Forsyth v. Lake LBJ Inv. Corp.

• Decision Date: 19 July 1995
• Docket Number: No. 03-94-00284-CV,03-94-00284-CV
• Citation: 903 S.W.2d 146
• Parties: William P. FORSYTH, et al., Appellants, v. LAKE LBJ INVESTMENT CORP., et al., Appellees.
• Court: Texas Court of Appeals

Page 146

903 S.W.2d 146

William P. FORSYTH, et al., Appellants, v. LAKE LBJ INVESTMENT CORP., et al., Appellees.

No. 03-94-00284-CV.

Court of Appeals of Texas Austin.

July 19, 1995.

Gary L. McConnell, Klement & McConnell, Angleton, for appellants.

Rick Harrison, Jones, Day, Reavis & Pogue, Austin, for appellees.

Before POWERS, ABOUSSIE and B.A. SMITH, JJ.

ABOUSSIE, Justice.

The Court's earlier opinion issued March 8, 1995 is withdrawn and the following substituted therefor.

This is an interlocutory appeal from a district court order denying class certification. See Tex.Civ.Prac. & Rem.Code Ann. § 51.014(3) (West Supp.1995). In their single point of error, appellants ¹ contend that the trial court abused its discretion by denying their motion for class certification. We will affirm the order of the district court.

BACKGROUND

The underlying action involves a dispute over the validity of restrictive covenants that apply to all lot owners in the Horseshoe Bay subdivision ("Horseshoe Bay"), which is located in Burnet and Llano counties. The appellees who were the original plaintiffs below ² are all developers of Horseshoe Bay. Appellants intervened in the trial court proceeding. Various Horseshoe Bay property owners were defendants below, but are not involved in this appeal.

Restrictive declarations or covenants apply to the Horseshoe Bay properties. Originally adopted by developer Lake Lyndon B. Johnson Improvement Corporation in 1971, the declarations have been amended four times. ³ Defendants below sought to rally support among Horseshoe Bay residents to challenge the enforceability of the declarations. The original plaintiffs below sued in response, seeking a declaratory judgment with respect to the validity of the declarations as well as damages under three causes of action.

Parties intervened on both sides of the action. Twelve Horseshoe Bay property owners intervened to support the original plaintiffs below. Subsequently, appellants and eight others intervened as counter-plaintiffs to support defendants below. Claiming to represent all Horseshoe Bay property owners in a class action, appellants sought a declaratory judgment pronouncing certain amendments to the declarations invalid. Appellants also sought damages on behalf of the class alleging seven causes of action.

Appellants' vigorous attempts to secure greater participation in the action failed. In fact, within three months, three of the intervenors in support of appellants' position dropped out of the lawsuit. Among the lot owners actually participating in the action, the number of those in favor of the declarations exceeded the number opposed.

Seven months after intervening in the action, appellants and one other intervenor filed a motion for class certification. ⁴ They requested that the trial court certify the intervenors as representatives of a class encompassing all lot owners in the Horseshoe Bay development. All appellees opposed the motion, and a hearing was held. None of the movants appeared at the class certification hearing to testify in person; appellants Christine K. Forsyth and A.L. "Dusty" Rhodes testified through deposition. Appellant James Crownover was the only intervenor supporting the motion who appeared at the hearing and offered live testimony. At the conclusion of the movants' presentation of their evidence at the class certification hearing, the trial court denied class certification. The district court's order does not state the reason for the denial of class certification, and the record does not contain findings of fact or conclusions of law, despite appellants' timely request. But see Tex.R.App.P. 42(a) (the trial court need not file findings of fact and conclusions of law). Appellants seek reversal of the trial court's order and ask us to direct the trial court to certify their intervention as a class action.

STANDARD OF REVIEW

We review a court order denying class certification using an abuse-of-discretion standard. Hutchins v. Grace Tabernacle United Pentecostal Church, 804 S.W.2d 598, 601 (Tex.App.--Houston [1st Dist.] 1991, no writ). A trial court has broad discretion in determining whether to grant or deny class certification. American Express Travel Related Servs. Co. v. Walton, 883 S.W.2d 703, 707 (Tex.App.--Dallas 1994, no writ h.). An appellate court must not substitute its judgment for that of the trial court. Id. Even if a trial court determines an issue differently than would an appellate court, the ruling does not necessarily constitute an abuse of discretion. Dresser Indus., Inc. v. Snell, 847 S.W.2d 367, 371 (Tex.App.--El Paso 1993, no writ) (citing Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 242 (Tex.1985), cert. denied, 476 U.S. 1159, 106 S.Ct. 2279, 90 L.Ed.2d 721 (1986)); see also Vinson v. Texas Commerce Bank-Houston, Nat'l Ass'n, 880 S.W.2d 820, 824 (Tex.App.--Dallas 1994, no writ) ("[E]ven if certification would have been proper, a denial may still not be an abuse of discretion.").

In determining whether a matter should be litigated as a class action, a trial court abuses its discretion if its decision is arbitrary, unreasonable, or without reference to any guiding principles. Dresser Indus., 847 S.W.2d at 371. Further, a trial court abuses its discretion if it does not properly apply the law to the undisputed facts, but does not abuse its discretion if it bases its decision on conflicting evidence. Vinson, 880 S.W.2d at 823. To satisfy their burden, appellants must "demonstrate that the undisputed evidence negates any valid rationale by which the trial court could have denied class certification." Id. at 825. To do this, appellants must provide an appellate record sufficient to demonstrate error. Tex.R.App.P. 50(d); Employers Casualty Co. v. Texas Ass'n of Sch. Bds. Workers' Compensation Self-Ins. Fund, 886 S.W.2d 470, 473 (Tex.App.--Austin 1994, writ requested); Fort Bend County v. Texas Parks & Wildlife Comm'n, 818 S.W.2d 898, 900 (Tex.App.--Austin 1991, no writ).

In making its class certification decision, the trial court can consider the pleadings and other material in the record, along with the evidence presented at the hearing. Employers Casualty Co., 886 S.W.2d at 474. The appellate court reviews the entire record to determine if the trial court abused its discretion in denying certification. See Chrysler Corp. v. Blackmon, 841 S.W.2d 844, 852-53 (Tex.1992). We must determine whether the record contains some evidence in support of the order. Vinson, 880 S.W.2d at 828. We view the evidence in a light most favorable to the trial court's action, entertaining every presumption that favors its judgment. Id. at 823; see also Texas Dep't of Mental Health & Mental Retardation v. Petty, 778 S.W.2d 156, 160-61 (Tex.App.--Austin 1989, writ dism'd w.o.j.); Brittian v. General Tel. Co., 533 S.W.2d 886, 889 (Tex.Civ.App.--Fort Worth 1976, writ dism'd) (citing Richardson v. Kelly, 144 Tex. 497, 191 S.W.2d 857 (1945)) (observing that trial court's finding as to class certification is entitled to great weight on appeal). If the record supports the court's ultimate decision, we cannot say that the trial court abused its discretion.

REQUIREMENTS OF CLASS CERTIFICATION

Texas Rule of Civil Procedure 42(a) sets out the following prerequisites for a class action:

(1) the class must be so numerous that joinder is impracticable (numerosity);

(2) questions of law or fact must be common to the class (commonality);

(3) the class representatives must have claims or defenses typical of the class (typicality); and

(4) the class representatives must fairly and adequately protect the interests of the class (adequacy of representation).

Tex.R.Civ.P. 42(a). In addition, Rule 42(b) enumerates the following standards for maintenance of a class action:

(1) individual suits would result in inconsistent or varying adjudications (2) an adjudication concerning an individual member would be dispositive of interests of other members, or would substantially impair the ability of those members to protect their interests;

(3) the party opposing the class has acted or refused to act on grounds generally applicable to the class;

(4) the suit affects specific property; and

(5) common questions of law or fact predominate over questions affecting only individual members, and a class action is the superior method of resolving the controversy.

Tex.R.Civ.P. 42(b). A trial court may certify a class action if a plaintiff establishes all four prerequisites in Rule 42(a), and meets at least one of the criteria for class maintenance in Rule 42(b). See Vinson, 880 S.W.2d at 824 (observing that Texas law does not require trial court to certify class action even if plaintiff satisfies Rule 42 requirements).

The record reflects that appellants established the numerosity, commonality, and typicality prerequisites. Numerosity is not disputed. ⁵ Commonality is evident. If the trial court were to determine the enforceability of the declarations as to one Horseshoe Bay resident, the adjudication would resolve the issue as to all other residents simultaneously. Additionally, appellants' claims are typical of those of the class; appellants possess the same interests as all other owners of Horseshoe Bay property. In theory, all class members have the same claims as appellants, even though it may not be in their best interests to assert their claims. ⁶ However, appellants have failed to demonstrate their adequacy of representation.

ADEQUACY OF REPRESENTATION

To comply with the adequacy of representation prerequisite, appellants must show that the class representatives will fairly and adequately protect the interests of the class members. Tex.R.Civ.P. 42(a)(4). This requirement has two basic components: (1) an absence of antagonism between the class representatives and the class members, and (2) an assurance that the representatives will vigorously prosecute the class members' claims and defenses. Wiggins v. Enserch...