Elbar Investments, Inc. v. Garden Oaks Maintenance Organization

500 S.W.3d 1, 2016 Tex. App. LEXIS 5905, 2016 WL 3162044
CourtCourt of Appeals of Texas
DecidedJune 2, 2016
DocketNO. 01-14-00447-CV
StatusPublished
Cited by7 cases

This text of 500 S.W.3d 1 (Elbar Investments, Inc. v. Garden Oaks Maintenance Organization) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Elbar Investments, Inc. v. Garden Oaks Maintenance Organization, 500 S.W.3d 1, 2016 Tex. App. LEXIS 5905, 2016 WL 3162044 (Tex. Ct. App. 2016).

Opinion

OPINION

Michael Massengale, Justice

Appellant Elbar Investments, Inc., appeals from the trial court’s final judgment and permanent injunction in favor of ap-pellee Garden Oaks Maintenance Organization. The court found that Elbar’s property violated Garden Oaks’s deed restrictions, and it issued a permanent injunction that prevented Elbar from selling or re-renting the property in a manner inconsistent with the judgment until it made all commercially reasonable efforts to cure the violation. Elbar appeals, asserting the trial court erred in its interpretation of the deed’s restrictive covenant, and thus it abused its discretion by ordering the permanent injunction.

Because we conclude as a matter of law that there is no evidence that Elbar violated the covenant, we reverse and remand for further proceedings.

Background

The facts underlying this appeal are essentially' undisputed. The property at issue is a lot in the Garden Oaks subdivision. All of the lots in Garden Oaks are subject to deed .restrictions originally established in 1937, including a set of architectural restrictions. These restrictions expressly contemplate homes that accommodate two families. The restrictions do not prohibit resubdivision or make any reference to subdividing lots.

The disputed property was part of a Garden Oaks lot that originally had a frontage of 75 feet. A multi-family duplex residence was constructed on the lot in 1979. When built,- this residence fully complied with the Garden Oaks deed restrictions.

A prior owner split the lot in half, resulting in the two halves of the duplex separately occupying the two. new lots. Each new lot had a frontage of 37½ feet. In 2008, Garden Oaks sued the then-owners of the resubdivided lots for violation of a restrictive covenant in the deed. The restriction at issue stated: “No residence shall be erected on a lot or homesite of less frontage than seventy-five (75) feet.” This suit was dismissed with prejudice after the defendant claimed the two lots had been reunified by a single owner.

In 2010, two separate lenders foreclosed on the property, with each claiming title to one of the resubdivided halves. The western half of the property was sold to Elbar in a nonjudicial foreclosure sale. Garden Oaks subsequently sued the owners of both halves of the property in two separate proceedings, claiming violation of.the 75-foot deed restriction. The record does not disclose the status or result of the suit against the owner of the eastern half of the duplex.

The suit against Elbar was tried to the bench. Garden Oaks’s president testified about the deed restrictions and his opinion that Elbar’s property was in violation of those restrictions because the frontage on the current lot was only 37½ feet. On cross-examination, the president admitted that the duplex on the property was initially in compliance,- and that Elbar had not engaged in any new construction on the property. The president also admitted that to “erect” something usually entails that “something is actually physically constructed.” Elbar’s vice president testified that Elbar had not erected any new strucr ture on the property or made any improvements beyond painting the building.

[3]*3The trial court issued findings of fact and conclusions of law in which it found that the foreclosure sale effectively resub-divided the lot and that the frontage of Elbar’s property was less than 75 feet. It specifically found that “Elbar has not erected any improvements on Elbar’s Property since acquiring it in 2010.” The trial court concluded: “Property that is initially in compliance with deed restrictions can nevertheless fall into noncompliance by the act of subdividing the lot, even if the deed restrictions do not explicitly prevent subdividing lots.” The court thus determined that Elbar’s property was in violation of the restrictions and that Garden Oaks was entitled to some form of relief.

After further briefing by the parties, the court issued a permanent injunction that required Elbar to “use all commercially reasonable efforts to rejoin the west one-half of [the property] with the east one-half.” The injunction provided that unless Elbar could demonstrate that it could not afford to do so, it was required to either purchase the other half of the property or sell its portion to enable the lots to be reunified. The injunction ordered Elbar to refrain from either selling or re-renting the property in any manner inconsistent with that judgment. Elbar appealed.

Analysis

On appeal, Elbar argues the trial court erred by finding a violation of the restrictive covenant and by entering the permanent injunction.

The relevant restrictive covenant states: “No residence shall be erected on a lot or homesite of less frontage than seventy-five (75) feet.” Elbar’s chief argument, both at' trial and on appeal, is that because it did not engage in construction of any kind, it did not “erect” anything on the lot, and therefore it did not violate the covenant. Elbar also argues -that the restrictions did not prohibit resubdivision and therefore there was no other violation. It does not contest the trial court’s factual findings regarding the frontage of the current lot, but it does challenge the legal conclusion that the resubdivision of the lot caused Elbar’s property to violate the restrictive covenant. Garden Oaks responds that the restrictions did hot need to explicitly prohibit subdivision and that the effect of the resubdivision was sufficient to' create a violation of the deed restrictions.

We review a trial court’s legal conclusions de novo. City of Pasadena v. Gennedy, 125 S.W.3d 687, 691 (Tex.App.-Houston [1st Dist.] 2003, pet. denied). The deed restrictions in this case are restrictive covenants concerning real property. See Tex. Prop. Code § 202.001(4). Restrictive covenants are generally subject to the rules of contract construction. Pilarcik v. Emmons, 966 S.W.2d 474, 478 (Tex.1998). We examine the covenant as a whole in light of the circumstances present when the covenant was made. Id. We must give a restrictive covenant’s words and phrases their commonly accepted meaning. Truong v. City of Houston, 99 S.W.3d 204, 214 (Tex.App.-Houston [1st Dist.] 2002, no pet.). Whether restrictive covenants are ambiguous is a legal question, and this court reviews the lower court’s interpretation of a restrictive covenant de novo. Id.-, Gennedy, 125 S.W.3d at 692.

- At common law, covenants restricting the free use of land are not favored but will be enforced when they are confined to a lawful purpose and are unambiguous. E.g., Wilmoth v. Wilcox, 734 S.W.2d 656, 657 (Tex.1987). A covenant is ambiguous if, after the appropriate rules of construction have been applied, it is susceptible to more than one reasonable inter[4]*4pretation. • Pilarcik, 966 S.W.2d at 478; Gennedy, 125 S.W.3d at 692-93.

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500 S.W.3d 1, 2016 Tex. App. LEXIS 5905, 2016 WL 3162044, Counsel Stack Legal Research, https://law.counselstack.com/opinion/elbar-investments-inc-v-garden-oaks-maintenance-organization-texapp-2016.