In Re Park Memorial Condominium Association Inc.

• Decision Date: 14 September 2010
• Docket Number: No. 14-10-00430-CV.,14-10-00430-CV.
• Citation: 322 S.W.3d 447
• Parties: In re PARK MEMORIAL CONDOMINIUM ASSOCIATION, INC., Sameer Soleja, Lynn Tibbe, Michael Kirk, Barbara Belbot, and Jonathan Simon, Relators.
• Court: Texas Court of Appeals

322 S.W.3d 447

In re PARK MEMORIAL CONDOMINIUM ASSOCIATION, INC., Sameer Soleja, Lynn Tibbe, Michael Kirk, Barbara Belbot, and Jonathan Simon, Relators.

No. 14-10-00430-CV.

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

Sept. 14, 2010.

Daryl L. Moore, Richard D. Daly, Jonathan Daniel Simon, Houston, for relators.

Sean Cody, James J. McConn, Jr., Joseph A. Slovacek, John W. Belk, Paul J. McConnell, III, William C. Ferebee, Oscar Trevino Jr., Dominique M. Varner, Jacob Fein, Houston, Olney G. Wallis, Llano, David R. Hunter, Simonette Verdi, Arlington, VA, James Eric Wren III, Waco, Jennifer P. Sanders, Addison, for real party in interest.

Panel consists of Justices BROWN, SULLIVAN, and CHRISTOPHER.

OPINION

KENT C. SULLIVAN, Justice.

This mandamus proceeding arises from a dispute between a condominium association and some of the condominium residents over the ownership of insurance proceeds. The respondent trial court ¹ ordered the relators, Park Memorial Condominium Association, Inc. and its directors (collectively, the “Association”), ² to distribute the disputed proceeds to the real parties in interest, an assortment of individual unit owners (the “Homeowners”). This mandamus action followed. See Tex. Gov't Code Ann. § 22.221 (Vernon 2004); Tex.R.App. P. 52.

We hold the trial court deprived the Association of due process, and abused its discretion, by summarily ordering distribution of the disputed funds in the absence of pleadings actually requesting such relief. Because the rulings in question are void, we conditionally grant mandamus relief.

I.Background

In 2008, the Association filed a declaratory-judgment action in the 133rd District Court, asking the trial court to affirm the Association's legal right to sell the Park Memorial Condominium complex. That property, according to several engineering reports, had sustained significant structural damage and, in lieu of making repairs, the Association sought to sell the complex.

However, the Homeowners-a collection of some, but not all, of the unit owners-opposed the Association's plan to sell the property. They filed a separate lawsuit in a different district court, ³ generally accusing the Association and others of failing to properly maintain the complex. They also alleged that the Association and its attorney had mishandled a lawsuit against the property's insurer, Lexington Insurance Company. That lawsuit had resulted in a settlement agreement, through which the Association received some unspecified amount of money from Lexington in settlement of the claims.

Those insurance proceeds-and, specifically, the question of who controls them-have become a source of disagreement between the Homeowners and the Association. The Homeowners believe the proceeds should be distributed to the owners of the individual condominium units. Generally, the Association does not oppose disbursement of the proceeds to most of the unit owners but claims a “setoff” as to money to be distributed to the Homeowners because those individuals allegedly interfered with a possible sale of the complex for $17 million.

In October 2009, the Homeowners filed a motion asking the trial court to resolve the parties' conflict by ordering the Association to distribute all of the insurance proceeds to the unit owners. In response, the Association repeatedly objected, over the course of several hearings, that the Homeowners' pleadings do not actually claim any entitlement to the proceeds and that the trial court could not grant relief not requested in the Homeowners' pleadings.

Notwithstanding that objection, on April 12, 2010, the trial court granted the Homeowners' motion and instructed the Association to distribute the disputed funds, ruling:

The Court is of the opinion that the net proceeds of the settlement with Lexington Insurance Company ... are the property of and should be distributed to all owners of condominium units in the Park Memorial Condominium (or their mortgagees, as applicable), and that no funds should be withheld by Park Memorial Condominium Association, Inc. from the owner's or mortgagees' portion of such settlement funds.

The Association objected to the ruling and asked for reconsideration, arguing that the trial court had deprived the Association of due process by summarily disposing of its claims without proper notice, pleadings, or proof. The trial court denied the Association's motion for reconsideration on May 10, 2010.

In addition, the trial court issued a show-cause order requiring the relators to appear before the court on May 18, 2010 to explain their failure to immediately comply with the court's orders. Relators petitioned this Court for a writ of mandamus, and we stayed the trial court's orders pending the resolution of this proceeding. We now lift our stay order and conditionally grant mandamus relief.

II.Standard of Review

A relator seeking mandamus must show that the trial court abused its discretion and there is no adequate remedy by appeal. In re Laibe Corp., 307 S.W.3d 314, 316 (Tex.2010) (orig. proceeding) (per curiam). As to the first prong, a trial court abuses its discretion if it (1) reaches a decision so arbitrary and unreasonable as to constitute a clear and prejudicial error of law, (2) clearly fails to correctly analyze or apply the law, or (3) acts without reference to any guiding rules or principles. See In re Columbia Med. Ctr. of Las Colinas, 306 S.W.3d 246, 248 (Tex.2010) (orig. proceeding) (per curiam); In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex.2005) (orig. proceeding) (per curiam); In re Helix Energy Solutions Group, Inc., 303 S.W.3d 386, 396 (Tex.App.-Houston [14th Dist.] 2010, orig. proceeding).

Regarding the second prong, in determining the adequacy of relators' appellate remedy, if any, we usually consider whether the benefits outweigh the detriments of mandamus review. See In re BP Prods. N. Am., Inc., 244 S.W.3d 840, 845 (Tex.2008) (orig. proceeding). However, if the trial court's order is void, as is claimed here, mandamus relief is appropriate and the relator need not show that he has no adequate appellate remedy. See In re Sw. Bell Tel. Co., 35 S.W.3d 602, 605 (Tex.2000) (orig. proceeding) (per curiam).

III.Analysis

The Association presents at least two arguments in support of its request for mandamus relief. First, the Association contends its due-process rights were deprived because the trial court granted the Homeowners relief that was not requested in their pleadings. Second, the Association contends the Texas Rules of Civil Procedure do not authorize a trial court to resolve a disputed fact issue-here, entitlement to the insurance proceeds-outside of a full trial on the merits, motion for summary judgment, or agreement by the parties. Accordingly, the Association concludes that, by doing so, the trial court acted without reference to guiding rules and principles and therefore abused its discretion. See Helix Energy, 303 S.W.3d at 396. We analyze each of these arguments in turn.

A. Notice of the Homeowners' Requested Relief

Due process, on a fundamental level, requires notice and a fair opportunity to be heard. See Fuentes v. Shevin, 407 U.S. 67, 80, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972); Tex. Workers' Comp. Comm'n v. Patient Advocates of Tex., 136 S.W.3d 643, 658 (Tex.2004); Derbigny v. Bank One, 809 S.W.2d 292, 295 (Tex.App.-Houston [14th Dist.] 1991, no writ). Due process requires a full hearing before a court having jurisdiction, the opportunity to introduce evidence at a meaningful time and in a meaningful manner, and the right to judicial findings based on the evidence. See Perry v. Del Rio, 67 S.W.3d 85, 92 (Tex.2001); Derbigny, 809 S.W.2d at 295; King v. Lindley, 697 S.W.2d 749, 752 (Tex.App.-Corpus Christi 1985, writ ref'd n.r.e.); Jordan v. Jordan, 653 S.W.2d 356, 358 (Tex.App.-San Antonio 1983, no writ).

Here, notice of the relief sought by the Homeowners-that is, distribution of the insurance proceeds-should have been, but was not, apparent from their pleadings. In fact, their petition did not assert any claim whatsoever to the insurance proceeds.

The primary function of pleadings is to notify the opposing party of one's claims and defenses, as well as the relief sought. See Herrington v. Sandcastle Condo. Ass'n, 222 S.W.3d 99, 102 (Tex.App.-Houston [14th Dist.] 2006, no pet.). A trial court cannot grant relief to a party in the absence of pleadings supporting that relief, unless the issue has been tried by consent. ⁴ See Cunningham v. Parkdale Bank, 660 S.W.2d 810, 813 (Tex.1983) (citing Tex.R. Civ. P. 301); Binder v. Joe, 193 S.W.3d 29, 32 (Tex.App.-Houston [1st Dist.] 2006, no pet.). Therefore, we conclude the trial court abused its discretion by granting the Homeowners relief not requested in their pleadings. See Helix Energy, 303 S.W.3d at 396.

B. Summary Disposition of Disputed Fact Issue

In addition, the Association claims the trial court abused its discretion by summarily resolving a disputed fact issue without a trial on the merits, motion for summary judgment, or settlement by the parties. We agree.

The Texas Rules of Civil Procedure provide several procedural vehicles that may be used to resolve a dispute between the parties. Those options include, among other things, the following: trial on the merits, either to a jury or the bench, motions for summary judgment, or agreements by the parties to compromise some or all of a party's claims. ⁵ See, e.g., Tex.R. Civ. P. 11 (agreements between parties), 166a (summary judgment), 216 (jury trial), 262 (bench trial). Except by these methods, however, a trial court cannot resolve a disputed issue. See Unitrust, Inc. v. Jet Fleet Corp., 673 S.W.2d 619, 623 (Tex.App.-Dallas 1984, no writ) (“A dismissal, when issues are disputed, without affording the parties a right to a full trial on the merits, should only be invoked if the summary-judgment procedure is invoked or if the parties come to an agreement on the issues.”)...