J. Ray Riley v. Nick C. Caridas

• Court: Court of Appeals of Texas
• Decided: December 29, 2020
• Docket: 01-19-00114-CV
• Status: Published

Opinion

Opinion issued December 29, 2020

In The

Court of Appeals For The

First District of Texas ———————————— NO. 01-19-00114-CV ——————————— J. RAY RILEY, Appellant V. NICK C. CARIDAS, DAVID L. HARSHBARGER, ROBERTO H. VAN DE WYNGARD, BRENDA B. RUBENSTEIN, YUSHA ABOUHALKAH, REBECCA JOYCE FAULCONER, GAIL ANN PRATHER, GREG CLARK, AND THE GALVESTONIAN CONDOMINIUM ASSOCIATION, INC., Appellees

On Appeal from the 281st District Court Harris County, Texas Trial Court Case No. 2016-04629 MEMORANDUM OPINION

This case concerns a condominium owner’s dispute with the condominium

association, its board of directors, and its manager regarding short-term rental of

individual units. Appellant J. Ray Riley alleged that the board of the Galvestonian

Condominium Association (“the Association”) had enacted policies that violated the

Galvestonian’s Declaration of Condominium (the “Galvestonian’s Declaration” or

the “Declaration”), made it unprofitable for him to rent his unit, and created a

monopoly in short-term rentals managed by the Association. He asserted various

statutory and common-law claims, seeking, among other things, declaratory

judgment that multiple policies violated the Galvestonian’s Declaration, monetary

damages, attorney’s fees, and costs. The Association counterclaimed for attorney’s

fees.

Before trial, the court granted partial summary judgment in Riley’s favor,

declaring that two provisions of the Association’s rental policy violated the

Declaration: one policy limited participation in the Association’s rental program and

another surcharged owners who rented outside the program. After a jury trial, the

court entered final declaratory judgment in accordance with the earlier partial

summary judgment and the jury verdict. The court otherwise rendered judgment that

all parties take nothing.

2 Riley, the Association, and the individual defendants appealed. Riley raised

nine issues on appeal that generally challenge: (1) the court’s failure to award

attorney’s fees and costs (issues 1-4); (2) the court’s failure to award monetary

damages for housekeeping surcharges (issue 5); and (3) two additional Association

policies on which the jury found against him (issues 6-9). In its cross-appeal, the

Association raised three issues challenging the partial summary judgment (issues 1

and 2) and the court’s denial of its requested attorney fees (issue 3).

We affirm in part and reverse in part.

Background

I. The Galvestonian

In 1983, Galveston East Condo, Inc., d/b/a The Galvestonian, established a

condominium regime by enacting “The Galvestonian Declaration of

Condominium,” (the “Galvestonian’s Declaration” or the “Declaration”). This

governing document provided that the Galvestonian Condominium Association

(“the Association”), a nonprofit corporation incorporated in 1983, would administer

the condominium and had “the right, power and obligation to provide for the

maintenance, repair, replacement, administration and operation of the Condominium

. . . .” Each owner of a unit in the condominium was a member of the Association.

The Declaration provided for the owners to share in the expenses of administering

and maintaining the condominium, in proportion to their ownership, by common

3 expense charges and special assessments. Both the Declaration and the Association’s

bylaws provided for annual and special meetings, which required that the members

receive prior notice and the opportunity to attend.

Relevant to this appeal, the Declaration provided: “Nothing herein shall

authorize the Board of Directors to furnish services to any person primarily for the

benefit or convenience of any Owner or Owners or any occupant or occupants of

any Residence other than services customarily rendered to all Owners and occupants

of Residences.” The Declaration also provided that each owner’s rights to use the

residences, common elements, or limited common elements extended to the owner’s

guests and tenants.

II. The Rental Program

The Association maintains a turnkey rental program for owners who want to

offer their units for short-term rentals. Participating owners execute an agreement

permitting the Association to act on their behalf, and the Association markets,

schedules, and manages the rentals in exchange for 40% of the rents collected. From

about 1990 until 2011, the rental program was open to all owners who chose to

participate, but in 2011, the Association limited participation to 40% of the

condominium units.

4 III. Riley’s Condominium Unit

In 1989, Riley, an attorney, purchased unit 107 in The Galvestonian

Condominium. The following year, he married Chelita. The Rileys used their unit

most weekends until sometime between 2000 and 2005, when they moved from

Houston to Johnson City, Texas. Riley then enrolled in the rental program, but by

2009 he concluded that the rental program was not covering his expenses. The Rileys

tried to sell the unit, but they were unsuccessful. In April 2011, they sought to reenter

the rental program, and they learned there was a cap on participation. They were

added to the waiting list. Unable to rejoin the rental program, Chelita began

marketing and renting the unit online in order to cover the increased assessments and

taxes. Chelita testified at trial that she wanted to demonstrate the investment value

of the unit in order to make it more attractive to potential buyers.

Riley and several others offered their units for rent outside the rental program

and sometimes at rates lower than those charged by the rental program. Throughout

2014, the Association board discussed concerns that arose from short-term rentals

outside the rental program. These concerns included:

(1) damage to the Galvestonian’s reputation if the independently- rented units did not meet the same standards as the units in the rental program;

(2) independently-renting unit owners reaping benefits of the rental program without paying a fair share of the expenses;

5 (3) lack of adequate insurance for independently-rented units and the potential for lien imposition in the future;

(4) lack of identification and contact information for people renting outside the rental program; and

(5) lower rates charged by independently-renting unit owners that undercut the units in the rental program.

In addition, the Association later became concerned about whether the

independently-renting unit owners were properly paying hotel taxes. The

Association internally acknowledged that all unit owners had the right to enter into

short-term rentals of their units and that there was no official reason to limit the

rental program to 40% participation. At meetings, including private board

workshops, in 2014 and 2015, the Association’s board discussed proposals to impose

additional fees on owners renting outside the rental program, particularly to cover

amenities such as front desk staff, keys, housekeeping, and beach supplies.

IV. Doubled Housekeeping Fees

In January 2015, the Association published a revised schedule of service

charges for various housekeeping services based on the size of the unit. In addition,

the schedule indicated that the rates were doubled in certain circumstances, including

“Non-rental program unit same day turnover for Guest of Owner/Owner.”1 At trial,

1 This text box appeared at the bottom of the schedule of service charges:

6 Riley’s undisputed testimony was that he paid $320 in doubled housekeeping fees

under this schedule because he was not part of the rental program.

V. The 2015 Rental Rules

In November 2015, Janelle Straach, who also owned a unit at the

Galvestonian, forwarded to Chelita an email, which indicated that the Association’s

board was planning to impose new, additional nightly and resort fees on owners who

rented their units outside the rental program. Riley believed that the additional fees

would make renting his unit unprofitable and “put us out of business.” Around the

same time, Riley became aware that the Association board had been holding

“workshop” meetings that were not open to the members.

On December 7, 2015, Riley sent a 12-page email to the board describing his

concerns. He did not receive a response. Five days after Riley sent the email, the

board met and approved the “Rules and Regulations relating to the Rental of

Residences” (the “2015 rental rules”). The 2015 rental rules specifically addressed

owners who rent their condominium units independent of the rental program. Rule

1.02 of the 2015 rental rules stated that the purpose of these rules was to “achieve

7 greater parity and equity” among owners who rent their condominium units through

the rental program and independently, to ensure that the owner who rents

independently “pays fees to the Association to cover administrative, operating and

maintenance costs (such as, by way of example and not in limitation, front desk

services, continental breakfasts, beach towels, cleaning and maintaining Common

Areas and recreational areas, recreational activities, trash disposal, utility costs,

personnel expenses, marketing expenses, information technology and internet

services, professional expenses, and general wear and tear) in the same manner as

Owners who rent their Residences through the Program,” and to give the Association

“a means of identifying persons who have a right to be on the premises, as well as a

right to use the recreational areas and other facilities.” The 2015 rental rules provided

for the following: (1) prohibited renting to a person younger than 25 years old;

(2) required disclosure of information about renters and their vehicles to the

Association; (3) prohibited smoking in a residence or on a residence balcony;

(4) prohibited pets; (5) limited the number of people who could occupy a rented

condominium unit according to the number of bedrooms; (6) required payment of a

nightly resort fee; (7) required owners renting independent of the rental program to

pay a nightly fee to cover administrative, operational, and maintenance costs that

ranged from $45 to $90 per night depending on the size of the condominium unit;

8 (8) payment of taxes including hotel occupancy taxes; and (9) authorized the

Association to impose fines for noncompliance with the rules.

VI. Riley’s suit and the Association’s counterclaims

In January 2016, Riley filed suit against the Association, the individual

members of the Association’s board of directors, and the Galvestonian’s managing

agent, Greg Clark. Riley sought appointment of a receiver and alleged causes of

action for: (1) violations of the Texas Free Enterprise and Antitrust Act;

(2) violations of the Texas Condominium Act and the Texas Uniform Condominium

Act; (3) breach of restrictive covenants in the Declaration, which Riley also pleaded

were of contract; (4) breach of the Association’s bylaws; (5) civil conspiracy; (6)

breach of fiduciary duties; and (7) negligence and mismanagement. These causes of

action arose from the disputes about the rental program, Association meetings, the

composition of the board of directors, and meetings of the board of directors. Riley

sought an injunction to prevent enforcement of the December 2015 rental program

rules and implementation of the fee schedules that charged owners renting

independent of the rental program for nightly rental, resort, and rush turnaround

housekeeping fees. He also sought statutory penalties, monetary damages, and

attorney’s fees and costs.

The Association and the individual defendants filed a counterclaim for

reasonable attorney’s fees and costs of litigation for successfully defending Riley’s

9 claims for violations of the Texas Condominium Act and for breach of restrictive

covenants in the Declaration and the bylaws. They also pleaded for attorney’s fees

under the Texas Free Enterprise and Antitrust Act, asserting that Riley’s antitrust

causes of action were groundless and brought in bad faith or for the purpose of

harassment.

VII. Pretrial partial summary judgment

Before trial, both sides filed traditional motions for partial summary judgment

regarding certain rental program rules. Riley argued that the Association, the board

of directors, and the manager lacked authority under the law, the Declaration, and

the Association’s bylaws to: (1) limit participation in the rental program; (2) impose

additional fees only on the unit owners who rented their units outside the rental

program; (3) deny the use of amenities to Riley’s rental guests unless additional

nightly rental and resort fees are paid; and (4) restrict who may rent from Riley in

competition with the rental program. The defendants argued that the fees and rental

rules were not improper because the Declaration authorized the Association to

administer the Galvestonian “as reasonably necessary or appropriate to maintain and

operate the Condominium.”

The trial court granted partial summary judgment in favor of Riley, holding

that the Association’s limitation on the number of units that could participate in its

rental program violated the Declaration and that the Association was not authorized

10 to impose additional fees on owners who rented their units outside the rental

program.

VIII. Trial

During trial, Riley nonsuited the breach of restrictive covenant claims against

the eight individual defendants, and the trial court granted directed verdict in favor

of the Association on other causes of action. After seven days of testimony,

including testimony about attorney’s fees, the remaining claims were submitted to

the jury. The court’s charge asked if specific provisions of the 2015 rental rules were

“arbitrary, capricious, or discriminatory.” The jury found that only one provision—

“charging an independent rental owner more than a Rental Program owner for rush

housekeeping services provided by the Galvestonian”—was arbitrary, capricious, or

discriminatory. The jury found that the remaining provisions were not arbitrary,

capricious, or discriminatory, that Riley incurred no damages as a result of the 40%

limitation on participation in the rental program, and that the Galvestonian did not

negligently cause harm to Riley related to the rental program losses.

The jury was also asked to determine the amount of attorney’s fees for Riley

and for the Galvestonian. The jury found that “a reasonable fee, if any, for the

necessary attorney services” for Riley for “services related to breach of

contract/restrictive covenants through trial and the completion of proceedings in the

trial court” was $228,750. The jury found that “a reasonable fee, if any, for the

11 necessary services of The Galvestonian’s attorneys” was $76,175 for “services

related to antitrust for the representation through trial and the completion of

proceedings in the trial court,” and $42,117 for “services related to restricted [sic]

covenants through trial and the completion of proceedings in the trial court.”

IX. Post-verdict and post-judgment motions

Riley filed a motion to disregard certain jury findings and for entry of

judgment. Riley argued that he was entitled to attorney’s fees as a prevailing party

on his cause of action for breach of the restrictive covenants because he prevailed in

the pretrial partial summary judgment. He asserted that he, not the defendants, was

the prevailing party and entitled to attorney’s fees under section 5.006 and section

82.262(b) of the Texas Property Code. Riley asked the trial court to disregard the

jury findings on attorney’s fees for the defendants under the Texas Free Enterprise

and Antitrust Act because they did not show that his antitrust claims were groundless

and brought in bad faith or for the purpose of harassment. He also asked the court to

disregard the jury’s finding that the Association’s rule prohibiting renting to people

under the age of 25 was not arbitrary, capricious, or discriminatory because that rule

conflicts with the Declaration.

The defendants filed a motion for judgment notwithstanding the verdict. They

argued that there was no evidence or insufficient evidence to support the jury’s

verdict that $228,750 was a reasonable and necessary amount of attorney’s fees for

12 Riley related to his cause of action for breach of restrictive covenants or contract.

They argued that the trial testimony about Riley’s and his wife Chelita’s fees did not

satisfy the proof necessary for a lodestar determination of reasonable and necessary

fees, particularly in the absence of any contemporaneous billing records or

documents evidencing the nature of the work, the time spent on various activities,

and who completed which tasks.

The defendants argued that Riley was not a prevailing party because he

recovered no actual damages and because the undisputed evidence at trial showed

that the Association had voluntarily eliminated the 40% limitation on participation

in the rental program and the doubled housekeeping fees for rush turnaround service

during the pendency of the case. The Association also declined to implement the

rules imposing nightly and resort fees on outside renters while the case was pending.

Finally, they argued that because Riley nonsuited his claims against the individual

defendants after a motion for directed verdict during trial, the individual defendants

were the prevailing parties on the breach of restrictive covenant claims and entitled

to recover their attorney’s fees.

X. Final judgment

In its final judgment, the trial court declared:

2. A Rental Program that is not available to all condominium owners violates The Galvestonian Declaration of Condominium.

13 3. Imposing fees on owners who rent outside the Rental Program violates the Galvestonian Declaration of Condominium.

4. The following provisions of the Galvestonian’s Proposed Rules and Regulations are not arbitrary, capricious, or discriminatory:

(a) An independent rental owner shall not rent to a person under the age of 25 years.

(b) Smoking is prohibited in an independent rental owner’s unit (including balcony).

(c) Pets are not permitted in an independent rental owner’s unit.

(d) Limiting the number of guests allowed in an independent rental owner’s unit.

(e) Requiring the name and contact information of the person renting an independent rental owner’s unit.

(f) The Fining Policy for the Galvestonian Condominium Association, which states: “this fining policy shall not apply to owners for violations committed by persons renting a unit through the Rental Program.”

5. The following provision is arbitrary, capricious, o[r] discriminatory:

(a) Charging an independent rental owner more than a Rental Program owner for rush housekeeping services provided by the Galvestonian.

The court also rendered judgment that Riley take nothing on any of his causes

of action, including his claim for attorney’s fees. The court ordered that the

Galvestonian recover nothing from Riley on its claim for attorney’s fees. All other

requests for relief were denied.

14 Riley filed a motion to modify the judgment asking the court to award

attorney’s fees, costs, and $320 in damages for excessive housekeeping fees. The

trial court denied the motion to modify.

Analysis

Both Riley and the defendants appealed, and both the appeal and cross-appeal

include issues that can generally be characterized as issues affecting the merits of

Riley’s causes of action and issues pertaining to attorney’s fees. Because fee-shifting

statutes often require that a party be a prevailing party in order to recover attorney’s

fees, we will address the issues relevant to the merits of Riley’s causes of action first,

and then we will address the parties’ issues pertaining to attorney’s fees.

I. Two rental rules violated the Declaration (the Association’s issues 1 & 2)

In its first two issues, the Association argued that the trial court erred by

granting partial summary judgment that (1) the Association’s limitation on the

number of units that could participate in its rental program violated the Declaration,

and (2) the Association was not authorized to impose additional fees on owners who

rented their units outside the rental program.

A. Standards of Review

We review de novo both a trial court’s summary judgment and its

interpretation of a restrictive covenant. Lujan v. Navistar, Inc., 555 S.W.3d 79, 84

(Tex. 2018) (summary judgment); Tarr v. Timberwood Park Owners Ass’n, Inc.,

15 556 S.W.3d 274, 279 (Tex. 2018) (restrictive covenant); Duncan v. Dominion

Estates Homeowners Ass’n, No. 01-09-01086-CV, 2011 WL 3505298, at *5–6 (Tex.

App.—Houston [1st Dist.] Aug. 11, 2011, no pet.) (mem. op.) (both). When

reviewing a traditional summary judgment, we must determine whether the movant

showed 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); Lujan, 555 S.W.3d at 84. When both

sides move for summary judgment, and the trial court grants one motion and denies

the other, a reviewing court must render the judgment the trial court should have

rendered. Lancer Ins. Co. v. Garcia Holiday Tours, 345 S.W.3d 50, 59 (Tex. 2011).

Restrictive covenants are treated as valid contracts and construed in

accordance with general rules of contract construction. Tarr, 556 S.W.3d at 279;

Duncan, 2011 WL 3505298, at *5–6; see TEX. PROP. CODE § 202.001(4) (defining

restrictive covenant). “Whether a restrictive covenant is ambiguous is a question of

law for the court to decide by looking at ‘the covenants as a whole in light of the

circumstances present when the parties entered the agreement.’” Tarr, 556 S.W.3d

at 279 (quoting Pilarcik v. Emmons, 966 S.W.2d 474, 478 (Tex. 1998)). Covenants

are ambiguous when they are susceptible to more than one reasonable interpretation,

and they are unambiguous when they can be given a definite or certain legal

meaning. Tarr, 556 S.W.3d at 279. Mere disagreement over the interpretation of a

16 restrictive covenant does not render it ambiguous. Id.; Uptegraph v. Sandalwood

Civic Club, 312 S.W.3d 918, 926 (Tex. App.—Houston [1st Dist.] 2010, no pet.).

Our primary concern when construing a restrictive covenant is to give effect

to the objective intent of the drafters of the restrictive covenant as expressed by the

language used. Tarr, 556 S.W.3d at 280; see Duncan, 2011 WL 3505298, at *5–6.

We examine the restrictive covenant as a whole and give the words their common

meaning at the time the instrument was written. Tarr, 556 S.W.3d at 280; Duncan,

2011 WL 3505298, at *5–6. “A restrictive covenant shall be liberally construed to

give effect to its purposes and intent.” TEX. PROP. CODE § 202.003(a). However, a

court should not construe a covenant to nullify or enlarge a restrictive covenant;

“[n]o construction, no matter how liberal, can construe a property restriction into

existence when the covenant is silent as to that limitation.” Tarr, 556 S.W.3d at 285.

B. A rental program that is not available to all condominium owners violates the Declaration.

In its first issue, the Association argues that the trial court erred by ruling that

the 40% cap on membership in the rental program violated the Declaration. In the

trial court, Riley moved for summary judgment on the grounds that the rule limiting

participation in the rental program conflicted with the Declaration. This was a pure

question of law requiring the court to construe the Declaration and determine

whether the rental rules were consistent with or contrary to it. The Association did

17 not move for summary judgment regarding the cap on the rental program.2 On

appeal, as in his motion for partial summary judgment, Riley argued that section 3.8

of the Declaration prohibits discrimination in the provision of services to owners and

the rental rules are, therefore, prohibited by the Declaration.

Section 1.01 of the contested rental rules adopted in December 2015 include

the limitation on participation in the rental program: “The number of Residences

included in the Program at any given time is capped at forty percent (40%) by

category of Residences.” The 2015 rental rules also provided that “[i]n the event of

a conflict between a provision in the Declaration and a provision in these Rules and

Regulations relating to the Rental of Residences, the provision in the Declaration

shall control.”

The Association argues that it has general authority to adopt the rental rules.

Section 2.5 of the Declaration authorizes the Association to adopt rules “for use of

the Common Elements, the Limited Common Elements, the Parking Spaces, and the

Residences as are necessary or desirable in the judgment of the Condominium

2 On appeal, the Association argues that the trial court erred by granting summary judgment because it presented evidence that the rule was reasonable and not arbitrary, capricious, or discriminatory. See TEX. PROP. CODE § 202.004(a) (“An exercise of discretionary authority by a property owners’ association . . . concerning a restrictive covenant is presumed reasonable unless the court determines by a preponderance of the evidence that the exercise of discretionary authority was arbitrary, capricious, or discriminatory.”). But because this is a question of construction of the Declaration, we do not consider the evidence the Association relies on. It is a pure question of law, not a question of fact. 18 Association for the operation of the condominium.” However, these rules may not

“conflict with the provisions of th[e] Declaration.” Section 3.1, “Authority to

Manage” provided that the Association “shall have the right, power, and obligation

to provide for the maintenance, repair, replacement, administration and operation of

the Condominium . . . as provided in this Declaration, the By-Laws and the Rules

and Regulations.”3

The specific responsibilities of the Association were more fully enumerated

in section 3.8, which concerns the administration of the Condominium, and it

provides that the Association will manage and pay for “out of the Common Expense

Fund”:

(a) utility services;

(b) insurance;

(c) the services of a managing agent and other necessary staff;

(d) supplies, tools, and equipment “reasonably required” for maintenance, operation, and enjoyment of the Condominium;

(e) cleaning, maintenance, repair, reconstruction, and replacement of the common elements;

(f) trash removal; and

3 It authorized the board of directors to “enter into such contracts and agreements concerning the Condominium as a whole, the Common Elements, or the Building,” as the board deemed “reasonably necessary or appropriate to maintain and operate the Condominium as a viable residential Condominium Regime, including, without limitation, the right to grant utility and other easements for such uses as the Board of Directors deems appropriate.” 19 (g) costs of bookkeeping, accounting, bonds, and taxes.

Section 3.8 prohibits the Association from furnishing certain services to some

but not all owners:

Nothing herein shall authorize the Board of Directors to furnish services to any person primarily for the benefit or convenience of any Owner or Owners or any occupant or occupants of any Residence other than the services customarily rendered to all Owners and occupants of Residences. The Board of Directors shall have the exclusive right and obligation to contract for all good, services and insurance in connection with the administration of the Condominium, and all payments therefor shall be made from the Common Expense Fund.

The 2015 rental rules authorized a turnkey rental program to be capped at 40%

participation. A plain reading of this provision indicates that the marketing and rental

management services offered by the rental program would be furnished to some but

not all owners at the Galvestonian. The Declaration does not include marketing and

rental management services among the services customarily rendered to all owners

and occupants of residences. Thus, the plan offered a different type of service to

owners than required by the Declaration and rendered these services only to some

owners, not all of them.

Although the Declaration affords broad general power to the Association to

adopt “necessary or desirable” rules for the operation of the condominium, those

rules cannot conflict the provisions of the Declaration. The rental rule capping the

rental program at 40% conflicted with section 3.8 of the Declaration. Even if the

20 Association had a reason, this sort of disparate provision of services to some but not

all of the owners was prohibited by the Declaration.

The Association also argues that Riley failed to produce evidence that the

board’s action in adopting restrictive rental program rules was arbitrary, capricious,

or discriminatory. Because we have concluded that the Association had no authority

to adopt the rule limiting participation in the rental program, we do not reach the

question of whether the Association exercised its discretionary authority reasonably.

See TEX. PROP. CODE § 202.004(a) (“An exercise of discretionary authority by a

property owners’ association or other representative designated by an owner of real

property concerning a restrictive covenant is presumed reasonable unless the court

determines by a preponderance of the evidence that the exercise of discretionary

authority was arbitrary, capricious, or discriminatory.”).

C. Imposing fees on owners who rent outside the rental program violates the Declaration.

In its second issue, the Association argues that the trial court erred by ruling

that imposing fees on owners who rent outside the rental program violates the

Declaration. In the trial court, both Riley and the Association moved for partial

summary judgment on Riley’s claim that this rule breached a restrictive covenant in

the Declaration. Riley argued that the Association lacked the authority to impose

fees on owners who rent outside the rental program because the Declaration

authorized only two types of assessments and this fee did not comport with either

21 type. The Association argued that such additional fees were not prohibited by the

Declaration. Relying on two Corpus Christi Court of Appeals cases, it also argued

that the fees are not improper because they were charged to those outside renters

who placed “a disproportionate burden on the other homeowners” and caused

“problems for the owners as a whole” by heavily using amenities. We review this

issue de novo because it requires us to construe the Declaration. See Tarr, 556

S.W.3d at 279.

Section 1.02 of the 2015 rental rules required owners who rented outside the

rental program to pay fees that had not previously been assessed:

1.02 Other rentals. Owners of Residences have historically rented their Residences outside or independently of the Program. These Rules and Regulations relating to the Rental of Residences do not prevent Owners from renting their Residences outside the Program. However, in an effort to safeguard the Association and all Owners, and to achieve greater parity and equity among Owners who rent their Residences through the Program, all rentals of Residences outside the Program must be in accordance with these Rules and Regulations relating to the Rental of Residences to assure that the Association has appropriate information on renters, that all rentals are compliant with the Declaration, and that the Owner of the Residence pays fees to the Association to cover administrative, operating and maintenance costs (such as, by way of example and not in limitation, front desk services, continental breakfasts, beach towels, cleaning and maintaining Common Areas and recreational areas, recreational activities, trash disposal, utility costs, personnel expenses, marketing expenses, information technology and internet services, and general wear and tear) in the same manner as Owners who rent their Residences through the Program. Rentals of Residences outside the Program must also be in accordance with these Rules and Regulations so that the Association has a means of identifying persons who have a right to be on the

22 premises, as well as a right to use the recreational areas and other facilities of the Association. (Emphasis added.)

The 2015 rental rules established a resort fee of $7.00 per night for all short-

term rentals, whether through the rental program or outside the program. The rules

provided that owners who rented through the program would pay a percentage of

rental income while those not in the rental program would pay a nightly fee

depending on the size of the unit and length of the rental term. These fees were

intended to cover the “administrative, operational and maintenance costs, as

described in Section 1.02.”

The Texas Condominium Act provides that an owner in a condominium

regime is “responsible for” his “pro rata share” of:

(1) the expenses to administer the condominium regime and to maintain and repair the general common elements;

(2) in proper cases, the expenses to administer the limited common elements of the buildings in the condominium regime; and

(3) other expenses approved by the council of owners.

TEX. PROP. CODE §81.204(a).4 An owner “is not exempted from the obligation under

this section to contribute toward the expenses of the condominium regime by

waiving the use of the common elements . . . .” Id. §81.204(b).

4 Two chapters of the Texas Property Code apply to condominium regimes; in general, chapter 81, the Texas Condominium Act, applies to condominium regimes created before January 1, 1994, and chapter 82, the Texas Uniform Condominium 23 The Galvestonian’s Declaration mirrors section 81.204. Section 4.1 required

“all owners” to

contribute to the Common Expense Fund as Common Expense Charge in proportion to their Percentage Ownership Interests, the expenses of (a) administration of the Condominium Regime, (b) the administration, maintenance and repairs of the Common Elements, (c) other expenses provided by the terms hereof to be paid by expenses provided by the terms hereof to be paid by the Condominium Association, and (d) those expenses that the Condominium Association agrees to assume pursuant to this Declaration, the By-Laws and Rules and Regulations. The Common Expense Charges shall be assessed in accordance with the provisions of this Article IV. No owner shall be exempt from the obligation to make such contribution to the Common Expense Fund by waiver of the use or enjoyment of the Common Elements, by abandonment of his Residence or for any other reason or under any other circumstances.

“The Common Expense Charge shall be allocated among the Owners

according to their respective Percentage Ownership Interests.” In addition to

common expense charges, the Declaration authorizes the Association’s board to levy

a special assessment when it determines that the common expense charges “are or

may prove to be” insufficient to pay “the costs of operation and management of the

Act, applies to condominiums “for which the declaration is recorded on or after January 1, 1994.” See TEX. PROP. CODE §§ 81.001; id. §§ 82.002. In addition, certain provisions of chapter 82 expressly apply to condominiums for which the declaration was recorded before January 1, 1994. Id. §82.002(c). These provisions include: (1) section 82.054, concerning the construction and validity of declarations and bylaws; (2) section 82.102(a)(1–7), (a)(12–21), (f), (g), concerning the powers of a unit owners’ association; and (3) section 82.161, concerning the effect of violations on rights of action and attorney’s fees. The Galvestonian’s Declaration was recorded in 1983; chapter 81 and the selected provisions of chapter 82, therefore, apply in this appeal. 24 Condominium for a fiscal year, or in the event of casualty losses, condemnation

losses or other events.” Special assessments may only be levied with the prior

majority vote of the members of the Association.

Section 3.8 of the Declaration also expressly provides that costs for certain

services shall be paid from the common expense fund:

The Condominium Association shall, for the benefit of all the Owners, provide, perform, cause to be performed, maintained, acquired, contracted and paid for out of the Common Expense Fund, the following:

(a) Utility services used in or for the Common Elements, water and sewer services used by or consumed by Residences and, if not separately metered or charged, other utility services for the Residences. Electricity, telephone and other utility services metered or charged shall be paid for by the Owner of the Residence served by such utility service.

(b) The insurance required by [the Declaration] and such other policies of casualty, liability and/or other insurance covering persons, property and risks as are in the best interests of the Condominium.

(c) The services of a Managing Agent and such other persons as the Board of Directors, from time to time, determines to be necessary or proper for the daily management, operation and maintenance of the Condominium.

(d) All supplies, tools and equipment reasonably required for use in the management, operation, maintenance, cleaning and enjoyment of the Condominium.

(e) The cleaning, maintenance, repairing, reconstruction and replacement of the Common Elements as the Board of Directors determines to be necessary for the operation of the

25 Condominium in a manner consistent with the desires of the members of the Condominium Association.

(f) The removal of all trash, garbage and rubbish from the central garbage receptacle or receptacles of the Building, including the employment of the public or private services of a garbage collection company or agency.

(g) Costs of (i) bookkeeping of the accounts of the Condominium Association and the annual accounting provided for in the Declaration and in the By-Laws; (ii) legal and accounting services and fees of the Council of Co-Owners; (iii) premiums of fidelity bonds and (iv) taxes and assessments of whatever type assessed against or imposed upon the Common Elements.

The fees levied against owners not participating in the rental program by the

2015 rental rules overlap with the common expense charges. For example, the rental

rules provide that the additional fee may cover “front desk services” and “personnel

expenses.” But the Declaration requires that the common expense fund be used to

pay for the services of both a managing agent as well as “such other persons” that

the board “determines to be necessary or proper for the daily management, operation

and maintenance of the Condominium.”

The rental rules provide that the additional fee may cover “cleaning and

maintaining Common Areas and recreational areas.” The Declaration defines

“common elements” to include recreational areas and “Common Areas,” which are

“the lobbies, hallways, stairs, reception room and other Common Elements intended

to be used for passage or temporary occupancy by persons.” And the Declaration

26 requires that the common expense fund be used to pay for the “cleaning,

maintenance, repairing, reconstruction and replacement of the Common Elements.”

The rental rules provide that the additional fees may be used for “trash

disposal” and “utility costs.” But the Declaration requires that the common expense

fund be used to pay for “removal of all trash, garbage and rubbish from the central

garbage receptacle or receptacles of the Building, including the employment of the

public or private services of a garbage collection company or agency.” The

Declaration also requires that the common expense fund be used to pay for “[u]tility

services used in or for the Common Elements, water and sewer services used by or

consumed by Residences and, if not separately metered or charged, other utility

services for the Residences.”

The Association relies on Gulf Shores Council of Co-Owners, Inc. v. Raul

Cantu No. 3 Family Ltd. Partnership, 985 S.W.2d 667 (Tex. App.—Corpus Christi

1999, pet. denied), and Raymond v. Aquarius Condominium Owners Ass’n, Inc., 662

S.W.2d 82 (Tex. App.—Corpus Christi 1983, no writ), for the proposition that the

general authorizations in the Declaration justify the imposition of additional fees on

owners who rent their units but do not participate in the rental program.

In Gulf Shores, the court of appeals held that, under a Declaration of

Condominium, a council of co-owners could levy fees on condominium unit owners

who rented their units outside a rental pool. 985 S.W.2d at 669. Like the Association,

27 the board of the council of co-owners enacted a policy regulating the rental of units

outside the pool and levied fees on those units “to cover the additional expenses

caused by renters.” Id. The Declaration authorized the council of co-owners to assess

the owners for their pro-rata share of the common expenses “and otherwise as herein

provided.” Id. at 671. The Declaration also expressly provided that the “making and

collection of assessments . . . for Common Expenses shall be subject to the Bylaws.”

Id. The bylaws “provided the Board shall have full power and authority to charge or

assess the members of the corporation for funds required for the performance of its

objects and purposes as set forth in the Declaration.” Id. The court of appeals

concluded that the bylaws authorized the board to “exercise powers necessary or

proper to obtain the object of the corporation,” and to levy fees against owners

renting outside the rental pool, so long as the fees were “reasonably necessary to

achieve the purpose of creating a uniform plan for development and operation of the

condominium project.” Id.

The Association has argued that “similar language” to that used in Gulf Shores

is in the Declaration in this case. We disagree. The Declaration in this case is

different. Section 3.1 of the Declaration incorporates by reference the Texas

Condominium Act, which makes an owner responsible for his pro rata share of

“other expenses approved by the council of owners.” TEX. PROP. CODE §81.204(a).

The Galvestonian’s Declaration states that common expense charges “shall be

28 assessed in accordance with the provisions of this Article IV.” While Article IV

authorizes the board of the Association to levy a special assessment, the standard for

such a special assessment is not the broad standard from Gulf Shores that the

assessment be “reasonably necessary to achieve the purpose of creating a uniform

plan for development and operation of the condominium project.” Id. Instead, the

board must “reasonably determine that the Common Expense Charges so levied are

or may prove to be [in]sufficient to pay the costs of operation and management of

the Condominium for a fiscal year.” In addition, the special assessment “shall not be

levied . . . without the prior approval” of a majority of owners, not merely the board

of the Association. Nothing in the Galvestonian Declaration permits the Association

to levy a common expense charge and then levy a fee that covers at least some of

the same expenses covered by the common expense fund.

The Association also argues that Raymond supports its actions. We disagree.

The Association represents that in Raymond, the court of appeals approved the

levying of fees against owners who did not participate in a rental pool as an exercise

of the board’s power under the Texas Condominium Act. A careful reading of

Raymond, however, shows that it is unlike the present case. 662 S.W.2d at 86. In

Raymond, the condominium owners association sued an owner for nonpayment of

common expenses and special assessments. Id. The owner argued that the common

expense charges and special assessments to pay for maintenance and repair of

29 common elements were inflated due to the existence of a rental pool and that

expenses associated with the rental pool did not qualify as allowable expenses under

the Condominium Act. Id. at 86–87. In Raymond, the issue was the owner’s failure

to pay his pro rata share of expenses, not the levying of additional fees—against

some but not all of the owners—to pay for expenses that the Declaration already

required to be paid from a common expense fund. See id. We conclude that Raymond

is inapposite to the situation presented by this appellate issue.

We conclude that the imposition of the fees described in the 2015 rental rules

on owners who rent their units but do not participate in the rental program is

inconsistent with the Galvestonian’s Declaration. We hold that the trial court did not

err by granting partial summary judgment in Riley’s favor regarding this rule. We

overrule the Association’s second issue.

II. Riley’s challenges to renter age-limit policy (Riley’s issues 6 & 7)

Riley’s sixth and seventh issues concern the 2015 rental rule that prohibited

renting a unit to a person under the age of 25. Riley pleaded that this rule breached

a restrictive covenant, and he moved for partial summary judgment. The trial court

determined that this issue could not be resolved as a matter of law because there was

a question of fact about whether this rule was arbitrary, capricious, or discriminatory.

That fact question was submitted to the jury, which found that the age restriction

was not arbitrary, capricious, or discriminatory. Riley moved for entry of judgment

30 and to disregard certain jury findings, including the finding that the age restriction

was not arbitrary, capricious, or discriminatory. Although he conceded at trial that

this was a question of fact for the jury, in his motion to disregard the jury finding,

Riley argued that this finding was immaterial because this was a question of law for

the court to determine based on statutory construction. The trial court denied the

motion to disregard the jury finding. On appeal, Riley again urges that the finding

should have been disregarded and that the court should have resolved this cause of

action in his favor as a matter of law.5 We disagree.

A motion to disregard a jury finding may be granted only if the finding has no

support in the evidence or the issue is immaterial. USAA Tex. Lloyds Co. v.

Menchaca, 545 S.W.3d 479, 505 (Tex. 2018); Spencer v. Eagle Star Ins. Co. of Am.,

876 S.W.2d 154, 157 (Tex. 1994); C. & R. Transp., Inc. v. Campbell, 406 S.W.2d

191, 194 (Tex. 1966). “A jury answer is immaterial when the question ‘should not

have been submitted, or when it was properly submitted but has been rendered

5 Riley’s issues 6 and 7 are:

6. If restrictive covenants in a condominium declaration do not impose an age or other restriction on persons to whom an owner can rent or lease his unit, can the Association unilaterally impose such a restrictive covenant?

7. If not, did the trial court err in failing to grant Riley relief related thereto? 31 immaterial by other findings.’” Menchaca, 545 S.W.3d at 506 (quoting Spencer, 876

S.W.2d at 157).

In Tarr, the Texas Supreme Court explained that although courts traditionally

have construed restrictive covenants narrowly, a provision added to the Property

Code in 1987 provides that a “restrictive covenant shall be liberally construed to

give effect to its purposes and intent.” 556 S.W.3d at 282 (citing TEX. PROP. CODE §

202.003(a)). The question in Tarr was whether a restrictive covenant in a deed

restriction that required the land to be used for “residential purposes” precluded the

homeowner from engaging in short-term leasing of his house. Id. at 276. The

homeowners’ association contended that it did because the homeowner was using

his house for a business purpose as a commercial rental property. Id. at 277. It

assessed fines against the homeowner, who sought a declaratory judgment that his

use of the house was acceptable.

The Supreme Court declined to reconcile the apparent conflict between the

common-law rule of narrow construction of restrictive covenants and the statutory

rule of liberal construction. Id. at 284–85. It concluded that the covenants

“unambiguously fail to address the property use complained of in this case,” and it

said: “No construction, no matter how liberal, can construe a property restriction into

existence when the covenant is silent as to that limitation.” Id. at 285. Riley relies

on this statement to argue for a narrow interpretation of the Declaration. He also

32 argues that the Declaration does not allow the Association to impose a requirement

that acts as a restrictive covenant. We disagree.

Section 2.5 of the Galvestonian Declaration authorizes the Association to

adopt rules that are not expressly included in the Declaration itself. Section 2.5 of

the Declaration authorizes the Association to

provide such additional rules and regulations for use of . . . the Residences as are necessary or desirable in the judgment of the . . . Association for the operation of the condominium; provided that such Rules and Regulations . . . are not in conflict with the provisions of this Declaration.

This provision is a delegation of discretionary authority to the Association,

and its adoption of the age limitation in the 2015 rental rules was an exercise of that

discretionary authority. “An exercise of discretionary authority by a property

owners’ association . . . concerning a restrictive covenant is presumed reasonable

unless the court determines by a preponderance of the evidence that the exercise of

discretionary authority was arbitrary, capricious, or discriminatory.” TEX. PROP.

CODE § 202.004(a). The jury determined that the adoption of the age limitation rule

was not arbitrary, capricious, or discriminatory. That finding was supported by

testimony at trial from Yusha Abouhalkah, an owner and board member, who

testified that they encourage a family friendly environment as opposed to a spring

break or fraternity party atmosphere and that the age limitation helped ensure

financial responsibility.

33 Riley argues that the amendments to Declaration removed the Association’s

right to approve tenants for short term rentals and that the age restriction rule is an

attempt to create a restrictive covenant by adopting a rule. However, that is expressly

what the Declaration authorizes: section 2.5 of the Declaration states that rules and

regulations adopted by the Association “shall be applicable to the . . . Residences as

if set forth herein.”

Riley has not shown that the jury’s finding on the age limitation was

immaterial. We overrule his sixth and seventh issues.

III. Riley’s challenge to “private” board workshop meetings (Riley’s issues 8 & 9)

In his eighth and ninth issues Riley contends that the Association failed to

comply with sections 82.108, 82.114, and 82.161 of the Texas Property Code, which

concern requirements for open meetings of condominium owners’ associations.6

Both sides moved for summary judgment before trial on this cause of action, and the

defendants moved for a directed verdict at trial. Both sides agreed it was a question

6 Riley’s issues 8 and 9 are:

8. If the Texas Uniform Condominium Act mandates that meeting of the board of directors of a condominium association “must be open to unit owners” subject to the board considering specific limited subject matter in closed executive session, can the Association none the less exclude owners from secret board meetings by calling them workshop meetings?

9. If not, did the trial court err in failing to grant Riley relief related to such practices. 34 of law, and the trial court deferred ruling on the motion. In his motion for entry of

judgment, Riley reurged this claim and asked the trial court to enjoin the Association

from holding secret workshop meetings. In its final judgment, the court denied his

request for injunctive relief.

In his brief, Riley reasserts his claim regarding the secret workshop meetings

and his contentions about statutory construction. He then asserts that the trial court

erred by not granting a writ of mandamus and asks this court to grant a writ of

mandamus.

Mandamus is an extraordinary remedy that is only available in limited

circumstances. See Walker v. Packer, 827 S.W.2d 833, 839–40 (Tex. 1992). To be

entitled to mandamus relief, relator must show both that the trial court clearly abused

its discretion and that no adequate remedy by appeal exists. See In re Kansas City S.

Indus., Inc., 139 S.W.3d 669, 670 (Tex. 2004). “An appeal is inadequate when it

comes too late to correct the [trial] court’s error without the loss of substantial rights

to the complaining party.” Id.

After three years of litigation, the court held a two-week trial and subsequently

considered the parties’ post-verdict and post-judgment motions. Riley has not shown

his entitlement to mandamus relief. See id. We overrule Riley’s eighth and ninth

issues.

35 IV. The trial court did not err by rendering a take-nothing judgment as to the housekeeping fees. (Riley’s 5th issue)

In his fifth issue, Riley argues that the trial court erred by failing to award him

$320 in damages for excessive housekeeping charges. He contends that the amount

of his damages was conclusively proven, and the jury found that charging an

independent rental owner more than a rental program owner for rush housekeeping

services was arbitrary, capricious, or discriminatory.7 In his brief, Riley

characterizes this as a legal sufficiency challenge. See City of Keller v. Wilson, 168

S.W.3d 802, 814 & n.52 (Tex. 2005) (uncontroverted fact issues should not be

submitted to a jury).

A legal sufficiency issue is preserved by “one of the following: (a) a motion

for instructed verdict; (2) a motion for judgment notwithstanding the verdict; (3) an

objection to the submission of the issue to the jury; (4) a motion to disregard the

jury’s answer to a vital fact issue; or (5) a motion for new trial.” T.O. Stanley Boot

Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 220 (Tex. 1992). Riley did not raise

the issue of judgment for the amount of excess rush housekeeping fees in a motion

for instructed verdict, a motion for judgment notwithstanding the verdict, an

objection to the jury charge, a motion to disregard the jury’s verdict or a motion for

7 The jury was not asked to determine the amount of damages, if any, suffered by Riley as a result of the rush housekeeping charges assessed against owners who rented their units outside the rental program. 36 new trial. He did, however, raise the issue in a post-judgment motion to modify the

judgment, in which he argued that he was entitled to judgment in the amount of $320

as a matter of law because the jury found the surcharge on rush housekeeping fees

arbitrary, capricious, or discriminatory and his testimony about the amount of the

fees was not controverted. This challenge was, in substance, a motion for directed

verdict or for judgment notwithstanding the verdict. We conclude that Riley

preserved this issue for appellate review. See Republic Petroleum LLC v. Dynamic

Offshore Res. NS LLC, 474 S.W.3d 424, 429 (Tex. App.—Houston [1st Dist.] 2015,

pet. denied) (“[I]t is not the title of the post-trial motion that governs the standard of

review; rather, it is the relief requested and the substance of the challenge

presented.”).

Riley contends that he is entitled to judgment as a matter of law. We review

this issue de novo. Internacional Realty, Inc. v. 2005 RP West, Ltd., 449 S.W.3d 512,

530 (Tex. App.—Houston [1st Dist.] 2014, pet. denied). A trial court may properly

grant a motion for directed verdict when the evidence is conclusive and establishes

the movant’s entitlement to recovery as a matter of law. See Envtl. Processing Sys.,

L.C. v. FPL Farming Ltd., 457 S.W.3d 414, 426 (Tex. 2015); Pitts & Collard, L.L.P.

v. Schechter, 369 S.W.3d 301, 320 (Tex. App.—Houston [1st Dist.] 2011, no pet.).

Riley asserts that this case is analogous to Duncan v. Dominion Estates

Homeowners Ass’n, No. 01-09-01086-CV, 2011 WL 3505298, at *6 (Tex. App.—

37 Houston [1st Dist.] Aug. 11, 2011, no pet.) (mem. op.), in which this court rendered

judgment for recovery of $250 that had been assessed in a manner contrary to the

homeowners’ association’s restrictive covenants. Id. at *1. In Duncan, the evidence

conclusively proved that the $250 assessment was entirely improper.

In the trial court and on appeal, Riley argued that he “conclusively established

at trial that he had been required to pay $320 more for housekeeping services”

because of the Association’s rule, which doubled certain housekeeping fees for

owners not participating in the rental program. We disagree. Riley gave the only

testimony about how much he paid for double housekeeping fees:

Q. The double turnaround fees that you were charged, do you know how much double turnaround or the time that they were doing that you were charged.

A. I believe it was, like, $320.

Riley’s testimony does not conclusively establish his right to recovery because it is

ambiguous whether the $320 he paid represented only the surcharge as compared to

the rates charged to other condominium unit owners or the total doubled amount of

housekeeping fees. Because the evidence in this case is not conclusive, we hold that

the trial court did not err by denying the motion to modify the judgment and by not

rendering judgment for Riley for $320. We overrule Riley’s fifth issue.

V. Attorney’s fees and costs (Riley’s issues 1–4 & the Association’s issue 3)

A. Entitlement to attorney’s fees and determination of the amount

38 Texas has long followed the “American Rule” prohibiting fee awards unless

specifically provided by contract or statute. MBM Fin. Corp. v. Woodlands

Operating Co., L.P., 292 S.W.3d 660, 669 (Tex. 2009) (citing Tony Gullo Motors I,

L.P. v. Chapa, 212 S.W.3d 299, 310–11 (Tex. 2006)). “To be entitled to an award of

attorney’s fees, a party must file an affirmative pleading requesting them.” Whallon

v. City of Hous., 462 S.W.3d 146, 165 (Tex. App.—Houston [1st Dist.] 2015, pet.

denied) (quoting Menix v. Allstate Indem. Co., 83 S.W.3d 877, 880 (Tex. App.—

Eastland 2002, pet. denied). “[I]f a party pleads facts which, if true, entitle him to

the relief sought, he need not specifically plead the applicable statute in order to

recover [attorney’s fees] under it.” Whallon, 462 S.W.3d at 165 (quoting Gibson v.

Cuellar, 440 S.W.3d 150, 156 (Tex. App.—Houston [14th Dist.] 2013, no pet.)); see

Mitchell v. LaFlamme, 60 S.W.3d 123, 130 (Tex. App.—Houston [14th Dist.] 2000,

no pet.) (holding that appellants, who prayed for attorney’s fees generally, could

argue that they were entitled to attorney’s fees under section 5.006(a) of Property

Code despite not raising applicability of that statute in trial court).

Fee-shifting statutes may be discretionary or mandatory. See Bocquet v.

Herring, 972 S.W.2d 19, 20 (Tex. 1998) (comparing discretionary statutes that state

court “may” award fees with mandatory statutes that state party “may recover,”

“shall be awarded,” or “is entitled to” attorney fees). “In general, the reasonableness

of statutory attorney’s fees is a jury question.” City of Garland v. Dallas Morning

39 News, 22 S.W.3d 351, 367 (Tex. 2000); see Smith v. Patrick W.Y. Tam Tr., 296

S.W.3d 545, 547 (Tex. 2009). But fee-shifting statutes may also specify who

determines the amount of the fees. Meyers v. 8007 Burnet Holdings, LLC, 600

S.W.3d 412, 429 (Tex. App.—El Paso 2020, pet. denied). A statute may explicitly

assign the duty of determining the amount of attorney’s fees to the trial court or the

factfinder. Id. at 429–30. A statute may also “provide[] that the court awards the fees

and in doing so, the court should consider specific factors.” Id.; see Ogu v. C.I.A.

Servs. Inc., No. 01-07-00933-CV, 2009 WL 41462, at *3 (Tex. App.—Houston [1st

Dist.] Jan. 8, 2009, no pet.) (mem. op.) (concluding that fee-shifting statute permitted

a jury trial on the amount of attorney’s fees).

An award of attorney’s fees under a fee-shifting statute must be reasonable

and necessary. Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469,

498, 501 (Tex. 2019). The lodestar analysis applies when a party seeks recovery of

attorney’s fees under any fee-shifting statute. Id. at 495–98, 501. A “claimant

seeking an award of attorney’s fees must prove the attorney’s reasonable hours

worked and reasonable rate by presenting sufficient evidence to support the fee

award sought.” Id. at 501–02. Sufficient evidence includes, at a minimum, evidence

of (1) particular services performed, (2) who performed those services, (3)

approximately when the services were performed, (4) the reasonable amount of time

required to perform the services, and (5) the reasonable hourly rate for each person

40 performing such services.” Id. at 502 (citing El Apple I, Ltd. v. Olivas, 370 S.W.3d

757, 762–63 (Tex. 2012)). “General, conclusory testimony devoid of any real

substance will not support a fee award.” Id. at 501. While “[c]ontemporaneous

billing records are not required to prove that the requested fees are reasonable and

necessary,” the “lodestar calculation should produce an objective figure that

approximates the fee that the attorney would have received had he or she properly

billed a paying client by the hour in a similar case.” Id. at 498, 502.

In addition, attorney’s fees that “relate solely to a claim for which such fees

are unrecoverable,” must be segregated from fees that relate to a claim for which

they are recoverable. Chapa, 212 S.W.3d at 313. “Intertwined facts do not make tort

fees recoverable; it is only when discrete legal services advance both a recoverable

and unrecoverable claim that they are so intertwined that they need not be

segregated.” Id. at 313–14. In some circumstances, it may be necessary for a plaintiff

to segregate fees on a claim-by-claim basis. See Horizon Health Corp. v. Acadia

Healthcare Co., Inc., 520 S.W.3d 848, 884 (Tex. 2017). Commonality of facts alone

does not excuse a plaintiff’s failure to segregate fees. Chapa, 212 S.W.3d at 313–

14; Khoury v. Tomlinson, 518 S.W.3d 568, 581 (Tex. App.—Houston [1st Dist.]

2017, no pet.) (requiring segregation of attorney’s fees; facts of underlying claims

were intertwined but no evidence showed that legal services were intertwined); BSG-

Spencer Highway Joint Venture, G.P. v. Muniba Enters., Inc., No. 01-15-01109-CV,

41 2017 WL 3261365, at *15 (Tex. App.—Houston [1st Dist.] Aug. 1, 2017, no pet.)

(mem. op.) (determining prevailing party status based on success regarding main

issues at trial).

B. The Association is entitled to attorney’s fees, but the individual defendants are not.

In the third cross-appellants’ issue, the Association and the individual

defendants argue that they were the prevailing parties on Riley’s “contractual/breach

of restrictive covenant” claims, and they are entitled to an award of attorney’s fees.

In their first amended original counterclaim, they pleaded for attorney’s fees and

costs under the Texas Uniform Condominium Act, section 82.161 of the Texas

Property Code, and section 15.21(a)(3) of the Texas Business and Commerce Code,

regarding antitrust claims.

In their motion for judgment notwithstanding the verdict for attorney’s fees,

the Association and the individual defendants argued that Riley was not a prevailing

party on his “breach of contract/breach of restrictive covenant claims.” They asserted

that they were the prevailing parties on those claims. They argued that Riley was not

a prevailing party because he did not recover actual damages, and because the

Association voluntarily declined to enforce the 40% cap on membership in the rental

program and the new fees in the 2015 rental rules for owners renting without

participating in the rental program. Finally, the individual defendants asserted that

42 they were prevailing parties because Riley nonsuited his claims against them in order

to avoid an unfavorable ruling.

On appeal, the Association argues that all cross-appellants expressly

counterclaimed for attorney’s fees under chapter 38 of the Texas Civil Practice and

Remedies Code and section 5.006 of the Texas Property Code. The Association

argues that it was the prevailing party on Riley’s breach of contract claims. The

individual defendants, who filed a separate cross-appellants’ brief, only argued on

appeal that they were not required to specifically plead a statutory basis for

attorney’s fees.

Section 38.001 of the Texas Civil Practice and Remedies Code provides that

a “person may recover reasonable attorney’s fees from an individual or corporation,

in addition to the amount of a valid claim and costs, if the claim is for . . . an oral or

written contract.” TEX. CIV. PRAC. & REM. CODE § 38.001(8). “Section 38.001,

however, does not provide for attorney’s fees for a party’s successful defense against

a breach of contract claim.” Cytogenix, Inc. v. Waldroff, 213 S.W.3d 479, 490–91

(Tex. App.—Houston [1st Dist.] 2006, pet. denied). But see Bankcard Processing

Int’l, L.L.C. v. United Bus. Servs., L.P., No. 01-10-01079-CV, 2012 WL 3776024,

at *9 (Tex. App.—Houston [1st Dist.] Aug. 30, 2012, pet. denied) (mem. op.)

(successful defendant may be entitled to attorney’s fees when parties contract for

prevailing party to recover attorney’s fees). Similarly, section 5.006 provides that a

43 successful plaintiff may recover attorney’s fees, but it is silent as to recovery by a

successful defendant: “In an action based on breach of a restrictive covenant

pertaining to real property, the court shall allow to a prevailing party who asserted

the action reasonable attorney’s fees in addition to the party’s costs and claim.” TEX.

PROP. CODE § 5.006(a) (emphasis added). The defendants, as successful defendants,

cannot recover attorney’s fees under section 38.001 or section 5.006 because they

were not the parties who asserted the action.8

The Uniform Condominium Act provides that the “prevailing party in an

action to enforce the declaration, bylaws, or rules is entitled to reasonable attorney’s

fees and costs of litigation from the nonprevailing party.” TEX. PROP. CODE §

82.161(b). This statute does not expressly assign the duty of determining the amount

of attorney’s fees to either the court or the factfinder nor does it expressly state that

the court shall consider certain factors in determining the amount of attorney’s fees.

See Meyers, 600 S.W.3d at 429–30. Therefore, the general rule that the factfinder

determines the amount of attorney’s fees applies to awards under section 82.161(b).

See City of Garland, 22 S.W.3d at 367; Smith, 296 S.W.3d at 547.

8 Moreover, Riley’s live pleading did not include a claim for breach of contract. See Eun Bok Lee v. Ho Chang Lee, 411 S.W.3d 95, 106 (Tex. App.—Houston [1st Dist.] 2013, no pet.) (“Trial by consent is intended for the exceptional case in which it appears clearly from the record as a whole that the parties tried an unpleaded issue— it should be applied with care and never in a doubtful situation.”). 44 To the extent that the individual defendants seek attorney’s fees under the

Uniform Condominium Act, that issue was waived by their failure to submit to the

jury an issue on the amount of their reasonable and necessary attorney’s fees.

Because no question regarding reasonable and necessary attorney’s fees for services

rendered to the individual defendants was submitted to the jury, their claim for

attorney’s fees is waived. See TEX. R. CIV. P. 279 (“Upon appeal all independent

grounds of recovery or of defense not conclusively established under the evidence

and no element of which is submitted or requested are waived.”); Intercont’l Grp.

P’ship v. KB Home Lone Star L.P., 295 S.W.3d 650, 659 (Tex. 2009) (“Given that

both parties tried questions of breach and attorney’s fees to the jury, Intercontinental

cannot be excused for failing to submit a jury question on attorney’s fees incurred in

defending KB Home’s lawsuit on the written contract, or otherwise preserving the

issue for appellate review.”).

The Association, however, pleaded for attorney’s fees under Texas Property

Code section 82.161, which provides: “[t]he prevailing party in an action to enforce

the declaration, bylaws, or rules is entitled to reasonable attorney’s fees and costs of

litigation from the nonprevailing party.” TEX. PROP. CODE § 82.161(b). In Rohrmoos

Venture v. UTSW DVA Healthcare, LLP, the Texas Supreme Court held that a

defendant can be a prevailing party when it obtains “actual and meaningful relief,

materially altering the parties’ legal relationship, by successfully defending against

45 a claim and securing a take-nothing judgment on the main issue or issues in the

case.” 578 S.W.3d at 486.

At trial, the damages issue asked: “What sum of money, if paid now in cash,

would fairly and reasonably compensate Mr. Riley for his injuries, if any, that

resulted from The Galvestonian enforcing a 40% cap on the Rental Program?” The

measure of damages in the jury charge was: “[t]he difference, if any, between the

profit Mr. Riley earned as an independent unit renter and the amount he would have

earned as part of the Rental Program.” The jury answered “zero.” Because the

Galvestonian secured a take-nothing judgment on the main issue in the case, it is

entitled to attorney’s fees. See TEX. PROP. CODE § 82.161(b); Rohrmoos Venture,

578 S.W.3d at 486.

At trial, a question regarding the “reasonable fee, if any, for the necessary

services of The Galvestonian’s attorneys” was submitted with granulated questions

for services related to antitrust and services related to restrictive covenants. “The

Galvestonian” was defined in the court’s charge as “Defendant Galvestonian

Condominium Association.” The jury found that a reasonable fee for the necessary

services of the Association’s attorneys related to restrictive covenants through the

completion of proceedings in the trial court was $42,117. Accordingly, we reverse

the trial court’s judgment denying attorney’s fees to the Association on its claim for

attorney’s fees, and we render judgment in favor of the Association for $42,117.

46 C. Riley is entitled to remand on his claim for attorney’s fees and costs.

In his first and second issues, Riley argues that he was the prevailing party on

his claim for breach of restrictive covenants and is entitled to an award of attorney’s

fees. See TEX. PROP. CODE § 5.006.9 In his third issue he argues that the trial court

erred by not allowing him to recover costs under the Texas Rules of Civil Procedure.

His fourth issue asserts that the trial court erred by failing to state on the record good

cause for not adjudging costs in his favor.

Section 5.006 of the Property Code provides: “In an action based on breach

of a restrictive covenant pertaining to real property, the court shall allow to a

prevailing party who asserted the action reasonable attorney’s fees in addition to the

party’s costs and claim.” TEX. PROP. CODE § 5.006(a). An award of attorney’s fees

to a prevailing plaintiff under this statute is mandatory. BCH Dev., LLC v. Lakeview

Heights Addition Prop. Owners’ Ass’n, No. 05-17-01096-CV, 2019 WL 2211479,

9 On appeal, Riley does not rely on any other statute to support his claim that he is entitled to attorney’s fees. Riley pleaded for attorney’s fees generally. The jury was asked to determine “a reasonable fee” for the “necessary attorney services” related to “breach of contract/restrictive covenants.” The jury found that the lump sum of $228,750 was a reasonable fee. In his motion for entry of judgment and subsequent motion to modify the judgment, Riley argued that he was entitled to attorney’s fees as the prevailing party under Texas Property Code sections 5.006(a) (attorney’s fees in breach of restrictive covenant action) and 82.161(b) (attorney’s fees under the Uniform Condominium Act). On appeal, he argues that he was the prevailing party in his suit to enforce restrictive covenants against the Association (issue 1) and that the court erred by not awarding him reasonable and necessary attorney’s fees and costs of suit under section 5.006(a) (issue 2). He does not complain on appeal about the trial court’s failure to award attorney’s fees under section 82.161.

47 at *11 (Tex. App.—Dallas May 21, 2019, pet. denied) (mem. op.); see Inwood N.

Homeowners’ Ass’n, Inc. v. Meier, 625 S.W.2d 742, 744 (Tex. Civ. App.—Houston

[1st Dist.] 1981, no writ). “Whether a party prevails turns on whether the party

prevails upon the court to award it something, either monetary or equitable.”

Intercontinental Grp. P’ship, 295 S.W.3d at 655. A party may be a prevailing party

for the purpose of recovering attorney’s fees when he obtains declaratory relief that

materially alters the legal relationship between the parties. See id.

Unlike section 82.161 under which we held that the Association should

recover the amount of attorney’s fees determined by the jury, section 5.006(b)

expressly states that the court shall consider certain factors in determining the

amount of attorney’s fees:

To determine reasonable attorney’s fees, the court shall consider:

(1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the expertise, reputation, and ability of the attorney; and (4) any other factor.

Id. § 5.006(b); see Meyers, 600 S.W.3d at 429–30.

In Meyers, the court of appeals considered whether section 125.003(d) of the

Civil Practice and Remedies Code required a court, as opposed to the jury, to

determine the amount of attorney’s fees. Id. at 430. Section 125.003(d) provides:

In an action brought under this chapter, the court may award a prevailing party reasonable attorney’s fees in addition to costs. In determining the amount of attorney’s fees, the court shall consider:

48 (1) the time and labor involved; (2) the novelty and difficulty of the questions; (3) the expertise, reputation, and ability of the attorney; and (4) any other factor considered relevant by the court.

TEX. CIV. PRAC. & REM. CODE § 125.003(d). The court of appeals concluded that

“the plain language of the statute” “commits to the trial court both the question of

entitlement to fees and the criteria for awarding fees.” Meyers, 600 S.W.3d at 430–

31. Accordingly, it held that the question of the amount and reasonableness of the

attorney’s fees was a question for the court, not the jury. See id. at 431.

Section 5.006(b) of the Property Code includes language that is nearly

identical to section 125.003 of the Civil Practice and Remedies Code. And section

5.006 plainly commits to the trial court the question of the amount and

reasonableness of an award of attorney’s fees under that section. See TEX. PROP.

CODE § 5.006(b) We hold that the amount of the attorney’s fees that Riley sought

under section 5.006 was a question for the court, not the jury. See id.

Although we have concluded that the Association was the prevailing party on

the merits of Riley’s claim for damages arising from his exclusion from the rental

program, we also conclude that Riley prevailed by obtaining a declaratory judgment

that: “A Rental Program that is not available to all condominium owners violates

The Galvestonian Declaration of Condominium.” See Intercont’l Grp. P’ship, 295

S.W.3d at 655 (party may be prevailing party by obtaining declaratory relief that

materially alters legal relationship between parties). Because Riley was a prevailing 49 party, a fee award under section 5.006 was mandatory. See TEX. PROP. CODE §

5.006(a); BCH Dev., 2019 WL 2211479, at *11; Inwood N. Homeowners’ Ass’n,

625 S.W.2d at 744. We hold that the trial court erred by not awarding Riley any

amount of attorney’s fees.

We sustain Riley’s first two issues. Because the amount of attorney’s to be

awarded under section 5.006 is committed to the trial court, we cannot render

judgment based on the jury verdict. Accordingly, we remand for a new trial on

mandatory attorney’s fees under section 5.006.

Riley also argues on appeal that the trial court erred by not awarding costs or

stating on the record good cause for not awarding costs. See TEX. R. CIV. P. 131

(“The successful party to a suit shall recover of his adversary all costs incurred

therein, except where otherwise provided.”); TEX. R. CIV. P. 141 (“The court may,

for good cause, to be stated on the record, adjudge the costs otherwise than as

provided by law or these rules.”). In light of our remand to the trial court for a new

trial on Riley’s attorney’s fees, we do not need to determine whether the trial court

erred by failing to award costs or state good cause for not doing so on the record.

See TEX. R. APP. P. 47.1. On remand, the trial court should either allocate costs

relevant to the claims for which Riley is the successful party or adjudge the costs

otherwise and state on the record good cause for doing so in accordance with rule

141.

50 Conclusion

We reverse the judgment of the trial court denying an award of attorney’s fees

in favor of the Association, and we render judgment that the Association recover

$43,117 in attorney’s fees. We reverse the judgment of the trial court denying an

award of attorney’s fees in favor of Riley, and we remand for a new trial on

attorney’s fees and consideration of allocation of costs in accordance with this

opinion. We affirm the remainder of the trial court’s judgment.

Peter Kelly Justice

Panel consists of Justices Kelly, Goodman, Countiss