Duane Rutherford and Darline Rutherford v. Millard A. Norred, Kenneth Latimer, Faye Gee, John Stofer, Warren J. Carroll and Greenwood Forest Fund, Inc D/B/A Greenwood Forest Property Owners Association

• Court: Court of Appeals of Texas
• Decided: March 28, 2006
• Docket: 14-05-00571-CV
• Status: Published

Opinion

Affirmed and Memorandum Opinion filed March 28, 2006

Affirmed and Memorandum Opinion filed March 28, 2006.

In The

Fourteenth Court of Appeals

____________

NO. 14-05-00571-CV

DUANE RUTHERFORD AND DARLINE RUTHERFORD, Appellants

V.

MILLARD A. NORRED, KENNETH H. LATIMER, FAY L. GEE, JOHN STOFER, WARREN J. CARROLL, AND GREENWOOD FOREST FUND INC. D/B/A/ GREENWOOD FOREST PROPERTY OWNERS ASSOCIATION, Appellees

On Appeal from the 270th District Court

Harris County, Texas

Trial Court Cause No. 04-58850

M E M O R A N D U M   O P I N I O N

Appellants Duane and Darline Rutherford are homeowners in the Greenwood Forest subdivision in Houston.  They sued appellees Greenwood Forest Fund Inc. d/b/a Greenwood Forest Property Owners Association (AGreenwood@) and Millard A. Norred, Kenneth H. Latimer, Fay L. Gee, John Stofer, and Warren J. Carroll, who are the members of the Greenwood Forest Property Owners Assocation=s Board of Directors,^[1] to stop the proposed sale of a piece of land in the Greenwood Forest subdivision.  Both parties filed motions for summary judgment, and the trial court granted appellees= motion and denied the Rutherfords= motion.  In two issues, the Rutherfords argue that the trial court erred in granting summary judgment for Greenwood.  We affirm.^[2]

                                                  Background

The property known as Reserve C is located in the Greenwood Forest subdivision and contains a club house, tennis courts, and other recreational facilities for subdivision residents and their guests.  Reserve C was formerly owned by the Greenwood Forest Residents Club, Inc., but in December 1998, that club merged into the Greenwood Forest Property Owners Association, as reflected in articles of merger, and title to Reserve C passed to the Property Owners Association.

In 2004, Greenwood proposed to sell a portion of Reserve C to the Champions Area Volunteer Fire Department, which already had a fire station on a different portion of Reserve C.  The Rutherfords opposed the sale and filed suit to stop it, arguing that Greenwood had no authority to sell the property unilaterally.  After both sides moved for summary judgment, the trial court granted Greenwood=s motion and denied the Rutherfords= motion, stating, AThe Court finds that Defendants are vested with the authority to sell all or a portion of Reserve C . . . .@  This appeal followed.

                                           Standard of Review

The summary judgment movant has the burden to show that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law.  Tex. R. Civ. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985).  When both sides move for summary judgment and the trial court grants one motion and denies the other, the reviewing court should review the summary judgment evidence presented by both sides and determine all questions presented.  Comm=rs Court v. Agan, 940 S.W.2d 77, 81 (Tex. 1997).  The reviewing court should then render the judgment the trial court should have rendered.  Id.

                                                      Analysis

In their first issue, the Rutherfords argue that Greenwood has no authority to unilaterally sell all or  part of Reserve C because it is ACommon Area@ under Greenwood=s governing documents.  Section 204.010 of the Texas Property Code sets forth powers of homeowners= associations, including the following:

(a) Unless otherwise provided by the restrictions or the association=s articles of incorporation or bylaws, the property owners= association, acting through its board of directors or trustees, may:

. . .

(20) exercise other powers that may be exercised in this state by a corporation of the same type as the property owners= association; and

(21) exercise other powers necessary and proper for the governance and operation of the property owners= association.

(b) Powers enumerated by this section are in addition to any other powers granted to a property owners= association by this chapter or other law.

Tex. Prop. Code Ann. ' 204.010(a)(20)B(21), (b) (Vernon Supp. 2005).  As a non-profit corporation, Greenwood also has powers provided in the Texas Non-Profit Corporation Act,^[3] which includes the power A[t]o sell, convey, . . . transfer, and otherwise dispose of all or any part of its property and assets.@  Tex. Rev. Civ. Stat. Ann. art. 1396-2.02, ' A(5) (Vernon 2003).

These statutes give homeowners associations broad authority unless Aotherwise provided@ in their governing documents.  Such limitations must be specifically stated.  Brooks v. Northglen Ass=n, 141 S.W.3d 158, 169 (Tex. 2004).  Silence on an issue cannot Aotherwise provide[].@  Id.; see also Brooks v. Northglen Ass=n, 76 S.W.3d 162, 167 (Tex. App.CTexarkana 2002) (AWe can find no instance where silence on the subject has been construed as >otherwise providing.=@), rev=d in part on other grounds, 141 S.W.3d 158 (Tex. 2004).  Thus, the powers provided in these statutes need not be enumerated in a homeowners association=s governing documents.  See Candlelight Hills Civic Ass=n, Inc. v. Goodwin, 763 S.W.2d 474, 478B79 (Tex. App.CHouston [14th Dist.] 1998, writ denied) (A[I]n addition to the express provisions in the restrictive covenants, the appellant is inhered with the powers and purposes enumerated in its articles of incorporation and bylaws. . . . The interaction of the Non-Profit Corporation Act is seen in its authorization of the purchase of real property without the need for an express enumeration of this power.@).

Greenwood clearly has the statutory power to sell property unless Aotherwise provided@ by its governing documents.  Thus, we analyze those documents.  The articles of merger specify that Reserve C will be owned by the Greenwood Property Owners  Association Aas part of the Common Areas.@  Later in the articles of merger, in a section amending Greenwood=s articles of incorporation, Greenwood is given power Ato acquire, own, construct, reconstruct, operate and maintain recreational facilities as part of the Common Areas . . . , including specifically but without limitation, all of Reserve >C.=@  This provision is silent on the issue of selling Common Areas; indeed, another provision confers broad general power to sell real property.  Appellant fails to identify any portion of the governing documents that explicitly limits Greenwood=s power to sell its property.  Given the statutory grant of authority to sell property, in addition to the power granted in the governing documents and their silence on the specific issue of selling Common Area, we hold that Greenwood had authority to sell Reserve C.  Accordingly, we overrule the Rutherfords= first issue.

In their second issue, the Rutherfords argue that because the restrictions applicable to Common Areas do not include the right to sell, those restrictions must be waived before Greenwood can sell.  Because we have already determined that the Common Area restrictions do not prohibit Greenwood from selling the property, there is no need for any restrictions to be waived before Greenwood can do so.  We overrule the Rutherfords= second issue.

We affirm the trial court=s judgment.

/s/      Leslie Brock Yates

Justice

Judgment rendered and Opinion Memorandum filed March 28, 2006.

Panel consists of Chief Justice Hedges and Justices Yates and Anderson.

---

^[1]  In their appellate brief, the Rutherfords explicitly abandoned their claims against the individual members of the board and are proceeding only against the association.

^[2]  In a third issue, the Rutherfords contend that because they are entitled to summary judgment, they are also entitled to attorneys= fees.  Because we conclude the trial court properly granted Greenwood=s summary judgment motion, we overrule this issue as well.

^[3]  In addition, the articles of merger, in a section amending Greenwood=s articles of incorporation, specifically authorize it Ato have and exercise any and all powers, rights and privileges which a corporation organized and existing under the Texas Non-Profit Corporation Act may by law now or hereafter have and exercise.@