Court Opinion

ID: 3131177
Source: CourtListenerOpinion
Date Created: 2015-10-16 17:01:13.292038+00
Date Added: 2024-06-11T11:46:09.382508
License: Public Domain

MEMORANDUM OPINION
                                       No. 04-09-00028-CV

   ZUEHL AIRPORT FLYING COMMUNITY OWNERS ASSOCIATION, INC., et al.,
                        Appellants/Cross-Appellees

                                                 v.

                                     Phil MESZLER, et al.,
                                    Appellees/Cross-Appallents

                   From the 25th Judicial District Court, Guadalupe County, Texas
                                    Trial Court No. 06-0010-CV
                           Honorable Dwight E. Peschel, Judge Presiding

Opinion by:      Rebecca Simmons, Justice

Sitting:         Sandee Bryan Marion, Justice
                 Rebecca Simmons, Justice
                 Marialyn Barnard, Justice

Delivered and Filed: February 10, 2010

AFFIRMED IN PART, REVERSED IN PART

           This appeal stems from the trial court’s determination that Zuehl Airport Flying

Community Owners Association (the Association) improperly increased the owners’ monthly

assessments under the Declaration of Covenants, Conditions and Restrictions for Zuehl Airport

Flying Community (the Declaration).         On appeal, the Association asserts the assessments

complied with Section 3(c) of the Declaration and the trial court erred in awarding attorneys’

fees under the Uniform Declaratory Judgments Act. See TEX. CIV. PRAC. & REM. CODE ANN.
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§ 37.010 (Vernon 2008).       In a cross-appeal, Appellees Phil Meszler, Mike Mosel, Gary

Tennison, Duane Golding, and Stan Ferris (the Members), argue that the trial court erred in

failing to make additional declarations and in awarding the Association attorneys’ fees following

the denial of a temporary injunction. We reverse the trial court’s order with regard to the award

of attorneys’ fees to Cross-Appellee Zuehl Airport Flying Community Owners Association, Inc.,

and we affirm the order in all other aspects.

                                          BACKGROUND

        Zuehl Airport Flying Community is a subdivision development located in Guadalupe

County, Texas governed by the Declaration of Covenants and Restrictions for Zuehl Flying

Community. The Association manages the common areas for the benefit of the subdivision

owners. On November 12, 2005, after written notice was sent to each property owner, the

Association held its annual meeting with the 2006 owner assessments as the sole agenda item.

        At the time of the annual meeting, monthly assessments were set at $22.00 per month per

lot.   Pursuant to the Declaration, “the annual assessment may be automatically increased,

effective January 1 of each year, ONE AND NO/100 DOLLARS ($1.00) per month per year

without a vote of the Association.” However, “[a]ny monthly assessment increase in excess of

ONE AND NO/100 DOLLAR per month per year or any decrease must be approved by three-

fourths (3/4) of the Directors of the Association and the Members.” The Board of Directors (the

Board) explained that the 2005 annual budget was $22,000.00, but the total expenditures

amounted to $47,000.00. After presentation of its case, the Members voted on two different

proposals. The first, increasing the monthly assessments to $50.00 per lot, failed to garner the

approval of three-fourths of the Members. A second vote, to maintain the current assessment at

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$22.00 per month, also failed. In light of the impasse, the Board called a Special Meeting to set

the annual assessments.

        At the November 22, 2005 Special Meeting, the Board was informed that the 2005

expenditures were actually $57,000.00 due to ongoing legal issues. The Board voted to increase

the regular monthly assessment from $22.00 to $23.00 per month and to set a special assessment

of $126.00 per quarter. In response, on January 4, 2006, several Members 1 filed Plaintiffs’

Original Petition, alleging Breach of Fiduciary Duty, Breach of Contract, Unjust Enrichment,

and an Application for Temporary Restraining Order and Temporary Injunction seeking to

restrain the Association from establishing and collecting property assessments in what amounted

to an additional $42.00 per month per lot assessment.

        On January 23, 2006, the trial court held a hearing on the Members’ application for

temporary injunction. The trial court orally explained:

        In my reading of the Covenant, they did act without authority. They exceeded
        their authority, but injunction relief is equitable relief and I have seen no showing
        of irreparable harm or there is not an adequate remedy at law. So the request for a
        temporary injunction is denied.

The trial court awarded the Association $5,000.00 in attorneys’ fees and dissolved the temporary

restraining order.       On January 30, 2006, the Association filed its original answer and

counterclaims for wrongful injunction and attorneys’ fees under section 5.006 of the Texas

Property Code. TEX. PROP. CODE ANN. § 5.006 (Vernon 2003).

        Approximately three months later, the Members filed their first amended petition,

including a request for declaratory judgment. The Members also sought attorneys’ fees pursuant

1
   During the pendency of the underlying litigation, several members were added as plaintiffs, but later nonsuited
their claims. Specifically, Plaintiffs Don Weaver, Ronnie Cameron, Steve Carlson, and Don Pogue nonsuited their
claims. The remaining members, Phil Meszler, Mike Mosel, Gary Tennison, Duane Golding, and Stan Farris, filed
the motion for partial summary judgment, which the trial court granted.

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to chapters 37 and 38 of the Texas Civil Practice and Remedies Code, and section 5.006 of the

Texas Property Code. On May 30, 2007, the Members moved for a traditional partial summary

judgment, arguing that the Board improperly increased assessments and requesting that the trial

court make certain declarations. On September 10, 2007, the trial court granted the Members’

motion for partial summary judgment, declaring that

       the additional assessment of $42.00 monthly on the real property owned by
       Plaintiffs, and subject to the Authority of the Zuehl Airport Flying Community
       Association, Inc. was invalidly assessed, and is declared void.

The trial court also awarded the Members $3,250.00 in attorneys’ fees. On December 10, 2008,

the trial court signed a final judgment disposing of all parties and causes of action pending before

the court.

       On appeal, the Association argues that: (1) the trial court erred in granting the Members’

motion for partial summary judgment and holding that the assessments were invalid, and thus,

void; and (2) the trial court erred in awarding the Members attorneys’ fees. The Members filed a

cross-appeal arguing (1) the trial court erred in not making additional declarations, specifically

an order declaring the rights of the parties in relation to the Declaration as opposed to entering an

order that the monthly assessment was null and void; and (2) the trial court had no authority to

award the Association $5,000.00 in attorneys’ fees in the temporary injunction order.

                                        THE DECLARATION

       With respect to the first issue, the Association argues that the trial court erred in granting

partial summary judgment and declaring the special assessment void because the Declaration

permits the Board to set the rate of the special assessment without approval of the Members. The

Members respond that the plain language of the Declaration does not allow the Association to set

the rate of the special assessment without a vote of three-fourths of the Members.

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A. Standard of Review

       Appellate review of a trial court’s grant of a traditional motion for summary judgment is

de novo. Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 156 (Tex. 2004). This standard

is well established: (1) the movant must show “that there is no genuine issue of material fact and

that it is entitled to judgment as a matter of law; (2) in deciding whether there is a disputed

material fact issue precluding summary judgment,” the court must take evidence favorable to the

non-movant as true; and (3) the court must indulge every reasonable inference in favor of the

non-movant and resolve any doubts in the non-movant’s favor. Am. Tobacco Co. v. Grinnell,

951 S.W.2d 420, 425 (Tex. 1997) (citing Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49

(Tex. 1985)); see also Joe, 145 S.W.3d at 157.

       In this case, the summary judgment concerned the construction of the Declaration. We

review the trial court’s interpretation of restrictive covenants de novo. Raman Chandler Props.,

L.C. v. Caldwell’s Creek Homeowners Ass’n, 178 S.W.3d 384, 390-91 (Tex. App.—Fort Worth

2005, pet. denied). In construing restrictive covenants, we apply general rules of contract

construction. Id. at 391. Under those general rules of contract construction, we interpret or

construe unambiguous contracts as a matter of law. Id.; see also Coats v. Farmers Ins. Exch.,

230 S.W.3d 215, 217 (Tex. App.—Houston [14th Dist.] 2006, no pet.).              Thus, when the

controversy can be resolved by proper construction of an unambiguous contract, summary

judgment is appropriate. Coats, 230 S.W.3d at 217; see also Hackberry Creek Country Club,

Inc. v. Hackberry Creek Home Owners Ass’n, 205 S.W.3d 46, 56 (Tex. App.—Dallas 2006, pet.

denied).

       Further, in construing a written contract, we must ascertain and give effect to the parties’

intentions as expressed in the four corners of the document. Frost Nat’l Bank v. L & F Distribs.,

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Ltd., 165 S.W.3d 310, 311-12 (Tex. 2005) (per curiam). “We consider the entire writing and

attempt to harmonize and give effect to all the provisions of the contract by analyzing the

provisions with reference to the whole agreement.” Id. at 312. “No single provision taken alone

will be given controlling effect; rather, all the provisions must be considered with reference to

the whole instrument.” J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). With

these principles in mind, we turn to the language of the Declaration.

       1. The Assessment

       The relevant portion of Section 3 of the Declaration, entitled “Maintenance and Other

Assessments,” reads as follows:

       Each Owner of any Lot in the Subdivision shall be subject to assessment whether
       or not such is expressed in the Deed or other evidence of conveyance, and each
       Owner is deemed to covenant and agree to pay the Developer or the Association
       after transfer from the Developer the following:

           (a) Annual or monthly assessments or charges;
           (b) Special assessments for capital improvements imposed by a vote of
               three-fourths (3/4) of the Board of Directors and Members; and
           (c) Any other sum to the extent they are specifically provided
               elsewhere in this instrument, or in the Deed or other evidence of
               conveyance.

       Such assessments or charges are to be established and collection made as herein
       provided. . . . Without limiting the foregoing, the total assessments accumulated
       by the Association shall be applied toward the payment of all taxes, insurance
       premiums, repair, maintenance costs, collection and disposing of garbage, ashes,
       rubbish and materials of a similar nature; payment of legal and all other expenses
       incurred in connection with the collection, enforcement and administration of all
       assessments and charges in connection with enforcement of this Declaration; . . .
       It is understood that the judgment of the Board of Directors, with three-fourths
       (3/4) vote of the Directors, in establishing annual assessments, special
       assessments and other charges for the items set forth above and in the
       expenditure of said funds shall be final and conclusive so long as said judgment is
       exercised in good faith. In addition and with a vote of three-fourths (3/4) of the
       Directors and of the Members, assessments may be made for any or all of the
       following purposes: lighting, building improvements, improving easements,
       sidewalks, taxiways, runways, paths, parks and parkways, and in acquiring and

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       maintaining any amenities or recreational facilities that may be operated in whole
       or in part for the benefit of the Owners and tenants in the Subdivision.

(emphasis added).

The Association claims that the foregoing language specifically permits a special assessment for

legitimate expenses and legal fees by a three-fourths vote of the Directors, so long as the Board

acts in good faith. The Association points out the absence of any evidence of bad faith.

       In response, the Members direct us to the section of the Declaration pertaining to the

setting of assessments:

                    BASIS AND MAXIMUM LEVEL OF ASSESSMENTS

               For the purpose of this section, Hangar Lots and Lots shall be treated in
       the same manner. Until the end of December 1998, the maximum monthly
       assessment shall be FIFTEEN AND NO/100 DOLLARS ($15.00) per assessed
       Lot and/or Hangar Lots owned. From and after such one year period, the annual
       assessment may be automatically increased, effective January 1 of each year,
       ONE AND NO/100 DOLLARS ($1.00) per month per year without a vote of the
       Association. Any monthly assessment increase in excess of ONE AND NO/100
       DOLLAR per month per year or any decrease must be approved by three-fourths
       (3/4) of the Directors of the Association and the Members.
               ....

                 SPECIAL ASSESSMENTS FOR CAPITAL IMPROVEMENT

               In addition to the assessment authorized above, the Association may levy a
       special assessment applicable to a certain period only, for the purpose of
       defraying, in whole or in part, the cost of any construction, or unexpected repair
       or replacement of a particular capital improvement located in or upon the
       Common Area, including any necessary fixtures and personal property related
       thereto, provided that any such assessment shall have the written approval of
       three-fourths (3/4) of the Directors and the Members.

                                         ASSESSMENT

              For the purpose of this section Lots and hangar Lots shall be treated in the
       same manner . . . On or before the 30th day of November each year, the Directors
       of the Association and Members with a three-fourths (3/4) vote, shall fix the
       amount of the monthly assessments to be levied against each Lot in the next
       calendar year, if such assessments are different from the annual assessment as
       automatically increased.

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(emphasis added).

       2. Analysis

       The language on which the Association relies relates to how the Board decides to spend

the assessments, not how the assessments are set. The Board is authorized to act with three-

fourths vote of the Directors, “in establishing annual assessments, special assessments and other

charges for the items set forth above and in the expenditure of said funds shall be final and

conclusive so long as said judgment is exercised in good faith.” (emphasis added).               The

covenant provides that the Members cannot challenge how the Board spends the assessments so

long as the Board expends the funds (1) on one of the items listed and (2) acts in good faith.

       The subsequent provisions specify the procedures for increasing the annual and special

assessments. Specifically,

       (1)   the annual assessment may be automatically increased by $1.00 per month
             per year without a vote of the Association;
       (2)   any monthly assessment increase in excess of $1.00 per month per year or
             any decrease must be approved by three-fourths of the Directors of the
             Association and the Members; and
       (3)   any special assessment, which must be applicable to a certain period, must
             have the written approval of three-fourths of the Directors and the Members

A clear reading of these provisions provides that any increase in the amount of assessment per

month by more than $1.00 or setting of a special assessment, requires approval by three-fourths

of the Board and the Members. The required procedures were simply not followed in this case.

The Members never voted to levy the special assessment and the special assessment was not

limited to a certain time period as required by the Declaration.

       The Association argues that the Declaration does not provide for the situation wherein

“three-fourths vote could not be obtained for any rate of assessment.” We disagree. According

to the section entitled “Basis and Maximum Level of Assessment,” the annual assessment may

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be increased by $1.00 per month “without a vote of the Association.” Only an increase or a

decrease of more than $1.00 per month or a special assessment requires approval by three-

fourths of the Board and Members.

       We hold that the trial court did not err in granting the partial summary judgment and in

holding that the assessment increase was invalid and, therefore, void.

C. Attorneys’ Fees

       In its order granting partial summary judgment, the trial court declared “that the

additional assessment of $42.00 monthly on the real property owned by [the Members], and

subject to the authority of the Zuehl Airport Flying Community Owners Association, Inc., was

invalidly assessed, and is declared void.” The trial court then awarded the Members $3,250.00

in attorneys’ fees. The Association argues that the trial court erred in awarding the Members’

attorneys’ fees because the Members declaratory judgment action “was void,” and “any attempt

to collect attorneys’ fees by posturing the right to fees by way of a declaratory judgment was also

void.” In response, the Members argue that they also pled for attorneys’ fees under section 5.006

of the Texas Property Code, which allows the trial court to award attorneys’ fees in a breach of

restrictive covenant action.

       The basis for the Members’ motion for partial summary judgment was the Association’s

breach of the Declaration, and the relief sought was a litany of declarations pertaining to the

invalid assessments, and attorneys’ fees. In order to grant the requested declaratory relief, the

trial court had to find that the Association breached the Declaration thereby entitling the

Members to their attorneys’ fees pursuant to section 5.006 of the Texas Property Code. See TEX.

PROP. CODE ANN. § 5.006 (Vernon 2003) (“In an action based on breach of restrictive covenant

pertaining to real property, the court shall allow to a prevailing party . . . attorney’s fees.).

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Likewise, the Declaratory Judgments Act provides that the trial court, in its discretion, may

award attorneys’ fees provided that the fees are reasonable, necessary, equitable, and just. TEX.

CIV. PRAC. & REM. CODE ANN. § 37.009 (Vernon 2008).

       The Association argues that a “declaratory judgment is not appropriate when a

controversy is already pending and the declaratory judgment simply answers the claims and asks

for no relief outside the scope of the main suit.” Thus, the Association argues that because the

Members breach of contract action was already pending when they filed their amended petition

adding their declaratory judgment action, the declaratory judgment action was improper. We are

not persuaded by this argument. The existence of another adequate remedy such as a breach of

contract action does not preclude a declaratory judgment. See MBM Fin. Corp. v. Woodlands

Operating Co., 292 S.W.3d 660, 669 (Tex. 2009). In this case the declaratory relief sought was

not a means to obtain otherwise impermissible attorneys’ fees, it was a means of obtaining the

quickest and most effective relief pertaining to the improper assessments. See Raman Chandler

Prop., L.C., 178 S.W.3d at 397 (evaluating a restrictive covenant declaration determining “the

trial court properly granted the Association its attorneys’ fees under the declaratory judgments

act.”); but cf. Janicek v. 2016 Main Owners Ass’n, Inc., No. 01-96-00599-CV, 1997 WL 414951,

at *5 (Tex. App.—Houston [1st Dist.] July 24, 1997, no writ) (mem. op., not designated for

publication) (“The Association’s pleadings were insufficient as a pleading for declaratory

judgment attorney’s fees.”). We hold that the trial court did not err in granting attorneys’ fees in

its order granting partial summary judgment.

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                          CROSS-APPEAL – TEMPORARY INJUNCTION

       In their cross-appeal, the Members argue that the trial court erred in failing to make their

additional requested declarations and in awarding the Association attorneys’ fees following the

temporary injunction hearing.

A. Requested Declaration

       The purpose of a declaratory action is to establish existing rights, status, or other legal

relations. See TEX. CIV. PRAC. & REM. CODE ANN. § 37.001-.011 (Vernon 2008); see also

Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995); Republic Ins. Co. v. Davis, 856
S.W.2d 158, 164 (Tex. 1993). The trial court’s order provides:

       [T]his Court . . . is of the opinion that the [Members] should have the relief to
       which they are entitled;

       IT IS THEREFORE the declaration of this Court that the additional assessment of
       $42.00 monthly on the real property owned by the [Members], and subject to the
       Authority of the Zuehl Airport Flying Community Owners Association, Inc., was
       invalidly assessed, and is declared void.

The Members requested an order providing, inter alia, that (1) the Association acted improperly,

(2) the assessment is null and void, (3) the Association must credit the over-payment to the

owner’s accounts, (4) the Association was not authorized to make the special assessment, and (5)

the Association may not assess fees for non-payment of the special assessment. A plain reading

of the trial court’s order encompasses the relief requested by the Members.

       Black’s Dictionary defines “void” as:

       Null; ineffectual; nugatory; having no legal force or binding effect; unable, in law,
       to support the purpose for which it was intended. [citation omitted] An
       instrument or transaction which is wholly ineffective, inoperative, and incapable
       of ratification and which thus has no force or effect so that nothing can cure it.
       [citation omitted]

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BLACK’S LAW DICTIONARY 1573 (6th ed. 1990). When an action is declared void, “it is as if it

did not exist because it has no effect from the outset.” Commonwealth Land Title Ins. Co. v.

Nelson, 889 S.W.2d 312, 318 (Tex. App.—Houston [14th Dist.] 1994, writ denied). Although

the Members seek a more specific declaration from the trial court, the request would require a

trial court to detail the consequences flowing from a void order, and we decline to require to the

trial court to make such a detailed declaration. We hold the trial court did not err in refusing to

make the additional declarations.

B. Attorneys’ Fees

       After granting the Members’ application for a temporary restraining order and signing an

order that restrained the Association from establishing and collecting the newly increased

property assessments, the trial court held a hearing on the Members’ application for a temporary

injunction. While the trial court agreed that the Association’s Board had exceeded its authority

in raising the amount of assessments, it denied injunctive relief because the Members had not

shown that they would be irreparably harmed or that they lacked an adequate remedy by appeal.

The trial court then awarded $5,000.00 to the Association in attorneys’ fees.

       On appeal, the Members argue that the trial court erred in awarding the Association

attorneys’ fees, because no legal authority allows a trial court to award attorneys’ fees as a result

of the denial of an application for temporary injunction. The Members emphasize that under the

“American Rule,” absent a contract or statute, trial courts do not have inherent authority to

require a losing party to pay the prevailing party’s fees. See MBM Fin. Corp., 292 S.W.3d at 669

(“Texas has long followed the ‘American Rule’ prohibiting fee awards unless specifically

provided by contract or statute.”); see also Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299,

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311 (Tex. 2006) (“Absent a contract or statute, trial courts do not have inherent authority to

require a losing party to pay the prevailing party’s fees.”).

       In response, the Association first argues that the Members have waived this issue on

appeal because they voluntarily paid the attorneys’ fees. The Association, however, does not cite

to any legal authority to support this assertion and fails to present a legal argument under Texas

Rule of Appellate Procedure 38.1(i). TEX. R. APP. P. 38.1(i) (“The brief must contain a clear and

concise argument for the contentions made, with appropriate citations to authorities and to the

record.”). As such, we hold this argument is without merit.

       The Association next responds that the trial court did not err in awarding attorneys’ fees

because the Members were liable for damages (including attorneys’ fees) caused by the

wrongfully obtained temporary restraining order. The Texas Supreme Court has stated that a

“person who obtains an injunction wrongfully is liable for damages caused by issuance of the

injunction.” DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 685 (Tex. 1990). The Association

further argues that in Groschke v. Gabriel, 824 S.W.2d 607, 615 (Tex. App.CHouston [1st Dist.]

1991, writ denied), the First Court of Appeals affirmed a trial court’s determination that “part of

the Gabriels’ attorneys’ fees were the damages resulting directly from the issuance of the

temporary injunction.” There is a notable distinction present in this case. The Association did

not seek damages for the “wrongful” entry of the temporary restraining order until after the

injunction hearing and issuance of the trial court’s order awarding the attorneys’ fees. We are

further constrained in analyzing the attorneys’ fee issue by the lack of a reporter’s record from

the injunction hearing. There is simply no evidence in the record to support an award of

attorneys’ fees at the temporary injunction hearing. Accordingly, because there is no basis in the

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record for an award of attorneys’ fees to the Association at the temporary injunction hearing, the

trial court erred in awarding such fees.

                                           CONCLUSION

       Because the Association acted without authority under the Declaration, the trial court did

not err in granting the partial summary judgment and in granting attorneys’ fees in favor of

Appellees Phil Meszler, Mike Mosel, Gary Tennison, Duane Golding, and Stan Ferris.

Additionally, because the trial court declared the Association’s actions void, the court was not

required to make further declarations detailing the consequences of the improper assessment.

Finally, the trial court had no basis for its award of attorneys’ fees to the Association resulting

from the temporary injunction hearing. Accordingly, we reverse the trial court’s judgment with

regard to the attorneys’ fee award of $5,000.00 to Appellants/Cross-Appellee Zuehl Airport

Flying Community Owners Association and affirm the trial court’s judgment in all other aspects.

                                                  Rebecca Simmons, Justice

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