Court Opinion

ID: 2955082
Source: CourtListenerOpinion
Date Created: 2015-09-17 00:32:58.787893+00
Date Added: 2024-06-11T13:09:37.169491
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                         NO. 03-11-00278-CV

     Appellant, Bambi Hollis // Cross-Appellants, Dale Gallagher and Carrie Gallagher

                                                    v.

      Appellees, Dale Gallagher and Carrie Gallagher // Cross-Appellee, Bambi Hollis

   FROM THE DISTRICT COURT OF TRAVIS COUNTY, 353RD JUDICIAL DISTRICT
  NO. D-1-GN-10-002759, HONORABLE GISELA D. TRIANA-DOYAL, JUDGE PRESIDING

                              MEMORANDUM OPINION

                These cross appeals address the affirmative defense of impossibility in the context

of restrictive covenants. The trial court granted summary judgment in favor of Dale Gallagher and

Carrie Gallagher based upon the impossibility defense to Bambi Hollis’s claims that the Gallaghers

were in default under the terms of the restrictive covenants at issue. The trial court also partially

granted Hollis’s motion for summary judgment as to the Gallaghers’ counterclaim seeking

declarations that the restrictive covenants were unenforceable. On appeal, Hollis urges that the

Gallaghers failed to carry their summary judgment burden to conclusively establish impossibility or

to otherwise demonstrate a right to summary judgment.

                The Gallaghers counter that the trial court correctly granted summary judgment as

to Hollis’s claims. In the alternative, they contend on cross appeal that, if the trial court erred, it only

did so by granting summary judgment in favor of Hollis as to their counterclaim seeking declaratory
relief. Because we conclude that the trial court did not err in rendering summary judgment against

Hollis’s claims, we affirm the trial court’s judgment.1

                                         BACKGROUND

               The material facts are undisputed. The parties own lots in the Marshall Ford Vista

subdivision on Lake Travis.        This single-street subdivision contains forty-five lots with

approximately half of the lots, lots 1 to 23, located on the lake side, and the remaining lots located

on the opposite side of the street. When the subdivision was created in 1966, the two developers of

the subdivision placed restrictive covenants (“restrictions”) on the property, filing the restrictions

of record. The restrictive covenant at the center of the parties’ dispute provides that “No two-story

dwelling shall be permitted on lots 1-23 without the consent of undersigned.” The parties agree that

“undersigned” refers to the initial two developers. The restrictions also provide that they are binding

until January 1, 1986, and then automatically extended for successive ten year periods, “unless, by

a vote of a three-fourth majority of the then owners of the lots . . . , it is agreed to change said

restrictions in whole or in part.” The restrictions have not been amended since their initial adoption,

and they do not create a homeowners association.

               Dale Gallagher purchased lot 23 in January 1989 and lot 24 in 1992. At the time he

purchased lot 23, there was a two-story house on the lot. Dale and Carrie Gallagher were married

in 2003, and, in 2010, they tore down the existing house on the lot and began construction of a new

two-story house. Several months after the construction of the Gallaghers’ new house had begun,

       1
          Owners of another lot in the subdivision intervened in the suit, asserting claims mirroring
Hollis’s claims, but they have not appealed the trial court’s judgment.

                                                  2
Hollis brought this suit, seeking injunctive relief as well as damages and attorney’s fees, based upon

the Gallaghers’ alleged violation of the restrictive covenant requiring the consent of the developers

to build a two-story dwelling on a lakeside lot. Hollis owned lot 26, a non-lakeside lot located a few

lots down from the Gallaghers’ lots.

               The Gallaghers answered Hollis’s suit, asserting affirmative defenses and bringing

a counterclaim under the uniform declaratory judgments act (“UDJA”). See Tex. Civ. Prac. & Rem.

Code Ann. §§ 37.001–.011 (West 2008). The declarations that they sought included a declaration

that the restrictions’ “requirement to obtain the approval of the developer prior to constructing a

two-story dwelling on Lots 1-23 [was] unenforceable as a matter-of-law because such approval [was]

impossible to obtain due to the deaths of said developers.” By the time the construction of the

Gallaghers’ new house had begun, both developers had died: one in 2007, and the other one

sometime earlier.

               The parties thereafter filed motions for summary judgment. See Tex. R. Civ. P. 166a.

Among the grounds asserted in their motion, the Gallaghers sought summary judgment as to their

UDJA counterclaim seeking a declaration that the restrictive covenant for a two-story dwelling on

a lakeside lot was unenforceable as a matter of law. They contended that compliance with the

restrictive covenant was impossible after the developers died. In her motion, Hollis sought

no-evidence partial summary judgment on Gallaghers’ affirmative defenses and their counterclaim,

see id. R. 166a(i), and argued that the Gallaghers’ UDJA action was not available “to settle disputes

already pending before the court.”2

       2
         The Gallaghers’ affirmative defenses included that the restrictions had been abandoned
and/or waived by the property owners. The Gallaghers filed a response to Hollis’s no-evidence

                                                  3
               After a hearing, the trial court rendered judgment against Hollis’s claims. In its order

on the parties’ motions, the trial court stated that it had interpreted the Gallaghers’ argument of

impossibility in their motion as an affirmative defense, redesignated their motion as a motion for

summary judgment on the affirmative defense of impossibility, and granted the Gallaghers leave to

add the affirmative defense of impossibility to their pleadings. See Tex. R. Civ. P. 45 (providing that

pleadings in district courts shall be construed so as to do substantial justice), 71 (allowing court to

redesignate pleadings if justice so requires), 166a(c) (allowing court to consider pleadings filed

“before judgment with permission of the court”). The trial court explained:

       Under these rules, and the general jurisdiction and power of the Court, the Court
       believes the correct and just outcome is to grant summary judgment on the
       Defendants’ claim that the covenant “No two-story dwelling shall be permitted on
       lots 1-23 without consent of undersigned” . . . has an impossible condition precedent
       and is therefore unenforceable as a matter of law as of January 21, 2007, the day the
       last of the “undersigned” developers passed away.

Between the time of the hearing and the trial court’s order on the motions, the Gallaghers amended

their pleadings to add the affirmative defense of impossibility.

               In the order, the trial court also partially granted Hollis’s motion for summary

judgment to the extent it was “based on the argument that Defendants’ cause of action under the

[UDJA] is redundant to the adjudication of the Plaintiff’s causes of action.” The court explained that

its “ruling [was] intended to prevent Defendants from asserting matters under the umbrella of the

motion and presented evidence to support findings that nine of the waterfront lots had two-story
dwellings on them, and, except for one of those dwellings, approval was not sought or obtained from
the developers.

                                                  4
UDJA that are already in litigation, presumably as a means to obtain attorney’s fees.” These cross

appeals followed.

                                            ANALYSIS

                In two issues, Hollis contends that the trial court erred by granting summary judgment

against her claims. She contends that the Gallaghers failed to conclusively establish the affirmative

defense of impossibility or otherwise demonstrate a right to summary judgment. She also urges that

this Court should decline to consider a separate ground raised in the Gallaghers’ summary judgment

motion as an independent basis for affirmance.3 On cross appeal, the Gallaghers contend that, if the

trial court erred, it only did so by rendering summary judgment against them on their UDJA

counterclaim.

Standard of Review

                We review a trial court’s summary judgment rulings de novo. Valence Operating Co.

v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). To prevail on a traditional motion for summary

judgment, the movant must show that there are no genuine issues of material fact and that it is

entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c). When reviewing a summary

judgment, we must take evidence favorable to the nonmovant as true, indulge every reasonable

inference in favor of the nonmovant, and resolve any doubts in the nonmovant’s favor. Dorsett,
164 S.W.3d at 661. When both sides move for summary judgment and the trial court grants one

       3
           In addition to arguing impossibility, the Gallaghers argued in their motion for summary
judgment that “enforcing the restriction as an absolute ban on two-story houses” after the developers’
death would constitute “a greater restriction than originally intended” and would be “an unreasonable
restraint on the use and alienation of the Gallaghers’ property.”

                                                  5
motion and denies the other, we determine all questions presented and render the judgment the trial

court should have rendered. Id.

                The parties’ issues also address the construction of restrictive covenants. “Like other

questions of law, we review a trial court’s construction of restrictive covenants de novo.” Owens

v. Ousey, 241 S.W.3d 124, 129 (Tex. App.—Austin 2007, pet. denied). “[R]estrictive covenants are

subject to the general rules of contract construction.” Pilarcik v. Emmons, 966 S.W.2d 474, 478

(Tex. 1998). When a court concludes that contract language can be given a “‘certain or definite legal

meaning or interpretation,’” then the language “‘is not ambiguous and the court will construe the

contract as a matter of law.’” SAS Inst., Inc. v. Breitenfeld, 167 S.W.3d 840, 841 (Tex. 2005)

(quoting Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983)). “Contract terms are given their plain,

ordinary, and generally accepted meanings unless the contract itself shows them to be used in a

technical or different sense.” Dorsett, 164 S.W.3d at 662.

Affirmative Defense of Impossibility

                In her appellate issues, Hollis contends that the Gallaghers failed to carry their

summary judgment burden on the affirmative defense of impossibility or to otherwise demonstrate

a right to summary judgment. See Tex. R. Civ. P. 166a(c); Diversicare Gen. Partner, Inc. v. Rubio,

185 S.W.3d 842, 846 (Tex. 2005); Nowak v. DAS Inv. Corp., 110 S.W.3d 677, 680 (Tex.

App.—Houston [14th Dist.] 2003, no pet.) (“Only when a party conclusively proves every element

of its affirmative defense is it entitled to summary judgment.”). She also argues that, “[a]t best, the

[restrictions] are ambiguous on continuance of the [restrictive covenant at issue], creating a fact issue

                                                   6
precluding summary judgment” and that she deserves a trial on the merits, regardless of how harsh

the possible outcome.

                As a preliminary matter, we must determine whether the restrictive covenant at issue

is ambiguous. See SAS Inst., Inc., 167 S.W.3d at 841. Hollis construes the restrictive covenant as

precluding, after the death of the developers, two-story dwellings on lakeside lots “in perpetuity”

unless and until seventy-five percent of the subdivision lot owners vote to change the restriction.

Hollis relies upon the provision in the restrictions that authorizes the property owners to amend the

restrictions “by a vote of a three-fourth majority of the then owners of the lots,” arguing that this

provision impliedly passed the right to approve two-story dwellings on lakeside lots to the lot owners

as a group upon the developers’ death. She urges that the intent of the restriction on two-story

dwellings was to protect views and property values on the non-lakeside lots and that her construction

of the restrictions is consistent with this intent.

                The Gallaghers counter that the restrictions, as they exist, are not ambiguous as to the

issues before this Court, and the provision authorizing the lot owners to amend the restrictions is

irrelevant because it was undisputed that they had not been amended. They also argue that, as the

restrictions exist, they contain no method of succession for the approval process for a two-story

dwelling on a lakeside lot and that they must be interpreted as they are written and not as they could

have been amended to read. In response to Hollis’s arguments concerning the developers’ intent to

protect the non-lakeside lots, the Gallaghers point out that the words “view” or “views” do not

appear in the restrictions, that there is a lack of limitation on the height of one-story houses, fences,

or outbuildings, and that, if the Developers’ intent was an absolute ban on two-story dwellings on

                                                      7
the lakeside lots to protect the views and property values of the non-lakefront lots, such intent could

have easily been expressed by leaving out an approval process by the developers.

               We agree with the Gallaghers that the restrictions are not ambiguous as to the issues

before us and interpret them as a matter of law. See id. The relevant words are plain and ordinary

and their meaning clear that developer consent was required to build two-story dwellings on the

lakeside lots. See id. The restrictions, as they exist, also do not name successors to the developers’

right to consent to two-story dwellings or otherwise provide an alternative method for obtaining

consent. Neither the omission of a succession approval process or the lot owners’ right to amend

the restrictions create an ambiguity in the relevant language. See id. The issue then is whether the

Gallaghers conclusively established the affirmative defense of impossibility as to the two-story

dwelling restrictive covenant as it exists.

               Texas courts refer to the impossibility defense as “impossibility of performance,

commercial impracticality, and frustration of purpose.” Key Energy Servs., Inc. v. Eustace,

290 S.W.2d 332, 339 (Tex. App.—Eastland 2009, no pet.) (citing Tractebel Energy Mktg., Inc.

v. E.I. Du Pont de Nemours & Co., 118 S.W.3d 60, 64 n.6 (Tex. App.—Houston [14th Dist.] 2003,

pet. denied)). The impossibility defense may be based upon “supervening circumstances.” Centex

Corp. v. Dalton, 840 S.W.2d 952, 954 (Tex. 1992). In that context, section 261 of the Restatement

(Second) of Contracts outlines the scope of the defense:

       Where, after a contract is made, a party’s performance is made impractical without
       his fault by the occurrence of an event the non-occurrence of which was a basic
       assumption on which the contract was made, his duty to render that performance is
       discharged, unless the language or the circumstances indicate the contrary.

                                                  8
Restatement (Second) of Contracts § 261 (1981) (titled “Discharge by Supervening Impracticality”);

see also Centex Corp., 840 S.W.2d at 954–55 (citing and applying section 261 of the Restatement

(Second) of Contracts to hold that party excused from performing based upon supervening

government order).

                Hollis contends that the Gallaghers “failed to conclusively establish an element of

their impossibility defense as stated in Centex: that the ‘the non-occurrence [of the developers’

deaths] was a basic assumption on which the [restrictions were] made.’” Hollis argues that “Centex

imposed upon the Gallaghers an obligation to conclusively prove that the event that they contend

rendered consent legally impossible—the developers’ respective deaths—could not have been

anticipated when the [restrictions] were adopted” and that there was no evidence to support that the

developers were unaware of their own mortality. The supreme court in Centex, however, recognized

that “many factors may excuse a failure to deal with contingencies, and that even if the event [the

supervening circumstance] was reasonably foreseeable, or even foreseen, the contracting party may

still be discharged.” Centex Corp., 840 S.W.2d at 955 (citing Restatement (Second) of Contracts

§ 261, cmts. b & c). Following the supreme court’s analysis in Centex, we conclude that the

developers’ awareness of their own mortality at the time that they adopted the restrictions is not

dispositive here.

                For the purpose of this appeal, the impossibility defense generally applies upon “the

death or incapacity of a person necessary for performance.” Eustace, 290 S.W.3d at 340 (citing

Tractebel, 118 S.W.3d at 65); see also Restatement (Second) of Contracts § 262 (1981) (“If the

existence of a particular person is necessary for the performance of a duty, his death . . . is an event

                                                   9
the non-occurrence of which was a basic assumption on which the contract was made.”); Hourani

v. Katzen, 305 S.W.3d 239, 250–51 (Tex. App.—Houston [1st Dist.] 2009, pet. denied) (upholding

summary judgment in favor of property owner and finding that property owner did not have to

comply with restrictive covenant that required pre-approval process by the board of the property

owner’s association for driveway construction because the association had forfeited its existence);

Hanchett v. East Sunnyside Civic League, 696 S.W.2d 613, 615–16 (Tex. App.—Houston [14th

Dist.] 1985, writ ref’d n.r.e.) (finding that failure by property owner to satisfy restrictive covenant

requiring approval of architectural committee to move house on property “did not in itself justify

forcing [property owner] to remove his house” where evidence showed that “one member of the

committee was known to be dead, another was presumed dead, and the other member could not be

located”). The plain language of the restrictive covenant at issue made the developers “necessary

for performance.” Eustace, 290 S.W.3d at 340.

               Hollis also argues that the Gallaghers relied only on subjective impossibility and that

subjective impossibility, as opposed to objective impossibility, is legally insufficient to support

summary judgment. See Janak v. Federal Deposit Ins. Corp., 586 S.W.2d 902, 906–07 (Tex. Civ.

App.—Houston [1st Dist.] 1979, no writ) (distinguishing between subjective and objective

impossibility); Johnson v. Johnson, No. 02-10-00296-CV, 2011 Tex. App. LEXIS 6140, at *5–7

(Tex. App.—Fort Worth Aug. 2, 2011, no pet.) (mem. op.) (“Objective impossibility can serve as

a defense in a breach of contract suit [whereas] a party cannot escape contract liability by claiming

subjective impossibility.” (citation omitted)). “Objective impossibility relates solely to the nature

of the promise.” Johnson, 2011 Tex. App. LEXIS 6140, at *6 (citing Janak, 586 S.W.2d at 906–07).

                                                  10
“Something is objectively impossible if ‘the thing cannot be done,’ such as an inability ‘to perform

the promise to settle [a] claim by entering an agreed judgment in the lawsuit which had been

dismissed’ prior to the completion of the agreement.” Id. (citation omitted).            In contrast,

“[s]ubjective impossibility is due wholly to the inability of the individual promisor.” See id.

“Something is subjectively impossible if ‘I cannot do it,’ such as when a promisor’s financial

inability to pay makes it impossible for the promisor to perform.” See id.

               Hollis’s position that the Gallaghers relied on subjective impossibility, however, is

not supported by the record. The Gallaghers’ position that it became impossible for them—or

anyone else—to obtain consent to build a two-story dwelling on the lakeside lots after the

developers’ deaths raised objective impossibility, a “thing that [could not] be done.” See Johnson,

2011 Tex. App. LEXIS 6140, at *6; see also Restatement (Second) of Contracts §§ 261, 262; Centex

Corp., 840 S.W.2d at 954 (holding that supervening circumstance, a government order, excused

party’s performance under contract based upon the doctrine of impossibility); Eustace, 290 S.W.3d

at 340 (impossibility defense generally applies upon “death or incapacity of person necessary

for performance”).

               Hollis also urges that the time for measuring objective versus subjective impossibility

is when the restrictions were adopted in 1966 and, “[b]ecause the condition was enforceable when

adopted, impossibility of performance is not a valid defense in this case.” Hollis appears to confuse

the distinction between objective and subjective impossibility with the distinction between original

and supervening impossibility.       See Janak, 586 S.W.2d at 906 (distinguishing between

original—“something which from the outset was impossible”—and supervening impossibility

                                                 11
“which develops sometime after the inception of the contract”). Supervening impossibility by

definition addresses an occurrence that happens after the fact. See id. The Gallaghers do not rely

upon original, but upon supervening impossibility.

               Hollis also argues that the restrictions must be “liberally construed” to effectuate the

parties’ intent and that a liberal construction supports her position that the Gallaghers violated the

restrictions by proceeding to build a two-story dwelling without an amendment of the restrictions.

See Tex. Prop. Code Ann. § 202.003(a) (West 2007) (“A restrictive covenant shall be liberally

construed to give effect to its purposes and intent.”). Courts, however, may not “liberally” construe

a restrictive covenant to say something that it plainly does not say. See Owens, 241 S.W.3d at 130

(holding that requirement in section 202.003(a) of the property code to liberally construe restrictive

covenants did not change analysis of unambiguous provision that restrictive covenants were in effect

for 25-year period). Here the unambiguous language of the restrictive covenant at issue requires

developers’ consent without providing an alternative person or entity to consent in the event that the

developers are unavailable.

               We conclude that the Gallaghers conclusively established the defense of impossibility

and, therefore, that the trial court did not err in granting summary judgment in favor of the

Gallaghers as to Hollis’s claims. See Tex. R. Civ. P. 166a(c). We overrule Hollis’s issues to the

extent that they challenge this ruling.4

       4
          Because we have concluded that the trial court did not err by rendering summary judgment
against Hollis’s claims based upon the impossibility defense, we need not address Hollis’s arguments
concerning other grounds raised by the Gallaghers in their motion for summary judgment. See Tex.
R. App. P. 47.1. Among the grounds that they raised, the Gallaghers argued that “enforcing the
restriction as an absolute ban on two-story houses” after the developers’ death would constitute “a
greater restriction than originally intended” and would be “an unreasonable restraint on the use and

                                                 12
The Gallaghers’ UDJA Counterclaim

                In their cross appeal, the Gallaghers request, in the alternative, that we reverse and

render judgment for the Gallaghers on their UDJA counterclaim as pleaded, and remand for the

limited purpose of hearing the Gallaghers’ claim for attorney’s fees and costs under the UDJA. See

Tex. Civ. Prac. & Rem. Code Ann. § 37.009. In its order, the trial court explained that its ruling

partially granting Hollis’s motion for summary judgment as to the Gallaghers’ UDJA counterclaim

was “intended to prevent Defendants from asserting matters under the umbrella of the UDJA that

are already in litigation, presumably as a means to obtain attorney’s fees.” See MBM Fin. Corp.

v. Woodlands Operating Co., 292 S.W.3d 660, 669 (Tex. 2009) (stating rule that “a party cannot use

the [UDJA] as a vehicle to obtain otherwise impermissible attorney’s fees”); Owens, 241 S.W.3d

at 132 (UDJA “cannot be used as a vehicle for defendants to obtain attorney’s fees merely for

resisting the plaintiff’s right to recover”).

                The Gallaghers, however, ask this Court to reach their cross issue only if this Court

reverses the summary judgment rendered against Hollis’s claims. They state that they only bring

their cross issue in the alternative and request “for the sake of finality” that this Court affirm the trial

court’s judgment. Thus we do not address the Gallaghers’ cross issue.

                                            CONCLUSION

                Because we conclude that the trial court did not err in granting summary judgment

in favor of the Gallaghers as to Hollis’s claims, we affirm the trial court’s judgment.

alienation of the Gallaghers’ property.”

                                                    13
                                            __________________________________________

                                            Melissa Goodwin, Justice

Before Justices Puryear, Rose and Goodwin

Affirmed

Filed: August 28, 2012

                                              14