Opinion
NUMBER 13-18-00418-CV
08-13-2020
FRANCIS GARRIGUES, BARBARA SMITH, AND CLAUDE F. GILSON, Appellants, v. JOHN HARDIE AND APEX GOLF PROPERTIES CORPORATION, Appellees.
On appeal from the 28th District Court of Nueces County, Texas.
MEMORANDUM OPINION
Before Chief Justice Contreras and Justices Hinojosa and Tijerina
Memorandum Opinion by Justice Hinojosa
Chapter 213 of the Texas Property Code provides a process for homeowners in a residential development to modify or terminate restrictive covenants affecting property within the development. See TEX. PROP. CODE ANN. §§ 213.001-.014. Appellee John Hardie, a homeowner in a residential development, filed an affidavit in the real property records of Nueces County reporting a successful petition to modify a restrictive covenant affecting property (the country club property) owned by appellee Apex Golf Properties Corp. (Apex). The original restriction—which limited the property's use to a country club, golf course, and related amenities—was purportedly modified to permit residential and commercial development in addition to the original permitted uses.
Appellants and subdivision homeowners, Francis Garrigues, Barbara Smith, and Claude F. Gilson (homeowners), sued Hardie and Apex (petitioners) for declaratory and injunctive relief, seeking to enforce the original restrictive covenant and to invalidate the Chapter 213 modification. The petitioners filed counterclaims for declaratory judgment seeking to declare the modified restriction valid. Faced with competing motions for summary judgment, the trial court granted summary judgment in favor of the petitioners. In seven issues, which we have reorganized into six issues, the homeowners argue that: (1) the judgment is void because it fails to contain an adequate description of the country club property; (2-5) the trial court erred in granting summary judgment because the petitioners failed to establish that Chapter 213 applied to the country club property, the petitioners did not comply with Chapter 213's requirements, the restrictive covenant was impermissibly modified for only a portion of the country club property, and Chapter 213 is unconstitutional; and (6) the trial court erred in awarding attorney's fees. We affirm.
I. BACKGROUND
The factual background is derived from the summary judgment record.
A. Deed Restriction
In 1971, Pharaoh Enterprises Ltd conveyed by warranty deed three adjoining parcels located in the Pharaoh Valley Subdivision (subdivision) of Corpus Christi to The Pharaohs Inc. The deed contained the following restrictive covenant:
No use shall be permitted upon said property other than a Country Club and any improvements which might be used in connection therewith, such as storage barns, club house, golf course, swimming pool, tennis courts, or improvements consistent with such use.The deed further provided that "any person or persons owning any real property adjacent to the above described property" is a beneficiary entitled to enforce the restrictive covenant.
The Pharaoh Country Club operated on the country club property until its closure on July 1, 2010. The property's current owner, Apex, claimed the club was no longer financially viable, and it stopped maintaining the property in January 2011. Apex continued mowing a strip of land between the property and adjacent homes and condominiums. The rest of the property returned to its natural state. A prospective buyer, Blackard Global (Blackard), proposed a mixed-used development for the country club property and obtained zoning approval for the project from the City of Corpus Christi. However, the 1971 deed restriction prohibited the proposed commercial and residential uses.
B. Petition to Modify Restriction
In 2015, the Texas Legislature enacted Chapter 213 of the property code, which provides a means for homeowners in a real estate development to terminate or modify restrictions on "amenity property." See id. The statute defines "amenity property" as "real property the use of which is restricted by a dedicatory instrument to use as a golf course or country club." Id. § 213.001(1). To qualify under Chapter 213, the amenity property must not have been in operation "for a continuous period of at least 36 months[.]" Id. § 213.004. A petition to modify or terminate a restriction would be deemed effective if it gained seventy-five percent approval of the owners of real property designated as beneficiary property in the dedicatory instrument containing the restriction. Id. § 213.008(a). The statute includes the following legislative findings:
(a) The legislature finds that:
(1) a restriction on the use of an amenity property may create uncertainty if the owners of an amenity property are reluctant or unable to properly maintain or operate the amenity property;
(2) such uncertainty may discourage investment and negatively impact property values in the development;
(3) investors may be reluctant to or will not invest funds to revitalize an amenity property burdened with a restriction on its use;
(4) financial institutions may be reluctant to or will not provide financing to revitalize an amenity property burdened with a restriction on its use; and
(5) establishing a procedural option to allow for the modification or termination of the restriction would alleviate the uncertainty and encourage revitalization of the amenity property.
Id. § 213.002.
(b) The purpose of this chapter is to provide a procedural option for the modification or termination of a restriction on the use of an amenity property.
After the statute took effect, Hardie circulated a petition to owners of beneficiary properties which proposed the following modification to the 1971 deed restriction:
No use shall be permitted upon said property other than a Country Club and any improvements which might be used in connection therewith, such as storage barns, club house, golf course, swimming pool, tennis courts, or improvements consistent with such use. Improvements that are consistent with use as a Country Club specifically shall include a mixed-use development on that portion of the property comprised of not more than 42 acres of land fronting on Ennis-Joslin Road on the following conditions:
(a) A building setback area of one hundred (100) feet in width shall separate the mixed[-]use development from any single-family residences and other areas as shown on the attached Exhibit A.
(b) The first row of buildings in the development adjacent to the setback area shall be limited to two (2) stories in height (35 feet). Additionally, the three tracts identified on Exhibit B shall be restricted to single-family residential use only, and the restrictive covenants for the development will restrict such areas by specific metes and bounds descriptions.
(c) All property owners (including residential and business uses) in the development shall be required to be dues-paying members in the Country Club.
(d) The mixed-use development only may include residential, office, retail and commercial uses including townhomes, condominiums, apartments, office space, restaurants, hospitality accommodations and banquet space, and retail space as delineated in Exhibit C.
(e) The mixed-use development shall be restricted to not more than 42 acres of land out of the 57.75-acre parcel described on Exhibit A adjacent to Ennis-Joslin Road.
(f) A minimum of 16 acres of the 57.75-acre parcel shall remain tennis courts and parking and an expanded lake.
(g) The mixed-use development shall comply with all of the restrictions and conditions of the Planned Unit Development Overlay (PUD) zoning for the development as approved by the City Council of the City of Corpus Christi, Texas.
(h) No property owners outside the development shall be responsible for any fees, POA dues or other expenses of any kind associated with the development unless they elect to become members of the Country Club.The 1971 deed described the beneficiaries of the restriction as those "owning any real property adjacent" to the country club property. Hardie reviewed the Nueces County Appraisal District records and obtained deeds from the Nueces County Clerk's Office to determine the owners of beneficiary property. He considered single-family dwellings adjacent to the country club property as well as units in adjacent condominium complexes as qualifying properties.
(i) These restrictions shall apply to the property and run with the land in accordance with state law regardless of whether the property is developed by Blackard Global, Inc., any joint venture or partnership, and lender or any other property.
All of the remaining 69 acres of the property shall remain under the original deed restriction and be used solely as a golf course, club house, tennis courts, swimming pool and accessory buildings related to such uses.
Hardie distributed the petition at large gatherings of interested owners and at regular meetings of condominium unit owners' associations and councils. He also distributed the petitions by regular mail, personal delivery, and through the assistance of others. Hardie maintained a record of the votes received by personal delivery, mail, e-mail, and facsimile. According to Hardie's records, 296 of 355 owners, or 83%, voted in favor of the petition. See id. § 213.008(a) ("The modification or termination of the restriction is adopted if the owners of at least 75 percent of the total number, as applicable, of the lots or parcels of land and the units or apartments of condominiums in the development, including the owners of the amenity property, vote in favor of the modification or termination of the restriction."). Pursuant to Chapter 213, Hardie filed an affidavit with the Nueces County Clerk setting out the modified restrictions and the voting totals. See id. § 213.010(a) ("The petition circulator shall certify the result of the votes by filing an affidavit with the county clerk of the county in which the restriction modified or terminated is recorded.").
C. Lawsuit
The homeowners sued the petitioners for injunctive and declaratory relief seeking to enforce the 1971 deed restriction and to invalidate the petition to modify the restriction. The petitioners answered and brought counterclaims for declaratory relief seeking to have the Chapter 213 petition declared valid.
The petitioners filed a hybrid traditional and no-evidence summary judgment motion seeking to dismiss the homeowners' claims. Their no-evidence grounds were limited to the homeowners' claims seeking to declare Chapter 213 unconstitutional. The petitioners also moved for traditional summary judgment on their counterclaims. The homeowners filed a competing motion for traditional summary judgment on its claims and the petitioners' counterclaims. The parties' motions and responses framed the dispositive issues as follows: (1) whether the modified restriction violated the common law based on a lack of mutuality; (2) whether the petition process was conducted in compliance with Chapter 213; (3) whether the modified restrictions exceeded Chapter 213 by requiring adjacent owners to pay dues to a new country club; (4) whether Hardie improperly counted votes of condominium owners whose units were not adjacent to the golf course property; (5) whether Hardie's affidavit provided proper notice of the modified restriction; and (6) whether Chapter 213 is constitutional.
D. Trial Court's Ruling
The trial court signed an order granting the petitioners' motion for summary judgment, denying the homeowners' motion for summary judgment, declaring that Chapter 213 is constitutional, and declaring that the modifications to the 1971 deed restrictions were valid. Following a bench trial on attorney's fees, the trial court signed a final judgment. The homeowners now appeal.
II. VOID JUDGMENT
In their first issue, the homeowners argue that the trial court's judgment is void because "it affects interests in real property, but fails to contain an adequate description of the property[.]"
A. Applicable Law
"To be valid, a conveyance of real property must contain a sufficient description of the property to be conveyed." AIC Mgmt. v. Crews, 246 S.W.3d 640, 645 (Tex. 2008). Like a conveyance of property, a judgment affecting an interest in real property must describe a definite tract of land; otherwise, it is void. Id.; see Arnold v. Crockett Indep. Sch. Dist., 404 S.W.2d 27, 28 (Tex. 1966) ("The general rule is that a judgment for foreclosure of a tax lien upon real estate which, though aided by the judgment roll, fails to describe a definite tract of land is void."). A judgment sufficiently describes property if it furnishes, within itself or by reference to another writing, "the means or data by which the particular land to be conveyed may be identified with reasonable certainty." Crews, 246 S.W.3d at 645; Greer v. Greer, 191 S.W.2d 848, 849 (Tex. 1946).
An appellate court has no jurisdiction to consider the merits of an appeal from a void judgment. Bird v. Kornman, 152 S.W.3d 154, 160 (Tex. App.—Dallas 2004, pet. denied); Waite v. Waite, 150 S.W.3d 797 (Tex. App.—Houston [14th Dist.] 2004, no pet.); Ins. Co. of State of Pa. v. Martinez, 18 S.W.3d 844, 847 (Tex. App.—El Paso 2000, no pet.). We may address issues affecting our jurisdiction for the first time on appeal, and we may do so sua sponte. Wells Fargo Bank, N.A. v. Murphy, 458 S.W.3d 912, 916 (Tex. 2015).
B. Analysis
The trial court's judgment described the country club property using its legal description: "Tracts 1 and 2, The Pharaohs Country Club and Lot 3, Pharaoh Valley Northeast, in Nueces County, Texas." The judgment incorporated the petition to modify the deed restrictions, which restated the legal description while also providing maps and field notes relating to the property. The petition provides that the mixed-use development would be located on "not more than 42 acres of land out of the 57.75-acre parcel . . . adjacent to Ennis-Joslin Road." The petition also provides for a "minimum of 16 acres" to be used as "tennis courts and parking and an expanded lake." Finally, it provides that "the remaining 69 acres" would "be used solely as a golf course, club house, tennis courts, swimming pool and accessory buildings related to such uses."
The judgment in this case declares that the modifications of the 1971 deed restrictions are valid. Those restrictions affect the country club property, which is adequately described in the judgment as set out above. See Selected Lands Corp. v. Speich, 702 S.W.2d 197, 200-01 (Tex. App.—Houston [1st Dist.] 1985, writ ref'd n.r.e.) (concluding that a restrictive covenant adequately described the affected property where it contained the subdivision name and section number and expressly referred to plats recorded in county deed records). Nonetheless, the homeowners argue that the locations of the various developments on the property are not adequately described. However, they cite no authority, nor have we found any, that would require such specificity. Because the judgment describes the affected property with reasonable certainty, it is not void. See Arnold, 404 S.W.2d at 28. We overrule the homeowners' first issue.
We find inapposite the authority cited by the homeowners which concern attempted conveyances of an indefinite tract of land. See Adams v. Duncan, 215 S.W.2d 599, 603 (Tex. 1948); Matney v. Odom, 210 S.W.2d 980, 982 (Tex. 1948); Greer v. Greer, 191 S.W.2d 848, 849 (Tex. 1946); Gaut v. Daniel, 293 S.W.3d 764, 767-68 (Tex. App.—San Antonio 2009, pet. denied).
III. SUMMARY JUDGMENT
In issues two through five, the homeowners argue that the trial court erred in granting the petitioners' motion for summary judgment.
A. Standard of Review
Under the Uniform Declaratory Judgments Act, a person whose rights, status, or other legal relations are affected by a statute, deed, or contract may have a court determine any question of construction or validity arising under the statute and may obtain a declaration of his rights under that instrument. TEX. CIV. PRAC. & REM. CODE ANN. § 37.004(a). When a trial court resolves a declaratory judgment action via summary judgment, we apply the standards applicable to reviewing a summary judgment. In re M.M.M., 428 S.W.3d 389, 393 (Tex. App.—Houston [14th Dist.] 2014, pet. denied).
We review a trial court's grant of summary judgment de novo. Katy Venture, Ltd. v. Cremona Bistro Corp., 469 S.W.3d 160, 163 (Tex. 2015); City of San Antonio v. Greater San Antonio Builders Ass'n, 419 S.W.3d 597, 600 (Tex. App.—San Antonio 2013, pet. denied). Traditional summary judgment is proper only when the movant establishes there is no genuine issue of material fact and it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); BCCA Appeal Grp., Inc. v. City of Houston, 496 S.W.3d 1, 6 (Tex. 2016); Greater San Antonio, 419 S.W.3d at 600-01. We take all the evidence favorable to the nonmovant as true, and we indulge every reasonable inference and resolve any doubts in favor of the nonmovant. BCCA, 496 S.W.3d at 6; Katy Venture, 469 S.W.3d at 163; Greater San Antonio, 419 S.W.3d at 600. Once the movant meets this burden of establishing each element of its claim as a matter of law, the burden shifts to the nonmovant to disprove or raise a fact issue as to at least one of the elements of the movant's claim. Katy Venture, 469 S.W.3d at 163.
Additionally, "[a]fter adequate time for discovery, a party without presenting summary judgment evidence may move for summary judgment on the ground that there is no evidence of one or more essential elements of a claim or defense on which an adverse party would have the burden of proof at trial." TEX. R. CIV. P. 166a(i). If the nonmovant brings forward more than a scintilla of probative evidence raising a genuine issue of material fact, then a no-evidence summary judgment is not proper. Smith v. O'Donnell, 288 S.W.3d 417, 424 (Tex. 2009); see TEX. R. CIV. P. 166a(i).
"A genuine issue of material fact exists if more than a scintilla of evidence establishing the existence of the challenged element is produced." Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). "[M]ore than a scintilla of evidence exists if the evidence 'rises to a level that would enable reasonable and fair-minded people to differ in their conclusions.'" Id. at 601 (quoting Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997)).
When, as here, both parties move for summary judgment on overlapping issues and the trial court grants one motion but denies the other, we review both motions and render the judgment the trial court should have rendered. BCCA, 496 S.W.3d at 6; Tex. Mun. Power Agency v. Pub. Util. Comm'n of Tex., 253 S.W.3d 184, 192 (Tex. 2007). "If, however, resolution of the issues rests on disputed facts, then summary judgment is inappropriate, and we should reverse and remand for further proceedings." Sheller v. Corral Tran Singh, LLP, 551 S.W.3d 357, 362 (Tex. App.—Houston [14th Dist.] 2018, pet. denied).
B. Dedicatory Instrument
In their second issue, the homeowners argue that the petitioners' summary judgment conclusively establishes that Chapter 213 does not apply to the country club property.
Chapter 213 applies to "amenity properties" which are defined as "real property the use of which is restricted by a dedicatory instrument to use as a golf course or country club." TEX. PROP. CODE ANN. § 213.001(1). A "dedicatory instrument" is defined as "a governing instrument that: (A) restricts amenity property to use as amenity property; (B) designates real property in the development, other than amenity property, as a beneficiary of a restriction described by Paragraph (A); and (C) addresses the establishment, maintenance, and operation of amenity property." Id. § 213.001(3).
The homeowners argue that the country club property is not an amenity property because its use is not restricted by a dedicatory instrument as that term is defined by the property code. Specifically, the homeowners maintain that the 1971 deed does not address the maintenance and operation of the country club property. As a result, the homeowners argue that the petitioners' motion for summary judgment failed to establish that Chapter 213 applied to the property. See id. § 213.001(3)(C). The petitioners respond that the homeowners waived this issue by not presenting it to the trial court. See TEX. R. CIV. P. 166a(c) ("Issues not expressly presented to the trial court by written motion, answer or other response shall not be considered on appeal as grounds for reversal."). We agree that the homeowners are foreclosed from asserting this issue on appeal.
In their summary judgment pleadings, the homeowners affirmatively represented that Chapter 213 applied to the country club property. The homeowners took this position in their petition ("The present facts meet all requirements to come within Chapter 213"); in their response to the petitioners' summary judgment motion ("The property at issue comes within these definitions [for amenity property]" and "Plaintiffs do not contest that the facts of this case fall within Ch. 213"); and in their motion for summary judgment ("The facts of the present case come within the provisions of Ch. 213."). They never argued that Chapter 213 did not apply to the country club property. Given the clear position taken by both the homeowners and the petitioners, the trial court would not have had a reason to address whether the petitioners established that Chapter 213 applied to the country club property, and we may not consider the contrary argument as grounds for reversal. See TEX. R. CIV. P. 166a(c).
Moreover, a party cannot take a position on appeal that is inconsistent with the position that it took in the trial court. W & F Transp., Inc. v. Wilhelm, 208 S.W.3d 32, 45 (Tex. App.—Houston [14th Dist.] 2006, no pet.); Rylander v. Bandag Licensing Corp., 18 S.W.3d 296, 302 (Tex. App.—Austin 2000, pet. denied); Perl v. Patrizi, 20 S.W.3d 76, 83-84 (Tex. App.—Texarkana 2000, pet. denied); Byrd v. Cent. Freight Lines, Inc., 976 S.W.2d 257, 259 (Tex. App.—Amarillo 1998, no pet.); see Litton Indus. Prods., Inc. v. Gammage, 668 S.W.2d 319, 322 (Tex. 1984); 6 Roy W. McDonald & Elaine G. Carlson, TEX. CIV. APP. PRAC. § 40:5 (2d ed. rev. 2019); see also In re A.F., No. 02-19-00117-CV, 2019 WL 4635150, at *10 (Tex. App.—Fort Worth Sept. 24, 2019, no pet.) (mem. op.). The homeowners affirmatively took the position in the trial court that Chapter 213 applied to the country club property. They cannot now urge the opposite position on appeal. See Wells Fargo Bank, N.A. v. Murphy, 458 S.W.3d 912, 916 (Tex. 2015) ("Parties are restricted on appeal to the theory on which the case was tried." (quoting Davis v. Campbell, 572 S.W.2d 660, 662 (Tex. 1978))); see also Trout v. Patterson, No. B14-93-00149-CV, 1994 WL 151442, at *2 (Tex. App.—Houston [14th Dist.] Apr. 28, 1994, writ denied) ("Howard cannot urge at trial that the contract was unambiguous and then, on appeal, take the opposite position and urge that it was ambiguous.") (mem. op.). We overrule the homeowners' second issue.
C. Compliance with Chapter 213
In their third issue, the homeowners argue that the petitioners failed to establish compliance with Chapter 213 because: (1) the petition delivery process did not satisfy § 213.007; (2) ineligible votes were counted; and (3) construction of the development did not commence within twenty-four months of the zoning ordinance approval.
1. Petition Delivery Process
Section 213.007 of the property code provides:
(a) A petition circulator shall deliver a copy of the petition to:
(1) all owners of: (A) each lot or parcel of real property in the development; and (B) each unit or apartment of each condominium, if any, in the development; and
(2) each property owners' association, unit owners' association, and council of owners in the development.
(b) The petition circulator may deliver a copy of the petition in any reasonable manner, including:
(1) by regular mail or certified mail, return receipt requested, to the last known address of the owners or entities described by Subsections (a)(1) and (2);
(2) personal delivery to the owners or entities described by Subsections (a)(1) and (2); or
(3) at a regular meeting of a property owners' association, unit owners' association, or council of owners.
TEX. PROP. CODE ANN. § 213.007.
(c) If the petition circulator acts in good faith in determining ownership and delivering copies of the petition as required by this section, an owner's lack of receipt of a copy of the petition does not affect the application of a modification or termination of a restriction under this chapter to the amenity property.
The petitioners' summary judgment evidence includes the declaration of Hardie, in which he testified concerning his efforts to identify the owners of beneficiary property and to deliver the petition. Regarding the identification of owners, Hardie testified:
I acted in good faith to determine the ownership of the Beneficiary Properties by initially reviewing the records of the Nueces County Appraisal
District. When I encountered persons who represented themselves as property owners that were not shown as the record owners on the property tax rolls, I consulted with Stewart Title of Corpus Christi, Inc. to obtain deeds from the Official Public Records of Nueces County in order to confirm that ownership had changed.Hardie testified that he distributed the petition "at a large gathering of all interested owners, at regular meetings of unit owners' associations and councils of owners, by regular mail, and by personal delivery[.]" Hardie stated that other owners of beneficiary property assisted in delivering the petitions. Hardie maintained a listing of the responses from all of the owners "noting whether they had responded to the [p]etition, whether they had rejected the [p]etition, and whether they had not responded." According to Hardie, 319 out of 355 eligible properties returned a signed petition statement indicating their vote. Hardie attached to his declaration copies of the petition votes.
The homeowners argue that there is no evidence that every owner of beneficiary property received the petition and that the petitioners failed to conclusively establish a good faith effort to deliver the petition to all homeowners. We disagree.
We first note that the statute requires the approval of seventy-five percent of the beneficiary owners—not merely seventy-five percent of those to whom the petition is circulated. Under this framework, an owner that fails to return a petition is effectively a "no" vote, so a petition circulator would have no incentive to distribute petitions only to voters who have expressed support for the modification. Here, the record establishes that Hardie identified the owners of all of the beneficiary properties through real property records, and he employed all of the methods of delivery authorized by the statute to distribute the petitions to the identified owners. As a result of his efforts, approximately ninety percent of eligible voters returned a petition indicating their approval or disapproval. We conclude that this evidence conclusively establishes Hardie's good faith effort to "determin[e] ownership and deliver[] copies of the petition[.]" Id. § 213.007(c). The homeowners presented no evidence that would create a fact issue regarding Hardie's good faith efforts. Therefore, the trial court did not err in granting summary judgment on this basis. See id.; Katy Venture, 469 S.W.3d at 163.
2. Eligible Votes
Next, the homeowners argue that summary judgment was inappropriate because the seventy-five percent voting threshold was only satisfied by considering properties that were ineligible to vote for the petition.
The owners of the country club property itself and the owners of property designated as beneficiary property in the 1971 deed are eligible to vote for the petition pursuant to Chapter 213. See TEX. PROP. CODE ANN. §§ 213.001(4), .001(5), .008. The 1971 deed describes beneficiary property as "any real property adjacent to the [country club property.]" If a beneficiary property has more than one owner, then "the owners may cast only one vote for that [property.]" Id. § 213.008(d).
First, the homeowners argue that the owners of condominium units located away from the country club property were ineligible to vote because they were not owners of "adjacent" property, even if the condominium complex itself was considered an adjacent property. However, the summary judgment record establishes that the petition received the required seventy-five percent approval whether or not the non-immediately-adjacent units were considered. In other words, setting aside those votes which the homeowners contend are ineligible, the petition would have received 129 favorable votes out of a total of 163 eligible properties, or seventy-nine percent. Accordingly, the trial court could not have erred in granting summary judgment on this basis.
The homeowners also argue that owners of property adjacent to the country club property but not adjacent to the proposed mixed-use development were not eligible to vote. We disagree. As noted above, Chapter 213 defers to the dedicatory instrument—here the 1971 deed—to identify beneficiary properties eligible to vote to modify an amenity property's restrictions. The 1971 deed identifies those owners of property adjacent to the entire country club property as beneficiaries. The statute, and by implication the deed, do not restrict eligible voters to those owning property next to the proposed mixed-use development.
3. Construction of Development
Finally, the homeowners contend that the petitioners failed to establish satisfaction of the following provision contained in the modified restriction: "The mixed-use development shall comply with all of the restrictions and conditions of the Planned Unit Development Overlay (PUD) zoning for the development as approved by the City Council of the City of Corpus Christi, Texas." In particular, the homeowners contend that the petitioners did not satisfy the following provision of the PUD ordinance: "Construction shall commence within 24 months from the date this PUD ordinance is approved by City Council." Whatever the effect of this condition, it is a condition that is contained within the modified restrictive covenant itself. The condition has no bearing on whether the petition process satisfied the requirements of Chapter 213 or whether the modified restrictions are otherwise valid. The timeliness of the mixed-use development construction is not an issue material to the propriety of the trial court's judgment. See W. Trinity Props., Ltd. v. Chase Manhattan Mortg. Corp., 92 S.W.3d 866, 869 (Tex. App.—Texarkana 2002, no pet.) ("A fact is "material" only if it affects the outcome of the suit under the governing law.").
4. Summary
Having rejected each of the homeowners' sub-arguments, we overrule their third issue.
D. Mutuality of Modified Restrictions
In their fourth issue, the homeowners argue that the modified restriction does not apply uniformly to all beneficiary properties in violation of the common law and Chapter 213.
1. Applicable Law
"[T]he basic concept underlying the use of restrictive covenants [is] that each purchaser in a restricted subdivision is subjected to the burden and entitled to the benefit of the covenant." Davis v. Huey, 620 S.W.2d 561, 568 (Tex. 1981). In that vein, the American Law Reports has observed the following:
It would appear that any action taken by property owners to alter, extend, or revoke existing restrictions must apply to all of the properties which are subject to them. In one case the court held invalid an attempt to retain restrictions as to part of a subdivision while releasing them as to another part.4 A.L.R.3d 570, 582 (1965). The Austin Court of Appeals adopted this position in Zent v. Murrow, 476 S.W.2d 875, 878 (Tex. App.—Austin 1972, no writ). In that case, the plaintiffs sought to enjoin the owners of two adjacent lots from constructing duplexes on their property. Id. at 877. Plaintiffs' and defendants' lots were part of a 42-lot subdivision. Id. Although the subdivision had originally been restricted to one single family residence per lot, a majority of subdivision homeowners executed a modification to the restrictions permitting the construction of duplexes on the lots owned by the defendants only. Id. at 878. The Austin Court of Appeals concluded that any action taken by property owners to alter, extend, or revoke existing restrictions must apply to all of the properties which are subject to them. Id. Therefore, the court held that the modification was not effective. Id. "The holding in Zent has been recognized by numerous appellate courts in Texas as well as by courts in other jurisdictions." Teal Trading & Dev., LP v. Champee Springs Ranches Prop. Owners Ass'n, 534 S.W.3d 558, 585 (Tex. App.—San Antonio 2017), aff'd, 593 S.W.3d 324 (Tex. 2020).
2. Analysis
The homeowners argue that the modified restrictions violate the "mutuality doctrine" announced in Zent. However, this doctrine concerns the modification of restrictive covenants which apply uniformly to all properties in a subdivision. The restriction in the 1971 deed applies only to the country club property. While adjacent properties are beneficiaries of this restriction, none of those properties are similarly burdened by the restriction. In other words, the modified restriction in this case does not impermissibly remove restrictions from certain lots that uniformly burdened the entire residential development. Therefore, the modifications do not violate the mutuality doctrine.
We further find inapposite Teal Trading & Development, LP v. Champee Springs Ranches Property Owners Ass'n, 534 S.W.3d 558 (Tex. App.—San Antonio 2017), aff'd, 593 S.W.3d 324 (Tex. 2020), on which the homeowners also rely. Teal Trading concerned a non-access easement which similarly burdened all homes in a subdivision, precluding ingress and egress across a one-foot strip of land. Id. at 565. The San Antonio Court of Appeals held that modification of the easement was ineffective without the consent of all owners similarly burdened by the easement. Id. at 586. Here, the restrictions do not burden the entire subdivision—only the country club property.
The homeowners also argue that "Chapter 213 does not allow splitting the [country club property] for the purpose of modifying restrictive covenants." The homeowners' position is based on the premise that Chapter 213 does not alter the common-law mutuality doctrine, and, therefore, it must be read consistently with that doctrine. However, because we have already concluded that the modified restriction does not violate the doctrine, we need not address this argument.
We overrule the homeowners' fourth issue.
E. Constitutional Challenge
In their fifth issue, the homeowners argue that Chapter 213 violates the Contract Clauses of the federal and state constitutions because it impairs the homeowners' contractual rights to enforce the 1971 deed restrictions; therefore, they argue the trial court erred in declaring the statute constitutional and the modified restrictions valid. See U.S. CONST., art. I, § 10, cl. 1; TEX. CONST. art. I, § 16.
1. Applicable Law
A statute is presumed to be constitutional, and the party challenging its constitutionality bears the burden of demonstrating that it fails to satisfy constitutional requirements. See Enron Corp. v. Spring Indep. Sch. Dist., 922 S.W.2d 931, 934 (Tex. 1996); Vinson v. Burgess, 773 S.W.2d 263, 266 (Tex. 1989); Satterfield v. Crown Cork & Seal Co., 268 S.W.3d 190, 201 (Tex. App.—Austin 2008, no pet.).
The Contract Clause of the United States Constitution provides that "No State shall . . . pass any . . . Law impairing the Obligation of Contracts." U.S. CONST. art. I, § 10, cl. 1. The Texas Constitution similarly provides that "No . . . law impairing the obligation of contracts, shall be made." TEX. CONST. art. I, § 16. Although the prohibitions listed in the contracts clauses of both constitutions are "facially absolute," they must be reconciled with the power of the state to safeguard the interests of the public. Liberty Mut. Ins. v. Tex. Dep't of Ins., 187 S.W.3d 808, 824 (Tex. App.—Austin 2006, pet. denied) (quoting Energy Reserves Grp. v. Kansas Power & Light Co., 459 U.S. 400, 410 (1983)).
In reviewing a Contract Clause claim, we first examine whether a change in state law results in the substantial impairment of a contractual relationship, and, if so, we then review whether the impairment nevertheless is "reasonable and necessary to serve an important public purpose." U.S. Tr. Co. of N.Y. v. New Jersey, 431 U.S. 1, 25 (1977); see Liberty Mut. Ins., 187 S.W.3d at 824. The first step involves three inquiries: (1) whether a contractual right exists in the first instance; (2) whether a change in the law impairs that right; and (3) whether the defined impairment is substantial. See Gen. Motors Corp. v. Romein, 503 U.S. 181, 186 (1992). One factor to consider when making a substantial impairment determination is whether the subject of the legislation has been regulated in the past. See Energy Reserves Grp., 459 U.S. at 411.
A similar analysis is employed for the Texas Constitution. A statute does not unconstitutionally impair contractual rights if the action is a "valid exercise of the police power necessary to safeguard the public safety and welfare." Barshop v. Medina Cnty. Underground Water Conservation Dist., 925 S.W.2d 618, 635 (Tex. 1996); see Liberty Mut. Ins., 187 S.W.3d at 825.
2. Analysis
We first note that Chapter 213 itself does not modify or terminate restrictive covenants for "amenity" properties. Rather, the statute provides a procedure for beneficiaries of the restrictive covenant to modify or terminate such restrictions. See Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 245 (1978) ("Minimal alteration of contractual obligations may end the inquiry at its first stage."). In other words, absent the action of the beneficiary property owners themselves, there is no modification of a contractual right. Cf. Canal Ins. v. Hopkins, 238 S.W.3d 549, 567 (Tex. App.—Tyler 2007, pet. denied) ("The Contracts Clause . . . is directed only against impairment by legislation, and not against the judgments of courts."). Second, the statute is limited in its application to amenity properties that have been abandoned for at least thirty-six months. See TEX. PROP. CODE ANN. § 213.004. Thus, the statute does not affect properties with successful or recently shuttered country clubs. Rather, it is aimed at properties for which the original permitted use has become untenable.
Finally, we note that restrictive covenants in general are subject to regulation in Texas, and that Texas courts have previously held that legislation directed at restrictive covenants does not violate the Contract Clause. See Teal Trading, 593 S.W.3d at 339 ("[T]he legislature has spoken extensively about restrictive covenants, both upholding their enforcement and setting limits."); Deep E. Tex. Reg'l Mental Health & Mental Retardation Servs. v. Kinnear, 877 S.W.2d 550, 560 (Tex. App.—Beaumont 1994, no writ) ("The restrictive covenants relied upon by the plaintiffs below, must yield to the exercise of the state's legitimate police power."); see also, e.g., TEX. PROP. CODE ANN. §§ 201.001-213.014; id. §§ 5.025 (voiding restrictions requiring the use of a wood shingle roof on residential property), 5.026 (voiding restrictions that "prohibit[] the use by or the sale, lease, or transfer to a person because of race, color, religion, or national origin"), 202.007 (prohibiting certain restrictive covenants).
For the foregoing reasons, we conclude that Chapter 213 does not result in the substantial impairment of a contractual relationship. See Liberty Mut. Ins., 187 S.W.3d at 824. Therefore, the trial court did not err in declaring the statute constitutional. We overrule the homeowners' fifth issue.
IV. ATTORNEY'S FEES
In their sixth issue, the homeowners argue that "[t]he Court should reverse and remand the attorneys' fees award to [the petitioners] if the Court reverses or vacates any other part of the judgment." Specifically, the homeowners contend that in the event of a successful appeal, the petitioners would no longer be prevailing parties entitled to attorney's fees. The homeowners further maintain that a reversal of the trial court's judgment would entitle them to attorney's fees on remand.
The homeowners' sixth issue is entirely premised on their successful appeal of the trial court's judgment. Because we have overruled the homeowners' issues challenging that judgment, we must necessarily overrule the homeowners' challenge to the attorney's fees award.
V. CONCLUSION
We affirm the trial court's judgment.
LETICIA HINOJOSA
Justice Delivered and filed the 13th day of August, 2020.