Victor S. Elgohary, Representatively on Behalf of Nominal Lakes on Eldridge North Community Association, Inc. v. Lakes on Eldridge North Community Association, Inc. RealManage, LLC Darla Kitchen Don Byrnes Michael Ecklund Laura Vasallo Lee John Kane Julie Ann Bennett Rick Hawthorne Cara Davis Christi Keller Jim Flanary Jill Richardson ( 2016 )

Opinion issued August 16, 2016.
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-14-00216-CV
———————————
VICTOR S. ELGOHARY, REPRESENTATIVELY ON BEHALF OF
NOMINAL DEFENDANT LAKES ON ELDRIDGE NORTH COMMUNITY
ASSOCIATION, INC., Appellant
V.
LAKES ON ELDRIDGE NORTH COMMUNITY ASSOCIATION, INC.;
REALMANAGE, LLC; DARLA KITCHEN; DON BYRNES; MICHAEL
ECKLUND; LAURA VASALLO LEE; JOHN KANE; JULIE ANN
BENNETT; RICK HAWTHORNE; CARA DAVIS; CHRISTI KELLER;
JIM FLANARY; JILL RICHARDSON, Appellees
****
LAKES ON ELDRIDGE NORTH COMMUNITY ASSOCIATION, INC.;
REALMANAGE, LLC; DARLA KITCHEN; DON BYRNES; MICHAEL
ECKLUND; LAURA VASALLO LEE; JOHN KANE; JULIE ANN
BENNETT; RICK HAWTHORNE; CARA DAVIS; CHRISTI KELLER;
JIM FLANARY; JILL RICHARDSON, Appellants
V.
VICTOR S. ELGOHARY, REPRESENTATIVELY ON BEHALF OF
NOMINAL DEFENDANT LAKES ON ELDRIDGE NORTH
COMMUNITY ASSOCIATION, INC., Appellee
On Appeal from the 234th District Court
Harris County, Texas
Trial Court Case No. 2013-17221
MEMORANDUM OPINION
On this day, the Court considered appellants’ motions for rehearing and
reconsideration en banc. The motions were DENIED. However, we withdraw our
previous opinion of December 17, 2015, and issue this opinion in its stead. Our
judgment of December 17, 2015 remains unchanged.
In this dispute between a homeowner and his neighborhood homeowners
association, we consider whether the trial court erred in (1) granting a no-evidence
summary judgment for the homeowners association, (2) granting a traditional
summary judgment for the homeowners association; (3) granting the homeowners
association’s request for declaratory relief; (4) limiting discovery; and (5)
awarding attorney’s fees to the homeowners association. In the homeowners
association’s appeal, we consider whether the trial court erred by reducing the
amount of attorney’s fees awarded to the homeowners association.
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BACKGROUND
On March 22, 2013, after the Lakes on Eldridge North Community
Association, Inc. [“the Association”] voted to change the usage requirements at the
rear restricted access gate of the subdivision, Victor Elgohary, a resident of the
subdivision, sued 10 directors and former directors of the Association [“the
Directors”], RealManage, LLC, the Association’s managing agent, and Christi
Keller, the Association’s managing agent and an employee of RealManage.
Specifically, Elgohary alleged that the Association’s “board of directors has
fundamentally changed the operation and use of the restricted access gate . . . [and]
has not only enacted new limited times of operation and reduced the vehicle size
restriction, but it has made resident access into or out of the northern access point
of the subdivision impossible unless utilizing a motor vehicle.”
Elgohary brought both individual and derivative claims, including breach of
contract, breach of fiduciary duty, negligence, conversion, and theft, asserting that
the Directors and RealManage had misappropriated funds and made expenditures
that were inconsistent with the Association’s non-profit status and its charter.
Elgohary also brought individual claims of trespass and breach of contract against
the Association and the Directors, and sought injunctive relief to prohibit the
closing of the neighborhood’s entrance and the placement of certain signs in the
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subdivision. Elgohary later amended his petition to include a request for sanctions
from the Association’s counsel, Neil McLaurin and Walter Spears.
The Association counterclaimed, seeking a declaratory judgment that the
Association’s Deed Restrictions (1) permitted the Association to regulate the
access gate to the neighborhood, and (2) did not prohibit the Association from
placing signs on subdivision property. The Association also sought attorney’s fees
from Elgohary.
On August 5, 2013, Elgohary served defendants with several hundred
discovery requests related to many different issues. On August 21, 2013, all
defendants filed a hybrid no-evidence and traditional motion for summary
judgment. Defendants also filed objections and a motion for protection from
Elgohary’s discovery requests; they also asked that the trial court stay their
discovery responses until it had ruled on their summary judgment motions. Both
the motions for summary judgment and the motions for protection from discovery
were set for September 16, 2013. Elgohary filed responses to both motions before
the September 16 hearing date.
However, at the hearing on September 16, 2013, Elgohary complained that
he had not received proper notice of the summary judgment motions. Specifically,
he complained that although he had received the motion by email, he did not
receive service as required by TEX. R. CIV. P. 166a(c). After verifying that
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Elgohary had received actual notice of the motion, the trial court asked both parties
if resetting the summary judgment motion for 21-days from the original hearing
date would be sufficient. He also indicated that he would reset the hearing on the
motion for protection after the summary judgment’s rescheduled hearing date.
Neither side objected to the trial court’s rescheduled hearings. Similarly, Elgohary
did not file a Motion for Continuance.
On September 30, 2013, Elgohary filed an Amended Response to
Defendants Traditional and No Evidence Motion for Summary Judgment,
supported by his own affidavit.
On October 12, 2013, more than 21 days after the originally scheduled
summary judgment hearing, the trial court granted the defendants’ motion for
summary judgment. The order did not specify whether the no-evidence motion or
the traditional motion was granted. The trial court did not rule on the defendants’
motion for protection at that time. However, on October 14, the trial court held a
hearing on the defendants’ motion for protection, at which time the trial court
stated that the motion was now moot because the trial court had granted the
summary judgment.
The Association’s declaratory judgment claims were tried to the bench on
March 13, 2014. After trial, the trial court signed a final judgment declaring that
(1) “the Association is permitted to regulate the use of the West Little York
5
entry/exit[;]” (2) “the Association is not prohibited from placing signs on
Association property, so long as said signs do not relate to the construction,
improvement, alteration, or addition to Lots within the Subdivision; and that (3)
the Association “shall have and recover from Counter-Defendant Victor S.
Elgohary $20,000 in reasonable and necessary attorney’s fees through the trial of
this case[;]”, plus attorney’s fees through appeal, costs, and interest.
PROPRIETY OF SUMMARY JUDGMENT
In issue one, Elgohary contends the trial court erred in granting defendants’
no evidence motion for summary judgment. In issue two, Elgohary contends the
trial court erred in granting the defendants’ traditional motion for summary
judgment.
Standard of Review
We review summary judgments de novo. Valence Operating Co. v. Dorsett,
164 S.W.3d 656, 661 (Tex. 2005). When a summary judgment does not specify the
grounds on which it was granted, we will affirm the judgment if any one of the
theories advanced in the motion is meritorious. Joe v. Two Thirty Nine Joint
Venture, 145 S.W.3d 150, 157 (Tex. 2004).
After adequate time for discovery, a party may move for summary judgment
on the ground that there is no evidence of one or more essential elements of a
claim. TEX. R. CIV. P. 166a(i); Hahn v. Love, 321 S.W.3d 517, 523–24 (Tex.
6
App.—Houston [1st Dist.] 2009, pet. denied). Once the movant specifies the
elements on which there is no evidence, the burden shifts to the nonmovant to raise
a fact issue on the challenged elements. Id.
In a traditional summary judgment motion, the movant has the burden to
show that no genuine issue of material fact exists and that the trial court should
grant judgment as a matter of law. TEX. R. CIV. P. 166a(c); KPMG Peat Marwick v.
Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). In reviewing a
traditional summary judgment, we must indulge every reasonable inference in
favor of the nonmovant, take all evidence favorable to the nonmovant as true, and
resolve any doubts in favor of the nonmovant. Valence, 164 S.W.3d at 661. A
defendant who moves for traditional summary judgment on the plaintiff’s claim
must conclusively disprove at least one element of the plaintiff's cause of action.
Little v. Tex. Dep’t of Crim. Justice, 148 S.W.3d 374, 381 (Tex. 2004).
No-Evidence Summary Judgment
Elgohary brings three procedural challenges to the trial court’s grant of no-
evidence summary judgment. First, he argues that the defendant’s waived the no-
evidence portion of their summary judgment motion. Second, he contends that
there was not adequate time for discovery because at the time it was granted, the
defendants had not responded to his discovery requests, and that he had five more
months to complete discovery under the discovery order entered by the trial court.
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Third, Elgohary contends that the trial court erred in granting summary judgment
because he did not have 21-days’ notice of the summary judgment hearing.
Elgohary does not argue that he raised a fact issue as to each of the elements
challenged in the no-evidence motion. We will address each argument
respectively.
Waiver of No-Evidence Motion
In its reply to Elgohary’s Amended Response to Defendant’s Traditional and
No Evidence Motion For Summary Judgment, the Defendant’s stated:
Defendants seek only a traditional motion for summary judgment on
their arguments and authorities concerning Association governing
documents and statutes which provide immunity to them.
On appeal, Elgohary argues that this statement in the Defendant’s reply is a
judicial admission that they were waiving their no-evidence motion. We disagree.
The elements of a judicial admission are: (1) a statement made during the
course of a judicial proceeding; (2) that is contrary to an essential fact or defense
asserted by the person making the admission; (3) that is deliberate, clear, and
unequivocal; (4) that, if given conclusive effect, would be consistent with public
policy; and (5) that is not destructive of the opposing party’s theory of recovery.
Bliss & Glennon, Inc. v. Ashley, 420 S.W.3d 379, 393 (Tex. App.—Houston [1st
Dist.] 2014, no pet.). The statement referenced above is not a deliberate, clear, and
unequivocal waiver of the Defendant’s no-evidence motion for summary
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judgment. To the contrary, it points out only that the portion of Defendants’
motion that relies on the Association’s governing documents and immunity statutes
are traditional summary judgment grounds, not no-evidence grounds. The
Defendants’ attempt to clarify that in its reply cannot be a deliberate, clear and
unequivocal waiver of its no-evidence grounds. Indeed, it does not mention its no-
evidence motion at all.
Thus, we reject Elgohary’s first ground for defeating the no-evidence motion
for summary judgment.
No Adequate Time For Discovery
When a party argues it has not had an adequate opportunity for discovery
before a no-evidence summary-judgment hearing, that party must file an affidavit
explaining the need for further discovery or a verified motion for continuance.
TEX. R. CIV. P. 166a(g); See Joe, 145 S.W.3d at 161. The affidavit must explain
why the continuance is necessary; conclusory allegations are insufficient. Carter
v. MacFadyen, 93 S.W.3d 307, 310 (Tex. App.—Houston [14th Dist.] 2002, pet.
denied). We generally consider the following nonexclusive factors in determining
whether the trial court abused its discretion: (1) the nature of the cause of action;
(2) the nature of the evidence necessary to controvert the no-evidence motion; (3)
the length of time the case has been active in the trial court; (4) the amount of time
the no-evidence motion has been on file; (5) whether the movant has requested
9
stricter time deadlines for discovery; (6) the amount of discovery that has already
taken place; and (7) whether the discovery deadlines that are in place are specific
or vague. Madison v. Willimson, 241 S.W.3d 145, 155 (Tex. App.—Houston [1st
Dist.] 2007, pet. denied); see also Joe, 145 S.W.3d at 161. When reviewing a trial
court’s order denying a motion for continuance, we consider whether the trial court
committed a clear abuse of discretion on a case-by-case basis. BMC Software
Belg., N.V. v. Marchand, 83 S.W.3d 789, 800–01 (Tex. 2002). A trial court abuses
its discretion when it reaches a decision so arbitrary and unreasonable as to amount
to a clear and prejudicial error of law. Id.
Here, Elgohary did not file a sworn motion for continuance. He did,
however, argue in his unsworn Amended Response to Defendant’s Traditional and
No Evidence Motion For Summary Judgment that he did not have adequate time
for discovery that that “[d]epositions are also necessary in this case in order for
Plaintiffs to controvert Defendants’ good faith assertions and presumptions of
acting in a reasonable way with regards to the restrictive covenants,” and that
“[s]ince the evidence needed to controvert the motion for summary judgment and
defend the counterclaims has not been fully developed, summary judgment would
be premature and should be continued or denied.” These unsworn allegations are
insufficient to carry Elgohary’s burden to show an inadequate time for discovery.
See Joe, 145 S.W.3d at 161 (requiring party arguing inadequate time for discovery
10
to file affidavit or verified motion for continuance). Elgohary did, however, attach
an affidavit to his response that is sworn, thus we look to the evidence presented in
the affidavit to determine whether Elgohary carried his burden.
In Doe v. Roman Catholic Archdiocese of Galveston–Houston, 362 S.W.3d
803, 811 (Tex. App.—Houston [14th Dist.] 2012, no pet.), the plaintiff alleging
lack of adequate time for discovery filed two affidavits in support of his motion for
continuance. The first affidavit alleged that the case had been on file for less than
four months, that “additional time is needed to conduct full discovery[,]” and that
“the information and items produced in discovery will assist Plaintiff in
establishing Plaintiff’s claims which defer, toll, or otherwise eliminate the statute
of limitations defense, or at a minimum, will create a fact issue on this affirmative
defense for a jury to decide[.]” Id. at 811. The second affidavit contained similar
allegations, plus further specified “the particular documents and depositions [the
plaintiff] wanted,” claiming that the discovery would help him “establish or
support [his] claims, and particularly, claims . . . which defeat Defendant’s
Motions or limitations defense.” Id. The court noted that the plaintiff’s affidavits
“did not explain how [the evidence sought through discovery] would enable him to
defeat the defendants’ asserted affirmative defense of limitations.” In so holding,
the court stated:
Indeed, in neither motion does Doe identify or explain what relevant
facts he expected to discover that would enable him to defeat or raise
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a fact issue on the affirmative defense of limitations. . . . Although
Doe generally asserts that the discovery he sought would support
doctrines which would ‘defer, toll, or eliminate’ the statute of
limitations . . . he did not discuss the elements of these doctrines or
explain how they would apply on these facts. Because Doe failed to
explain how the additional discovery he sought was in any way
material, the trial court did not abuse its discretion in denying the
motions for continuance.
Id. at 812; see also Madison v. Williamson, 241 S.W.3d 145, 155–56 (Tex. App.—
Houston [1st Dist.] 2007, pet. denied) (no abuse of discretion when nonmovant
“made no effort to specify the additional evidence she needed to respond to the
motion”); Carter v. MacFadyen, 93 S.W.3d 307, 311 (Tex. App.—Houston [14th
Dist.] 2002, pet. denied) (same when response did not indicate “what specific
discovery needed to be completed”); Rest. Teams Int’l, Inc. v. MG Secs. Corp., 95
S.W.3d 336, 341 (Tex. App.—Dallas 2002, no pet.) (finding trial court did not
abuse its discretion by granting no-evidence motion for summary judgment when
case had been on file for seven months, but before discovery period ended;
appellants’ motion for continuance did not explain their failure to present evidence
opposing summary judgment motion or explain how they attempted to participate
in discovery while case was pending).
Elgohary’s affidavit provides even less information than that provided by the
plaintiff in Doe. In his affidavit, Elgohary alleges that he “personally served
discovery of interrogatories and production of documents on Defendants by hand
delivery on August 5, 2013 at the offices of Hays, McConn, Rice & Pickering.”
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He then avers that Defendants objected to his discovery requests as “all
overbroad,” and that, despite his offers to “deal with and discuss objections as they
applied to each individual request for production and discovery,” Defendants
instead filed a motion for protection from discovery. Elgohary’s affidavit does not,
however, state which of his discovery requests were necessary to rebut the no-
evidence motion for summary judgment or how the information sought would raise
fact issues precluding summary judgment.
Regarding Elgohary’s argument that the discovery period did not expire
until January 24, 2014, some three months after the summary judgment was
granted, we note that “Rule 166a(i) begins with the phrase, ‘[a]fter adequate time
for discovery’ not ‘after a pretrial scheduling discovery period has concluded,’ and
therefore, it does not support appellant’s argument that a trial court abused its
discretion in granting no-evidence summary judgment during the discovery
period.” Lucio v. John G. & Marial Stella Kenedy Mem 7 Found., 298 S.W.3d
663, 670 (Tex. App.—Corpus Christi 2009, pet. denied).
Based on the lack of information provided in Elgohary’s affidavit, we cannot
conclude that the trial court abused its discretion in ruling on the no-evidence
motion for summary judgment. “The mere fact that a trial court decided an issue
in a manner differently than an appellate court would under similar circumstances
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does not establish an abuse of discretion.” Zeifman v. Michels, 212 S.W.3d 582,
587 (Tex. App.—Austin 2006, no pet.).
Thus, we reject Elgohary’s second ground for defeating the no-evidence
motion for summary judgment.
Notice of Summary Judgment Hearing
In issue two regarding the traditional summary judgment, Elgohary argues
that he did not have 21 days’ notice before the summary judgment hearing.
Because this argument applies equally to the no-evidence motion for summary
judgment, we address it here.
Elgohary contends that the trial court erred in granting the motions for
summary judgment “because the Defendants did not comply with filing and service
rules under TEX. R. CIV. P. 21, TEX. R. CIV. P. 21a, and TEX. R. CIV. P. 166a.” We
disagree.
Proof of actual notice will establish compliance with Rule 21a. See Goforth
v. Bradshaw, 296 S.W.3d 849, 854 (Tex. App.—Texarkana 2009, no pet.) (stating
that purpose of rule 21a “is to achieve actual notice and to set up presumptions to
use in disputes about whether notice was achieved”; determining that even though
report was served on party by regular mail, which is not authorized by rule 21a,
there was “acknowledged” and “actual delivery” of report); Netherland v. Wittner,
662 S.W.2d 786, 787 (Tex. App.—Houston [14th Dist.] 1983, writ ref’d n.r.e.)
14
(holding that when appellant acknowledged timely receipt of notice by regular
mail, appellant appeared and fully participated at trial, and appellant did not claim
harm arising from notice, appellee had fulfilled primary purposes of service under
rule 21a).
Here, any error in giving less than 21-days’ notice of the summary judgment
submission was cured when the trial court reset the submission date for 21 days
beyond the original submission date, thereby giving Elgohary actual notice of the
summary judgments’ submission and additional time to respond.
Elgohary also challenges the summary judgment on the basis that not all of
the individual defendants were included in the motion for summary judgment and
the defendants did not move for summary judgment on his claims for sanctions
under TEX. CIV. PRAC. & REM. CODE § 10 and TEX. R. CIV. P. 13. Specifically,
Elgohary contends that the trial court erred in dismissing his claims “against
counsel for the Association Walter Spears and Neil McLaurin without a properly
noticed summary judgment hearing or motion for summary judgment,” and erred
in dismissing his “sanctions claims against the Association, Defendant Directors,
RealManage, and Keller without a timely noticed submission for summary
judgment.”
First, we note that Spears and McLaurin were never served, thus there was
no need for them to file a motion for summary judgment. Their absence from the
15
final judgment does not mean that it did not dispose of all parties and all claims
because they were never made parties to the suit. Second, the record shows that
Elgohary’s sanctions requests were disposed of by separate order entered after the
summary judgment was granted. This was not error. Requests for sanctions are
not independent causes of action. See Mantri v. Bergman, 153 S.W.3d 715, 717–
18 (Tex. App.—Dallas 2005, pet. denied) (“[T]here is no precedent in Texas for
treating motions for sanctions as independent causes of action.”).
Thus, we reject Elgohary’s third ground for defeating the no-evidence
motion for summary judgment.
Having disposed of both of Elgohary’s challenges to the no-evidence
summary judgment, we conclude that the trial court did not err in granting the
defendants’ no-evidence summary judgment.
Accordingly, we overrule issue one.
Traditional Summary Judgment
In light of our disposition of the no-evidence summary judgment, we need
not address Elgohary’s second issue regarding the propriety of the traditional
summary judgment, and decline to do so.
DECLARATORY JUDGMENT
In issue three, Elgohary contends the trial court erred in rendering judgment
on the Association’s declaratory judgment claims because (1) “the lower court
16
erred in not abating the Association’s claims by requiring the joinder of all
homeowners and other necessary parties in the declaratory action[;]” (2) “the
Covenant Conditions and Restrictions prohibit signs in the Subdivision[;] and (3)
“the Association’s request for a declaration that the Association is permitted to
regulate the use of the West Little York Entry/Exit is not a justiciable controversy
as presented[.]” We address each argument respectively.
Abatement
Elgohary filed a motion to abate the Association’s counterclaim for
declaratory relief, arguing that it was necessary to join all homeowners in Lakes on
Eldridge North [“LOEN”] before proceeding to judgment on the Association’s
counterclaim. The trial court denied the motion. Elgohary contends this was
reversible error.
This Court considered a similar, but slightly different issue in Indian Beach
Prop. Owners’ Ass’n v. Linden, 222 S.W.3d 682, 697-98 (Tex. App.—Houston
[1st Dist.] 2007, no pet.). In Indian Beach, the homeowners’ association brought
suit against a homeowner, seeking an injunction that his fence violated deed
restrictions. Id. at 690. The homeowner counterclaimed, seeking a declaratory
judgment that its fence was in compliance with the deed restrictions. Id. On
appeal, the homeowners’ association claimed that the trial court lacked jurisdiction
to render a declaratory judgment because all other homeowners were not joined as
17
necessary parties. This Court held that the failure to join all property owners
affected by a restrictive covenant in a declaratory judgment action did not deprive
the trial court of jurisdiction to enter the declaratory judgment because nothing
prevented the trial court from rendering complete relief between the parties, and
because the declaratory judgment did not prejudice the rights of any person not a
party to the proceeding. Id. at 698 (citing Brooks v. Northglen Ass’n, 141 S.W.3d
158, 162 (Tex. 2004) and Wilchester West Concerned Homeowners LDEF, Inc. v.
Wilchester West Fund, Inc., 177 S.W.3d 552, 559 (Tex. App.—Houston [1st Dist.]
2005, pet. denied)). This Court also noted that, had the homeowners’ association
been concerned about the possibility of inconsistent judgments, it could have asked
the trial court to abate to join the absent homeowners. Id.
The issue in this case is not jurisdiction, but whether the trial court
committed reversible error by refusing Elgohary’s request to abate so that the
absent homeowners could be joined. Indeed, courts have held that all homeowners
should be joined when a declaratory judgment would affect the property interests
of all real property owners in the community. See Dahl v. Hartman, 14 S.W.3d
434, 437 (Tex. App.—Houston [14th Dist.] 2000, pet. denied); April Sound Mgmt.
Corp. v. Concerned Prop. Owners for April Sound, Inc., 153 S.W.3d 519, 521
(Tex. App.—Amarillo 2004, no pet.).
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Elgohary and the Association dispute whether the declaratory judgment
would affect the property interest of all real property owners in the community.
However, we need not decide the issue because, under the facts presented here,
error, if any, in denying Elgohary’s requested abatement, is harmless. See TEX. R.
APP. P. 44.1(a). The purpose of TEX. CIV. PRAC. & REM. CODE ANN. §37.006(a)
(West 2008), which requires joinder in a declaratory judgment proceeding of “all
persons who have or claim any interest that would be affected by the declaration,”
is to avoid a multiplicity of suits. Dahl, 14 S.W.3d at 436. Elgohary, however,
cannot be harmed by the possibility of multiple suits, only the Association can. As
noted by this Court in Indian Beach, “nothing prevented the trial court from
rendering complete relief between the parties to the suit.” 222 S.W.3d at 698. As
such, we conclude that Elgohary has failed to show that the trial court’s error in
denying his requested abatement “probably caused the rendition of an improper
judgment” as to him. See TEX. R. APP. P. 44.1(a).
Construction of Association’s Governing Documents
Article V of the Association’s Declaration of Covenants, Conditions &
Restrictions, entitled Protective Covenants and Restrictions, as follows:
Section 1. Covenants Applicable. The following provisions shall be
applicable to any and all construction, improvement, alteration, or
addition to the Lots.
b. No sign, including political signs, advertisement, billboard or
advertising structure of any kind shall be displayed, maintained
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or placed in the public view on or from any part of the Property
or on any Lot, except signs temporarily used by Declarant or
any Owner on a Lot, of not more than six (6) square feet,
advertising the Lot for sale or rent, or signs of architects and
builders during the period of construction and sale of
improvements on any Lot.
After trial on the merits, the trial court entered a declaratory judgment
stating:
It is therefore, . . . ORDERED, ADJUDGED and DECREED that,
pursuant to the Uniform Declaratory Judgments Act, the Association
is not prohibited from placing signs on Association property, so long
as said sign to not relate to the construction, improvement, alteration,
or addition to Lots within the Subdivision.
Elgohary contends the trial court erred in rendering this declaratory
judgment, arguing that “the Covenants Conditions and Restrictions prohibit signs
in the subdivision.” Specifically, Elgohary contends that the only signs allowed in
the neighborhood were “for sale signs” and/or architects and builders signs during
construction. Elgohary’s position was that the Association’s signs explaining the
hours and use of the restricted access gate were prohibited, and, indeed, that all
other signs, were prohibited. We construe Elgohary’s issue to be a challenge to the
trial court’s interpretation of the restrictive covenant as a matter of law.
Standard of Review and Applicable Law
The Association’s Declaration of Covenants, Conditions & Restrictions
contains restrictive covenants concerning real property. See TEX. PROP. CODE ANN.
§ 202.001(4) (Vernon 2014) (defining restrictive covenant). Restrictive covenants
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are subject to the general rules of contract construction. Pilarcik v. Emmons, 966
S.W.2d 474, 478 (Tex. 1998); Bank United v. Greenway Improvement Ass’n, 6
S.W.3d 705, 707 (Tex. App.—Houston [1st Dist.] 1999, pet. denied). As when
interpreting any contract, the court’s primary duty in construing a restrictive
covenant is to ascertain the drafter’s intent from the instrument's language. Bank
United, 6 S.W.3d at 708. In ascertaining the drafter’s intent, we must examine the
covenant as a whole in light of the circumstances present when the covenant was
made. Pilarcik, 966 S.W.2d at 478. We must give a restrictive covenant’s words
and phrases their commonly accepted meaning. Truong v. City of Houston, 99
S.W.3d 204, 214 (Tex. App.—Houston [1st Dist.] 2002, no pet.). We review a trial
court’s interpretation of a restrictive covenant de novo. Air Park–Dallas Zoning
Committee v. Crow–Billingsley Airpark, Ltd., 109 S.W.3d 900, 909 (Tex.App.—
Dallas 2003, no pet.).
Whether restrictive covenants are ambiguous is a matter of law for the court
to decide. Pilarcik, 966 S.W.2d at 478; Samms v. Autumn Run Cmty. Improvement
Ass’n, Inc., 23 S.W.3d 398, 402 (Tex. App.—Houston [1st Dist.] 2000, pet.
denied). A covenant is unambiguous if, after appropriate rules of construction have
been applied, the covenant can be given a definite or certain legal meaning.
Pilarcik, 966 S.W.2d at 478; Pitman v. Lightfoot, 937 S.W.2d 496, 517 (Tex.
App.—San Antonio 1996, writ denied) (holding same concerning contracts
21
generally). In contrast, if, after appropriate rules of construction have been applied,
a covenant is susceptible of more than one reasonable interpretation, the covenant
is ambiguous. Pilarcik, 966 S.W.2d at 478; Universal C.I.T. Credit Corp. v.
Daniel, 243 S.W.2d 154, 157 (1951).
Analysis
In construing a restrictive covenant, a court’s primary task is to determine
the drafter’s intent and to liberally construe the language of the restrictions to give
effect to their purposes and intent and to harmonize all of the provisions so that
none are rendered meaningless. Rakowski v. Committee to Protect Clear Creek
Village Homeowners’ Rights 252 S.W.3d 673 (Tex. App.—Houston [14th Dist.]
1997, pet. denied).
Here, if we were to accept Elgohary’s assertion that, as a matter of law, the
restrictive covenant prohibited all signs other than those specifically permitted, it
would render the phrase applying the covenants to “any and all construction,
improvement, alteration, or addition to the Lots” meaningless by effectively
eliminating that verbiage. Further, adopting Elgohary’s interpretation of the
restrictive covenant would lead to an absurd result, i.e., the prohibition of all signs
by any party, including the Association, in the neighborhood’s common areas.
Under Elgohary’s interpretation, the Association could make rules about use of
common areas, but could not disseminate those rules through the use of any signs.
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We cannot interpret a contract so as to produce an absurd result. See Lane v.
Travelers Indem. Co., 391 S.W.2d 399, 402 (Tex. 1965) (refusing to construe
contract in manner that would lead to absurd results); Avasthi & Assocs., Inc. v.
Banik, 343 S .W.3d 260, 264 (Tex. App.—Houston [14th Dist.] 2011, pet. denied)
(declining to accept construction of contract that would produce absurd results
because there was construction that would not produce absurd result).
Thus, we cannot say that the trial court erred as a matter of law when it
rendered judgment declaring that the Association could place signs in the
neighborhood as long as the signs did “not relate to the construction, improvement,
alteration, or addition to Lots within the Subdivision.”
Justiciable Controversy
Article 1, section 1.d. of the Association’s Declaration of Covenants,
Conditions & Restrictions defines “Common Areas” of the subdivision, and Article
VIII, section 3(a) provides for “[t]he right of the Association to prescribe rules and
regulating for the use, enjoyment, and maintenance of the Common Areas.” Based
on these provisions, the Association sought by way of its counterclaim “a
declaration from the Court that the Association is permitted to regulate the use of
the [West Little York] entry/exit.”
Elgohary’s position was that that the Association was not permitted to
regulate access to the subdivision from West Little York via Enclave Vista Lane
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because there was an express easement on Enclave Vista Lane. The Association’s
position was that its regulation of access to Enclave Vista Lane from West Little
York did not interfere with the express easement on Enclave Vista Lane because
that street remained fully accessible to homeowners via another street, Sonora
Canyon Lane, and that regulating access to one end of the street was permissible
under section 3(a) of the Declaration of Covenants, Conditions & Restrictions as a
regulation regarding the use of a common area.
After trial on the merits, the trial court entered the following declaratory
judgment:
It is therefore, . . . ORDERED, ADJUDGED and DECREED that,
pursuant to the Uniform Declaratory Judgments Act, the Association
is permitted to regulate the use of the West Little York entry/exit.
On appeal, Elgohary contends that the trial court erred in rendering this
declaratory judgment because there was no justiciable controversy between the
parties regarding this issue. Specifically, Elgohary states that “he has never
disputed that the Association may regulate the gate for purposes of keeping it
operation or to limit its use solely to those with remote controls registered in the
Association’s computer systems.”
A declaratory judgment is appropriate only if a justiciable controversy exists
concerning the rights and status of the parties and the controversy will be resolved
by the declaration sought. Bonham State Bank v. Beadle, 907 S.W.2d 465, 467
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(Tex. 1995); see also TEX. CIV. PRAC. & REM.CODE § 37.002(b) (reflecting that the
purpose of the Uniform Declaratory Judgments Act is “to settle and to afford relief
from uncertainty and insecurity with respect to rights, status, and other legal
relations”). For a justiciable controversy to exist, there must be a real and
substantial controversy involving a genuine conflict of tangible interest and not
merely a theoretical dispute. Bonham State Bank, 907 S.W.2d at 467. “A
declaratory judgment action does not vest a court with the power to pass upon
hypothetical or contingent situations, or to determine questions not then essential
to the decision of an actual controversy, although such questions may in the future
require adjudication.” Tex. Health Care Info. Council v. Seton Health Plan, Inc.,
94 S.W.3d 841, 846 (Tex. App.—Austin 2002, pet. denied).
Here, the declaration that the Association sought—whether it could regulate
the West Little York entry/access gate—was essential to resolution of the dispute
between the Association and Elgohary, and, as it alleged in its counterclaim, “the
relief the Association sought is greater in scope and concerns the underlying
disagreement between the parties as to the interpretation of the Association’s
dedicatory instruments.” Indeed, if the Association had no authority to regulate the
West Little York entry/access gate at all, none of the actions it took, including
those Elgohary now contends are permitted such as “keeping it operational” and
“limit[ing] its use solely to those with remote controls, would be permissible. As
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such, the trial court did not err by concluding that the Association’s request for
declaratory relief presented a justiciable controversy.
Conclusion
Having decided that (1) there was no reversible error in the trial court’s
denial of Elgohary’s motion to abate; (2) the Declaration of Covenants, Conditions
& Restrictions did not prohibit the Association from placing signs in the
neighborhood about the rules regarding access from West Little York; and (3) the
Association’s request for declaratory judgment presented a justiciable controversy,
we overrule Elgohary’s third issue.
LITMITATION OF DISCOVERY
In issue four, Elgohary contends the trial court erred in granting the
Defendant’s protective order from discovery.
Background
In August 2013, Elgohary served several hundred discovery requests on the
Defendants. The Defendants filed a motion for protective order, which was set for
a hearing on October 14, 2014. At the October 14 hearing for the protective order,
the trial court indicated that the motion for protective order was moot because it
had already granted the Defendants’ Motion for Summary Judgment. This ruling
is not the basis for Elgohary’s issue on appeal.
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After summary judgment was granted, discovery continued on the
Association’s remaining declaratory judgment claims. Elgohary served written
discovery and deposition notices to the Association and certain directors, and also
subpoenaed a former director, Michael Dach, who was not a party to the suit. The
Defendants and Dach filed motions for protection from further discovery and
seeking to quash all noticed depositions.
At a hearing on January 27, 2014, the trial court asked Elgohary why he
needed the discovery, and he responded that it was necessary to determine whether
the Association’s and Directors’ actions had been reasonable and taken in good
faith. Defendants responded that no further discovery was needed because
summary judgment had been granted on all of Elgohary’s claims, which were
based on reasonableness and good faith, and that the only claims remaining were
their declaratory judgment claims, which required the interpretation of the
Declaration of Covenants, Conditions & Restrictions, a question of law. The
remaining issue, the Defendants argued, was not whether the Association’s
regulations were reasonable and done in good faith, but whether the Declaration of
Covenants, Conditions & Restrictions permitted them to regulate the entry/exit at
West Little York at all, a “more global declaratory judgment not specific to
[Elgohary’s] facts.” The trial court agreed with the defendants and granted their
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motions for protection. It is this ruling that Elgohary challenges in his fourth issue
on appeal.
Law and Analysis
Elgohary argues that the trial court erred in limiting his discovery because
the Defendants did not carry their burden to show that his requests were unduly
burdensome. However, as made clear from the record of the hearing, the trial court
did not limit discovery because it was burdensome, but because it was irrelevant to
the remaining issues in the case.
Texas Rule of Civil Procedure 192.3 is entitled “Scope of Discovery” and
provides, “In general, a party may obtain discovery regarding any matter that is not
privileged and is relevant to the subject matter of the pending action . . . [and
which] appears reasonably calculated to lead to the discovery of admissible
evidence.” TEX. R. CIV. P. 192.3(a); Crown Central Petroleum Corp. v. Garcia,
904 S.W.2d 125, 127 (Tex. 1995) (orig. proceeding). In discovery situations, the
trial court is granted latitude in limiting or tailoring discovery. TEX. R. CIV. P.
192.4. Generally, a trial court should limit discovery methods to those which are
more convenient, less burdensome, and less expensive, or when the burden or
expense of the proposed discovery outweighs its likely benefit. In re Alford
Chevrolet–Geo, 997 S.W.2d 173 (Tex. 1999) (orig. proceeding); TEX. R. CIV. P.
192.4. Discovery requests themselves must be reasonably tailored to matters
28
relevant to the case at issue. In re Xeller, 6 S.W.3d 618, 626 (Tex. App.—Houston
[14th Dist.] 1999, orig. proceeding). Consequently, the trial court has broad
discretion to limit discovery requests by time, place, and subject matter. See
Texaco, Inc. v. Sanderson, 898 S.W.2d 813, 815 (Tex.1995) (orig. proceeding).
Here, the issues for which Elgohary sought discovery—reasonableness and
good faith of the Association’s and Directors’ actions—had already been resolved
against him by way of summary judgment. The only remaining issue involved the
interpretation of the Association’s Declaration of Covenants, Conditions &
Restrictions. Since this issue was to be resolved as a matter of law based upon the
language of the declarations, the trial court did not abuse its discretion by
preventing Elgohary from conducting further discovery on issues that had no
relevance to the upcoming trial.
We overrule issue four.
ATTORNEY’S FEES
In the final judgment, the trial court ordered that the Association “shall have
and recover from Counter-Defendant Victor S. Elogohary $20,000 in reasonable
and necessary attorney’s fees through the trial of this case[.]” In his fifth issue on
appeal, Elgohary contends the trial court erred in awarding attorney’s fees because
(1) “the Association sought no damages or specific relief[,]” and (2) he did not
receive timely notice of the billing statements that the Association entered into
29
evidence at trial in support of its attorney fee claim. In its appeal, the Association
contends the trial court erred in reducing its reasonable and necessary fees from
$42,000 to $20,000. We address each issue respectively.
Attorney’s Fees in the Absence of Damages or Specific Relief
Elgohary contends that the attorney’s fees cannot stand because “the
Association sought no damages or specific relief from Elgohary,” thus the fees,
“even though supported by [the Association’s attorney’s testimony] cannot support
such a high award since it is clearly out of proportion with the result [the
Associations’ attorneys] obtained on behalf of the Association.”
Here, the Association sought and obtained relief pursuant to the Declaratory
Judgment Act, which provides that “[i]n any proceeding under this chapter, the
court may award costs and reasonable and necessary attorney’s fees as are
equitable and just.” TEX. CIV. PRAC. & REM. CODE ANN. § 37.009 (West 2015).
There was no need for the Association to seek damages or injunctive relief in order
to obtain attorney’s fees pursuant to the statute.
Timely Notice of Billing Statements
At trial, when the Association’s attorney offered his billing records into
evidence, the following exchange took place:
[Trial Court]: Any objection?
[Elgohary]: I do have one objection. And that was, again, this was
one of the things I asked for in discovery that was quashed.
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[Association’s counsel]: Your Honor—
[Trial court]: Was it produced?
[Association’s counsel]: Your Honor, we produced copies of our
invoices to Mr. Elgohary along with all of [the] trial exhibits pursuant
to the Court’s trial preparation order. We also e-mailed copies of the
invoices after the hearing, in which I told your Honor and Mr.
Elgohary that we would give him the invoices. That was one of the
conditions to Your Honor’s ruling on discovery.
[Trial Court]: Overruled. You may proceed.
[Elgohary]: I would just add to the record that that was less than 30
days prior to trial.
[Trial court]: Okay.
[Elgohary]: That’s what we objected to.
[Trial court]: Proceed.
....
[Trial court]: Hang on. Mr. Elgohary, let me just state that the basis
for my ruling is that I don’t—I don’t—based upon the types of records
that are involved here and the types of cases and the claims that have
been made, there’s no unfair prejudice or surprise.
Rule 193.6 of the Texas Rules of Civil Procedure provides:
(a) Exclusion of Evidence and Exceptions. A party who fails to make,
amend, or supplement a discovery response in a timely manner
may not introduce in evidence the material or information that was
not timely disclosed, or offer the testimony of a witness (other than
a named party, who was not timely identified, unless the court
finds that:
(1) there was good cause for the failure to timely make, amend
or supplement the discovery response; or
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(2) the failure to timely make, amend or supplement the
discovery response will not unfairly surprise or unfairly
prejudice the other parties.
(b) Burden of Establishing Exception. The burden of establishing
good cause or the lack of unfair surprise or unfair prejudice is on
the party seeking to introduce the evidence or call the witness. A
finding of good case or the lack of unfair prejudice must be
supported by the record.
(c) Continuance. Even if the party seeking to introduce the evidence
or call the witness fails to carry the burden under paragraph (b), the
court may grant a continuance or temporarily postpone the trial to
allow a response to be made amended, or supplemented, and to
allow opposing parties to conduct discovery regarding any new
information presented by that response.
TEX. R. CIV. P. 193.6. Rule 193.6’s exclusion provision is automatic unless one of
the exceptions applies. See Fort Brown Villas III Condo. Ass’n v. Gillenwater, 285
S.W.3d 879, 881 (Tex. 2009).
Here, the trial court found that the second exception applied, i.e., that
Elgohary was not unfairly prejudiced or surprised by the exhibit containing the fee
statements. Indeed, Elgohary does not argue how he was prejudiced, other than a
conclusory statement in his brief that it prevented him “from making any
reasonable cross examination of McLaurin’s testimony regarding the
reasonableness of his fees.” And, the record supports the trial court’s conclusion
that Elgohary was not prejudiced. Contrary to his assertion that “this was one of
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the things I asked for in discovery that was quashed,” the record shows that the
trial court ordered the Association to “produce in response for Elgohary’s Resquest
for Production No. 6 copies of invoices for attorney’s fees incurred in this
lawsuit[.]” The Association’s counsel stated on the record that he gave Elgohary
the fee statements “along with all of [the] trial exhibits pursuant to the Court’s trial
preparation order.” Elgohary does not make any argument about how the time he
had to review the invoices was insufficient or how he would have prepared
differently if he had more time. As such, he has not shown how the trial court’s
ruling was an abuse of discretion.
Reduction of Attorney’s Fees Awarded
At the conclusion of the bench trial when the judgment of the court was
announced, the trial court stated:
Now, I’m going to arbitrarily reduce the award for attorney’s fees in
this case to $20,000. If you’re unhappy with that reduction, you can
certainly take that up on appeal. If there’s appeal of this matter, you
can certainly take up my completely arbitrary reduction from your
$42,000 request, which is probably and, in fact, I do find is
completely reasonable and necessary attorney’s fees, but I’m going to
arbitrarily strike it down to $20,000.
In its sole issue on appeal, the Association contends the trial court abused its
discretion in reducing the attorney’s fees below that which was reasonable and
necessary because it admitted that the reduction was made “arbitrarily.”
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In a declaratory judgment action a trial court may award reasonable and
necessary attorney’s fees that are equitable and just. Ridge Oil Co., Inc. v. Guinn
Invs., Inc., 148 S.W.3d 143, 161 (Tex. 2004). The reasonable and necessary
requirements are questions of fact to be determined by the factfinder, but the
equitable and just requirements are questions of law for the trial court to decide.
Id. (citing Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998)). Unreasonable fees
can never be awarded, even if the trial court believes them to be just, but the court
may conclude that it is not equitable or just to award even reasonable and
necessary fees. Id. at 161–62. “Section 37.009’s ‘as are equitable and just’
language cannot reasonably be construed to mean anything other than the extent to
which such fees are equitable and just and, thus, authorizes an award of attorney’s
fees less than the amount found by [the factfinder] to be reasonable and
necessary.” Id. at 162. The amount of reasonable and necessary attorney’s fees
does not dictate their availability under the declaratory judgment act; the trial court
must decide whether it would be just and equitable to award them. Id. at 163. We
review a decision to reduce an attorney’s fee award below what is reasonable and
just for an abuse of discretion. Id. If the judge’s decision is not arbitrary or
unreasonable, it does not abuse its discretion. Id.
Here, nothing other than the trial court’s off-the-cuff statement that the
reduction was done “arbitrarily,” indicates that the trial court abused its discretion
34
in determining whether the fees were “equitable and just.” Contrary to its oral
statement, the trial court in its order recited that the fees it awarded were
“reasonable and necessary.” Whether it is “equitable and just” to award attorney’s
fees depends not on direct proof, but on the concept of fairness, in light of all the
circumstances of the case. Approach Res. I, L.P. v. Clayton, 360 S.W.3d 632, 639
(Tex. App.—El Paso 2012, no pet.) (citing Ridge Oil, 148 S.W.3d at 162.) If the
trial court acts according to principles of fairness, it does not act arbitrarily.
Chambers v. First United Bank & Trust Co., No. 02-11-00047-CV, 2012 WL
1556091, at *11 (Tex. App.—Fort Worth May 3, 2012, no pet.) (mem. op.) (citing
Ridge Oil, 148 S.W.3d at 162)). The trial court heard testimony, exhibits, and the
cross-examination contesting an award of attorney’s fees. The trial court was also
very aware of the nature of the case, and that the issue regarding the declaratory
judgment involved a fairly straight-forward interpretation of the Association’s
governing documents. Because it is clear that the trial court reduced the attorney’s
fees based on principles of fairness, it did not act arbitrarily, despite its statement
to the contrary.
We overrule both Elgohary’s fifth issue on appeal and the Association’s first
issue on appeal.
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CONCLUSION
We affirm the trial court’s judgment.
Sherry Radack
Chief Justice
Panel consists of Chief Justice Radack and Justices Bland and Huddle.
36