Waterford Harbor Master Association v. Michael Landolt and Ann Wismer

CourtCourt of Appeals of Texas
DecidedJanuary 23, 2015
Docket14-13-00817-CV
StatusPublished

This text of Waterford Harbor Master Association v. Michael Landolt and Ann Wismer (Waterford Harbor Master Association v. Michael Landolt and Ann Wismer) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Waterford Harbor Master Association v. Michael Landolt and Ann Wismer, (Tex. Ct. App. 2015).

Opinion

Appellees’ Motion for Rehearing Overruled; Appellees’ Motion for En Banc Consideration Denied as Moot; Memorandum Opinion of November 6, 2014 Withdrawn; Affirmed in Part, Reversed and Rendered in Part, and Substitute Memorandum Opinion filed January 22, 2015.

In The

Fourteenth Court of Appeals

NO. 14-13-00817-CV

WATERFORD HARBOR MASTER ASSOCIATION, Appellant

V. MICHAEL LANDOLT AND ANN WISMER, Appellees

On Appeal from the 56th District Court Galveston County, Texas Trial Court Cause No. 12-CV-2145

SUBSTITUTE MEMORANDUM OPINION

We overrule appellees’ motion for rehearing, deny appellees’ motion for en banc consideration as moot, withdraw our opinion issued November 6, 2014, and issue this substitute memorandum opinion. Appellant, Waterford Harbor Master Association (“Waterford”), appeals a final judgment rendered in a suit for declaratory relief and monetary damages filed by appellees, Michael Landolt and wife, Ann Wismer, (“the Landolts”), and on Waterford’s counterclaim for declaratory relief. We affirm in part, and reverse and render in part. I. BACKGROUND

Waterford Harbor is a subdivision in Galveston County comprised of different types of residences, a marina, and parks. In 1991, the Landolts purchased a home in the Waterford Oaks section (“the Oaks”) of Waterford Harbor. The Oaks is an exclusive, private section within Waterford Harbor; access to this section is through a second gate. Within the Oaks is a park area, (“the Oaks park”) which is accessible to residents of Waterford Harbor and the Oaks.

To “create certain easements, [and] . . . assessments . . . in a consistent, compatible, and mutually beneficial manner,” the developer promulgated a “Master Declaration of Restrictive Covenants” (“Master Declaration”). The Master Declaration was executed and filed of record in 1991—there is no dispute that it burdens the Landolts’ property1 and applies to all of Waterford Harbor. The Oaks, often referred to as a “sub-association,” also promulgated a “Declaration for Waterford Oaks,” separate and apart from the Master Declaration. The Oaks Declaration is also filed of record.

Attached to the Master Declaration as Exhibit “B” is the “Waterford Harbor Pro-Rata Share of Reserves.”2 It sets out the total square feet of each Reserve, and the percentage each Reserve represents, as compared to the total square footage of

1 The Master Declaration was to continue through December 31, 2005, and could be extended for one or more periods of ten additional years if approved by a two-thirds vote. 2 The Master Declaration defines a “Reserve” as “(i) any portion of the Property identified by reserve and block number, reserve letter or similar designation on any recorded Plat of the Property or portion of it, and (ii) each other portion of land contained within the Property which shall be designated as a “Reserve” for the purposes of this Declaration in any amended or supplementary declaration or deed hereafter executed by Declarant.”

2 the subdivision. Exhibit “B” lists the Oaks, designated as Reserve G, as containing 394,254 square feet. The Plat for Waterford Harbor identifies the square footage as 594,254, as does the Declaration specific to the Oaks. The total square footage of the Oaks is part of the calculation for determining the amount of the annual assessment for expenses charged to the particular reserve and how that amount of expenses is charged to each lot owner in Waterford Oaks. Specifically, in the Master Declaration, “Pro Rata Share” is defined to mean:

(i) each Reserve, the percentage allocated to each Reserve on Exhibit “B” to this Declaration, and (ii) each Owner of a Lot . . ., a fraction, the numerator of which is the number of Net Square Feet in the Lot(s) owned by the Owner in question and the denominator of which is the number of Net Square Feet in the Reserve, excluding all Common Facilities. . . .” Thus, “Pro Rata Share” is used for two purposes. The first is to calculate the percentage of the Master Association expenses for which each Reserve is responsible; that is, for what percentage of Master Association expenses the Oaks section is responsible. The second is to calculate the amount of the total figure assessed for each Reserve for which each lot owner in that reserve is responsible.3 The “Pro Rata Share” calculation does not bear on voting.

The Landolts learned of a change to the Oaks square footage figures in 2002. The minutes of Waterford’s board of directors reveal that in December 2002, the square footage of the Oaks was changed from the 394,254, as shown on Exhibit “B”, to 594,254, as reflected on the Plat of the subdivision and in the sub- association Declaration. Beginning in 2003, Waterford calculated assessments using the 594,294 square feet figure. The Landolts claim their assessment

3 While there are two assessments on the Landolts’ property; one for the Master Association, and a separate one for the Oaks sub-association, only the Master Association assessment is at issue.

3 increased 7-8%. Since that time, the Landolts have paid their assessments “under protest.”

In May 2012, Waterford’s Master Association called for a vote on three amendments. The first was to amend the Master Declaration to approve the 2002- 2003 change to the total square footage of the Oaks. The second was to allow sub- associations (such as the Oaks) to submit petitions to elect their own boards of directors. The third was to increase approval by membership required to amend the Master Declaration from 51% to 67% for purposes of the Pro Rata Share or termination of the covenants. The minutes of Waterford’s board of directors meeting in June 2012, show Amendment 1 passed with 52.93%, Amendment 2 received 50.98% approval, and Amendment 3 had 50.40%. Because 51% is required to amend the Master Declaration, only Amendment 1 was approved.

In June 2012, the Landolts received a letter asking homeowners to verify the square footage of the owners’ lot, explaining the figures used were taken from the records of the Galveston County Appraisal District (“GCAD”). The letter listed the square footage of the Landolts’ property as 35,911. Michael Landolt testified the property was approximately 36,200 square feet.

The Landolts sued Waterford under the Texas Declaratory Judgment Act, seeking a declaration that the “Oaks park” be considered “Common Facilities.” This declaration, the Landolts urged, would result in a reduction in the amount of assessment because “Community Facilities” are exempt from inclusion in the calculation on which assessments are based. The Landolts also asked the court to declare that a particular section of property, Reserve A, is a common interest property for every resident of Waterford Harbor, arguing every resident should be allowed to vote a pro rata share of that property. They also asked the court to require Waterford to use the square footage listed on the Plat, and not that listed in

4 the GCAD records, for voting purposes. Finally, the Landolts sought recovery of overpayments on assessments based on the increased square footage due to the 2002-2003 change to the square footage contained in the Plat.

The trial court ordered that the 2002-2003 action of Waterford’s board of directors changing the typographical error, correcting the square footage from 394,254 to 594,254, was invalid. The trial court further found the May 2012 vote was invalid because the numbers used were based on the “invalid” 2002-2003 voting numbers. The trial court declared that the “Oaks park” area is not a Common Facility and the trial court rejected that Reserve A should be allocated to the homeowners for purposes of voting. Finally, the trial court awarded the Landolts $16,218.24 (four years of assessments), along with attorneys’ fees, pre and post-judgment interest.

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Waterford Harbor Master Association v. Michael Landolt and Ann Wismer, Counsel Stack Legal Research, https://law.counselstack.com/opinion/waterford-harbor-master-association-v-michael-land-texapp-2015.