Dipprey v. Double Diamond, Inc.
| Decision Date | 21 October 2021 |
| Docket Number | No. 11-19-00250-CV,11-19-00250-CV |
| Parties | Dan DIPPREY et al., Appellants v. DOUBLE DIAMOND, INC. et al., Appellees |
| Court | Texas Court of Appeals |
Tim W. Ford, Mineral Wells, Chad E. Robinson, Dallas, Thomas F. Harkins Jr., Mack Ed Swindle, Brent Shellhorse, Fort Worth, for Appellants.
Michael H. Myers, Darryl J. Silvera, Jason A. Schmidt, Scott P. Stolley, Dallas, for Appellees.
Panel consists of: Bailey, C.J., Trotter, J., and Williams, J.
This appeal arises from a bench trial concerning "The Cliffs," a resort property development at Possum Kingdom Lake in Palo Pinto County. Appellants Dan Dipprey, Curtis Priddy, Ken Hill, Ken Hill Investment Group, Inc., Walt Leutwyler, Bryan Harveston, William C. Wageneck, Stanley Jerry Brasher, Cheryl D. Brasher, Ray Lunger, Steven Ware, Chris O. Knox, C. Wayne Parks, Daniel J. Dziuba, Samuel K. Howard, Ruth M. Howard, Byrom J. Smith, III, Malibu L.P., Steve Janicek, Jeffrey Coolidge, Ginger Coolidge, Tony W. Docken, Terry Test, William E. Walker, II, Steven D. Helling, Douglas M. Boston, Thomas Scheidel, Carol Scheidel, Terry Zenoble, Sarah Zenoble, James R. Peek, and Trimerica Corp. (collectively Appellants) are individuals or entities that own property or an interest in property at the Cliffs Resort, or control entities that own property at the Cliffs Resort. They are also members of The Cliffs Property Owners’ Association, Inc. (the POA), a nonprofit Texas Corporation. The POA is also an appellant in this appeal. As noted below, the POA was not an original party to the litigation.
This proceeding started as a suit by some of the Appellants concerning the management of the POA and the development of The Cliffs. They originally brought suit against the developer, Appellee Double Diamond, Inc., as well as entities affiliated with Double Diamond, Inc.: Appellees Double Diamond Management Corp. and Double Diamond Utilities Co. The original Appellants also sued R. Mike Ward, the principal officer of the Double Diamond entities and the president of the POA for several years.
Over time, additional property owners joined the suit as plaintiffs. Appellants also sued additional defendants, who are also Appellees to this appeal. Appellees Cliffs Club Corp., Cliffs Dining Corp., Cliffs Hotel Corp., Cliffs Golf, Inc., and Cliffs Marina, Inc. are other entities affiliated with Double Diamond, Inc. that own or conduct operations at The Cliffs. Appellants also joined Appellee Double Diamond-Delaware, Inc., the parent company and sole shareholder of the Double Diamond entities. Appellants also joined Appellee Randy Gracy as a defendant. Among other things, Gracy is the president of Double Diamond Utilities. He was also the vice president of the POA for several years.
The earlier phases of the litigation concerned the manner in which the votes of the members of the POA were to be tabulated and the way in which the meetings of the board of directors were to be conducted. The earlier litigation spawned two original proceedings and an interlocutory appeal in this court. See In re Dipprey , 582 S.W.3d 531 (Tex. App.—Eastland 2018, orig. proceeding) ; In re Double Diamond, Inc. , 582 S.W.3d 535 (Tex. App.—Eastland 2018, orig. proceeding) ; Double Diamond, Inc. v. Dipprey , No. 11-18-00105-CV, 2019 WL 150921 (Tex. App.—Eastland Jan. 10, 2019, no pet.) (mem. op.). During this period, the case focused on the efforts of Appellants to gain control of the POA. From the inception of the POA until a few months before trial, Ward and employees of the POA made up a majority of the board of directors.
Appellants gained control of the POA during the pendency of the underlying proceedings by virtue of securing enough votes to elect a majority of the board of directors of the POA. The POA intervened in the suit approximately four months prior to trial as a plaintiff aligned with Appellants.
The bench trial focused on the following issues: (1) the interpretation of the POA's governing documents; (2) claims for breach of contract against Appellees for alleged overcharges and failure to maintain the resort as required by various contracts; (3) claims for breach of fiduciary duty against Ward, Gracy, and Double Diamond Management; (4) ownership of the water and sewer systems at The Cliffs; (5) access to the amenities at The Cliffs; and (6) Appellants’ claims for diminution in value of their properties based upon the manner in which the Double Diamond entities operated the resort. At the conclusion of the bench trial, the trial court entered a take-nothing judgment in favor of Appellees on all claims asserted by Appellants and the POA.
Appellants and the POA bring eleven issues challenging the trial court's rulings and judgment. We note at the outset that Appellants have not challenged the trial court's denial of their claims for diminution in value with respect to the value of their properties. In this regard, a significant portion of the trial focused on these claims. Additionally, in their seventh issue, Appellants and the POA challenge the trial court's denial of their claims to declare the POA's "rights of ownership, maintenance or operation of the central water and central sewer systems ... to compel conveyance of those systems to [the POA]." However, Appellants and the POA have withdrawn this issue in a letter to the court dated June 12, 2020. Accordingly, we do not address their seventh issue. With respect to Appellants’ and the POA's remaining ten issues, as well as Appellees’ cross-issue, we affirm in part, reverse and render in part, and reverse and remand in part.
In the 1980s, a limited partnership known as Cliffs Development, Ltd. began developing The Cliffs. Cliffs Development, Ltd. executed a "Declaration of Covenants, Conditions, and Reservations for The Cliffs" on August 20, 1986. The original declarations addressed the creation of "The Cliffs Homeowners Association, Inc." However, the POA was not created at that time.
Double Diamond Inc. purchased The Cliffs in 1993 after Cliffs Development, Ltd. experienced financial difficulties. Ward filed Articles of Incorporation for the POA on January 18, 1994. On behalf of Double Diamond Inc., Ward also executed a "Declaration Regarding the Establishment of The Cliffs Property Owners’ Association, Inc." on January 18, 1994 (the Declaration). On January 20, 1994, Ward and the other initial directors of the POA executed bylaws for the POA.
On January 25, 1994, Double Diamond Inc. executed an amended Declaration of Covenants, Conditions and Restrictions, which amended the previous Declaration of Covenants, Conditions and Restrictions filed by Cliffs Development, Ltd. Between January 26, 1994, and May 31, 2011, Double Diamond Inc. filed additional amendments to the Declaration of Covenants, Conditions, and Reservations, with the final amendment being the Fourteenth Amended and Restated Declaration of Covenants, Conditions, and Restrictions for The Cliffs filed on May 31, 2011 (the Fourteenth Amended CCRs).
In January 1994, the POA executed a contract with Double Diamond Inc. to maintain the golf course at The Cliffs and in February 1994, the POA executed a separate contract with Double Diamond Inc. to manage certain affairs for the POA and to maintain the common areas and amenities at The Cliffs. Double Diamond Inc. later assigned the maintenance contracts to Double Diamond Management.
As noted previously, Appellants became dissatisfied with the manner in which Ward and the Double Diamond entities operated The Cliffs and managed the POA. Among other things, Appellants and the POA asserted that Appellees operated the water and sewer systems at The Cliffs in a deficient manner. Appellants and the POA also asserted that Appellees overcharged the POA for services at The Cliffs.
Vote Tabulation In their first issue, Appellants1 and the POA contend that the trial court erred by determining that each owner of a timeshare estate is entitled to a full vote with respect to the election of directors of the POA. The trial court made this ruling prior to trial,2 and it confirmed this ruling in its findings of facts and conclusions of law.
In addition to lots held in fee simple, The Cliffs also has some timeshare units that are owned by individuals in one-week increments. Each one-week increment is referred to as a "timeshare estate." The trial court interpreted the POA's governing documents and concluded that each owner of a one-week timeshare estate is entitled to a full vote, the same as the owner of a lot in fee simple. In their first issue, Appellants and the POA challenge this interpretation.
There are four documents that govern the POA: (1) the Fourteenth Amended CCRs; (2) the Declaration; (3) the articles of incorporation; and (4) the bylaws. Prior to analyzing these documents in detail, we note that the provisions of the Fourteenth Amended CCRs have little to do with membership of the POA and voting for directors. The articles of incorporation also do not address membership and voting to any specific degree. The parties do not rely on the provisions of the articles of incorporation or the Fourteenth Amended CCRs in their briefs on the timeshare voting issue. Accordingly, we focus our analysis on the Declaration and the bylaws.
The interpretation of the governing documents of a homeowners’ association is subject to the general rules of contract construction. C.A.U.S.E. v. Vill. Green Homeowners Ass'n, Inc. , 531 S.W.3d 268, 274 (Tex. App.—San Antonio 2017, no pet.) (citing Pilarcik v. Emmons , 966 S.W.2d 474, 478 (Tex. 1998) ); Uptegraph v. Sandalwood Civic Club , 312 S.W.3d 918, 925 (Tex. App.—Houston [1st Dist.] 2010, no pet.) (same); Goddard v. Northhampton Homeowners Ass'n, Inc. , 229 S.W.3d 353, 356 (Tex. App.—Amarillo 2007, no pet.) (same). The court's primary duty is to ascertain the drafter's intent from the instrument's language. Uptegraph , 312 S.W.3d...
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