Court Opinion

ID: 4230850
Source: CourtListenerOpinion
Date Created: 2017-12-20 23:25:18.659693+00
Date Added: 2024-06-11T14:42:38.340200
License: Public Domain

ACCEPTED

                     03-17-00849-CV
                                                                 03-17-00849-CV
                                                                       21307607
                                                       THIRD COURT OF APPEALS
                                                                 AUSTIN, TEXAS
                                                              12/14/2017 4:59 PM
                                                               JEFFREY D. KYLE
                                                                          CLERK
                  No. 03-17-________-CV

                                               FILED IN
                                        3rd COURT OF APPEALS
     In   The Court of Appeals for the Third AUSTIN, TEXAS
            District of Texas at Austin 12/14/2017 4:59:41 PM
                                            JEFFREY D. KYLE
                                                 Clerk

     In re Richard W. Jackson and Lisa C. Jackson,
                                       Relators.

From the County Court at Law No. 1, Travis County, Texas
        Trial Court Cause No. C-1-CV-17-001833

          Petition for Writ of Mandamus

                       J. Patrick Sutton
                       SBOT 24058143
                     1706 W. 10th Street
                     Austin Texas 78703
                      Tel. (512) 417-5903
                     Fax. (512) 355-4155
                        jpatricksutton@
                    jpatricksuttonlaw.com
                      Counsel for Relators

             Oral Argument Not Requested
            IDENTITY OF PARTIES AND COUNSEL

Relators:      Richard W. Jackson and Lisa C. Jackson
Respondent: The Honorable Todd Wong, 1000 Guadalupe Street,
            Room 206, Austin, Texas 78701. Ph. (512) 854-
            9241.

Real Parties Janice Cox and Helen Ramsey
In interest:

Counsel for Relator in the appeals court:
J. Patrick Sutton
SBOT 24058143
1706 W. 10th Street
Austin Texas 78703
Tel. (512) 417-5903 / Fax (512) 355-4155
jpatricksutton@
jpatricksuttonlaw.com

Counsel for Relator in the trial court:

J. Patrick Sutton                    David M. Gottfried
SBOT 24058143                        State Bar of Texas No. 08231200
1706 W. 10th Street                  1505 West Sixth Street
Austin Texas 78703                   Austin, Texas 78703
Tel. (512) 417-5903                  Tel. (512) 494-1481
Fax (512) 355-4155                   Fax (512) 472-4013
jpatricksutton@                      david@davidgottfriedlaw.com
jpatricksuttonlaw.com

Counsel for Real Party in Interest:
Michael L. Navarre
Beatty Bangle Strama P.C.
400 West 15th Street, Suite 1450
Austin, Texas 78701
Phone: 512.879.5050 / Fax: 512.879.5040
mnavarre@bbsfirm.com

                                 i
                                 TABLE OF CONTENTS

INDEX OF AUTHORITIES ..................................................................... iii

STATEMENT OF THE CASE .................................................................... 1

STATEMENT OF JURISDICTION ........................................................... 1

ISSUE PRESENTED .................................................................................. 1

STATEMENT OF FACTS .......................................................................... 2

ARGUMENT ............................................................................................... 3

  I. Standard of Review .......................................................................... 3

  II. The Trial Court Abused Its Discretion .............................................. 4

  III. The Jacksons Lack an Adequate Remedy by Appeal ...................... 5

  IV. Remedies Appropriate by Mandamus .............................................. 6

PRAYER FOR RELIEF .............................................................................. 7

RULE 52.7(a)(2) STATEMENT AS TO EVIDENCE ................................ 8

RULE 52.3(j) CERTIFICATION ................................................................ 8

CERTIFICATE OF SERVICE .................................................................... 8

CERTIFICATE OF COMPLIANCE ........................................................... 8

APPENDIX TO PETITION FOR WRIT OF MANDAMUS ...................... 9

                                                    ii
                                 INDEX OF AUTHORITIES

  CASES

In re Olshan Found. Repair Co., 328 S.W.3d 883 (Tex. 2010) .......... 3

In re Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex. 2004) .......... 4

In re Reece, 341 S.W.3d 360 (Tex. 2011) (orig. proceeding) ............... 3

In re Team Rocket, L.P., 256 S.W.3d 257 (Tex. 2008) ......................... 4

In re United Scaffolding, Inc., 301 S.W.3d 661 (Tex. 2010) .............. 3

Murphy v. McDaniel, 20 S.W.3d 873 (Tex. App. – Dallas 2000, no
 pet.) .......................................................................................................... 4

State v. Walker, 679 S.W.2d 484 (Tex. 1984) (orig. proceeding) ... 5, 6

  STATUTES

Tex. Civ. Prac. & Rem. Code § 51.014 ................................................... 5

                                                        iii
                      STATEMENT OF THE CASE
Nature of the case:         In a suit to construe the meaning of
                            restrictive covenants, the relators
                            obtained     a  temporary    injunction
                            barring the real parties in interest
                            from recording an amendment to the
                            restrictive covenants. Months after the
                            time for an interlocutory appeal of the
                            injunction expired, the real parties in
                            interest sought an order dissolving the
                            temporary injunction.
Respondent:                 The Honorable Todd Wong, County
                            Court at Law No. 1, Travis County,
                            Texas.
Ruling Assailed:            On December 8, 2017, the trial court
                            granted the motion to dissolve the
                            injunction despite the movants’ failure
                            to offer any evidence of a change in
                            circumstances.

                STATEMENT OF JURISDICTION
     Texas Government Code § 22.221(b)(1) provides jurisdiction.

                        ISSUE PRESENTED
      If a party seeking to dissolve a validly-obtained temporary
injunction did not timely appeal the temporary injunction yet
offers no evidence of a change of circumstances after the injunction
was issued, is it a clear abuse of discretion for the trial court to
dissolve the injunction?

                                 1
                         STATEMENT OF FACTS

     The Jacksons sued to stop Ramsey and Cox from recording

any amendments to subdivision restrictive covenants1 unless

Ramsey and Cox (1) sent prior notice of the proposed amendment

to all owners and (2) obtained a recommendation from the

subdivision’s architectural committee. Following an evidentiary

hearing, the trial court granted the Jacksons’ motion for a

temporary injunction on March 3, 2017. 2 Ramsey and Cox did not

appeal the order granting the temporary injunction.

     On December 4, 2017, four days before the pretrial conference

ahead of the December 11 trial, Ramsey and Cox filed a motion to

dissolve the injunction. 3 The sole basis for their motion was that

the trial court reversed its interpretation of the restrictive

covenants in an interlocutory summary judgment order. At the

hearing on the motion to dissolve the injunction on December 8,

Ramsey and Cox offered no evidence in support of their motion.

The trial court granted the motion. 4 The trial setting was then

passed by the parties owing to the unlikelihood of the case being

reached.

 1 App. E (Plaintiffs’ Exhibit 1 thereto).
 2 App. A.
 3 App. B.
 4 Ohio App. C.

                                             2
        On December 11, 2017, Ramsey and Cox recorded in the

Official Records of Travis County an amendment to the restrictive

covenants. 5 They had not notified all owners of the voting on the

amendment in early 2017 and never obtained any recommendation

from the subdivision’s architectural committee.6

        On December 13, 2017, the Jacksons noticed an interlocutory

accelerated       appeal     of   the    order    dissolving      the   temporary

injunction. No. 03-17-00846-CV.

                                   ARGUMENT

                            I. Standard of Review
        Mandamus relief is appropriate when a trial court clearly

abuses its discretion and there is no adequate remedy at law. . A

trial court clearly abuses its discretion when it reaches a decision

that is arbitrary and unreasonable such that it amounts to a clear

and prejudicial error of law or when it fails to correctly analyze or

apply the law. In re Olshan Found. Repair Co., 328 S.W.3d 883,

888 (Tex. 2010) (orig. proceeding). An erroneous legal conclusion,

even in an unsettled area of law, is an abuse of discretion. In re

United Scaffolding, Inc., 301 S.W.3d 661, 663 (Tex. 2010) (orig.

 5   Tab D.
 6   Tab C (containing findings of fact); Tab E (transcript of injunction hearing).

                                           3
proceeding).

     Whether there is an adequate appellate remedy is determined

by balancing the benefits of mandamus review against the

detriments. In re Team Rocket, L.P., 256 S.W.3d 257, 262 (Tex.

2008) (orig. proceeding). In that balancing, the court considers

whether mandamus will “preserve important substantive and

procedural rights from impairment or loss, allow the appellate

courts to give needed and helpful direction to the law that would

otherwise prove elusive in appeals from final judgments, and spare

private parties and the public the time and money utterly wasted

enduring eventual reversal of improperly conducted proceedings.”

In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 136 (Tex. 2004)

(orig. proceeding).

           II. The Trial Court Abused Its Discretion

     As the authority relied upon by Ramsey and Cox in their

motion to dissolve the temporary injunction holds, the movant

must prove that a change in circumstances arose after the

injunction was entered. See Murphy v. McDaniel, 20 S.W.3d 873,

877 (Tex. App. – Dallas 2000, no pet.). However, an interlocutory

                                4
ruling on the merits of a case is not, in and of itself, a “change in

circumstances” authorizing dissolution of an otherwise properly

obtained temporary injunction. Id. at 878. This legal framework

prevents a party who failed to appeal an order granting a

temporary injunction from doing so belatedly, and from getting an

advance ruling from the court of appeals on the merits of a claim

prior to final judgment. Id. at 877-879.

     The sole basis for Ramsey and Cox’s motion to dissolve the

temporary injunction was their obtaining of an interlocutory

summary judgment order favorable to them on the merits. They

presented no evidence at all of any change in circumstances.

Accordingly, the trial court clearly abused its discretion in

granting the motion to dissolve the temporary injunction.

   III. The Jacksons Lack an Adequate Remedy by Appeal

     Where a party has already established the validity of a

temporary injunction, it is improper to force that party to re-

establish the injunction’s validity prior to final judgment in the

case. State v. Walker, 679 S.W.2d 484, 485 (Tex. 1984) (orig.

proceeding).

                                  5
     Ramsey   and   Cox   could   have   appealed   the   temporary

injunction order but did not. See Tex. Civ. Prac. & Rem. Code §

51.014(a)(4). Instead, they waited many months and, on the eve of

trial, sought to force the Jacksons’ to relitigate the early 2017

evidentiary injunction hearing. The Jacksons cannot seek an

appeal of the validity of the original injunction, so mandamus is

the appropriate remedy.

     In addition, the Jacksons engage in leasing that Ramsey and

Cox’s recorded amendment would ban, and they have leases in

force. The amendment is a direct threat to their property rights

and contracts. It provides a basis for Ramsey and Cox to seek legal

and equitable relief in the trial court that they should not have

been entitled to seek at all had the injunction not been wrongfully

procured. Expensive, wasteful new proceedings directly stemming

from a clear abuse of discretion by the trial judge will be the

result.

           IV. Remedies Appropriate by Mandamus

     The order dissolving the injunction must be vacated and the

injunction reinstated. See State v. Walker, 679 S.W.2d at 486. The

                                  6
Jacksons are simultaneously seeking emergency relief to stay the

trial court’s order in both their interlocutory accelerated appeal

and in this original proceeding.

                      PRAYER FOR RELIEF

     This Court should grant Relators the Jacksons’ petition for a

writ of mandamus and direct the trial court to vacate its December

8, 2017 order dissolving the temporary injunction and to reinstate

the injunction. The Court should remand the case consistent with

the above and grant any other relief to which the relator may be

justly and in fairness entitled.

                                   Respectfully submitted,

                                   /s/ J. Patrick Sutton
                                   J. Patrick Sutton
                                   Texas Bar No. 24058143
                                   1706 W. 10th Street
                                   Austin Texas 78703
                                   Tel. (512) 417-5903
                                   Fax. (512) 355-4155
                                   jpatricksutton@
                                   jpatricksuttonlaw.com
                                   Attorney for Relator

                                     7
       RULE 52.7(a)(2) STATEMENT AS TO EVIDENCE
     In the trial court, the real party in interest put it no evidence
in support of its motion to dissolve the temporary injunction. A
record was made of the arguments of counsel at the hearing.

                 RULE 52.3(j) CERTIFICATION
     I have reviewed the petition and concluded that every factual
statement in the petition is supported by competent evidence
included in the appendix or record.
                                        /s/ J. Patrick Sutton
                                        J. Patrick Sutton

                   CERTIFICATE OF SERVICE
      I certify that on December 14, a true and correct copy of this
petition was served by efiling on:

Michael L. Navarre
Beatty Bangle Strama P.C.
400 West 15th Street, Suite 1450
Austin, Texas 78701
Phone: 512.879.5050 / Fax: 512.879.5040
mnavarre@bbsfirm.com
                              /s/ J. Patrick Sutton
                              Attorney for Relator

                CERTIFICATE OF COMPLIANCE
This document complies with the typeface requirements of Tex. R.
App. P. 9.4(e) because it has been prepared in Century Schoolbook
14-point for text and 12-point for footnotes. Spacing is expanded by
.6 point for clarity. This document also complies with the word-
count limitations of Tex. R. App. P. 9.4(i), if applicable, because it
contains 983 words, excluding any parts exempted by Tex. R. App.
P. 9.4(i)(1).

                                /s/ J. Patrick Sutton
                                Attorney for Relator

                                  8
                    No. 03-17-________-CV

        In The Court of Appeals for the Third
             District of Texas at Austin

        In re Richard W. Jackson and Lisa C. Jackson,
                                         Relators.

  From the County Court at Law No. 1, Travis County, Texas
          Trial Court Cause No. C-1-CV-17-001833

  APPENDIX TO PETITION FOR WRIT OF MANDAMUS

Order granting Defendants’ motion to dissolve TI        Tab A

Defendants’ Motion to Dissolve TI                       Tab B

Order granting temporary injunction                     Tab C

Recorded Amendment (without signature pages)            Tab D

Transcript of March 9, 2017 injunction hearing          Tab E

                               9
Tab A
Tab B
                                                                                        Filed: 12/4/2017 10:48 PM
                                                                                                 Dana DeBeauvoir
                                                                                               Travis County Clerk
                                 CAUSE NO. C-1-CV-17-001833                                     C-1-CV-17-001833
                                                                                                   Kylie Uhlaender

RICHARD W. JACKSON,                              §            IN THE COUNTY COURT
LISA C. JACKSON, and                             §
KATHLEEN WOODALL,                                §
            Plaintiffs,                          §            AT LAW NUMBER TWO OF
vs.                                              §
                                                 §
JANICE COX and HELEN RAMSEY,                     §
           Defendants.                           §            TRAVIS COUNTY, TEXAS

     DEFENDANTS’ MOTION TO DISSOLVE THE TEMPORARY INJUNCTION

       Defendants and Counter-Plaintiffs file their Motion To Dissolve The Temporary

Injunction, and would respectfully show the court the following:

                                  I. EXECUTIVE SUMMARY

Background: On February 24, 2017, Plaintiffs sued Ms. Cox and Ms. Ramsey to prevent them

from following Section 4 of Article I of the 1972 Deed Restrictions to prohibit rentals for less than

ninety (90) days. Plaintiffs’ claims were for (1) a declaratory judgment that a notice and ACC

approval requirement in Article IX of the 1972 Deed Restrictions could be copied/pasted into

Section 4 of Article I of the 1972 Deed Restrictions and (2) breach of contract based on this same

rewriting of the 1972 Deed Restrictions. Plaintiffs moved for a temporary restraining order and a

subsequent temporary injunction, which the Court granted.

Problem: On November 17, the Court ruled against Plaintiffs on their sole basis for the temporary

injunction. The Court rejected Plaintiffs’ interpretation of the 1972 Deed Restrictions and granted

Defendants’ Motion for Partial Summary Judgment As To Claims And Counterclaims Concerning

Section 4 Of Article I Of The Restrictive Covenants. Furthermore, Plaintiffs previously dropped

their breach of contract claim that was based on their same faulty contract interpretation.

Relief: Defendants respectfully request that the Court grant this Motion, dissolve the temporary

injunction, award Defendants the bond, and grant further relief.
                                    II. ARGUMENT AND AUTHORITIES
A.         The Sole Basis For Plaintiffs’ Temporary Injunction Was Their Faulty Contract
           Interpretation.

           On February 24, 2017, Plaintiffs sued Ms. Cox and Ms. Ramsey. Their sole claim for

declaratory judgment was the following: 1

           “Plaintiffs seek a declaration that 30 days’ notice to all owners of proposed
           amendments and the prior recommendation of the ACC are required before any
           amendment may be adopted and recorded.”

As set forth in Plaintiffs’ lawsuit, these requirements are in Article IX of the 1972 Deed

Restrictions. 2 These requirements are not in Section 4 of Article I of the 1972 Deed Restrictions.

Plaintiffs’ breach of contract claim was based on Plaintiffs’ same faulty interpretation of the 1972

Deed Restrictions. 3 Although Plaintiffs amended their claim twice before the temporary injunction

hearing, these claims remained the same and Plaintiffs did not add any new claims. 4

           In his opening argument, Plaintiffs’ counsel made it clear that the sole basis for Plaintiffs’

request for a temporary injunction was their faulty interpretation of the 1972 Deed Restrictions: 5

           “We will show and will also argue that there are certain deeds restrictions in a
           subdivision from 1972 and that those deed restrictions do not allow any amendment
           to those restrictions without two specific things occurring.
           One, written notice to all owners 30 days in advance of the adoption of the
           amendment. Two, a quote “recommendation” by an entity called the architectural
           control authority.”
Subsequently, the parties filed competing motions for partial summary judgment concerning the

proper interpretation of the 1972 Restrictions. The Court recently ruled in favor of Defendants

and granted partial summary judgment against Plaintiffs’ claims.

1
    Plaintiffs’ Original Petition at ¶ 25.
2
    Id. at ¶ 13.
3
    Id. at ¶ 26-29.
4
    Plaintiffs’ First Amended Petition at ¶ 25; 26-29; Plaintiffs’ Second Amended Petition at ¶ 25; 26-29.
5
    Transcript of March 9, 2017 Temporary Injunction Hearing at 6-7.

                                                           2
B.        The Court Rejected The Sole Basis For Plaintiffs’ Temporary Injunction And
          Granted Defendants’ Motion For Partial Summary Judgment Against Plaintiffs’
          Claims.

          On October 12, 2017, Defendants filed their Motion For Partial Summary Judgment As To

Claims And Counterclaims Concerning Section 4 Of Article I Of The Restrictive Covenants

(“Defendants’ MPSJ”). As set forth in the Motion, Defendants sought a partial summary judgment

as to the claims that were the basis for Plaintiffs’ temporary injunction: 6

          This Motion for Partial Summary Judgment covers Plaintiffs’ claims for (1)
          declaratory judgment that “30 days’ notice to all owners of proposed
          amendments and the prior recommendation of the ACC are required before
          any amendment may be adopted and recorded” and (2) breach or attempted
          breach of the Restrictive Covenants. Defendants also move for summary
          judgment on their declaratory judgment claim that the requirements of notice and
          prior recommendation of the Architectural Control Authority in Article IX are not
          copied/pasted into Section 4 of Article I of the Restrictive Covenants.

On the other hand, Plaintiffs filed their Renewed Cross-Motion for Partial Summary Judgment

Concerning Procedure for Amending Restrictive Covenants (“Plaintiffs’ Cross-MPSJ”).

Plaintiffs’ Cross-MPSJ was a mirror-image of Defendants’ MPSJ and sought the opposite

interpretation of the 1972 Deed Restrictions.

          On November 17, 2017, the Court issued its rulings. Importantly, the Court granted

Defendants’ MPSJ as to this contract interpretation issue: 7

          “ORDERED, ADJUDGED, AND DECREED that Defendants’ Motion for Partial
          Summary Judgment as to Claims and Counterclaims Concerning Section 4 of
          Article I of the Restrictive Covenants is GRANTED.”

The Court similarly denied Plaintiffs’ Cross-MPSJ. By its orders, the Court disposed of Plaintiffs’

claims in favor of Defendants.

6
    Defendants’ MPSJ at 3 (emphasis added).
7
    Order on Defendants’ Motions for Summary Judgment at 2 (emphasis in original).

                                                        3
C.     The Court Should Dissolve The Injunction And Grant Relief To Defendants.

       By its Orders, the Court also eliminated the sole basis of Plaintiffs’ temporary injunction.

There is no basis for Plaintiffs’ temporary injunction. Therefore, pursuant to Texas law, the Court

should dissolve the temporary injunction. Murphy v. McDaniel, 20 S.W.3d 873, 878 (Tex. App.—

Dallas 2000, no pet.) (explaining the circumstance that result in the dissolution of a temporary

injunction). Furthermore, the Court should award the $10,000 bond to Defendants. Energy

Transfer Fuel, L.P. v. Bryan, 322 S.W.3d 409, 413-14 (Tex. App.—Tyler 2010, no pet.) (citing

DeSantis v. Wackenhut Corp. 793 S.W.2d 670, 685 (Tex. 1990)). Finally, if the Court deems it

necessary, Defendants request equitable or other relief in the form of time to file the change to the

1972 Restrictions or some other form to cure any harm caused to Defendants.

                                       III. CONCLUSION

       WHEREFORE, PREMISES CONSIDERED, Defendants respectfully request that the

Court grant this Motion, dissolve the temporary injunction, award Defendants the bond, and if the

Court deems it necessary, Defendants request equitable or other relief in the form of time to file

the change to the 1972 Restrictions or some other form to cure any harm caused to Defendants

grant further relief. Defendants also request such other relief as the Court deems proper.

                                                      Respectfully submitted,

                                                      /s/ Michael L. Navarre
                                                      Michael L. Navarre
                                                      State Bar No. 00792711
                                                      BEATTY BANGLE STRAMA, PC
                                                      400 West 15th Street, Suite 1450
                                                      Austin, Texas 78701
                                                      (512) 879-5050 Telephone
                                                      (512) 879-5040 Facsimile
                                                      mnavarre@bbsfirm.com

                                                      ATTORNEYS FOR DEFENDANTS

                                                 4
                                CERTIFICATE OF SERVICE
       I hereby certify that a true and correct copy of the foregoing instrument was electronically
served on counsel of record by electronic transmission on this 4th day of December, 2017:

James Patrick Sutton – via jpatricksutton@jpatricksuttonlaw.com
The Law Office of J. Patrick Sutton
1706 W. 10th St.
Austin, Texas 78701

Mr. David M. Gottfried – via david.gottfried@thegottfriedfirm.com
The Gottfried Firm
West Sixth Place
1505 West Sixth Street
Austin, Texas 78703

                                                     /s/ Michael L. Navarre
                                                     Michael L. Navarre

                                                5
Tab C
Tab D
Tab E
                                                              1

 1                      REPORTER'S RECORD

 2                    VOLUME 1 OF 1 VOLUMES

 3            TRIAL COURT CAUSE NO. C-1-CV-17-001833

 4    RICHARD W. JACKSON,       )   IN THE COUNTY COURT
      LISA C. JACKSON, AND      )
 5    KATHLEEN A. KOLB          )
      WOODALL                   )
 6                              )
                                )
 7    VS.                       )   AT LAW NO. 1
                                )
 8                              )
      JANICE COX, HELEN         )
 9    RAMSEY, POINT VENTURE     )
      NEIGHBORS FOR STR         )
10    REFORM                    )   TRAVIS COUNTY, TEXAS

11

12   ********************************************************

13                     TEMPORARY INJUNCTION

14   ********************************************************

15

16            On the 9th day of March, 2017, the following

17   proceedings came on to be heard in the above-entitled

18   and numbered cause before the Honorable Todd T. Wong,

19   Judge presiding, held in Austin, Travis County, Texas:

20            Proceedings reported by machine shorthand.

21

22

23

24

25
                                                2

 1                A P P E A R A N C E S

 2

 3   ATTORNEYS FOR THE PLAINTIFFS:

 4        Mr. James Patrick Sutton
          SBOT NO. 24058143
 5        THE LAW OFFICE OF J. PATRICK SUTTON
          1706 West 10th Street
 6        Austin, Texas 78703
          Phone: 512-417-5903
 7             - AND -
          Mr. David M. Gottfried
 8        THE GOTTFRIED FIRM
          SBOT NO. 08231200
 9        West Sixth Place
          1505 West Sixth Street
10        Austin, Texas 78703
          Phone: 512-494-1481
11

12

13   ATTORNEY FOR THE DEFENDANTS:

14        Mr. William E. 'Bill' Sterling
          SBOT NO. 19175200
15        WILSON, STERLING & RUSSELL
          9951 Anderson Mill Road, Suite 200
16        Austin, Texas 78750
          Phone: 512-258-2244
17
18

19

20

21

22

23

24

25
                                                                        3

 1                                    INDEX

 2                                   VOLUME 1

 3                         Temporary Injunction

 4   March 9, 2017

 5                                                         PAGE   VOL.

 6   Announcements . . . . . . . . . . . . . . . . .5               1

 7   Opening Statement by Mr. Sutton . . . . . . . .6               1

 8   Opening Statement by Mr. Sterling . . . . . . .7               1

 9   Plaintiff's
     Witnesses                  Direct        Cross   Voir Dire   Vol.
10
     Janice   Cox
11       By   Mr.   Gottfried   16                                  1
         By   Mr.   Sterling                   23                   1
12       By   Mr.   Gottfried   29                                  1
         By   Mr.   Sterling                   29                   1
13
     Helen Ramsey
14       By Mr. Gottfried       30                                  1
         By Mr. Sterling                       33                   1
15
     Kathleen Woodall
16       By Mr. Gottfried       34                                  1
         By Mr. Sterling                       38                   1
17       By Mr. Gottfried       41                                  1

18

19   Closing Argument by Mr. Sutton . . . . . . . . 44              1

20   Closing Argument by Mr. Sterling . . . . . . . 52              1

21   Closing Argument by Mr. Sutton . . . . . . . . 59              1

22   Closing Argument by Mr. Sterling . . . . . . . 61              1

23   Court's Ruling . . . . . . . . . . . . . . . . 67              1

24   Adjournment . . . . . . . . . . . . . . . . . .69              1

25   Court Reporter's Certificate . . . . . . . . . 70              1
                                                                      4

 1                ALPHABETICAL INDEX OF WITNESSES

 2                           Direct   Cross    Voir Dire        Vol.

 3   COX, JANICE
         By Mr. Gottfried    16                                   1
 4       By Mr. Sterling               23                         1
         By Mr. Gottfried    29                                   1
 5       By Mr. Sterling               29                         1

 6                     INDEX - VOLUME 1 CONT.

 7                ALPHABETICAL INDEX OF WITNESSES

 8                           Direct   Cross    Voir Dire        Vol.

 9   RAMSEY, HELEN
         By Mr. Gottfried    30                                   1
10       By Mr. Sterling               33                         1

11   WOODALL, KATHLEEN
         By Mr. Gottfried    34                                   1
12       By Mr. Sterling               38                         1
         By Mr. Gottfried    41                                   1
13

14

15               EXHIBITS OFFERED BY THE PLAINTIFF

16   EXHIBIT   DESCRIPTION                      OFFER   ADMIT VOL.

17     1       Point Venture Section Three-1      13       14     1
               Plat Record
18
       2       General Provisions                 14       14     1
19
       3       Amendment to Restrictions          15       15     1
20
       4       Notes                              21       21     1
21

22               EXHIBITS OFFERED BY THE PLAINTIFF

23   EXHIBIT   DESCRIPTION                      OFFER   ADMIT VOL.

24     1       VRBO web listing                   27       28     1

25
                                                                   5

 1                     P R O C E E D I N G S

 2                          March 9, 2017

 3                 THE COURT:    C-1-CV-17-001833, Richard

 4   Jackson and Lisa Jackson versus Janice Cox, Helen

 5   Ramsey, Point Venture Neighbors.

 6                 Counsel, if you would go ahead and make

 7   your appearances for record.

 8                 MR. SUTTON:     Judge, Patrick Sutton and

 9   David M. Gottfried for all plaintiffs.

10                 THE COURT:    All right.   Thank you.

11                 MR. STERLING:     William Sterling, Jr. for

12   defendants, Janice Cox and Helen Ramsey.     In reality,

13   there is no incorporated or association.

14                 THE COURT:    Okay.   Very good.   All right.

15   Thank you very much.

16                 All right.    I read the original -- well, I

17   guess the third amended petition that was filed.      I read

18   the TRO.   Pulled some cases.

19                 You-all have anything you want me to look

20   at?

21                 MR. STERLING:     Your Honor, I did file an

22   answer, and I sent a copy to Court 2's staff attorney

23   and I don't know whether that's...

24                 MR. GOTTFRIED:     If I may approach, Your

25   Honor?
                                                                      6

 1                 THE COURT:    Sure.    All right.

 2                 So we're here just on the temporary

 3   injunction.   This is not a permanent injunction.         It's

 4   no final hearing on anything.       So just to remind

 5   counsel, you keep that in mind as you proceed today.

 6                 All right.    Well, plaintiffs, may proceed.

 7                 MR. SUTTON:    Judge, what I'd like to do is

 8   just preview for you what the evidence will show.

 9                 THE COURT:    That would be great.        If you

10   could do that, then I'll let the defendant do the same.

11                      OPENING BY PLAINTIFF

12                 MR. SUTTON:    Thank you, Judge.

13                 First, we will show and will also argue

14   that there are certain deeds restrictions in a

15   subdivision from 1972 and that those deed restrictions

16   do not allow any amendment to those restrictions without

17   two specific things occurring.

18                 One, written notice to all owners 30 days

19   in advance of the adoption of the amendment.       Two, a,

20   quote, "recommendation" by an entity called the

21   architectural control authority.

22                 We will then show, one, that the

23   defendants failed to meet those two requirements, that

24   there is an architectural control authority, and that

25   the defendants have circulated an amendment which would
                                                               7

 1   restrict the rights of property owners, actually bar

 2   property owner's right to rent for short terms.

 3                 We will have seven witnesses who will talk

 4   about the lack of notice, the existence of an

 5   architectural control authority, and then, finally,

 6   Judge, we'll show that all that deed restrictions

 7   provide that all that is required for a temporary

 8   injunction in this case is a showing of a breach or

 9   attempted breach, and that the deed restrictions

10   specifically remove the requirement of irreparable

11   injury or that money damages are not an adequate remedy.

12                 Thank you, Judge.

13                 THE COURT:   Thank you.

14                 Counsel.

15                     OPENING BY DEFENDANT

16                 MR. STERLING:   Your Honor, we -- they're

17   going to be introducing a certified copy of 1972

18   restrictions, and we don't have any quarrel with that

19   particular document as it's going to be presented.

20                 We do disagree with counsel as to whether

21   or not there is a requirement for 30 days notice or a

22   requirement for having ACA approval when it comes to an

23   attempted change of the restrictive covenants under a

24   particular portion of the restrictive covenants

25   themselves.
                                                                 8

 1                 And we'll call Your Honor's attention to

 2   Section -- I believe it's Section 1.

 3                 THE COURT:    It's 1.4, isn't it?

 4                 MR. STERLING:    1.4, yes.

 5                 And that particular section allows for a

 6   majority of the lot owners to change the 1972

 7   restrictions by getting a document signed by them,

 8   proper manner of recording it in the deed records, and

 9   then so recording.     And that's the only real

10   requirements that are there.

11                 We're going to be arguing that, in

12   essence, the provision that the other side has been

13   referred to is not applicable to that particular

14   provision.   It may be under a section having to do with

15   label amendments.    But right on that same page is going

16   to be a section -- I think it's Section 11 of the

17   document that basically says that -- it's on Section 11

18   -- talk about captions.     And captions basically say

19   forget the captions.     They don't mean anything.   You can

20   look at it as if they were never there in terms of doing

21   that.

22                 THE COURT:    But you just told me -- you

23   referred to me 9 which says Amendments, but in the body

24   of that provision, it talks about any covenants that may

25   be annulled, amended, or modified.     So it's not just
                                                                  9

 1   amendments either, right?

 2                 MR. STERLING:    Well, it's -- I think it's

 3   referring only to the particular form by which they go

 4   about doing it using this particular provision.     If you

 5   want to change any time during the year, at any time you

 6   have to go through the ACA and give your 30 days notice.

 7   But if you're going through this other provision, the

 8   provision that allows you to change it but it doesn't

 9   become effective until the next period of duration, if

10   you do it that way, it's a totally different system.

11                 In other words, the changes where you're

12   using the ACA, you're going to be having -- having to

13   have notice who's going to go voting and all that kind

14   of stuff.   There's no voting when it comes to the actual

15   use of this majority getting a changing instrument and

16   signing it and recording it.    You're voting by signing

17   on the instrument or not signing the instrument.

18                 THE COURT:    I see your argument.

19                 MR. STERLING:    So basically that's what

20   I'm saying, it's a whole different thing.

21                 And so what I wanted to state is that

22   that's the crux of what the problem is between my

23   client -- my clients and theirs is the interpretation of

24   those two particular provisions.    They want to basically

25   say that their provision overrides and makes mine
                                                                     10

 1   meaningless, essentially.

 2                    THE COURT:   They're not saying they can

 3   coalesce together.

 4                    MR. STERLING:   Well, they may be trying to

 5   say that, but I don't see how they can really coalesce

 6   together.   How do you do a 30 days in advance of when

 7   you're picking up individual signatures, you know, as

 8   you go, and it may take you the whole 10-year period to

 9   get them all signed up?

10                    It's just not the same thing.   You're not

11   doing a vote-type situation.

12                    But in any case, what I was getting at is

13   that that's the crux of it.      And what they're trying to

14   do is add a temporary injunction to kill our current

15   effort to try to change the restrictive covenants to

16   disallow, you, know, these short-term rentals.         And

17   they're trying to, basically, use that -- use this

18   temporary injunction in order to try to prevent us from

19   getting there.     Essentially getting there during this

20   period.

21                    THE COURT:   Let me stop you there.     From

22   my reading, they're enjoining you from going through the

23   process from not engaging in the process that's set up

24   under the restriction, under this document.      And I

25   understand what you're saying is that they're preventing
                                                                 11

 1   you from doing the -- using provision or paragraph 4.

 2   You're trying to go through paragraph 4.

 3                  MR. STERLING:   Right.

 4                  THE COURT:   And they're saying, no, you've

 5   got to go through 9.

 6                  MR. STERLING:   Right.

 7                  THE COURT:   Is that about it?

 8                  MR. STERLING:   That's about it.

 9                  THE COURT:   Okay.   All right.

10                  MR. STERLING:   But the one thing I wanted

11   to get across is that if we don't make -- essentially

12   the way this -- our method works is that the successive

13   periods essentially provides for duration of these

14   original restrictive covenants starting out with a

15   35-year period then it goes succeeding 10-year period,

16   et cetera.    We're at the end of a 10-year period.

17                  THE COURT:   You're at the end of the

18   second 10-year period.

19                  MR. STERLING:   Right.   And if we are not

20   successful in getting signed up a majority and recorded

21   all those done by March 15th, we will be prevented from

22   this taking effect until the next period beyond that.

23   Not, you know --

24                  THE COURT:   It's not March 27th?   It's

25   March 15th?
                                                                  12

 1                   MR. STERLING:   Well, March 27th.     That's a

 2   good question because March 15th is when it was signed,

 3   the original.

 4                   THE COURT:   Oh, I see.

 5                   MR. STERLING:   But it wasn't recorded

 6   until 19 or till March 27th.     Whichever date, the point

 7   is if we don't get it done certainly within one of those

 8   two days, we could end up in a situation where it would

 9   not take effect during the next 10-year period but the

10   one after that is what would happen.      So, in effect,

11   we'll be stopping this thing from being effective for a

12   full 10 years using this method.

13                   THE COURT:   All right.

14                   MR. STERLING:   And that will cause it to

15   happen by just doing a temporary injunction.

16                   THE COURT:   I see.   You could read it that

17   way.   You might read it another way too.

18                   MR. STERLING:   Well, I think if you can

19   figure out a way for us to get it effective otherwise, I

20   would be happy to do that.

21                   THE COURT:   I'm not going to engage in

22   that with you, but I think there may be a creative way

23   to do something there but, all right.        Very good.

24                   MR. STERLING:   All right.    I think that

25   basically --
                                                               13

 1                 THE COURT:   Is that it?

 2                 MR. STERLING:    -- gives us an idea what

 3   our situation and our position is.

 4                 THE COURT:   Fair enough.   All right.

 5   Thank you both.

 6                 Counsel for plaintiff, you-all may

 7   proceed.

 8                 MR. GOTTFRIED:   Good morning, Your Honor.

 9                 Being mindful of the fact this is a

10   temporary injunction hearing not a permanent injunction

11   hearing, I think we may be able to cut through some of

12   the formalities by stipulating as to a couple of

13   documents.

14                 THE COURT:   Fantastic.

15                 MR. GOTTFRIED:   I visited with

16   Mr. Sterling and he's graciously agreed that we can mark

17   this plat as Plaintiff's Exhibit 1.

18                 MR. STERLING:    I have no objection.

19                 THE COURT:   So he has no objection you

20   admitting it into evidence.

21                 MR. Gottfried:   May I approach?

22                 THE COURT:   Yes, of course.   Thank you.

23                 MR. GOTTFRIED:   Your Honor, we would move

24   for the admission of Plaintiff's Exhibit Number 1.

25                 (Plaintiff's Exhibit No. 1 offered.)
                                                                   14

 1                 THE COURT:     All right.     Thank you.

 2                 Plaintiff's Exhibit 1 admitted.

 3                 (Plaintiff's Exhibit No. 1 admitted.)

 4                 MR. GOTTFRIED:        Your Honor, that's just to

 5   give you some perspective of where this subdivision is.

 6   It's on Lake Travis.   And the folks that are in the

 7   courtroom today are the waterfront section of Lake

 8   Travis.

 9                 THE COURT:     Okay.

10                 MR. GOTTFRIED:        May I approach, Your

11   Honor?

12                 THE COURT:     Yes.     Thank you.

13                 MR. GOTTFRIED:        Mr. Sterling and I have

14   also stipulated to the deed restrictions, which I've

15   just provided the Court as Plaintiff's Exhibit Number 2

16   and move for the admission of Plaintiff's 2.

17                 (Plaintiff's Exhibit No. 2 offered.)

18                 THE COURT:     All right.     Thank you.

19                 MR. STERLING:     I have no objection, Your

20   Honor.

21                 THE COURT:     All right.     Thank you.

22                 Plaintiff's Exhibit 2 is admitted.

23                 You-all don't need to ask permission to

24   come up and show me stuff.     It's fine.

25                 (Plaintiff's Exhibit No. 2 admitted.)
                                                                15

 1                 MR. GOTTFRIED:   Your Honor, I have handed

 2   the Court Plaintiff's Exhibit Number 3, which is the

 3   proposed amendment.   And we move for the admission of

 4   Plaintiff's Exhibit 3.

 5                 (Plaintiff's Exhibit No. 3 offered.)

 6                 MR. STERLING:    May I see it?

 7                 MR. GOTTFRIED:   Yes.

 8                 MR. STERLING:    I just want to make sure.

 9                 I have no objection, Your Honor.

10                 THE COURT:   All right.   Thank you.

11                 Plaintiff's Exhibit 3 is admitted.

12                 (Plaintiff's Exhibit No. 3 admitted.)

13                 MR. GOTTFRIED:   And, Your Honor, I'm also

14   hoping that we can stipulate that notice to all of the

15   residents of the proposed amendment was not given.     It's

16   actually a judicial admission in paragraph 12 of

17   defendant's answer and counter-claim where they state,

18   defendants admit that the facts set forth in paragraph

19   20 of the plaintiff's petition are true and correct,

20   same and except all lot owners but six were given at

21   least 30 days notice in writing of the proposed

22   amendment and the web sites were up for at least 30 days

23   in writing showing the proposed amendment.

24                 And they say, on information and belief,

25   those six received 30 days notice in writing by reading
                                                                  16

 1   from the web sites, which is not the provision of

 2   written notice as required under the deed restriction.

 3                   MR. STERLING:    Your Honor, I'll stand by

 4   what he read.

 5                   THE COURT:   Okay.   Well, then, the Court

 6   will note and make part of the record that provision 12

 7   in defendant's original answer is admitted to by the

 8   defendant's counsel.

 9                   MR. STERLING:    With those exceptions.

10                   THE COURT:   With the exceptions that are

11   noted.

12                   MR. Gottfried:   Your Honor, we would call

13   Janice Cox.

14                   THE COURT:   Ms. Cox.

15                             JANICE COX,

16   having been first duly sworn, testified as follows:

17                        DIRECT EXAMINATION

18   BY MR. GOTTFRIED:

19       Q.    Good morning, Ms. Cox.

20       A.    Good morning.

21       Q.    Could you please state your full name for the

22   record?

23       A.    Janice K. Cox.

24       Q.    And what is your home address?

25 A. 18940 Peckham Drive.
                                                                 17

 1       Q.     And are you a resident of Point Venture Section

 2   Three-1?

 3       A.     Yes, sir.

 4       Q.     And you oppose short-term rentals in your

 5   subdivision; is that correct?

 6       A.     Yes.

 7       Q.     And you've authored a web site that you put up

 8   entitled Point Venture Neighbors; is that correct?

 9       A.     No.

10       Q.     Have you put together a web site as part of

11   your effort to ban short-term rentals in the

12   subdivision?

13       A.     Yes.

14       Q.     What is the name of that web site?

15       A.     There's two web sites.   SaveSection3-1.org.

16   There's -- it's sort of a joint web site,

17   pvstrreform.com.

18       Q.     And are you the owner of both of those web

19   sites?

20       A.     Yes.

21       Q.     Who were the other neighbors that are part of

22   that organization that is trying to ban short-term

23   rentals in the subdivision?

24 A. I can't go through the entire list.    I don't

25   have it in front of me.    Pepper would be one.
                                                                 18

 1          Q.   I'm sorry?

 2          A.   Helen Ramsey would be one.

 3          Q.   Who is Helen Ramsey?

 4          A.   She lives with me.

 5          Q.   Are there more than three people that are part

 6   of the, quote, neighbors --

 7          A.   No.

 8          Q.   No?

 9          A.   No.

10          Q.   So you can only name yourself and Ms. Ramsey?

11          A.   Correct.     Yes.

12          Q.   And I'd like to refer you to Plaintiff's

13   Exhibit Number 3, which I believe -- is that the

14   amendment to the deed restrictions that you've been

15   circulating within the subdivision?

16          A.   The back page is blank but, yes.     Page 1 and 2,

17   yes.

18          Q.   What do you mean by "the back page is blank"?

19          A.   If it was for a specific lot, the lot would be

20   filled in and the name would be filled in.

21          Q.   Oh, okay.     What I'm really asking, is this the

22   form of the amendment that you're asking your neighbors

23   to sign?

24          A.   Yes.

25          Q.   Okay.   And under this proposed amendment,
                                                              19

 1   short-term rentals of less than 90 days would be

 2   forbidden in the subdivision; is that correct?

 3       A.   Yes.

 4       Q.   Who is the developer of the subdivision

 5   currently?     Is there one?

 6 A. I would believe the -- I guess it was the

 7   Mitchell Group originally, and then that passes down to

 8   the ACC or POA.     Don't know.

 9       Q.   To your knowledge, do any -- does any developer

10   still own any lots within the subdivision?

11 A. I can't answer that yes or no.

12       Q.   You simply don't know?

13 A. I don't know.

14       Q.   Did you provide 30 days written notice to all

15   of the members of the subdivision of your proposed

16   amendment to the deed restrictions, which are

17   Plaintiff's Exhibit Number 3?

18       A.   All but -- all but seven.

19       Q.   And how did you pick the seven that you were

20   not going to provide notice to?

21       A.   They own short-term rentals.

22       Q.   So is it fair to say that that was a concerted

23   effort by you to exclude them from the dialogue

24   regarding the amendment that you were proposing for the

25   subdivision?
                                                                   20

 1       A.     One, we didn't think they would sign it.        Two,

 2   we had some elderly people in the subdivision, and we

 3   were afraid they -- we were afraid of harassment.

 4       Q.     And so based on those reasons, you specifically

 5   excluded, what was it, six or seven of the residents?

 6       A.     Seven.

 7                     MR. GOTTFRIED:      May I approach the

 8   witness?

 9                     THE COURT:   Yes.     Thank you.

10       Q.     (BY MR. GOTTFRIED)      Ms. Cox, I've handed you

11   what's been marked as Plaintiff's Exhibit Number 4 and

12   ask you if you can identify it?

13       A.     What do you want?

14       Q.     Can you identify Plaintiff's Exhibit Number 4?

15       A.     Yes.

16       Q.     What is Plaintiff's Exhibit Number 4?

17       A.     The number of mailouts when they were done.

18       Q.     Is Exhibit Number 4 a document that you

19   created?

20 A. I believe, yes.     I didn't, but I believe Helen

21   Ramsey did.

22       Q.     And you were subpoenaed to be here today as a

23   witness, correct?

24       A.     Yes.

25       Q.     And you produced certain documents pursuant to
                                                                       21

 1   that subpoena; is that correct?

 2       A.      This was not one of them.        This document, I

 3   don't believe was on the subpoena.

 4       Q.      Would you agree with me that that was a

 5   document that was produced to me today by your lawyer?

 6       A.      Yes.

 7                      MR. GOTTFRIED:   Your Honor, we move for

 8   the admission of Plaintiff's Exhibit Number 4.

 9                      (Plaintiff's Exhibit No. 4 offered.)

10                      MR. STERLING:    I don't really have an

11   objection to it, Your Honor.         I would say my client

12   produced certain documents in relationship to the

13   subpoena that was given, and there has been some

14   confusion with her about what that entailed.           But I

15   think that qualifies as one of the documents -- as a

16   document that they requested.

17                      THE COURT:   All right.    So no objection.

18                      So Plaintiff's Exhibit 4 is admitted.

19                      (Plaintiff's Exhibit No. 4 admitted.)

20       Q.      (BY MR. GOTTFRIED)      And Ms. Cox, there are two

21   Post-it notes on Plaintiff's Exhibit Number 4.           Do you

22   see them?

23       A.      Uh-huh.

24       Q.      Are those your handwriting?

25       A.      No, sir.
                                                                22

 1      Q.    Do you recognize the handwriting?

 2      A.    Yes.

 3      Q.    Whose handwriting is it?

 4      A.    Helen Ramsey's.

 5      Q.    Are you aware -- do you have any personal

 6   knowledge of the existence of an architectural control

 7   authority within your subdivision?

 8      A.    Yes.     I believe it's a committee.

 9      Q.    And who are the members of that committee?

10      A.    Two that I know of are Stan Retriman (ph) and

11   Cindy Clemmons.

12      Q.    What about Eugene Glass, would he be a member?

13 A. I don't know if he is currently, but he has

14   been in the past.

15      Q.    Marvin Ruthridge?     Are you familiar with --

16 A. I know the name.     Don't know if he certainly

17   sits on the ACC.

18      Q.    And Greg McConnel?

19      A.    Don't recognize the name.

20      Q.    But you do have personal knowledge that an

21   architectural control authority does exist and is

22   operating or committee is operating within your

23   subdivision?

24      A.    Yes.

25      Q.    Did you submit your proposed amendment to that
                                                                  23

 1   architectural control authority before you started

 2   circulating it for signatures?

 3       A.     No.

 4       Q.     So you would agree with me that since you never

 5   submitted it, there was never a recommendation by the

 6   architectural control authority that the amendment be

 7   adopted by the members; is that correct?

 8       A.     Yes.

 9                     MR. Gottfried:   We'll pass the witness,

10   Your Honor.

11                     THE COURT:   All right.   Thank you.

12                     Counsel.

13                          CROSS-EXAMINATION

14   BY MR. STERLING:

15       Q.     Ms. Cox, in connection with your living at the

16   -- on the lot, are you the owner of the lot?

17       A.     Yes.

18       Q.     Is Ms. Ramsey also an owner?

19       A.     Yes.

20       Q.     So you own it jointly together; is that

21   correct?

22       A.     Yes.

23       Q.     And in the course of -- how long have you owned

24   it or how long have you actually lived on the lot?

25 A. I believe it's three years.
                                                                 24

 1       Q.   And during that period of time -- well, scratch

 2   that.

 3                    Do the Jacksons, the plaintiffs, own any

 4   lots nearby?

 5       A.   Yes.

 6       Q.   They own one near you?

 7       A.   Yes.

 8       Q.   Is it a next door neighbor-type situation?

 9       A.   Yes.

10       Q.   And have you or -- to your personal knowledge,

11   do you know whether they're renting out or leasing the

12   improvements on their lot?

13       A.   Yes.

14       Q.   Have you seen the renters on the lot?

15       A.   Yes.

16       Q.   Have the Jacksons used, at least in the past, a

17   manager for the lot or for that lot?

18       A.   Yes and no.     They use the BRBO at current

19   times.

20       Q.   Okay.     But did they use this individual in the

21   past?

22       A.   Can you clarify "for"?

23       Q.   Well, was there -- did they have someone other

24   than Mr. and Mrs. Jackson themselves act as their

25   manager of the rental?
                                                                     25

 1 A. I believe very early on they did.         They used

 2   the company in Lago.

 3       Q.    Do they have any on-site managers now?

 4       A.    They did.    I think the neighbor was actually

 5   part of the caretaker --

 6       Q.    Arrangement?

 7       A.    -- arrangement.

 8       Q.    And did you ever have any problems with the

 9   renters or the managers?

10       A.    Yes.

11                    MR. GOTTFRIED:   Objection, Your Honor.

12   I'm going to object to the relevance.       We're here about

13   notice.

14                    MR. STERLING:    Your Honor, we're not just

15   here about notice.     I have an affirmative defense that

16   goes to the invitation of clean hands doctrine which

17   replies to this temporary injunction, and I filed an

18   answer that actually has that in writing.       I'm entitled

19   to go into that.

20                    THE COURT:   I'm going to allow a little

21   bit of leeway here, not a whole lot, just enough to

22   handle this injunction.       So you may proceed.

23       Q.    (MR. STERLING)      Have you had any problems with

24   the use or -- problem with the renters or the managers

25   in connection with the short-term rental being used on
                                                                   26

 1   the lot?

 2       A.      Yes.

 3       Q.      Could you describe for us what kind of problems

 4   you've had?

 5       A.      We've had disorderly conduct.    We've had lewd

 6   profanity.     We've had people dancing on the roofs.

 7   We've had people trespassing.       We've had vandalism.

 8   We've had continuing loss of sleep.       We've had bongo

 9   drums.     We've had karaoke music.    We've had -- I mean,

10   it's endless.

11                      We have people parking in our driveway.

12   We have people turning around in our driveway.       We have

13   people trespassing.       Just Christmas I was out of town,

14   we have people standing there and drinking beer in our

15   driveway.     Their kids are in our -- we can see from our

16   cameras we're being notified.       They come over in 10s or

17   15s at a time asking questions.       It's been a basic

18   nightmare.

19       Q.      Have you had to call the police?

20       A.      Yes, sir.

21       Q.      And have there been -- have your other

22   neighbors complained about the same activities?

23       A.      Yes, sir.

24       Q.      Would it be fair to say that the existence of

25   the short-term rental business on the lot has become an
                                                                   27

 1   annoyance or a nuisance in the neighborhood?

 2       A.   Yes, sir.

 3       Q.   I'm going to show you what's been marked as

 4   Defendant's Exhibit 1.

 5                    THE COURT:   Why don't you go ahead and

 6   show it to opposing counsel first.        Thank you.

 7       Q.   (BY MR. STERLING)        Let me show you what's been

 8   marked as Defendant's Exhibit 1 and ask you is that a

 9   printout from a web site service that allows for

10   advertising short-term vacation rentals?

11       A.   Yes, sir.

12       Q.   And is that -- if you looked at it completely

13   and fairly, is that describing pictures and all the

14   Jackson's property?

15       A.   Yes, sir.

16       Q.   And does it have a picture of the two of them

17   as the owners?

18       A.   Yes, sir.

19                    MR. STERLING:    We offer Defendant's

20   Exhibit 1.

21                    (Defendant's Exhibit No. 1 offered.)

22                    MR. GOTTFRIED:    Your Honor, we object on

23   the grounds of relevancy.        Leasing, even short-term

24   leasing, is permitted under the current restrictions.

25   It's not really an issue in this case what they're using
                                                                  28

 1   their property for.

 2                  MR. STERLING:    Actually, Your Honor, it's

 3   not.   One of the things that I brought up in my pleading

 4   is that there is a section of the restrictive covenants,

 5   which is Article or Roman Numeral 4, Section -- or

 6   Paragraph 5, which basically prohibits the renting of

 7   any improvements on a lot without the prior consent of

 8   the architectural control authority.

 9                  MR. GOTTFRIED:    Your Honor, I don't think

10   that that's what it says.      I think it says without the

11   authority of the developer and there currently is no

12   developer.    And if the defendants are taking the

13   position that the deed restrictions prevent all leasing

14   of any kind for any duration in this subdivision, that's

15   something I'd love to get on the record.

16                  THE COURT:    Okay.   I'm going to allow

17   Defendant's Exhibit 1.      It's admitted.

18                  (Defendant's Exhibit No. 1 admitted.)

19                  THE COURT:    I'm going to remind you,

20   gentlemen, that we are here simply on a temporary

21   injunction.   I'm not going into the leads of your final

22   hearing on this.

23                  I understand you-all wanting to go ahead

24   and get it out.    If you-all want free discovery and you

25   want to have a reporter type everything out now, that's
                                                                       29

 1   absolutely fine with me and I'm sure for her.           But I'm

 2   going to allow Defendant's Exhibit 1.           But I'm going to

 3   remind you why we're here.        All right.     Please proceed.

 4                    MR. STERLING:    I'll pass the witness.

 5                    THE COURT:   All right.       Thank you.

 6                    Anything else?

 7                        REDIRECT EXAMINATION

 8      Q.    (BY MR. GOTTFRIED)        Ms. Cox, is it your

 9   position that all leasing of any kind within the

10   subdivision is prohibited by the deed restrictions?

11      A.    Yes.

12                    MR. GOTTFRIED:    We'll pass the witness.

13                        RECROSS-EXAMINATION

14      Q.    (BY MR. STERLING)        Ms. Cox, would it also be

15   your understanding that prohibiting of the renting

16   within the subdivision is subject to the exception by

17   approval of the architectural control authority?

18      A.    Yes.

19                    MR. GOTTFRIED:    Your Honor, I'm going to

20   object to the leading and, actually, it's not what the

21   document says.

22                    THE COURT:   That's sustained.

23      Q.    (BY MR. STERLIING)        Ms. Cox, the individual

24   restrictive covenants provides for the developer to

25   basically sign away his rights to an architectural
                                                                  30

 1   control authority; is that correct?

 2                     MR. GOTTFRIED:   Objection; leading.

 3                     THE COURT:   Sustained.

 4                     MR. STERLING:    Pass the witness.

 5                     MR. GOTTFRIED:   Nothing further.

 6                     THE COURT:   All right.    You may step down.

 7                     MR. GOTTFRIED:   Your Honor, we would call

 8   Helen Ramsey.

 9                     THE COURT:   Ms. Ramsey.

10                            HELEN RAMSEY,

11   having been first duly sworn, testified as follows:

12                          DIRECT EXAMINATION

13   BY MR. GOTTFRIED:

14       Q.    Good morning, Ms. Ramsey.

15       A.    Good morning.

16       Q.    Could you please state your full name for the

17   record?

18       A.    Helen Ramsey, Jr.

19       Q.    And where do you reside?

20 A. 18940 Peckham.

21       Q.    And do you live there with Janice Cox?

22 A. I do.

23       Q.    And so you are a resident of Point Venture

24   Section Three-1; is that correct?

25       A.    Three-1 is correct.
                                                                 31

 1       Q.   Okay.     And you oppose short-term rentals in

 2   your subdivision?

 3       A.   In Section Three-1, correct.

 4       Q.   Okay.     And did you, together with Ms. Cox, put

 5   together the web site entitled neighbors -- the Point

 6   Venture Neighbors -- what's the name of the web site you

 7   and Ms. Cox started?

 8       A.   Ms. Cox started the web site.     I did not.     It's

 9   pvstrreform.com and savesection3-1.

10       Q.   Other than two of you, has anyone else joined

11   in that group of neighbors as you define it in your --

12   in the web site?

13       A.   No, sir.

14       Q.   So it's just the two of you?

15       A.   It's just the two of us.

16       Q.   Do you have Plaintiff's Exhibit Number 4 in

17   front of you?

18 A. I do.

19       Q.   And the two Post-its on Plaintiff's Exhibit

20   Number 4, are those your handwriting?

21       A.   Yes, sir.

22       Q.   Could you please read them both loud for the

23   Court?

24 A. I can.     Kathy is a member at the Point Venture

25   Renters Association and so are -- as are other STR
                                                                    32

 1   owners in Section Three-1.      They obviously were aware of

 2   the amendment by 2-3-17.      That's the first one.

 3                    Second one says, didn't send mailout to

 4   STR and friends because of history of harassment we have

 5   endured and didn't want to waste a stamp.

 6       Q.      So you were present in the courtroom for

 7   Ms. Cox's testimony, correct?

 8       A.      Correct.

 9       Q.      And you agree that neither you nor Ms. Cox sent

10   notice to all the members of the subdivision that you

11   were seeking the amendment that is Plaintiff's Exhibit

12   Number 3?

13       A.      Correct.   Seven were excluded.

14       Q.      And those seven that were excluded, that wasn't

15   just inadvertence.      They were purposely left off the

16   list of who got the notice, correct?

17       A.      That's true.   We decided that we did not want

18   to endure -- we wanted to hold off the harassment that

19   -- we didn't want to it escalate.

20       Q.      Is it your position that all leasing within the

21   subdivision of any duration is prohibited under the deed

22   restrictions?

23 A. I don't know how to interpret that really.     I

24   think the Court needs to interpret that.      I don't know.

25       Q.      I'm asking for your position.
                                                                   33

 1 A. I don't have a position on it.       I don't have a

 2   position on it.     I'm not sure I can interpret that in

 3   the reading of the deed restrictions.       I'll leave that

 4   to the lawyers and the...

 5       Q.   Do you oppose leasing of any duration in the

 6   subdivision?

 7       A.   No, sir.

 8                   MR. GOTTFRIED:    Pass the witness, Your

 9   Honor.

10                   THE COURT:   Thank you.

11                         CROSS-EXAMINATION

12   BY MR. STERLING:

13       Q.   Ms. Ramsey, did you check the controller's

14   office as to whether or not hotel tax is being paid by

15   the Jacksons?

16                   MR. GOTTFRIED:    Objection, Your Honor.

17   Calls for hearsay.     And objection on the grounds of

18   relevance.

19                   THE COURT:   That's sustained.

20       Q.   (BY MR. STERLING)       Do you agree with Ms. Cox's

21   characterization of the problems that the short-term

22   rental caused in the neighborhood?

23       A.   Yes, sir.

24       Q.   Is there any doubt in your mind that this would

25   all end the Jacksons are running a short-term rental
                                                                    34

 1   business on their lot?

 2                    MR. GOTTFRIED:     Your Honor, I object to

 3   the relevancy.

 4                    THE COURT:     Overruled.

 5                    THE WITNESS:     No, there's -- no, sir.

 6                    MR. STERLING:     Pass the witness.

 7                    MR. GOTTFRIED:     Nothing further, Your

 8   Honor.

 9                    THE COURT:     Thank you, ma'am.   You may

10   step down.

11                    MR. GOTTFRIED:     Your Honor, we would call

12   Kathleen Woodall.

13                    THE COURT:     Ms. Woodall, come around and

14   let me swear you in.

15                         KATHLEEN WOODALL,

16   having been first duly sworn, testified as follows:

17                         DIRECT EXAMINATION

18   BY MR. GOTTFRIED:

19       Q.   Good morning, Ms. Woodall.

20       A.   Hello.

21       Q.   Can you please state your full name for the

22   Court?

23       A.   Kathleen Kolb Woodall.

24       Q.   And what is your address?

25 A. 18920 Peckham Drive.
                                                                 35

 1          Q.   And is that a property within Point Venture

 2   Section Three-1?

 3          A.   Yes.

 4          Q.   And how long have you owned that property?

 5          A.   Since late October, I think, 2004.

 6          Q.   And are you a full-time or part-time resident

 7   there?

 8 A. I split my time, but it's my primary residence.

 9          Q.   When you are not residing there, do you rent

10   out that property?

11          A.   Yes.

12          Q.   And for what periods of time do you typically

13   rent it out?

14          A.   Between two and 21 days.

15          Q.   And how many years have you been renting it

16   out?

17 A. I began renting it last year -- mid-year of

18   2016.

19          Q.   Were you provided with written notice of the

20   proposed amendment that is Plaintiff's Exhibit Number 3?

21          A.   No.

22          Q.   How did you learn about the proposed amount?

23 A. I received an e-mail from another resident

24   notifying me saying -- with a link to the web site.

25          Q.   And did you know at that time who was proposing
                                                               36

 1   the amendment?

 2        A.   No.

 3        Q.   Was -- have you ever been given an opportunity

 4   to speak at a meeting regarding the proposed amendment?

 5        A.   No.

 6        Q.   Are you aware of the existence of an

 7   architectural control authority within the subdivision?

 8        A.   Yes.

 9        Q.   And explain for the Court what your familiarity

10   is with that architectural control committee, what do

11   they do, and if you know any of the members.

12 A. I know that Stan Retriman is a member, and I

13   know that it is a committee created by way of the

14   owners' association, and that they have some broad

15   duties that include the review of development of plans

16   and building plans and administration of that.

17        Q.   Are you aware of any architectural control

18   authority recommendation one way or the other related to

19   the proposed amendment that's Plaintiff's Exhibit Number

20   3?

21        A.   There was none.

22        Q.   Do you oppose the proposed amendment that is

23   Plaintiff's Exhibit Number 3?

24 A. I would not sign it.

25        Q.   Are you familiar with the history -- with the
                                                              37

 1   developer history out there in Point Venture?

 2      A.    Yes.

 3      Q.    Explain for the Court what your understanding

 4   is of the developer history out there.

 5      A.    My understanding is that there were several

 6   developers over time from the inception of the community

 7   that experienced financial difficulties and some

 8   bankruptcies with the final group of lots being vested

 9   with the Point Venture POA which they disposed of to

10   private owners over time and they do not own anymore.

11      Q.    So your understanding is that there are no --

12   that there is currently no developer as that term is

13   defined within the deed restrictions currently?

14      A.    Correct.

15      Q.    How would the proposed amendment, Plaintiff's

16   Exhibit Number 3, affect your property rights?

17      A.    Well, I would be restricted from not only

18   short-term rentals, but it would restrict me from the

19   potential of renting on a longer term because I would

20   not be able to maintain a tenant in a holdover status on

21   a lease for month to month.   And my property is

22   currently for sale which would impact the value because

23   it sets my title separate and different from others in

24   the neighborhood impacting the way it would be viewed by

25   the open market.
                                                                38

 1                    MR. GOTTFRIED:   I'll pass the witness.

 2                         CROSS-EXAMINATION

 3   BY MR. STERLING:

 4       Q.   Ms. Woodall, do you pay hotel tax?

 5       A.   Yes.

 6       Q.   In relationship to your short-term rental?

 7       A.   Yes.

 8       Q.   And have you been, in the past, an advocate for

 9   regulation of short-term rentals?

10 A. I have advocated for the Village of Point

11   Venture to enforce ordnances for everyone and to

12   potentially permit STRs in the neighborhood through the

13   Village of Point Venture.

14       Q.   And isn't it true that you said in a Point

15   Venture meeting, October 7, 2015, that you felt that

16   VRBOs are causing property values to decrease?

17 A. I don't recall if that was the total of my

18   statement.   It may have been a part of a statement I

19   made which was lengthy.

20       Q.   Okay.     Would it surprise you that it's part of

21   a Point Venture minutes of that meeting?

22       A.   The minutes of the meeting do not include my

23   full statement, which was submitted to the board and

24   asked to be appended to the minutes.

25       Q.   But that is substantially something you said
                                                                       39

 1   during that meeting; is that correct?

 2       A.      They were the minutes approved by the board.

 3   It's was not my full statement.

 4       Q.      Okay.     Did you say that VRBOs would -- what

 5   does VRBO mean?

 6       A.      Vacation rental by owner.

 7       Q.      Okay.

 8                       -- was causing property values to

 9   decrease?

10                       MR. GOTTFRIED:    Objection, Your Honor,

11   asked and answered.

12                       THE COURT:   Sustained.

13       Q.      (BY MR. STERLING)        Were you aware of a

14   provision in the 1972 restrictions, Article -- Roman

15   Numeral 4 of 5 where it says, the renting or leasing of

16   any improvement thereon or a portion thereof without the

17   prior consent of the developer is prohibited?

18 A. I was provided with a copy of the deed

19   restrictions when I bought my first house in Point

20   Venture in 2002 and my second in 2004.           I had not read

21   them until after the amendment was submitted.              I had not

22   read them in sometime.

23       Q.      And when you read them at the time that you

24   were called upon to think about what it actually says,

25   because of the existence of amendment being floated
                                                                 40

 1   around for signature, did you read that in the

 2   restrictive covenants?

 3       A.   That paragraph was not the object of my focus.

 4       Q.   Okay.     Were you aware that no lot of the

 5   subdivision shall be used for commercial, business or

 6   professional purpose nor for church purpose?

 7 A. I have been aware --

 8                    MR. GOTTFRIED:    Objection, Your Honor,

 9   relevancy.

10                    THE COURT:   Overruled.

11       Q.   (BY MR. STERLING)        Were you aware that all lots

12   in the subdivision were to be used for single-family

13   residences purposes only?

14       A.   Yes.

15       Q.   Were you aware that no noxious or offensive

16   activity of any sort shall be permitted, nor shall

17   anything be done on any lot which may be or become an

18   annoyance or nuisance to the neighborhood?

19       A.   Yes.

20       Q.   Did you have a conversation with Janice Cox on

21   or about April 30, 2016, in which you indicated you were

22   going to join the other side, you were going to become a

23   joint short-term renter -- short-term business?

24 A. I don't consider it us or them.

25                    MR. GOTTFRIED:    Your Honor, I'm going
                                                                      41

 1   object to relevancy.

 2                    THE COURT:     Overruled.

 3       Q.   (BY MR. STERLING)        You can answer.

 4 A. I do not consider it joining the other side.            I

 5   recall a conversation where I informed Janice that I was

 6   going to begin using my house as a short-term rental.

 7       Q.   Was that the day of the -- of a man who was

 8   dancing on a roof?

 9       A.   No.     I really don't know.

10                    MR. STERLING:     Pass the witness.

11                    THE COURT:     Thank you.

12                       REDIRECT EXAMINATION

13       Q.   (BY MR. GOTTFRIED)        Ms. Woodall, could I direct

14   your attention to Plaintiff's Exhibit Number 1?

15                    MR. GOTTFRIED:     Which is the plat, Your

16   Honor.

17       Q.   (BY MR. GOTTFRIED)        Can you point out to the

18   Court the section of that plat which is Point Venture,

19   Section Three-1?

20       A.   Sure.

21                    MR. STERLING:     Could we approach, Your

22   Honor?

23                    THE COURT:     Yes, of course.     Thank you.

24                    THE WITNESS:     It roughly is -- this is not

25   a complete plat because there are homes down here, but
                                                                   42

 1   it goes roughly down lake front and then it comes around

 2   and comes back up here.      And along this side all the way

 3   up here through Kelly and along Venture Drive and back

 4   down here.     And my home is here.     This is the defendant,

 5   the Jacksons.

 6          Q.   (BY MR. GOTTFRIED)     And where is the lake?

 7          A.   The lake is here.     These are waterfront homes,

 8   and the lake is here.     This is very -- it's vertical.

 9                   MR. STERLING:      Could I ask just one

10   question for clarity?

11                   This is the whole of Section Three-1,

12   isn't it?     Doesn't show anything else?

13                   THE WITNESS:      I believe that's correct.     I

14   don't know where the Three-1 stops here on lake front,

15   you know, right along this road so I assume this to be

16   correct.

17                   MR. GOTTFRIED:      We'll pass the witness,

18   Your Honor.

19                   MR. STERLING:      I pass the witness.

20                   THE COURT:      All right.   Thank you.

21                   MR. GOTTFRIED:      Your Honor, we have six

22   other witnesses, but I think we're going to rest.

23                   THE COURT:      All right.   Let me let her get

24   off.

25                   You may step down.
                                                                   43

 1                    MR. GOTTFRIED:     In light of the testimony

 2   so far, I think we can dispense with the other

 3   witnesses.

 4                    THE COURT:    Yeah,   but they paid for

 5   parking down here and tried to find a spot.

 6                    MR. GOTTFRIED:     If they really want to get

 7   their time on the stand, I could do it.

 8                    THE COURT:    It's entirely up to you.

 9                    MR. GOTTFRIED:     We'll rest, Your Honor.

10                    THE COURT:    All right.   Thank you.

11                    Counsel.

12                    MR. STERLING:     Your Honor, I don't know

13   that we have anything further to put on because he

14   called our witnesses.       I got what I wanted out of them.

15                    THE COURT:    Okay.   Very good.

16                    If you-all want to give me a closing

17   argument for this particular phase of this matter, I can

18   take it if you-all want to give it.

19                    MR. SUTTON:     Judge, I'd like to make a

20   brief closing.     I need about five minutes.

21                    THE COURT:    All right.   You're going to

22   need five minutes to do it or you need a five-minute

23   break?

24                    MR. SUTTON:     If you'd like to take a

25   break, I'm fine.
                                                              44

 1                 THE COURT:    No, I'm good.

 2                CLOSING ARGUMENT BY PLAINTIFF

 3                 MR. SUTTON:   Okay.   Judge, I'd like to

 4   direction your attention to Plaintiff's Exhibit 2, which

 5   is the deed restrictions.

 6                 What I'd like to do is orient you to the

 7   two or three key provisions, and then I'm going to offer

 8   you some cases that will guide you in your

 9   interpretation this morning.

10                 On page 2, number page 2 of the deed

11   restrictions is one of the clauses implicated today.

12   It's called the Duration clause.    And I agree the title

13   of these provisions are not controlling.

14                 And I will summarize that what the

15   Duration clause says is, first, for a 35-year period and

16   then on 10-year anniversaries thereafter, a majority of

17   owners -- not two-thirds, but just over 50 percent --

18   are empowered to change the provisions hereof in whole

19   or part.

20                 So we know that there are circumstances

21   under which the percentage required is, I'm going to

22   say, 51 percent instead of 67 percent.

23                 Now, I'm going to skip over a clause

24   that's on the next page and come back to it because I

25   want to stick to the subject matter of amendment.
                                                              45

 1                 If you go to the second to the last page

 2   there is Article 9, IX, called Amendments.   This is a

 3   stand-alone clause which says that any or all of the

 4   amendments may be annulled, amended, or modified at any

 5   time at the recommendation of the architectural control

 6   authority by a vote of two-thirds.

 7                 That is one sentence.   Irrespective of the

 8   35- and 10-year anniversaries, there is a separate

 9   procedure involving architectural control authority

10   where a two-thirds vote suffices.

11                 Now, we get into the difficulty which is

12   the next two sentences, which are stand-alone sentences.

13                 All such lot owners shall be given 30 days

14   notice in writing of any proposed amendment before it is

15   adopted.

16                 Then, finally, there shall be no

17   annulment, amendment, or modification of these covenants

18   without the prior recommendation of the architectural

19   control authority.

20                 So we have two clauses which have -- I

21   will call complimentary provisions, but there is a

22   conflict as to the percentage required if you want to

23   call it a conflict.

24                 This presents a problem for the Court

25   because you've got two clauses that deal with some of
                                                               46

 1   the same subject matter.   One of which imposes some

 2   additional requirements.   It is very easy, Judge, to

 3   harmonize these provisions without resorting to any

 4   tiebreaker rule.   The harmonization is that there are

 5   circumstances under which a lower voting threshold is

 6   possible, and that's on these anniversary dates.

 7   However, nothing in that first clause says, and you can

 8   do that without notice or you can do that without the

 9   recommendation of the architectural control authority.

10   To harmonize the two, you simply add those procedural

11   due process requirements to the first clause and,

12   thereby, you have given effect to every word in this

13   document.

14                  I will cite to the Court the broad

15   principles announced in two cases as to how you

16   interpret deed restrictions.   One is a case from --

17                  And if I may, I'll give the Court copies

18   of these.

19                  One is a case relating to deed

20   restrictions, particularly from 2015.   It's called

21   Zgabay, Z-G-A-B-A-Y.   And the other case called Forbau,

22   F-O-R-B-A-U.

23                  And I will give opposing counsel copies of

24   these.

25                  Summarized briefly, these two cases hold
                                                                 47

 1   as follows:     Forbau, the older case, is a general

 2   contract interpretation case.     And it says that the

 3   court needs to give effect to every provision in a

 4   contract and specific clauses control over general.        The

 5   Zagbay case, a 2015 case, relates specifically to deed

 6   restrictions.     And this is an important case for the

 7   third appellant district.

 8                   It says as follows:   If the court finds

 9   there is any ambiguity between two deed restrictions or

10   any ambiguity in deed restrictions, there is a

11   tiebreaker rule.     The deed restricts are interpreted to

12   favor the free and unrestricted use of property.

13                   Judge, you, therefore, have two ways to

14   answer the -- to interpret this conflict or this

15   harmonization in our favor.     One, without resort to a

16   tiebreaker rule that you can harmonize the two

17   provisions.     Second, that under the rule in Zgabay if

18   you have any doubt what to do, what you have to do is

19   favor the free and unrestricted use of property.

20                   There is one narrow sense in which whether

21   leasing is allowed in this subdivision is relevant.        And

22   the only sense in which it's relevant is as follows:

23   Does the amendment that has been put into evidence seek

24   to restrict property rights?

25                   The reason that it does, Judge, is because
                                                                48

 1   it expressly bans, without exception, rentals by

 2   duration.     A minimum duration of 90 days is required for

 3   rentals.

 4                   And what I'll do is point to the Court to

 5   another page of the deed restrictions, page 6, at the

 6   bottom of the page.

 7                   Paragraph 5, the renting or leasing of any

 8   improvements without the prior written consent of

 9   developer is prohibited.

10                   Well, let's state that another way.

11   Renting is allowed with the prior consent of the

12   developer.     We don't have to address today whether

13   renting is, in fact, allowed.     All the Court has to

14   address is whether the proposed amendment would restrict

15   renting to the extent it is allowed.     And the answer is

16   plainly yes.     The whole point of the amendment to the

17   deed restrictions is to restrict property rights.

18                   Judge, if you have any doubt at all what

19   these two different provisions mean, if you find there's

20   an ambiguity or any doubt, you're going to interpret the

21   deed restrictions in favor of my clients, the rent for

22   short terms and who oppose the amendment.

23                   Finally, Judge, I'd like to address a

24   procedural issue of what we have to show today for this

25   injunction.
                                                              49

 1                 This is on page 3, the Enforcement clause.

 2                 I believe that this is the broadest

 3   enforcement clause I've ever encountered in 10 years of

 4   HOA litigation.   Probably explained by this being a

 5   fairly old deed restrictions.

 6                 It says as follows, and I'll summarize:

 7   Any attempted -- any violation or attempted violation is

 8   subject to legal or equitable action.   And it doesn't

 9   say by an owner, but the implication is that someone

10   with standing can bring a case for damages or an

11   injunction.

12                 And then it says, you can see either a

13   mandatory or prohibitory injunction for any violation or

14   attempted violation, and it is not a prerequisite to the

15   granting of an injunction to show inadequacy of the

16   legal remedy or irreparable harm.

17                 The only thing my clients have to show

18   today to get an injunction is that the defendants have

19   violated or attempted to violate the restrictive

20   covenants by going out and getting an amendment --

21   seeking an amendment without written notice or

22   architectural control recommendation.   Both of those

23   facts were established in the testimony.

24                 The common law of Texas already provides

25   that irreparable injury need not be shown in any deed
                                                                   50

 1   restriction case in any event.

 2                   And I'll give the Court the authority for

 3   that.     What I've done is provided the Court with a newer

 4   case, Reed versus Reed, which summarizes the state of

 5   law as of 2016 on that.

 6                   The defendants are going to argue that the

 7   rest -- the other requirement -- or the other allowance

 8   of the deed restriction is that you can seek an

 9   injunction without a showing of an inadequacy of legal

10   remedy.     They're going to argue that that contract

11   clause is not enforceable.     So to address that, I have a

12   case for the Court --

13                   Excuse me just one minute, Judge.

14                   I should say the defendants cite a case

15   from 1870 which has nothing to do with that issue.        I

16   have two cases for the Court, more modern cases.        One is

17   called Doyle and the other is called Inwood.

18                   Judge, the Doyle and Inwood cases do as

19   follows:     The Doyle case says that parties can agree by

20   contract to any remedy and if it doesn't violate public

21   policy, the courts will enforce it.

22                   The Inwood case is really a watershed case

23   relating to just how much power homeowners associations

24   have under deed restrictions.     And I will offer the

25   Court by analogy the following:     The Texas Constitution
                                                                  51

 1   forbids foreclosures of homesteads.     There are eight

 2   enumerated exceptions.

 3                 There is no exception allowing a

 4   homeowners association to foreclose a homestead and yet

 5   the Texas Constitution is overridden by deed

 6   restrictions because, as the Inwood case says, if a deed

 7   restriction says that a homeowners association can take

 8   your house away, the deed restrictions remedy controls.

 9                 I can't think of a stronger statement as

10   to how much power there is in recorded deed restrictions

11   as having your house taken away for not paying your

12   monthly assessment.

13                 Defendants are going to argue that we

14   don't get the benefit of this enforcement clause, that

15   it's not enforceable because it somehow conflicts with

16   state law.   That's simply not the case.     This

17   enforcement clause should be enforced as written.      The

18   only thing we have to prove today is that there is a

19   breach -- attempted breach of the deed restrictions.

20                 Finally, Judge, the defendants have made

21   too much of the potential harm that they would suffer.

22   The injunction asks that any deed restriction -- that

23   any amendment that they may get a 51 percent vote for

24   not be recorded until final judgment.      They may well get

25   their 51 percent vote, Judge.   All we're saying is it
                                                              52

 1   can't be recorded until this lawsuit has been decided so

 2   that there won't be limitations on my client's rights,

 3   clouds on their title, and most importantly, they won't

 4   be subject to lawsuits by 20 or 30 or 40 or 50 owners

 5   while they're renting to short terms.

 6                Thank you, Judge.

 7                THE COURT:   Thank you.

 8                Counsel.

 9                CLOSING ARGUMENT BY DEFENDANT

10                MR. STERLING:   Your Honor, I'm going to

11   kind of go -- work backwards of what counsel talked

12   about.

13                Last thing he said was about how

14   structuring the temporary injunction and that it's not

15   going to be that inconvenient, they can go on and get

16   their majority but that somehow just being prevented

17   from going ahead and filing it, recording it, is not

18   going to cause or cause any damage to my client.    Well,

19   it will cause damage because it won't be effective.

20   It's going to change the effective date of it without

21   even getting an actual hearing on the merits.

22                It was going to be a situation -- if

23   they're ordered not to record it that they will end up

24   in a situation where they just want -- if they get it --

25   get the final amount of signatures they need, they'll
                                                                  53

 1   end up recording it in the next 10-year period and that

 2   means it would be effective until the 10-year period

 3   after that.     And it seems to me that's a wrong way about

 4   going about doing any kind of -- keeping and maintaining

 5   the status quo.     It's not doing that at all.     At the

 6   very least, it should have allowed us to go ahead with

 7   it.     You record it if you want to.     You can even have an

 8   injunction prohibiting people from enforcing it after

 9   it's been recorded just so we could go ahead and get it

10   done.

11                   They have a legal remedy, which is the

12   Declaratory Judgment Act, they can invoke.        They do have

13   a legal remedy.     And I think they ought to be compelled

14   to use that legal remedy itself.        They can clearly get a

15   declaration that is void if that's what they want to do.

16                   Now, there's been a lot of talk about not

17   having a chance to read everything counsel has given me.

18   But the way he structured his argument makes me think

19   that there is still not a direct case that says, gee

20   whiz, you can get rid of or you do not have to have a --

21   that fourth point of proof in a temporary injunction

22   situation involving restrictive covenants.        That is,

23   showing of an inadequacy of your legal remedy.        I think

24   that you do.

25                   One of the things that I think that is --
                                                                    54

 1   I know I cited a case that's fairly old, but I like the

 2   language in it and the language in it is basically that

 3   your state is not really a party to the contract.        The

 4   case I cited was Moore versus Letchford.     It's 19- or

 5   1871.

 6                    But it basically is saying that while it's

 7   required to give adequate process for the enforcement of

 8   rights, you can't tie the state's hands on how they're

 9   going to go about proving it.

10                    And that's the point I'm trying to

11   basically say.     They're basically changing the

12   evidentiary rules of the court, and I don't think they

13   get away with doing that by putting it in their contract

14   in the restrictive covenants.

15                    Now, let's go, I think, to the situation

16   that I tried to raise, and I think there's evidence of

17   it in what you've heard.     And that is, essentially,

18   you've got to come into the court with clean hands.          And

19   they haven't come into court with clean hands.        They

20   have shown and they have admitted that they're violating

21   certain restrictive covenants themselves.     And it's

22   pretty clear that if they're saying, you know, gee whiz,

23   the only exception can be a developer and that

24   developer's rights aren't moving on to the HOA, then

25   they can't change it at all and renting at all.
                                                                 55

 1                 And there are other things that they're

 2   violating in terms of running a business on the lot.

 3   They're running what amounts to annoyance or nuisance

 4   activity on the lots.     All of that is happening, and

 5   they're violating all those things.

 6                 And the reason I brought them up in this

 7   temporary injunction hearing is because these are all

 8   centered around the issue about short-term rentals.       And

 9   in the situation where you're talking about the same

10   subject matter -- that's what we're talking about -- the

11   ultimate goal on both sides is fighting over the

12   existence or nonexistence and the continued existence of

13   short-term rental rights.     And I think that you cannot

14   permit them to get a temporary injunction when their

15   hands are as dirty as they are in this situation.

16                 So let's go, I think, now to actually

17   talking about the restrictive covenants.

18                 Now, one of the things that counsel

19   referred to was a case.     And one of the cases it cited

20   was Coker versus Coker, which is a Supreme Court case.

21   And it's cited by one of his references.

22                 And that particular case is talking about

23   how you use contract interpretation rules on any

24   contract, not just a restrictive covenants contract.

25   And it's clear that the usual principles of contract
                                                                56

 1   principles are supposed to be done by or applied by the

 2   court to any contract which includes restrictive

 3   covenants, which is just another form of a contract.

 4                  But one of the things it says, basically,

 5   is that in harmonizing contract provisions, terms stated

 6   earlier in an agreement must be favored over subsequent

 7   terms.   And our term is way in front of this contract.

 8   The term they're pushing is way in the back of the

 9   contract.    It's possible to harmonize that without any

10   real problem at all, and harmonizing it is the developer

11   providing two separate methods of initiating and

12   providing for amendments or changes to the restrictive

13   covenants.

14                  One is a grassroots method that's done

15   without voting where you have a majority of people

16   running around collecting signatures.    Usually that's

17   going to be somebody like my clients pushing to get an

18   amendment of some sort.    Essentially petitioning to get

19   their actual amendment.    And there are -- if you read

20   the rules of the statutes about restrictive covenants,

21   there are provisions in there for doing exactly that.

22   Similar to what is being done -- provided for in the

23   1972 restrictions themselves.

24                  And the 1972 restrictions were done before

25   those statutes probably even went into effect.     So it's
                                                               57

 1   showing that there's one way of doing it and then

 2   there's going to be another way of doing it.    And the

 3   other way of doing it is doing it using the HOA or the

 4   architectural control authority, essentially, which is a

 5   committee, apparently, of the current HOA.

 6                 But you see the difference.    One, it's got

 7   -- one has bare majority.   The other one has two-thirds.

 8   One require as vote.   The other one just requires

 9   signatures.   One requires notice.   The other one doesn't

10   require notice.   One requires -- and it would be

11   superfluous to have notice when you're running around

12   going to each person door to door trying to get them to

13   sign on to the actual instrument that you want to sign

14   or want to record.

15                 And it doesn't require the architectural

16   control authority to give us permission or a

17   recommendation.

18                 So it's just two separate things that work

19   separately, and you can harmonize it as being that.

20                 Now, the thing that I'm concerned with is

21   one of the things that counsel said was because of the

22   type of amendment that we requested, which would

23   supposedly restrict the -- what is currently in the

24   restrictive covenants, which may not be exactly true.

25   It may actually be opening up if you ban all leasing and
                                                                 58

 1   we now have another thing that allows leasing or only

 2   bans a portion of leasing.     It seems to me that that is

 3   opening up.     But in any case, they're characterizing as

 4   being restrictive.

 5                    But you're not supposed to be looking at

 6   the amendment.     You're supposed to be looking at --

 7   because what they're fighting about is the amendment

 8   processes.     And it seems to me the one, if you're going

 9   to look at it past trying to harmonize it, you're trying

10   to sit there and say which is the most restrictive.

11                    Their's is the most restrictive.   Their's

12   the one who ends up having everything go at two-thirds

13   majority, requiring the actual architectural control

14   authority to do a recommendation prior to getting on a

15   ballot of some sort.     That's essentially much more

16   restrictive than what's allowed in the one allowing from

17   a majority of people and lot owners rising up as a group

18   and going ahead and signing off on an instrument that

19   changes and is recorded.

20                    So either way you want to look at it, and

21   I think the proper way is to say that it's not really

22   ambiguous.     I think it's pretty straightforward on

23   service.     And if you use the normal contract principles,

24   look at the entire four corners of the document, and

25   apply the tiebreaker that I'm talking about, it's pretty
                                                                   59

 1   obvious that the one at the head of the line should be

 2   given more favor.    And we're not doing anything against

 3   the other process.     All it's doing is being allowed both

 4   processes to work together.

 5                 So we urge the Court to deny the

 6   injunction -- the temporary injunction for all the

 7   reasons I've stated.

 8                 THE COURT:    Thank you.

 9                 MR. SUTTON:     May I have a brief minute

10   rebuttal, Judge?

11                 THE COURT:    Sure.

12                 FURTHER ARGUMENT BY PLAINTIFF

13                 MR. SUTTON:     Regarding the defense of

14   unclean hands, here is why that argument is erroneous.

15                 There is a confusion in the short-term

16   rental cases by people who oppose them, between an

17   owner's right to rent for any duration versus an owner's

18   breaches of restrictive covenants.       And often you have

19   owners who have a right to rent for short terms who have

20   breached the restrictive covenants because they have

21   either caused nuisances or they have had over occupancy

22   violations.   Any number of other actionable wrongs for

23   which there are damages and injunction as a remedy.

24                 So the fact that an owner may have

25   violated a restrictive covenant would not mean that the
                                                               60

 1   owner does haven't a property right.   And so the error

 2   in the analysis here by the defendants is to say that

 3   unclean hands would prevent owners from having

 4   procedural due process when it comes to amending the

 5   deed restrictions.

 6                 I can't think of anything that would take

 7   that right away from a homeowner unless they -- unless

 8   that homeowner had actually themselves sabotaged the

 9   amendment process.   That's where the unclean hands

10   argument come in.

11                 Second, the evidence was that the

12   defendants actually blocked us from having a voice in

13   this vote, and it's quite apparent why.   If you believe

14   that deed restrictions are local, local government, that

15   they are constitutions for subdivisions, then the spirit

16   of this document is that everyone has a voice.

17                 There is a process for them to be involved

18   when deed restrictions are being proposed.   I suspect

19   that the architectural control authority will have some

20   words to say if a group of owners, without the

21   architectural control authority's recommendation, have

22   gone and recorded something.   I guess we'll see if the

23   injunction is denied.

24                 Finally, the Zgabay opinion relates not to

25   -- not merely to enforcement of a deed restriction in
                                                                    61

 1   favor of an owner, but specifically the free and

 2   unrestricted use of property.        And that's what has to be

 3   born in mine.

 4                    Another aspect of Zgabay that applies here

 5   is that my client's property right is partly bound up

 6   with the procedural due process rights they have.        They

 7   have spent money on land, Judge.        That land came with a

 8   bundle of rights that are important to these people.

 9   They are making rents on their property.        The defendants

10   want to take that away without procedural due process.

11   I would ask the Court to keep that in mind for a group

12   of homeowners.

13                    Thank you, Judge.

14                    THE COURT:   All right.   Thank you.

15                   FURTHER ARGUMENT BY DEFENDANT

16                    MR. STERLING:   Only thing I would add is

17   it's one thing to talk about procedural due process in a

18   situation about taking away, let's say, a home -- or a

19   HOA has accused you of violating something and you're

20   entitled to a hearing and that kind of stuff.        But it's

21   another thing to be talking about procedural due process

22   in the sense of changing the amendments.        That's not a

23   matter of due process in a judicial or semi-judicial

24   method.

25                    It's basically, we're talking about two
                                                                    62

 1   different methods of changing a particular process.

 2   They were aware of it when they bought their property.

 3   They should have been aware of it.        They are plain to

 4   see to read both those two provisions.        And the first

 5   conclusion any reasonable personal would come to is both

 6   those apply.   One way -- I can do it this way, or I can

 7   do it that way.

 8                  THE COURT:    All right.    Thank you.

 9                  All right.    I always hate it when judges

10   kind of went off on a tangent when I was practicing law,

11   so I'm going to do that anyway.

12                  I want to ask both attorneys this:        Let's

13   say, hypothetically, provision comes up.        Petition or a

14   request of the architectural control authority -- I know

15   you guys aren't saying ACA because you don't want to be

16   called the Affordable Care Act -- but anyway, the

17   architectural control committee looks at something, has

18   a proposal, has something but then it has to go through

19   two-thirds to be approved.     That's about right.

20                  But before they do that, they've got to

21   give a 30-day notice to those -- to everyone.        Is that

22   about right?

23                  Okay.   So let's say they do that.       And

24   that's approved.   What next -- who files the instrument

25   with the property records?     Is it signed under the ACA
                                                                     63

 1   or is it signed by -- how does that work procedurally?

 2                   MR. SUTTON:    Judge, I believe I can

 3   address that.

 4                   THE COURT:    Okay.

 5                   MR. SUTTON:    In this particular set of

 6   deed restrictions, we don't have a mandatory HOA in

 7   here.   But there is this ACC.        And the only thing that

 8   it says about the ACC in that amendment process is that

 9   it makes a recommendation.      And that could be

10   recommendation for or against.

11                   The recordation would be a list of

12   signatures attached to an amendment.         And that signature

13   would be either 51 percent or two-thirds.         And they

14   would be on the back of the recorded instrument.

15                   THE COURT:    All right.    So is it your

16   argument, then, that after it's approved -- let's say

17   two-thirds agree and they bless the architectural

18   committee's or whatever, ACA, then those two-thirds have

19   to sign the document to get it filed, or does it revert

20   back to Provision 1-4 -- Section 1-4 where you then have

21   to go ahead and just get one-half of everyone to sign

22   off on it?

23                   MR. SUTTON:    Our position is that at the

24   stated tenure intervals of the first provision that a

25   relaxed majority requirement is required, and you would
                                                                  64

 1   only need 51 percent on that instrument.       But outside of

 2   those unusual periods, then it's two-thirds and attached

 3   -- their signatures attached.

 4                 THE COURT:      Okay.   So that's you-all's

 5   position.

 6                 What is your view on that?

 7                 MR. STERLING:      My view is that I really

 8   think that when it says recommendation, it means

 9   favorable recommendation.      Because I think most people

10   when they talk about you're recommending something, it's

11   favorable.   If you're not recommending something, it's

12   unfair.

13                 THE COURT:      Okay.

14                 MR. STERLING:      So I disagree with him on

15   that.

16                 And I think that, practically speaking,

17   that if you had a HOA run a vote on this thing and -- or

18   I should say the architectural control authority, I

19   would think the right thing to do would be to then to

20   file a document that had the amendment on it; cite that

21   it got, you know, 30 days notice; that they had the

22   vote; it was over two-thirds; and they certify to it

23   that the architectural control authority, and only the

24   architectural control authority, have to sign it and

25   record it.   A lot simpler.
                                                                    65

 1                  THE COURT:    Do you think that under

 2   Section 1, Paragraph 4 that you have to give notice to

 3   all of the property owners?

 4                  MR. STERLING:     No, I don't think so.    I

 5   think the reason why is that the whole process works

 6   differently.   You're taking your petition in your hand,

 7   or whatever you're calling it, and you're going out and

 8   essentially lobbying to get a signature lot by lot.           And

 9   once you reach your majority, you stop.      You don't need

10   to go any further.    So I don't think there's a question

11   about having any kind of a need for notice.      You're

12   having to lobby each single time you do it.

13                  THE COURT:    Okay.

14                  MR. STERLING:     That's how you do regular

15   petitions.

16                  THE COURT:    All right.   Thank you.

17                  All right.    I'm going take a 10-minute

18   break, and I'll be back at 10:45 and let you know.

19                  Thank you.

20                  MR. SUTTON:     Judge, should I give you our

21   proposed order now?

22                  THE COURT:    Yeah, let me see.

23                  Do you have one too?

24                  MR. STERLING:     I haven't seen it, and our

25   order would be denied.
                                                                    66

 1                  THE COURT:    Okay.      That's fine.   Thank

 2   you.

 3                  (Court in recess.)

 4                  THE COURT:    By the way, when do you guys

 5   want to have this case set for trial?         You have to do it

 6   in 60 days.

 7                  MR. SUTTON:     60 days.     I was thinking the

 8   end of June.   Does that fit with the window?

 9                  MR. STERLING:     Yeah, probably can be done.

10   I would think somewhere end of June.

11                  MR. SUTTON:     I have vacation beginning

12   July 13th.

13                  THE COURT:    Okay.

14                  MR. SUTTON:     That third week in June, if

15   that's the square on the calendar.

16                  THE COURT:    That's a jury week.

17                  MR. SUTTON:     I have not pled for a jury.

18                  MR. STERLING:     No, I don't see any point

19   in a jury.

20                  MR. SUTTON:     We'll do bench.

21                  THE COURT:    So the third week of June is

22   actually a jury week.

23                  MR. SUTTON:     Forth week in June, then.

24                  THE COURT:    June 26th through the 30th.

25                  MR. SUTTON:     Agree.
                                                                67

 1                  MR. STERLING:   I'm sorry, what was it?

 2                  THE COURT:   June 26th through the 30th is

 3   there -- you guys probably don't have your calendars

 4   with you.

 5                  MR. STERLING:   I don't have it with me.

 6                          COURT'S RULING

 7                  THE COURT:   All right.

 8                  All right.   I thought you-all did a fine

 9   job.   I always appreciate good lawyering.     So let me

10   tell all of you that you did fantastic.      The

11   clientsshould be pleased no matter what the judge does.

12                  I am concerned in the taking of property

13   rights without due process and without following

14   procedures that are set forth in governing documents for

15   a neighborhood or community.    I spent quite a bit of

16   time on this yesterday reading the cases, reading what

17   have been submitted -- or, actually, I looked at yours

18   and then I just saw yours today.    But to harmonize the

19   provisions, I think at this point the document -- the

20   deed restrictions, as they're written, provide a

21   process.    And I don't think that's been followed.

22                  And so, therefore, I'm granting the

23   temporary injunction as proposed by the plaintiff.

24   We're going to maintain the status quo.

25                  MR. STERLING:   Your Honor --
                                                                   68

 1                 THE COURT:    Hold on.

 2                 A $10,000 bond that's been previously

 3   filed will remain in effect.     This will, essentially,

 4   require -- will enjoin the defendants from going against

 5   what I believe is required, giving 30 days notice, going

 6   through the architectural control authority.

 7                 We're going to set the case for trial

 8   during the week of June 26th through the 30th, 2017, on

 9   agreement of counsel.

10                 So, yes, this is prohibiting any further

11   -- well, it actually kind of speaks for itself as to

12   what can and can't be done.     I've signed this.    You-all

13   can get it filed.

14                 And now, I'm sorry.

15                 MR. SUTTON:     Judge, Mr. Sterling has

16   raised an issue that I may not have written clearly that

17   the prior bond cash remain in effect.       I wonder if you

18   would like to interline them.

19                 MR. STERLING:     Before you do, Your Honor,

20   I wanted an opportunity to at least say that I think

21   that a separate bond should be placed for this

22   particular temporary injunction.       I think it ought to be

23   at least $10,000.

24                 THE COURT:    You want a separate bond, a

25   different bond?     Any particular reason why?
                                                                69

 1                 MR. STERLING:     I think that the stakes are

 2   pretty high in this particular situation.     And,

 3   effectively, what the Court is doing is going to prevent

 4   my client from ever getting this particular amendment in

 5   effect for at least 10 years.

 6                 MR. SUTTON:     Judge, I believe he should

 7   have elicited testimony as to the dollar issues relating

 8   to the bond and that was not done.

 9                 THE COURT:    All right.   I'm just going to

10   go ahead and interline this prior cash bond.

11                 And if you-all will get together as to a

12   date in that week of June 26th through 30th, I can

13   actually sign a separate order if you-all want that.

14   Okay.

15                 MR. SUTTON:     Thank you, Judge.

16                 THE COURT:    All right.   Thank you very

17   much.

18                 (The proceedings were concluded.)

19

20

21

22

23

24

25
                                                                 70

 1   STATE OF TEXAS         )

 2   COUNTY OF TRAVIS       )

 3           I, Cathy Mata, Official Court Reporter in and for

 4   the County Court at Law No. 1 of Travis County, State of

 5   Texas, do hereby certify that the foregoing contains a

 6   true and correct transcription of all portions of

 7   evidence and other proceedings requested in writing by

 8   counsel for the parties to be included in this volume of

 9   the Reporter's Record, in the above-styled and numbered

10   cause, all of which occurred in open court or in

11   chambers and were reported by me.

12           I further certify that this Reporter's Record of

13   the proceedings truly and correctly reflects the

14   exhibits, if any, admitted, tendered in an offer of

15   proof or offered into evidence.

16           I further certify that the total cost for the

17   preparation of this Reporter's Record is $651.20 and was

18   paid/will be paid by Mr. James Patrick Sutton.

19           WITNESS MY OFFICIAL HAND this the 3rd day of May,

20   2017.

21

22         /s/ Cathy Mata
         Cathy Mata, Texas CSR No. 6126
23       Expiration Date: 12/31/17
         Official Court Reporter, County Court at Law No. 1
24       Travis County, Texas
         P.O. Box 1748, Austin, Texas 78767
25       Telephone (512) 854-9252