Johnie Jennings v. Carolyn Bindseil, No. 03-06-00371-CV (Tex.App.- Austin Feb. 22, 2008)(Opinion by Justice Henson) (deed restriction suit, declaratory judgment, mobile home) (Before Chief Justice Law, Justices Waldrop and Henson)
Johnie Jennings v. Carolyn Bindseil, Dan Bindseil, Jannalyn Welch, Julian Welch, Allen Knodel, Betty Knodel, Dale A. Friesenhahn, Horacio Ayala, Richard Aramendia, Daryl Payne, Melinda Payne, Deanna S. Wilson, Rodney Wilson, D.M. Stuller, William Hall, et al.
Appeal from 207th District Court of Comal County
Disposition: Reversed and remanded
Also see ==> Justice Waldrop's Dissent in Jennings vs. Bindseil
FROM THE DISTRICT COURT OF COMAL COUNTY, 207TH JUDICIAL DISTRICT
NO. C2005-0149B, HONORABLE JACK H. ROBISON, JUDGE PRESIDING
O P I N I O N
Johnie Jennings appeals from a summary judgment granted in favor of a coalition of landowners on Bindseil Lane in Comal County, Texas. (1) The Bindseil Landowners brought suit against Jennings under the Texas Declaratory Judgment Act (TDJA) and the Texas Property Code, seeking a declaratory judgment that a certain structure placed by Jennings on his property violated a deed restriction prohibiting mobile homes on the property. The Bindseil Landowners further sought a declaratory judgment that Jennings had proper notice that his act of placing the structure on his property would violate the deed restriction. The trial court granted the Bindseil Landowners' motion for summary judgment on their requests for declaratory relief. The trial court also granted the Bindseil Landowners' request for a permanent injunction, preventing Jennings from maintaining the structure on his property and requiring that he remove the structure and all associated equipment. Because we hold that a question of fact exists regarding whether the deed restriction prohibits the type of structure Jennings placed on his property, we reverse the trial court's order and remand the case for trial.
BACKGROUND
In 1999, Jennings purchased 2.25 acres in rural Comal County from Allen and Betty Knodel. In 2004, Jennings purchased a modular home, also referred to as industrialized housing, for assembly on the property. (2) When Jennings's home was delivered to his property on
December 22, 2004, a neighboring landowner objected to the delivery, claiming that the structure violated a deed restriction against mobile homes that was applicable to Jennings's property.
The deed restriction at issue was written by Dan Bindseil in 1978 and states:
No mobile home or homes or temporary houses or residences shall be placed upon or remain upon the property conveyed hereby, nor shall such property be used for the purposes of a tourist park, trailer court, mobile home park or community, nor for an overnight camping or trailer facility.
Jennings concedes that the deed restriction applies to his property and that he had notice of the restriction when he purchased the property. However, Jennings argues that after researching modular homes and contacting the state agency responsible for regulating modular homes, he came to the conclusion that a modular home would not violate the deed restriction against mobile homes.
Jennings's home was delivered in the form of two factory-constructed modular units mounted on a flat-bed truck and driven onto the property. The units were then connected on site and attached to the property on a permanent concrete foundation. The home required extensive on-site finish work, including completion of the roof and installation of dormers. The house plans for the home call for front and back porches and a carport to be installed, but the porches and carport were not completed, due to the injunction resulting from this litigation, which prohibited any further work on the home.
On February 14, 2005, the Bindseil Landowners filed suit against Jennings to enforce the deed restriction against mobile homes. Jennings counter-claimed, requesting a declaratory judgment that his home was not subject to the restriction. The parties filed cross motions for summary judgment, and the trial court granted the Bindseil Landowners' motion, declaring that the deed restriction prohibits modular homes, that Jennings's home was in violation of the deed restriction, and that Jennings was on notice that his acts were in violation of the restriction. The court also granted a permanent injunction, prohibiting Jennings from maintaining the home and requiring him to remove it from the property within 30 days. The trial court denied the Bindseil Landowners' request to impose statutory penalties but granted their request for attorney's fees. Jennings's traditional and no-evidence motions for summary judgment were denied.
Jennings argues on appeal that the deed restriction does not apply to his modular home. In the alternative, he argues that the deed restriction is ambiguous and that fact questions exist regarding whether the deed restriction applies to his home and whether he was on notice that his home violated the deed restriction. He further argues that the Bindseil Landowners are not entitled to injunctive relief because they failed to conclusively establish that they would be harmed by the presence of a modular home on his property.
STANDARD OF REVIEW
Summary judgments are reviewed de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). When, as here, both parties move for summary judgment on the same issues, and the trial court grants one motion and denies the other, the appellate court considers the summary-judgment evidence presented by both sides, determines all questions presented, and if the reviewing court finds that the trial court erred, renders the judgment the trial court should have rendered. Id.
The Bindseil Landowners filed a traditional motion for summary judgment and Jennings filed both traditional and no-evidence motions for summary judgment. To prevail on a traditional motion for summary judgment, the movant must show that there is no issue of material fact and that it is entitled to judgment as a matter of law. TX Far West, Ltd. v. Texas Invs. Mgmt., Inc., 127 S.W.3d 295, 301 (Tex. App.--Austin 2004, no pet.). Evidence favorable to the non-movant is taken as true and every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in its favor. Id.
A no-evidence motion for summary judgment must be granted if the moving party asserts that there is no evidence of one or more essential elements of a claim or defense on which
the non-movant would have the burden of proof at trial, and the nonmovant fails to produce more than a scintilla of summary-judgment evidence raising a genuine issue of material fact on those elements. Tex. R. Civ. P. 166a(i); Cox Texas Newspapers, L.P. v. Penick, 219 S.W.3d 425, 432-33 (Tex. App.--Austin 2007, pet. denied).
We review a trial court's grant of injunctive relief for an abuse of discretion. Operation Rescue-Nat'l v. Planned Parenthood, 975 S.W.2d 546, 560 (Tex. 1998). An abuse of discretion occurs when a trial court acts in an unreasonable or arbitrary manner, or without reference to guiding rules or principles. Holubec v. Brandenberger, 214 S.W.3d 650, 657 (Tex. App.--Austin 2006, no pet.).
DISCUSSION
Deed Restrictions
Covenants restricting the free use of land are not favored by the courts, but will be enforced if they are clearly worded and confined to a lawful purpose. Wilmoth v. Wilcox, 734 S.W.2d 656, 657 (Tex. 1987). When the language of a restrictive covenant is unambiguous, the Texas Property Code requires that the restrictive covenant be liberally construed to give effect to its purpose and intent. Tex. Prop. Code Ann. § 202.003(a) (West 2007). However, if the language is found to be ambiguous, the restrictive covenant is construed strictly against the party seeking to enforce the restriction, and all doubts must be resolved in favor of the free and unrestricted use of the property. Wilmoth, 734 S.W.2d at 657. The words and phrases in the restriction must be given their commonly accepted meaning as of the date the restriction was written and must not be enlarged, extended, changed, or stretched by construction. Id. at 657-58.
Restrictive covenants are subject to the general rules of contract construction. Pilarcik v. Emmons, 966 S.W.2d 474, 478 (Tex. 1998). If a restrictive covenant is subject to more than one reasonable interpretation so that the intention of the parties cannot be determined, the restriction is ambiguous. See Columbia Gas Transmission Co. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996). Whether a restrictive covenant is ambiguous is a question of law that must be decided by examining the covenant as a whole in light of the circumstances present when it was drafted. See id.
The deed restriction on Jennings's property prohibits "mobile homes." To determine if ambiguity exists, we must look to the common and ordinary meaning of the term "mobile home" as of the date the restriction was drafted to determine if the prohibition on mobile homes is susceptible to two or more meanings. See Dempsey v. Apache Shores Prop. Owners Assoc., Inc., 737 S.W.2d 589, 592 (Tex. App.--Austin 1987, no writ).
"Mobile home" is a term generally used to describe factory-built residential structures. The terminology used to describe these structures has evolved over the years to keep pace with innovations in technology and design. The original term generally associated with such housing was "house trailer." As the Texas Supreme Court observed in Wilmoth, 734 S.W.2d at 658, "[i]n the late 1960's the term 'mobile home' began to replace the term 'house trailer.' In the late 1970's the industry applied the term 'manufactured homes' to the products, replacing the name 'mobile home.'" As the industry began to make design improvements and use different names to avoid negative connotations associated with original types of factory-built housing, legislative changes were made to reflect the new terminology. See Dempsey, 737 S.W.2d at 592 ("At the time the restricted covenants were drafted [between 1968 and 1972], there was statutorily only the 'mobile home.' When the need became apparent, legislation was enacted to protect consumers and the terms 'manufactured homes,' 'modular homes,' and later 'industrialized housing' were employed . . . .").
As the terms used to describe various forms of factory-built housing have evolved, the regulation of such structures has also become highly specialized. Currently, manufactured housing is regulated by the Texas Department of Housing and Community Affairs (TDHCA), while modular homes are regulated by the Texas Department of Licensing and Regulation (TDLR). (3) However, this Court has recognized that, while a statutory scheme has evolved that differentiates manufactured homes from modular homes, "[t]he differences between the two are technical and minor." Id.
Jennings argues that the current regulatory, statutory, and other distinctions between his home and other types of factory-built housing are sufficient to exclude his home from the language of the deed restriction. According to a letter from TDLR sent to Jennings on February 22, 2005:
The primary difference between an industrialized (modular) home and a manufactured (HUD) home are:
a. The codes to which the homes are built. Modular housing in the State of Texas is constructed to the same codes as site built housing. Manufactured housing is constructed to Federal HUD code standards;
b. Modular homes must be installed on a permanent foundation system;
c. Titles are not issued for modular homes. Once installed the home becomes part of the real property; and
d. A municipality may not discriminate against modular homes built under the IHB program from being placed inside city limits or restrict these buildings to areas zoned for "manufactured" housing. (Please reference § 1202.251(b) of the Occupations Code).
Jennings emphasizes the fact that municipalities may not discriminate against modular homes in zoning decisions or adopt regulations that are more restrictive for modular homes than for site-built homes, including restricting the location of modular homes to areas zoned for manufactured housing. Significantly, however, while a municipality may not adopt a regulation "that is more restrictive for industrialized housing than that required" for site-built housing, the statute further states, "This section does not . . . affect deed restrictions." Tex. Occ. Code Ann. § 1202.253(e), (f)(2) (West 2004 & Supp. 2007). This language makes it clear that the legislature recognized the existence of deed restrictions prohibiting factory-built housing and indicated a clear intention that such restrictions were to remain unaffected by subsequent regulatory and statutory distinctions.
The deed restriction at issue here was written in 1978, before the terms "manufactured housing," "modular housing," or "industrialized housing" were commonly used. Because we must "look to the common and ordinary meaning of the term 'mobile home' as of the date the covenant was drafted," Dempsey, 737 S.W.2d at 592, the current distinctions between modular homes and manufactured homes are not dispositive. As we noted in Dempsey, "[t]he covenant drafters had no way to predict these subsequent technical statutory distinctions, and the language they chose should be viewed in that light." Id. at 593.
Because the covenant drafters did not have the benefit of subsequent technical statutory distinctions at the time the deed restriction on "mobile homes" was written, we hold that the covenant is unambiguous in its prohibition of mobile homes and any generic successors, regardless of minor changes in construction technology, design, or regulation. (4) To hold otherwise would essentially require drafters of restrictive covenants to foresee an infinite array of technological advances that might take place in the future and to draft a restriction prohibiting structures described by terminology that does not yet exist. Furthermore, "restrictive covenants would be rendered meaningless if they could be implicitly subverted by legislatively changing the name of that which is prohibited." Id. at 593. Therefore, we hold that the restrictive covenant prohibiting mobile homes is unambiguous as written and must be liberally construed to give effect to its purpose and intent, which was to prohibit mobile homes and their generic successors. See Tex. Prop. Code Ann. § 202.003(a). Thus, the question at hand is whether Jennings's home constitutes a mobile home or a generic successor, notwithstanding the label used by statute or regulatory authorities to describe such a structure in 2008.
However, when we held that the deed restriction against mobile homes in Dempsey was unambiguous, a jury had already made a factual finding that the structure at issue--a double-wide manufactured home--actually qualified as a mobile home. See id. at 593 ("Double-wides were considered 'mobile homes' at the time the covenants were drafted and the jury found, based on considerable evidence, that despite improvements in quality and appearance, they are still 'mobile homes' today. We cannot say that finding is legally or factually erroneous.").
In the present case, we do not have the benefit of a jury determination regarding whether the structure Jennings placed on his property constitutes a mobile home or a generic successor as prohibited by the deed restriction. (5) As a result, summary judgment is improper because a fact question exists regarding whether Jennings's home qualifies as the type of structure that the deed restriction prohibits. Therefore, we reverse the trial court's judgment declaring that Jennings's home violates the deed restriction against mobile homes and remand the cause for a determination of whether Jennings's home constitutes a mobile home or a generic successor of a mobile home as prohibited by the deed restriction, giving effect to the liberal construction required for unambiguous deed restrictions. See Tex. Prop. Code Ann. § 202.003(a).
Notice
A purchaser is bound only by those restrictive covenants of which he has actual or constructive notice. Davis v. Huey, 620 S.W.2d 561, 565-66 (Tex. 1981). Jennings concedes that he had notice of the deed restriction prohibiting mobile homes, but argues that because of his independent research and the information he received from government agencies, he was acting on a good-faith belief that his home did not violate the restriction. Jennings's good-faith belief, however, is irrelevant. A purchaser is bound by restrictive covenants of which he has notice, regardless of whether he believed that his actions violated the restriction. See Pheasant Run Homeowners Assoc., Inc. v. Kastor, 47 S.W.3d 747, 753-54 (Tex. App.--Houston [14th Dist.] 2001, pet. denied) (holding that property owners who are aware of deed restrictions and accompanying guidelines are considered to be on notice of such restrictions despite believing that guidelines are unclear and inapplicable); Tien Tao Assoc., Inc. v. Kingsbridge Park Cmty. Assoc., Inc., 953 S.W.2d 525, 528 (Tex. App.--Houston [1st Dist.] 1997, no pet.) (holding that property owner could not argue it had no notice of deed restrictions simply because guidelines were unclear when owner acknowledged having copy of such restrictions).
However, because we have determined that a fact issue exists regarding whether Jennings's home is prohibited by the deed restriction, we also reverse and remand the issue of whether Jennings had notice that his actions in placing such a structure on his property violated the deed restriction. We cannot conclude that Jennings was on notice that his actions violated the restriction when there has been no final determination regarding whether a violation actually
occurred. As a result, the trial court's declaratory judgment that Jennings had notice that his actions violated the restriction is also reversed and remanded.
The Permanent Injunction
Jennings argues that the Bindseil Landowners have not established that they will suffer an actual and substantial injury because of the presence of a modular home on Jennings's property. While the general rule is that one seeking injunctive relief must establish an actual and substantial injury, "[t]here is a well-settled exception to the general rule in restrictive covenant cases." Gigowski v. Russell, 718 S.W.2d 16, 21 (Tex. App.--Tyler 1986, no writ.). A covenant restricting the use of land may be enforced by injunction without a showing of any particular amount of damages, provided there is a distinct or substantial breach of the restrictive covenant. Id. However, because we have determined that the Bindseil Landowners failed to conclusively establish through summary-judgment evidence that Jennings committed a distinct or substantial breach of the deed restriction against mobile homes, we also reverse the trial court's judgment issuing a permanent injunction.
Attorney's Fees
In its order granting summary judgment in favor of the Bindseil Landowners, the trial court granted the Bindseil Landowners' request for attorney's fees. Because we have reversed and remanded this case for a factual determination regarding whether the structure placed on Jennings's property was in violation of the deed restriction against mobile homes, we also remand the issue of attorney's fees for the trial court's reconsideration pending the outcome of the necessary factual determination.
CONCLUSION
Because a genuine issue of material fact exists regarding whether the structure Jennings placed on his property constitutes a mobile home or a generic successor as prohibited by the deed restriction applicable to his property, we reverse the trial court's judgment and remand this case for further proceedings consistent with this opinion.
__________________________________________
Diane Henson, Justice
Before Chief Justice Law, Justices Waldrop and Henson;
Concurring and Dissenting Opinion by Justice Waldrop
Reversed and Remanded
Filed: February 22, 2008
1. For convenience, we will refer to the appellees collectively as the Bindseil Landowners.
2. Because this case revolves around the applicability of certain terminology to describe various types of housing, we will use the terms "modular home" and "industrialized housing" interchangeably to refer to the type of structure defined in § 1202.002(a) of the Texas Occupations Code. We will use the term "manufactured housing" to refer to the type of structure defined in § 1201.003(9) of the Texas Occupations Code.
Industrialized housing is governed by chapter 1202 of the Texas Occupations Code, while manufactured housing is governed by chapter 1201. "Industrialized housing" is defined as:
[A] residential structure that is:
(1) designed for the occupancy of one or more families;
(2) constructed in one or more modules or constructed using one or more modular components built at a location other than the permanent site; and
(3) designed to be used as a permanent residential structure when the module or the modular component is transported to the permanent site and erected or installed on a permanent foundation system.
Tex. Occ. Code Ann. § 1202.002(a) (West 2004).
"Manufactured housing" is defined as "a HUD-code manufactured home or a mobile home." Tex. Occ. Code Ann. § 1201.003(15) (West 2004 & Supp. 2007). According to § 1201.003(9) of the Texas Occupations Code:
"HUD-code manufactured home":
(A) means a structure:
(i) constructed on or after June 15, 1976, according to the rules of the United States Department of Housing and Urban Development;
(ii) built on a permanent chassis;
(iii) designed for use as a dwelling with or without a permanent foundation when the structure is connected to the required utilities;
(iv) transportable in one or more sections; and
(v) in the traveling mode, at least eight body feet in width or at least 40 body feet in length or, when erected on site, at least 320 square feet;
(B) includes the plumbing, heating, air conditioning, and electrical systems of the home; and
(C) does not include a recreational vehicle as defined by 24 C.F.R. Section 3282.8(g).
Tex. Occ. Code Ann. § 1201.003(9) (West 2004 & Supp. 2007).
The statutory definition of "mobile home" is essentially identical to that of a "HUD-code manufactured home" except that a mobile home is a structure constructed before June 15, 1976 and is not required to meet HUD requirements. See Tex. Occ. Code Ann. § 1201.003(17) (West 2004 & Supp. 2007).
3. Jennings contends that his home was assigned specific label numbers to certify that it is considered a modular home by TDLR and that it was manufactured in accordance with the requirements of the Texas Industrialized Building Code Council.
4. As the Tyler court of appeals has aptly stated:
To a greater or lesser extent, almost all the machines and equipment with which we are most familiar have been dramatically improved in recent times. . . . But the most radical advances rarely result in change that so overflows the basic definition of an object so as to require its re-classification. Airplanes and automobiles have been spectacularly altered and improved over this century, but they remain airplanes and automobiles. A 1981 Cadillac bears little resemblance to a model-T Ford, but it is still an automobile.
Gigowski v. Russell, 718 S.W.2d 16, 19 (Tex. App.--Tyler 1986, writ ref'd).
5. Due to the differences between manufactured homes and modular homes, we acknowledge that the issue of whether Jennings's home constitutes a "mobile home" or a generic successor may be a closer question than the determination made in Dempsey, 737 S.W.2d at 591, and Wilmoth, 734 S.W.2d at 657, that a double-wide manufactured home is a "mobile home." While Jennings's home may not have differed significantly in appearance from two double-wide manufactured homes labeled as "modular units" and connected on site, such a determination is necessarily a fact issue for the jury to decide.
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Thursday, August 30, 2007
Deed restrictions, injunctions: Owens vs. Ousey (Tex.App.- Austin, Aug. 30, 2007)
Appellants, Robert L. Owens, Jr. and Sylvia Lee Owens//Cross-Appellees, Michael Ousey, Kirsten Ousey, Robert F. West and Elizabeth West v. Appellees, Michael Ousey, Kirsten Ousey, Robert F. West and Elizabeth West//Cross-Appellants, Robert L. Owens, Jr. and Sylvia Lee Owens, No. 03-05-00329-CV (Tex.App.- Austin, August 30, 2007)(Opinion on rehearing by Justice Pemberton)(restrictive covenant injunction)(Before Chief Justice Law, Justices Pemberton and Waldrop)
Appeal from 207th District Court of Hays County
FROM THE DISTRICT COURT OF HAYS COUNTY, 207TH JUDICIAL DISTRICT
NO. 03-1778, HONORABLE CHARLES R. RAMSAY, JUDGE PRESIDING
OPINION BY JUSTICE BOB PEMBERTON
We withdraw our opinion and judgment issued June 8, 2007, and substitute the following in its place. We overrule appellees' motion for rehearing.
This is an appeal from a final judgment granting a mandatory permanent injunction to enforce restrictive covenants. The injunction compelled Robert L. Owens, Jr. and Sylvia Lee Owens to remove a mobile home from a lot they owned adjacent to lots owned by Michael and Kirsten Ousey and Robert and Elizabeth West. The Owenses appeal, contending that the injunction purported to enforce restrictive covenants that had expired in 2001, that purported 2003 "amendments" to "extend" the covenants were void, and that the covenants cannot be enforced under an implied negative reciprocal easement theory.
Appellees bring a cross-appeal contending that the district court erred in refusing to award them damages for the Owenses' breaches of restrictive covenants both on the lot in question and on an adjacent Owens-owned lot where the Owenses had initially placed the mobile home. For reasons explained below, we affirm in part, reverse in part, render in part, and remand in part.
BACKGROUND
Appellees and the Owenses own adjoining properties in a residential, unincorporated area of Hays County near San Marcos. The Owenses own two adjoining lots, a .23-acre lot located to the immediate west of, and sharing a common boundary with, a .715-acre lot. The Owenses' lots are located at essentially the southeast corner of three lots owned by appellees. Along the north and west boundaries of the Owenses' .23-acre lot are two lots totaling roughly 15 acres owned by the Ouseys. The Wests own a .716-acre lot bordering the Owenses' .715-acre lot to the north and one of the Ouseys' lots to the east. (1)
The deeds to both of the Owenses' lots contain restrictive covenants prohibiting, among other things, the placement of mobile homes on the property. The deed to the .715-acre lot, executed in 1976, specifies that the restrictive covenants:
shall be in full force and effect for a period of twenty-five years. However, any restrictive covenant or covenants may be renewed at the end of said 25 year period, or may, at any time, be altered amended or cancelled by a majority vote of the owners of the property, each lot, whether owned by one or more persons, having and being entitled to one vote, on any question of alteration, amendment of [sic] cancellation of any restriction. (2)
By contrast, the deed to the .23-acre lot, executed in 1984, does not specify a time limit or term for its restrictive covenants.
In October 2003, the Owenses placed a mobile home on the .23-acre lot. Appellees notified the Owenses of their objection to the placement of the mobile home on that lot, maintaining that it violated restrictive covenants on the property. On October 22, 2003, appellees voted to "amend" and "extend" the deed restrictions on the .715-acre lot. On the same date, appellees notified the Owenses of this action. Thereafter, on or about November 3, 2003, the Owenses moved the mobile home to their .715-acre lot. On or about November 6, 2003, appellees recorded a document entitled "Amendment/Extension of Deed Restrictions," pertaining to the Owenses' .715-acre lot, in the real property records of Hays County. This document purported to "extend and amend the covenants" applicable to the .715-acre lot, including those prohibiting mobile homes, and added some new restrictions.
After the Owenses refused to remove the mobile home from their .715-acre lot, appellees sued for damages and a mandatory permanent injunction requiring the Owenses to remove the mobile home from their property. Appellees asserted claims that (1) the Owenses violated "a deed restriction" applicable to the .23-acre lot by placing a mobile home there on or about October 1 and refusing to remove it until on or about November 4, 2003; (2) the Owenses violated "applicable deed restrictions" on the .715-acre lot by "moving and installing a mobile home" there and refusing to remove it; and alternatively, (3) the placement of the mobile home on either lot violated implied reciprocal negative easements applicable to both lots. Appellees also alleged that the Owenses' actions constituted a nuisance. The Owenses counter-claimed alleging that appellees' "Amendment/Extension of Deed Restrictions" "creates a cloud on Counter-Plaintiffs's land title" and requested a declaratory judgment that the instrument "is void and of no force or effect."
The case was tried to the court on mostly stipulated facts. The district court rendered judgment that:
1. The Owenses violated deed restrictions applicable to their .23-acre lot (those without a specified term or duration) by placing a mobile home there between October 1 and November 3, 2003.
2. The Owenses violated deed restrictions applicable to their .715-acre lot (those effective "for a period of twenty-five years") by placing a mobile home on that lot on November 3, 2003, and refusing to remove it. The court granted a mandatory injunction compelling the Owenses to move the mobile home off their property within thirty days after the judgment was signed.
3. "The Court finds for [the Owenses] as to [appellees'] claims of nuisance . . . and denies [appellees'] claim."
4. "[Appellees] not recover actual damages or any other kind of damages or interest from [the Owenses] and [the Owenses] not recover actual damages or any other kinds of damages from [appellees]."
5. Neither party would be awarded attorney's fees but, in the event of an appeal, each party would recover appellate attorney's fees if successful.
The district court subsequently entered findings of fact and conclusions of law. Among other facts, the court found that appellees had proven statutory damages as to the Owenses' .23-acre lot of $6,000 and $99,000 as to the Owenses' .715-acre lot. See Tex. Prop. Code Ann. § 202.004(c) (West 2007) (providing that a court "may assess civil damages for the violation of a restrictive covenant in an amount not to exceed $200 for each day of the violation"). It also found that the Wests had incurred loss of value to their property of $36,000 and that the Ouseys had incurred a loss of $60,000. However, the district court concluded that "[i]n accordance with the Court's discretion," appellees were "not entitled to recover damages" or interest.
The district court also found that appellees had incurred $14,024.70 in attorney's fees through trial, that the Owenses had incurred $20,000 in attorney's fees through trial, and that each party would incur $5,000 and $3,000 in attorney's fees on appeal to the court of appeals and the supreme court, respectively. The court concluded that "[i]n accordance with the Court's discretion," neither party was entitled to recover their attorney's fees through judgment, but each party could recover their appellate attorney's fees if successful.
ANALYSIS
The Owenses bring eight issues on appeal. They do not challenge the judgment that they violated restrictive covenants encumbering their .23-acre lot (where they initially placed the mobile home) but assert that the district court erred in rendering judgment that they violated restrictive covenants encumbering their .715-acre lot and in awarding mandatory injunctive relief. In their first issue, the Owenses argue that the restrictions encumbering their .715-acre lot made the basis for appellees' claims expired by their terms in August 2001 and could not be "amended" or "extended" by appellees' actions over two years after that date. The Owenses contend in their eighth issue that the district court erred in refusing to grant their request for a declaration that appellees' purported "amendment" or "extension" of the deed restrictions is void. In their second and seventh issues, the Owenses assert that appellees lack standing to enforce the restrictive covenants encumbering their .715-acre lot. The Owenses' remaining issues challenge the applicability of the implied negative restrictive easement theory on several grounds, including their contention that this theory cannot apply when, as here, the subject property is covered by express deed restrictions that had expired by their terms.
Appellees bring a cross-appeal asserting that the district court abused its discretion in denying their claims for statutory damages, common-law damages as to the .715-acre lot, (3) and attorney's fees. They also complain that the district court abused its discretion in awarding the Owenses conditional appellate attorney's fees.
The Owenses' appeal
Applicability of express deed restriction
We consider first whether express deed restrictions applied to the Owenses' .715-acre lot. When construing restrictive covenants, we apply the general rules of contract construction. Pilarcik v. Emmons, 966 S.W.2d 474, 478 (Tex. 1998). We examine the covenants as a whole in light of the circumstances present when the parties entered into the agreement. Id. Our primary concern is to ascertain and give effect to the true intention of the parties as expressed in the instrument. See Gulf Ins. Co. v. Burns Motors, 22 S.W.3d 417, 424 (Tex. 2000). Like other questions of law, we review a trial court's construction of restrictive covenants de novo. Raman Chandler Props., L.C. v. Caldwell's Creek Homeowners Ass'n, 178 S.W.3d 384, 390 (Tex. App.--Fort Worth 2005, pet. denied); City of Pasadena v. Gennedy, 125 S.W.3d 687, 692 (Tex. App.--Houston [1st Dist.] 2003, pet. denied).
The deed to the Owenses' .715-acre lot contains restrictive covenants prohibiting "noxious or other offensive activity," structures other than "one single family dwelling unit not to exceed two stories in height," any "mobile home, house trailer, tent, shack, garage or other out building [that] shall be used for residential purposes," or moving a dwelling situated outside the lot onto the lot or allowing it to remain there. It further provided that these restrictions:
shall be in full force and effect for a period of twenty-five years. However, any restrictive covenant or covenants may be renewed at the end of said 25 year period, or may, at any time, be altered, amended or cancelled by a majority vote of the owners of the property, each lot . . . having and being entitled to one vote, on any question of extension of said restrictions, and on any question of alteration, amendment of [sic] cancellation of any restriction.
The deed was executed on October 22, 1976. Under its terms, the restrictive covenants were to remain "in full force and effect for a period of 25 years," or only until October 22, 2001. Appellees contend that the "amendments" and "extension" of the deed restrictions that they voted to approve on October 22, 2003, and recorded on or about November 3--two years after the 25-year period had expired--made the restrictions effective through the relevant period. The Owenses contend that because the deed restrictions expired by their terms in October 2001, appellees necessarily could not have "extended" or "amended" the restrictions two years thereafter. Appellees point to the provisos that "any restrictive covenant or covenants may be renewed at the end of said 25 year period, or may, at any time, be altered, amended or cancelled." (Emphasis added.) They urge that these terms allow them to amend the restrictions "at any time," even two years after the "end of said 25 year period." We agree with the Owenses.
We must construe restrictive covenants as a whole, give effect to every sentence, clause, and word of a covenant, and avoid constructions that would render parts of the covenant superfluous or inoperative. See City of San Antonio v. City of Boerne, 111 S.W.3d 22, 29 (Tex. 2003). Appellees' construction, while literally supported by the words "at any time" if read in isolation, is inconsistent with the deed restrictions as a whole and renders the explicit 25-year term superfluous. Read in its proper context, the provision necessarily means that the restrictions may be amended "at any time" while they remain in effect. Similarly, the provision that the restrictions may be extended "at the end of said 25 year period" does not contemplate a time two years after the end of that period. (Emphasis added.) The fact that the property code requires restrictive covenants to be "liberally construed," see Tex. Prop. Code Ann. § 202.003(a) (West 2007), does not change our analysis--even under a liberal construction, the plain language of the deed states that the restrictive covenants are in effect for a 25-year period.
For these reasons, we conclude that the express restrictive covenants in the deeds to the Owenses' .715-acre lot had expired long before October 2003, when the Owenses moved a mobile home onto the property, and that appellees' purported "extensions" and "amendments" to the restrictions were void and ineffective. We sustain the Owenses' first and eighth issues, and need not reach their second and seventh issues, which concern appellees' standing to enforce these restrictions.
Implied reciprocal negative easement
In the alternative, appellees plead that even if the express deed restrictions had expired, the
Owenses were still barred from placing a mobile home on their property under an implied reciprocal negative easement theory. An implied reciprocal negative easement may arise or operate when:
an owner of real property subdivides it into lots and sells a substantial number of those lots with restrictive covenants designed to further the owner's general plan or scheme of development. The central issue is usually the existence of a general plan of development. The lots retained by the owner, or lots sold by the owner from the development without express restrictions to a grantee with notice of the restrictions in the other deeds, are burdened with what is variously called an implied reciprocal negative easement, or an implied equitable servitude, or negative implied restrictive covenant, that they may not be used in violation of the restrictive covenants burdening the lots sold with the express restrictions. Evans v. Pollock, 796 S.W.2d 465, 466 (Tex. 1990). The Owenses challenge the application of this principle on several grounds, (4) including that an implied reciprocal negative easement cannot arise where, as here, the subject property was sold with express restrictions that are the same as those allegedly implied. We agree with the Owenses.
As the supreme court observed in Evans, the implied reciprocal negative easement doctrine applies to enforce restrictions against lots "retained by the owner, or lots sold . . . without express restrictions to a grantee with notice of the restrictions in the other deeds." Id. (Emphasis added). The reason courts imply restrictions on these lots is to give effect to the general development scheme intended by the grantor. Id. But here, the deed to the Owenses' .715-acre lot contains express restrictions that reflect the grantor's intent. We conclude that no restrictions may be implied in the face of the express deed restrictions. We sustain the Owenses' third issue and need not reach their remaining issues.
Disposition
In light of our disposition of the Owenses' issues, we must reverse the portions of the district court's judgment holding that the Owenses violated restrictive covenants encumbering their .715-acre lot and granting injunctive relief compelling them to move the mobile home off this lot. The Owenses are also entitled to a declaration that appellees' post-expiration "extension" or "amendment" of the restrictive covenants applicable to the .715-acre lot is void.
As the Owenses are now the prevailing party on their declaratory judgment claim, we will remand the issue of their attorney's fees to afford the district court the opportunity to exercise its discretion to decide whether to award them. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009 (West 1997); McMillin v. State Farm Lloyds, 180 S.W.3d 183, 211 (Tex. App.--Austin 2005, pet. denied).
On rehearing, appellees complain that this Court erred in its original opinion in rendering a declaratory judgment in favor of the Owenses and remanding the issue of their attorney's fees under that cause of action. Appellees insist that the Owenses' declaratory-judgment counterclaim presented no new controversy apart from the issues raised in appellees' suit and therefore could not support an attorney's fee award. We disagree.
The "Declaratory Judgment Act is not available to settle disputes already pending before a court," BHP Petroleum Co. v. Millard, 800 S.W.2d 838, 841 (Tex. 1990), and it cannot be used as a vehicle for defendants to obtain attorney's fees merely for resisting the plaintiff's right to recover. See HECI Exploration Co. v. Clajon Gas Co., 843 S.W.2d 622, 638-639 (Tex. App.--Austin 1992, writ denied). However, a counterclaim for declaratory relief is appropriate where it is more than a mere denial of the plaintiff's claim and it has greater ramifications than the original suit. BHP Petroleum Co., 800 S.W.2d at 842. "A counterclaim has greater ramifications than the original suit if it seeks affirmative relief." Howell v. Mauzy, 899 S.W.2d 690, 706 (Tex. App.--Austin 1994, writ denied). To state a claim for affirmative relief, a defendant must allege a cause of action "independent of the plaintiff's claim on which the defendant could recover benefits, compensation, or relief, even if the plaintiff were to abandon or fail to establish his cause of action." Id. For example, in the context of suits asserting breaches of contracts or deeds, declaratory counterclaims seeking construction of such instruments may constitute claims for affirmative relief because, in contrast to a "one-time occurrence" giving rise to the plaintiff's suit, they concern the parties' ongoing and future relationship. BHP Petroleum Co., 800 S.W.2d at 840-42; Indian Beach Prop. Owners' Ass'n v. Linden, 222 S.W.3d 682, 702 (Tex. App.--Houston [1st Dist.] 2007, no pet.).
Appellees attempt to equate this case with decisions of this Court holding that certain declaratory counterclaims failed to state claims for affirmative relief. In Howell v. Mauzy, Howell sued Mauzy for violating the Texas Election Code and Mauzy counterclaimed for a declaratory judgment that all of his campaign activities complied with the Election Code. Howell, 899 S.W.2d at 706. This Court found that Mauzy was not entitled to recover on his declaratory judgment counterclaim because the claim "was expressly confined to denying liability on the claims Howell raised in his pleadings, and did not seek independent relief." Id. at 706-707. Similarly, in HECI Exploration Co., this Court held that a defendant gas company could not recover attorney's fees on its counterclaim in which it sought a declaration of its rights and obligations under a gas-purchasing contract with the plaintiff. HECI Exploration Co., 843 S.W.2d at 638-639. This Court noted that the parties had no ongoing relationship and that the alleged harm resulted from a one-time occurrence that was fully covered by the plaintiff's original suit. Id. Because the defendant's declaratory-judgment counterclaim sought nothing more than to avoid liability for its allegedly deficient performance under the contract, the defendant could not recover attorney fees under the declaratory judgments act. Id.
The Owenses' declaratory-judgment counterclaim is distinguishable from those in Howell and HECI because it seeks affirmative relief beyond the subject of appellees' suit. While appellees' suit is predicated on the violation of restrictive covenants prohibiting the placement of mobile homes on the Owenses' property, the Owenses counterclaim alleges that appellees' "Amendment/Extension of Deed Restrictions" "creates a cloud on Counter-Plaintiffs' land title" and seeks a declaration that the instrument is void in its entirety. The restrictions contained in the instrument include not only prohibitions against mobile homes, but also a ban on using the property for "any business, commercial, trade, mercantile or professional purpose"; a prohibition against subdividing the property; limitations on structures to single-family dwellings, minimum and maximum size restrictions on same, and prohibitions against using "modular, prefabricated or pre-built exterior or interior walls, or wall sections" in such structures; bans on the raising, breeding, or keeping of rabbits, poultry, dogs, cats or other animals other than household pets ("so long as no such household pets are kept in such numbers as to constitute an annoyance or nuisance to owners of other lots"); and a prohibition on "oil drilling, refining, or mining" on the lot. By seeking to invalidate these and other restrictions contained in the "Amendment/Extension of Deed Restrictions," the Owenses' counterclaim is one for affirmative relief extending beyond the subject matter of appellees' suit. We further observe that the declaration sought does not merely concern a past or current violation of restrictive covenants, but clarifies and defines the parties' ongoing relationship into the future. BHP Petroleum Co., 800 S.W.2d at 840-42; Indian Beach Prop. Owners' Ass'n., 222 S.W.3d at 702. We hold that the Owenses asserted a proper declaratory-judgment claim that potentially could support an award of attorney's fees, if the district court exercises its discretion to award them. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009.
Appellees' cross-appeal
Damages
In their first issue, appellees complain that the district court abused its discretion in refusing to award them statutory damages on their claims to enforce the restrictive covenants applicable to the Owenses' two lots. Section 202.004 of the property code authorizes trial courts to assess civil damages for the violation of a restrictive covenant for an amount up to $200 per day of violation. See Tex. Prop. Code. Ann. § 202.004(c). The district court found that appellees had proven statutory damages of $6,000 from the roughly one-month period in which the Owenses had placed the mobile home on their .23-acre lot, and $99,000 from the period after the Owenses moved the mobile home to their .715-acre lot. Section 202.004, however, states that the court "may" award these damages, see Tex. Prop. Code. Ann. § 202.004(c), and the district court exercised its discretion not to award appellees any statutory damages.
Having held that the restrictive covenants in the deed to the Owenses' .715-acre lot were no longer in effect when they placed the mobile home on that property, we affirm the district court's judgment denying appellees statutory damages based on those acts. However, the Owenses have not challenged the district court's judgment that they violated the restrictive covenants on their .23-acre lot. The district court chose to exercise its discretion to deny appellees statutory damages for these violations in the context of rendering a judgment that granted appellees mandatory injunctive relief compelling them to remove the mobile home from their other lot. Now that we have reversed that injunction, we believe that the district court should have the opportunity to revisit how it should exercise its discretion in deciding whether to award appellees statutory damages for the Owenses' breach of the restrictive covenants on their .23-acre lot. Accordingly, we will remand this issue to the district court.
Appellees also complain that the district court abused its discretion in refusing to award them common-law damages for the Owenses' breach of restrictive covenants on the .715-acre lot. For the same reasons that they were not entitled to injunctive relief based on the Owenses' placement of a mobile home on this lot, appellees were not entitled to damages from those acts. Further, having reviewed the record, we find no evidence of such damages. Consequently, the district court did not abuse its discretion in its ultimate determination not to award appellees common-law damages for the Owenses' breach of restrictive covenants on the .715-acre lot.
Appellees' attorney's fees
Appellees also contend that the district court abused its discretion in refusing to award the
$14,024 that it found they had incurred in attorney's fees. Appellees rely on section 5.006 of the property code, which provides that a trial court "shall allow as to a prevailing party" who asserted an action based on breach of restrictive covenant "reasonable attorney's fees." Tex. Prop. Code Ann. § 5.006(a) (West 2003) (emphasis added). Appellees are no longer a prevailing party on their claims that the Owenses breached restrictive covenants encumbering their .715-acre lot. However, they remain a prevailing party on their claims concerning the Owenses' .23-acre lot. Accordingly, we remand to the district court to segregate and award the attorney's fees relating to this claim. See Varner v. Cardenas, 218 S.W.3d 68, 69 (Tex. 2007); Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 314 (Tex. 2006) (remanding because evidence of attorney's fees for entire case is some evidence of what amount of segregated fees should be).
The Owenses' appellate attorney's fees.
Finally, appellees contend that the district court erred as a matter of law in awarding the Owenses appellate attorney's fees conditioned on their success on appeal. They observe that, under the court's original judgment, the Owenses had no statutory or contractual basis for an attorney's fees award. The Owenses do not dispute this argument. We reverse this award but remand the issue to the district court for consideration alongside the Owenses' entitlement to attorney's fees under their declaratory judgment action.
CONCLUSION
We reverse the portions of the district court's judgment holding that the Owenses' .715-acre lot was encumbered by restrictive covenants past August 2001, that they violated such restrictions by placing a mobile home on that lot, and enjoining them to remove the mobile home from that property. We render judgment declaring that appellees' 2003 post-expiration "extensions" or "amendments" to these deed restrictions are void and ineffective. We affirm the district court's judgment denying appellees recovery of statutory and common-law damages for the Owenses' alleged breach of restrictive covenants on the .715-acre lot.
To enable the district court to exercise its discretion in light of our ruling, we reverse and remand the issues of (1) whether the Owenses should be awarded attorney's fees under their declaratory judgment claim, including appellate attorney's fees, and (2) whether appellees should be awarded their statutory damages under section 202.004 of the property code relating to the Owenses' breach of restrictive covenants encumbering their .23-acre lot. We also remand the issue of appellees' attorney's fees under section 5.006(a) of the property code so the district court can segregate and award the portion relating to the .23-acre lot.
__________________________________________
Bob Pemberton, Justice
Before Chief Justice Law, Justices Pemberton and Waldrop
Affirmed in part; Reversed and Rendered in part; Reversed and Remanded in part on
Motion for Rehearing
Filed: August 30, 2007
APPENDIX A
1. A survey plat illustrating the locations of the lots is attached as Appendix A.
2. The parties dispute whether the deed clearly identifies "owners of the property" authorized to amend the restrictions. Ultimately, we need not reach that issue.
3. On rehearing, appellees have clarified that "[n]o common law damages were sought for the .23 acre lot deed violation."
4. It is unclear whether the district court's judgment is also predicated on this theory. The court did not explicitly address this theory, although it made fact findings that appear possibly to address some but not all of its elements. To avoid deemed findings, the Owenses requested additional fact findings regarding each element, which the district court declined to make. However, because both parties briefed the issue, and because we ultimately conclude that the implied reciprocal easement theory cannot apply here, we proceed to address it.
Appeal from 207th District Court of Hays County
FROM THE DISTRICT COURT OF HAYS COUNTY, 207TH JUDICIAL DISTRICT
NO. 03-1778, HONORABLE CHARLES R. RAMSAY, JUDGE PRESIDING
OPINION BY JUSTICE BOB PEMBERTON
We withdraw our opinion and judgment issued June 8, 2007, and substitute the following in its place. We overrule appellees' motion for rehearing.
This is an appeal from a final judgment granting a mandatory permanent injunction to enforce restrictive covenants. The injunction compelled Robert L. Owens, Jr. and Sylvia Lee Owens to remove a mobile home from a lot they owned adjacent to lots owned by Michael and Kirsten Ousey and Robert and Elizabeth West. The Owenses appeal, contending that the injunction purported to enforce restrictive covenants that had expired in 2001, that purported 2003 "amendments" to "extend" the covenants were void, and that the covenants cannot be enforced under an implied negative reciprocal easement theory.
Appellees bring a cross-appeal contending that the district court erred in refusing to award them damages for the Owenses' breaches of restrictive covenants both on the lot in question and on an adjacent Owens-owned lot where the Owenses had initially placed the mobile home. For reasons explained below, we affirm in part, reverse in part, render in part, and remand in part.
BACKGROUND
Appellees and the Owenses own adjoining properties in a residential, unincorporated area of Hays County near San Marcos. The Owenses own two adjoining lots, a .23-acre lot located to the immediate west of, and sharing a common boundary with, a .715-acre lot. The Owenses' lots are located at essentially the southeast corner of three lots owned by appellees. Along the north and west boundaries of the Owenses' .23-acre lot are two lots totaling roughly 15 acres owned by the Ouseys. The Wests own a .716-acre lot bordering the Owenses' .715-acre lot to the north and one of the Ouseys' lots to the east. (1)
The deeds to both of the Owenses' lots contain restrictive covenants prohibiting, among other things, the placement of mobile homes on the property. The deed to the .715-acre lot, executed in 1976, specifies that the restrictive covenants:
shall be in full force and effect for a period of twenty-five years. However, any restrictive covenant or covenants may be renewed at the end of said 25 year period, or may, at any time, be altered amended or cancelled by a majority vote of the owners of the property, each lot, whether owned by one or more persons, having and being entitled to one vote, on any question of alteration, amendment of [sic] cancellation of any restriction. (2)
By contrast, the deed to the .23-acre lot, executed in 1984, does not specify a time limit or term for its restrictive covenants.
In October 2003, the Owenses placed a mobile home on the .23-acre lot. Appellees notified the Owenses of their objection to the placement of the mobile home on that lot, maintaining that it violated restrictive covenants on the property. On October 22, 2003, appellees voted to "amend" and "extend" the deed restrictions on the .715-acre lot. On the same date, appellees notified the Owenses of this action. Thereafter, on or about November 3, 2003, the Owenses moved the mobile home to their .715-acre lot. On or about November 6, 2003, appellees recorded a document entitled "Amendment/Extension of Deed Restrictions," pertaining to the Owenses' .715-acre lot, in the real property records of Hays County. This document purported to "extend and amend the covenants" applicable to the .715-acre lot, including those prohibiting mobile homes, and added some new restrictions.
After the Owenses refused to remove the mobile home from their .715-acre lot, appellees sued for damages and a mandatory permanent injunction requiring the Owenses to remove the mobile home from their property. Appellees asserted claims that (1) the Owenses violated "a deed restriction" applicable to the .23-acre lot by placing a mobile home there on or about October 1 and refusing to remove it until on or about November 4, 2003; (2) the Owenses violated "applicable deed restrictions" on the .715-acre lot by "moving and installing a mobile home" there and refusing to remove it; and alternatively, (3) the placement of the mobile home on either lot violated implied reciprocal negative easements applicable to both lots. Appellees also alleged that the Owenses' actions constituted a nuisance. The Owenses counter-claimed alleging that appellees' "Amendment/Extension of Deed Restrictions" "creates a cloud on Counter-Plaintiffs's land title" and requested a declaratory judgment that the instrument "is void and of no force or effect."
The case was tried to the court on mostly stipulated facts. The district court rendered judgment that:
1. The Owenses violated deed restrictions applicable to their .23-acre lot (those without a specified term or duration) by placing a mobile home there between October 1 and November 3, 2003.
2. The Owenses violated deed restrictions applicable to their .715-acre lot (those effective "for a period of twenty-five years") by placing a mobile home on that lot on November 3, 2003, and refusing to remove it. The court granted a mandatory injunction compelling the Owenses to move the mobile home off their property within thirty days after the judgment was signed.
3. "The Court finds for [the Owenses] as to [appellees'] claims of nuisance . . . and denies [appellees'] claim."
4. "[Appellees] not recover actual damages or any other kind of damages or interest from [the Owenses] and [the Owenses] not recover actual damages or any other kinds of damages from [appellees]."
5. Neither party would be awarded attorney's fees but, in the event of an appeal, each party would recover appellate attorney's fees if successful.
The district court subsequently entered findings of fact and conclusions of law. Among other facts, the court found that appellees had proven statutory damages as to the Owenses' .23-acre lot of $6,000 and $99,000 as to the Owenses' .715-acre lot. See Tex. Prop. Code Ann. § 202.004(c) (West 2007) (providing that a court "may assess civil damages for the violation of a restrictive covenant in an amount not to exceed $200 for each day of the violation"). It also found that the Wests had incurred loss of value to their property of $36,000 and that the Ouseys had incurred a loss of $60,000. However, the district court concluded that "[i]n accordance with the Court's discretion," appellees were "not entitled to recover damages" or interest.
The district court also found that appellees had incurred $14,024.70 in attorney's fees through trial, that the Owenses had incurred $20,000 in attorney's fees through trial, and that each party would incur $5,000 and $3,000 in attorney's fees on appeal to the court of appeals and the supreme court, respectively. The court concluded that "[i]n accordance with the Court's discretion," neither party was entitled to recover their attorney's fees through judgment, but each party could recover their appellate attorney's fees if successful.
ANALYSIS
The Owenses bring eight issues on appeal. They do not challenge the judgment that they violated restrictive covenants encumbering their .23-acre lot (where they initially placed the mobile home) but assert that the district court erred in rendering judgment that they violated restrictive covenants encumbering their .715-acre lot and in awarding mandatory injunctive relief. In their first issue, the Owenses argue that the restrictions encumbering their .715-acre lot made the basis for appellees' claims expired by their terms in August 2001 and could not be "amended" or "extended" by appellees' actions over two years after that date. The Owenses contend in their eighth issue that the district court erred in refusing to grant their request for a declaration that appellees' purported "amendment" or "extension" of the deed restrictions is void. In their second and seventh issues, the Owenses assert that appellees lack standing to enforce the restrictive covenants encumbering their .715-acre lot. The Owenses' remaining issues challenge the applicability of the implied negative restrictive easement theory on several grounds, including their contention that this theory cannot apply when, as here, the subject property is covered by express deed restrictions that had expired by their terms.
Appellees bring a cross-appeal asserting that the district court abused its discretion in denying their claims for statutory damages, common-law damages as to the .715-acre lot, (3) and attorney's fees. They also complain that the district court abused its discretion in awarding the Owenses conditional appellate attorney's fees.
The Owenses' appeal
Applicability of express deed restriction
We consider first whether express deed restrictions applied to the Owenses' .715-acre lot. When construing restrictive covenants, we apply the general rules of contract construction. Pilarcik v. Emmons, 966 S.W.2d 474, 478 (Tex. 1998). We examine the covenants as a whole in light of the circumstances present when the parties entered into the agreement. Id. Our primary concern is to ascertain and give effect to the true intention of the parties as expressed in the instrument. See Gulf Ins. Co. v. Burns Motors, 22 S.W.3d 417, 424 (Tex. 2000). Like other questions of law, we review a trial court's construction of restrictive covenants de novo. Raman Chandler Props., L.C. v. Caldwell's Creek Homeowners Ass'n, 178 S.W.3d 384, 390 (Tex. App.--Fort Worth 2005, pet. denied); City of Pasadena v. Gennedy, 125 S.W.3d 687, 692 (Tex. App.--Houston [1st Dist.] 2003, pet. denied).
The deed to the Owenses' .715-acre lot contains restrictive covenants prohibiting "noxious or other offensive activity," structures other than "one single family dwelling unit not to exceed two stories in height," any "mobile home, house trailer, tent, shack, garage or other out building [that] shall be used for residential purposes," or moving a dwelling situated outside the lot onto the lot or allowing it to remain there. It further provided that these restrictions:
shall be in full force and effect for a period of twenty-five years. However, any restrictive covenant or covenants may be renewed at the end of said 25 year period, or may, at any time, be altered, amended or cancelled by a majority vote of the owners of the property, each lot . . . having and being entitled to one vote, on any question of extension of said restrictions, and on any question of alteration, amendment of [sic] cancellation of any restriction.
The deed was executed on October 22, 1976. Under its terms, the restrictive covenants were to remain "in full force and effect for a period of 25 years," or only until October 22, 2001. Appellees contend that the "amendments" and "extension" of the deed restrictions that they voted to approve on October 22, 2003, and recorded on or about November 3--two years after the 25-year period had expired--made the restrictions effective through the relevant period. The Owenses contend that because the deed restrictions expired by their terms in October 2001, appellees necessarily could not have "extended" or "amended" the restrictions two years thereafter. Appellees point to the provisos that "any restrictive covenant or covenants may be renewed at the end of said 25 year period, or may, at any time, be altered, amended or cancelled." (Emphasis added.) They urge that these terms allow them to amend the restrictions "at any time," even two years after the "end of said 25 year period." We agree with the Owenses.
We must construe restrictive covenants as a whole, give effect to every sentence, clause, and word of a covenant, and avoid constructions that would render parts of the covenant superfluous or inoperative. See City of San Antonio v. City of Boerne, 111 S.W.3d 22, 29 (Tex. 2003). Appellees' construction, while literally supported by the words "at any time" if read in isolation, is inconsistent with the deed restrictions as a whole and renders the explicit 25-year term superfluous. Read in its proper context, the provision necessarily means that the restrictions may be amended "at any time" while they remain in effect. Similarly, the provision that the restrictions may be extended "at the end of said 25 year period" does not contemplate a time two years after the end of that period. (Emphasis added.) The fact that the property code requires restrictive covenants to be "liberally construed," see Tex. Prop. Code Ann. § 202.003(a) (West 2007), does not change our analysis--even under a liberal construction, the plain language of the deed states that the restrictive covenants are in effect for a 25-year period.
For these reasons, we conclude that the express restrictive covenants in the deeds to the Owenses' .715-acre lot had expired long before October 2003, when the Owenses moved a mobile home onto the property, and that appellees' purported "extensions" and "amendments" to the restrictions were void and ineffective. We sustain the Owenses' first and eighth issues, and need not reach their second and seventh issues, which concern appellees' standing to enforce these restrictions.
Implied reciprocal negative easement
In the alternative, appellees plead that even if the express deed restrictions had expired, the
Owenses were still barred from placing a mobile home on their property under an implied reciprocal negative easement theory. An implied reciprocal negative easement may arise or operate when:
an owner of real property subdivides it into lots and sells a substantial number of those lots with restrictive covenants designed to further the owner's general plan or scheme of development. The central issue is usually the existence of a general plan of development. The lots retained by the owner, or lots sold by the owner from the development without express restrictions to a grantee with notice of the restrictions in the other deeds, are burdened with what is variously called an implied reciprocal negative easement, or an implied equitable servitude, or negative implied restrictive covenant, that they may not be used in violation of the restrictive covenants burdening the lots sold with the express restrictions. Evans v. Pollock, 796 S.W.2d 465, 466 (Tex. 1990). The Owenses challenge the application of this principle on several grounds, (4) including that an implied reciprocal negative easement cannot arise where, as here, the subject property was sold with express restrictions that are the same as those allegedly implied. We agree with the Owenses.
As the supreme court observed in Evans, the implied reciprocal negative easement doctrine applies to enforce restrictions against lots "retained by the owner, or lots sold . . . without express restrictions to a grantee with notice of the restrictions in the other deeds." Id. (Emphasis added). The reason courts imply restrictions on these lots is to give effect to the general development scheme intended by the grantor. Id. But here, the deed to the Owenses' .715-acre lot contains express restrictions that reflect the grantor's intent. We conclude that no restrictions may be implied in the face of the express deed restrictions. We sustain the Owenses' third issue and need not reach their remaining issues.
Disposition
In light of our disposition of the Owenses' issues, we must reverse the portions of the district court's judgment holding that the Owenses violated restrictive covenants encumbering their .715-acre lot and granting injunctive relief compelling them to move the mobile home off this lot. The Owenses are also entitled to a declaration that appellees' post-expiration "extension" or "amendment" of the restrictive covenants applicable to the .715-acre lot is void.
As the Owenses are now the prevailing party on their declaratory judgment claim, we will remand the issue of their attorney's fees to afford the district court the opportunity to exercise its discretion to decide whether to award them. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009 (West 1997); McMillin v. State Farm Lloyds, 180 S.W.3d 183, 211 (Tex. App.--Austin 2005, pet. denied).
On rehearing, appellees complain that this Court erred in its original opinion in rendering a declaratory judgment in favor of the Owenses and remanding the issue of their attorney's fees under that cause of action. Appellees insist that the Owenses' declaratory-judgment counterclaim presented no new controversy apart from the issues raised in appellees' suit and therefore could not support an attorney's fee award. We disagree.
The "Declaratory Judgment Act is not available to settle disputes already pending before a court," BHP Petroleum Co. v. Millard, 800 S.W.2d 838, 841 (Tex. 1990), and it cannot be used as a vehicle for defendants to obtain attorney's fees merely for resisting the plaintiff's right to recover. See HECI Exploration Co. v. Clajon Gas Co., 843 S.W.2d 622, 638-639 (Tex. App.--Austin 1992, writ denied). However, a counterclaim for declaratory relief is appropriate where it is more than a mere denial of the plaintiff's claim and it has greater ramifications than the original suit. BHP Petroleum Co., 800 S.W.2d at 842. "A counterclaim has greater ramifications than the original suit if it seeks affirmative relief." Howell v. Mauzy, 899 S.W.2d 690, 706 (Tex. App.--Austin 1994, writ denied). To state a claim for affirmative relief, a defendant must allege a cause of action "independent of the plaintiff's claim on which the defendant could recover benefits, compensation, or relief, even if the plaintiff were to abandon or fail to establish his cause of action." Id. For example, in the context of suits asserting breaches of contracts or deeds, declaratory counterclaims seeking construction of such instruments may constitute claims for affirmative relief because, in contrast to a "one-time occurrence" giving rise to the plaintiff's suit, they concern the parties' ongoing and future relationship. BHP Petroleum Co., 800 S.W.2d at 840-42; Indian Beach Prop. Owners' Ass'n v. Linden, 222 S.W.3d 682, 702 (Tex. App.--Houston [1st Dist.] 2007, no pet.).
Appellees attempt to equate this case with decisions of this Court holding that certain declaratory counterclaims failed to state claims for affirmative relief. In Howell v. Mauzy, Howell sued Mauzy for violating the Texas Election Code and Mauzy counterclaimed for a declaratory judgment that all of his campaign activities complied with the Election Code. Howell, 899 S.W.2d at 706. This Court found that Mauzy was not entitled to recover on his declaratory judgment counterclaim because the claim "was expressly confined to denying liability on the claims Howell raised in his pleadings, and did not seek independent relief." Id. at 706-707. Similarly, in HECI Exploration Co., this Court held that a defendant gas company could not recover attorney's fees on its counterclaim in which it sought a declaration of its rights and obligations under a gas-purchasing contract with the plaintiff. HECI Exploration Co., 843 S.W.2d at 638-639. This Court noted that the parties had no ongoing relationship and that the alleged harm resulted from a one-time occurrence that was fully covered by the plaintiff's original suit. Id. Because the defendant's declaratory-judgment counterclaim sought nothing more than to avoid liability for its allegedly deficient performance under the contract, the defendant could not recover attorney fees under the declaratory judgments act. Id.
The Owenses' declaratory-judgment counterclaim is distinguishable from those in Howell and HECI because it seeks affirmative relief beyond the subject of appellees' suit. While appellees' suit is predicated on the violation of restrictive covenants prohibiting the placement of mobile homes on the Owenses' property, the Owenses counterclaim alleges that appellees' "Amendment/Extension of Deed Restrictions" "creates a cloud on Counter-Plaintiffs' land title" and seeks a declaration that the instrument is void in its entirety. The restrictions contained in the instrument include not only prohibitions against mobile homes, but also a ban on using the property for "any business, commercial, trade, mercantile or professional purpose"; a prohibition against subdividing the property; limitations on structures to single-family dwellings, minimum and maximum size restrictions on same, and prohibitions against using "modular, prefabricated or pre-built exterior or interior walls, or wall sections" in such structures; bans on the raising, breeding, or keeping of rabbits, poultry, dogs, cats or other animals other than household pets ("so long as no such household pets are kept in such numbers as to constitute an annoyance or nuisance to owners of other lots"); and a prohibition on "oil drilling, refining, or mining" on the lot. By seeking to invalidate these and other restrictions contained in the "Amendment/Extension of Deed Restrictions," the Owenses' counterclaim is one for affirmative relief extending beyond the subject matter of appellees' suit. We further observe that the declaration sought does not merely concern a past or current violation of restrictive covenants, but clarifies and defines the parties' ongoing relationship into the future. BHP Petroleum Co., 800 S.W.2d at 840-42; Indian Beach Prop. Owners' Ass'n., 222 S.W.3d at 702. We hold that the Owenses asserted a proper declaratory-judgment claim that potentially could support an award of attorney's fees, if the district court exercises its discretion to award them. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009.
Appellees' cross-appeal
Damages
In their first issue, appellees complain that the district court abused its discretion in refusing to award them statutory damages on their claims to enforce the restrictive covenants applicable to the Owenses' two lots. Section 202.004 of the property code authorizes trial courts to assess civil damages for the violation of a restrictive covenant for an amount up to $200 per day of violation. See Tex. Prop. Code. Ann. § 202.004(c). The district court found that appellees had proven statutory damages of $6,000 from the roughly one-month period in which the Owenses had placed the mobile home on their .23-acre lot, and $99,000 from the period after the Owenses moved the mobile home to their .715-acre lot. Section 202.004, however, states that the court "may" award these damages, see Tex. Prop. Code. Ann. § 202.004(c), and the district court exercised its discretion not to award appellees any statutory damages.
Having held that the restrictive covenants in the deed to the Owenses' .715-acre lot were no longer in effect when they placed the mobile home on that property, we affirm the district court's judgment denying appellees statutory damages based on those acts. However, the Owenses have not challenged the district court's judgment that they violated the restrictive covenants on their .23-acre lot. The district court chose to exercise its discretion to deny appellees statutory damages for these violations in the context of rendering a judgment that granted appellees mandatory injunctive relief compelling them to remove the mobile home from their other lot. Now that we have reversed that injunction, we believe that the district court should have the opportunity to revisit how it should exercise its discretion in deciding whether to award appellees statutory damages for the Owenses' breach of the restrictive covenants on their .23-acre lot. Accordingly, we will remand this issue to the district court.
Appellees also complain that the district court abused its discretion in refusing to award them common-law damages for the Owenses' breach of restrictive covenants on the .715-acre lot. For the same reasons that they were not entitled to injunctive relief based on the Owenses' placement of a mobile home on this lot, appellees were not entitled to damages from those acts. Further, having reviewed the record, we find no evidence of such damages. Consequently, the district court did not abuse its discretion in its ultimate determination not to award appellees common-law damages for the Owenses' breach of restrictive covenants on the .715-acre lot.
Appellees' attorney's fees
Appellees also contend that the district court abused its discretion in refusing to award the
$14,024 that it found they had incurred in attorney's fees. Appellees rely on section 5.006 of the property code, which provides that a trial court "shall allow as to a prevailing party" who asserted an action based on breach of restrictive covenant "reasonable attorney's fees." Tex. Prop. Code Ann. § 5.006(a) (West 2003) (emphasis added). Appellees are no longer a prevailing party on their claims that the Owenses breached restrictive covenants encumbering their .715-acre lot. However, they remain a prevailing party on their claims concerning the Owenses' .23-acre lot. Accordingly, we remand to the district court to segregate and award the attorney's fees relating to this claim. See Varner v. Cardenas, 218 S.W.3d 68, 69 (Tex. 2007); Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 314 (Tex. 2006) (remanding because evidence of attorney's fees for entire case is some evidence of what amount of segregated fees should be).
The Owenses' appellate attorney's fees.
Finally, appellees contend that the district court erred as a matter of law in awarding the Owenses appellate attorney's fees conditioned on their success on appeal. They observe that, under the court's original judgment, the Owenses had no statutory or contractual basis for an attorney's fees award. The Owenses do not dispute this argument. We reverse this award but remand the issue to the district court for consideration alongside the Owenses' entitlement to attorney's fees under their declaratory judgment action.
CONCLUSION
We reverse the portions of the district court's judgment holding that the Owenses' .715-acre lot was encumbered by restrictive covenants past August 2001, that they violated such restrictions by placing a mobile home on that lot, and enjoining them to remove the mobile home from that property. We render judgment declaring that appellees' 2003 post-expiration "extensions" or "amendments" to these deed restrictions are void and ineffective. We affirm the district court's judgment denying appellees recovery of statutory and common-law damages for the Owenses' alleged breach of restrictive covenants on the .715-acre lot.
To enable the district court to exercise its discretion in light of our ruling, we reverse and remand the issues of (1) whether the Owenses should be awarded attorney's fees under their declaratory judgment claim, including appellate attorney's fees, and (2) whether appellees should be awarded their statutory damages under section 202.004 of the property code relating to the Owenses' breach of restrictive covenants encumbering their .23-acre lot. We also remand the issue of appellees' attorney's fees under section 5.006(a) of the property code so the district court can segregate and award the portion relating to the .23-acre lot.
__________________________________________
Bob Pemberton, Justice
Before Chief Justice Law, Justices Pemberton and Waldrop
Affirmed in part; Reversed and Rendered in part; Reversed and Remanded in part on
Motion for Rehearing
Filed: August 30, 2007
APPENDIX A
1. A survey plat illustrating the locations of the lots is attached as Appendix A.
2. The parties dispute whether the deed clearly identifies "owners of the property" authorized to amend the restrictions. Ultimately, we need not reach that issue.
3. On rehearing, appellees have clarified that "[n]o common law damages were sought for the .23 acre lot deed violation."
4. It is unclear whether the district court's judgment is also predicated on this theory. The court did not explicitly address this theory, although it made fact findings that appear possibly to address some but not all of its elements. To avoid deemed findings, the Owenses requested additional fact findings regarding each element, which the district court declined to make. However, because both parties briefed the issue, and because we ultimately conclude that the implied reciprocal easement theory cannot apply here, we proceed to address it.
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