Witkowski v. Brian, Fooshee & Yonge Properties

181 S.W.3d 824, 2005 Tex. App. LEXIS 10225, 2005 WL 3330793
CourtCourt of Appeals of Texas
DecidedDecember 8, 2005
Docket03-03-00768-CV
StatusPublished
Cited by18 cases

This text of 181 S.W.3d 824 (Witkowski v. Brian, Fooshee & Yonge Properties) 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
Witkowski v. Brian, Fooshee & Yonge Properties, 181 S.W.3d 824, 2005 Tex. App. LEXIS 10225, 2005 WL 3330793 (Tex. Ct. App. 2005).

Opinion

OPINION

W. KENNETH LAW, Chief Justice.

We grant appellants’ motion for rehearing, withdraw our opinion and judgment issued June 23, 2005, and substitute the following in its place. 1

This appeal arises from the sale of the River Woods apartment complex, part of which was designated as low-income housing, located in Austin, Texas. Appellants — Pearl Witkowski, Joseph Phillips, and Deanna Warner, individually and on behalf of two classes of all others similarly situated — are former low-income tenants and persons eligible for low-income tenancy at River Woods. 2 Appellants assert that they are entitled to collect damages from appellees, who are the property owners — Brian, Fooshee and Yonge Properties, a general partnership, and Patrick Brian, Jefferson Fooshee, and George Yonge, individuals (collectively, “BFY”)— and the proposed purchaser of the property — Embrey Partners, Ltd. (“Embrey”)— because these parties acted improperly to effect the release of the low-income housing restrictions, resulting in the low-income tenants’ eviction from River Woods.

Following their eviction, appellants filed suit against BFY and Embrey, but the district court granted summary judgments in favor of appellees. Appellants then moved for leave of court to file a fifth amended petition, which was opposed by BFY. Ultimately, the court denied appellants’ motion for leave to amend their petition and issued a final judgment in favor of BFY and Embrey as to all claims asserted by appellants, ordering that appellants take nothing.

Appellants now appeal the trial court’s decision, urging in five issues that the court erred (1) by granting summary judgment in favor of BFY and Embrey and (2) by denying appellants’ motion for leave to amend, thereby “dismissing” the newly asserted claim contained in appellants’ proposed fifth amended petition. We will affirm.

BACKGROUND

The low-income housing restrictions governing the River Woods complex were imposed pursuant to 12 U.S.C. § 1441a, which was enacted following the savings and loan crisis of the late 1980s. See 12 U.S.C. § 1441a (2001 & Supp.2005). As part of § 1441a, Congress established the Resolution Trust Corporation (“RTC”) to serve as a receiver of all properties previously held by failed thrift institutions. See id. § 1441a(b). The River Woods property was previously held by a failed thrift and, thus, by 1990 was under the RTC’s control.

As part of the Act, the RTC was given the authority to sell such residential properties as long as the sale complied with the Affordable Housing Disposition Program (“AHDP”). See id. § 1441a(c). Pursuant to the AHDP, purchasers of thrift property must agree to provide residential housing opportunities to lower and very-low income families. Id. Specifically, the AHDP mandates that “not less than 35 percent of all dwelling units” shall be re *827 served for low-income housing. Id. § 1441a(c)(3)(E)(i)(I). The AHDP further requires that these restrictions be agreed to in a contract or other recorded instrument. Id. § 1441a(c)(3)(E)(ii); see also id. § 1441a(b)(10)(A)(i).

In 1991, the RTC sold River Woods to George Yonge, who conveyed it days later to Brian, Fooshee, and Yonge Properties. In order for the sale of River Woods to comply with the AHDP’s low-income housing regulations, the RTC and Yonge entered a written Land Use Restriction Agreement (“LURA”), which remained in effect when Yonge transferred the property to BFY. The LURA characterized River Woods as an “ ‘eligible multifamily housing property’ as defined in ... 12 U.S.C. § 1441a(c)(9)(D)” and stated that, “[d]uring the Term, Owner will maintain the Property as multifamily rental housing and will ... make continuously available for occupancy by Lower-Income Families ... not less than 40 Units, of which not less than 23 Units shall be made available for occupancy by Very Low Income Families.”

The LURA defined the “Term” as continuing either for forty years, or until the earliest one of four specified events occurred. One of the four events that could cause the Term to expire before the forty-year mark was “the date upon which the RTC or the Agency determines ... (i) that all or a portion of the Property is obsolete as to physical condition ... making it unusable for housing purposes, and (ii) that no reasonable program of modifications is financially feasible to return the Property or a portion of the Property to useful life.” “Agency” was defined in the LURA as “the State Housing Finance Agency [i. e., the Texas Department of Housing and Community Affairs (“TDHCA”) ] or any agency, corporation, or authority of the United States government that normally engages in activities related to the preservation of affordable housing,” which included the RTC or its predecessor, the Federal Deposit Insurance Corporation (“FDIC”). The LURA did not require any procedural steps, such as notice and hearing, before the applicable government agency could end the Term by determining that the property was physically obsolete and financially infeasible to repair.

Six years after acquiring River Woods, BFY agreed to sell the apartment complex to Embrey Partners. This sale was conditioned on obtaining a release of the low-income housing restrictions contained in the LURA. The purchase agreement stated as a “condition precedent” that “Purchaser shall have obtained (and Seller shall have cooperated in a reasonable manner to assist Purchaser) an executed instrument filed at or prior to Closing which abandons and/or releases the restrictive covenants, so that the result is the [LURA] is null and void.”

After Embrey and BFY considered various options for how to remove the “encumbrance” of the LURA, Yonge wrote to the TDHCA requesting that it release the LURA “due to the condition of the property.” Embrey joined BFY’s efforts to have the TDHCA release the LURA. Accordingly, Embrey submitted to the TDHCA a physical inspection report, which described the property as dilapidated and unsuitable for residential habitation, and a redevelopment proposal, which suggested demolishing the existing structure and constructing a new facility on the land. 3

*828 In February 1998, the TDHCA recommended to the FDIC that the River Woods LURA be released. The letter was written by the Executive Director of the TDHCA and stated, “The Department has inspected the property and recommends the LURA be lifted for the entire property. There are project conditions which support a finding of obsolescence and that it is not economically feasible to rehabilitate the existing structures.” The letter also described specific, physical problems that the TDHCA identified as rendering the property unsuitable for habitation or rehabilitation and concluded by listing several reasons to support the agency’s recommendation that the LURA be terminated.

In March 1998, the.

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Bluebook (online)
181 S.W.3d 824, 2005 Tex. App. LEXIS 10225, 2005 WL 3330793, Counsel Stack Legal Research, https://law.counselstack.com/opinion/witkowski-v-brian-fooshee-yonge-properties-texapp-2005.