Michael Rankin and Suzanne Farrer v. Covington Oaks Condominium Owners Association, Inc.--Appeal from 57th Judicial District Court of Bexar County

MEMORANDUM OPINION

No. 04-04-00861-CV

Michael RANKIN and Suzanne Farrer,

Appellants

v.

COVINGTON OAKS CONDOMINIUM OWNERS ASSOCIATION, INC.,

Appellee

From the 57th Judicial District Court, Bexar County, Texas

Trial Court No. 2003-CI-05763

Honorable Patrick J. Boone, Judge Presiding

Opinion by: Rebecca Simmons, Justice

Sitting: Catherine Stone, Justice

Sarah B. Duncan, Justice

Rebecca Simmons, Justice

Delivered and Filed: November 23, 2005

REVERSED AND RENDERED IN PART AND REMANDED IN PART

Appellants Michael Rankin and Suzanne Farrer appeal a take-nothing judgment rendered by the trial court following a jury trial. Rankin and Farrer, owners of adjacent condominiums, brought suit against the Covington Oaks Condominium Owners Association, Inc. after being denied permission to add insulation and radiant barrier paint in their shared attic space and a dual fire door between the two units. The jury found that Covington Oaks acted arbitrarily, capriciously, or discriminately in denying Rankin s and Farrer s requested improvements, but awarded no monetary damages. The trial court subsequently entered a take-nothing judgment and denied attorney s fees. Because the jury s finding is inconsistent with a take-nothing judgment, we REVERSE the trial court s entry of a take-nothing judgment and RENDER a declaratory judgment in favor of Rankin and Farrer and further REMAND to the trial court for a determination of reasonable attorney s fees consistent with this opinion.

Background

Suzanne Farrer owned a condominium unit at the Covington Oaks Condominiums and in 2002, Michael Rankin purchased the unit adjacent to Farrer s condominium intending to join the two units in accordance with Article 28 of the Condominium Declaration for the Covington Oaks Condominium (Covington Oaks Declaration). // See also Tex. Prop. Code Ann. 82.061(3) (Vernon 2003). On December 8, 2002, Rankin and Farrer each presented the architectural control committee with two different applications: one with architectural drawings and specifications to construct a dual fire door between the utility rooms of the two units, allowing access from one unit to the other; and a second with a proposal to add radiant barrier paint and insulation in the shared attic space above the two units in accordance with the procedures identified in Article 17 of Covington Oaks Declaration. // The proposed modifications did not affect any other unit and were not visible from outside the units. Approximately one month later, the requests were denied without explanation. A subsequent letter from Covington Oaks counsel confirmed the unexplained denial.

Rankin and Farrer filed suit requesting, primarily, a declaratory judgment. It was during the discovery process that Covington Oaks first raised concerns regarding the installation of fire doors creating potential problems with electrical lines, plumbing lines, and structural issues. In an attempt to alleviate these concerns, a hole was cut into the wall to exclude the possibility of any such obstacles. All parties agree the requested modifications would not affect electrical, pipes, utilities, or structural supports. With regard to the radiant barrier paint and loose fill insulation, Covington Oaks claimed concerns for improper ventilation, mold, and shortening the life of the shingles. Covington Oaks also raised concerns with effects to the fire wall and exceeding deed restricted occupancy limits. At trial, both representatives of Covington Oaks admitted no investigation was made into any of these areas of concern. Instead, these requests were simply denied.

Restrictive Covenants

The right of individuals to use their property in whatever manner they desire remains one of the most fundamental rights an individual property owner possesses. Restrictive covenants arguably enhance the value and marketability of each individual s property within the group or association. The Texas Property Code defines a restrictive covenant as any covenant, condition, or restriction contained in a dedicatory instrument, whether mandatory, prohibitive, permissive or administrative. Tex. Prop. Code Ann. 202.001(4) (Vernon 1995). Black s Law Dictionary defines restrictive covenant as a private agreement, usu[ally] in a deed or lease, that restricts the use or occupancy of real property, esp[ecially] by specifying lot sizes, building lines, architectural styles, and the uses to which the property may be put. Black s Law Dictionary 393 (8th Edition 2004). The Restatement (Third) of Property states that a restrictive covenant is a negative covenant that limits permissible uses of land. Restatement (Third) of Prop.: Servitudes 1.3(3) (2000).

Texas Property Code Section 202.003 requires liberal construction of restrictive covenants to give effect to their purpose and intent. Tex. Prop. Code Ann. 202.003 (Vernon 1996); Boudreaux Civil Ass n v. Cox, 882 S.W.2d 543, 547 (Tex. App. Houston [1st Dist.] 1994, no writ). Courts strictly construe covenants against the party seeking to enforce it in favor of the free and unrestricted use of the premises. Munson v. Milton, 948 S.W.2d 813, 816 (Tex. App. San Antonio 1997, pet. denied). Moreover, a presumption exists that a property owners association reasonably exercised their discretionary authority unless the court determines by a preponderance of the evidence that the exercise of discretionary authority was arbitrary, capricious, or discriminatory. Tex. Prop. Code Ann. 202.004 (Vernon 1995); Gettysburg Homeowners Ass n.,Inc. v. Olson, 768 S.W.2d 369, 372 (Tex. App. Houston [14th Dist.] 1989, no writ).

Texas case law appears to mirror the Restatement s definition. In Voice of the Cornerstone Church Corp. v. Pizza Prop. Partners, 160 S.W.3d 657, 665 (Tex. App. Austin 2005, no pet.), the court held a restrictive covenant is a negative covenant that limits permissible uses of land. We hold that Articles 17 and 28 of the Covington Oaks Declaration limit the abilities of homeowners to perform work or create doorways in the common elements, without permission. These restrictions limit the homeowners ability to use the land and are therefore restrictive covenants.

Declaratory Judgment

The Declaratory Judgments Act provides a person whose rights, status, or other legal relations are affected by a statute, municipal ordinance, contract, or franchise with the right to have a court determine any question of construction or validity arising under the instrument, statute, ordinance, contract, or franchise and obtain a declaration of rights, status, or other legal relations thereunder. Tex. Civ. Prac. & Rem. Code Ann. 37.004(a) (Vernon 1997). Section 37.002 provides that the statute is to be liberally construed and administered. Tex. Civ. Prac. & Rem. Code Ann. 37.002(b) (Vernon 1997). The purpose of the declaratory action is to establish existing rights, status, or other legal relationships. City of Garland v. Dallas Morning News, 22 S.W.3d 351, 357 (Tex. 2000). A declaratory judgment is applicable whenever there is a justiciable controversy existing as to the rights and status of the parties and the controversy will be resolved by the declaration sought. Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995).

Rankin and Farrer s sole complaint was that Covington Oaks refusal to allow for the installation of energy efficient insulation and radiant barrier paint and the installation of fire doors between the two units was arbitrary and capricious. Rankin and Farrer sought a determination as to whether the requested alterations to their respective condos were allowed pursuant to the Declaration s restrictive covenants, and if allowed, whether Covington Oaks had a right to deny their request. Because the determination Rankin and Farrer sought would clearly terminate the uncertainty which gave rise to the proceedings, settle the dispute and put an end to the controversy, we hold that a declaratory judgment action was appropriate. Tex. Civ. Prac. & Rem. Code 37.008 (Vernon 2003); see Vicc Homeowners Ass n, Inc. v. Los Campeones, Inc., 143 S.W.3d 832 (Tex. App. Corpus Christi 2004, no pet.) (affirming declaratory judgment against homeowners association voiding certain amended restrictive covenants); City of Corpus Christi v. Tayor, 126 S.W.3d 712 (Tex. App. Corpus Christi 2004, pet. dism d) (coexecutors of estate brought an action seeking declaration that restrictions against building on real property owned by deceased landowners were void or unenforceable).

The Jury Verdicts

In accordance with the Declaratory Judgment Act, two questions were presented to the jury for determination of an issue of fact. Tex. Civ. Prac. & Rem. Code 37.007 (Vernon 2003). Jury Question 1 tracked the language of Tex. Prop. Code Ann. 202.004(a) (Vernon 1995). // Although the jury was instructed that Covington Oaks was presumed to have acted reasonably, the jury found that Covington Oaks intentionally interfered with the property rights of Rankin and Farrer. By answering yes to Jury Question 1, the jury necessarily made a finding that Covington Oaks acted arbitrarily, capriciously, or discriminately. In Jury Question 2, the jury awarded no monetary damages for either remedial damages or loss of use and enjoyment of property for either Rankin or Farrer. However, on the jury question addressing the damages of Michael Rankin, next to the blank associated with damages sustained in the past, the jury hand wrote Plaintif s [sic] be reimbursed for lawyer fees and court costs.

Following the receipt of the jury verdict, Covington Oaks filed a motion to enter judgment, or in the alternative, for judgment notwithstanding the verdict based on the jury s finding of liability on the interference claim and the lack of damages associated with the liability finding. Conversely, Rankin and Farrer sought entry of judgment in their favor based on the jury s affirmative finding of arbitrary, capricious and discriminate action by the Board of Managers, as well as an award of attorney s fees. After both parties submitted post-trial motions, the trial court awarded a take-nothing judgment in favor of Covington Oaks, which included a recitation that its judgment was based upon the jury findings, and denied the requested attorney s fees. Rankin and Farrer subsequently filed this appeal.

Standard of Review

If a jury s finding is inconsistent with a trial court s grant of a take-nothing judgment, it is, in effect, a judgment notwithstanding the verdict (JNOV). See Del Valle Indep. Sch. Dist. v. Lopez, 845 S.W.2d 808, 809 (Tex. 1992) (holding that it is the character and function of an order that determines its classification, not its title). A JNOV is properly granted only if there is no evidence to support an issue, or conversely, the evidence establishes an issue as a matter of law. Exxon Corp. v. Quinn, 726 S.W.2d 17, 19 (Tex. 1987).

We review a JNOV under a legal sufficiency, or no evidence standard of review. Sherman v. First Nat l Bank, 760 S.W.2d 240, 242 (Tex. 1988). As such, the evidence is viewed in the light most favorable to the jury findings, considering only the evidence and inferences that support the jury findings and disregarding all evidence and inferences to the contrary. Tiller v. McLure, 121 S.W.3d 709, 713 (Tex. 2003). If more than a scintilla of evidence supports the jury findings, it must be upheld and the judgment notwithstanding the verdict should be reversed. Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 228 (Tex.1990).

A judge s decision to award attorney s fees is also reviewed under an abuse of discretion standard. Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998). A trial court abuses its discretion when it refuses to award attorney s fees despite sufficient evidence being introduced to show the fees were reasonable, necessary, equitable and just as a matter of law. Id.

Analysis

On December 8, 2002, Rankin and Farrer filed the required applications seeking approval from the Board of Managers regarding the installation of fire doors and the installation of insulation and radiant barrier paint in their shared attic space. On January 10, 2002, the requests were denied without explanation. Attempts to contact the property management were to no avail, and finally on February 12, 2003, a letter was sent to Covington Oaks attorney requesting the decision be revisited. Once again, the requests were denied without explanation. During the discovery process, Covington Oaks raised several construction issues, specifically related to the installation of the dual fire door, including structural support, electrical wiring, and plumbing lines. Rankin and Farrer addressed each of these concerns during discovery and should have been alleviated. Regardless of the action taken by Rankin and Farrer, Covington Oaks failed to investigate or substantiate any concerns it may have held. To the contrary, the testimony elicited at trial suggested the Board of Managers did not feel any reason was necessary for its denial. More specifically, Covington Oaks representative Craig Stein reiterated during testimony that the Board of Managers had the authority to deny the claim regardless of documentation presented by Rankin and Farrer. //

Under this record, a jury could have reasonably found: (1) Covington Oaks actions interfered with the property rights of Rankin and Farrer, that being the ability to install a door and add insulation and radiant barrier paint; (2) such interference caused nonmonetary damage to Rankin and Farrer, that being their inability to use and enjoy their property and attorney s fees; and (3) these actions were without cause, not otherwise excused and such decisions were arbitrary, capricious, or discriminatory

Covington Oaks argues the jury verdicts are in conflict with each other, that being a finding of liability and lack of harm. They argue these answers concern the same material fact and therefore must be stricken. A court may not strike down jury answers on the ground of conflict if there is any reasonable basis upon which they can be reconciled. Bender v. Southern Pac. Transp. Co., 600 S.W.2d 257, 260 (Tex. 1980). The court is bound to reconcile apparent conflicts in the jury s findings if reasonably possible in light of the pleadings and evidence, the manner of submission and other findings considered as a whole. Id. Furthermore, the appellate court s duty is to harmonize jury findings when possible. Id. Conflicting findings require reversal only if one finding is such that it would warrant judgment for one of the parties, and the other finding would warrant judgment for the other party. Id.

The primary relief sought by Rankin and Farrer was the ability to proceed with the proposed modifications to their condominiums. By answering Jury Question 1 in the affirmative, the jury determined that without just cause or excuse, Covington Oaks failure to approve the requested internal changes interfered with the property rights of Rankin and Farrer thereby causing damages. Thus, Rankin and Farrer prevailed on the necessary finding for their requested declaratory judgment. Furthermore, because the jury s response to Jury Question 1 also encompassed a finding that Covington Oaks caused Rankin and Farrer damage, and Jury Question 2 found no monetary damages, the damage finding in Jury Question 1 must be considered nonpecuniary in nature. The jury s answers are therefore not in conflict. The questions allowed a finding of Covington Oaks wrong doing by their arbitrary, capricious, or discriminatory actions without necessitating an award of monetary damages.

Because the jury determined the Board of Managers acted arbitrarily, capriciously, and discriminately, Rankin and Farrer were entitled to the declaratory judgment sought in their petition. Consequently, the trial court erred in entering the take-nothing judgment and refusing to enter the requested declaratory judgment. See Scurlock Permian Corp. v. Brazos Cty., 869 S.W.2d 478, 486 (Tex. App. Houston [1st Dist.] 1993, writ denied) (holding that a trial court has limited discretion to refuse a declaratory judgment and may do so only when entry will not remove the uncertainty giving rise to the proceedings). Accordingly, we render judgment that Rankin and Farrer are entitled to make the requested changes. Id. at 488-89 (holding, in declaratory judgment action, an appellate court has a duty to render judgment trial court should have entered). Appellants first and third issues are sustained.

Attorney s Fees

We next determine whether Rankin and Farrer were entitled to attorney s fees. Prior to trial, the parties stipulated that the issues of attorney s fees would be tried to the court after the jury s rendition of the verdict. The parties further stipulated that the same would be decided by motion and evidence provided by affidavit. Thus, the trial court would be the trier of fact as to whether the attorney s fees were reasonable and necessary and whether, as a matter of law, the attorney s fees were equitable and just.

The Texas Uniform Condominium Act provides that [t]he prevailing party in an action to enforce the declaration, bylaws or rules is entitled to reasonable attorney s fees and costs of litigation from the nonprevailing party. Tex. Prop. Code Ann. 82.161(b) (Vernon 1995). Section 5.0006 of the Texas Property Code specifically states in an action based on breach of restrictive covenant pertaining to real property, the court shall allow the prevailing party asserting the action reasonable attorney s fees in addition to the party s costs and claim. Tex. Prop. Code Ann. 5.006 (Vernon 2003). In Mitchell v. LaFlamme, 60 S.W.3d 123, 130-31 (Tex. App. Houston [14th Dist.] 2000, no pet.), the court held that because the attorney s fees provision of 5.006 and 82.161(b) were so similar, if a party pled attorney s fees under one section, the notice of such relief would suffice for both sections.

If properly pleaded and proved, Section 5.006 of the Texas Property Code mandates attorney s fees to the prevailing party and therefore is not discretionary. See Beere v. Duren, 985 S.W.2d 243, 249 (Tex. App. Beaumont 1999, pet. denied). Moreover, if a party pleads facts which, if true, entitle him to the relief sought, he need not specifically plead the applicable statute in order to recover under such authority. See Mitchell, 60 S.W.3d at 103-31. Because Rankin and Farrer s pleadings requested attorney s fees, and we previously determined that they prevailed on their suit for declaratory relief to enforce the Condominium Declaration for the Covington Oaks Condominiums, they are entitled to attorney s fees under Sections 5.006 & 82.161(b) of the Texas Property Code.

Conclusion

The record supports that the jury answered affirmatively and found that Covington Oaks acted in an arbitrary, capricious, or discriminatory manner by denying the requested changes. Rankin and Farrer were successful on their claims before the jury. Therefore, the trial court s take-nothing judgment and the failure to award attorney s fees should be reversed. We therefore REVERSE the trial court and RENDER a declaratory judgment that Rankin and Farrer are entitled to make the changes requested in the Improvement Request Forms submitted to the Covington Oaks Board of Managers on December 8, 2002. We further REMAND this matter to the trial court for a determination of reasonable attorney s fees consistent with this opinion.

Rebecca Simmons, Justice