Davis v. Canyon Creek Estates Homeowners Ass'n

• Decision Date: 19 August 2011
• Docket Number: No. 04–10–00725–CV.,04–10–00725–CV.
• Citation: 350 S.W.3d 301
• Parties: Luis DAVIS, Trustee of the Davis Family Blanco Road Property Trust, Appellant,v.CANYON CREEK ESTATES HOMEOWNERS ASSOCIATION, et al., Appellees.
• Court: Texas Court of Appeals

350 S.W.3d 301

Luis DAVIS, Trustee of the Davis Family Blanco Road Property Trust, Appellant,

v.CANYON CREEK ESTATES HOMEOWNERS ASSOCIATION, et al., Appellees.

No. 04–10–00725–CV.

Court of Appeals of Texas, San Antonio.

July 13, 2011.Rehearing Overruled Aug. 19, 2011.

From the 224th Judicial District Court, Bexar County, Texas, Trial Court No. 2006–CI–12456; Martha Tanner, Judge Presiding.¹William D. Crist, Law Office of Christopher J. Weber, L.L.C., San Antonio, TX, for Appellant.G. Wade Caldwell, Barton, East & Caldwell, L.L.P., San Antonio, TX, for Appellees.Sitting: KAREN ANGELINI, Justice, STEVEN C. HILBIG, Justice, concurring in the judgment only, MARIALYN BARNARD, Justice.

OPINION

Opinion by: MARIALYN BARNARD, Justice.

This is an appeal by Luis Davis, Trustee of the Davis Family Blanco Road Property Trust (“the Trust”) from a trial court's order granting summary judgment in favor of Canyon Creek Estates Homeowners Association (“the Association”) in a case involving restrictive covenants. This case was previously appealed to this court, and we affirmed the trial court's partial summary judgment order. See Davis Family Blanco Rd. Prop. Trust v. Canyon Creek Estates Homeowners Ass'n, No. 04–09–00007–CV, 2009 WL 3382232, *5 (Tex.App.-San Antonio Oct. 21, 2009, no pet.). We remanded the matter to the trial court for further proceedings on the Trust's claims that were not disposed of in the partial summary judgment order. Id. In response to our affirmance and remand, the Association filed for summary judgment on the claims it alleged remained and also filed a counterclaim through which it sought attorney's fees. The trial court granted summary judgment in favor of the Association and awarded the requested attorney's fees. On appeal, the Trust contends the trial court erred in: (1) granting summary judgment in favor of the Association, and (2) awarding the Association attorney's fees. We affirm in part and reverse and render in part.

Factual and Procedural Background

In 1957, Valley View Heights, a subdivision located along Blanco Road in San Antonio, Texas, adopted and recorded restrictive covenants pertaining to lots within the subdivision. The covenants mandated that property in the subdivision “shall be used for residence purposes only.” The covenants further provided they were “to run with the land” and “shall continue in full force and effect until revoked or modified by owners of more than one-half of the property.” The Valley View Heights subdivision was later expanded and incorporated into a larger subdivision renamed Canyon Creek Estates. Canyon Creek Estates consists of approximately thirty-five single-family homes. In 1963, Canyon Creek Estates adopted the 1957 restrictive covenants, reaffirming that property within the subdivision was restricted to residential use.

In 1997, Edward and Rosaura Davis, who are the parents of Luis Davis, acquired Lot 8 in the Canyon Creek Estates subdivision. Luis Davis and his brother moved into the home on Lot 8, residing there for several years. In March of 2000, Elare Partners, Ltd. (“Elare”) acquired Lots 6 and 7, which adjoined Lot 8. Elare is a partnership controlled by the Davis family, and Edward Davis is the general partner. Lots 6, 7, and 8, along with several other lots, front Blanco Road. After Elare purchased Lots 6 and 7, Luis Davis moved into the home on those lots with his wife and stepson.

In 2001, Canyon Creek Estates recorded a document entitled “Canyon Creek Estates Homeowners Association Covenants and Restrictions,” which adopted the 1957 and 1963 restrictive covenants, reaffirming that property within the subdivision was restricted to residential use. This document also contained other changes, but those are not relevant to this appeal. The document was recorded after the Association, in 1997, sent a ballot to all thirty-five homeowners in the subdivision with the proposed covenants and restrictions. The record shows that twenty-seven ballots were returned, i.e., a majority of the homeowners voted, and only six opposed the revised covenants and restrictions. Therefore, as required by the 1957 and 1963 restrictive covenants, more than fifty percent of the property owners approved the revised covenants and restrictions.

In 2005, Luis Davis purchased a home in the interior of the subdivision and moved his family to that home. Around the same time, Luis Davis's brother and his brother's family moved out of the home on Lot 8. In October 2005, the properties were listed for sale by the parents and Elare as residential properties; however, the properties were taken off the market on March 2, 2006. There was some interest in the properties, but according to Davis, after those interested determined the properties were restricted to residential use pursuant to a covenant, their interest waned.

According to documents produced during the initial litigation, Edward and Rosaura Davis and Elare sold their properties on Blanco Road to “Luis Davis, Trustee of the Davis Family Blanco Road Property Trust” on August 13, 2006, by general warranty deed. Though the deeds state the date of sale as August 13, 2006, the day before suit was filed, neither deed was notarized until January 31, 2008, and neither deed was produced until the Trust filed a response to a November 26, 2008 motion for sanctions, which sought sanctions based on the Trust's alleged lack of ownership, and therefore lack of standing to file suit.

On August 14, 2006, after failing to sell the properties, the Trust itself brought suit against the Association and the individual property owners within Canyon Creek Estates. The Trust sought a declaratory judgment that the property within the subdivision should no longer be burdened by restrictive covenants limiting the use of the property to residential purposes. The petition asserted the Trust owned lots 6, 7, and 8 in the subdivision. The petition alleged, in essence: (1) the 2001 restrictive covenants were null and void because they were signed only by the Association's officers and directors rather than by a majority of the property owners; or (2) circumstances and conditions had so changed such that the lots located on Blanco Road should no longer be restricted to residential use as set forth in the 1957, 1963, and 2001 covenants.

The Association answered, and thereafter, on January 3, 2008, filed a plea in abatement and a plea to the jurisdiction. The Association asserted the Trust lacked the legal capacity to be a party to the lawsuit, noting that the proper party would be the trustee of the Trust. The Association also asserted the Trust did not own property in the subdivision, i.e., Lots 6, 7, and 8 were owned by Edward and Rosaura Davis and Elare, and therefore, the Trust lacked standing to request declaratory relief. See Ski Masters of Tex., LLC v. Heinemeyer, 269 S.W.3d 662, 667–69 (Tex.App.-San Antonio 2008, no pet.) (holding one must own property in subdivision to have standing to seek declaratory relief regarding enforceability of restrictive covenants). The trial court granted the plea, but gave the Trust time to “file an amended petition adding the correct property owners as plaintiffs.” In response, the Trust filed an amended petition naming the plaintiff as Luis Davis, Trustee of the Davis Family Blanco Road Property Trust. The Association acknowledged that this amendment resolved the capacity issue, but asserted it did not resolve the jurisdictional issue of standing because documentation showed the property allegedly owned by the Trust, i.e., Lots 6, 7, and 8, were still owned by the Davises and Elare. The Association therefore filed a motion to dismiss for want of jurisdiction, asserting that because the Trust was not the property owner, it lacked standing to challenge the restrictive covenants. The Association also filed a partial motion for summary judgment in which it alleged the Trust was estopped from invoking the “changed conditions” doctrine as to the 1957 and 1963 deeds because at the time the Davis family acquired Lots 6, 7, and 8, they knew about the existing conditions on Blanco Road.

On May 27, 2008, the trial court held a hearing on the motion to dismiss and the motion for partial summary judgment. The trial court granted the Trust's motion for continuance as to the partial summary judgment based on lack of notice, but proceeded with the hearing on the motion to dismiss. At the hearing, and as mentioned above, the Trust introduced into evidence two unrecorded deeds dated August 13, 2006, but notarized on January 31, 2008. The first deed conveyed Lot 8 from Edward and Rosaura Davis to the Trust, and the second conveyed Lots 6 and 7 from Elare to the Trust. At the conclusion of the hearing, the trial court granted the motion to dismiss, dismissing all claims, except the Association's claims for attorney's fees. Despite having dismissed all of the Trust's claims based on lack of standing, the trial court insisted on setting a hearing on the Association's motion for partial summary judgment.

In accordance with the trial court's verbal order, the parties set June 3, 2008, as the date for the hearing on the partial summary judgment. At that hearing, the parties presented an agreed order, which the trial court signed. In the order, the trial court granted the Association's partial motion for summary judgment, and further stated that the Trust should take nothing “on all claims for declaratory judgment regarding claims that changes in conditions or circumstances as of the date Plaintiff ... acquired the property justify the canceling or invalidation of any restrictive covenants on Plaintiff's ... properties as to use for residential purposes.”

In December 2008, the trial court held a hearing on the Association's request for sanctions in the form of attorney's fees. The trial court denied the request for sanctions. Thereafter, a final judgment was signed on December 18, 2008.

The Trust appealed and, among...