Heblen Kanan, Pharr Plantation, Inc. v. Plantation Homeowner's Ass'n Inc.

• Decision Date: 25 April 2013
• Docket Number: No. 13–11–00282–CV.,13–11–00282–CV.
• Citation: 407 S.W.3d 320
• Parties: Heblen KANAN, Pharr Plantation, Inc., and Pharr Plantation Management Co., Ltd., Appellants, v. PLANTATION HOMEOWNER'S ASSOCIATION INC., et al., Appellees.
• Court: Texas Court of Appeals

407 S.W.3d 320

Heblen KANAN, Pharr Plantation, Inc., and Pharr Plantation Management Co., Ltd., Appellants,

v.PLANTATION HOMEOWNER'S ASSOCIATION INC., et al., Appellees.

No. 13–11–00282–CV.

Court of Appeals of Texas, Corpus Christi–Edinburg.

April 25, 2013.

Carlos Escobar, Escobar Law Firm, McAllen, Gilberto Hinojosa, Brownsville, James P. Grissom, McAllen, Fernando G. Mancias, Law Office of Fernando G. Mancias, Edinburg, for Appellants.

Arturo R. Cantu, McAllen, for Appellees.

Before Chief Justice VALDEZ and Justices RODRIGUEZ and GARZA.

OPINION

Opinion by Chief Justice VALDEZ.

Appellants, Heblen Kanan, Pharr Plantation, Inc., and Pharr Plantation Management Co., Ltd., have appealed a judgment rendered on March 29, 2011, in trial court cause number CL–07–0468–A in the County Court at Law Number One of Hidalgo County, Texas. By one issue with multiple sub-issues, appellants contend that the trial court erred in entering judgment on an unenforceable settlement agreement. We affirm.¹

I. Background

The underlying lawsuit involves a dispute over ownership and management of the Plantation South Subdivision in Hidalgo County, Texas. Pharr Plantation, Inc. (“Plantation”), as owner of the subdivision, and Pharr Plantation Management Co. (“Management”), as manager of the subdivision, brought a suit for declaratory relief against Pharr Plantation Homeowners Association, Inc. and individual property owners ² (collectively “Homeowners”) in the subdivision. Plantation alleged that it had sole authority and power to manage the subdivision through Management as opposed to the Homeowners. In their pleadings, Plantation and Management sought declaratory and injunctive relief, damages and exemplary damages, and to remove the cloud on title and to quiet title.

In response, Homeowners filed a counterclaim against Plantation and Management and a third party petition against Heblen Kanan, whom Homeowners alleged was the “alter ego” of Plantation and Management. The Homeowners alleged that Plantation, Management, and Kanan breached their duty to manage the subdivision and collect assessments and brought suit against them for negligence, breach of fiduciary duty, breach of the duty of good faith and fair dealing, fraud, mismanagement, conversion, and for failing to enforce restrictive covenants and the subdivision's rules and regulations. They sought declaratory and injunctive relief and damages. The specific issues between the parties generally concerned who had the right to manage the subdivision, collect assessments from homeowners, and exercise control over common areas such as the subdivision's recreation room and ballroom.

On February 1, 2011, the trial on the merits began. Appellants presented their case for approximately five days. On February 8, 2011, the parties recessed the trial, excused the jury, and orally stated a settlement agreement on the record before the trial court. The reporter's record shows the following:

THE COURT: All right. I understand that you have pretty much resolved all issues with the exception of one issue that is still outstanding.

Now, do you want to just tell the Court—

COUNSEL FOR APPELLANTS: That is correct.

THE COURT:—which that issue is so that I can make a determination on that issue?

COUNSEL FOR APPELLEES: Yes, [y]our Honor. Mr. Kanan, as he testified, and Michelle Huebe [ ³]—they testified there are seven lots where either they or their family members live that are not paying assessments, and we have agreed that we, as the homeowners association, will waive any past due assessments that may be owed on those seven lots. But the disagreement is we want them to start paying assessments beginning March 1st, and Mr. Mancias' clients want to not pay assessments until three years from now.

COUNSEL FOR APPELLANTS: That is the disagreement, Judge.

THE COURT: That is the disagreement, and that is more of a legal issue that the Court would have to address—

COUNSEL FOR APPELLANTS: It is.

THE COURT:—as to the payment of those—of these seven lots?

COUNSEL FOR APPELLANTS: Yes.

THE COURT: All right. And that is what is basically keeping it from getting resolved?

COUNSEL FOR APPELLEES: I think so, Your Honor.

THE COURT: All right. I will make a decision on that, and then just all other matters being resolved I will make a decision on this and the case will be over and done with.

....

THE COURT: All right. Ladies and gentlemen, it is my understanding that there is an agreement with the exception of one issue that I am going to make a decision on right now. I will allow your attorney ... to read it into the record as far as the agreement so that we can have it on the record, and then this case should be over and done with.

....

THE COURT: All right. The issue with respect to the seven lots—the plaintiff is offering to pay until three years from now and the defendants want it to be paid immediately. The decision of the Court will be that he start[s] paying in one year and a half. All right. So he does not get what he wants. You know, it is halfway. In one year and a half, he needs to—he will have to start paying as opposed to three years.

All right. I am going to allow you to read the agreement into the record....

....

COUNSEL FOR APPELLEES: ... The homeowners association will take over control of the common areas and collecting the assessments and the expenditures on March 1, 2011. An election of all officers and directors for the homeowners association will take place in December of 2011. At the election, Heblen Kanan or any of his entities will not have a vote at the election.

The title to the rec hall or those ballrooms will be transferred by warranty deed transferring clear title to the rec room and ballrooms to the Plantation Homeowners Association. The warranty deed will have a reservation that Mr. Kanan or Pharr Plantation, Inc. will have the right to use the rec hall on Friday nights and Saturday nights for three years. The homeowners association will ... have the right to use the rec hall the way they had been doing it in the past, either on Friday morning or Saturday morning, for their pancake meetings or some meetings that they have, and the meetings generally end around 9:00 or 9:30. And by 11:00, they should be available for Mr. Kanan to use when they clean everything up.

Mr. Kanan or his entities will not take any funds from the assessments to pay any debts that he claims is owed to him. Mr. Kanan or his entities use the ballroom on Friday night or Saturday night for those three years, the—any expenses or—and/or utilities will be prorated between the homeowners association and Mr. Kanan or his entity.

And as the Court has mentioned, those seven lots that do not pay assessments right now, as Mr. Kanan and Michelle Huebe testified, will not owe any past due amounts and will not start incurring assessments until one year and a half from now.

All employees of the management company will be paid up until March 1, 2011 and will be terminated as of February 28, 2011.

There is an office on the right side as you go into the ballroom, and that is the office that Mr. Kanan will be able to use during those three years to manage the ballrooms.

This will be a complete settlement for all parties. Each party will pay their own attorney's fees. Any equipment, computers, telephone systems and security system that are on the property/common areas shall remain on the property and will be owned by the homeowners association.

At this point in the proceedings, the individual homeowners raised various questions regarding the scope of the settlement. One question that was raised concerned Kanan's right to use the recreation room and ballroom on nights other than Friday or Saturday, the right to profits from such use, and scheduling usage of the recreation room and ballroom between the parties on those nights. After some colloquy between the parties, counsel, and court, it was determined that Kanan could use the recreation room and ball room on other nights of the week when nothing was otherwise scheduled and retain the profits, and that the parties bore equal responsibility for communicating an effective calendar for use of the property. It was also determined that the homeowners association could similarly use the recreation room and ball room on Friday and Saturday nights that Kanan did not schedule events. At the conclusion of the hearing, the homeowners and Kanan agreed to the settlement, and the court “noted on the record that it is an agreed settlement by all parties involved and their attorneys are present.” The court directed the parties to “work on the basic ... description of what you agreed and put it in writing, and I will approve it and sign it.”

On March 1, 2011, the day that the parties had agreed that the homeowners association was going to take control over the common areas and collecting assessments, appellants filed an emergency motion to abate enforcement of the agreement. According to the motion to abate, appellees had “unilaterally interpreted the vague and overbroad language read into the record ... as a basis for their one sided actions to interfere with access to the subdivision.” Appellants further complained that appellees had improperly begun to set up committees and procedures for an upcoming election and that the homeowners association was not “legally created.” In response, on March 3, 2011, appellants filed a motion to enforce settlement agreement and for temporary injunction. On March 15, 2011, appellants filed “Plaintiffs' Revocation of Purported Agreement.”

The trial court held a hearing on the foregoing matters on March 15, 2011 and took these issues under advisement. Both appellants and appellees submitted supplemental briefing. On March 24, 2011, the trial court entered judgment on the settlement agreement. The judgment provides, in pertinent part:

After considering the pleadings on file and the argument of counsel, it appears to the Court that the parties...