TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-03-00316-CV

TX Far West, Ltd., Appellant

v.

Texas Investments Management, Inc., Appellee

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT

NO. GN200239, HONORABLE SCOTT H. JENKINS, JUDGE PRESIDING

O P I N I O N

This case involves a restrictive covenant that purportedly requires appellant TX Far

West, Ltd. (“TX Far West”) to pay an annual maintenance fee to appellee Texas Investments

Management, Inc. (“appellee”). Because appellee never developed the land as originally

contemplated, TX Far Westsought a declaratory judgment that appellee had breached the restrictive

covenant, and, in the alternative, that the restrictive covenant is not enforceable. Both parties moved

for summary judgment, and the district court granted summary judgment for appellee and denied

summary judgment for TX Far West. TX Far West appeals both the denial of its summary-judgment

motion and the grant of appellee’s summary-judgment motion. Because we conclude that appellee

failed to prove that no issues of material fact exist and failed to prove that it was entitled to summary

judgment as a matter of law, we reverse the district court’s order granting summary judgment and

remand to the district court for further proceedings.
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BACKGROUND

In the early 1980s, appellee Texas Investments Management, Inc. proposed plans to

develop a 35.49-acre tract of land in northwest Austin, which was to include several office and

commercial buildings, interconnecting roads and sidewalks, and possibly public gathering areas and

a jogging trail. While appellee was awaiting approval of its development plans by the City of Austin,

Prudential HealthCare Plan,Inc.(“Prudential”) purchased five acres out ofthe 35.49-acre tract. The

deed ofsale to Prudential included restrictive covenantsthat were attached as an exhibit to the deed.

The restrictive covenants provided:

The following restrictive covenants are created as covenants running with the five

acre tract of land described in this Deed (“Said Property”), for the benefit of Grantor

[appellee] herein, its successors and assigns in its capacity as developer of that

certain thirty-five and 49/100 (35.49) acre tract out of which is hereby conveyed the

herein described five acre parcel. The restrictions herein imposed are created for the

purpose of establishing a high quality mixed-use office and commercial complex

composed of a coordinated series of buildings, roadways, landscaping, pedestrian

malls and parking facilities.

The restrictive covenantssection included a provision for a maintenance fee to be paid by Prudential

and subsequent owners to appellee. This provision provided:

Maintenance Fee

1. Grantee [Prudential] and each subsequent owner of Said Property [the five-acre

tract]shall pay an annual maintenance fee to Grantor [appellee], for the purpose

of providing for the orderly development, operation and maintenance ofstreets,

sidewalks, pedestrian malls and other quasi-public facilities on said 35.49-acre

tract, as well as to provide for the operation and maintenance of a proposed

jogging trail, necessary security services, insurance, traffic control and

architectural review and enforcement for said 35.49-acre development. The

maintenance fee for Said Property herein conveyed shall be $.20 per gross
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square foot of building space per year commencing with the initial occupancy

of said space. . . . Commencing with January 1, 1983 and thereafter on January

1 of each following year, the maintenance fee shall be adjusted to reflect any

increase in the Consumer Price Index (“CPI”) from the base year of 1981. . . .

Grantor shall provide Grantee annually with a written report disclosing all

expenditures made by Grantor out of the maintenance fee fund.

Prudential’s purchase of the five-acre tract was completed while appellee was

awaiting approval of its development plan by the City of Austin, which, in fact, never approved the

plan. Despite the City of Austin’s failure to approve appellee’s master-development plan, Prudential

commenced payment ofthe annual maintenance fee to appellee in 1983 and continued payment until

1998, when Prudential sold the property to Texas HCP Holdings, Inc. (“THCP”). THCP continued

paying the maintenance fees until it sold the property to appellant TX Far West in July 2001.

In November 2001, Richard Kemp, the president of TX Far West’s corporate general

partner, received the billing for the 2002 maintenance fee. Kemp requested a written report

itemizing the services being rendered in exchange for payment of the maintenance fee. This request

was consistent with the deed requirement that “Grantorshall provide Grantee annuallywith a written

report disclosing all expenditures made by Grantor out of the maintenance fee fund.” According to

Kemp, Jay Tapp, appellee’s president, responded “it is none of your [expletive] business.”

After various correspondence between the partiesregarding appellee’s expenditures,

TX Far West filed a declaratory-judgment action seeking a determination that appellee had violated

the terms of the restrictive covenant due to its failure to provide the amenities specified therein. TX

Far West argued that, because it was paying the maintenance fee, it was entitled to receive the

benefits provided forin the language ofthe restrictive covenant, namely, amenities on the 35.49-acre
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tract. In the alternative, TX Far West alleged that the maintenance-fee covenant was a personal

covenant only and did not run with the land.

Appellee responded with a counterclaim for breach of contract and its own

declaratory-judgment action. Appellee admitted that, for some or all of the years in question, it had

not provided streets, sidewalks, pedestrian malls, or other quasi-public facilities on the 35.49-acre

tract, nor had it provided a jogging trail,security services, insurance, or traffic control for the 35.49-

acre development. However, appellee did build an 80-foot roadway to access the five-acre tract and

has been mowing a strip of grass on the median of that roadway. Appellee claimed that the

maintenance fee was not conditioned on the construction of additional amenities. Moreover,

appellee argued that the maintenance fee was, in essence, actually a financing arrangement that had

been negotiated by Prudential. In his affidavit, Jay Tapp stated:

As president of [appellee], I was involved in negotiating with Prudential about the

sale of the five-acre Property. In negotiating with Prudential, I was informed that

[appellee]’s asking price was more than Prudential had available in its budget. I also

was informed, however, that Prudential was willing to pay a lower price for the land

with an additional amount to be paid to [appellee] as a guaranteed annual

maintenance fee for a period of fifty years (the “Maintenance Fee”). [Appellee]

(through me) and Prudential (through its Vice President, Paul McCarty, now

deceased) agreed the amount due each year for the Maintenance Fee would be

determined by a mathematical calculation based solely on the square footage of

building space on the property and the consumer price index, and not the amount of

maintenance expenses incurred in a particular year.

[Appellee] agreed to accept the lower purchase price based, in part, on an analysis

that the Maintenance Fee payments would likely exceed actual maintenance costs and

much of the price [appellee] had initially sought for the Property could be recovered

during the 50-year agreement.
1

 This roadway, now known as Austin Center Boulevard, was later dedicated to the City of

Austin as a public right-of-way. Appellee admits that, because the City of Austin maintains the

roadway, appellee does not maintain any streets on the 35.49-acre tract.

2

 The district court determined the maintenance fee to be $17,697.56 in 2002 and $18,174.91

in 2003. Appellee expends approximately $4,320 per year for maintaining the median on Austin

Center Boulevard.

5

Furthermore, appellee claimed that the development plansinitiallycalled for appellee

to construct a 30-foot roadway. Because Prudential desired a larger roadway, appellee constructed

an 80-foot roadway1that allegedly cost $138,144.72 more than the 30-footroadway originally called

for in the development plans. According to appellee, this expanded roadway was the only amenity

that Prudential desired. Although the maintenance fee is far greater than current maintenance

expenditures,2appellee claims it has failed to recover more than $430,000 of its maintenance

expenses when a six-percent interest rate is applied to appellee’s initial expenditure. 

Both parties filed traditional motions for summary judgment. In its motion, TX Far

West argued that because it was paying the maintenance fee and incurring the burden of the

restrictive covenant, it was entitled to the benefits provided by the language of the restrictive

covenant as well. TX Far West also contended that payment of the maintenance fee was conditioned

upon appellee providing the amenities called for in the restrictive covenant. Conversely, appellees

argued in its summary-judgment motion that construction of the 80-foot roadway constitutes

“development” of the 35.49-acre tract, the amenities mentioned in the restrictive covenant were

entirely optional, and appellee’s “only obligation included in the language of the Restrictive

Covenant[was] to maintain and provide security and insurance for any streets,sidewalks, and public

amenitiesit choosesto construct on the Property.” Appellee also presented its argument that the true
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intent of the maintenance fee was to function as a deferred compensation financing arrangement to

compensate for a lower initial price paid by Prudential. The trial court denied TX Far West’s

summary-judgment motion, granted appellee’s summary-judgment motion, and stated that “the

payment of this maintenance fee is not conditioned on additional amenities being added to the

property, but is solely conditioned on the maintenance of the grass median currently existing in the

center of Austin Center Blvd. . . .”

On appeal, TX Far West argues that, because the 35.49-acre tract was not developed

as called for in the restrictive covenant, the restrictive covenant should not be enforced because (1)

the purpose of the restrictive covenant has been frustrated; (2) there has been such a change in

conditions that it is no longer possible to secure to a substantial degree the benefits sought to be

realized from the restrictive covenant; and (3) the mutuality of obligation central to the purpose of

the restrictive covenant is absent.

Appellee responds on appeal that the district court’s grant of summary judgment for

appellee should be affirmed because (1) TX Far West’s arguments that the restrictive covenant is

unenforceable are waived because these arguments were not before the trial court in the summaryjudgment proceeding; (2) no language in the restrictive covenant requires appellee to construct

additional amenities; (3) the continued payment of the maintenance fee by previous owners

constitutes a waiver of TX Far West’s right to enforce the restrictive covenant and require appellee

to build additional amenities; (4) TX Far West hasjudicially admitted the validity and enforceability

of the restrictive covenant; and (5) it would be inequitable to relieve TX Far West of the burden of
7

the restrictive covenant due to the large initial expenditure appellee incurred in building the 80-foot

roadway.

STANDARD OF REVIEW

The standards for reviewing a traditional summary-judgment motion are well

established: (1) the summary-judgment movant has the burden of showing that there is no issue of

material fact and that it is entitled to judgment as a matter of law; (2) in deciding if there is a

disputed issue of material fact precluding summary judgment, evidence favorable to the non-movant

will be taken astrue; and (3) every reasonable inference must be indulged in favor of the non-movant

and any doubts resolved in its favor. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex.

1985). When both parties move for summary judgment, each party must carry its own burden as the

movant. Tigner v. First Nat’l Bank of Angleton, 264 S.W.2d 85, 87 (Tex. 1954); Jun v. Lloyds &

Other VariousInsurers, 37 S.W.3d 59, 62 (Tex. App.—Austin 2000, pet. denied). When the district

court grants one party’s motion and denies the other’s, the reviewing court should determine all

questions presented and render the judgment that the court below should have rendered.

Commissioners Court v. Agan, 940 S.W.2d 77, 81 (Tex. 1997); City of Fort Worth v. Cornyn, 86

S.W.3d 320, 322 (Tex. App.—Austin 2002, no pet.).

On appeal, all reasonable inferences will be indulged, and all doubts will be resolved

in favor of the losing party. University of Tex. Health Sci. Ctr. v. Big Train Carpet, Inc., 739 S.W.2d

792, 792 (Tex. 1987). The propriety of summary judgment is a question of law; therefore, we review

the trial court’s decision de novo. Natividad v. Alexsis, Inc., 875 S.W.2d 695, 699 (Tex. 1994).

“When a trial court’s order granting summary judgment does not specify the ground or grounds
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relied on for itsruling,summary judgment will be affirmed on appeal if any of the theories advanced

are meritorious.” Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. 1989). If we find inconsistencies in

the summary-judgment evidence that raise an issue of material fact, we must reverse the summary

judgment and remand to the trial court. Hinojosa v.Columbia/St. David’s Healthcare Sys., L.P., 106

S.W.3d 380, 384 (Tex. App.—Austin 2002, no pet.).

ANALYSIS

Appellee’s Summary-Judgment Motion

Appellee argued that it was entitled to declaratory relief and summary judgment on

its breach-of-contract claim on four grounds: (1) the language of the restrictive covenant; (2) the

intent of the parties and the consistent interpretation and performance of the restrictive covenant in

previous years; (3) intentional waiver of the right to enforce alleged obligations; and (4) equity and

good conscience. Because we will affirm the summary judgment if any of these theories are

meritorious, see Carr, 776 S.W.2d at 569, we will address each argument in turn. First, however,

we must outline some of the principles of restrictive covenants.

Appellee focuses much of its appellate efforts on whether TX Far West has waived

the right to contest the validity of the restrictive covenant. However, this overlooks the wellestablished rule that a traditional summary-judgment movant must prove that it is entitled to

judgment as a matter of law. Nixon, 690 S.W.2d at 548. If a defendant establishes a right to

judgment as a matter of law, the burden then shifts to the plaintiff to raise a fact issue precluding

summary judgment. Curtis v. Anderson, 106 S.W.3d 251, 253 (Tex. App.—Austin 2003, pet.

denied).
3

 Neither party argues that the restrictive covenant is actually an equitable servitude.

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In order for appellee to be entitled to summary judgment, appellee had to show that

the restrictive covenant was binding on TX Far West as a successor to Prudential. A restrictive

covenant can bind a successor to the burdened land in two ways: as a covenant that runs with the

land at law, or as an equitable servitude.3 Reagan Nat’l Adver. of Austin, Inc. v. Capital Outdoors,

Inc., 96 S.W.3d 490, 495 (Tex. App.—Austin 2002, pet. granted, judgm’t vacated w.r.m.). In Texas,

a covenant runs with the land when (1) it touches and concerns the land; (2) it relates to a thing in

existence or specifically binds the parties and their assigns; (3) the original parties to the covenant

intend it to run with the land; and (4) the successor to the burden has notice. Inwood North

Homeowners’ Ass’n v. Harris, 736 S.W.2d 632, 635 (Tex. 1987). In addition to these fundamental

requirements,section 202.003(a) of the Texas PropertyCode statesthat “a restrictive covenantshall

be liberally construed to give effect to its purposes and intent.” Tex. Prop. Code Ann. § 202.003(a)

(West 1995).

(1) The Language of the Restrictive Covenant

Having outlined the requirements for a restrictive covenant to run with the land, and

having reviewed the entire summary-judgmentrecord, we now look to the language ofthe restrictive

covenant to determine its meaning and whether it runs with the land. Restrictive covenants are

subject to the same rules of construction and interpretation as contracts. Pilarcik v. Emmons, 966

S.W.2d 474, 478 (Tex. 1998). The primary concern of a court in construing a written contract is to

ascertain the true intent of the parties as expressed in the instrument. See National Union Fire Ins.
10

Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). For a court to be able to construe a

contract as a matter of law, the contract must be unambiguous. See Columbia Gas Transmission

Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996). If a written contract is so worded

that it can be given a definite or certain legal meaning, then it is unambiguous. See National Union,

907 S.W.2d at 520; Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983). On the other hand, if the

contract is subject to two or more reasonable interpretations after applying the pertinent rules of

construction, the contract is ambiguous, which creates a fact issue on the parties’ intent. See

Columbia Gas, 940 S.W.2d at 589.

Appellee argues that it is entitled to judgment as a matter of law because courts

should construe the parties’ rights under an unambiguous contract in accordance with the language

of the contract contained within the “four corners” of the document. Although appellee cites French

v. Chevron U.S.A., Inc., 896 S.W.2d 795, 797 (Tex. 1995), for this proposition, French also states

that “the ‘four corners’ canon of construction meansthat the court must look at the entire instrument

to ascertain the intent of the parties.” Id. (citing Luckel v. White, 819 S.W.2d 459, 461 (Tex. 1991)).

Appellee focuses on the language in the restrictive covenant that statesthat the restrictive covenants

are created “for the benefit of Grantor herein.” Appellee also argues that no language requires

appellee to build any amenities on the 35.49-acre tract, and that the only obligation the restrictive

covenant imposes on appellee is to “maintain and provide security and insurance for any streets,

sidewalks, and public amenities it chooses to construct on the Property.”

TX FarWest, however,focuses on language in the restrictive covenant thatstatesthat

the restrictive covenants were “created for the purpose of establishing a high quality mixed-use
11

office and commercial complex composed of a coordinated series of buildings, roadways,

landscaping, pedestrian malls and parking facilities.” (Emphasis added.) Moreover, TX Far West

arguesthat the complete language of the restrictive covenantsstates that they were imposed “for the

benefit of Grantor herein, itssuccessors and assignsin its capacity as developer of that certain thirtyfive and 49/100 (35.49) acre tract out of which is hereby conveyed the herein described five acre

parcel.” (Emphasis added.) TX Far West argues that, because the 35.49-acre tract was never

developed, appellee has breached its obligations under the restrictive covenant, or, in the alternative,

the restrictive covenant is not enforceable.

Appellee responds that it did, in fact, develop the 35.49-acre tract. Although its

master-development plans were never approved by the City of Austin, appellee argues that

construction of a roadway on the five-acre tract constitutes development of the 35.49-acre tract

because the five-acre tract is a part of the larger 35.49-acre tract.

TX Far West and appellee have presented differing interpretations of the restrictive

covenant, both of which are reasonable. Because the language of the restrictive covenant cannot be

given a definite or certain legal meaning—especially the meaning of the language “in [appellee’s]

capacity as developer of that certain thirty-five and 49/100 (35.49) acre tract”—it is ambiguous and

therefore creates a fact issue on the parties’ intent. See Columbia Gas, 940 S.W.2d at 589. We

therefore hold that, because the ambiguous language of the restrictive covenant cannot establish

whether the original parties intended it to run with the land when the 35.49-acre tract was not fully

developed, the language of the restrictive covenant alone isinsufficient to support the district court’s

summary judgment.
4

 Appellee’s assertions are based largely on the affidavit of Jay Tapp. In appellee’s

summary-judgment motion, of the sixty-two footnotes that cite appellee’s attached summary

judgment evidence, forty-four reference Tapp’s affidavit. Tapp’s affidavit is based largely on his

recollection of Prudential’sintent, but the only person at Prudential whom Tapp specifically names,

Paul McCarty, is now deceased.

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(2) Intent of the Original Parties and Purpose of the Restrictive Covenant

Having determined that the language of the restrictive covenant is ambiguous, we turn

to the intent of the original parties and to the purpose of the covenant to determine whether this

restrictive covenant runs with the land. Although appellee contends that it and Prudential intended

the maintenance fee to be, in essence, a financing arrangement in exchange for a lower purchase

price, our review of the summary-judgment record reveals a conflict as to this assertion.4 Included

in the summary-judgment record is an affidavit of Edwin Maurice (Mo) Keathley, a former vice

president at Prudential. According to Keathley’s affidavit, Tapp sent Keathley an affidavit to execute

on Tapp’s behalf and indicated to Keathley that attorneys might contact Keathley. Keathley

responded that “if [lawyers] did [contact him], [his] recollections did not support the position as set

forth in the proposed Affidavit submitted by Mr. Tapp.” Specifically, Keathley’s affidavit states:

4. I am a former Vice-President at Prudential Health Care, Inc. I was VicePresident at [Prudential] on March 26, 1981, the date that the property [in

question] was purchased from [appellee] and at all times during the negotiation

of said price. I was aware of the property purchase negotiations at that time,

including the price that was paid and the amenities that were to be provided by

the seller of the land pursuant to the Restrictive Covenant, due to my position

at [Prudential], my participation in corporate meetings, and my review of

documents during the negotiation and consummation of the purchase. Based on

my recollection of the transaction and the events and discussions surrounding

same, it was clear that [Prudential] believed that it was paying fair market price

for the real property in question. There was no belief by me that [Prudential]

was getting a below market deal on the property.
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5. Based on my position at [Prudential] I was aware of the transaction between

[Prudential] and [appellee] and was aware that Prudential wastrying to purchase

the property. I am aware of no discussion internally, or with Mr. Tapp, that the

price being paid for the property was too low, or the purchase price for the

property was all that [Prudential] could pay. Additionally, I am aware of no

discussion or decision on the part of [Prudential] that the maintenance fee

obligation in the restrictive covenants would essentially be used to make up any

alleged shortage in the purchase price paid for the property. On the contrary,

[Prudential] inquired on multiple occasions as to what [appellee] was doing in

return for the maintenance fees. After seeking this information for some time,

Mr. Tapp finally provided a statement of his expenses, which indicated a great

disparity, in [appellee’s] favor, between the expensesincurred for maintenance,

and the maintenance fee paid to [appellee] pursuant to the restrictive covenant.

[Prudential] was never satisfied that it was getting fair value for the fees being

paid for the maintenance/services by [appellee].

Appellee asserts on appeal that the statements in Keathley’s affidavit “are entirely

consistent with Mr. Tapp’s affidavit and they cannot be said to ‘contradict’ the evidence that the

maintenance fee was deferred consideration for the sale of the five acres.” Appellee supports this

position by noting that Keathley’s statement that Prudential believed it was paying “the fair market

price for the real property in question” is not inconsistent with Mr. Tapp’s statement that appellee’s

“asking” price was more than Prudential had available in its budget.

We disagree. To accept appellee’s argument would require us to agree with Mr.

Tapp’srecollection of Prudential’sintent and entirely ignore the recollection of an actual Prudential

representative with personal knowledge of the transaction that resulted in this litigation. This is

precisely the type of fact dispute that should be determined by a trier of fact.

The closing agreement between appellee and Prudential also contradicts appellee’s

assertion that Prudential did not desire any amenities other than the roadway. This document states

that
5

 The letter from Tapp was in response to a Prudential letter dated February 23, 1983.

According to Tapp’s letter, the Prudential letter “inquir[ed] about the expenditures out of the

maintenance fund fee.” The Prudential letter is not included in the record.

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the jogging trail shall be completed within a reasonable period of time . . . and shall

be constructed and completed in a good and workmanlike manner, attractive in

appearence [sic], and maintained and constructed in such a way that [Prudential’s]

use of, and ingress and egress to and from the [five-acre tract] is in no way hindered.

(Emphasis added.) The use of the word “shall” indicates that the parties, at the least, contemplated

that the jogging trail would be built. This contradicts appellee’s assertion, supported only by Tapp’s

affidavit, that Prudential essentially agreed to trade all of the listed amenities in the restrictive

covenant for a wider roadway and specifically requested, based on liability concerns, that additional

amenities not be built.

Appellee’s own summary-judgment evidence also contradicts its assertion that

Prudential only cared about construction of a roadway and that the maintenance fee was a disguised

financing arrangement. A March 9, 1983 letter from Jay Tapp to Prudential5 reads:

Since your payment ofthisfee is an unconditional obligation,Iwould appreciate your

prompt processing of our invoice. The initial amount for 1982 was due when you

first occupied the building, and the amount due for 1983 was due in January.

We are in the process of finalizing our master landscaping plan, including the

medians, but have been held up by the good City of Austin bureaucracy.

I am sure you can see that we have spent a considerable amount on improving and

maintaining the appearance of the Austin Center.

Despite appellee’s assertionsthat Prudential was only concerned about construction of the roadway,

this letter appears to indicate otherwise. Prudential was evidently requesting an accounting to
15

itemize the expendituresfrom the maintenance-fee fund. If appellee’s assertion regarding the actual

nature of the maintenance fee is correct—that it was a financing arrangement and Prudential had no

interest in development of anything other than a roadway to access the five-acre tract—we see no

reason why Prudential would request an itemization of expenses from appellee, nor do we

understand why appellee’s response would allude to the “good City of Austin bureaucracy” if

Prudential had no interest in any developments other than the roadway. Because this letter was

written on March 9, 1983, it also contradicts appellee’srepeated assertionsthat the maintenance fees

were paid, without objection, since 1981.

Because Keathley’s affidavit, the closing agreement, and the March 9, 1983 letter

from Jay Tapp to Prudential all contradict appellee’s summary-judgment evidence, a material fact

issue exists as to the intent of the original parties and the purpose of the restrictive covenant.

Appellee has therefore failed to prove as a matter of law that the restrictive covenant runs with the

land and is enforceable against TX Far West. We hold that the disputed intent of the parties does

not support the district court’s summary judgment.

(3) Intentional Waiver

Appellee, citing Cowling v. Colligan, 312 S.W.2d 943, 945 (Tex. 1958), argues that

the acquiescence of the previous owners of the five-acre tract to the alleged violations of the

restrictive covenant amounts to a waiver of TX Far West’s right to enforce the restrictive covenant.

Because the restrictive covenant expressly statesthat “failure byGrantor or Grantee, theirsuccessors

or assigns, to enforce any covenant, condition or restriction herein contained shall in no event be
16

deemed a waiver of the right to do so thereafter,” we disagree with appellee’s waiver argument and

hold that it is insufficient to support the district court’s summary judgment.

(4) Equity and Good Conscience

Finally, appellee contends that the equities of the situation warrant a grant of

summary judgment in its favor. Appellee argues it has failed to recover more than $430,000 of its

maintenance expenses when a six-percent interestrate is applied to appellee’sinitial expenditure and

compounded for more than two decades. In fact, appellee states that even if the maintenance fee is

paid until its fifty-year term expires, appellee would still not recover the balance of its initial

investment.

According to its own arguments, appellee bargained for a maintenance fee it knew

would not reimburse it for its initial expenditure. Moreover, appellee’s equitable argument is

inconsistent with its position that the maintenance fee was intended as a deferred-compensation

scheme and was not intended to compensate for actual maintenance expenses. Because the equitable

arguments presented by appellee create at most a fact dispute, we hold that the district court’s grant

of summary judgment in appellee’s favor is not supported by the equities of the situation.

Having overruled all of the grounds appellee presented in its summary-judgment

motion, we determine that the district court erred in granting summary judgment to appellee. 

TX Far West’s Summary-Judgment Motion

We turn now to the question of whether the district court’s denial of TX Far West’s

summary-judgment motion was improper. In its summary-judgment motion, TX Far West argues
17

that appellee breached the restrictive covenant and should therefore be ordered to comply with

appellee’s affirmative duties required therein. In the alternative, TX Far West argues that the

restrictive covenantshould be modified or terminated. As explained above, the restrictive covenant

is ambiguous, and a determination of the obligations imposed on both appellee and TX Far West

requires a trier of fact to determine the intent of the original parties and the purpose of the restrictive

covenant. Accordingly, the district court did not err in denying TX Far West’s summary-judgment

motion based upon TX Far West’s argument that the restrictive covenant was unambiguous and

imposed affirmative duties on appellee. Therefore, we need only address TX Far West’s contention

that the restrictive covenant is not enforceable.

A court may refuse to enforce a restrictive covenant if there has been such a change

of conditions that it is no longer possible to secure in a substantial degree the benefits sought to be

realized through the covenant. Cowling, 312 S.W.2d at 945; Dempsey v. Apache Shores Prop.

Owners Ass’n, 737 S.W.2d 589, 597 (Tex. App.—Austin 1987, no writ). Appellee argues that,

because TX Far West failed to present this argument to the district court, it is precluded from arguing

on appeal that the restrictive covenant is not enforceable. Specifically, appellee asserts, “Nowhere

in [TX Far West’s] 39-page Response and Counter-Motion for Summary Judgment does [TX Far

West] contest the validity of the Restrictive Covenant.”

After examining the pleadings and responses of TX Far West, we disagree. TX Far

West argued in both its live pleading and in its summary-judgment motion that the restrictive

covenant is unenforceable. In its live pleading, TX Far West argued that the restrictive covenant

“does not run with the land, but is merely a personal covenant.” In its summary-judgment motion,
18

TX Far West argued that “there have been changed conditions . . . [that] consist of the failure of

[appellee] to receive approval for the 35 acre development.” TX Far West contended that, due to

these changed conditions, 

it is no longer possible to secure in a substantial degree the benefits sought to be

realized through the covenant, to wit, establishing a high quality mixed-use office

and commercial complex composed of a coordinated series of buildings, roadways,

landscaping, pedestrian malls and parking facilities. . . . Cowling [v. Colligan] tends

to support TX Far West’s contention that the Restrictive Covenant should be

terminated and/or equitably reformed due to changed conditions which substantially

impair the benefit that was to be derived from same.

(Emphasis added.) Because TX Far West argued in both its live pleading and in its summaryjudgment motion that the restrictive covenant is unenforceable, we reject appellee’s contention that

TX Far West waived the right to present this argument on appeal.

Appellee also assertsthatstatements byKemp,TX FarWest’srepresentative, qualify

as judicial admissions and therefore prove the validity of the restrictive covenant as a matter of law.

Specifically, Kemp stated in his affidavit:

• I . . . clearly and unequivocally came to the conclusion that the Restrictive

Covenant had neither been abandoned nor its enforcement waived. . . .

• I reasonably believed, and still now believe, the Restrictive Covenant is in full

force and effect. . . .

• TX Far West, as a bonafide [sic] purchaser, clearly retained all rightsto enforce

the Restrictive Covenant and the obligations of [appellee] as TX Far West is

asserting in this lawsuit.
19

It is well established that “assertions of fact, not pleaded in the alternative, in the live pleadings of

a party are regarded as formal judicial admissions.” Holy Cross Church of God in Christ v. Wolf,

44 S.W.3d 562, 568 (Tex. 2001) (quoting Houston First Am. Sav. v. Musick, 650 S.W.2d 764, 767

(Tex. 1983)). A judicial admission that is clear and unequivocal has conclusive effect and bars the

admitting party from later disputing the admitted fact. Id.; Gevinson v. Manhattan Constr. Co., 449

S.W.2d 458, 467 (Tex. 1969).

Here, however, we disagree for several reasons that these statements prove the

validity of the restrictive covenant as a matter of law. First, Kemp’s statements that the restrictive

covenant is enforceable are made in support of TX Far West’s argument that, because TX Far West

is incurring the burden of the maintenance fee, it is entitled to force appellee to provide the

concomitant benefits. This in no way prevents TX Far West from pleading, in the alternative, that

the restrictive covenant is unenforceable due to changed conditions, frustration of purpose, or lack

of mutuality of obligations. Kemp’s statements also do not foreclose TX Far West from arguing,

in the alternative, that the restrictive covenant was a personal covenant that does not run with the

land.

Second, appellee cites Mendoza v. Fidelity & Guaranty Insurance Underwriters, Inc.,

606 S.W.2d 692, 694 (Tex. 1980), for the proposition that Kemp’s “judicial admissions” now bar

TX Far West from taking an inconsistent position. However, Mendoza dealt with testimonial

declarations, which are quasi-admissions only, as opposed to pleading declarations, which can be

“true judicial admissions.” See id. Kemp’s declarations are testimonial and are, at most, quasiadmissions. See id.
20

Finally, even if we were to accept appellee’s argument that Kemp’s statements qualify

as judicial admissions, they do not constitute conclusive evidence supporting summary judgment.

Kemp’s statements are statements only as to what Kemp believes to be true. Furthermore, Kemp’s

testimony reveals his opinion on the legal enforceability of the restrictive covenant. When an affiant

states legal conclusions and fails to state facts regarding the pertinent issues, the affidavit cannot

support summary judgment as a matter or law. Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 122

(Tex. 1996); Hidalgo v. Surety Sav. & Loan Ass’n, 487 S.W.2d 702, 703 (Tex. 1972); FFNS, Ltd.

v. Security State Bank & Trust, 63 S.W.3d 546, 550 (Tex. App.—Austin 2001, pet. denied).

Therefore, we reject appellee’s assertion that Kemp’s statements are judicial admissions that prove

the validity of the restrictive covenant as a matter of law.

However, resolution of TX Far West’s contention that appellee breached the

restrictive covenant by failing to provide certain amenities requires a factual determination of both

the intent of the original parties and the purpose of the restrictive covenant. Similarly, determining

whether the restrictive covenant should not be enforced due to frustration of purpose, changed

conditions, or lack of mutuality of obligations requires a trier of fact to make the same

determinations. We therefore hold that the district court did not err in denying TX Far West’s

summary-judgment motion based on these grounds.

Finally, TX Far West argues that because the amount of the maintenance fee

($17,697.56 in 2002 and $18,174.91 in 2003) greatly exceeds the amount of services rendered by

appellee (approximately $4,320 per year for maintaining the median on Austin Center Boulevard),

the restrictive covenantshould not be enforced due to equitable principlessuch as unjust enrichment.
21

However, these equitable arguments lose much of their merit if the maintenance fee is, as appellee

argues, a financing arrangement that runs with the land. Because the true nature of the maintenance

fee requires an examination of the intent of the original parties to the covenant as well as a

determination of the purpose of the restrictive covenant, TX Far West’s equitable arguments are

insufficient to support summary judgment in its favor. Having overruled all of TX Far West’s

argumentsin support of itssummary-judgment motion, we hold that the district court’s denial of TX

Far West’s summary-judgment motion was proper.

CONCLUSION

Having concluded that the existence of material fact issuesregarding the intent of the

parties prevents the granting of summary judgment for either party, we reverse the district court’s

grant of summary judgment to appellee and remand this cause for further proceedings.

________________________________________

Mack Kidd, Justice

Before Chief Justice Law, Justices Kidd and Puryear

Reversed and Remanded

Filed: January 15, 2004