Garrett v. Sympson

• Decision Date: 08 June 2017
• Docket Number: NO. 02–16–00437–CV,02–16–00437–CV
• Parties: William T. GARRETT and Lanetta M. Garrett, Appellants v. Georgia Kaye SYMPSON and Clifford A. Hall, Sr., Appellees
• Court: Texas Court of Appeals

523 S.W.3d 862

William T. GARRETT and Lanetta M. Garrett, Appellants

v.Georgia Kaye SYMPSON and Clifford A. Hall, Sr., Appellees

NO. 02–16–00437–CV

Court of Appeals of Texas, Fort Worth.

DELIVERED: June 8, 2017

ATTORNEY FOR APPELLANT: MICHAEL ALFRED, MOLLY COWAN, HALLETT & PERRIN, P.C., DALLAS, TX.

ATTORNEY FOR APPELLEE: JANNA CLARKE, FORT WORTH, TX.

PANEL: WALKER, KERR, and PITTMAN, JJ.

MEMORANDUM OPINION¹

SUE WALKER, JUSTICE

I. INTRODUCTION

This is an interlocutory appeal from a temporary injunction order prohibiting Appellants William T. Garrett and Lanetta M. Garrett from using their lake house for "commercial/business purposes," from renting or leasing their lake house to multiple individuals, and from renting their lake house to any person for "temporary or transient purposes." The sole issue we address is whether short-term vacation rentals violate restrictive covenants that require the lots to be used for "single family residence purposes" and prohibit commercial use of the lots. Because the restrictive covenants at issue are ambiguous and because we are required to resolve any ambiguity against Appellees Georgia Kaye Sympson and Clifford A. Hall Sr. and in favor of the Garretts' free and unrestricted use of their property, we will reverse the trial court's order granting the temporary injunction and we will order the temporary injunction dissolved.

II. FACTUAL AND PROCEDURAL BACKGROUND

In December 2015, the Garretts purchased the lake house located at 405 Peninsula Court in the Scenic View Estates in Granbury, Texas ("the Property"). The Property is governed by deed restrictions ("the Restrictions"), which require the Property to be used for "single family residence purposes" and prohibit the Property from being used for commercial purposes. The Restrictions, however, provide that for-rent "signs not exceeding five (5) square feet in size" may be posted.

In February 2016, the Garretts began advertising and renting the Property through the website VRBO. As of November 4, 2016,² the Garretts had rented the Property for approximately 100 nights to various groups of individuals.³ The Garretts' practice is to rent the entire house to one individual who is at least twenty-five years old, and that individual is allowed to bring other individuals to stay overnight at the Property. The Garretts also require the individual who rents the Property to explain his or her planned use of the Property; the Garretts turned down rental requests that they "just didn't feel like fit the [P]roperty as well as the neighborhood." The Garretts expected to earn $50,000 in rental income from the Property during the first twelve months it was listed on VRBO and up to $100,000 in rental income from the Property during the following twelve-month period.⁴

Approximately seven months after the Garretts started renting the Property on VRBO, Appellees, who own nearby property, filed suit for a declaratory judgment and sought a temporary and permanent injunction based on the following Restrictions:

SECTION II. USE OF LAND:

(a). No lot or plot shall ever be used for other than single family residence purposes. No dwelling house located there-on shall ever be used for any other than single family residence purposes, no[r] shall any outbuilding or structure located thereon be used in any manner other than incidental to such family residence purposes. The erection and/or maintenance and/or use of any lot or plot for other purposes including but not limited to commercial or professional purposes is hereby expressly prohibited.

....

SECTION VIII. MISCELLANEOUS :

....

(d) No noxious or offensive trade or activity shall be carried on upon any lot or plot, nor shall anything be done or placed thereon, which may be or become an annoyance or nuisance to the neighborhood.

Appellees challenged the short-term rentals of the Property because they "believe personally that one year should be the minimum period of time for leasing a property."

The Garretts answered and asserted the affirmative defenses of unclean hands, laches, and waiver. The Garretts also filed a brief in opposition to Appellees' application for temporary injunction, arguing that the Restrictions allow the Property to be rented without limiting or addressing the duration of such rentals⁵ and that rental of the Property was neither a commercial purpose nor could it be considered a noxious or offensive trade or activity under the Restrictions.

The trial court held a hearing on Appellees' application for temporary injunction and heard testimony from Mr. Garrett and both Appellees. The trial court granted Appellees' application for temporary injunction and ordered the Garretts to immediately cease and desist from the following: using the Property for "commercial/business purposes"; renting, sub-renting, leasing, or subleasing the Property to multiple individuals, multiple families, and groups; and renting, sub-renting, leasing, or subleasing the Property to any person or the public for "temporary or transient purposes."⁶ The temporary- injunction order further ordered Appellees to execute and file a $1,000 bond. The Garretts then perfected this interlocutory appeal.

III. APPELLEES DID NOT ESTABLISH THAT THE RESTRICTIONS ARE ENFORCEABLE AS WRITTEN

In their first issue, the Garretts argue that the trial court erred by applying the Restrictions to enjoin them from renting the Property to guests on a short-term basis.

A. Standard of Review

While we review a trial court's grant of a temporary injunction for an abuse of discretion, Butnaru v. Ford Motor Co. , 84 S.W.3d 198, 204 (Tex. 2002) (op. on reh'g), the temporary injunction's validity here rests upon the trial court's construction of the Restrictions, which we review de novo, see City of Garland v. Dallas Morning News , 22 S.W.3d 351, 357 (Tex. 2000) ; Bizios v. Town of Lakewood Vill. , 453 S.W.3d 598, 600 (Tex. App.—Fort Worth 2014), aff'd , 493 S.W.3d 527 (Tex. 2016).

B. Law on Interpreting Restrictive Covenants

When interpreting restrictive covenants, we apply the general rules of contract construction. Pilarcik v. Emmons , 966 S.W.2d 474, 478 (Tex. 1998). Our primary task is to determine the drafter's intent from the instrument's language. Wilmoth v. Wilcox , 734 S.W.2d 656, 658 (Tex. 1987). In ascertaining the drafter's intent, we must examine the covenant as a whole in light of the circumstances present when the covenant was made. Pilarcik , 966 S.W.2d at 478. Words used in a restrictive covenant may not be enlarged, extended, stretched, or changed by construction; words and phrases used in the covenant must be given their commonly accepted meaning. Wilmoth , 734 S.W.2d at 657–58 ; Dyegard Land P'ship v. Hoover , 39 S.W.3d 300, 308 (Tex. App.—Fort Worth 2001, no pet.).

If a restrictive covenant can be given definite legal meaning, it is unambiguous and should be construed liberally to effectuate its intent. See Tex. Prop. Code Ann. § 202.003(a) (West 2014); Jennings v. Bindseil , 258 S.W.3d 190, 195 (Tex. App.—Austin 2008, no pet.). However, when a restrictive covenant may reasonably be interpreted in more than one way, it is ambiguous, and we will resolve all doubts in favor of the free and unrestricted use of the property, strictly construing any ambiguity against the party seeking to enforce the restriction. Wilmoth , 734 S.W.2d at 657 ; Dyegard Land P'ship , 39 S.W.3d at 308–09. The party seeking to enforce a restrictive covenant has the burden of showing that the restriction is valid and enforceable. Gillebaard v. Bayview Acres Ass'n , 263 S.W.3d 342, 347 (Tex. App.—Houston [1st Dist.] 2007, pet. denied).

C. The Restrictions Are Ambiguous⁷

Here, the Restrictions provide that the Garretts may use the Property solely for "single family residence purposes." The phrase "single family residence purposes" is not defined in the Restrictions, nor does the phrase "single family residence purposes" have a commonly accepted meaning. The Restrictions do, however, reflect that the drafters contemplated the leasing of homes because the Restrictions permit signs advertising the Property for rent. The Restrictions do not state a minimum permissible duration for the leasing of homes but do set a limit of six months for utilizing a garage or outbuilding as a dwelling while the construction of the main dwelling is proceeding. Moreover, despite allowing the Property to be rented, the Restrictions prohibit the Property from being used for commercial purposes without specifying what activities constitute commercial purposes.

Under these circumstances, we conclude that the phrase "residence purposes"⁸ is ambiguous in two respects. First, "residence purposes" is ambiguous as to whether "residence purposes" is viewed only in contradistinction to business or commercial purposes; and, if not so limited, it is ambiguous both as to whether "residence purposes" requires an intention to be physically present in a home for more than a transient stay and as to whether the focus of the inquiry is on the owner's use of the Property or the renter's use. See Scott v. Walker , 274 Va. 209, 645 S.E.2d 278, 283 (2007). Second, if the phrase "residence purposes" carries with it a duration-of-use component, it is ambiguous as to when a rental of the Property moves from short-term to long-term. Id. Because we conclude that the Restriction requiring the Property to be used for "single family residence purposes" is ambiguous, we must strictly construe the ambiguity against Appellees and resolve all doubts in favor of the free-and-unrestricted use of the Property. See Wilmoth , 734 S.W.2d at 657 ; Zgabay v. NBRC Prop. Owners Ass'n , No. 03-14-00660-CV, 2015 WL 5097116, at *3 (Tex. App.—Austin Aug. 28, 2015, pet. denied) (mem. op.); Dyegard Land P'ship , 39 S.W.3d at 308–09.

D. Appellees' Contentions on Appeal

1. Whether Section 202.003(a) Applies

Because we hold that the Restrictions are ambiguous, we are not required to liberally construe the Restrictions to effectuate their intent, as set...