Benders Landing Estates Prop. Owners Ass'n, Inc. v. Lgi Land, LLC

• Decision Date: 08 March 2018
• Docket Number: NO. 09-16-00183-CV,09-16-00183-CV
• Parties: BENDERS LANDING ESTATES PROPERTY OWNERS ASSOCIATION, INC., Appellant v. LGI LAND, LLC, Appellee
• Court: Texas Court of Appeals

BENDERS LANDING ESTATES PROPERTY OWNERS ASSOCIATION, INC., Appellant v. LGI LAND, LLC, Appellee

NO. 09-16-00183-CV

Court of Appeals Ninth District of Texas at Beaumont

Submitted on October 20, 2017

March 8, 2018

On Appeal from the 284^th District Court Montgomery County, Texas

Trial Cause No. 15-03-03011-CV

MEMORANDUM OPINION

Appellant Benders Landing Estates Property Owners Association, Inc. (BLE POA) initiated suit against Appellee, LGI Land, LLC, by filing its application for temporary restraining order, temporary injunction, permanent injunction, and original petition. BLE POA filed its first amended petition, eliminating claims for breach of contract and injunctive relief, but still sought a declaratory judgment pursuant to Chapter 37 of the Texas Civil Practice and Remedies Code and attorney's fees. See generally Tex. Civ. Prac. & Rem. Code Ann. §§ 37.001-.011 (West 2015). BLE POA is the property owners association for the Benders Landing Estates community, and LGI is the property developer of that community. The dispute concerns the transfer of certain rights and obligations between the parties pursuant to a restrictive covenant and an instrument entitled Assignment of Developer's Rights.

On October 7, 2015, the trial court denied BLE POA's traditional motion for summary judgment and granted LGI's traditional motion for partial summary judgment. The trial court's order declared the Assignment was "valid and binding." BLE POA appeals the denial of its traditional motion for summary judgment. In two issues on appeal, BLE POA asks first, whether the trial court erred in denying its motion for summary judgment and second, whether the trial court abused its discretion by granting attorney's fees to LGI. We reverse and render in part and remand in part.

Background

As the property developer, LGI executed the Declaration of Covenants, Conditions and Restrictions for the Benders Landing Estates community on May 12, 2011, and filed the Declaration in the real property records on May 13, 2011. Certainrights and powers would pass from LGI to BLE POA on the "Control Transfer Date," as set forth in article VII, section 7.01 of the Declaration. Section 7.01 provides in pertinent part, "Developer shall have, retain and[,] reserve certain rights as hereinafter set forth with respect to the Association from the date hereof, until . . . the Control Transfer [D]ate[.]" The Control Transfer Date is defined in article IV, section 4.02(b) as occurring "[a]t the discretion of the Developer or in any event at such time as eighty percent (80%) of the Lots in all sections of the Subdivision are conveyed by Developer . . . ." The parties agree that the Control Transfer Date described in the Declaration occurred on March 1, 2013, and the rights of LGI passed to BLE POA at that time.

The dispute arose following the execution of the Assignment of Developer's Rights by the parties on March 26, 2013. That document acknowledged the Control Transfer Date of March 1, 2013; however, that instrument also contained express language that the "Assignment shall be effective as the Control Transfer Date on March 1, 2013, regardless of the last date executed below." The Assignment attempts to reserve and carve-out rights to be held by LGI, while at the same time attempting to have BLE POA "grant" rights back to LGI that had already transferred to BLE POA. The Assignment states the "Assignor desires to assign all of its rights and powers under the Declarations (including these referenced in Article IV, Section4.02(b) of the Declarations) to Assignee except those rights reserved, carved out and excluded below, and Assignee desires to accept the assignment thereof" (emphasis in original). The Assignment provides

Assignor hereby assigns and transfers to Assignee all of the Assignor's remaining rights and powers (including, without limitation, the power to grant any consents and approvals) under the Declarations except those rights specifically enumerated in "a." through "i." below, and Assignee hereby accepts the assignment of Assignor's rights and powers under the Declarations. This Assignment intends to assign from Assignor to Assignee the full and complete power and authority which the Assignor has or may have under the Declarations, except for and as to those reserved rights and carve-outs/exclusions, below. This Assignment does not pass any liabilities from Assignor to Assignee that may have been incurred by Assignor prior to the effective date of this Assignment. Assignee grants to Assignor, and consents to and approves Assignor's reservations, carve-outs and exclusions, and Assignor specifically accepts Assignee's grant, consent and approval and reserves unto itself the following rights and carves out and excludes each from this assignment[.] (emphasis in original).

The Assignment goes on to list certain enumerated rights and powers in provisions "a" through "i" that LGI would continue to hold. The language contained in the Assignment is contrary to the Declaration, which provided that the rights and powers held by LGI transferred to BLE POA upon the Control Transfer Date.

BLE POA asserted that the rights of LGI automatically transferred to BLE POA on the Control Transfer Date of March 1, 2013. Accordingly, BLE POA argued in its Amended Motion for Summary Judgment that the Assignment was an improper reservation of rights that LGI no longer held, because they expired on March 1, 2013.BLE POA further asserted that the reservations by LGI in the Assignment were an attempt to circumvent the provisions in the Declaration by reserving control after the Control Transfer Date, and the attempted reservations were void ab initio. Finally, BLE POA argued that by adding rights and powers into the Assignment, LGI attempted to amend the Declaration in violation of article IX, which outlines the amendment procedures, and the BLE POA's Articles of Incorporation.

LGI filed its traditional motion for partial summary judgment claiming the Assignment was a valid, enforceable contract and sought a declaration of the same. LGI's motion did not address the issue of attorney's fees, but rather asked the trial court to consider them separately, depending on the court's ruling on its summary judgment motion. BLE POA filed a traditional motion for summary judgment and an amended motion for summary judgment seeking a declaration from the trial court that provisions 1(a) through 1(i) of the Assignment are void ab initio and are of no force and effect and that the Control Transfer Date occurred on March 1, 2013.

Standard of Review

We review a trial court's summary judgments de novo. See Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 156 (Tex. 2004). When the parties file cross-motions for summary judgment and one motion was granted, but the other denied, the appellate court should determine all questions presented and may reverse the trialcourt's judgment and render such judgment as the trial court should have rendered, including rendering judgment for the other movant. Jones v. Strauss, 745 S.W.2d 898, 900 (Tex. 1988). In making its determination, the appellate court should review the summary judgment evidence presented by both sides. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000). When a trial court's order granting summary judgment does not specify the grounds relied upon, the reviewing court must affirm summary judgment if any of the summary judgment grounds are meritorious. Id. at 872. Moreover, "the appealing party must show it is error to base [summary judgment] on any ground asserted in the motion." Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995). Additionally, we review a trial court's interpretation of restrictive covenants de novo. Raman Chandler Props., L.C. v. Caldwell's Creek Homeowners Ass'n, 178 S.W.3d 384, 390 (Tex. App.—Fort Worth 2005, pet. denied).

Analysis

In its first issue, BLE POA argues the trial court erred when it failed to grant its motion for summary judgment.

The Declaration executed by LGI on May 12, 2013, and recorded on May 13, 2013, constitutes the original restrictive covenants for the real property involved in this case. The Assignment subsequently executed by the parties attempted to amendand substantively alter the rights and powers under the Declaration and, unlike the original Declaration, the Assignment contained no expiration date. The plain meaning of the term "amend" is to change, correct, or revise. Cont'l Cars, Inc. v. Tex. Motor Vehicle Comm'n, 697 S.W.2d 438, 441 (Tex. App.—Austin 1985, writ ref'd n.r.e.). In theory, under the Assignment, LGI could retain the enumerated rights and powers in perpetuity, which directly contradicts the "Period of Developer's Rights and Reservations" contained in article VII, section 7.01 of the Declaration. The language of the Assignment would, if valid, broaden the powers of LGI to amend plats, annex property, and modify designated Reserves without further consent of BLE POA. Although styled as an "Assignment," the substance of the instrument would amend and contradict the material terms of the original Declaration.

BLE POA argues it is entitled to summary judgment based upon the original restrictive covenant and seeks a declaration that provisions 1(a)-1(i) of the Assignment are void ab initio and are of no force and effect and a declaration that the Control Transfer Date occurred on March 1, 2013. LGI, on the other hand, claims it is entitled to summary judgment based on the amendment contained in the Assignment, which LGI contends incorporates the theory of modification of theoriginal contract. See Dyegard Land P'ship v. Hoover, 39 S.W.3d 300, 308 (Tex. App.—Fort Worth 2001, no pet.).

"A declaration containing restrictive covenants in a subdivision defines the rights and obligations of property ownership, and the mutual and reciprocal obligation undertaken by all purchasers in a subdivision 'creates an inherent property interest possessed by each...