purchaser of real property. Ski Masters of Tex., LLC v. Heinemeyer, 269 S.W.3d 662, 667 (Tex. App.-San Antonio 2008, no pet.). When construing a restrictive covenant, appellate courts apply general rules of contract construction. Pilarcik v. Emmons, 966 S.W.2d 474, 478 (Tex. 1998); Ski Masters, 269 S.W.3d at 668. Covenants are examined as a whole in light of the circumstances present when the parties entered into the agreement. Ski Masters, 269 S.W.3d at 667. The reviewing court's primary intent is to ascertain and give effect to the true intention of the parties as expressed in the instruments. Owens v. Ousey, 241 S.W.3d 124, 129 (Tex. App.-Austin 2007, pet. denied). A restrictive covenant should be liberally construed "to give effect to its purposes and intent." Tex. Prop. Code Ann. § 202.003(a) (West 2014). A trial court's construction of a restrictive covenant is reviewed de novo. Owens, 241 S.W.3d at 129.

         As set forth previously, Section 26(c) states, in pertinent part, that any of the restrictions may be amended by a majority vote of the lot owners in the subdivision, each then existing lot entitling its owner to one vote. Appellants argue that this italicized clause means that, for example, if someone owns three lots in the subdivision, that person is entitled to three votes regarding a proposed amendment to the deed restrictions. On the other hand, HLRA contends that this language is intended to address only a situation wherein a lot has multiple owners and to restrict each lot to one vote, regardless of the number of lot owners. But the mere fact that the parties disagree about its meaning does not make an otherwise straightforward instrument ambiguous. See Transcon. Gas Pipeline Corp. v. Texaco, Inc., 35 S.W.3d 658, 665 (Tex. App.-Houston [1st Dist.] 2000, pet. denied). ...

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