Ridgepoint Rentals, LLC v. James W. McGrath and Bernadine L. McGrath ( 2017 )

In The
Court of Appeals
Ninth District of Texas at Beaumont
____________________
NO. 09-16-00393-CV
NO. 09-17-00006-CV
____________________
RIDGEPOINT RENTALS, LLC, Appellant
V.
JAMES W. MCGRATH AND BERNADINE L. MCGRATH, Appellees
On Appeal from the 258th District Court
Polk County, Texas
Trial Cause No. CIV30246
MEMORANDUM OPINION
In cause number 09-16-00393-CV, Ridgepoint Rentals LLC (“Ridgepoint” or
“Appellant”) filed an interlocutory appeal of an order granting a temporary
injunction in favor of James W. and Bernadine L. McGrath (“the McGraths” or
“Appellees”). In cause number 09-17-00006-CV, Ridgepoint filed an appeal of an
order granting a summary judgment and a permanent injunction in favor of the
McGraths. The McGraths and Ridgepoint each own property located in Oak Terrace
Estates in Montgomery County, Texas. The dispute between the parties relates to
1
certain deed restrictions for Oak Terrace Estates that were recorded on February 1,
1971 (the “Deed Restrictions”). We dismiss the appeal in cause number 09-16-
00393-CV as moot, and we affirm the trial court’s order appealed in cause number
09-17-00006-CV.
Original Petition
On September 29, 2016, the McGraths filed an original petition against
defendant Ridgepoint for alleged violations of the Deed Restrictions. According to
the original petition, on March 22, 2010, Lot 18 of Section 4 of Oak Terrace Estates
(“the Property”) was conveyed to Susan and Stefan Ractliffe. On the following day,
Ridgepoint was formed as a Texas limited liability company, with Stefan Ractliffe
as its sole member, and on April 21, 2010, the Ractliffes conveyed the Property to
Ridgepoint.
The McGraths alleged that Ridgepoint was violating the Deed Restrictions,
and that the restrictions were covenants running with the land.1 The Deed
Restrictions stated in relevant part:
1. These covenants are to run with the land and shall be binding
upon all parties and all persons claiming under them until December
31st., 2000, A.D., at which time said covenants shall be automatically
extended for successive periods of Ten (10) years, unless an instrument
1
According to the parties, the subdivision homeowners’ association board
attempted to amend the deed restrictions in 2004, but a majority of owners did not
ratify the proposed amendment. Only the 1971 Deed Restrictions are at issue in this
lawsuit.
2
signed by a majority of the then owners of the tract has been recorded,
agreeing to change said covenants in whole or in part.
2. If the parties hereto, or any of them, or their heirs, successors,
or assigns, shall violate or attempt to violate any of the covenants
herein, it shall be lawful for the undersigned owners, their heirs,
administrators, or assigns to enter and abate such violation without
liability, or they, their heirs, administrators, or assigns, and any other
persons owning any real property situated in said subdivision shall have
the right to prosecute any proceeding at law or equity against the person
or persons violating or attempting to violate such restrictions and either
to prevent him or them from doing, or to cause to be removed such
violation, or to recover damage for such violation.
....
10. The land to be conveyed hereunder shall be used for
residential purposes only, except those which are designated on the
official plat of said addition as being commercial lots or reserves and
except those lots which may from time to time be designated by grantor,
its successors or assigns, for business, recreational or commercial
purposes. The term “residential purposes” as used herein shall be held
and construed to exclude hospitals, clinics, duplex houses, apartment
houses, boarding houses, hotels, and all other commercial uses and all
such uses of said property are hereby expressly prohibited. No building
shall be erected, altered, placed or permitted to remain on any residence
tract other than one detached single family dwelling and a private
garage for not more than two cars.
....
13. No structure of a temporary character, trailer, mobile house,
basement, tent, shack, garage, barn, or other outbuilding shall be used
on any tract any time as a residence either temporarily or permanently.
The McGraths alleged that Ridgepoint had violated the Deed Restrictions by
“operating a weekend/vacation rental of the home situated” on the Property and by
“operation of a hotel” on the Property. The McGraths sought a temporary and
3
permanent injunction, enjoining Ridgepoint from using the Property for weekend or
vacation rentals and enjoining Ridgepoint from advertising the Property for rent for
any period of time less than ninety days.
Answer and Counterclaim
In its answer, Ridgepoint admitted the Ractliffes conveyed the Property to
Ridgepoint. Ridgepoint further alleged that the Ractliffes use the Property as their
own vacation home, that Ridgepoint advertises and leases the Property “for varying
terms, generally less than 14 days[,]” that Ridgepoint pays “the Texas Hotel Tax for
leases of thirty days or less[,]” and that “[h]ouses have long been leased throughout
the subdivision.” Ridgepoint counterclaimed for a declaratory judgment, asking the
court to declare that the Deed Restrictions permit “leasing and leasing for any
duration[.]” Ridgepoint also asserted that the McGraths’ claims were barred by
waiver, abandonment, and estoppel.
October 2016 Hearing
On October 7, 2016, the court held a hearing on the McGraths’ motion for
temporary injunction. Oscar Good testified that he is a member of the Oak Terrace
Estates architectural committee that was established by the Deed Restrictions for the
subdivision. Good agreed he was aware that Ridgepoint had used the Property for
“weekend rentals or vacation rentals” and he was not aware of any other property in
Section 4 of the subdivision used as a hotel. According to Good, at times “four to
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five cars” were at the Property on weekends, and the driveway does not hold that
many cars.
Stefan Ractliffe testified that he and his wife purchased the Property in 2010
and subsequently conveyed it to Ridgepoint, which is a business that he owns.
Ractliffe agreed he had file an application for a hotel occupancy tax on the Property
and that “we’ve obviously been renting it out[]” in addition to staying there and
allowing friends to stay there. Ractliffe explained as follows:
Q. Okay. So you have charged for a short-term rental for a weekend or
a few days?
A. It’s typically a weekend or over a week, a period of a week, typically,
yeah.
Q. Okay. And how many times have you rented it and reported under
this hotel occupancy tax, the use of this as a hotel?
A. Maybe 15 or 20 times.
....
Q. So you’re still renting the property to weekend people.
A. Currently, yes.
Ractliffe explained that he advertises the Property for rent on the VRBO website.
He explained that the rental amount varies by season but ranges “from about $300
to about $450[]” per day. Ractliffe testified that his gross income on the Property
was about $50,000, of which he netted about $42,000 to $45,000.
5
According to Ractliffe, he had spoken with his neighbors concerning tenants
parking on the street, and the rental agreement he uses limits the number of vehicles
to five. Ractliffe also explained that he limits the number of people to nine because
that is how many people the Property sleeps and more than nine people creates wear
and tear on the house and disruption in the area.
James McGrath testified that he and his wife live in the subdivision, where
they own two lots. McGrath explained that he did not know whether people staying
at the Property owned by Ridgepoint were tenants or friends of the Ractliffes and
that no one has parked in the McGraths’ driveway. He agreed that his complaint was
that the Property was rented for weekends, and he understood that rentals for shorter
than ninety days were not allowed by the Deed Restrictions.
On October 19, 2016, the trial court signed an order granting a temporary
injunction, enjoining Ridgepoint from weekend or vacation rentals of the Property
for a period of less than ninety days and ordering Ridgepoint to remove all
advertising of the Property for a rental period of less than ninety days. Ridgepoint
filed an interlocutory appeal of the temporary injunction with this Court.
On November 17, 2016, Ridgepoint filed an amended answer that included a
counterclaim requesting dismissal of the plaintiffs’ claims with prejudice. Therein,
Ridgepoint argued that the McGraths’ claims were barred by waiver or abandonment
because
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. . . [l]easing of the living areas of main dwellings for various
durations, including for terms of under 90 days, has occurred at a
sign[i]ficant number of properties at the subdivision for many years
without any owner or entity taking any enforcement action.
Motion for Summary Judgment
The McGraths filed a motion for summary judgment on November 18, 2016.
The McGraths argued that no material issues of fact existed and that “the only issues
are legal issues.” Citing to the testimony of Stefan Ractliffe provided during the
hearing on temporary orders, the McGraths alleged that Ridgepoint started renting
the Property for weekend rentals in August or September 2015, the Property has nine
beds, and Ridgepoint has rented the property “[m]aybe 15 or 20 times[]” for periods
of a week or less, charging $300 to $450 a night. Further, the McGraths alleged that
Ridgepoint has netted around $42,000 to $45,000 in the last year from renting the
Property to persons who are typically from the Houston area and who are not
members of the Ractliffes’ family, that Ridgepoint advertises the Property for rent
on the internet, Ridgepoint filed a Texas Questionnaire for Hotel Occupancy Tax on
May 24, 2016, and Ridgepoint began paying hotel occupancy taxes on July 14, 2016.
According to the McGraths, such activities indicate that Ridgepoint “is operating a
weekend/vacation rental of the home . . . in violation of the 1971 Deed Restriction,
number 10.”
The McGraths argued that the Deed Restrictions at issue in this case compare
to those in Benard v. Humble, 990 S.W.2d 929, 930-32 (Tex. App.—Beaumont
7
1999, pet. denied), a case in which this Court construed a deed restriction that limited
the use of a home to “single-family residence purposes.” In Bernard, we held that
the deed restriction did not permit rentals shorter than ninety days. Id. The McGraths
also relied on Munson v. Milton, 948 S.W.2d 813 (Tex. App.—San Antonio 1997,
writ denied). Notably, Munson was cited by the dissenting opinion in Bernard. 990
S.W.2d at 932 (Burgess, J., dissenting). In Munson, the use of a residence for short-
term rentals was deemed to be prohibited by the restrictive covenants that declared
that
All tracts within the Chisum’s subdivision shall be used solely
for residential, camping or picnic[k]ing purposes and shall never be
used for business purposes. Motel, tourist courts, and trailer parks shall
be deemed to be a business use.
948 S.W.2d at 815, 817-18. The San Antonio court concluded that the restrictive
covenant allowed only residential use. Id. at 816-17. The court read the provisions
together in determining the intent of the covenants and concluded the restrictions
were unambiguous and prohibited the homeowner from “renting and/or leasing said
property to the public for lodging, vacation and recreation purposes.” Id.at 815-16.
The San Antonio Court applied section 202.003 of the Texas Property Code,
explaining that when construing the intent of the framers of the restrictive covenant,
it would “liberally construe the covenant’s language and . . . ensure that every
provision is given effect.” Id. at 816 (citing Tex. Prop. Code Ann. § 202.003(a)
8
(West 2014)).2 The court explained that “[a]lthough the term ‘residence’ is given a
variety of meanings, residence generally requires both physical presence and an
intention to remain.” Id. at 816-17. "If a person comes to a place temporarily, without
any intention of making that place his or her home, that place is not considered the
person’s residence.” Id. at 817. Additionally, the court noted that the “Texas
Property Code draws a distinction between a permanent residence and transient
housing, which includes rooms at hotels, motels, inns and the like.” Id. (citing Tex.
Prop. Code Ann. § 92.152(a) (West 2014); Warehouse Partners v. Gardner, 910
S.W.2d 19, 23 (Tex. App.—Dallas 1995, writ denied)).
Similarly, the McGraths cited to Tarr v. Timberwood Park Owners
Association, Inc., 510 S.W.3d 725 (Tex. App.—San Antonio 2016, pet. granted),
wherein the San Antonio court followed Munson and again held that the short-term
stays at issue therein were prohibited by the wording in the applicable deed
restrictions, which provided as follows:
All tracts shall be used solely for residential purposes, except
tracts designated on the above mentioned plat for business purposes,
provided, however, no business shall be conducted on any of these
tracts which is noxious or harmful by reason of odor, dust, smoke, gas
fumes, noise or vibration . . . .[]
2
We cite to the current version of statutes, as subsequent amendments do not
affect the disposition of this appeal.
9
Id. at 729. The McGraths argued that they were entitled to a permanent injunction to
enforce the Deed Restrictions against Ridgepoint. And, the McGraths sought a
summary judgment on their claims and on Ridgepoint’s counterclaim.
Cross-Motion for Summary Judgment
Ridgepoint subsequently filed a cross-motion for summary judgment and a
request for a dismissal of the McGraths’ lawsuit with prejudice. Therein, Ridgepoint
admitted that it rents the Property for periods of fourteen days or less, that it pays
Texas Hotel Tax, and that it netted about $42,000 annually. Ridgepoint argued that
the Property “has none of the features or characteristics of a hotel[]” and that the
Deed Restrictions do not impose duration restrictions on use of properties in the
subdivision. Ridgepoint argued that while the Deed Restrictions do impose duration-
of-use requirements on temporary or other structures set apart from the main
dwelling, they are silent as to any duration-of-use requirement for the main dwelling
with the exception of a basement.3 According to Ridgepoint, the Deed Restrictions
are clear and specific, and a liberal construction, as required by section 202.033 of
the Property Code, favors the free use of the Property and the use of the main
dwelling as a temporary residence. Ridgepoint argued that in the absence of a
limitation on renting or a limitation on duration of use of a main dwelling, a court
3
In his sworn declaration, Stefan Ractliffe attested that the main dwelling at
the Property does not have a basement.
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should not impose one. Ridgepoint also argued that, of the prohibited commercial
uses (“hospitals, clinics, duplex houses, apartment houses, boarding houses, [and]
hotels[]”), only hotels “are presumptively short-term in nature.” Although
Ridgepoint admitted to paying Texas Hotel Tax, Ridgepoint also argued that it does
not operate a hotel, and the Property has no features of a hotel, such as a concierge,
a front desk, or a business office. Ridgepoint further argued that renting for any
duration is not a commercial use and that “its business, to the extent it is one, is to
provide residence use of a home[.]”
Ridgepoint challenged the efficacy of Benard and argued that the minimum
duration requirement in Benard was problematic in the absence of specific language
in the deed restrictions at issue regarding leasing or duration of occupancy.
Ridgepoint further argued that under Tarr and Benard, “an owner of a vacation home
is apparently in violation of deed restrictions if that owner uses his [] own home for
weekends only, in addition to being forbidden from renting for short terms.”
Ridgepoint urged the trial court to reject the reasoning in Tarr and Benard and
instead to adopt the reasoning in Zgabay v. NBRC Property Owners Association, No.
03-14-00660-CV, 2015 Tex. App. LEXIS 9100 (Tex. App.—Austin Aug. 28, 2015,
pet. denied) (mem. op.), in which the Third Court of Appeals found that leasing for
periods of shorter than six months did not violate a deed restriction limiting use to
residential purposes.
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Order Granting Summary Judgment
On December 20, 2016, the trial court signed an order granting summary
judgment for the McGraths and permanently enjoining Ridgepoint from operating a
short-term rental business at the Property. Therein, the trial court observed that the
undisputed evidence reflected that Ridgepoint rented the Property for short periods
of a “weekend” or “a week[,]” Ridgepoint charges $300 to $450 per night, grossed
about $50,000 and netted about $45,000 in the previous year, rented to persons not
members of the Ractliffes’ family and generally to persons from Houston, advertised
the Property for rent on the internet, and paid Texas hotel occupancy taxes. The court
also observed that, despite Ridgepoint’s assertion of the defense of waiver and
abandonment of the Deed Restrictions, there was no evidence of other short-term
rentals in the section of the subdivision where the Property was located. The trial
court concluded as follows:4
The Defendant is operating a weekend/vacation rental of the
home situated on Lot 18 in violation of the 1971 Deed Restriction,
number 10. Such use also amounts to use of the Property for non
residential purposes, including but not limited to operating a hotel that
is prohibited under the deed restrictions, specifically number 10.
....
The Court finds that the Defendant has violated the Restrictive
Covenants, and the relief sought by Plaintiffs should be granted, and
4
The order also awarded attorney’s fees to the McGraths, which we do not
address herein because the Appellant has not challenged the attorney’s fees on
appeal.
12
the Defendant should be ordered to cease and desist from short term
rentals of the Property for period[s] of time of less than ninety (90)
days.
Ridgepoint timely filed its notice of appeal.
Appeals
On October 19, 2016, in cause number 09-16-00393-CV, Ridgepoint Rentals
filed its notice of interlocutory appeal of the trial court’s order granting the
temporary injunction. The trial court later rendered a final order granting the
McGraths summary judgment and a permanent injunction on December 20, 2016,
while the interlocutory appeal of the temporary injunction was pending before this
Court.
When a trial court renders a final judgment while an appeal of an order
granting or denying a temporary injunction is pending, the temporary injunction
order becomes moot. See Richards v. Mena, 820 S.W.2d 372 (Tex. 1991); Isuani v.
Manske-Sheffield Radiology Grp., P.A., 802 S.W.2d 235, 236 (Tex. 1991). In this
case, the temporary injunction and the summary judgment (which includes a
permanent injunction) address the same parties, same issues, and same property.
Accordingly, because the interlocutory appeal is now moot, we dismiss the appeal
of the temporary injunction in cause number 09-16-00393-CV for lack of subject-
matter jurisdiction. See, e.g., BCH Dev., LLC v. Lakeview Heights Addition Prop.
Owners’ Ass’n, No. 05-14-00003-CV, 2015 Tex. App. LEXIS 3908 (Tex. App.—
13
Dallas Apr. 17, 2015, no pet.) (mem. op.); Livingston v. Arrington, No. 03-11-
00266-CV, 2012 Tex. App. LEXIS 3413 (Tex. App.—Austin Apr. 25, 2012, no pet.)
(mem. op.).
In appellate cause number 09-17-00006-CV, Ridgepoint challenges the trial
court’s order granting summary judgment in favor of the McGraths. Initially,
Ridgepoint argues that the trial court erred in making findings of fact on the
summary judgment. Next, Ridgepoint argues that the trial court erred in determining
that the Deed Restrictions prohibit short-term rentals and Ridgepoint argues that a
“residential purposes only” restriction imposes no minimum duration on occupancy
or leasing. Finally, Ridgepoint argues that the trial court erred in ordering only a
$1,000 temporary injunction bond when the “unrebutted evidence” established that
Ridgepoint had netted about $42,000 in rents on the property in the previous year.
Standard of Review
We review a trial court’s order granting summary judgment de novo, taking
as true all evidence favorable to the nonmovant, and indulging every reasonable
inference and resolving any doubts in the nonmovant’s favor. Cmty. Health Sys.
Prof’l Servs. Corp. v. Hansen, 525 S.W.3d 671, 680 (Tex. 2017); Joe v. Two Thirty
Nine Joint Venture, 145 S.W.3d 150, 156-57 (Tex. 2004); Provident Life & Accident
Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003) (citing Sw. Elec. Power Co. v.
Grant, 73 S.W.3d 211, 215 (Tex. 2002)). To prevail on a traditional motion for
14
summary judgment, the movant must show that no genuine issue of material fact
exists and that it is entitled to judgment as a matter of law. See Tex. R. Civ. P.
166a(c); Provident Life, 128 S.W.3d at 216. An issue is conclusively established “if
reasonable minds could not differ about the conclusion to be drawn from the facts in
the record.” Childs v. Haussecker, 974 S.W.2d 31, 44 (Tex. 1998). We also review
a trial court’s interpretation of restrictive covenants de novo. Buckner v. Lakes of
Somerset Homeowners Ass’n, Inc., 133 S.W.3d 294, 297 (Tex. App.—Fort Worth
2004, pet. denied).
Findings of Fact
Appellant argues that the trial court erred in making findings of fact in its
order granting summary judgment and that this Court should review the summary
judgment de novo. Appellees argue that, to the extent the trial court’s order sets forth
findings of fact, such would not affect this Court’s review.
A trial court should not make findings of fact in connection with a summary
judgment. IKB Indus. (Nigeria) Ltd. v. Pro-Line Corp., 938 S.W.2d 440, 441 (Tex.
1997); Reynolds v. Reynolds, No. 14-14-00624-CV, 2015 Tex. App. LEXIS 12009,
at *15 (Tex. App.—Houston [14th Dist.] Nov. 24, 2015, no pet.) (mem. op.) (citing
Coastal Transp. Co. v. Crown, Cent. Petroleum Corp., 20 S.W.3d 119, 125 (Tex.
App.—Houston [14th Dist.] 2000, pet. denied)); Eland Energy, Inc. v. Rowden Oil
& Gas, Inc., 914 S.W.2d 179, 188 n.7 (Tex. App.—San Antonio 1995, writ denied).
15
Findings of fact have no place in a summary judgment proceeding because, for
summary judgment to be rendered, there cannot be a genuine issue as to any material
fact, and the legal grounds are limited to those stated in the motion and response.
See Tex. R. Civ. P. 166a(c); Linwood v. NCNB Texas, 885 S.W.2d 102, 103 (Tex.
1994); Stiles v. Resolution Trust Corp., 867 S.W.2d 24, 26 (Tex. 1993); Willms v.
Ams. Tire Co., 190 S.W.3d 796, 810 (Tex. App.—Dallas 2006, pet. denied) (“If
summary judgment is proper, there are no facts to find, and the legal conclusions
have already been stated in the motion and response.”).
When a trial court makes findings of fact in its ruling on a summary judgment,
any factual recitations in the trial court’s order granting summary judgment are mere
surplusage that we cannot consider in our appellate review. See IKB, 938 S.W.2d at
441; Linwood v. NCNB Texas, 885 S.W.2d 102, 103 (Tex. 1994); see generally
Valley Mun. Util. Dist. No. 2 v. Hild, 578 S.W.2d 827, 829 (Tex. Civ. App.—
Houston [1st Dist.] 1979, no writ) (stating that recitations in a dismissal order that
do not constitute a judgment are mere surplusage). We disregard the surplusage and
we overrule Appellant’s first issue.
Deed Restrictions
Next, Appellant argues that the trial court erred in granting summary
judgment for the McGraths. Appellant argues that, although the Deed Restrictions
require “residential purposes only[,]” they prohibit temporary occupancy only as to
16
the basement of the main dwelling, and they are silent as to leasing or duration of
use. Appellant argues that the court erred in imposing a minimum duration on
occupancy or leasing. Appellant also argues that there is no evidence that the
Property is a hospital, duplex, boarding house, hotel, or that any business is
conducted at the Property. Appellant additionally argues that a prohibition on short-
term leasing as a “business use” of the Property would apply equally to long-term
rentals.
Restrictive Covenants
Restrictive covenants are subject to the general rules of contract construction.
Pilarcik v. Emmons, 966 S.W.2d 474, 478 (Tex. 1998) (citing Scoville v. Springpark
Homeowner’s Ass’n, 784 S.W.2d 498, 502 (Tex. App.—Dallas 1990, writ denied).
An instrument is not ambiguous simply because the parties disagree over its
meaning. Dynegy Midstream Servs., Ltd. P’ship v. Apache Corp., 294 S.W.3d 164,
168 (Tex. 2009) (citing Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd.,
940 S.W.2d 587, 589 (Tex. 1996)); Kelley-Coppedge, Inc. v. Highlands Ins. Co.,
980 S.W.2d 462, 464 (Tex.1998) (holding that mere conflicting expectations or
disputes are not enough to create ambiguity).
Whether a restrictive covenant is ambiguous is a matter of law for the court to
decide. Wenske v. Ealy, 521 S.W.3d 791, 794 (Tex. 2017) (citing Heritage Res., Inc.
v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996); Truong v. City of Houston, 99
17
S.W.3d 204, 214 (Tex. App.—Houston [1st Dist.] 2002, no pet.) (citing Roman
Catholic Diocese of Galveston-Houston v. First Colony Cmty. Serv. Ass’n, Inc., 881
S.W.2d 161, 163 (Tex. App.—Houston [1st Dist.] 1994, writ denied)). A reviewing
court construes an unambiguous instrument as a matter of law. Dynegy, 297 S.W.3d
at 168 (citing Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003)).
When the language of a restrictive covenant is unambiguous, section 202.003(a) of
the Property Code requires that the restrictive covenant be liberally construed to give
effect to its purpose and intent. Jennings v. Bindseil, 258 S.W.3d 190, 195 (Tex.
App.—Austin 2008, no pet.); see Tex. Prop. Code Ann. § 202.003(a) (West 2014).
When terms are not defined, courts determine the parties’ intent by giving the terms
their “plain, ordinary, and generally accepted meaning unless the instrument shows
that the parties used them in a technical or different sense.” Heritage Res., 939
S.W.2d at 121; see also Truong, 99 S.W.3d at 214 (citing Wilmoth v. Wilcox, 734
S.W.2d 656, 657-58 (Tex. 1987)) (“Words and phrases in the covenant must be
given their commonly accepted meaning.”); Travis Heights Improvement Ass’n v.
Small, 662 S.W.2d 406, 409 (Tex. App.—Austin 1983, no writ) (Language in a
restrictive covenant “will be given its plain grammatical, ordinary and commonly-
accepted meaning, unless it appears that to do so will defeat the intention of the
parties as clearly evidenced by other provisions of the instrument.”).
18
Whether a restrictive covenant is violated by a particular set of facts is also a
question of law, which we review de novo. See Elbar Invs., Inc. v. Garden Oaks
Maint. Org., 500 S.W.3d 1, 3-5 (Tex. App.—Houston [1st Dist.] 2016, pet. denied)
(reviewing de novo whether the facts constituted a violation of a restrictive
covenant). As a general rule, covenants restricting the free use of land are not favored
by the courts, but will be enforced if they are clearly worded and confined to a lawful
purpose. Wilmoth, 734 S.W.2d at 657; Jennings, 258 S.W.3d at 194-95.
Analysis
On appeal, neither party contends that the deed is ambiguous, and we agree.
See Wenske, 521 S.W.3d at 794 (ambiguity is a question of law for the court).
Accordingly, we must first ascertain the parties’ intent as expressed in the language
of the deed and then determine whether the facts in this case constitute a violation
of the Deed Restrictions. See id.; Elbar, 500 S.W.3d at 3-5; Munson, 948 S.W.2d at
816.
The dispute between the parties in this matter pertains to paragraph 10 of the
Deed Restrictions. Therein, the use of the Property is limited to “residential purposes
only[.]” The provision further expressly provides that “[t]he term ‘residential
purposes’ as used herein shall be held and construed to exclude hospitals, clinics,
duplex houses, apartment houses, boarding houses, hotels, and all other commercial
uses and all such uses of said property are hereby expressly prohibited.”
19
For purposes of the hotel occupancy tax, the Texas Tax Code defines “hotel”
to include “a hotel, motel, tourist home, tourist house, tourist court, lodging house,
inn, rooming house, or bed and breakfast.” Tex. Tax Code Ann. § 156.001(a) (West
Supp. 2016). The statute also provides that “hotel” includes short-term rentals of all
or part of a residential property to a person who is not a permanent resident. Id.
§ 156.001(b).
The undisputed evidence reflects that Ridgepoint started renting the Property
to third parties in August or September 2015 and it rented the Property about twenty
times. According to Stefan Ractliffe, the Property sleeps nine people, and Ridgepoint
rents the Property for periods of “a weekend” or “a week,” charging $300 to $450
per night. Ractliffe testified that the Property was advertised for rent on a website
called “VRBO, which is owned by Home Away, and that [] connects potential
tenants with [] owners and owner operators.” Ridgepoint grossed about $50,000
from rentals of the Property and netted around $42,000 to $45,000. On May 24,
2016, Ridgepoint filed a Texas Questionnaire for Hotel Occupancy Tax with the
State of Texas and began paying hotel occupancy taxes on July 14, 2016, on the
rental of the Property.
20
This Court has previously determined that a short-term rental of ninety days
or less constituted a non-residential use in violation of a deed restriction that limited
use to “single-family residence purposes.” See Benard, 990 S.W.2d at 931-32.5 On
the record before us, we conclude that Ridgepoint’s short-term rentals of the
Property amount to a non-residential purpose, because such rentals constituted the
operation of a hotel or other commercial use and the use was excluded by the Deed
Restrictions. Accordingly, we cannot say the trial court erred in determining that
Ridgepoint’s use of the Property was prohibited by the Deed Restrictions or in
granting the injunctive relief as requested by the McGraths.
Appellant argues that “[t]he deed restrictions here specifically address what
duration-of-use limits apply to what buildings.” Appellant notes that paragraph 13
of the Reservations and Restrictions states:
No structure of a temporary character, trailer, mobile house,
basement, tent, shack, garage, barn, or other outbuilding shall be used
on any tract any time as a residence either temporarily or permanently.
5
We have also previously examined the Deed Restrictions for Section 4 of
Oak Terrace Estates. See generally Architectural Control Comm. of Oak Terrace
Estates v. McCormick, No. 09-10-00495-CV, 2011 Tex. App. LEXIS 9114 (Tex.
App.—Beaumont Nov. 17, 2011, no pet.) (mem. op.) (finding no evidence supported
the jury’s finding that the deed restrictions had been abandoned). In McCormick, we
explained that “[i]tem 10 requires that a lot be used only for residential purposes
unless the lot is designated on the official pl[a]t as a commercial lot.” Id. at *3. We
also explained that “Section 4 is restricted to residential use, with certain exceptions
not applicable here. The deed restrictions include a restriction that the lots not be put
to commercial use.” Id. at *8.
21
Appellant argues that because paragraph 13 evinces the drafters’ intent to limit
duration-of-use as to outbuildings, but paragraph 10 is silent as to duration-of-use
limits, the trial court erred in imposing a duration-of-use limitation on the main
dwelling. However, the duration of use in paragraph 13 pertains to temporary
structures, whereas paragraph 10 limits the use of the property to “residential
purposes” and then specifically states that “[t]he term ‘residential purposes’ as used
herein shall be held and construed to exclude hospitals, clinics, duplex houses,
apartment houses, boarding houses, hotels, and all other commercial uses and all
such uses of said property are hereby expressly prohibited.” We conclude that the
plain and unambiguous language of the Deed Restrictions prohibits the short-term
rentals.
We reject Appellant’s reliance upon Zgabay v. NBRC Property Owners
Association. See 2015 Tex. App. LEXIS 9100, at *8 (concluding that a restrictive
covenant that restricted use “for single family residential purposes only” permitted
rentals and placed no time limits on the duration of a lease). The deed restriction at
issue in Zgabay was silent regarding prohibitions against commercial uses and
22
factually distinguishable from the case at bar. See id. at *1 (disputed deed restriction
stated “for single family residential purposes”).6, 7
Appellant also argues that construing the Deed Restrictions to prohibit short-
term rentals would, in effect, create various other problems, including situations
involving property co-owned by multiple parties, leases to multiple lessees, post-
6
We also distinguish the present case from Boatner v. Reitz, decided by the
Austin Court of Appeals. See Boatner v. Reitz, No. 03-16-00817-CV, 2017 Tex.
App. LEXIS 7967, at **1, 8-9 (Tex. App.—Austin Aug. 22, 2017, no pet.) (mem.
op.). While the deed restriction in Boatner limited use “for residence purposes only,
and not for business[,]” it did not define “residence purposes” or “business” or
specify what activities constitute business use. Id.; cf. Garrett v. Sympson, 523
S.W.3d 862 (Tex. App.—Fort Worth 2017, pet. filed) (court determined that short-
term rentals were not prohibited where disputed deed restriction did not define
residential or commercial purposes). In our case, however, the Deed Restrictions
specifically define “residential purposes” as excluding “hospitals, clinics, duplex
houses, apartment houses, boarding houses, hotels, and all other commercial uses[.]”
Accordingly, we are guided by the specific language of the restriction itself.
7
Appellant also cites to the following cases from jurisdictions outside Texas:
Dunn v. Aamodt, 695 F.3d 797 (W.D. Ark. 2012); Slaby v. Mountain River Est.
Residential Ass’n, Inc., 100 So. 3d 569 (Ala. Civ. App. 2012); Houston v. Wilson
Mesa Ranch Homeowners Ass’n, Inc., 360 P.3d 255 (Colo. App. 2015); Roaring
Lion, LLC v. Exclusive Resorts PBL1, LLC, Nos. 30152 and CAAP-12-0000003,
2013 Haw. App. LEXIS 232 (Haw. Ct. App. Apr. 24, 2013); Pinehaven Planning
Bd. v. Brooks, 70 P.3d 664 (Idaho 2003); Applegate v. Colucci, 908 N.E.2d 1214
(Ind. Ct. App. 2009); Lowden v. Bosley, 909 A.2d 261 (Md. 2006); Mullin v.
Silvercreek Condo. Owners Ass’n, Inc., 195 S.W.3d 484 (Mo. Ct. App. 2006);
Estates at Desert Ridge Trails Homeowners’ Ass’n v. Vazquez, 300 P.3d 736 (N.M.
Ct. App. 2013); Mason Family Trust v. DeVaney, 146 N.M. 199 (N.M. Ct. App.
2009); Yogman v. Parrott, 937 P.2d 1019 (Or. 1997); Scott v. Walker, 645 S.E.2d
278 (Va. 2007); Wilkinson v. Chiwawa Communities Ass’n, 327 P.3d 614 (Wash.
2014); Ross v. Bennett, 203 P.3d 383 (Wash. Ct. App. 2008).
23
sale lease-backs, or an owner’s temporary hardship during which a short-term lease
could prove beneficial. Such are not the facts in the case at bar, and we do not address
such hypotheticals as we may not render advisory opinions. See Tex. Ass’n of Bus.
v. Tex. Air Control Bd., 852 S.W.2d 440, 444 (Tex. 1993); see also Rusk State Hosp.
v. Black, 392 S.W.3d 88, 95 (Tex. 2012) (noting that “the Texas Constitution does
not afford courts jurisdiction to make advisory decisions or issue advisory
opinions”). We also need not decide whether the Deed Restrictions permit long-term
rentals, as the record before us does not present this question. See Tex. R. App. P.
47.1. We overrule Appellant’s second issue.
Temporary Injunction Bond
Appellant’s third issue argues that the trial court erred in ordering a $1,000
temporary injunction bond because the “unrebutted evidence” established that
Ridgepoint’s annual rental income was about $42,000. As we have already
explained, Ridgepoint’s appeal of the order granting a temporary injunction was
mooted when the trial court rendered summary judgment. See, e.g., Isuani, 802
S.W.2d at 236. When the appeal on the temporary injunction became moot, all
previous orders pertaining to the temporary injunction are set aside by the appellate
court and the case is dismissed. Texas Foundries, Inc. v. Int’l Moulders & Foundry
Workers’ Union, 248 S.W.2d 460, 461 (Tex. 1952). Therefore, the order granting
the temporary injunction, which also ordered the temporary injunction bond, has
24
expired, and an appeal pertaining to such order is moot.8 See Estate of Sheshtawy,
478 S.W.3d 82, 85 (Tex. App.—Houston [14th Dist.] 2015, no pet.) (explaining that
final judgment rendered moot any issue on appeal relating to appellant’s request for
a temporary injunction); Jordan v. Landry’s Seafood Rest., Inc., 89 S.W.3d 737, 741
(Tex. App.—Houston [1st Dist.] 2002, pet. denied) (same). We lack jurisdiction to
render an opinion on a matter that has become moot, hence we render no opinion
concerning the amount of the temporary injunction bond. See Valley Baptist Med.
Ctr. v. Gonzalez, 33 S.W.3d 821, 822 (Tex. 2000) (explaining that a mooted appeal
presents no live controversy, such that a court has no jurisdiction to render an opinion
thereon); see also Tex. R. App. P. 47.1.
We dismiss the accelerated appeal in appellate cause number 09-16-00393-
CV as moot, and we affirm the trial court’s order in appellate cause number 09-17-
00006-CV.
DISMISSED AS MOOT; AFFIRMED.
_________________________
LEANNE JOHNSON
Justice
8
No bond is required for a permanent injunction. See Tex. R. Civ. P. 684; see
also Regal Entm’t Grp. v. iPic-Gold Class Entm’t, LLC, 507 S.W.3d 337, 345-46
(Tex. App.—Houston [1st Dist.] 2016, no pet.) (explaining that the applicant for a
temporary injunction must post a bond to protect the defendant from the harm he
may sustain as a result of temporary relief granted upon the reduced showing
required of the injunction plaintiff, pending full consideration of all issues) (citing
DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 686 (Tex. 1990)).
25
Submitted on July 11, 2017
Opinion Delivered December 7, 2017
Before Kreger, Horton, and Johnson, JJ.
26