Opinion issued August 19, 2014
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-13-01031-CV ——————————— IN RE THE SIGNORELLI COMPANY, INC., SIGNORELLI OPERATING CORPORATION, SIGNORELLI HOLDINGS, LTD., SIGNORELLI INVESTMENT COMPANY, LTD., SIGNORELLI INVESTMENT OPERATING COMPANY, L.L.C., SIGNORELLI HOMES, LTD., SIGNORELLI HOMES OPERATING COMPANY, L.L.C., SIGNORELLI MEDIA, LTD., LAKE CONROE RESORTS, LTD., AND LAKE CONROE RESORTS OPERATING COMPANY, L.L.C., Relators
Original Proceeding on Petition for Writ of Mandamus
OPINION
Relators, The Signorelli Company, Inc., Signorelli Operating Corporation,
Signorelli Holdings, Ltd., Signorelli Investment Company, Ltd., Signorelli
Investment Operating Company, L.L.C., Signorelli Homes Ltd., Signorelli Homes Operating Company, L.L.C., Signorelli Media, Ltd., Lake Conroe Resorts, Ltd.,
and Lake Conroe Resorts Operating Company, L.L.C. (collectively, “Signorelli”),
bring this original mandamus proceeding complaining of the trial court’s order
denying their motion to transfer venue from Harris County to Montgomery County
based on the mandatory venue provision found in Texas Civil Practice and
Remedies Code section 15.011.1 We conditionally grant the petition for writ of
mandamus.
Background
The underlying proceeding arises from a dispute concerning an agreement
between Signorelli and real party in interest Champion Custom Home Builders,
L.L.C. (“Champion”) related to a real estate development project.
Champion is a custom home builder. Signorelli is a real estate developer
and home builder. In approximately 2007, Signorelli started a development named
“Bella Vita” on a tract of land located in Montgomery County, Texas. 2 In
connection with the development, Signorelli prepared an “Amended and Restated
Declaration of the Covenants, Conditions, and Restrictions for Bella Vita” (the
“Declaration”). Pursuant to the Declaration, Signorelli appointed itself and its
1 The underlying proceeding is Champion Custom Homes Builders, LLC v. The Signorelli Company, Inc. et al., No. 2013-45469, in the 165th District Court of Harris County, Texas, the Honorable Elizabeth Ray presiding. 2 The parties do not dispute that the Bella Vita development is located in Montgomery County.
2 employees and agents as the “New Construction Committee,” which was in charge
of approving builders for the development and ensuring that the builders operated
in accordance with the Declaration and the rules and regulations adopted by the
Bella Vita Homeowners Association.
In 2009, Champion became involved with Bella Vita when an owner of a lot
in the development asked Champion to complete construction on the owner’s
home. Champion sought approval from Signorelli to complete the construction
project, which was provided.
Subsequently, Champion was approached by other lot owners to construct
additional homes in the Bella Vita development. It was at this point that Signorelli
informed Champion that it must first become an “approved builder” before
Champion could begin additional construction projects. The parties then engaged
in discussions regarding the means by which Champion could become an approved
builder. To this end, Champion and Signorelli entered into an Approved Builder
Purchase Agreement (“Builders Agreement”), through which Champion purchased
two lots in the Bella Vita development from Signorelli in exchange for
Champion’s becoming an approved builder. However, the parties’ relationship
appears to have deteriorated after the signing of the Builders Agreement.
Champion filed suit in Harris County district court, alleging that Signorelli
had made false representations and promises to Champion in order to induce
3 Champion to invest in the Bella Vita development. Champion asserted causes of
action for fraud, statutory fraud, breach of the Builders Agreement and the
Declaration, and violation of the Texas Deceptive Trade Practices Act; and it
sought to recover monetary damages. Champion also brought a claim for
declaratory judgment and for rescission of the Builders Agreement, under which
Signorelli had conveyed two parcels of land in the Bella Vita development to
Champion.
Signorelli moved to transfer venue to Montgomery County arguing, inter
alia, that venue was mandatory in that county pursuant to Texas Civil Practice and
Remedies Code section 15.011 as the county where the real property at issue in the
case was located. Champion argued in its response that section 15.011 did not
apply in the present case and that venue was proper in Harris County under general
venue provisions as the county where all or a substantial part of the events giving
rise to the claim occurred.
The trial court denied Signorelli’s motion to transfer venue, and Signorelli
filed a petition for writ of mandamus challenging the trial court’s denial.3
3 The only argument presented by Signorelli on mandamus is that the trial court erred in failing to transfer venue to Montgomery County pursuant to Civil Practice and Remedies Code section 15.011—a mandatory venue provision.
4 Standard of Review
Generally, a venue ruling is not a final judgment ripe for appeal. See TEX.
CIV. PRAC. & REM. CODE ANN. § 15.064(a) (West 2002); TEX. R. CIV. P. 87(b).
However, mandamus relief is appropriate to enforce a mandatory venue provision
when the trial court has denied a motion to transfer venue. See TEX. CIV. PRAC. &
REM. CODE ANN. § 15.0642 (West 2002); In re Lopez, 372 S.W.3d 174, 176 (Tex.
2012) (orig. proceeding) (per curiam); In re Transcon. Realty Investors, Inc., 271
S.W.3d 270, 271 (Tex. 2008) (orig. proceeding) (per curiam).
In an original proceeding regarding the application of a mandatory venue
provision, the appellate court reviews the trial court’s ruling on a motion to transfer
for an abuse of discretion. See In re Applied Chem. Magnesias Corp., 206 S.W.3d
114, 117 (Tex. 2006) (orig. proceeding); In re Cont’l Airlines, Inc., 988 S.W.2d
733, 735 (Tex. 1998) (orig. proceeding). “[A] clear failure by the trial court to
analyze or apply the law correctly will constitute an abuse of discretion . . . .”
Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig. proceeding). When a
relator seeks to enforce a mandatory venue provision, it is not required to prove
that it lacks an adequate appellate remedy and is only required to show that the trial
court clearly abused its discretion by failing to transfer the case. See In re Lopez,
372 S.W.3d at 176–77; In re Mo. Pac. R.R., 998 S.W.2d 212, 215–16 (Tex. 1999)
(orig. proceeding).
5 Analysis
Certain kinds of suits involving land must be filed in the county where the
property is located. Specifically, Civil Practice and Remedies Code section 15.011
provides:
Actions for recovery of real property or an estate or interest in real property, for partition of real property, to remove encumbrances from the title to real property, for recovery of damages to real property, or to quiet title to real property shall be brought in the county in which all or a part of the property is located.
TEX. CIV. PRAC. & REM. CODE ANN. § 15.011 (West 2002).
Two venue facts must be established to show that venue is mandatory under
section 15.011: (1) that the nature of the suit fits within those listed in section
15.011; and (2) that all or part of the realty at issue is located in the county of suit.
Poock v. Wash. Mut. Bank, F.A., No. 01-08-00415-CV, 2009 WL 2050905, at *6
(Tex. App.—Houston [1st Dist.] July 16, 2009, no pet.) (mem. op.); Airvantage,
L.L.C. v. TBAN Props. #1, L.T.D., 269 S.W.3d 254, 258 (Tex. App.—Dallas 2008,
no pet.). It is undisputed that the property at issue in this original proceeding is
located in Montgomery County; thus, the sole issue to be decided in this case is
whether the suit falls within the parameters of section 15.011. See In re Applied
Chem., 206 S.W.3d at 117.
The Texas Supreme Court has stated that we are to look at the “essence” of a
dispute to determine whether it falls under the mandatory venue statute. See id. at
6 119; see also Yzaguirre v. KCS Res., Inc., 53 S.W.3d 368, 371 (Tex. 2001)
(examining “substance of the dispute”). “It is the ultimate or dominant purpose of
a suit that determines whether a particular suit falls under the mandatory venue
statute, and not how the cause of action is described by the parties.” In re City
Nat’l Bank, 257 S.W.3d 452, 454 (Tex. App.—Tyler 2008, orig. proceeding)
(citing Bracewell v. Fair, 638 S.W.2d 612, 615 (Tex. App.—Houston [1st Dist.]
1982, no writ)).
The nature of the suit is determined by the facts alleged in the plaintiff’s
petition, the rights asserted, and the relief sought. Brown v. Gulf Television Co.,
306 S.W.2d 706, 708 (Tex. 1957); In re Hardwick, 426 S.W.3d 151, 161 (Tex.
App.—Houston [1st Dist.] 2012, orig. proceeding); see also Airvantage, 269
S.W.3d at 258 (“Whether the recovery is called conversion, breach of contract, or
other non-real property types of recovery, the true nature of the lawsuit depends on
the facts alleged in the petition, the rights asserted, and the relief sought.”). “Thus,
once it is demonstrated that the court’s judgment would have some effect on an
interest in real property, the venue of the suit is properly fixed under section
15.011.” In re Hardwick, 426 S.W.3d at 161 (citing Bracewell, 638 S.W.2d at 615,
and Airvantage, 269 S.W.3d at 259). If section 15.011 applies to one of the claims
or causes of action, then all claims and causes of action arising from the same
transaction must be brought in the county of mandatory venue. See TEX. CIV.
7 PRAC. & REM. CODE ANN. § 15.004 (West 2002); In re Hardwick, 426 S.W.3d at
161; Airvantage, 269 S.W.3d at 259.
Because of its mandatory nature, we must strictly construe section 15.011
and will “not hold that it applies unless [Champion’s] suit is clearly within one of
the categories set out in the statute.” Marantha Temple, Inc. v. Enter. Prods. Co.,
833 S.W.2d 736, 739 (Tex. App.—Houston [1st Dist.] 1992, writ denied); see also
Allison v. Fire Ins. Exch., 98 S.W.3d 227, 241 (Tex. App.—Austin 2002, pet.
granted, judgm’t vacated w.r.m.) (“[W]e will strictly construe [section 15.011] and
will not hold that it applies unless Ballard’s suit falls clearly within one of the
categories in the section.”); In re Riata Energy, Inc., No. 01-00-01138-CV, 2001
WL 1480291, at *1 (Tex. App.—Houston [1st Dist.] Nov. 21, 2001, orig.
proceeding) (mem. op., not designated for publication) (holding that section 15.011
is to be strictly construed).
Here, Signorelli asserts that section 15.011 applies to the present case
because Champion has pled to rescind the Builders Agreement, under which
Champion purchased two parcels of land, and seeks a judgment that would change
ownership of and title to the real property. In doing so, Signorelli relies on this
Court’s decision in Poock.
Poock concerned the propriety of rescission of a release of a lien that
secured an interest in a property. Litigation arose between the parties, David
8 Edwards (“Edwards”) and Washington Mutual Bank, F.A. (“Washington Mutual”),
regarding a home equity loan that was evidenced by a promissory note and secured
by a security instrument on Edwards’ real property. Poock, 2009 WL 2050905, at
*1. After Edwards paid off the loan, but not the attorney’s fee award Washington
Mutual had recovered in the lawsuit with Edwards, it mistakenly filed a release of
its lien on Edwards’ property. Id. at *2. Washington Mutual subsequently
rescinded the release of its lien and then brought suit in Harris County against
Edwards seeking an order from the trial court authorizing foreclosure of Edward’s
home as well as an order confirming the rescission of the release of the lien. Id. at
*3. Edwards filed a motion to transfer venue to Fort Bend County—the county
where Edwards’ property was located. Id. (citing TEX. CIV. PRAC. & REM. CODE
ANN. § 15.011).
On appeal, Edwards asserted that Washington Mutual’s request for
rescission of the release was a claim that involved an interest in real property
covered by section 15.011, while Washington Mutual argued that the “dominant
purpose” of the suit was not to recover an interest in property, but rather to enforce
the trial court’s prior judgment and attorney’s fees award. Id. at *5. This Court
agreed with Edwards and concluded that the parties were actually disputing “the
effectiveness of the release of the lien, . . . and the rescission and Edwards’ and
Washington Mutual’s competing claims to their respective interests in the real
9 property located in Fort Bend County.” Id. at *7. Thus, because Washington
Mutual sought to recover its interest in the property, through confirmation of its
rescission of the release of its lien, this Court held that the action involved an
interest in real property under section 15.011 and that the trial court had erred in
failing to transfer venue. Id. at *10.
Similarly, in In re Hardwick, the parties, Smith Energy Company and Mark
Hardwick, entered into a series of agreements under which Hardwick was to obtain
leases and rights of access for Smith Energy’s oil and gas development in
exchange for cash and an interest in the leases he acquired. 426 S.W.3d at 154.
After business relations between the parties broke down, Smith Energy sued
Hardwick for breach of fiduciary duty, breach of contract, fraud, and civil theft.
Id. at 155. In addition to requesting actual and exemplary damages and attorney’s
fees, Smith Energy sought “forfeiture of all compensation paid or granted to
[Hardwick], including all assigned mineral interests and overriding royalty
interests.” Id. Hardwick subsequently moved for a transfer of venue, arguing that
venue was mandatory in one of the counties where the property interests at issue
were located, based in part on section 15.011. Id.
This Court concluded that “because Smith Energy ha[d] prayed for the
equitable remedy of forfeiture to obtain from [Hardwick] certain specified ‘mineral
10 interests and overriding royalty interests,’” the case involved a dispute over the
rightful ownership of property. Id. at 162. We concluded,
[A]lthough Smith Energy’s claims are premised upon allegations of breaches of contractual and fiduciary duties, through the mechanism of this lawsuit, Smith Energy in substance seeks, as part of its remedy, the recovery of real property interests. Because a judgment that awarded such relief would have some effect on an interest in real property, venue is properly fixed under Section 15.011.
Id. at 163.
Here, just as in In re Hardwick, Champion has premised its claims upon
allegations of breach of contract and fraud. As part of its remedy, it seeks, in
substance, the rescission of a contract in which the parties transferred real property.
See id. If the trial court determined that Champion was entitled to such relief, the
judgment awarding that relief would transfer title of the real property that is the
subject of the Builders Agreement from Champion to Signorelli, and thus it would
have some effect on an interest in real property. We conclude, just as this Court
did in In re Hardwick and Poock, that the substance of at least one of Champion’s
claims affects an interest in real property, and thus venue is properly fixed in
Montgomery County under section 15.011. See id.; Poock, 2009 WL 2050905, at
*10.
Champion argues, however, that section 15.011 does not apply in this suit
because its request for rescission of the Builders Agreement was not the “dominant
purpose” of its petition, as evidenced by the fact that Champion pled for rescission
11 in the form of alternative relief. Thus, it is not the “heart of the controversy” or the
“controlling issue in the case.” However, one of Champion’s claims—the claim
for the equitable remedy of rescission of the Builders Agreement—does, as its
dominant purpose, seek to have title to real property transferred from one party in
the case to another.
As we discussed above, this case is similar to this Court’s precedent in In re
Hardwick, in which, in addition to alleging claims for breach of contract and
breach of fiduciary duty, the plaintiff claimed in equity that the defendant should
be required to forfeit certain interests in real property. 426 S.W.3d at 161. We
held that venue was properly fixed under section 15.011. Id. Here, Champion
petitioned the trial court to rescind the Builders Agreement, which would have an
effect on an interest in real property, bringing that claim within the scope of section
15.011. And, if section 15.011 applies to one of the claims or causes of action,
then all claims and causes of action arising from the same transaction must be
brought in the county of mandatory venue. See TEX. CIV. PRAC. & REM. CODE
ANN. § 15.004; In re Hardwick, 426 S.W.3d at 161; Airvantage, 269 S.W.3d at
259.
Relying on Miller v. Lochridge, Champion also argues that section 15.011
does not apply because it “is not seeking to recover real property or an estate or
interest in real property, nor is it seeking to partition, remove an encumbrance,
12 recover damages to, or quiet title to real property.” It contends that Texas law
distinguishes between cases in which a plaintiff seeks to reinvest himself with a
property he had previously transferred through a suit for rescission and cases in
which a plaintiff asserts a claim for rescission in the hopes of divesting himself of a
property previously acquired. See Miller v. Lochridge, 416 S.W.2d 573 (Tex. Civ.
App.—Houston 1967, no writ); TEX. CIV. PRAC. & REM. CODE ANN. § 15.011
(setting mandatory venue for actions “for recovery of real property or an estate or
interest in real property”) (emphasis added).
However, Miller did not address the requirements of section 15.011; rather,
this Court considered 15.011’s predecessor statute in determining that because
Miller sought to divest herself of land by seeking to rescind the contract of sale, the
action was not for “recovery” of land and the mandatory venue provision did not
apply. 416 S.W.2d at 573 (emphasis added); see also James v. Eagle Rock Ranch,
304 S.W.2d 471, 476 (Tex. Civ. App.—Austin 1957, no writ) (holding that action
by buyers for rescission of contract for sale of land did not fall within predecessor
statute); Traweek v. Ake, 280 S.W.2d 297, 299 (Tex. Civ. App.—El Paso 1955, no
writ) (same).
In In re Applied Chemical, the Texas Supreme Court discussed the
differences between section 15.011 and its predecessor. The issue presented in In
re Applied Chemical was “whether a declaratory judgment suit to determine the
13 rights of the parties to a contract to acquire surface and mineral leases is an action”
that is subject to the mandatory venue provision in section 15.011. 206 S.W.3d at
115. In addressing this question, the supreme court noted that, unlike partition
suits under the predecessor statute, partition suits now fall under section 15.011
and that section 15.011 now includes “actions for an ‘interest’ in real property.”
See id. at 118. The supreme court stated that section 15.011’s additional reference
to “actions for an ‘interest’ in real property,” which were not addressed by the
predecessor venue provision for real property disputes, “suggests that the
Legislature intended section 15.011 to be more inclusive regarding the types of real
property suits subject to mandatory venue.” Id.
Since the revision of the mandatory venue provision to include the present
language of section 15.011, courts have read section 15.011 to include “actions for
an ‘interest’ in real property.” See Poock, 2009 WL 2050905, at *6; see also In re
Hardwick, 426 S.W.3d at 161 (holding that trial court judgment that would have
some effect on “an interest in real property” invokes section 15.011); In re Brin &
Brin, P.C., No. 13-13-00324-CV, 2013 WL 3895365, at *6–8 (Tex. App.—Corpus
Christi July 23, 2013, orig. proceeding) (considering In re Applied Chemical’s
“analyses concerning mandatory venue regarding an interest in land” in concluding
that suit over rightful ownership of nonparticipating royalty interest fell within
scope of section 15.011).
14 Champion argues that because it is Champion, the plaintiff, that seeks to
have the property returned to Signorelli, this is not a suit that falls within the scope
of section 15.011. Under Champion’s interpretation of the venue provision, if
Signorelli had sought rescission, so that it was asking to “recover” the property,
section 15.011 would cover this suit, but as it is the plaintiff who will lose title,
section 15.011 does not apply. See TEX. CIV. PRAC. & REM. CODE ANN. § 15.011.
Champion has not cited any authority construing section 15.011 in so limited a
way as to include only suits where the plaintiff is the party that would recover an
interest in real property.
Nothing in the language of the statute itself indicates that the Legislature
intended the limited reading Champion would have us give it, and such a narrow
reading does not comport with precedent of this Court and the Texas Supreme
Court, as set out above. We observe that, here, if Champion prevails on its
rescission claim, Champion will give up its interest in the property and transfer it
to Signorelli, from whom Champion purchased it. Signorelli will thus “recover”
the property in exchange for Champion’s receiving back the consideration it paid
for the property, and title will revert to Signorelli.
We decline to interpret section 15.011 so narrowly, especially in light of the
precedent of the Texas Supreme Court and this Court construing the statute to
include actions for an interest in real property. See In re Applied Chem., 206
15 S.W.3d at 118 (holding that section 15.011 “includes actions for an ‘interest’ in
real property” and stating that addition of word “interest” suggests “that the
Legislature intended section 15.011 to be more inclusive regarding the types of real
property suits subject to mandatory venue”); In re Hardwick, 426 S.W.3d at 161
(“[O]nce it is demonstrated that the court’s judgment would have some effect on an
interest in real property, the venue of the suit is properly fixed under Section
15.011.”); Poock, 2009 WL 2050905, at *6 (same).
We conclude that, although Champion’s claims are premised upon breach of
contract and fraud, through the mechanism of the underlying lawsuit it, in
substance, seeks, as part of its remedy, a judgment that would transfer ownership
of an interest in real property. See In re Hardwick, 426 S.W.3d at 163. Thus,
venue is properly fixed in Montgomery County under section 15.011. See id.
16 Conclusion
We hold that the trial court erred by failing to transfer venue pursuant to
section 15.011. Accordingly, we conditionally grant Signorelli’s petition for writ
of mandamus. We direct the district court to vacate its order denying the relators’
motion to transfer venue, and we further direct it to grant the motion. Our writ will
issue only if the district court does not comply with our order.
Evelyn V. Keyes Justice
Panel consists of Justices Keyes, Sharp, and Huddle.