Court Opinion

ID: 4040010
Source: CourtListenerOpinion
Date Created: 2016-09-28 22:23:00.488123+00
Date Added: 2024-06-11T14:28:10.305870
License: Public Domain

ACCEPTED
                                                                            12-14-00310-CV
                                                                TWELFTH COURT OF APPEALS
                                                                             TYLER, TEXAS
                                                                       4/1/2015 11:01:54 AM
                                                                               CATHY LUSK
                                                                                     CLERK

                       NO. 12-14-00310-CV

                                                          FILED IN
                                                   12th COURT OF APPEALS
                              In The                    TYLER, TEXAS
                                                   4/1/2015 11:01:54 AM
                         Court of Appeals               CATHY S. LUSK
                                                            Clerk

                              for the

                     Twelfth District of Texas

                             at Tyler

                       BRANDON SAXON,
                          Appellant

                                v.

                   GROVE CLUB LAKE, INC.,
                          Appellee

     Appeal from the County Court at Law, Smith County, Texas

                      Brief of Appellant

                              Sean P. Healy
                              State Bar Card 00785953

                              Healy Law Offices, P.C.
                              113 E. Houston St.
                              Tyler, Texas 75702-8130
                              TEL: (903) 592-7566
                              FAX: (903) 592-7589
                              ATTORNEY FOR APPELLANT

ORAL ARGUMENT IS REQUESTED
                 IDENTITY OF PARTIES AND COUNSEL

Defendant/Appellant:             Counsel:
BRANDON SAXON                    Sean P. Healy
                                 State Bar Card 00785953
                                 Healy Law Offices, P.C.
                                 113 E. Houston St.
                                 Tyler, Texas 75702-8130
                                 genghis@healylaw.com
                                 TEL: (903) 592-7566
                                 FAX: (903) 592-7589

                                  E. Glenn Thames, Jr.
                                  State Bar Card 00785097
                                  Potter Minton, P.C.
                                  110 N. College Avenue, Suite 500
                                  Tyler, Texas 75702
                                  glennthames@potterminton.com
                                  Tel: (903) 597-8311
                                  Fax: (903) 593-0846
Plaintiff/Appellee:               Counsel:
GROVE CLUB LAKE, INC.             Kevin Giddens
                                  Boyd & Brown, P.C.
                                  1215 Pruitt Pl.
                                  Tyler, Texas 75703
                                  giddenslawfirm@gmail.com
                                  TEL: (903) 705-7211
                                  FAX: (903) 705-7221

                               -ii-
                                       TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL ........................... -u-

TABLE OF CONTENTS .......................................... -iii-

INDEX OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -v-

STATElVIENT OF THE CASE ..................................... -viii-

ISSUES PRESENTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -x-

STATEMENT OF FACTS ......................................... -1-

SUivlMARY OF THE ARGillvtENT ................................. -5-

ARGillvtENT AND AUTHORITIES ................................. -7-

I.      Standard of Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-

II.     Mr. Saxon Did Not Violate the Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . . -8-

III.    The Club is Required to Comply With its Own Bylaws. . . . . . . . . . . . . -13-

IV.     The Club Violated Its Own Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-

        A.      The Club Fined Mr. Saxon When He Had Not Violated the Bylaws.
                 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
        B.      The Club Imposed Fines Far in Excess of What the Bylaws
                Authorize. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-

        C.      The Club Failed to Establish an Investigative Committee. . . . . . -18-

        D.      The Club Failed to Provide Notice and an Opportunity to be Heard.
                 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-

                                                          -iii-
         E.       The Club Tried to Seize Mr. Saxon's Home and Share Without
                  Following the Bylaws or Texas Law. . . . . . . . . . . . . . . . . . . . . . . -22-

V.       Mr. Saxon is Entitled to Recover Attorney's Fees and Costs from The Club
          . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-

VI.      Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-

PRAYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-

SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-

CERTIFICATE OF SERVICE ..................................... -30-

CERTIFICATE OF COMPLIANCE WITH TRAP 9.4(i)(3) .............. -31-

APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3 2-

                                                             -iv-
                                     INDEX OF AUTHORITIES

Constitutions, Statutes, and Rules

Massachusetts Constitution, Part the First, Article XXX (1780) . . . . . . . . . . . -27-

Texas Business and Commerce Code§ 1.002(35) ...................... -13-

Texas Business and Commerce Code§ 3.101                                                                        -13-

Texas Business and Commerce Code§ 9.601                                                                        -23-

Texas Business Organizations Code§§ 22.156- 160 . . . . . . . . . . . . . . . . . . . -16-

Texas Civil Practice and Remedies Code§ 38.001 . . . . . . . . . . . . . . . . . . . . . -26-

Texas Property Code § 209.0091                                                                                 -23-

Texas Property Code§ 209.0092 ............................... -23-, -24-

Texas Property Code § 51.002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-

Texas Rule of Civil Procedure 735 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-

Texas Rule of Civil Procedure 736 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-

Case Law

B & W Supply, Inc. v. Beckman, 305 S.W.3d 10 (Tex. App.- Houston [1st Dist.]
2009, pet. denied) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-

Brockie v. Webb, 244 S.W.3d 905 (Tex. App.-Dallas 2008, pet. denied). . . -26-

Exxon Corp. v. Emerald Oil & Gas Co .. L.C., 348 S.W.3d 194 (Tex. 2011) .. -8-

Foley v. Daniel, 346 S.. W.3d 687 (Tex. App.-El Paso 2009, no pet.)... . . . . . . -8-

                                                         -v-
Ford Mtr. Co. V. Ridgway, 135 S.W.3d 598 (Tex. 2004) . . . . . . . . . . . . . . . . . -8-

Heil Co. v. Polar Corp., 191 S.W.3d 805 (Tex. App.- Ft. Worth 2006, pet. denied)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-

Hernandez v. Gulf Group Lloyds, 875 S.W.2d 691 (Tex. 1994) ........... -25-

Horizontal Holes, Inc. v. River Valley Enterprises, Inc., 197 S.W.3d 834 (Tex.
App. -Dallas 2006, no pet.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-

King Ranch, Inc. V. Chapman, 118 S.W.3d 742 (Tex. 2003) . . . . . . . . . . . . . . -7-

MCI Telecommunications Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647
(Tex.1999) ...................................................... -8-

Mead v. Johnson Group, Inc., 615 S.W.2d 685 (Tex. 1981) .............. -25-

Moayedi v. Interstate 35/Chisam Rd., L.P., 438 S.W.3d 1 (Tex. 2014) ....... -8-

Mustang Pipeline Co., Inc. v. Driver Pipeline Co .. Inc., 134 S.W.3d 195 (Tex.
2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-

Seagull Energy E & P. Inc. v. Eland Energy, Inc., 207 S.W.3d 342 (Tex.2006)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...   -8-

Smith v. Patrick W.Y. Tam Trust, 296 S.W.3d 545 (Tex. 2009) . . . . . . . . . . . -26-

Bylaws of Grove Club Lake, Inc.

Article II, ''Members'' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-

Article II, Section A, "Membership" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-

Article II, Section A( 1), "Member" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-

Article II, Section A(2), "Associate Member" . . . . . . . . . . . . . . . . . . . . . . . . . . -9-

                                                                -vi-
Article II, Section A(3), "Visitor" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-

Article II, Section A( 4), "Service Personnel" . . . . . . . . . . . . . . . . . . . . . . . . . . -10-

Article IV, Section E, "Authority" .............................. -16-, -17-

Article VI, Section A, "Committees- General" . . . . . . . . . . . . . . . . . . . . . . . . -18-

Article VI, Section A(2), " Investigative Committee" . . . . . . . . . . . . . . . -18-, -19-

Article VIII, Section A, "Ownership" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-

Article IX, Section A, "Liens" ................................. -22-, -23-

Article IX, Section D, "Failure to Pay Dues" . . . . . . . . . . . . . . . . . . . . . . . . . . -21-

Article IX, Section F, "Taxes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                               2

Article IX, Section H, "Fines" . . . . . . . . . . . . . . . . . . . . . . . . -14-, -16-, -18-, -25-

Article XI, Section E, "Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-

Article XII, Section D, "Building" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-, -2-

Article XII, Section E, "Maintenance of Buildings" . . . . . . . . . . . . . . . . . . . . -12-

Article XIII, "Amendments to Bylaws"                                                                                                                                                                    -16-

Other Authorities

Aristotle, Politics 3:16 (350 B.C.E.).                                                                                                                                                                  -27-

John Emerich Edward Dalberg-Acton (1st Baron Acton), April1887letter to
Mandell Creighton . . . . . . . .       0   0   •   •   •   •   •   •   •   •   0   •   0   •   •   •   •   •   •   •   •   •   •   •   •   0   •   •   •   •   •   •   •   •   •   •   •   •   •   •    -7-

                                                                        -vii-
                             STATEMENT OF THE CASE

       This is a suit by a corporation, Grove Club Lake, Inc. for breach of contract

against a shareholder/member, Brandon Saxon. For clarity, this brief shall refer to

Appellant as "Mr. Saxon" and to Appellee as "the Club."

          On April3, 2013, the Club filed suit against Mr. Saxon for breach of contract.

1 CR 3. 1 Mr. Saxon answered, asserted certain affirmative defenses, and made a

counterclaim for breach of contract and attorney's fees. 1 CR 99-1 01. The Club

amended its pleadings twice, and went to trial on its Second Amended Petition. 1 CR

60-98; 2 CR 102-137.

          Mr. Saxon filed a Motion for Partial Summary Judgment and a Motion for No-

Evidence Summary Judgment. 2 CR 149-205; 3 CR 206-9. The Club filed a

Response, 3 CR 211-298, and Mr. Saxon filed a Reply, 3 CR 299. The Court never

conducted a hearing or made a ruling on them. Mr. Saxon also filed a Motion for

Sanctions against the Club for failing to send a corporate representative to mediation

with full authority to negotiate a settlement, Supp. CR 2, and the Club filed a

Response, 4 CR 3 06-15. The Court never conducted a hearing or ruled on this motion

either.

          1
        References to the record will be made as (Volume number) (CR for Clerk's Record or RR
for Reporter's Record) (page number). References to the Supplemental Clerk's Record will be made
as Supp. CR (page number).

                                             -viii-
      The Court held a bench trial, granted a motion for instructed verdict in favor

of the Club on the counterclaims, and awarded a judgment to the Club for $765.00.

4 CR334-8; 3 RR4; 4 CR341-2.!
                                  I

                                        -ix-
                              ISSUES PRESENTED

I.     Whether any evidence supports the Trial Court's judgment in favor of the Club
       on its breach of contract claim

II.    Whether the Trial Court erred in granting an instructed verdict in favor of the
       Club on Mr. Saxon's breach of contract counterclaim.

III.   Whether the Trial Court Erred in Not Awarding Attorney's Fees and Costs to
       Mr. Saxon.

                                          -x-
                               STATEMENT OF FACTS

       This is a lawsuit filed by a nonprofit corporation, Grove Club Lake, Inc. ("the

Club"), against a member. 2 RR 16-17; 2 CR 103. The Club alleged Mr. Saxon

committed a breach of contract by allegedly allowing "unauthorized guests" to stay

in his house in violation of the Bylaws. 2 CR 103. Mr. Saxon filed a counterclaim

against the Club for violating its Bylaws, and sought attorney's fees and costs. 1 CR

98.

       The Club acts as a property owners' association governing a lake and

surrounding lots, but unlike most similar organizations, it holds record title to the

land. 2 RR 19. "The Club Lake and all surrounding lands belong to all Members."

Bylaws Article XII, Section D; 4 RR 20; 2 RR 102.2 Each member owns one share

in the Club. 2 RR 78-9; 2 RR 87. The Club is a small organization, limited to issuing

a maximum of sixty shares. Article VIII, Section A, "Ownership," 4 RR 16.

       The land is not subject to restrictive covenants. Instead, the Club, as a

corporation, is governed by its Bylaws. 2 RR 17-8; 4 RR 10-22. Those Bylaws have

never been filed with the Smith County Clerk. 2 RR 66; 2 RR 88.

       Members are allowed to build residences and other improvements on Club

       2
         The Bylaws were admitted into evidence at 2 RR 18 and are found at Appendix A. They will
be cited as "Article _, Section _."

                                               -1-
property. 2 RR 87; Article XII, Section D, "Building," 4 RR 20. They own those

improvements and pay property taxes on them. 2 RR 102; 2 RR 100. Each member

has the primary use and possession of the real property surrounding his or her

residence. 2 RR 87. Article XI, Section E of the Bylaws states, "Property that each

Member maintains or otherwise cares for shall be considered as such Member's yard

unless otherwise agreed upon by the Board and all Members involved, especially

those with adjoining yards, or until and unless the Club is dissolved." 4 RR 19. The

Club pays property taxes on the land from the annual assessments paid by each

member. 2 RR 19; 2 RR 100; Article IX, Section F (4 RR 17). Each member pays

property taxes on his or her improvements. 2 RR 19; 2 RR 100.

      In 2006, Mr. Saxon and his former wife purchased a share in the Club,

associated with Lot No. 7. 4 RR 23. He subsequently obtained a building permit from

the Club and built a three-bedroom, two-bath home on the lot, along with a storage

shed and deck. 2 RR 87. Mr. Saxon and his wife were divorced in late 2011. 2 RR 88.

He received the share and associated property in the divorce. 2 RR 88.

      Mr. Saxon works out of town for months at a time. 2 RR 88-9. After Mr.

Saxon's wife moved out, he hired William Hodge to serve as caretaker for his lot,

home, and other improvements, and to care for his dog. 2 RR 90. On September 1,

2012, this agreement between Mr. Saxon and Mr. Hodge was reduced to writing in

                                         -2-
the form of a "House Sitting Service Agreement" and signed by Mr. Saxon and Mr.

Hodge. 2 RR 90; 4 RR 62-3; Appendix B. Pursuant to the agreement, Mr. Hodge

provided maintenance and repairs for the home, lawn care and trimming for the lot,

and care for Mr. Saxon's dog. 2 RR 89. The only time Mr. Hodge stayed on the

property without Mr. Saxon being present was when he was performing his duties

under the agreement. 2 RR 91. It is undisputed that Mr. Saxon allowed William

Hodge to stay at his home for at least fourteen nights. 2 RR 82.

      In 2011, the Club's Board initiated a campaign to try to compel Mr. Saxon to

cease allowing Mr. Hodge to stay at his home. This included verbal threats and a

letter threatening $500.00 fines. 2 RR 24-5; 4 RR 29. The Board sent letters actually

assessing fines, including one on January 27,2012, assessing a $1,500.00 fine. 2 RR

93; 4 RR 68. The Board later withdrew these fines. 2 RR 45. Brent Smith, a Board

member, even called the Sheriff to try to get Mr. Hodge forcibly removed from the

property. 2 RR 98. According to the Board, Mr. Hodge was an unaccompanied visitor

and therefore Mr. Saxon's action in allowing Mr. Hodge on the property was in

violation of the Bylaws.

      Using this unaccompanied visitor theory, on November 16, 2012, the Board

began assessing fines once again, initially for a total of $3,000.00 for six alleged

violations. 2 RR 31; 2 RR 93-4; 4 RR 32-3. The Board sent two more fine letters, one

                                         -3-
on December 19, 2012, assessing an additional $2,500.00 fine for five alleged

violations (2 RR 32; 2 RR 94; 4 RR 34 and 37), and one on January 18, 2013,

assessing another $1,500.00 in fines for three alleged violations, for a total of

$7,000.00 (2 RR 33; 2 RR 94; 4 RR 35-6). Five days later, the Club's attorney sent

a demand letter to Mr. Saxon threatening to sue him if he did not pay the $7,000.00.

4 RR 38-9.

      Mr. Saxon refused to pay these fines and the Club filed this lawsuit.

                                         -4-
                      SUMMARY OF THE ARGUMENT

      The relevant facts of this case are not in dispute. In order to prevail, the Club

had to prove that Mr. Hodge was a "visitor" as defined in the Bylaws. In other words,

the Club had to prove that each time Mr. Hodge spent the night in Mr. Saxon's house

while Mr. Saxon was out of town, he had "come[] onto GROVE CLUB LAKE

premises for the specific purpose of contacting a Member or Associate Member." The

Club did not carry its burden. It offered no evidence from which such a finding could

be made. Indeed, no one disputes that Mr. Hodge knew Mr. Saxon was out of town.

In fact, Mr. Saxon's absence was the very reason Mr. Hodge came over, as Mr. Hodge

had been hired to take care of the house and dog. Thus, Mr. Hodge could not possibly

have come onto the premises "for the specific purpose of contacting" Mr. Saxon.

      Furthermore, the evidence conclusively established that each time Mr. Saxon

left town, he "summoned [Mr. Hodge] for the specific purpose of performing a

specific service." As a result, Mr. Hodge was "service personnel," and therefore Mr.

Saxon did not need to be present. Contrary to the Club's position, the Bylaws do not

require a member's presence for service personnel, and they do not prohibit service

personnel from staying overnight. Accordingly, Mr. Hodge's presence at Mr. Saxon's

house did not violate the Bylaws.

      In contrast, the Club did violate the Bylaws. Article VI requires the Board of

                                         -5-
Directors to designate an Investigative Committee. That was never done. It also

provides that complaints from the Board of Directors regarding violation of the

Bylaws are to be submitted to the Investigative Committee and that the Committee

is to provide the Board with a report of its investigation and any recommendations.

While the Board can assess fines against Members, it can only do so for violation of

the Bylaws and only after giving the Member fourteen days written notice and

conducting a hearing at which the Member may be heard. The undisputed facts show

that instead of following any of these provisions in the Bylaws, the Board summarily

assessed fines against Mr. Saxon without any complaint, committee investigation,

advance notice, or hearing, and most importantly, without any proof that Mr. Saxon

committed the Bylaw violation of which he was accused. The Board also set the

amount of each fine at $500.00, despite the fact that Article IX, Section H of the

Bylaws clearly limits fines to $15.00, $30.00, and $60.00 (for the first, second, and

subsequent violations, respectively). Because of these violations by the Club, Mr.

Saxon was forced to retain counsel and incur attorney's fees fighting the Club's abuse

of power.

      For all of the above reasons, the judgment of the trial court should be reversed

and judgment should be rendered in favor of Mr. Saxon for his attorney's fees.

                                         -6-
                       ARGUMENT AND AUTHORITIES

      "Power tends to corrupt, and absolute power corrupts absolutely." John

Emerich Edward Dalberg-Acton, 1st Baron Acton, April 1887 letter to Mandell

Creighton. This case demonstrates how a relatively small measure of power, held by

a property owners' association over the property owners, can tempt a board of

directors into violating their own governing documents.

      The important facts of this case are not in dispute. Neither side contends that

the Bylaws are ambiguous. The trial court simply viewed this case as a petty dispute,

split the baby, and sent everyone home unhappy. However, the evidence and Bylaws

do not support the trial court's decision. Thus, the judgment should be reversed and

rendered in favor of Mr. Saxon.

I.    Standard of Review

      There is no evidence to support a judgment when "(a) there is a complete

absence of evidence of a vital fact, (b) the court is barred by rules of law or of

evidence from giving weight to the only evidence offered to prove a vital fact, (c) the

evidence offered to prove a vital fact is no more than a mere scintilla, (d) the evidence

conclusively establishes the opposite of the vital fact." King Ranch, Inc. v. Chapman,

118 S.W.3d 742, 751 (Tex. 2003). Evidence is no more than a mere scintilla unless

it "rises to a level that would enable reasonable and fair-minded people to 4iffer in

                                           -7-
their conclusions." Ford Mtr. Co. V. Ridgway, 135 S.W.3d 598,601 (Tex. 2004). In

other words, if the evidence does no more than create mere surmise or suspicion, then

it is no evidence. Id.

      The interpretation of an unambiguous contract is a question of law for the

court. Moayedi v. Interstate 35/Chisam Rd., L.P., 438 S.W.3d 1 (Tex. 2014); Exxon

Corp. v. Emerald Oil & Gas Co., L.C., 348 S.W.3d 194, 214 (Tex. 2011) (citing

Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342,345 (Tex.2006)).

On appeal, questions of law are reviewed de novo. MCI Telecommunications Corp.

v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 650-51(Tex.1999); Heil Co. v. Polar Corp.,

191 S.W.3d 805 (Tex. App.- Ft. Worth 2006, pet. denied).

II.    Mr. Saxon Did Not Violate the Bylaws.

       The Club asserted a breach of contract claim against Mr. Saxon. The elements

of a claim for breach of contract are: ( 1) the existence of a valid contract; (2)

performance or tendered performance by the plaintiff; (3) breach of the contract by

the defendant; and (4) damages to the plaintiff resulting from that breach. Foley v.

Daniel, 346 S.W.3d 687,690 (Tex. App.-El Paso 2009, no pet.); B & W Supply, Inc.

v. Beckman, 305 S.W.3d 10, 16 (Tex. App.-Houston [1 Dist.] 2009, pet. denied).

       The Club's breach of contract claim is entirely based on the accusation that Mr.

Saxon violated the Club's Bylaws by allowing "unauthorized visitors" on the

                                          -8-
premises of the Club, without having a member present. 2 CR 103. The Club's only

complaint was that Mr. Saxon allowed William Hodge on the property while he was

not present. 2 RR 44-5. It is undisputed that Mr. Saxon allowed William Hodge to

stay at his home for at least fourteen nights. 2 RR 82. However, the only time Mr.

Hodge stayed on the property without Mr. Saxon being present was when Mr. Hodge

was performing his duties under the agreement. 2 RR 91. Thus, the sole question is

whether the Bylaws allowed Mr. Hodge to be on the property.

      Article II, Section A of the Bylaws defines four classes of persons: Members,

Associate Members, Visitors, and Service Personnel. 4 RR 10. Article II of the

Bylaws specifically allows "members," "associate members," and "service personnel"

to be on the property. 4 RR 10-11.

      Article II, Section A( 1) defines "Member" as " . . . one who holds a Share

Certificate of stock in GROVE CLUB LAKE in his or her name, evidencing rights

of membership in the Club." 4 RR 10. Obviously this includes Mr. Saxon.

      Article II, Section A(2) defines "Associate Member" as " ... the spouse or

companion of a member, or any immediate family of a member, (parent, child,

brother, or sister)." 4 RR 10. This section also states: "An Associate Member shall

enjoy the privileges of the Club with respect to residency, boating, hiking, swimming,

fishing, etc." 4 RR 10.

                                         -9-
      Article II, Section A(3) defines "Visitor" as " ... a person who comes onto

GROVE CLUB LAKE premises for the specific purpose of contacting a Member or

Associate Member." 4 RR 10. This section also states: "A Visitor may be invited to

participate in and enjoy the privileges offered to Members and Associate Members

of the Club, only as long as the Member or Associate Member is present somewhere

on Grove Club Lake property and has made the visitor aware of all restrictions,

especially those regarding types of fishing allowed, size and quantity of fish to be

taken." 4 RR 10.

      Article II, Section A( 4) defines "Service Personnel" as "Individual or

individuals summoned by a Member or Associate Member for the specific purpose

of performing a specific service." 4 RR 11. This section also states: "No lake

privileges shall be extended to service pers?nnel." 2 RR 50; 4 RR 11. There are no

further limitations.

      Pursuant to these provisions, the member must be present when a Visitor is on

Club property, but there is no similar requirement when Service Personnel are on

Club property. 2 RR 53. Although the Club's representative tried to claim that Service

Personnel are not permitted to stay overnight, she ultimately admitted the Bylaws

contain no such provision. 2 RR 50-54. Indeed, the Bylaws do not prohibit Service

Personnel from staying overnight. 2 RR 54. Time of day is never even mentioned in

                                         -10-
the Bylaws.

      In order for the Club to prevail, it had to prove that Mr. Hodge was a Visitor,

not Service Personnel. In other words, using the definitions in the Bylaws, the

evidence must be such that a reasonable fact finder could conclude that Mr. Hodge

was not summoned to perform the service of looking after Mr. Saxon's house, but

instead came onto the property to contact Mr. Saxon. The record contains no evidence

to support this vital fact. Indeed, the evidence conclusively established just the

opposite-the only reason Mr. Hodge came onto the property when Mr. Saxon was not

present was to perform the duties Mr. Saxon hired him to perform.

      The Club did not even attempt to establish that on the 14 occasions in question,

Mr. Hodge had come to the house to contact Mr. Saxon. Indeed, the Club's only

witness, Ms. Malone, admitted that Mr. Hodge was Service Personnel. 2 RR 22; 2 RR

29. However, the Board did not like Mr. Hodge staying overnight, so it "expressed

an opinion that despite the fact Mr. Hodge was there to perform a service, he was not

allowed to spend the night." 2 RR 29. Of course, the Bylaws contain no such

prohibition. Neither time of day nor duration are even mentioned.

      Not only is the record devoid of any evidence that Mr. Hodge was a Visitor, the

evidence conclusively established that he was Service Personnel. Mr. Saxon works

out of town for months at a time and has a house, lot, and dog that require care. 2 RR

                                         -11-
88-9. After his divorce, Mr. Saxon hired Mr. Hodge to serve as a housesitter and

caretaker while he was away. 2 RR 90. Mr. Saxon and Mr. Hodge later even signed

a "House Sitting Service Agreement." 2 RR 90; 4 RR 62-3; Appendix B. Pursuant to

their agreement, Mr. Hodge provided maintenance and repairs for the home, lawn

care and trimming for the lot, and care for Mr. Saxon's dog. 2 RR 89. These things are

explicitly required by Article XII, Section E, "Maintenance of Buildings":

       Improvements such as houses, boathouses, docks and piers erected by
       a Member shall be kept in reasonably good condition. Grass and weeds
       are to be cut at regular intervals for snake control. Structures which
       become an eyesore due to neglect and disrepair shall be repaired by the
       Member within thirty (30 days after notification by the Board. If the
       Member fails to repair such structures within 30 days after notification,
       the Board may sell the structure or have it removed. An extension of
       time may be granted upon proper application of the Member to the
       Board of Directors. No residence or home shall be constructed within
       100 feet of the Club Lake.

4 RR 20. If Mr. Saxon left his home to rot and let the grass and weeds grow unabated

for six months at a time, and let his dog run free and forage for survival, the Board

would undoubtedly have cited him for violating the Bylaws. He took reasonable

steps, in full compliance with the Bylaws, to meet his responsibilities. Later, when

Mr. Saxon became engaged and his fiance moved in and began taking care of the

property, Mr. Saxon terminated Mr. Hodge's services. 2 RR 34-35. 3

       3
         While the Board's stance on girlfriends is amazingly circular, it views Mr. Saxon's fiance
as an associate member who is allowed to stay in the house without him being present. RR 41-44.

                                               -12-
       Ms. Malone defined service personnel as, "Lawn maintenance, appliance

repair, construction, anybody who's performing a service or upkeep maintenance on

your home." 2 RR 22. She admitted that the only limitation on being "service

personnel" is providing a specific service. 2 RR 50. In fact, the Club did not dispute

Mr. Hodge's status as Service Personnel. It simply decided that ''despite the fact that

Mr. Hodge was there to perform a service, he was not allowed to spend the night." 2

RR 29. Therefore, as a matter of law, Mr. Hodge falls under the definition of"Service

Personnel," and is not an "Unauthorized Guest." Accordingly, Mr. Saxon was fully

within his rights to hire Mr. Hodge to look after his property, and it was the Board

that violated the Club's Bylaws by attempting to fine him for conduct that did not

violate the Bylaws.

III.   The Club is Required to Comply With its Own Bylaws.

       At the risk of stating the obvious, the Bylaws limit the power of the Board, and

the Board is required to comply with the Bylaws. See Business and Commerce Code

§ 1.002(35) ('"Governing authority' means a person or group of persons who are

entitled to manage and direct the affairs of an entity under this code and the

governing documents ofthe entity ... The term includes ... the board of directors of

a corporation") [emphasis added]. Section 3.101 reaffirms this principle: "Subject to

the title of this code that governs the domestic entity and the governing documents

                                         -13-
of the domestic entity, the governing authority of a domestic entity manages and

directs the business and affairs of the domestic entity." Put another way, the Board

must manage a corporation "subject to [its] governing documents." This is especially

important for an organization that reserves the right to amend the Bylaws to the

members -this ensures that the Board will govern under the Members' authority. See

4 RR22.

IV.   The Club Violated Its Own Bylaws.

      A.     The Club Fined Mr. Saxon When He Had Not Violated the Bylaws.

      Article IX, Section H of the Bylaws states in relevant part: "The Board of

Directors may assess fines against Members for any violation of the Bylaws or Rules

and Regulations of the Club. 4 RR 18. The Board is not permitted to fine members

for not following their instructions, or for other personal reasons. As discussed above,

Mr. Saxon did not violate the Bylaws by allowing Service Personnel to come on the

premises. The Board violated the Bylaws by fining him for conduct that is specifically

authorized by the Bylaws.

      B.     The Club Imposed Fines Far in Excess of What the Bylaws
             Authorize.

      Beginning in 2011, the Board began escalating its efforts to force Mr. Saxon

to keep Mr. Hodge off the premises. The Board verbally threatened to fine Mr. Saxon,

                                          -14-
then on July 20, 2011, sent a letter threatening a $500.00 fine. 2 RR 24-5; 4 RR 29.

The Board subsequently sent letters assessing fines, including a letter on January 27,

2012, assessing a $1,500.00 fine. 2 RR 93; 4 RR 68. The Board later withdrew them.

2 RR 45. Brent Smith also made phone calls to Mr. Saxon, and even called the Sheriff

trying to get Mr. Hodge removed from the property. 2 RR 98.

      When Mr. Saxon refused to submit to the Board's will, the Board once again

began assessing fines. On November 16,2012, the Board sent a letter informing Mr.

Saxon that he owed them a total of $3,000.00 for six alleged violations. 2 RR 31; 2

RR 93-4; 4 RR 32-3. On December 19, 2012, the Board sent another letter informing

Mr. Saxon that he owed them a total of$5,500.00, including an additional $2,500.00

for five more alleged violations. 2 RR 32; 2 RR 94; 4 RR 34 and 37. On January 18,

2013, the Board sent another letter informing Mr. Saxon that he owed the Club a total

of$7 ,000.00, including an additional $1,500.00 for three alleged violations. 2 RR 33;

2 RR 94; 4 RR 35-6. This letter was followed five days later by a demand letter from

the Club's attorney. 4 RR 3 8-9. Under the circumstances, the Club had no authority

to impose these fines on Mr. Saxon.

      In addition, the Board had no authority to increase the fines beyond the limits

set forth in the Bylaws. On April 9, 2011, the Board voted to increase the fines to

$500.00 per violation. 2 RR 23. This was done as a Board resolution, not as a Bylaws

                                         -15-
amendment. 2 RR 54. The Board made no effort to comply with the requirements for

amending the Bylaws. 2 RR 55. A Bylaws amendment would require calling a

meeting of the members for that purpose, and having at least 75% of the members

entitled to vote cast their votes in favor of the amendment. Article XIII (4 RR 22).

This is in addition to the normal requirements for members' meetings in Business

Organizations Code §§ 22.156 - 160.

      The Board's decision to authorize a $500.00 fine for each violation directly

violates Article IX, Section H, which authorizes the Board to assess a $15.00 fine for

the first violation, a $30.00 fine for the second violation, and a $60.00 fine (or

suspension of Club privileges) for the third and subsequent violations. 2 RR40; 4 RR

18.

      Debbie Malone claimed the Board was justified in assessing fines in excess of

what the Bylaws authorize because a fine of $15 - $60.00 would not be enough to

deter violations. 2 RR 72-5. Article IV, Section E of the Bylaws, "Authority," reads

as follows:

      Subject to the provisions of these Bylaws, the Board of Directors, by
      majority vote thereof, shall have the power to prescribe and enforce the
      Rules governing the Club and to enforce penalties for violations of the
      Rules and Bylaws of the Club. The Board of Directors may exercise
      other powers as may be necessary and proper to carry out the objectives
      for which the Club is organized. The vote of a majority of the Board of
      Directors shall be final. Failure of Members and Associate Members to

                                         -16-
      comply with the Rules and Bylaws of the Club or the penalties
      prescribed by the Board of Directors may result in revocation of
      membership.

      4 RR 12-3. Ms. Malone claims these sentences mean the Board "can do

whatever it wants," and has "unlimited power." 2 RR 48-9. This is in direct conflict

with the very first part of this section, which says these powers are "Subject to the

provisions of these bylaws." 4 RR 12-3.

      Logically, the escalating fine provision requires the complaint for the first

alleged violation to be processed, a violation to be found, then a fine to be assessed

before assessing a fine for a second violation, then the same process to be repeated

before assessing a fine for a third violation. This process is designed to give the

accused member fair notice that the fine will increase in the event of a subsequent

violation. It is also designed to give the accused member the benefit of a final finding

by the Board that there was a violation, and a chance to cure the violation, before

incurring the increased fines. This is especially important in this case, where there has

been only one alleged violation (Mr. Hodge staying on the property). Instead of

finding a first violation and giving Mr. Saxon a chance to cure it, then proceeding to

assess larger fines for violations following the conclusion of the first disciplinary

proceeding, the Board simply met without notice to Mr. Saxon, found him guilty of

three violations, and assessed three fines. If the Board is allowed to meet once, find

                                          -17-
three violations, and assess three fines, what is the purpose of escalating fines?

      C.     The Club Failed to Establish an Investigative Committee.

      Article VI, Section A and A(2) states that the Board "shall designate" an

Investigative Committee and requires that Committee to investigate all complaints

and make recommendations to the Board. 2 RR 67;·4 RR 15. Article IX, Section H

specifically requires the Board to consider the recommendations of the Investigative

Committee. 4 RR 18. Had they been followed, these procedures would have given

Mr. Saxon an additional level of protection before being prosecuted for allegedly

violating the Bylaws. 2 RR 68. Ms. Malone admitted that the Board had never

established an Investigative Committee. 2 RR 67.

      The Board's actions violated the Bylaws and Mr. Saxon's right to due process

by depriving him of the chance to present his side of the story to the Investigative

Committee, and preventing the Investigative Committee's findings from being

considered by the Board.

      D.     The Club Failed to Provide Notice and an Opportunity to be Heard.

      Article VI, Section A(2) also requires a complaint to be filed by a member,

before punitive action can be initiated against a Member. 2 RR 55, 57; 4 RR 15. Ms.

Malone admitted that there was no complaint against Mr. Saxon when the Board first

took action against him. 2 RR 55; 4 RR 30. On July 20, 2011, Ms. Malone sent a

                                         -18-
letter accusing Mr. Saxon of violating the Bylaws by having unauthorized guests. In

the letter she stated that the Board had declined to issue a fine at that time because

"The complaint must be in writing by another member and as I told you, we have not

received such." 4 RR 29. This was an acknowledgment by the Board that Article VI,

Section A(2) prohibits any punitive action against Mr. Saxon without such a

complaint. The record here is completely devoid of any such written complaints.

      Then on January 27, 2012, the Board notified Mr. Saxon that it had assessed

fines for three alleged violations at $500.00 each, for a total of$1,500.00. 2 RR 93;

4 RR 68. The Club imposed these fines on Mr. Saxon without bothering to contact

him or hear his side of the story. The Board decided on March 20, 2012 to "suspend"

those fines. 4 RR 30.

      The Board sent additional letters to Mr. Saxon on November 16, 2012,

assessing $3,000.00 in fines; on December 19, 2012, assessing a total of$5,500.00

in fines; and on January 18,2013, assessing a total of$7,000.00 in fines. 4 RR 32-3;

4 RR 71-2; 4 RR 35-6. The December 19, 2012, letter invited Mr. Saxon to attend a

Board meeting which was scheduled for January 12,2013, slightly less than 30 days

after the date of the letter, to 'discuss this notice.' 4 RR 71-2. The January 18, 2013,

letter invited Mr. Saxon to attend a Board meeting scheduled for February 91h. 4 RR

35-6. Mr. Saxon received the demand letter from the Club's attorney before this

                                          -19-
meeting occurred. 4 RR 38-9. Put another way, each letter informed Mr. Saxon that

the Board had already found him guilty of violating the Bylaws and assessed a fine,

but he was welcome to show up and discuss the matter ifhe liked. These matters were

taken up and decided without providing Mr. Saxon with any advance notice, and

without allowing him an opportunity to be heard. 2 RR 70. These letters reflect a

number of egregious violations of Mr. Saxon's rights.

      Ms. Malone admitted that she was not aware of the requirements to give

written notice of a violation to the owner, to give the owner an opportunity to cure

the violation, to allow the owner a hearing before the Board, or to allow 30 days to

request the hearing. 2 RR 66. She admitted that the Board made no efforts to comply

with any of these requirements. 2 RR 66.

      If the Board had complied with its own Bylaws, it would have taken action

against Mr. Saxon only after receiving a written complaint from a member. Then it

would have assigned the matter to the Investigative Committee, which would have

allowed Mr. Saxon a formal or informal chance to present his side of the story. After

receiving the committee's report, the Board would have notified Mr. Saxon in writing

of an alleged violation (before actually finding that the accusation was true). The

notice would have given him notice of a meeting where the issue would be

considered, and an opportunity to attend and be heard. At that meeting, the Board

                                        -20-
would have applied the definitions of "Visitor" and "Service Personnel" from the

Bylaws. If the Board still found that Mr. Saxon had violated the Bylaws, it could have

assessed a $15.00 fine for the first violation. If the Board received a complaint of a

second alleged violation, it would have repeated this process, and if a violation was

found, imposed a $30.00 fine. If the Board received a complaint of a third alleged

violation, it would have repeated this process, and if a violation was found, imposed

a $60.00 fine OR suspended Mr. Saxon's privileges. Instead, the Board skipped all

these formalities and sent Mr. Saxon notices that he had already been found guilty of

multiple violations and fined.

      Article IX, Section D states: "The Board of Directors may not take any action

against a Member without giving the Member adequate notice and an opportunity to

be heard." 4 RR 17. This sentence appears in the "Failure to Pay Dues" section, but

by its terms it prevents the Board from taking any action without affording this basic

right to the member. This is more than just a technicality because Mr. Saxon works

out of state for extended periods of time. 2 RR 78; 2 RR 88-9.

      The Club's Bylaws establish a specific procedure for imposing fines or taking

other punitive action against a member. The Board ignored these procedures, and

therefore failed to establish the conditions precedent for recovering fines from Mr.

Saxon.

                                         -21-
      The three letters assessing fines make it clear the Board assessed the fines, then

notified Mr. Saxon of its actions. 4 RR 32-3; 4 RR 71-2; 4 RR 35-6. Mr. Saxon was

never allowed to meet with the Board after 20 11. 2 RR 83. He also was not allowed

to speak to the Club's attorney, regarding the Bylaws requirements. 2 RR 83. The

Board systematically denied him any chance to present his side of the story. When the

Board assessed $7,000 in unauthorized fines for conduct that did not violate the

Bylaws, Mr. Saxon had no choice by to hire an attorney and protect his legal rights.

      E.     The Club Tried to Seize Mr. Saxon's Home and Share Without
             Following the Bylaws or Texas Law.

      On November 8, 2013, while this lawsuit was pending, the attorney for the

Club sent Mr. Saxon's attorney a letter threatening to suspend or expel Mr. Saxon as

a Member and sell his membership at a meeting scheduled for November 23, 2013.

The stated purpose of the letter was to collect $650.00 in annual dues. 2 RR 95; 4 RR

79. The letter did not discuss the alleged fines. This was apparently based on the lien

which the Club holds on each share pursuant to Article IX, Section A of the Bylaws.

4 RR 16; 4 RR 17. However, the Club did not take any of the actions required to

foreclose its lien, other than sending the two letters. This is despite the clear

requirement in Article IX, Section A: "This lien shall be enforced as provided by the

laws of the State of Texas and/or these Bylaws." 4 RR 17.

                                         -22-
      On November 25, 2013, the Club's attorney sent the undersigned counsel a

letter indicating that the Board had "revoked" Mr. Saxon's share. 2 RR 95; 4 RR 80.

The letter also informed Mr. Saxon that he was no longer a Member and could not

reside there, generously giving him ten days to vacate the premises. These actions

were taken without judicial supervision, without complying with any of the

requirements for foreclosure, and without even pleading for such relief.

      Article IX, Section A clearly requires the Club to comply with Texas law

regarding foreclosures. The Club made no effort to hold a foreclosure sale or

otherwise follow the proper procedures. Texas Property Code§ 209.0091 prohibits

a property owners' association from foreclosing unless it has notified the owner of

the delinquency and given him or her 60 days to cure it. The Club ignored this

requirement. Most significantly,§ 209.0092 requires an association to obtain a court

order in an expedited foreclosure proceeding, before foreclosing its lien.

      Texas Business and Commerce Code§ 9.601 establishes the procedures for

foreclosure on goods or other assets subject to UCC. This should apply to foreclosure

of Mr. Saxon's "share," but the Board did not comply with it. Texas Property Code

§ 51.002 establishes the procedures for foreclosure sale of real property under

contract lien; which shoul~ apply to Mr. Saxon's interest in the land and his yard, but

the Board did not comply with it. Texas Rule of Civil Procedure 736 establishes the

                                         -23-
procedures for expedited foreclosure. Under Rule 73 5.1, these procedures specifically

apply to " ... a lien securing ... a property owners' association assessment under

section 209.0092 of the Property Code." Instead of following its Bylaws and "the

Laws ofthe State ofTexas," the Boardsimplymetand tried to confiscate Mr. Saxon's

share and property, and ban him from the premises.

      The Board failed to follow any of the proper procedures for foreclosure. This

was a clear violation of the law, of the Club's Bylaws, and of Mr. Saxon's rights.

V.    Mr. Saxon is Entitled to Recover Attorney's Fees and Costs from The Club

      In announcing his ruling, the trial court commented, "One thing that is really

abundantly clear to the Court is that neither side acted right. That's the way I feel. I

think both of them need to review their actions and start treating people like they

really should." 3 RR 15. The ruling indicates that the trial judge was sending a

message to both sides that they should have worked out their differences instead of

taking up the Court's time with a trial.

      Mr. Saxon's "mistake" was complying with the Bylaws and refusing to

conform to the Board's will. On January 23, 2013, the Club's attorney sent a demand

letter to Mr. Saxon, threatening a lawsuit if he did not pay the $7,000.00. 2 RR 37;

2 RR 94; 4 RR 38-9. At that point, Mr. Saxon hired an attorney instead of paying the

fines that were issued in violation of the Bylaws. 2 RR 95. On April3, 2013, the Club

                                           -24-
filed suit against Mr. Saxon. Mr. Saxon may have been somewhat assertive in dealing

with the Board, but what was he to do when they attempted to collect $7,000.00 from

him and eject him from his home?

      The trial court granted a judgment for $765.00 against Mr. Saxon. This was

computed by assessing a $15.00 fine for the first alleged violation, a $30.00 fine for

the second, and $60.00 fines for alleged violations three through fourteen. This ruling

recognizes that the Board was violating Article IX, Section H of the Bylaws by

attempting to assess a $500.00 fine for each alleged violation. In other words, Mr.

Saxon was completely within his rights at all stages in this matter to refuse to pay a

$7,000.00 fine. He did not violate the Bylaws and his performance was excused by

the Club's breach. Mustang Pipeline Co., Inc. v. Driver Pipeline Co., Inc., 134
S.W.3d 195, 198-200 (Tex. 2004); Mead v. Johnson Group, Inc., 615 S.W.2d 685,

689 (Tex. 1981); Hernandez v. Gulf Group Lloyds, 875 S.W.2d 691, 692-3 (Tex.

1994). Nevertheless, the trial court ruled for the Club and granted an instructed

verdict, tossing out Mr. Saxon's counterclaim. As shown previously, this was error

as there was plenty of evidence that the Board violated the Bylaws. Even if one were

to consider the trial court's ruling a finding of no breach by the Club, rather than an

instructed verdict, it is impossible to reconcile the judgment with the undisputed

facts. In light of the record, this Court should reverse and render judgment in favor

                                         -25-
of Mr. Saxon, thereby making him the prevailing party and, as such, entitled to

recover the amount of fees stipulated as reasonable and necessary by the parties.

      Civil Practice and Remedies Code § 3 8.001 (8) provides as follows: "A person

may recover reasonable attorney's fees ... in addition to the amount of a valid claim

and costs, if the claim is for ... an oral or written contract." The Texas Supreme

Court has held: "If attorney's fees are proper under section 38.001(8), the trial court

has no discretion to deny them." Smith v. Patrick W.Y. Tam Trust, 296 S.W.3d 545,

547, 53 Tex. S. Ct. J. 54 (Tex. 2009).

      Attorney's fees are recoverable under this section to the prevailing party.

Horizontal Holes. Inc. v. River Valley Enterprises, Inc., 197 S.W.3d 834, 835 - 6

(Tex. App.-Dallas 2006, no pet.). Section 38.001 allows for recovery of attorney's

fees in cases where the plaintiffs breach of contract claim and the defendant's

counterclaim arise from the same transaction and the same facts required to prosecute

the claim are required to defend against the counterclaim. Brockie v. Webb, 244
S.W.3d 905, 910 (Tex.App.-Dallas 2008, pet. denied); Horizontal Holes, Inc. v.

River Valley Enterprises, Inc., 197 S.W.3d 834, 836 (Tex. App.-Dallas 2006, no

pet.).In this case, Mr. Saxon asserted a breach of contract counterclaim against the

Club for violating the Bylaws by, inter alia, charging improper fines. Thus, the same

facts are used to defeat the Club's breach of contract claim and to prosecute Mr.

                                          -26-
Saxon's counterclaim.      As a result, when this Court reverses the trial court's

judgment, it should also render judgment in favor ofMr. Saxon for attorney's fees in

the amount stipulated by the parties on the record at trial. 2 RR 77.

VI.   Conclusion

      John Adams wrote the following phrase into the Massachusetts Constitution:

" . . . to the end it may be a government of laws and not of men." Massachusetts

Constitution, Part the First, Article XXX (1780). This principle traces all the way

back to Aristotle, who said:

      Therefore he who bids the law rule may be deemed to bid God and
      Reason alone rule, but he who bids man rule adds an element of the
      beast; for desire is a wild beast, and passion perverts the minds of rulers,
      even when they are the best of men.

Aristotle, Politics 3:16 (350 B.C.E.). This is sometimes translated as, "Laws should

govern."

      The problem in this case is that the Board has governed the Club according to

its passion, contrary to the rule of law. If the Court rules for the Club, it will be clear

that officers and directors of corporations can rule according to their own whims,

without regard to the law or their governing documents. If the Court rules for Mr.

Saxon, it will send a message that officers and directors govern within the limitations

of the power specifically delegated to them.

                                           -27-
      It is clear that the Club's Board ignored its own Bylaws and sought to assess

fines against Mr. Saxon without justification. Unless reversed, the Club has signaled

its intent to use the trial court's judgment to seize Mr. Saxon's home and remove him

from the neighborhood. To prevent this abuse of power, this Court should vacate the

trial court's judgment and award Mr. Saxon his attorney's fees and costs.

                                     PRAYER

      Appellant prays that the Court reverse the judgment of the trial court and

render judgment in favor of Appellant for his attorney's fees and court costs.

                                        -28-
SIGNATURE

  Respectfully submitted,

  By:     Is/ Sean P. Healy
  SEAN P. HEALY
  Texas Bar No. 00785953

  HEALY LAW OFFICES, P.C.
  113 E. Houston St.
  Tyler, Texas 75702-8130
  TEL: (903) 592-7566
  FAX: (903) 592-7589
  ATTORNEY FOR APPELLANT

   -29-
                         CERTIFICATE OF SERVICE

      This certifies that the undersigned served this Brief of Appellant, by electronic

filing, on March 31, 2015, to the following attorney:

                                 Kevin Giddens
                              Boyd & Brown, P.C.
                                 1215 Pruitt Pl.
                               Tyler, Texas 75703
                           giddenslawfirrn@gmail.com
                          ATTORNEY FOR APPELLEE
                           GROVE CLUB LAKE, INC.

                                                  Is/ Sean P. Healy
                                                SEAN P. HEALY
                                                ATTORNEY FOR APPELLANT

                                         -30-
          CERTIFICATE OF COMPLIANCE WITH TRAP 9.4(i)(3)

      I hereby certify that this brief contains 7,157 words (excluding the caption,

table of contents, table of authorities, signature, proof of service, certification, and

certificate of compliance). This is a computer generated word count created in Word

PerfectX4, using a 14-point typeface for all text, except for footnotes which are in 12-

point typeface. In making this certificate of compliance, I am relying on the word

count provided by the software used to prepare the document.

                                                  Is/ Sean P. Healy
                                                 SEAN P. HEALY
                                                 ATTORNEY FOR APPELLANT

                                          -31-
                APPENDIX

Appendix A:   Bylaws

Appendix B:   House Sitting Service Agreement

Appendix C:   Judgment

                       -32-
                                          BYLAWS

                                               OF

                                  GROVE CLUB LAKE, INC.

  I.      GENERAL

          A.    These Bylaws (herein referred to as the "Bylaws") govern the affairs of GROVE
                CLUB LAKE, INC., a non-profit corporation, in perpetuity, (herein referred to as
                the "Club" or the "Corporation"), organized under the Texas Non-Profit
                Corporation Act (herein referred to as the "Act").

          B.    The Corporation shall comply with the requirements of the Act and maintain a
                registered office and registered agent in Texas. The Board of Directors shall
                designate the registered office and registered agent of the corporation in
                accordance with the Act, and the Board of Directors may change the registered
                office and the registered agent as provided by the Act.

          C.    The objective of the Club shall be the creation of a quiet and desirable
                recreational community with the promotion of wholesome and healthy sports for
                the enjoyment and pleasure of its Members, their families and their guests.

 II.      MEMBERS

          A.    Membership. Membership shall be restricted to the Members and
                Associate Members as defined below:

                       1. Member. A Member is one who holds a Share Certificate of stock in
                       GROVE CLUB LAKE in his or her name, evidencing rights of
                       membership in the Club. Each Member is entitled to one (1) vote on all
                       matters requiring a vote at any meeting of Members. A share Certificate
                       may be issued in the name of no more than two persons, with each person
                       making application for membership. Such persons shall not each be
                       entitled to a vote, but shall jointly share one ( 1) vote.

                       2. Associate Member. An Associate Member is the spouse or
                       companion of a member, or any immediate family of a member, (parent,
                       child, brother, or sister). Inheritance of a share is not automatic, the
                       inheritor must make application and be approved for membership before
                       becoming an active member. An Associate Member shall be responsible
                       for adherence to all provisions of the Bylaws. An Associate Member shall
                       enjoy the privileges of the Club with respect to residency, boating, hiking,
                       swimming, fishing, etc.

BYLAWS OF GROVE CLUB LAKE. INC.
Page I of IS.                                                                 Appendix A
                       3. Visitor. A Visitor is a person who comes onto GROVE CLUB
                          LAKE premises for the specific purpose of contacting a Member
                          or Associate Member. A Visitor may be invited to participate in
                          and enjoy the privileges offered to Members and Associate
                          Members of the Club, only as long as the Member or Associate
                          Member is present somewhere on Grove Club Lake property and
                          has made the visitor aware of all restrictions, especially those
                          regarding types of fishing allowed, size and quantity of fish to be
                          taken.

                       4. Service Personnel. Individual or individuals summoned by a
                          Member or Associate Member for the specific purpose of
                          performing a specific service. No lake privileges shall be
                          extended to service personnel.

       B.      Residency. Residencies on the Club property are privileges, not rights,
               extended to Members and Associate Members. Violation of the Bylaws of
               the Club, including but not limited to conduct on Club property which is
               incompatible with the provisions of the Bylaws or otherwise violate the
               laws of the State of Texas, may result in the revocation or restriction of
               these privileges or the imposition of a fine by the Board of Directors of the
               Club.

IlL MEETINGS OF MEMBERS
       A.      Annual Meetings. An annual meeting of the Members shall be held on a
               day and at an hour set from time to time by the Board of Directors for the
               purpose of electing Directors and for the transaction of such other business
               as may come before the meeting. Decisions at annual, regular or special
               meetings shall be decided by a majority of the votes presented at such
               meetings. There shall be no more than one ( 1) vote cast per Share
               Certificate.

       B.      Special Meetings.     A special meeting of the Members may be requested
               by any Member, but may be called only by the President, the Board of
               Directors, or the Members holding not less than one-fourth (Y..) of the
               votes entitled to be cast at such meeting, as defined in Article III, Section
               E.

       C.      Meeting Place.    All meetings shall be held at a conveniently located address
               designated by the Board of Directors and included in the Notice of Meeting.

BYLAWS OF GROVE CLUB LAKE. INC.
Page 2 of 15.
       D.      Notice of Meeting. Written or printed notice stating the place, day and hour of
               any meeting of Members shall be delivered personally, by mail or by e-mail to
               each Member entitled to vote at such meeting at the direction of the President or
               the Members calling the meeting. Such notice shall be delivered to such
               Members not less than ten (1 0) nor more than fifty (50) days before the date set
               for such meeting. Notice of a special meeting shall state the purpose or purposes
               for which such meeting is being called. In the case of an emergency, this section
               may be waived by the President or the Board of Directors.

               If mailed, such notice shall be deemed to be delivered upon the expiration of
               three (3) days after depositing such notice in the U.S. Mail, in a sealed
               envelope with postage thereon prepaid. If notice is given by e-mail, such
               notice shall be deemed delivered when the e-mail company, (AOL, Prodigy,
               etc.), accepts the message for delivery. If delivered personally, such notice shall
               be deemed to be delivered when delivered to the Member or Associate Member
               occupying a residence on the Club property. In the case of notice delivered
               personally, in the event of a dispute regarding receipt of notice, the written
               statement of the person delivering such notice shall be conclusive.

       E.      Quorum. The Members holding one-fourth (V.S) of the votes entitled to be cast,
               represented in person or by proxy, shall constitute a quorum at any meeting. The
               vote of the majority of the votes entitled to be cast by the Members present, or
               represented by proxy at a meeting at which a quorum is present, shall be the act
               of the meeting of Members. If a quorum is not present at a meeting of the
               Members, a majority of the Members present may move to adjourn the meeting
               to a future date. Notice of such meeting shall be deemed delivered by posting the
               date and time of such meeting on the bulletin board at the front gate of the Club.

       F.      Proxies.    A Member may cast his or her vote by proxy executed in writing by
               the Member or by the Member's duly authorized attorney-in-fact. No proxy shall
               be valid after eleven (11) months from the date of its execution, unless otherwise
               provided in the proxy. Each proxy shall be revoke able unless expressly
               provided therein to be irrevocable, and in no event shall it remain irrevocable for
               more than eleven (11) months.

       G.      Voting by Mail. Where Directors are to be elected, such election may be
               conducted by mail in such manner as the Board of Directors shall determine.

       H.      Rights of Members. Members may speak at any meeting of Members.
               Members and Associate Members will act under Roberts Rules of Order when
               called upon by the Chairman.

       I.      Agenda. Members may have items of business placed on the agenda of
               meetings of Members by their attendance at a Board Meeting or by informing the
               Board of Directors of the requested item in writing.

BYLAWS OF GROVE CLUB LAKE, INC.
Page 3 of IS.
IV.   BOARD OF DIRECTORS

       A.      General Powers. The property and affairs of the Corporation shall be managed
               and controlled by its Board of Directors. Only Members of the Club may serve
               on the Board of Directors.

       B.      Number. Tenure and Qualification.        The Board of Directors shall consist of
               five (5) members. All Board members to serve two- ·year terms with three (3)
               Board members being elected on the odd years and two (2) Board members being
               elected on the even years, with no term limits. Election of Directors shall be by a
               majority of votes presented at the annual meeting of Members, and Board
               members shall hold their office for the length of term elected, or until their
               successor shall have been elected and qualified.

       C.      Nominating Committee. Immediately preceding the annual meeting of
               Members, the nominating committee will present a list of the Members
               willing to be nominated to serve on the Board of Directors. Further
               nominations may be made by Members from the floor at such meeting.

       D.      Vacancies. Vacancies occurring on the Board of Directors shall be filled by the
               affirmative vote of a majority of the remaining Directors no less than a quorum
               of the Board of Directors. A Director elected to fill a vacancy shall be elected for
               the unexpired term of his predecessor in office.

       E.      Authority. Subject to the provisions of these Bylaws, the Board of Directors, by
               majority vote thereof, shall have the power to prescribe and enforce the Rules
               governing the Club and to enforce penalties for violations of the Rules and
               Bylaws of the Club. The Board of Directors may exercise other powers as may
               be necessary and proper to carry out the objectives for which the Club is
               organized. The vote of a majority of the Board of Directors shall be final. Failure
               of Members and Associate Members to comply with the Rules and Bylaws of the
               Club or the penalties prescribed by the Board of Directors may result in
               revocation of membership.

       F.      Regular Meetings. At least quarterly, the Board of Directors shall meet in a
               regular session at specified times to be determined by the Board and posted so
               that interested Members may attend.

       G.      Special Meetings. Special meeting of the Board of Directors may be called by
               the President or any two (2) Directors.

       H.      Notice. Notice of any special meeting of the Board of Directors shall be given at
               least two (2) days prior thereto by written notice delivered personally or sent by
               mail, e-mail or verbally over the telephone to each Director at his address as

BYLAWS OF GROVE CLUB LAKE, INC.
Page4 oflS.
               shown on the records of the Corporation. Such notice shall specify the purpose or
               business to be transacted at such meeting.

               If mailed, such notice shall be deemed to be delivered upon the expiration of
               three (3) days after depositing such notice in the U.S. Mail, in a sealed envelope
               with postage thereon prepaid. If notice is given by e-mail, such notice shall be
               deemed to be delivered when the e-mail company, (AOL, Prodigy, etc.),
               accepts the message for delivery. If delivered personally, such notice shall be
               deemed to be delivered when delivered to the Member or Associate Member
               occupying a residence on the Club property. In the case of notice delivered
               personally, in the event of a dispute regarding receipt of notice, the written
               statement of the person delivering such notice shall be conclusive.

               Directors may waive notice of any meeting. The attendance of a Director at any
               meeting shall constitute a waiver of notice of such meeting, except where a
               Director attends a meeting for the express purpose of objecting to the transaction
               of any business because the meeting is not lawfully called or convened.

       I.      Quorum. At least three (3) members of the Board of Directors must be present at
               a meeting to constitute a quorum. All decisions of the Board shall be by majority
               vote of those present.

       J.      Compensation. Directors as such shall not receive any remuneration for their
               services.

Y,.   OFFICERS

       A.      General

               1. Designation. The officers of the Corporation shall be a President,
                  Vice President, Secretary, Treasurer, Maintenance Officer and such other
                  officers as may be elected in accordance with the provisions of this Article.
                  The Board of Directors may elect or appoint such officers as it shall deem
                  desirable, such officers to have the authority to perform the duties prescribed
                  by the Board of Directors from time to time. Any two (2) or more offices may
                  be held by the same person, except the offices of President and Secretary.

               2. Election and Term of Office. Immediately following the Annual Meeting of
                  Members, the newly elected Board of Directors shall meet and elect the
                  officers of the Corporation to serve for the ensuing year. Each officer shall
                  hold office until his successor has been duly elected and qualified.

BYLAWS OF GROVE CLUB LAKE, INC.
Page 5 of 15.
               3. Removal. Any officer elected or appointed by the Board of Directors may be
                  removed by the Board of Directors whenever, in its judgment, the best
                  interests of the Corporation would be served thereby.

               4. Vacancies. A vacancy in an office resulting from the death, resignation,
                  removal or other circumstance of such officer may be filled by the Board of·
                  Directors for the unexpired portion of the term vacated.

       B.      President. The President shall be the principal executive officer of the
               Corporation and shall, in general, supervise and control all of the business and
               affairs of the Corporation and of the Board of Directors. The President shall not
               vote at Board meetings except in the case of a tie. In general, the President shall
               perform all duties incident to the office of President and such other duties as may
               be prescribed by the Board of Directors from time to time.

       C.      Vice President. In the absence of the President, or in the event of his inability
               or refusal to act, the Vice President shall perform the duties of the President.
               When so acting, the Vice President shall have all the powers of and be subject to
               all the restrictions of the office of the President. The Vice President shall perform
               such other duties as may from time to time be assigned to his office by the Board
               of Directors.

       D.      Treasurer. If required by the majority vote of the Board of Directors, the
               Treasurer shall give a bond for the faithful discharge of the duties of Treasurer in
               such sum and with such surety or sureties as the Board of Directors shall
               determine. The Treasurer shall have charge and custody of and be responsible for
               all funds and securities of the Corporation, and shall receive and give receipts for
               monies due and payable to the Corporation from any source whatsoever. The
               Treasurer shall deposit all such monies in the name of the Corporation in such
               banks, trust companies or other depositories as shall be selected by the Board of
               Directors in accordance with the provisions of Article VII of these Bylaws, and,
               in general, shall perform all the duties incidental to the office of Treasurer and
               such other duties as may be assigned to the Treasurer from time to time by the
               President or the Board of Directors.

       E.      Secretary. The Secretary shall keep the minutes of the meetings of the
               Members and of the Board of Directors in one or more books provided therefore
               in accordance with the provisions of these Bylaws or as required by law. The
               secretary shall be the custodian of the corporate records and of the corporate seal
               of the Corporation, and shall see that the seal of the Corporation is affixed to all
               legal documents duly authorized to be executed under the provisions of these
               Bylaws. The Secretary shall keep a register of the post office address of each
               Member, and, in general, perform all duties incidental to the office of Secretary
               and such other duties as from time to time may be assigned to him or her by the
               President or the Board of Directors.

BYLAWS OF GROVE CLUB LAKE, INC.
Page 6 of IS.
          F.    Maintenance Officer. The Maintenance Officer shall be responsible for upkeep
                and appearance of the Corporation property. The Maintenance Officer shall
                oversee the caretaker and act as liaison between the Members and the caretaker.
                The Maintenance Officer shall report to the President and/or the Board of
                Directors on all matters which may require additional help and/or the need of the
                formation of a committee. In general, the Maintenance Officer shall perform all
                the duties incidental to the office and such other duties as from time to time may
                be assigned to him or her by the President or by the Board of Directors.

YL COMMITTEES
          A.    General. The Board of Directors, by resolution adopted by a majority of the
                Directors, shall designate a Nominating Committee, Club Membership
                Committee and an Investigative Committee. The Board of Directors may
                designate such other committees as it deems necessary. The President of the
                Corporation shall appoint the members of a committee. All committees shall be
                responsible to the Board of Directors.

                1. Membership Committee. The Membership Committee will investigate
                applicants for membership in GROVE CLUB LAKE. Applicants will be
                furnished an Application for Membership and a copy of these Bylaws of GROVE
                CLUB LAKE, INC. Applicants are required to submit a completed Application
                for Membership with a report of financial responsibility, and a statement that
                they have read and agree to comply with the Bylaws of GROVE CLUB LAKE,
                INC.

                2. Investigative Committee. Complaint forms are available from the secretary,
                who will direct all complaints to the Board of Directors. The Investigative
                Committee will receive written complaints from the Board of Directors regarding
                violation of the Bylaws and Rules and Regulations by other Members, Associate
                Members, and guests. The results of the investigation and any recommendations
                made by the Committee will be reported to the Board of Directors within thirty
                (30) days of the date such complaint is turned over to the Investigative
                Committee.

          B.    Term of Office. All members of a committee shall continue to serve until the
                next Annual Meeting of Members of the Corporation and/or until their successor
                is appointed, or until the committee is terminated.

          C.    Chairman. One (1) member of each committee shall be appointed Chairman of
                such committee by the President of the Corporation.

          D.    Vacancies. A vacancy on any committee may be filled by appointment made in
                the same manner as provided in the case of the original appointments.

BYLAWS OF GROVE CLUB LAKE, INC.
Page 7 of IS.
       E.      Ouorum. Unless otherwise provided in the resolution of the Board ofDirectors
               designating a committee, a majority of the whole committee shall constitute a
               quorum, and the act of a majority of the members present at a meeting at which a
               quorum is present shall be the act of the committee.

VII.   CONTRACTS, CHECKS, DEPOSITS, FUNDS

       A.      Contracts. The Board of Directors may authorize any officer or officers, agent
               or agents of the Corporation, to enter into any contract or execute and deliver any
               instrument in the name of and on behalf of the Corporation. Such authority may
               be general or confined to specific instances. Neither the Board of Directors nor
               any officer or agent of the Corporation shall have the power or authority to
               execute any deed, mortgage, deed of trust or other instrument or conveyance
               covering any real property owned by the Corporation without unanimous
               approval of the Members.

       B.      Checks, Drafts, etc. All checks, drafts or orders for the payment of money,
               notes or other evidence of indebtedness of the Corporation for any amount over
               the sum of Five Hundred Dollars ($500.00) shall be signed by the Treasurer and
               countersigned by the President, Vice President or other officer so authorized by
               the Board of Directors.

       C.      Deposits. All funds of the Corporation shall be deposited to the credit of the
               Corporation in such banks, trust companies or other depositories as the Board of
               Directors may select.

       D.      Gifts. The Board of Directors, on behalf of the Corporation, may accept any
               contribution, gift, and bequest or devise for general purposes or for any special
               purpose of the Corporation.

VIII. OWNERSHIP AND TRANSFER OF MEMBERSHIP

       A.      Ownership. The ownership of the Corporation shall be limited to sixty (60)
               shares. Each share will be entitled to one ( 1) vote.

       B.      Issuance of Shares. The Board of Directors shall provide for the issuance of
               Share Certificates evidencing membership in the Corporation, which shall be in
               such form as may be determined by the Board. Such Certificates shall be
               numbered and signed by the President and Secretary, and shall be sealed with
               the seal of the Corporation. The name and address of each Member, the
               certificate number and date of issuance of the Certificate shall be entered in the
               records of the Corporation.

BYLAWS OF GROVE CLUB LAKE, INC.
Page 8 of 15.
          C.    Certificate Restrictions. It shall be stated on the face of each Share
                Certificate that the Corporation holds a lien on the shares represented by such
                Certificate as set forth in Article IX, Section B. The face of each Share
                Certificate shall also reflect the restrictions on the sale and transfer of such Share
                Certificate as set forth in this Article.

          D.    Transfer of Shares. Share Certificates of the Corporation will not be
                transferred unless and until the transferee has made proper application for
                membership in the Club and has been accepted as a Member in accordance with
                these Bylaws, and has paid any applicable transfer fees.

          E.    Rejection of Application of Membership. No person shall become a Member
                where one (1) or more of the Club Membership Committee votes against
                accepting the application. No person shall have a Share Certificate transferred
                into their name, nor shall they be entitled to any privileges or interests in the
                Club until they shall have filed an Application for Membership and furnished
                all other information requested by the Membership Committee, and have been
                contacted by at least two (2) members of the Membership Committee. At least
                three (3) character references shall be submitted with an Application for
                Membership. Applications shall be fully investigated.

          F.    Corporate Rights. Members must afford the Corporation a period of ten ( 10)
                full days within which to purchase, at prevailing prices, shares of the Corporation
                such Member desires to sell or transfer.                          ·

          G.    Limitation of Shares. There shall be one (1) share and only one (1) share ofthe
                Corporation held in any one household. Minors cannot hold a share in the
                Corporation unless dictated by law.

IX. LIENS. DUES. ASSESSMENTS AND FINES

          A.    Liens. The Club shall have and hold an express lien upon each share in the
                Corporation represented by the Certificate. Such lien shall secure the Corporation
                in the payment of all indebtedness of the holder of such certificate due or
                hereafter becoming due to the corporation, without regard to how or when such
                indebtedness may be incurred. This lien shall be enforced as provided by the
                laws of the State of Texas and/or these Bylaws.

          B.    Dues. The amount of assessments, annual dues, fines or other indebtedness
                (herein sometimes collectively referred to as "indebtedness") shall be determined
                by the Board of Directors, subject to Article IX, Sections E and F.

          C.    Payment of Dues. Dues of the Club are due and payable annually on or before
                the 31st day of January, or can be paid biannually, with payments due on or

BYLAWS OF GROVE CLUB LAKE, INC.
Page 9 of IS.
               before January 31st and July 31st. A penalty of Fifty Dollars ($50.00) per month
               will be assessed each Member whose dues are not paid by the due date. A like
               penalty will be assessed for special assessments that are not paid within two (2)
               months of the due date of such assessments. Any Member who is in default in
               payment of dues and/or assessments shall forfeit his or her right to vote at all
               meetings of Members of the Club until such delinquency has been satisfied. If
               indebtedness is not paid as provided in this Article, membership in the Club may
               be revoked unless application for special conditions is submitted to the Board
               pursuant to Section E below.

       D.      Failure to Pay Dues. Whenever a Member shall fail to pay any and all
               indebtedness due the Corporation after such indebtedness shall have been due for
               one (1) month, the Secretary of the Corporation shall give written notice to such
               Member at the Member's last known address that such indebtedness is due, and
               unless such indebtedness is paid within thirty (30) days from the date such notice
               is mailed, the Board of Directors may impose reasonable sanctions on such
               Member, including the suspension or expulsion of such Member from the
               Corporation and the sale of the Member's interest in the Corporation.

               The Board of Directors may not take any action against a Member without giving
               the Member adequate notice and an opportunity to be heard. To be deemed
               adequate, notice shall be in writing and delivered at least fourteen ( 14) days prior
               to the hearing before the Board. The Board of Directors, by majority vote, may
               suspend or expel a Member and may take action to sell the membership,
               privileges and interest of a defaulting Member in accordance with applicable law.

               In the event of such a sale of the membership interest, only the Corporation, or a
               person who has been approved for membership, as set forth herein, may purchase
               the membership, privileges and interest. The proceeds from such sale shall be
               applied first to the payment of the expenses incidental to such sale, secondly to
               the payment of the past due indebtedness precipitating such sale, and the
               remainder, if any, shall be paid to the Member whose rights and privileges, if not
               already revoked, shall immediately cease. Such sale shall serve to transfer the
               entire interest of such dispossessed Member in the Corporation to the purchaser
               at such sale. No such sale may be held without resolution of the Board of
               Directors, which resolution shall be duly entered in the minutes of the
               Corporation, and no such sale shall be construed to include the residence of such
               dispossessed Member.

       E.      Special Conditions. Members under economic duress may, on application to,
               and with the approval of, the Board, have their payment of dues and/or
               assessments deferred without penalty for a specific time period set by the Board.
               Such indebtedness will be charged interest at the rate often (10%) percent per
               annum.

BYLAWS OF GROVE CLUB LAKE, INC.
Page 10 oflS.
       F.      Taxes. The Club will pay all advalorem taxes assessed against Club property,
               liability insurance, and expenses of maintenance. The Club's liability insurance
               shall be maintained in full force and effect at all times.

       G.       Assessments. Should the revenue base of the Corporation be insufficient to
               meet the expenses of taxes, maintenance, insurance, improvements, betterment's,
               etc., the Board of Directors shall have the right to assess each Member an amount
               sufficient to meet the expenses of the Club. Such assessment shall not exceed
               Fifty Dollars ($50.00) per year per share unless a higher amount is necessary in
               the discretion of the Board of Directors. A greater assessment shall require the
               consent of a majority of Members entitled to vote at a meeting of Members
               called and held for such purposes.

       H.      Fines. The Board of Directors may assess fines against Members for any
               violation of the Bylaws or Rules and Regulations of the Club. All such fines shall
               be payable by the Member against whom the fine is assessed within thirty (30)
               days from receipt of notice thereof by the Member. The amount of the fine will
               be determined by the Board based on the type, severity, potential danger to
               person, property or peaceful enjoyment of others of the violation, and the
               recommendations of the Investigative Committee. The amount of fines will
               increase for repeated violations.

               1. First violation of Bylaws ----------------------------Fine $15.00

               2. Second violation of same offense ------------------Fine $30.00

               3. Third violation -SUSPENSION OF GROVE CLUB LAKE
                  PRIVILEGES FOR SIX (6) MONTHS OR--------Fine $60.00

X.    BOOKS AND RECORDS

       The Corporation shall keep correct and complete books and records of accounts and
       shall keep minutes of the proceeding of its meetings. All books and records of the
       Corporation may be inspected by any Member, or a Member's agent or attorney, for any
       proper purpose at any reasonable time.

XI.   USE OF COMMON AREA

       Use of the common areas within GROVE CLUB LAKE by the membership shall be
       subject to the following rules, and such additional rules as the Directors or a committee
       appointed by them shall direct (sometimes herein referred to as "Rules" or "Rules and
       Regulations"):

BYLAWS OF GROVE CLUB LAKE, INC.
Page 11 of 15.
       A.      Recreation Area.   Use of the recreation facilities shall be restricted to the use
               of families of Members and their guests or visitors. Guests shall be accompanied
               by the Member under whose membership they are visiting, or by a member of
               such Member's family.

       B.      Curfew. There shall be no group activity, including parties and meetings, in the
               common area after 10:00 PM unless approved by the Board or committee on a
               case by case basis. No source of excessively loud music shall be permitted within
               the common areas after curfew.

       C.      Occupancy; Conduct.       A Member or Associate Member shall not intentionally
               or unintentionally annoy or interfere with the peaceful enjoyment or rights of
               other Members or Associate Members, the Corporation or any other occupants of
               GROVE CLUB LAKE. Such interference or annoyance shall include
               unreasonable noise, offensive odors, improper neighborly conduct or any other
               private or public nuisance including public intoxication, abusive language, public
               disturbance or other conduct which otherwise violates the laws of the State of
               Texas.

       D.      Compliance with Law; Waste.        A Member and Associate Member shall obey
               and comply with all public laws, ordinances, rules and regulation, and all ground
               rules now or hereafter promulgated. No Member shall do or allow to be done any
               act which would cause or threaten to cause any damage, encroachment or
               disrepair to the Corporation property, community facilities or residence or
               residence building site of any other Member.

       E.      Property. Property that each Member maintains or otherwise cares for shall be
               considered as such Member's yard unless otherwise agreed upon by the Board
               and all Members involved, especially those with adjoining yards, or until and
               unless the Club is dissolved.

XII.   RULES AND REGULATIONS

       A.      Firearms.    Hunting or other discharge of a firearm on the Club premises by
               anyone is strictly prohibited, except as specifically set out below:

               1. Rifles. The discharge of a rifle on Club premises, including but not limited to
                  a Member's yard, is strictly prohibited, and is punishable by a fine.

               2. Pistols. The use of pistols or any type of hand guns is prohibited.

               3. Shotguns. Shotguns may be used by a Member for the purpose of killing
                   snakes only in the area m~intained by such Member as his yard.

BYLAWS OF GROVE CLUB LAKE, INC.
Page 12 of 15.
               4. Pellet Guns. No air rifles or pistols will be allowed. Guns requiring the
                  shooter to pump them will be restricted to not more than two (2) pumps.

       B.      Fishing. Fishing by Members of the Club and their guests shall be governed by
               the regulations set out below. Violation of the provisions of the section may
               result in fines or other penalties assessed by the majority vote of the Board of
               Directors, including but not limited to the revocation of fishing privileges for a
               specified time period.

               1. Policy. It shall be the policy of this Club to follow the recommendations of
                  the Federal and State Game and Fishing Commission pertaining to the growth
                  and perpetuation of game and fish on GROVE CLUB LAKE property.

               2. Size and Limit. The limit should be no more than that which the Member can
                  use. No Member may catch and dispose of fish for profit or favors. The fish
                  specified below may not be kept:

                       Bass under 10"

                       Catfish under 12"

               3. Guests and Visitors. Members are limited to two (2) guests and such guests'
                  families in any one day for the purpose of fishing without a special permit in
                  writing signed by the President or a majority of the Board of Directors.
                  Restrictions in Article II, Sections A and B shall apply. All Members are
                  responsible for their guests or visitors while such guests are on Club property.

               4. Netting or Seining. Netting or seining is STRICTLY PROHIBITED. No
                  one will be allowed to net or seine for fish in the Lake or other waters of the
                  Club.

               5. Trot lines and Jug Fishing. Trot lines are STRICTLY PROHIBITED. No
                  more than five (5) Jugs per share will be allowed in the Club Lake at any one
                  time. Jugs must be checked at regular intervals, and the Jugs will be removed
                  if the Member leaves the Club lake property for more than three (3) hours.

       C.      Domestic Waterfowl.       Members are prohibited to have geese or ducks on Club
               lake property, as they are destructive to both spawn and small fish.

       D.      Building. The Club Lake and all surrounding lands belong to all Members. Any
               Member desiring to build a house or any kind of structure, including fences,
               sheds, pools, etc., on Club lake property shall first secure the approval of his
               neighbor Members to either side, in front of and in back of the property, and then
               apply for a permit from the Board of Directors. After obtaining such permit,
               construction shall begin within ninety (90) days, or the Member must secure
               another permit. Structures must be 100 feet apart from any other member's home.

BYLAWS OF GROVE CLUB LAKE, INC.
Page 13 of 15.
               Proposed houses must be constructed on site. All sites must be approved by the
               Board of Directors. Any building in the front, sides or rear of a present home,
               inside or outside an existing fence line, must be only by mutual consent of all
               neighbor Members involved and the Board of Directors.

       E.      Maintenance of Buildings. Improvements such as houses, boathouses, docks
               and piers erected by a Member shall be kept in reasonably good condition. Grass
               and weeds are to be cut at regular intervals for snake control. Structures which
               become an eyesore due to neglect and disrepair shall be repaired by the Member
               within thirty (30 days after notification by the Board. If the Member fails to
               repair such structures within 30 days after notification, the Board may sell the
               structure or have it removed. An extension of time may be granted upon proper
               application of the Member to the Board of Directors. No residence or home shall
               be constructed within 100 feet of the Club Lake.

       F.      Boating.    Boat motors on the Lake are limited to twelve (12) horsepower. No
               boats, other than those owned by Members, are to be permitted on Grove Club
               Lake without permission of the Board of Directors.

       G.      Movable Homes. No house trailers or mobile homes are allowed for residence
               on the Club property.

       H.      Boathouses.     Members will be permitted to build only average size boathouses.
               Storage facilities musts be six feet (6') wide or less and no longer than the length
               of the boathouse. Building will be regulated by the provisions of Section D
               above and the following:

               The following detailed information must be included with your application for
               construction: Elevation views of front and back, side and roof design and height.
               Boathouse plans must include the complete size and construction information.
               Plans will then be submitted to an experienced construction individual before
               final approval by the Board of Directors.

               Running water and toilet facilities are PROHIBITED.

       I.      Timber.     Timber on Club property is owned by the Corporation. No timber may
               be cut without the permission of the Board of Directors unless such timber poses
               a clear and imminent danger to a Member's property.

       J.      Speed Limit.       The speed limit on Club roads is not to exceed fifteen (15) miles
               per hour.

       K.      Swimming. The Club has provided a designated swimming area for the use of
               Members and their guests or visitors. The Club's insurance will only cover
               swimming accidents which occur in this designated area and are determined to be
               the result of negligence on the part of the Club. The Club will not be responsible

BYLAWS OF GROVE CLUB LAKE, INC.
Page 14 of IS.
               for accidents of Members or their guests occurring outside of the designated
               swimming area or are otherwise determined to be the gross negligence of the
               swimmer or others in the swimming party.

       L.      Pets. A Member may keep household pets on Club property, except that
               horses, cows, goats, sheep, and other herd animals are strictly prohibited. All
               pets not kept in a Member's house shall be kept within the confines of a fence or
               staked. Pets accompanying Members on Club property must be on a leash or
               closely supervised by the Member, or otherwise kept off premises maintained by
               other Members. Violation of this provision may result in a fine being assessed
               against such Member; habitual violation may result in the animal being removed
               from the Club property to the Smith County Humane Society and any cost
               assessed against the Member.

       M.      Commercial Activities. The conduct of any commercial or business activity
               on any portion of the Club property that invites strangers onto GROVE CLUB
               LAKE property is prohibited for security reasons. Such prohibited activity
               includes, but is not limited to, garage sales, yard sales, etc. Or rental of
               dwellings, garages, rooms or boathouses.

       N.      Rules and Regulations. Excluding homes with fenced yards on the water
               frontage, property between the road and the lake shall be under the supervision of
               the Grove Club Lake Board of Directors. A Member maintaining the property in
               front of his boathouse or home has exclusive use of said property for normal
               recreational activities of the Member and his family. However, any construction,
               cutting of trees, fencing or unusual use of the property must be approved by the
               Board of Directors. Unsightly storage, camping, or failure to maintain property
               will be considered a breach of Club Bylaws, and the Member is subject to a fine
               or loss of Club privileges. (This includes any area used by the Member, such as
               surrounding yard and boathouse area.)

XllL AMENDMENTS TO BYLAWS

       These Bylaws may be altered, amended or repealed and new Bylaws adopted by a vote
       of seventy-five (75%) percent of the votes entitled to be cast by the Members present, in
       person or by proxy at a meeting called for such purpose. Proposed amendments to the
       Bylaws must be posted for thirty (30) days in advance of the meeting of Members at
       which a vote upon the proposed amendments will be taken.

BYLAWS OF GROVE CLUB LAKE, INC.
Page IS of IS.
-

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