EWB-I, LLC v. PlazAmericas Mall Texas, LLC

527 S.W.3d 447, 2017 WL 2438648, 2017 Tex. App. LEXIS 5160
CourtCourt of Appeals of Texas
DecidedJune 6, 2017
DocketNO. 01-15-00527-CV
StatusPublished
Cited by14 cases

This text of 527 S.W.3d 447 (EWB-I, LLC v. PlazAmericas Mall Texas, LLC) 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
EWB-I, LLC v. PlazAmericas Mall Texas, LLC, 527 S.W.3d 447, 2017 WL 2438648, 2017 Tex. App. LEXIS 5160 (Tex. Ct. App. 2017).

Opinion

OPINION

Harvey Brown, Justice

This appeal arises out of a dispute over the continuing enforceability of restrictive covenants governing the Houston shopping center formerly known as Sharpstown Mall.

EWB-I LLC owns five overflow parking areas along the southern and eastern edge of the mall property that are alleged to be underutilized. EWB (“Overflow Owner”) wishes to develop these overflow parking areas for commercial use, including possibly constructing a free-standing bank on one of the lots, but there are long-standing restrictive covenants that limit the use of these areas to only parking for the mall structure. Overflow Owner filed suit against all other entities to which the mall complex’s restrictive covenants apply, seeking a declaratory judgment that various covenants are no longer enforceable, as well as injunctive relief and damages.

There are seven defendants in the suit: PlazAmericas Mall Texas, LLC (“PlazAm-ericas Texas”); Sharpstown Mall Texas, LLC (“Sharpstown Texas”); Burlington Coat Factory Realty of Bellaire, Inc.; Mai & Matthew, R.E.I., Inc.; CCW, LLC; Smith, FLP, Ltd.; and LG Sharpstown Bellaire, LLC. Each holds an ownership interest in one of the structures within the mall complex. These defendants (referred to collectively as “Structure Owners”) own the three anchor-tenant buildings, the main mall building where smaller retail tenants sell their goods, an adjacent office building, and an on-site parking garage. The party that owns the main mall building also owns the parking surface lots closest to the mall. That party is PlazAm-ericas Texas, which acquired its interest from Sharpstown Texas.

Structure Owners moved for summary judgment and for dismissal of Overflow Owner’s suit. The trial court granted Structure Owners summary judgment on Overflow Owner’s declaratory judgment claims and dismissed the injunctive relief claims for lack of jurisdiction. Ultimately, the trial court entered a take-nothing judgment in favor of Structure Owners on all Overflow Owner’s claims and awarded attorney’s fees.

Overflow Owner appeals, arguing in seven issues that the trial court erred by granting summary judgment, dismissing its claims for injunctive relief, awarding attorney’s fees, entering a final judgment without finally disposing of all claims, and striking certain summary-judgment evidence. We reverse the judgment and remand for further proceedings consistent with this opinion.

Background

Sharpstown Mall was developed more than 40 years ago as the first enclosed, air-conditioned shopping mall in Houston. It was a premiere retail facility with three anchor tenants: Montgomery Ward, J.C. Penney, and Foley’s. The three anchor tenants were connected by a large main mall structure that housed additional, [453]*453smaller retailers. Between the main mall structure and the primary surface parking lots was a multi-floor office building.

To accommodate the traffic to this regional mall, the developer constructed a three-story parking garage near the Foley’s store as well as surface-level parking at each end of the property and along the perimeter of two sides of the property as shown below:

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No single entity owned all the realty for this project. Each anchor-tenant location had a separate owner. The office building had a separate owner. And the original mall developer owned what was left: the main mall structure and all of the parking areas, including the parking garage, the surface parking areas surrounding the mall structure, and the five overflow parking areas. Thus, as originally configured, every owner held an ownership interest in at least one building; no party owned only parking lots. And the success of the entire mall complex required the owners to work together.

To ensure a cohesive approach to the development of the mall, all the various owners, in 1979, entered into or consented to a contract—a Restated Operating Agreement (“ROA”)—that contained various restrictive covenants. The ROA stated that it would be binding on all parties and their successors and assignees until termination of the agreement in 2035 or earlier by agreement. The ROA was part of a “major overhaul” of the mall that added a second story, a food court, the J.C. Penney store, and a parking garage. It governs all aspects of the operation of the mall and the mall complex, including security, maintenance, ingress, egress, and parking. Adequate parking was vital to the success of the entire mall complex.

One of the ROA restrictions was that the parking area (which was defined to include the parking garage and all surface parking lots) had to contain no less than five parking spaces for each 1,000 square feet of floor area in the mall. “Floor area” was defined to include all the floor space in the mall, regardless of whether it was actively being used for retail sales. It prohibited parties from diminishing the area on each party’s parcel reserved for parking or from placing obstructions or permanent improvements of any kind in the parking area or parking garage.

Over the years, individual portions of [454]*454the mall were sold to various successors.1 In 2004, for the first time, ownership of some of the parking areas was transferred to a party that did not also own one of the mall structures. Ownership of the five overflow parking lots was transferred by one of the Structure Owners to a related entity, NBC-Bellaire Parcel Development, LLC. The newly formed entity then used the five overflow parking lot as collateral for a nearly $6 million loan. Appellant EWB is the current successor to the lender. In 2008, NBC-Bellaire defaulted, and the following year, in May 2009, EWB (referred to throughout as Overflow Owner) foreclosed on the five tracts and became the owner of the overflow parking area. Both before and after Overflow Owner obtained its ownership interest, Sharps-town Mall was changing. More specifically, it was declining,

A. The mall’s decline

Sharpstown Mall was developed as a “first class regional shopping center.” But the mall went through a period of transition and decline in the 1990s and 2000s. All three anchor tenants closed within a ten-year period: J.C. Penney closed in the late 1990s; Montgomery Ward closed next; and Foley’s, which was the largest and considered the main anchor of the mall, closed last, in 2007.2

[455]*455In 2010, the J.C. Penney location reopened as “Clarewood Mercado,” which is a collection of small, individual vendors. The Montgomery Ward store was replaced by a retailer with a smaller national presence, Burlington Coat Factory. And the Foley’s site was padlocked and has remained empty.3

Without anchors to draw traffic to the mall, the character of the retailers filling the main mall structure also, changed. The mall retail space was set up as a “flea-market”-style shopping area. Photographs depict caged, micro-retail stores surrounded by vast areas of unused space. There is evidence that the flea-market shopping area did not draw the level of traffic that Sharpstown Mall once enjoyed. There is also evidence that the parking lots would no longer fill, even during the height of Christmas shopping season.

Seeing its parking areas go unused, Overflow Owner sporadically allowed traveling carnivals to operate on its parking lots.

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Cite This Page — Counsel Stack

Bluebook (online)
527 S.W.3d 447, 2017 WL 2438648, 2017 Tex. App. LEXIS 5160, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ewb-i-llc-v-plazamericas-mall-texas-llc-texapp-2017.