Court Opinion

ID: 6330000
Source: CourtListenerOpinion
Date Created: 2022-04-12 22:24:26.685674+00
Date Added: 2024-06-11T09:24:58.252849
License: Public Domain

Supreme Court of Texas
                            ══════════
                             No. 20-0682
                            ══════════

      Sunchase IV Homeowners Association, Inc. and Board,
                              Petitioners,

                                   v.

                           David Atkinson,
                              Respondent

   ═══════════════════════════════════════
               On Petition for Review from the
     Court of Appeals for the Thirteenth District of Texas
   ═══════════════════════════════════════

                            PER CURIAM

      Justice Lehrmann did not participate in the decision.

      This case concerns whether a defendant condominium association
is entitled to attorney’s fees after obtaining a take-nothing judgment on
claims by a plaintiff unit owner. Because we have held that a party may
qualify as a “prevailing party” by “successfully defending against a claim
and securing a take-nothing judgment,” Rohrmoos Venture v. UTSW
DVA Healthcare, LLP, 578 S.W.3d 469, 486 (Tex. 2019), we conclude
that the fee award was authorized by Section 82.161(b) of the Texas
Property Code. Accordingly, we reverse the court of appeals’ judgment
as to attorney’s fees.
       Sunchase IV is a condominium complex in South Padre Island,
Texas. The property is administered and managed by Sunchase IV
Homeowners Association (Sunchase), a non-profit corporate entity of
which each unit owner is a member. Sunchase’s Board operates the
property subject to rules and regulations contained in the Sunchase IV
Homeowners Association, Inc. Condominium By-Laws and the
Sunchase IV Condominium Declaration and Master Deed (the
Governing Documents).
       David Atkinson owns a unit in the Sunchase IV complex. In July
2008, Hurricane Dolly caused damage to Sunchase IV, including
Atkinson’s unit. Following a lengthy repair and insurance disbursement
process, Atkinson sued Sunchase and its Board for fraud, civil
conspiracy, breach of fiduciary duty, breach of contract, negligence,
gross negligence, conversion, and trespass.       Atkinson alleged that
Sunchase created a fraudulent scheme to keep insurance monies from,
and shift the hurricane repair obligations to, individual unit owners. He
also asserted that Sunchase violated its Governing Documents by
altering portions of individual units, making secretive repairs inside his
unit, and failing to repair common elements of the building. Finally, he
contended that Sunchase unlawfully used his air conditioning and
violated terms of a previous settlement agreement by giving
“preferential parking” to motorcycles, trailers, and boats.
       In response, Sunchase filed a counterclaim for declaratory
judgment and requested attorney’s fees under Section 82.161 of the

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Texas Property Code (the Uniform Condominium Act) and Section
37.009 of the Texas Civil Practice and Remedies Code (the Uniform
Declaratory Judgments Act). Sunchase moved for partial summary
judgment and the trial court granted its motion on twelve declaratory
issues, including that “Sunchase [was] entitled to reasonable attorney’s
fees and costs of litigation from Atkinson in the event Sunchase
prevail[ed].” The case proceeded to trial on Atkinson’s remaining claims
and Sunchase’s claim for attorney’s fees. Ultimately, the jury found that
Sunchase did not breach a fiduciary or contractual duty to Atkinson,
Sunchase did not trespass, and Sunchase was entitled to reasonable
attorney’s fees of $135,029.94 for trial and $85,000 for appeal. Atkinson
appealed.
      The court of appeals affirmed the trial court’s take-nothing
judgment, concluding that Atkinson’s substantive challenges were
either waived or unsupported by the record. The court of appeals also
rejected Atkinson’s argument that Sunchase had failed to segregate its
fees, but it held that Sunchase was not entitled to attorney’s fees under
either theory asserted in the trial court. As to Section 37.009, the court
concluded that Sunchase “did not state a claim for affirmative relief”
because its request for declaratory relief was a mirror image of
Atkinson’s claims. ___ S.W.3d ___, 2020 WL 2079093, at *15 (Tex.
App.—Corpus Christi–Edinburg Apr. 30, 2020).          Regarding Section
82.161, the court of appeals concluded that Sunchase was not a
prevailing party because (1) it was not adversely affected by a violation
of Chapter 82 or the condominium’s declaration or bylaws, and (2) it did
not seek affirmative relief.

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         Sunchase filed a petition for review in this Court, arguing that
(1) a defendant that obtains a take-nothing judgment may qualify as a
prevailing party under Section 82.161, and (2) Sunchase’s requests for
declaratory relief either were not mirror images of Atkinson’s claims or
qualified for an exception to the mirror-image rule.
         Consistent with our decision in Rohrmoos, we conclude that
Sunchase is entitled to attorney’s fees because it is a prevailing party
under Section 82.161(b). Because a single legal basis is sufficient to
support the trial court’s award of fees, we do not reach Sunchase’s
second issue.
         Though the general rule is that litigants are responsible for their
own attorney’s fees, parties may recover attorney’s fees from an
opposing party if authorized by a statute or contract. Rohrmoos, 578
S.W.3d at 484; Travelers Indem. Co. of Conn. v. Mayfield, 923 S.W.2d
590, 593 (Tex. 1996). Whether a party is entitled to attorney’s fees is a
question of law. Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 94 (Tex.
1999).
         Chapter 82 of the Texas Property Code governs the creation,
management, and termination of condominiums.                 Section 82.161
provides:

         (a) If a declarant or any other person subject to this chapter
         violates this chapter, the declaration, or the bylaws, any
         person or class of persons adversely affected by the
         violation has a claim for appropriate relief.

         (b) The prevailing party in an action to enforce the
         declaration, bylaws, or rules is entitled to reasonable
         attorney’s fees and costs of litigation from the
         nonprevailing party.

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Because it provides that a prevailing party “is entitled to” attorney’s
fees, subsection (b) is a mandatory fee-shifting provision. See Bocquet v.
Herring, 972 S.W.2d 19, 20 (Tex. 1998). The Legislature did not define
“prevailing party” in Chapter 82, but we have previously construed the
term in other contexts. See Rohrmoos, 578 S.W.3d at 484-86 (addressing
“prevailing party” language in a contract); Intercontinental Grp. P’ship
v. KB Home Lone Star L.P., 295 S.W.3d 650, 653-55 (Tex. 2009) (drawing
from “prevailing party” jurisprudence in the Supreme Court of the
United States to construe “prevailing party” language in Section 38.001
of the Texas Civil Practice and Remedies Code).
       The court of appeals concluded that “to qualify as the prevailing
party, [Sunchase] must have shown that it was adversely affected by a
violation of ‘this chapter, the declaration, or the bylaws’ and that it
suffered damages or otherwise obtained affirmative relief from the trial
court.” 2020 WL 2079093, at *8 (quoting TEX. PROP. CODE § 82.161(a)).
This is a correct statement of the two-pronged test for identifying
prevailing plaintiffs. But neither the text of Section 82.161 nor our cases
support applying such a test to defendants.
       First, the court of appeals incorrectly applied subsection (a) to
Sunchase, holding that it must have been “adversely affected by a
violation” of Chapter 82.      But subsection (a) restricts the class of
plaintiffs who may bring a cause of action under the Act. Only after
subsection (a) has been met may a plaintiff—via an action to enforce the
Chapter, declaration, or bylaws—obtain the “actual and meaningful
relief . . . materially alter[ing] the parties’ legal relationship” required to
become a prevailing party under subsection (b). Wheelbarger v. Landing

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Council of Co–Owners, 471 S.W.3d 875, 896-97 (Tex. App.—Houston [1st
Dist.] 2015, pet. denied) (quoting KB Home, 295 S.W.3d at 652)
(discussing the “prevailing party” element only after a plaintiff shows
she was “adversely affected” by a violation).
       In contrast, a defendant seeking fees need only satisfy subsection
(b), which requires that it prevail “in an action to enforce” a
condominium’s governing documents or rules. It does not require the
party seeking fees to be the same party who brought the action.
       Second, the court of appeals incorrectly concluded that Sunchase
must have suffered damages or obtained affirmative relief to qualify as
a prevailing party. But the text of subsection (b), unlike some other
fee-shifting statutes, does not contain a requirement that the prevailing
party obtain damages or affirmative relief. 1           The court of appeals
seemingly derived its rule from three cases involving prevailing
plaintiffs. See Farrar v. Hobby, 506 U.S. 103, 109-10 (1992) (holding
that “to qualify as a prevailing party, a civil rights plaintiff must obtain
at least some relief on the merits of his claim” (emphasis added)); KB
Home, 295 S.W.3d at 652 (adopting the rule from Farrar and concluding
that “a plaintiff must prove compensable injury and secure an
enforceable judgment in the form of damages or equitable relief”
(emphasis added)); Wheelbarger, 471 S.W.3d at 896 (applying the rule
from KB Home and holding that a condominium unit owner-plaintiff was

       1  Cf. TEX. CIV. PRAC. & REM. CODE § 38.001(b)(8) (authorizing recovery
of fees “in addition to the amount of a valid claim”); Green Int’l, Inc. v. Solis,
951 S.W.2d 384, 390 (Tex. 1997) (holding that prevailing party must recover
damages to obtain fees under Chapter 38).

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not a prevailing party because she could not show “she suffered damages
or otherwise obtained affirmative relief from the trial court”).
       In KB Home, we recognized but did not reach the question
whether the requirements necessary for a prevailing plaintiff to recover
fees   would   apply    to   differently   situated   parties,     such   as
“breaching-but-nonpaying defendant[s].”      295 S.W.3d at 659.       Since
deciding KB Home, we provided an answer in Rohrmoos as to one class
of defendants: those who successfully defend against a plaintiff’s claims
and obtain a take-nothing judgment. 578 S.W.3d at 486. Rohrmoos
addressed whether a defendant could obtain attorney’s fees under a
commercial lease provision authorizing a fee award to “the prevailing
party” in “any action to enforce the terms of this Lease.” Id. at 484. We
explained that KB Home considered “only what a plaintiff must prove to
be a ‘prevailing party.’” Id. at 485. Distilling the foundational principle
from KB Home and Farrar, we concluded that “[a] defendant can obtain
actual and meaningful relief, materially altering the parties’ legal
relationship, by defending against a claim and securing a take-nothing
judgment on the main issue.” Id. at 486.
       Applying the rule from Rohrmoos here, we hold that Sunchase is
a prevailing party under Section 82.161(b). First, because Atkinson
alleged that his damages were due to violations of the Governing
Documents and requested injunctive relief to interpret and enforce the
Governing Documents, Atkinson’s suit was an “action to enforce” the
condominium declaration and bylaws under subsection (a). Specifically,
Atkinson cites the Governing Documents as a basis for his claims of
fraud, breach of contract, and breach of fiduciary duty, as well as his

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allegations that Sunchase unlawfully made changes to common
elements and gave preferential parking to certain vehicles.
      Second, the trial court granted Sunchase a partial summary
judgment on twelve declaratory issues and a partial directed verdict
before the jury found against Atkinson on each of the remaining issues.
Sunchase thus obtained a take-nothing judgment on all of Atkinson’s
substantive claims, so it was a prevailing party under subsection (b).
See Rohrmoos, 578 S.W.3d at 486.
      In conclusion, the court of appeals’ decision regarding fees is
contrary to our holding in Rohrmoos. Sunchase did not need to show it
was adversely affected by a violation of Chapter 82 or obtain damages
to qualify as a prevailing party under Section 82.161(b). Consistent with
Rohrmoos, Sunchase is a prevailing party because it obtained a
take-nothing judgment on the main issue of the litigation. Without
hearing oral argument, TEX. R. APP. P. 59.1, we grant Sunchase’s
petition for review, reverse the court of appeals’ judgment as to
attorney’s fees, and reinstate the trial court’s judgment awarding fees to
Sunchase.

OPINION DELIVERED: April 8, 2022

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