High Rd. on Dawson v. Benevolent & Protective Order of the Elks of the U.S., Inc.

• Decision Date: 31 August 2020
• Docket Number: NO. 14-18-00382-CV,14-18-00382-CV
• Citation: 608 S.W.3d 869
• Parties: The HIGH ROAD ON DAWSON, Appellant v. BENEVOLENT AND PROTECTIVE ORDER OF the ELKS OF THE UNITED STATES OF AMERICA, INC., Appellee
• Court: Texas Court of Appeals

608 S.W.3d 869

The HIGH ROAD ON DAWSON, Appellant

v.BENEVOLENT AND PROTECTIVE ORDER OF the ELKS OF THE UNITED STATES OF AMERICA, INC., Appellee

NO. 14-18-00382-CV

Court of Appeals of Texas, Houston (14th Dist.).

Opinions filed August 31, 2020

Margaret "Meg" Poissant, Justice

In this dispute over the ownership of real and personal property, appellant The High Road on Dawson ("High Road") challenges the final summary judgment in favor of appellee Benevolent and Protective Order of Elks of the United States of America, Inc. (the "National Elks"). We affirm the final summary judgment of the trial court.¹

I. BACKGROUND

The National Elks is a national fraternal and charitable organization, comprised of approximately two thousand local lodges and eight hundred fifty thousand members throughout the United States. High Road, previously known as Austin Lodge No. 201, is a Texas non-profit corporation affiliated with the National Elks. The issues presented to us involve disputed ownership of real and personal property in Austin, Texas.

The National Elks is structured as a hierarchical organization, with legislative power vested in a national organization called the Grand Lodge. Based on its legislative power, the Grand Lodge issues charters to local lodges and is the organization that establishes membership rules, which are set forth in its Constitution and Statutes (also known as "Laws of the Order"). In 1891, the National Elks issued a charter to Austin Lodge No. #201, Benevolent and Protective Order of Elks of the United States of America ("Austin Lodge"). The National Elks's Constitution and Laws of the Order require that all major decisions of local lodges be approved by the Grand Lodge, including any alteration, purchase, or disposition of real property.

In May of 1957, the Austin Lodge incorporated as "Austin Lodge No. 201, Benevolent and Protective Order of Elks of the United States of America." The Articles of incorporation state Austin Lodge is "organized exclusively as a fraternal organization, as a non-profit corporation, and its activities shall be conducted for the aforesaid purposes in such manner that no part of its net earnings will inure to the benefit of any member, director, trustee, officer or individual." The Articles of Incorporation further state that the By-laws of the Austin Lodge shall define the duties of the directors, officers, and trustees. The Austin Lodge applied for and received approval from the Grand Lodge of its Articles of Incorporation.

The Austin Lodge also received approval from the Grand Lodge of its By-laws and Rules of Order, which were amended and approved as recently as January 2009. The By-Laws of the Austin Lodge are subordinate to the Grand Lodge's Laws of the Order, as the Austin Lodge By-Laws provide that "any action, Statute or edict of the Grand Lodge altering these By-Laws, Rules of Order or House Rules shall have the effect of an amendment without any further action of this Lodge." The Austin Lodge By-laws further provide that all proposed amendments to the Austin Lodge By-Laws, Rules of the Order or House Rules, in conflict with the Grand Lodge's Laws of the Order, are void, and shall be declared out of order by the Exalted Ruler of the Austin Lodge.² Additionally, the Austin Lodge By-Laws do not take effect until approval by the Grand Lodge.

A. PURCHASE OF THE PROPERTY AT DAWSON ROAD

The land acquired under the 1957 and 1959 deeds is referred to as the "Dawson Road property." Title to the Dawson Road property was held in two deeds. The first deed was dated April 8, 1957 (the "1957 deed"), and granted a 3.11 acre tract to "Robert Proctor, Forest Gathright, Henry Wendlandt, Jr., Joe Lundell and Roger Newhall as Trustees of Austin Lodge No. 201, B. P. O. E. of the City of the Austin." Prior to purchasing the property, the Austin Lodge submitted an application to the Grand Lodge certifying that the National Elks's Laws of the Order had been complied with by members of the Austin Lodge for the purchase of the property. Funding for the purchase came from Austin Lodge's building fund, which was created by setting aside a portion of each member's dues. The purchase of the real property was approved by the National Elks.

After the Austin Lodge was incorporated, a second deed, dated August 4, 1959 (the "1959 deed"), granted a 0.65-acre tract to the "Benevolent and Protective Order of Elks, Inc., of Austin, Texas."

The Austin Lodge submitted several permits for approval to the Grand Lodge, seeking to construct a building on the land. In 1958, a clubhouse was constructed on the land. Between 1959 and 2013, the Austin Lodge filed a variety of applications to purchase and sell property pursuant to Grand Lodge rules.³

B. DISPUTE OVER THE AUSTIN LODGE

At the time of the election of the first female Exalted Ruler of the Austin Lodge in 2012, the conflict between the Austin Lodge and the Grand Lodge escalated, bringing scrutiny of the Austin Lodge by the Grand Lodge. In 2012, the Grand Lodge briefly suspended the charter of the Austin Lodge. On September 27, 2012, after reinstatement, the Austin Lodge was placed on probation.

On July 29, 2013, by executive order from its Grand Lodge, the National Elks revoked the charter of the Austin Lodge.⁴ The executive order revoking the charter of the Austin Lodge: (1) listed a litany of violations of the National Elks's Laws of the Order by the Austin Lodge, (2) appointed three trustees to take possession of the real and personal property possessed by the Austin Lodge, and (3) authorized the trustees to hire a local attorney to manage or liquidate the Dawson Road property. Members of the Austin Lodge exercised their rights under the National Elks's law and appealed the order of revocation, which stayed the enforcement of the revocation order and allowed the Austin Lodge to operate pending a decision by a Grand Justice, appointed to preside at a trial de novo of the Grand Forum.⁵

Although evidence was heard by an associate judge of the Grand Forum in October 2013, the trial was never concluded because the Austin Lodge withdrew its appeal on November 8, 2013, making the executive order of revocation final. The Austin Lodge, before withdrawing its appeal of the executive order of revocation, voted to disassociate from the National Elks. Sixty-three members of the total membership of four hundred thirty-three members voted to amend the Articles of Incorporation and Bylaws of the Austin Lodge and rename the corporation "The High Road on Dawson." (hereafter referred to as either "the Austin Lodge" or "High Road" as appropriate.) The purpose of the corporation was changed to general charitable purposes, deleting references to the National Elks and the Elks. On November 8, 2013, the Associate Justice of the Grand Forum issued a final order making the July 29, 2013, revocation of the Austin Lodge's charter final and conclusive, and reaffirming the authority of the three trustees named by the Grand Exalted Ruler to hold, manage, and conserve all of the Austin Lodge's real and personal property until a new lodge is formed or the Austin Lodge's charter is reinstated.

C. LITIGATION IN DISTRICT COURT

On December 16, 2013, the National Elks filed suit, alleging causes of action against High Road for trespass to try title, conversion, unjust enrichment, breach of contract, breach of fiduciary duty, and violations of the Texas Theft Liability Act,⁶ and requesting a declaratory judgment, a permanent injunction, imposition of a constructive trust, damages, and attorney's fees and costs. The National Elks requested a judicial determination that the acquisition and use of the Dawson Road property and personal property, was acquired, used and maintained for the benefit of the National Elks, and asked the court to rule that the property, both real and personal, be held in an equitable trust by the Trustees for the use and benefit of the Austin Lodge members upon reinstatement or other alternatives provided for by section 9.170 of the National Elks's Laws of the Order.

High Road filed counterclaims for civil conspiracy and the breach of the duty of good faith and fair dealing, and requested a declaratory judgment, damages, and attorney's fees and costs. High Road contended it owned the property because the National Elks did not hold title or have possession of the property.

The National Elks filed its first motion for traditional summary judgment on its causes of action for trespass to try title, violations of the Texas Theft Liability Act, and conversion. The National Elks also filed a motion for traditional and no-evidence summary judgment on High Road's counterclaims.

On August 28, 2017, the trial court heard the following motions: the National Elks's amended motion for summary judgment, filed on July 25, 2016; the National Elks's traditional and no-evidence motion for summary judgment as to defendant's counterclaims, filed on October 4, 2016; and High Road's no-evidence motion for summary judgment and traditional motion for summary judgment, filed on October 5, 2016, together with supplemental motions. As to the National Elks's causes of action, the trial court:

1. Granted the National Elks summary judgment on its trespass to try title cause of action;

2. Denied High Road summary judgment on the National Elks's breach of contract and breach of fiduciary duty causes of action without stating a basis for the denials;

3. Denied High Road summary judgment on the National Elks's unjust-enrichment cause of action "due [to] an insufficient summary judgment record on the personal property in question"; 4. Denied summary judgment for both the National Elks and High Road on conversion and violations of the Texas Theft Liability Act "due [to] an insufficient summary judgment record on the personal property in question"; and

5. Ruled the National Elks voluntarily withdrew its request for a Declaratory Judgment.

As to High Road's counterclaims, the trial court:

1. Granted the National

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