Rankin v. Covington Oaks Condominium Owners Association, Inc., No. 4-04-00861-CV (TX 11/23/2005)
| Decision Date | 23 November 2005 |
| Docket Number | No. 4-04-00861-CV.,4-04-00861-CV. |
| Parties | MICHAEL RANKIN AND SUZANNE FARRER, Appellants, v. COVINGTON OAKS CONDOMINIUM OWNERS ASSOCIATION, INC., Appellee. |
| Court | Texas Supreme Court |
Appeal from the 57th Judicial District Court, Bexar County, Texas, Trial Court No. 2003-CI-05763, Honorable Patrick J. Boone, Judge Presiding.
REVERSED AND RENDERED IN PART AND REMANDED IN PART.
Sitting: Catherine STONE, Justice, Sarah B. DUNCAN, Justice, Rebecca SIMMONS, Justice.
Appellants Michael Rankin and Suzanne Farrer appeal a take-nothing judgment rendered by the trial court following a jury trial. Rankin and Farrer, owners of adjacent condominiums, brought suit against the Covington Oaks Condominium Owners Association, Inc. after being denied permission to add insulation and radiant barrier paint in their shared attic space and a dual fire door between the two units. The jury found that Covington Oaks acted arbitrarily, capriciously, or discriminately in denying Rankin's and Farrer's requested improvements, but awarded no monetary damages. The trial court subsequently entered a take-nothing judgment and denied attorney's fees. Because the jury's finding is inconsistent with a take-nothing judgment, we REVERSE the trial court's entry of a take-nothing judgment and RENDER a declaratory judgment in favor of Rankin and Farrer and further REMAND to the trial court for a determination of reasonable attorney's fees consistent with this opinion.
Suzanne Farrer owned a condominium unit at the Covington Oaks Condominiums and in 2002, Michael Rankin purchased the unit adjacent to Farrer's condominium intending to join the two units in accordance with Article 28 of the Condominium Declaration for the Covington Oaks Condominium (Covington Oaks' Declaration).1 See also Tex. Prop. Code Ann. § 82.061(3) (Vernon 2003). On December 8, 2002, Rankin and Farrer each presented the architectural control committee with two different applications: one with architectural drawings and specifications to construct a dual fire door between the utility rooms of the two units, allowing access from one unit to the other; and a second with a proposal to add radiant barrier paint and insulation in the shared attic space above the two units in accordance with the procedures identified in Article 17 of Covington Oaks' Declaration.2 The proposed modifications did not affect any other unit and were not visible from outside the units. Approximately one month later, the requests were denied without explanation. A subsequent letter from Covington Oaks' counsel confirmed the unexplained denial.
Rankin and Farrer filed suit requesting, primarily, a declaratory judgment. It was during the discovery process that Covington Oaks first raised concerns regarding the installation of fire doors creating potential problems with electrical lines, plumbing lines, and structural issues. In an attempt to alleviate these concerns, a hole was cut into the wall to exclude the possibility of any such obstacles. All parties agree the requested modifications would not affect electrical, pipes, utilities, or structural supports. With regard to the radiant barrier paint and loose fill insulation, Covington Oaks claimed concerns for improper ventilation, mold, and shortening the life of the shingles. Covington Oaks also raised concerns with effects to the fire wall and exceeding deed restricted occupancy limits. At trial, both representatives of Covington Oaks admitted no investigation was made into any of these areas of concern. Instead, these requests were simply denied.
The right of individuals to use their property in whatever manner they desire remains one of the most fundamental rights an individual property owner possesses. Restrictive covenants arguably enhance the value and marketability of each individual's property within the group or association. The Texas Property Code defines a restrictive covenant as "any covenant, condition, or restriction contained in a dedicatory instrument, whether mandatory, prohibitive, permissive or administrative." Tex. Prop. Code Ann. § 202.001(4) (Vernon 1995). Black's Law Dictionary defines restrictive covenant as a "private agreement, usu[ally] in a deed or lease, that restricts the use or occupancy of real property, esp[ecially] by specifying lot sizes, building lines, architectural styles, and the uses to which the property may be put." Black's Law Dictionary 393 (8th Edition 2004). The Restatement (Third) of Property states that a restrictive covenant is "a negative covenant that limits permissible uses of land." Restatement (Third) of Prop.: Servitudes § 1.3(3) (2000).
Texas Property Code Section 202.003 requires liberal construction of restrictive covenants to give effect to their purpose and intent. Tex. Prop. Code Ann. § 202.003 (Vernon 1996); Boudreaux Civil Ass'n v. Cox, 882 S.W.2d 543, 547 (Tex. App.-Houston [1st Dist.] 1994, no writ). Courts strictly construe covenants "against the party seeking to enforce it in favor of the free and unrestricted use of the premises." Munson v. Milton, 948 S.W.2d 813, 816 (Tex. App.-San Antonio 1997, pet. denied). Moreover, a presumption exists that a property owners' association reasonably exercised their discretionary authority "unless the court determines by a preponderance of the evidence that the exercise of discretionary authority was arbitrary, capricious, or discriminatory." Tex. Prop. Code Ann. § 202.004 (Vernon 1995); Gettysburg Homeowners Ass'n., Inc. v. Olson, 768 S.W.2d 369, 372 (Tex. App.-Houston [14th Dist.] 1989, no writ).
Texas case law appears to mirror the Restatement's definition. In Voice of the Cornerstone Church Corp. v. Pizza Prop. Partners, 160 S.W.3d 657, 665 (Tex. App.-Austin 2005, no pet.), the court held a restrictive covenant is a negative covenant that "limits permissible uses of land." We hold that Articles 17 and 28 of the Covington Oaks' Declaration limit the abilities of homeowners to perform work or create doorways in the common elements, without permission. These restrictions limit the homeowners' ability to use the land and are therefore restrictive covenants.
The Declaratory Judgments Act provides a person "whose rights, status, or other legal relations are affected by a statute, municipal ordinance, contract, or franchise with the right to have a court determine" any question of construction or validity arising under the instrument, statute, ordinance, contract, or franchise and obtain a declaration of rights, status, or other legal relations thereunder. Tex. Civ. Prac. & Rem. Code Ann. § 37.004(a) (Vernon 1997). Section 37.002 provides that the statute is to be liberally construed and administered. Tex. Civ. Prac. & Rem. Code Ann. § 37.002(b) (Vernon 1997). The purpose of the declaratory action is to establish existing rights, status, or other legal relationships. City of Garland v. Dallas Morning News, 22 S.W.3d 351, 357 (Tex. 2000). A declaratory judgment is applicable whenever there is a justiciable controversy existing "as to the rights and status of the parties and the controversy will be resolved by the declaration sought." Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995).
Rankin and Farrer's sole complaint was that Covington Oaks' refusal to allow for the installation of energy efficient insulation and radiant barrier paint and the installation of fire doors between the two units was arbitrary and capricious. Rankin and Farrer sought a determination as to whether the requested alterations to their respective condos were allowed pursuant to the Declaration's restrictive covenants, and if allowed, whether Covington Oaks had a right to deny their request. Because the determination Rankin and Farrer sought would clearly terminate the uncertainty which gave rise to the proceedings, settle the dispute and put an end to the controversy, we hold that a declaratory judgment action was appropriate. Tex. Civ. Prac. & Rem. Code § 37.008 (Vernon 2003); see Vicc Homeowners' Ass'n, Inc. v. Los Campeones, Inc., 143 S.W.3d 832 (Tex. App.-Corpus Christi 2004, no pet.) (affirming declaratory judgment against homeowners' association voiding certain amended restrictive covenants); City of Corpus Christi v. Tayor, 126 S.W.3d 712 (Tex. App.-Corpus Christi 2004, pet. dism'd) ().
In accordance with the Declaratory Judgment Act, two questions were presented to the jury for determination of an issue of fact. Tex. Civ. Prac. & Rem. Code § 37.007 (Vernon 2003). Jury Question 1 tracked the language of Tex. Prop. Code Ann. § 202.004(a) (Vernon 1995).3 Although the jury was instructed that Covington Oaks was presumed to have acted reasonably, the jury found that Covington Oaks intentionally interfered with the property rights of Rankin and Farrer. By answering "yes" to Jury Question 1, the jury necessarily made a finding that Covington Oaks acted arbitrarily, capriciously, or discriminately. In Jury Question 2, the jury awarded no monetary damages for either remedial damages or loss of use and enjoyment of property for either Rankin or Farrer. However, on the jury question addressing the damages of Michael Rankin, next to the blank associated with damages sustained in the past, the jury hand wrote "Plaintif's [sic] be reimbursed for lawyer fees and court costs."
Following the receipt of the jury verdict, Covington Oaks filed a motion to enter judgment, or in the alternative, for judgment notwithstanding the verdict based on the jury's finding of liability on the interference claim and the lack of damages associated with the liability finding. Conversely, Rankin and Farrer sought entry of judgment in their...
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