Court Opinion

ID: 2869847
Source: CourtListenerOpinion
Date Created: 2015-09-06 03:10:18.669161+00
Date Added: 2024-06-11T12:46:06.461912
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                     NO. 03-03-00768-CV

  Pearl Witkowski and Joseph Phillips, Individually and on behalf of a class of all others
         similarly situated; and Deanna Warner, Individually and on behalf of a
                      class of all others similarly situated, Appellants

                                                v.

    Brian, Fooshee and Yonge Properties, a Texas General Partnership; George Yonge;
              Jefferson Fooshee; Patrick Brian; and Embrey Partners, Ltd.,
                         a Texas Limited Partnership, Appellees

     FROM THE DISTRICT COURT OF TRAVIS COUNTY, 53RD JUDICIAL DISTRICT
           NO. GN000998, HONORABLE PAUL DAVIS, JUDGE PRESIDING

                                         OPINION

               This lawsuit arises from the sale of the River Woods apartment complex (“River

Woods”), located in Austin, Texas. In 1991, the Resolution Trust Corporation (“RTC”) sold River

Woods to appellee George Yonge for a reduced price and required Yonge and his successors-in-

interest to adhere to certain low income housing restrictions, and occupancy and rent-control

provisions memorialized in a recorded land use restriction agreement (“LURA”). See 12 U.S.C.

§ 1441a(c)(9)(E). A successor-in-interest to River Woods and a party interested in acquiring River

Woods, appellees in this action, provided the Texas Department of Housing and Community Affairs

(“TDHCA”)1 with evidence of River Woods’s dilapidated condition and petitioned the TDHCA to

       1
        The TDHCA entered into a Memorandum of Understanding for Monitoring and
Enforcement with the RTC to monitor and enforce property owner compliance with all occupancy,
release the LURA. Based on the TDHCA’s recommendation, the FDIC2 released the LURA in

1998, and the property was sold to a third party. Appellants, former tenants of River Woods, and

others who would qualify as tenants under the LURA restrictions brought a class action suit against

the appellees for damages associated with the alleged premature release of the LURA. The district

court granted summary judgment in favor of the appellees and this appeal followed. Concluding that

appellants lack standing, we affirm the district court’s order.

                                         BACKGROUND

               In 1991, RTC sold River Woods to appellee George Yonge for $725,000, and

conditioned the sale subject to certain low income housing restrictions, occupancy and rent-control

provisions memorialized in a recorded LURA. See 12 U.S.C. § 1441a(c)(9)(E). Yonge conveyed

the property, subject to the LURA, to appellee Brian, Fooshee and Yonge Properties (“BFY”).

Under its own terms, the LURA expires upon (1) the lapse of 40 years from the date the LURA was

signed; (2) the involuntary loss of River Woods by seizure, condemnation, or foreclosure; (3) the

total or partial involuntary casualty loss; or (4) a determination by the appropriate oversight agency

that all or a portion of River Woods is obsolete as to physical condition, location, or other factors,

such that River Woods would be unusable for housing purposes, and that no reasonable program of

modifications is financially feasible to remediate River Woods.

rent, and resale requirements set out in LURAs executed pursuant to 12 U.S.C. 1441a(c).
       2
        The FDIC succeeded the RTC as Receiver for the bank from which River Woods was
purchased.

                                                  2
               In 1997, appellee Embrey Properties (“Embrey”) offered BFY $3,000,000 for River

Woods, conditioning the purchase of the property on the release of the LURA. Yonge formally

petitioned the TDHCA to determine that the LURA had terminated due to the condition of the

property and to recommend that the FDIC release the LURA. Embrey’s vice president of

development met with TDHCA and provided it with an independent inspection report on the

dilapidated condition of the property and with Embrey’s proposed redevelopment plans. In February

of 1998, the TDHCA recommended to the FDIC that the LURA at River Woods be released on the

grounds that the property was “obsolete as to physical condition” and not financially feasible to

rehabilitate, a condition sufficient to terminate the LURA. The FDIC released the LURA in March

of 1998. The property was sold in 1999 to a third party to whom Embrey had assigned its right to

purchase River Woods.

               The River Woods tenants were evicted following the sale of the complex. Pearl

Witkowski and her daughter, lower income tenants of River Woods, brought suit against the

appellees in their individual capacities and on behalf of former River Woods tenants and those lower

income and very low income individuals qualified to live at River Woods under the LURA. They

were joined by Joseph Phillips, another former tenant, and by Deanna Warner, an individual eligible

for a low-income unit in the complex under the LURA restrictions.3 For clarity, we refer to the

proposed class as “appellants.”

       3
          Witkowski ultimately withdrew as a class representative. Plaintiffs’ First Amended
Original Class Action Petition, filed on October 19, 2000, added Joseph Phillips as a class
representative.

                                                 3
               Appellants sued BFY, the BFY partners individually, and Embrey, (collectively n as

“appellees”) for fraud, breach of fiduciary duty, breach of contract, tortious interference, unjust

enrichment, negligence, and breach of implied warrantee of habitability, and for damages resulting

from the LURA’s release, caused by the appellees’ allegedly fraudulent representations to the

TDHCA. In other words, appellants seek to hold appellees liable for damages allegedly caused by

the TDHCA’s and FDIC’s actions releasing the LURA. Appellees jointly moved for summary

judgment on three independent grounds: (1) appellants lacked standing to bring their suit; (2) the

Noerr-Pennington doctrine protected appellee’s actions, or (3) appellants failed to allege a legal

injury. The district court granted summary judgment for the appellees. This appeal followed.

                                           DISCUSSION

               Appellants appeal the district court’s summary judgment decision on three grounds.

First, appellants argue that they have standing to sue the appellees. Second, appellants argue that

the Noerr-Pennington doctrine does not protect the appellees’ actions. Third, appellants argue that

their claims are not barred by the “legal injury” doctrine.

Standard of Review

               The movant has the burden of showing there is no genuine issue of material fact and

that it is entitled to summary judgment as a matter of law. Nixon v. Mr. Prop. Mgmt. Co., 690
S.W.2d 546, 548 (Tex. 1985). To prevail on summary judgment, a defendant must either disprove

at least one element of each of the plaintiff’s theories of recovery or plead and conclusively establish

each element of an affirmative defense. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d
4
671, 678 (Tex. 1971). When a district court grants summary judgment without specifying the ground

for its decision, on appeal, summary judgment will be affirmed if “any of the theories advanced are

meritorious.” State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 380 (Tex. 1993). Because the

district court did not specify the grounds for granting summary judgment, if we find that any one of

appellees’ three grounds is meritorious, we must uphold the grant of the motion for summary

judgment. See id.

Standing

                  Appellants assert that they have standing to sue appellees for injuries resulting from

alleged misrepresentations appellees made that prompted the TDHCA to release the LURA, as

intended third party beneficiaries under 12 U.S.C. 1441a(c) (“section 1441a(c)”), or, alternatively,

as express third party beneficiaries of the LURA at common law. We discuss the merits of each

theory in turn.

                  Appellants assert that section 1441a(c) provides two bases under which they may sue

appellees. First, appellants argue that although there is no specific language in the statute that grants

appellants a private right of action against appellees for damages related to the alleged improper

release of the LURA, the purposes behind section1441a(c) and the statutory provisions that benefit

appellants, taken together as a whole, create actionable rights for appellants. See 12 U.S.C.

§ 1441a(c). Appellants point to subsection 1441a(c)(1) (residential properties acquired from the

RTC are intended to provide home ownership and rental housing opportunities for very low-income,

lower income, and moderate-income families) and subsection 1441a(c)(3)(E) (at least 35% of any

multifamily housing sold by the RTC under this program is required to be set aside for occupancy

                                                    5
and maintained as affordable for lower income and very low-income families during the remaining

useful life of the property) as evidence of this intent. Id. §§ 1441a(c)(1), 1441a(c)(3)(E). Second,

appellants argue that affected lower income and very low-income families, such as appellants, may

enforce the occupancy requirements against purchasers of the property and their successors-in-

interest. Id. § 1441a(c)(11)(B). Appellants assert that these provisions apply to the appellees

because they are purchasers and successors-in-interest of the River Woods property, which is

identified in the LURA as an “eligible multifamily housing property.” See id. § 1441a(c)(9)(E). We

disagree.

                 The key inquiry a court must make in determining whether an implied private right

of action under a certain federal law exists is whether Congress, expressly or impliedly, intended to

create a private right of action. Schmeling v. NORDAM, 97 F.3d 1336, 1343-44 (10th Cir. 1996)

(Explaining that the four factor Cort4 test, previously used to determine whether a private cause of

action exists, had been condensed into one factor—assessing Congress’ intent.); Transamerica

Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 15-16 (Scalia, J., concurring) (effectively overruling

the Cort v. Ash analysis in Touche Ross,5 converting one of its four factors (congressional intent) into

the determinative factor.)). Furthermore, it is a well-settled rule of construction that where Congress

includes particular language in one section of a statute but omits it in another section of the same act,

it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or

exclusion. Duncan v. Walker, 533 U.S. 167, 173 (2001).

        4
            Cort v. Ash, 422 U.S. 66, 78 (1975).
        5
            Touche Ross & Co. v. Redington, 442 U.S. 560, 575 (1979)

                                                   6
                Third party rights are articulated in section 1441a(c)(11)(B). Appellants admit that

section 1441(a)(c) does not explicitly provide them with a private right of action against appellees

for damages resulting from the alleged improper actions of the TDHCA and FDIC. Thus, we must

determine whether Congress intended appellants to have an implied private right of action. See

Schmeling, 97 F.3d at 1344. Under section 1441(a)(c), Congress expressly granted a private right

of action for those in the protected class to sue to enforce the rental restrictions in a LURA. See 12

U.S.C. § 1441a(c)(9)(E). Congress did not include any language that would provide appellants with

a private right of action against those whose alleged wrongful actions, misrepresentations or

omissions may have contributed to a government agency releasing the LURA. Thus, under

established statutory construction principles, we must conclude that Congress intentionally and

purposely excluded the private right of action appellants seek. See Duncan, 533 U.S. at 173.

                Furthermore, subsection 1441a(c)(11)(B) does not support appellant’s argument. See

12 U.S.C. 1441a(c)(11)(B). Section 1441a(c)(11)(B) establishes a cause of action for residents to

enforce the housing restrictions and requirements set forth in an existing LURA; it does not implicate

standing to challenge the termination of the LURA. See id. Because the LURA under which

appellants attempt to sue was released by government action in March 1998, appellants no longer

have any LURA restrictions to enforce. Thus, appellees are no longer subject to section1441a(c)

restrictions.

                Because we determine that no explicit or implicit evidence of legislative intent to

create an express or implied private right of action exists, we hold that appellants lack standing under

section 1441a(c) to bring this suit. See Akinseye v. Bigos, 75 F. Supp. 2d 976, 980 (D. Minn. 1998).

                                                   7
               Appellants assert alternatively that they are express third party beneficiaries of the

LURA and thus have a cause of action under common law to sue the appellees for their

nonperformance. See Cumis Ins. Soc. v. Republic Nat’l Bank, 480 S.W.2d 762, 767 (Tex. Civ.

App.—Dallas 1972, writ ref’d n.r.e.). However, because the LURA was released by agency action,

there is no contract under which appellants may be third party beneficiaries. Thus, we do not reach

the question of whether appellants had third party beneficiary rights under the LURA.

                                         CONCLUSION

               We conclude that appellants do not have standing to sue the appellees under either

federal or state law and hold that the district court properly granted appellees’ motion for summary

judgment. See State Farm Fire & Cas. Co., 858 S.W.2d at 380. Therefore, we need not reach the

appellants’ second and third issues.

                                              W. Kenneth Law, Chief Justice

Before Chief Justice Law, Justices B. A. Smith and Pemberton

Affirmed

Filed: June 23, 2005

                                                 8