Polk v. Seven Thirds Holdings
| Decision Date | 21 December 2020 |
| Docket Number | No. 06-20-00033-CV,06-20-00033-CV |
| Parties | TERESA COWAN POLK, Appellant v. SEVEN THIRDS HOLDINGS, LLC, Appellee |
| Court | Texas Court of Appeals |
On Appeal from the 71st District Court Harrison County, Texas
Before Morriss, C.J., Burgess and Stevens, JJ.
In the judgment below, the trial court awarded Seven Thirds Holdings, LLC (STH, LLC), a roadway easement across Teresa Cowan Polk's property to a private road in Harrison County. On appeal, Polk asserts that (1) the trial court lacked subject-matter jurisdiction because STH, LLC, did not have standing when the suit was filed, (2) the trial court exceeded its authority under the Declaratory Judgments Act when it entered judgment without the joinder of all persons who would be affected by the judgment, and (3) legally insufficient evidence supported the trial court's findings of fact, conclusions of law, and judgment. Because we find that STH, LLC, did not have standing to assert its claims and that the trial court lacked subject-matter jurisdiction, we reverse the trial court's judgment and dismiss STH, LLC's, claims against Polk, without prejudice.
Although our decision turns on standing, it is important to recite the history of the property in question and to identify the access issues presented to give context to our holding. Nevertheless, as we will explain below, our holding turns on the legal status of the parties rather than the property rights at issue. We will begin by discussing the history of the property.
As relevant to the standing issue, the evidence at trial showed that by a partition judgment entered on September 25, 1933, the 71st Judicial District Court of Harrison County partitioned a 200-acre tract of land bordering Caddo Lake into fourteen tracts. Seven smaller tracts, numbered Blocks 8 through 14, abutted Caddo Lake, with Block 8 being the easternmost tract, and Block 14 being the westernmost tract. Seven larger tracts, numbered Blocks 1 through 7, lay to the south of the southern borders of Blocks 8 through 14, with Block 7 being the northernmost tract, and Block 1 being the southernmost tract. A plat of the tracts follows:
Image materials not available for display. Each person or family group that was granted one of the smaller tracts was also granted one of the larger tracts.
The partition judgment also set aside a right-of-way for the use and benefit of each owner of the fourteen tracts. The right-of-way began in the southeast corner of Block 8 and then ran west through Blocks 9, 10, 11, 12, and 13 and into Block 14. At a certain point in Block 14,1 the right-of-way turned south through Block 14 and proceeded south through Blocks, 14, 7, 6, 5, 4, 3, and 2 and to the southern boundary of Block 1. As a result, the 1933 partition judgment created a right-of-way easement that travelled west, parallel to the northern boundary line of Block 7, and then turned ninety degrees south to travel parallel to the western boundary line of Block 7. The existence and location of the right-of-way easement created by the 1993 partition judgment are undisputed.
At some point after the partition judgment was entered, the Polk family acquired a part of Block 7 and a narrow strip on the eastern side of Block 14. Also, around 1997, a dwelling, or cabin, was built on Polk's portion of Block 14, and it is undisputed that the dwelling is situated directly across the right-of-way granted in the partition deed. The following survey shows the tracts owned by Polk to the west of Private Road 2626, the location of the right-of-way granted in the partition judgment, the location of Polk's cabin, and the location of Blocks, 7, 10, 11, 12, 13, and 14. The dispute in this case involves access to and across Blocks 7 and 13.
Image materials not available for display.
Although the location and existence of the 1933 right-of-way easement is important to understanding the dispute in this case, there was no evidence that it was ever used. And since 1997, the easement has been encumbered by the dwelling built across it. Nevertheless, ingress and egress to Blocks 12 and 13 did not become a problem until those lots were sold at two sheriff's sales in 2016.
The situation changed in 2016, when Seven Thirds Holdings (STH) purchased Blocks 12 and 13 at two sheriff's sales. STH was not a legal entity, but was merely an assumed name of Robert Clayton Allen, also known as Clay Allen (Clay), and his wife, Edythe Allen. However, in June 2017, Clay and Charles Robert Clayton Allen (Charles)—but not Edythe—formed a limited liability company—STH, LLC—which is very similar to the assumed name of Clay and Edythe—STH. Then, in March 2018, Clay filed an Abandonment of Use of Assumed Business Name, which represented that the assumed name of STH was abandoned on March 19, 2018.
Thus, Clay and Edythe purchased Blocks 12 and 13 at the sheriff's sales under the assumed name STH; but after the purchases, Clay and Charles created STH, LLC, and Clay abandoned the assumed name, STH. Accordingly, as we will discuss in more detail below, Clay and Edythe purchased Blocks 12 and 13 at the sheriff's sales, but did not file this suit, whereas, STH, LLC, filed this lawsuit, but did not purchase Blocks 12 and 13 at the sheriff's sales. This series of events is key to understanding the standing issues in this case.
On April 24, 2019, STH, LLC, filed its original petition in which it alleged that it was the owner of Block 13 and complained that Polk's cabin blocked its use of the right-of-way granted in the partition judgment. STH, LLC, also alleged that Polk's late husband had ratified a relocation of the right-of-way to the location of Private Road 2626 and asked the court to declare that the location of the right-of-way had changed, that Polk was estopped from denying its right to access its property, and that STH, LLC, be granted an easement across Polk's property to Private Road 2626. Essentially, STH, LLC, asked the trial court to impose an easement across Block 7 from the Private Road 2636 to the southeast corner of Block 13. The following map shows the location of the requested easement:
Image materials not available for display.
In August 2019, STH, LLC, filed a motion for summary judgment on its claims. In support of its claim that it owned Block 13, STH, LLC, attached a certified copy of the sheriff's deed conveying Block 13 to STH. Polk filed a response to the motion in which she asserted, inter alia, that STH, LLC, lacked standing to assert its claims since it had no ownership interest in Blocks 12 or 13. In its reply, STH, LLC, asserted that STH had conveyed its interest in Block 13 to STH, LLC, by a warranty deed that had an effective date of August 1, 2017, and attached a certified copy of that warranty deed. That warranty deed purported to have an effective date of August 1, 2017; was executed by "Robert Clayton Allen and Charles Allen, individually and DBA Seven Thirds Holding," on August 19, 2019; and was filed of record that same day.
In December 2019, STH, LLC, filed its first amended petition in which it asserted ownership in Block 13 through the warranty deed from STH. Polk answered and again asserted, inter alia, that STH, LLC, lacked standing since it did not own an interest in Block 13 when the suit was filed. At the trial on the merits, Clay, the managing member of STH, LLC, testified that he did not know if STH, LLC, owned Block 13 at the time the lawsuit was filed. He acknowledged filing an assumed name certificate for STH and that he and his wife did business under that name. He also testified that the warranty deed from STH to STH, LLC, was actually executed in August 2019, and that he thought the effective date indicated when the warranty deed was first drafted.
After the trial, the trial court entered its judgment in favor of STH, LLC, awarding it a twenty-foot easement across Polk's property to Private Road 2626 and attorney fees. The trial court also entered findings of fact and conclusions of law in which it found, regarding STH, LLC's, standing, that:
The trial court also entered conclusions of law that it had jurisdiction over the subject matter of the case and that "[STH, LLC,] is the owner of Pl...
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