Court Opinion

ID: 4466380
Source: CourtListenerOpinion
Date Created: 2019-12-20 15:13:20.184513+00
Date Added: 2024-06-11T08:48:27.644367
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                    NO. 03-18-00665-CV

David Matthew Prewett, Prewett Rentals Series 2752 Military LLC, Adrienne V. Prewett,
     Richard Coons, Jeannette Coons, Tami Jan, Ward Galbreath, Sumit Kapoor,
Rachel Kapoor, Nakul Jeirath, Tasha Jeirath, Mark L. Reis, and Janis R. Reis, Appellants

                                               v.

                     Canyon Lake Island Property Owners Association,
                     Sally W. Duncan, and A. Baker Duncan, Appellees

              FROM COUNTY COURT AT LAW NO. 1 OF COMAL COUNTY
       NO. 2018CVA0217, THE HONORABLE RANDAL C. GRAY, JUDGE PRESIDING

                               MEMORANDUM OPINION

               In April 2018, the appellants, a group of individuals owning residential property

in the Canyon Lake Island subdivision (collectively, the “Homeowners”), sued the Canyon

Lake Island Property Owners Association in Comal County Court at Law Number One. The

Homeowners later added as defendants Sally W. Duncan and A. Baker Duncan, who also own

property in the subdivision.

               According to their petition, the Homeowners have been renting their properties

for terms less than 30 days using internet sites such as “VRBO” and “HomeAway” and are

now being threatened with legal action by the Property Owners Association and, in fact, have

been sued by the Duncans in district court. The Homeowners allege that the Property Owners

Association and the Duncans have informed them that the subdivision’s deed restrictions bar
short-term rentals and have demanded that they stop engaging in any further short-term rental

activity. The Homeowners seek a declaration that “the [deed restrictions] do not bar Plaintiffs’

leasing according to any duration, limit, minimum or maximum” and claim that they “seek

monetary relief of $100,000 or less and non-monetary relief.”

               The Duncans subsequently filed a plea in abatement, asserting that their

previously filed action in district court acquired dominant jurisdiction over the dispute. The

Duncans also filed a plea to the jurisdiction, claiming that the amount in controversy exceeds the

jurisdictional limit of the court. Without ruling on the plea in abatement, the trial court granted

the plea to the jurisdiction, awarded attorney’s fees to the Duncans, and dismissed Homeowners’

suit. The Homeowners timely appealed to this Court. For the reasons set forth below, we will

affirm the county court’s judgment of dismissal.

                                   STANDARD OF REVIEW

               A plea to the jurisdiction is a dilatory plea that challenges the trial court’s subject-

matter jurisdiction without regard to whether the asserted claims have merit. See Texas Dep’t of

Parks & Wildlife v. Miranda, 133 S.W.3d 217, 225-26 (Tex. 2004); Bland Indep. Sch. Dist. v.

Blue, 34 S.W.3d 547, 554 (Tex. 2000). Because subject-matter jurisdiction is a question of

law, we review a trial court’s ruling on a plea to the jurisdiction applying a de novo standard.

Miranda, 133 S.W.3d at 225.

               The burden is on the plaintiff to plead or present evidence of facts that

affirmatively demonstrate a trial court’s jurisdiction.      See Heckman v. Williamson County,

369 S.W.3d 137, 149-50 (Tex. 2012). Typically, a plea to the jurisdiction challenges the sufficiency

of the plaintiff’s pleadings—that is, whether the plaintiff met his initial burden to allege facts

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that affirmatively demonstrate the trial court’s jurisdiction to hear the cause. Mission Consol.

Indep. Sch. Dist. v. Garcia, 372 S.W.3d 629, 635 (Tex. 2012). When a plea to the jurisdiction

challenges the sufficiency of the plaintiff’s pleadings, the court will look to the pleader’s intent,

construe the pleadings liberally in favor of jurisdiction, and accept the allegations in the

pleadings as true. Miranda, 133 S.W.3d at 227.

               A plea to the jurisdiction can also properly challenge the existence of

jurisdictional facts. Garcia, 372 S.W.3d at 635. In these cases, the court must consider evidence

submitted by the parties when necessary to resolve the jurisdictional issue raised. Blue, 34 S.W.3d

at 555. The manner in which the trial court analyzes the jurisdictional evidence depends on

whether the disputed jurisdictional facts do or do not overlap with the merits of the plaintiff’s

case. Miranda, 133 S.W.3d at 227. When the disputed jurisdictional facts do not overlap with

the merits of the plaintiff’s claims, as is the case here, the trial court must review the evidence

and make the necessary factual findings to resolve the jurisdictional issue. Vernco Constr., Inc.

v. Nelson, 460 S.W.3d 145, 149 (Tex. 2015); University of Tex. v. Poindexter, 306 S.W.3d 798,

806-07 (Tex. App.—Austin 2009, no pet.). In the absence of written findings of fact and

conclusions of law, it is implied that the trial court made all the findings necessary to support its

judgment. Worford v. Stamper, 801 S.W.2d 108, 109 (Tex. 1990). The trial court’s fact findings,

explicit or implicit, may then be challenged on appeal in the same manner as any other factual

findings, for legal and factual sufficiency. Poindexter, 306 S.W.3d at 806-07; see City of Keller

v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005) (legal-sufficiency standard); Cain v. Bain,

709 S.W.2d 175, 176 (Tex. 1986) (factual-sufficiency standard).

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                                            ANALYSIS

               Unlike state district courts, county courts at law are courts of “limited

jurisdiction.” United Servs. Auto. Ass’n v. Brite, 215 S.W.3d 400, 401 (Tex. 2007). Jurisdiction in

a county court at law is not presumed, and therefore, “the authority to adjudicate the claims

presented must be established at the outset of the case.” Abdullatif v. Erpile, LLC, 460 S.W.3d
685, 691 (Tex. App.—Houston [14th Dist.] 2015, no pet.).

               Comal County Court at Law Number One is a statutory county court at law.1 See

Tex. Gov’t Code §§ 25.0481, .0482. Statutory county courts “ha[ve] jurisdiction over all causes

and proceedings, civil and criminal, original and appellate, prescribed by law for county courts.”

Id. § 25.0003(a); see also id. §§ 26.042 (general civil jurisdiction and juvenile jurisdiction of

constitutional county courts), .043 (listing specific types of cases in which constitutional county

courts do not have jurisdiction). Relevant to this dispute, the jurisdiction of statutory county

courts includes jurisdiction over “civil cases in which the matter in controversy exceeds $500 but

does not exceed $200,000, excluding interest, statutory or punitive damages and penalties, and

attorney’s fees and costs, as alleged on the face of the petition.” See id. § 25.0003(c)(1).

               Because declaratory-judgment actions are not generally within the jurisdiction

of the Comal County courts at law, a plaintiff seeking declaratory relief in the court must

demonstrate that the subject matter of the action falls within the amount-in-controversy limits.

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          The Texas Constitution authorizes the Texas Legislature to “establish such other courts
as it may deem necessary and prescribe the jurisdiction and organization therefore, and [to]
conform the jurisdiction of the district and other inferior courts thereto.” See Tex. Const. art. V,
§ 1. Texas courts that are enumerated in the constitution are referred to as “constitutional”
county courts, and courts that are established by the legislature are referred to as “legislative” or
“statutory” county courts. Thielemann v. Kethan, 371 S.W.3d 286, 289 (Tex. App.—Houston
[1st Dist.] 2012, pet. denied).

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See id. § 25.0482 (Comal County Court at Law provisions); but see id. § 27.034(a), (e) (granting

jurisdiction to justice courts “of suits relating to enforcement of a deed restriction of a residential

subdivision” “regardless of the amount in controversy”); Garrett Operators, Inc. v. City of

Houston, 360 S.W.3d 36, 44 (Tex. App.—Houston [1st Dist.] 2011, pet. denied) (concluding that

county court at law lacked jurisdiction to consider claim for declaratory relief because such

actions “are not generally within the jurisdiction of Harris County civil courts at law” and no

proof was presented that subject matter of action was within court’s jurisdictional limits). In the

jurisdictional context, the phrase “amount in controversy” means “the sum of money or the value

of the things sued for.” Tune v. Texas Dep’t of Pub. Safety, 23 S.W.3d 358, 361 (Tex. 2000)

(quoting Gulf, C. & S.F. Ry. v. Cunnigan, 67 S.W. 888, 890 (Tex. 1902)). The amount in

controversy is generally determined by the allegations in the plaintiff’s petition and measured by

the amount that the plaintiff seeks to recover. Blue, 34 S.W.3d 554. “However, pleadings are

not determinative when, as in this case, “the issue in dispute is a license or right rather than

damages.” Id. In such cases, “[t]he subjective value of [the] privilege, if asserted in good faith,

establishes jurisdiction if that value meets the requisite amount in controversy.” Tune, 23 S.W.3d

at 361; see Eris v. Giannakopoulos, 369 S.W.3d 618, 622 (Tex. App.—Houston [1st Dist.] 2012,

pet. dism’d) (“Generally, when a suit is for an interest in real property, rather than damages, the

value of the property at issue determines the amount in controversy.”).

               In their plea to the jurisdiction, the Duncans challenged the existence of a

jurisdictional fact, namely, that the value of the privilege asserted by Homeowners—the right to

rent out their real property for terms of less than 30 days—exceeds the jurisdictional limits of

the court. See Miranda, 133 S.W.3d at 227. By concluding that it lacks jurisdiction over the

dispute, the county court implicitly found that the value of this privilege was greater than

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$200,000. Because this jurisdictional fact does not implicate the merits of the Homeowners’

claim for declaratory relief, we will construe appellants’ issue on appeal to be that the evidence

is legally and factually insufficient to support this finding. See Vernco Constr., Inc., 460 S.W.3d

at 149; Poindexter, 306 S.W.3d at 806-07.

               In support of their plea, the Duncans presented evidence that the gross rental

revenues reported by the Homeowners to the Texas Comptroller in 2017 for the calculation of

hotel occupancy taxes on all but one of the properties at issue (1105 Marine Court) totaled

$144,881.40 and that the gross revenue for the first half of 2018 for these same properties totaled

$61,816.63. In addition, the Duncans presented evidence that the average nightly rental rate for

1105 Marine Court was $645 per night, almost twice that of the other properties, and that based

on personal observation, 1105 Marine Court was rented most of the time. Finally, the Duncans

also pointed out that prior to the hearing on the plea, the parties entered into the following

stipulation:

       [W]ithout waiving the position that the fact is not relevant to the determination of
       the court’s subject-matter jurisdiction, the [Homeowners’] combined gross rental
       income for their Canyon Lake Island properties exceeds $100,000 annually.

The Duncans assert that this evidence is sufficient to show that the Homeowners stand to make

hundreds of thousands of dollars from their ability to rent out the properties for short terms and

that, consequently, the value of this privilege or right is greater than $200,000.

               In response, and now on appeal, the Homeowners do not dispute that the value of

the privilege of renting property under short-term rental agreements is related to the amount of

money generated from the properties. The Homeowners also do not dispute that their properties,

collectively, have in the past generated more than $100,000 in annual revenue. Instead, the

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Homeowners assert that this evidence, even if true, fails to establish that the amount in

controversy is greater than $200,000. Specifically, the Homeowners argue that when calculating

the value of the short-term rental privileges, it was improper for the court to aggregate the gross

rental values of all of the leases for all of the properties in a given year and that, in contrast, there

is no evidence that any individual homeowner, under any individual current short-term rental

agreement, will make a net of profit of more than $200,000. In addition, and in the alternative,

the Homeowners argue that multiplying the aggregate amount of revenue over a period of

multiple years, which they presume the trial court did here, is an arbitrary method for

determining the value of short-term rental privileges.

                We disagree with the Homeowners’ assertion that the county court was precluded

from aggregating individual short-term rental agreements in determining the amount in

controversy. The Homeowners are not seeking a declaration of their rights under any particular

rental agreement, but instead seek a declaration of their rights with respect to all short-term rental

agreements, now and in the future. In addition, we cannot conclude that the county court was

prohibited from considering the value of the Homeowners’ claims in the aggregate when

determining the amount in controversy. Texas Government Code Section 24.009 states:

        If two or more persons originally and properly join in one suit, the suit for
        jurisdictional purposes is treated as if one party is suing for the aggregate amount
        of all their claims added together, excluding interest and costs. This section does
        not prevent jurisdiction from attaching on any other ground.

Tex. Gov’t Code § 24.009; Dubai Petroleum Co. v. Kazi, 12 S.W.3d 71, 75 n.4 (Tex. 2000)

(noting that section 24.009 “does apply to statutory county courts”). Under the plain language of

the statute, the Homeowners’ suit exceeds the amount in controversy if the Homeowners’ claims,

in the aggregate, exceed the $200,000 jurisdictional limit for the county court. See Watson v.
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City of Southlake, Nos. 02-18-00143-CV, 02-18-00515-CV, 2019 Tex. App. LEXIS 8481, at *26

(Tex. App.—Fort Worth, Sept. 19, 2019, pet. filed) (concluding that aggregated claims of

plaintiffs exceeded amount in controversy for justice court).

                Finally, we disagree that the trial court acted unreasonably in considering

potential gross revenue from multiple years to determine the value of the short-term rental

privileges. We recognize, as the Homeowners suggest, that there may be instances in which the

projected gross revenue is too speculative to support a finding as to valuation of a privilege or

right. However, we cannot conclude, as a matter of law, that multiple years of projected gross

revenue is too speculative in this case, where evidence was presented demonstrating that the

properties were on track to generate at least as much rental revenue in the coming year as they

had in the previous year (more than $100,000 annually) and where no evidence was presented to

the contrary.

                Based on the record before us, we conclude that the evidence is legally and

factually sufficient to support the trial court’s implied finding that the value of the privilege

that is the subject of the Homeowners’ claim for declaratory relief is greater than $200,000.

Consequently, the county court did not err in concluding that the amount in controversy exceeds

its jurisdictional maximum and, consequently, in granting the Duncans’ plea to the jurisdiction.

See Tex. Gov’t Code § 25.0003(c).

                                         CONCLUSION

                Having overruled the Homeowners’ sole appellate issue, we affirm the trial

court’s judgment dismissing the cause for lack of jurisdiction.

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                                            __________________________________________
                                            Chari L. Kelly, Justice

Before Justices Goodwin, Baker, and Kelly
 Dissenting Opinion by Justice Goodwin

Affirmed

Filed: December 20, 2019

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