### TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03
- 21
- 00269
- CV

Angelwylde HOA, Inc. and Angelwylde Place Homeowners Association, Inc. , Appellant s

v. Emily Fournier, David Fournier, Thomas Nelms , and Susan Nelms , Appellee s

FROM THE COUNTY COU R T AT LAW NO. 2 OF TRAVIS COUNTY NO. C-1- CV -20-005619, THE HONORABLE ERIC SHEPPERD , JUDGE PRESIDING

M E M O R A N D U M O P I N I O N

This is a dispute over amendments to deed restrictions that impos e a minimum duration on lease s of residence s i n two s ubdivisions . Angelwylde HOA, Inc. and Angel wylde Place Homeowners Association, Inc. (collectively, HOAs ) appeal from the trial court’s judgment that the amendment s a re unenforceable against appellees Emily Fournier, David Fournier , T homas Nelms , and Susan Nel ms (c ollectively, “ Home owners”). We reverse in part and remand in part.

BACKGROUND 1 In 2004, Thomas and Su san Nelms b ought a home in the Ang elw y ld e subd ivision

. T he Nelmses ’ property is subject to the Angelwylde Convenants, Conditions, an d Res t ricti ons

1 We draw the background section of this opinion fro m the agreed statemen t of f

acts signed by the parties. See Tex. R. Civ. P. 263 (providing for trial upon agreed statemen t of fact s).2 ( Angelwylde Convenants ) , dated June 16, 199 5 , and filed with the real property records of Travis Co unty. At the time the Nelmses purc h a sed their property, t he Angelwylde Convenants provi de d in part :

Co

- Declarants do hereby decl a re that the real p ropert y describ ed in Section 1.02, here of, is and shall be h eld, transferred, sold, conveyed , and occupied subject to the covenants, conditions, restrictions, charges and liens hereinafter set for th [.]

. . . RESIDENTIAL RESTRICTIONS 4.0 1 Residential Use. Except as otherwise expressly provided for herein all Lots shall be improved and u se d for si ngle

- family reside ntial use, inclusive of such other Improvements as are necessary or customarily incide nt to residential use. Single

- family res i dential use a s de f ined h erein shall include immediate fam ily members, siblings, cousins, parents, gr an dparents , great grandparents , and domestic employees.

. . . . 4.08 Rentals. Nothing in this Declaration shall p revent the rental of any Lot and the Impr o vements ther e on b y the O wner thereof for residential purp oses only. Within ten (10) days after the e xe cution o f a lease for rental of any Lot and the Improvements thereon, the Owner shall give written notice thereo f to the Board, which notice shall set fo r th the name( s ) of the te nant(s) and the length of time th e lease is in effect. Al l lease agreements sh all be i n writing and shall provid e that the te rm s of such lease shall be subject in all respects to the provisi ons of the Declaration, Bylaws and Associ a tion Rules, as th e n exis ting and as may be amended or mod ified thereafter [.]
In October of 2013, t he F ournier s purchased a lot in Angelwylde Place and moved into their new home there in Mar ch 2016. T he Fournie r s ’ p ropert y i s sub j e ct to the “ Declar ation of Covenants , Condi t ions a n d Restrictions for the Resubdivi sion of Lot 9 , Block A , Angelwylde Section 3 ” ( “ Ange lwylde Plac e Declaration ” ) dated December 10, 2010 , and filed in the real propert y records of Travis County. At th e time t he Fournier s p urc h a sed their proper t y , t h e3 Angel w ylde Place Declaration contained materially identical provisions to the Angelwylde Covenants

. T h e Fourniers and the N elmses rented out the ir prope rties for terms of thirty days or less when not using the residences themselves

. In 2020, the m embers of eac h HOA voted to amend the governin g document to restrict rent als

. T he amended provi sion of the Angelwy ld e Covenants st ate s:
Nothing in this Declaration shall p revent the rental of any Lot and the Improvements thereon by th e Owner thereof for residen tial pu r pose s only , provided that (a) th e minimum lease te rm shall be 12 months, and (b ) no Lot or p o rtion thereof sha ll be l e ased or used ( i) for hotel , transient or vacation rental (similar to AirBnb or VRBO) purposes o r (ii) i n a manner that woul d be su bject t o pay ment of hotel tax under appl icable law

.

. . . . No Lot or portion thereof shall be advertised at daily or weekly r ental rates or for a lease term of less than 12 months.
(empha s e s added)

. T he members of the Angelwyld e Place Homeowners A ssociat ion ado p ted a materially identical amend ment to the An g elwylde Place Declaration (collectivel y, 2022 Amendments )

. T he Fournier s and Nelm ses sued , seeking a declaration that the 2022
A me ndments a re un enforceable as to them. See Tex. Civ. Prac. & Rem. Code § 37.00 4 (a)

. The parties agreed to a be nch trial on s tipulat ed facts , including the amount of each side ’ s reasonable and necessary attorney ’ s fe es and contingent appellate fees

. See Tex. R. Civ. P. 263 (providing for trial o n stipulated facts)

. Aft er co ns ideri n g the filed stipulations an d joi nt exhib its, the trial court rendered judgment in favor of the Homeowners

. Th e final judg ment provides that the
Homeowners are each entitled to a declaration tha t the 2020 A mendmen t s ar e unenforceable4 “ owing to the ir settl e d proper ty rights ” under the d eclaration s , “ under which they purchased their property without restrictions on leasin g ” except for notice provisions not relevant here

. 2 The trial co urt stated that each amendment “ represents a new and different restriction wh ich defie s the reasonable expectations ” of the owners. Separately , the t rial court determined that the restriction s on advertising are “ void as against public policy. ” Consis tent with the stipulations, the tr ial court awarded the Homeowners $ 12, 500 in attorne ys ’ fee s and contingent appellate fees

. This appeal ensued.

STANDARD OF REVI EW
I n an appeal involving a n agreed statement of facts pursuant to Rule 263, the

“ ag reed facts are binding on the parties, the trial court, and the appellate court. ” Patt o n

v. Po rterfie ld , 411 S.W.3d 147, 153 (Tex. App

. — Dallas 2013, pet. denied)

. The “ on ly i ssue on appeal is whether the trial court properly applied the law to the agreed facts. ” Poole Point Subdivision Homeowners ’ Ass ’ n v. DeGon , No. 03

- 20

- 00618

- CV, 2022 W L 86980 9, at * 2 (Tex. App.

— Austin Mar. 2 4, 2022 , pet. denied) (mem. op.) (citing Abb ott v. Blue Cross & Blue Shield of Tex. , In c. , 113 S.W .3d 753, 757 (Tex. App.

— Austin 2003, pet. denied) ). We review this issue de novo. I d.

D ISCUSSION The HOA s argue i n t hree issues t hat t he trial court err ed by concluding that the 2022 Amendments are u nenfo r ceable as to the Homeowners

.

2 The tri al court also rend ered an agreed judgment against the Home owners for violating re quirements that they provide the prop erty owners ’ association written notice of the leases

. That por tion of the judgment is not at issue her e.5 To amend deed restrictions, thre e conditions must be m et. Roddy v. Holl y Lake Ranch Ass ’ n , 589 S.W. 3d 336, 342 (Tex. App.

— Tyler 201 9, no pet.)

. Fi rst, either “ the instrument creating the origin al restrictions must establis h both t he right to amend and the method of ame ndment ” or the amendments must have been adopted through a statutory
p ro cedure. See Poole Point , 2022 WL 869809, a t *3

. “ Second, t h e right to amend implies only thos e changes contemplating a correc ti on, improvemen t, or reformatio n of the agreement rathe r than its complete destructi on. ” Id

. (citing Wilchester W. Concerned Homeowners LDEF, Inc.

v. Wilchester W

. Fund , Inc. , 1 7 7 S.W.3 d 552, 562 (Tex. App.

— Houston [1st Dist.] 2005, pet. denied ) ; Dyega rd Land P ’ ship v. Hoo ver , 39 S.W.3d 300, 313 (Tex. App.

— Fo rt Worth 2001, no pet.) )

. Final ly , “ the amendment must not be illegal or against public policy. ” Id.
Right to Lease The H O A s a rg ue in their first t wo issue s tha t the 2022 Amendments do not effectivel y de stroy the right to le ase orig inally granted in the declarations

. This Court addres sed a similar question in Poole Point v. D eGon

. In that case , th e govern ing declara tion ex p ressly al lo wed property owners to lease their residence s subject t o the d ec laration ’ s ot her provisions

. I

d. at *1. T he De Gons b egan leasing their residen ce for periods of fewer than thirty days, and
t he home owners ’ association amend ed the declar ation to prohib it rent als for fewer than 180 days. Id. at *2. The DeGons sued f or a decla rat ion th at the amendmen t could not be enforced against them. Id. The tr ial court ruled that the restrictio n wa s une nforceable b ec ause it “ r epresents a

n ew and differen t r e strict ion which defies the reasonable and settle d expectations of the DeG ons, who relied on the 1987 Decla ration ’ s grant of the rig ht t o lease the main dwelling without duration restriction and physical occupancy r equiremen ts. ” Id.6 This Court rejected th e lower co urt ’ s reasoning , explaining that t he DeGons purchased the i r re sidence “ knowing that the [declarat ion] could be amen ded and that the right to lease was ‘ subject to all provisions ’ in the Restrictions, inc l uding any valid amendmen ts. For this r eas o n, the De Gons co uld not reasonably hav e expected that there could n ever be restrictions placed on the righ t to lease their re sidence. ” I d. at * 3 n.1. The real issue was whether the amendment destroyed th e right t o lease originally gran ted and whether th e restr ict ion was illegal or against pu blic policy

. Id. at *3

. The Homeowners argue that we should not follow this approa ch, which they term the “ pure - contract approach. ” In other words, they urge that we should not treat restri ctive

co venants purely as c ontrac ts. Generally , “ [r] estrictive covenants are contracts that run with the la nd a n d are subject to the general rules of contract construction.” J Brice Holdings, L.L.C.

v. Wilcrest Walk Townhomes Ass ’ n , 644 S.W.3d 179, 183 (Tex . 2022 ) (footnote and qu o tation

ma rks omitt ed). W hen buyers purchase property governed by a declaration cap ab le of amendment, they are on notice that “ the unique form of ownership t hey ac quired when they purchased their [property] was subjec t to change through the amendment proc e ss, a nd t hat they would be bound by properly adopted amendments.” Adlong v. Twi n S ho res Prop. Owners Ass ’ n , No. 09

- 21

- 0 0166

- CV, 2022 WL 8698 01, at *9 (Tex. App.

— B eaumont Mar. 24, 2022, pet. denied) (mem. op. ). The Home owners respond t hat Texas buyers do not h ave a meaningful choice to purc hase property governed by a declaration that is n ot subject to amendme nt. For example , S ection 20 9.0041 of the Property Code provides that the declaration of a pro perty

owners ’ associat ion “may be am ended only by a vot e of 6 7 pe rcent of the total votes allocated to
proper ty owners entitled to vote on th e a me ndment of the de clarat ion.” Tex. P rop. Code § 20 9.0041(h). With few exceptions, Section 20 9.0 041 applies to a dedicatory instrumen t7 regardless o f when it was creat e d and sup ersedes any contrary requirement in a dedicatory instrument. Se e id. § 20 9. 004 1 ( e) , (f). Even i f most property dec la rations ar e subject to amendment , it does not change their status as “ contracts that run with the land

. ” See JBrice Holdings , 6 4 4 S.W .3d at 183 ; accord Tarr v. Timberwood Par k Owners Ass ’ n , 556 S.W.3d 274,
2 80 (T ex. 20 18) ( “ [T] h e courts have alway s treated unambiguous covenants as valid contra cts between individuals .” (internal qu otation marks omitted) ). Nor do es it change the fa c t tha t wh en the Homeowners purchased their homes, they were aware the governing decl aration was subject to amendme nt. Thus, we will continue to apply the same three

- pronged approach we applied in Poole Point

. Th is Court h eld in Poole Point that an ame ndm e nt t hat i mposed a 180

- day minimum duration on lea ses and required that the lessee o ccupy the pro perty did not de stroy the

r ight to leas e becaus e the declaration did
not grant homeowners an absolute or unlimited right to leas e th eir residences. Ins tead, t h at r ight is “subject to all the provisions of” the Restrictions, whi ch contain a pr ovision permi tting amendments

. The Amen dment, which was val idly executed and recorded, does not completely prohibi t the owners’ ability to le ase their residences. R ather, it i mpose s a minimum sta y provision, establishing the minimum duratio n for a lease of a prop erty owner ’ s residen ce
. . . . T he placing of certain conditions on the duration of a lease and the lessee ’ s use of the leased propert y do es not constitute “c omplet e des truct ion” of the Dee d Restrictions

. The Ame ndment reformed the r ight to lease contained in the Restrictions by setting a minimum du ration f or any leases and requiring that the lessees use the le ased property as their res iden ce for the duration of the leas e. T hus, unless the Amendment is illegal or against public policy , it constitu tes an enf orc eable limitation on the rig ht to lease th e Proper ty.

Poole Point , 2022 WL 869809, at * 3 (internal citati on omitted )

. Similarly , n ei ther the Angelwylde Convenan t s nor the Angelwylde Place Decalaration gran t ed homeowners an absolute right to l ease their resi dences . Rather, both8 exp ressly state that any c onveyance of the land is subject to the “covenants, conditions,
rest rictions, [an d] charges” laid out in th e de c la ration. T he Angelwylde Place Declara tion contains a provision permitting amend men ts , but t he Angelwylde Coven ants do es not ; t he amendment was enacted pur suant to Section 209.0041 of the Property Code

. However, the
Homeowner s do not disp ute that they “ h ad notice when they purchased t hei r h omes that their d eed restric tions could be amende d

. ” I nstead, t hey contend that they wer e unawa re that an amendment could “ operate retro actively to deprive them of rights they already purch ased. ” But
t hat is another w ay of say ing that the y expected to be b ound only by valid amendments, i .e., ones tha t correct, i mprov e, or reform an e xisting provisi on rather than causing it s “ complete destruction. ” See id

. We conclude tha t the Homeowners c ould not “ reasona bly have ex p ecte d that there could never be res tri ctions placed on the right to l ease their re sid e nce. ” See i d.
at * 3 n.1. Turning to t he question of whether the 2020 Amendments effectively destroy the right to lease, we conclude d i n Poole Point tha t an amendmen t se t ting a 180

- day minimum durati o n on leas es and req uiring that the le ssee reside at th e prope rty did not completely destroy th e right to leas e s et ou t in the declaration

. See id. at *3 ( “ The placing of certain conditions on the duration of a leas e and the l esse e ’ s use of the leased p roperty d oes not constitute ‘ complete destr uction ’ of the Deed R estrictions. ” )

. Our sister court has similarly concluded that an amendment placing a six

- month minimum duration on leas es did no t effectively “ forbid all
renta ls ” o n th e property. See Adlon g , 2022 W L 869801, at *12

. Guided by these author i ties, w e

co nclude that the 202 2 A mendments cons titute an enforceable limitation on the right to use the properties unless they are illegal or a gainst public polic y . See Pool e Po i nt , 2022 WL 869809, at *3 ; Adlon g , 2022 WL 869801, at *12 ; Ca vazos v. Board. of Gove rnor s of Council of Co

- O wners9 of Summit Cond os. , No. 13

- 12

- 00524

- CV, 2013 WL 5305237, at *3 (Tex. App.

— Corpus Christi

– Edinburg Sept. 19, 2013, no pet.) (mem. op.) (con clud i ng s imilar minimum

- sta y
pro vision did not de stroy right to lease). Regar ding le galit y , we explained in Po ole Point :

Modifica tions to deed restrictions that impose greater restrictions are not prohibited by law when they are consistent with the overall pla n of d evel opmen t.

. . . T he Restrictions for the Poole P oin t Subdivisi on indicate th e i nte nt that it be a residential commun ity.

. . . “[R]estrictions placed upon lots for the purpose of prescribing and preserving the re siden tial character thereof are loo k ed u p on w ith f avo r by the courts.” Wald v. West MacGreg or Protective As s’n , 332 S.W .2d 33 8, 343 (Tex. App.

— Houston 1960, wr it ref ’ d n.r.e.). The minimum duration requirement created by the Amendment reinforced the exis ting re sidential use and occupa ncy r estr i ctio n and th e prohib ition against commercial activi tie s. Furtherm or e, the Texas Supre me Court has indicated that amendi ng deed restrictions is an appropriate method for specifying a minimum duration for leases in a residen tial subdivision. See T arr v . Ti m berw ood P ark Owners Ass ’ n , 556 S.W.3d 274, 277 (Tex . 2 018).

. . . I f such amend ments were illegal or against public pol icy, the supreme court would not have described them as an available option.
2022 WL 869809, at *4 (some internal citations omi tted )

. He re, b ot h de dicat ory instruments specific ally state t hat each subdi vi sion is inte nd ed t o be a residential community

. Lik e the amendment at issue in Poole Point , t he
2020 Amendments reinforced the existing residential use restriction and the prohib itio n aga inst

co mmercial activities. Furt hermor e, the suprem e c ourt has in di cated that a mendin g deed restrictions is an appropri ate me thod for specifying a minimum duration for leases in a residential subdivision. See Tarr , 556 S.W.3d at 277

. The issue in T a rr w as “w he ther shor t

term vacation r entals vio lated res tri ctive cove n an ts that limi ted tr acts to residential p urposes and

s ingle

- family residences.” Id. at 276 . Although declining to construe the co ven an ts as prohibit ing short

- term leases, th e supr eme c ourt noted t hat “thro ughout the disput e, nei ther the10 asso cia tion nor Ta rr attempted to amen d the deed restrictions to sp ecif y a minimum du ration for leasing

— an option available to both of them under the deed’s amendment provisions.” Id . at 277. “ If such amen dments w ere illeg al or against pub lic po licy, the sup rem e court wou ld not have d es cribe d them as an available option. ” S ee Poole Point , 2022 WL 869809, at * 4

. We conclude that the 2020 Amendment s are valid and enfo rceable because t hey
meet the r equir e ment s of (1 ) correct ing , reform ing , o r imp roving the de d icat ory instru me nts rather than d estroying them, and (2) are not il legal or against public policy. See Chu

v. Windermere Lakes Homeowners Ass ’ n , 652 S.W.3d 899, 905 (Tex. App.

— Housto n [14th Dis t.] 2 0 22, p et. filed ) ( upholding 180

- day m inimum restric tion ) ; Poole P oi nt , 2022 WL 86980 9,
at * 4 ( same ) ; Adlong , 2022 WL 8 69801, at *12 ( upholding six

- mont h minimum on lease )

. We sustain the HOA s ’ first two issues.

Re strictions on Advertising We separate ly co n side r the limitations on advertising in the 2020 Amendment. The HOAs argu e in their third issue that the trial cour t erred by invalidating the restriction on public policy grounds because it does not contravene Section 209.016 of the Property Code. See
T ex. Prop. Code § 209.016(b)

– (c) ( pertaining to certain restrictions on leasing in dedicatory instruments). The Homeowners argued in the trial court that it is void because “ [ a ] flat

- out denial of commercial speech rises to the level of a constituti onal i n firm ity” and they make the same argument on appeal. Section 209.016 prohibits the adoption or enforcement of a dee d restriction requiring “a lease or rental applicant or a tenant to be submitted to and ap proved for tenancy by the property owners’ associat i on” or requiring the submission of certain informat ion about the11 applicant. Id. § 209.016(b)

– (c). However, Sect ion 209.016 “shall not be construed to prohibit the adoption or enforcement of a provision in a dedicatory instrument establishing a restricti o n

re lating to occupancy or leasing.” Id. § 209.016 (d). The HOAs argue that if the legislature had intended to p rohibit the adoption of other restrictions “relating to occupancy or leasing” it would have said so. In effect, they argue that any restricti o n no t prohibited by Section 209.016(d) (and which d oes not violate state or federal laws against housing discrimi nation) complies with public policy. We agree that the restriction on advertising does no t con travene public policy. “Courts shoul d refrain f r om n ullifying a transaction because it is contrary to public policy, unless the transaction contravenes some posi tive statute or some well

- established rule of law.” Teal Trading & Dev., LP v. Champee Springs Ranches Prop. Owners Ass ’ n , 593 S.W .3d 324, 33 8 (Te x. 2020) (inter nal quotation marks omitted). The Homeowners argued that the restriction on advertising regulated commercia l speech that is protected by the First Amendment. See Anders on Courier Serv. v. State , 104 S.W.3d 121, 124 (Tex. Ap p.

— Austin 2 0 03, pet. denied) (a

pplying test for regulation of commercial speech set out in Central Hudson Gas & Elec tric Corp oration v. Public Serv ice Comm ission of New York , 447 U.S. 557, 564

– 65 (1980)). The First Amendment, however, constrains state act ion and not priv ate conduct. Manhattan Cmty. Access Corp. v. Halleck , 139 S. Ct. 1921, 1928 (2019). Because the HOAs are private corporations, we conclu de that the record does not support the trial court’s implicit conclusion that the 2020 Amendments con stitute sta t e ac tion that implicate First Amen dment protections. See Adlong , 2022 WL 869801, at *12 (concluding that plaintiffs had not established adopt ion of similar provision by property owners’ association was s tate action); Park v. Escalera Ranch
Own ers’ Ass’n , , 457 S.W.3d 571, 590 n.9 (Tex . App.

— Austin 2015, no pet.) (same conclusion12 with respect to due process claim against association). We co nclude that the district court erred by declaring the restrict ion void as against public policy and sustain the HOAs’ t hird issue.
Attorney s ’ Fees
T he Homeowners argue tha t we must affirm the award of attorney s ’ fees because the HOAs failed to atta ck it on appeal

. See Tex. R. App. P. 33.1 (i) ( appella nt ’ s “ brief must
cont ain a suc cinct, clea r, and a c curate stat e ment of th e arg umen ts made in the body o f the brie f ” ). The trial court awarded the Homeowners at torney s ’ fees as well as conditional appellate fees under the Uniform Dec laratory J udgmen t Act. See Tex. Civ. Prac. & Rem

. Code § 37.00 9 ( “ In any p roceeding under this c hapt er, the c ourt may award c osts and reasonable and ne cessary
attorne y's fees as are equitable and just. ” ). A lthough the HOA s did not challeng e the award in a separate iss ue, th ey challenge d the propriety o f the declaratory jud gme nt

. Whether a party
pr e vail ed is a s ubstantial facto r in determining whether an aw ard is equitable and ju st. See , e.g. , Bailey v. Sm ith , 581 S.W.3d 374, 399 (Tex. App.

— Austin 2019, pet. denied) ( “ [A] court ‘ i s well within its disc r etion to deny or awa rd attorney ’ s f ees based o n the outcome of the case. ’ ” ( quoting Brazoria C ou nt y v. Tex as Comm ’ n on Env ’ t Quality , 128 S.W.3d 728, 744 (Tex

. App.

— Au stin 2004, no pet.) )). Under these circumstances, w e conclude tha t the HOAs ’ challenge to the pro priet y of th e judgment nec essarily in c lude d a chal lenge to the fee award

. S ee Tex. R. App. P. 38.1(f) ( “ The statement of an issue or point will be trea ted as co vering every subsidiary question that is fairly included. ” ) ; Adams v. Starside Custom Build ers, LLC , 547 S. W.3d 890, 897 (Tex. 2018) ( “Co nstituti onal imperatives favor the determination of cases on their merits [.] ” ). R ather than re nder judgment awarding fees as the HOAs request , we will remand the issue to th e trial court to determine whether th e awa r d i s still equ it able an d jus t. Se e13 Mor ath v. Tex as Taxpayer & Student Fairne ss Coal. , 490 S.W.3d 826, 885 (Tex. 2016) ( “ Where the extent to which a party prevailed has changed on appeal, our practice has been to remand the issue of attorney fees to the trial court f or reconsi de ration of w h at i s equitable and just. ” ) ; HMT
Tan k Serv . LLC v. Am erican Tank & Vessel, Inc. , 565 S.W.3d 799, 813

– 14 (Te x. App.

— Houston [14th Dist.] 2018, no pet.) (remanding for trial court to reconsider whether award was eq uitab le and just giv en chan ged c ircumstan ce s ).

C ONCLUSION
We re verse the trial court ’ s judg me nt and render judgment declaring that the
2022 Am endments are enforc eable against the Homeowners

. We remand the issue of attorney s ’ fees for further proceedings

.

______________ _

____ ______ _________ ______ _

_ Edward Smith , Jus tice Before J ustices Baker, Smith, and Theofani s Reverse d and Render ed in Part ; Reversed and R e manded in P art Filed: March 17, 2023