Sunset Hills Homeowners Association, Inc. v. Frank Carroll ( 2015 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-14-00184-CV
SUNSET HILLS HOMEOWNERS APPELLANT
ASSOCIATION, INC.
V.
FRANK CARROLL APPELLEE
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FROM THE 236TH DISTRICT COURT OF TARRANT COUNTY
TRIAL COURT NO. 236-271464-14
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MEMORANDUM OPINION1
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Appellant Sunset Hills Homeowners Association, Inc. challenges the trial
court’s default judgment awarding it damages, attorney’s fees, and costs in its
suit against Appellee Frank Carroll to collect unpaid assessments. In its sole
1
See Tex. R. App. P. 47.4.
issue, Sunset Hills contends the trial court erred by refusing to include in the
default judgment an order authorizing Sunset Hills to foreclose on its assessment
lien. We affirm.
Background
In its original petition, Sunset Hills alleged that Carroll is the record owner
of real property located at 3844 Drexmore Road, Keller, Texas, 76244, further
described as:
LOT 11, BLOCK 4, SUNSET HILLS ADDDITION, AN ADDITION TO
THE CITY OF FORT WORTH, TARRANT COUNTY, TEXAS,
ACCORDING TO THE MAP OR PLAT THEREOF RECORDED IN
CABINET A, SLIDE 8794, PLAT RECORDS, TARRANT COUNTY,
TEXAS.
The property is located in the Sunset Hills subdivision, and it is burdened by the
“Sunset Hills Homeowners Association, Inc.’s Declaration of Covenants,
Conditions and Restrictions,” which were recorded in the Tarrant County real
property records on July 11, 2002. Sunset Hills attached portions of the
declaration to its original petition and incorporated them into its petition.
Pursuant to the declaration, “[e]ach Owner of a Lot shall be a member in
the Association” and the covenants, restrictions, liens, and easements set forth in
the declaration “run with the land and shall be binding upon all persons or entities
hereafter acquiring title to or any interest in any portion of the [subdivision].” The
declaration required Carroll to pay to Sunset Hills regular assessments, special
assessments, and initial assessments. If the assessment payments were
delinquent, the declaration required Carroll to pay collection costs, attorney’s
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fees, and interest at the highest rate allowed by law, or, if no such rate was set,
at a rate of eighteen percent.
The assessments were secured by an assessment lien in favor of Sunset
Hills, and the declaration provided that the lien could be nonjudicially foreclosed
or enforced judicially:
Section 6.6 Liability for and Enforcement of Assessments.2
....
(b) Reservation, Subordination, and Enforcement of
Assessment Lien. Declarant hereby reserves for the benefit of
itself and the Association, a lien (the “Assessment Lien”) against
each Lot to secure payment of the Assessments imposed
hereunder. Each Owner, by accepting conveyance of a Lot, shall be
deemed to have agreed to the reservation of the Assessment
Lien. . . . The Assessment Lien may be non-judicially foreclosed by
power of sale in accordance with the provisions of Section 51.002 of
the Texas Property Code (or any successor provision) or may be
enforced judicially. Each Owner, by accepting conveyance of a Lot,
expressly grants the Association a power of sale in connection with
the foreclosure of the Assessment Lien. The Board is empowered to
appoint a trustee, who may be a member of the Board, to exercise
the powers of the Association to non-judicially foreclose the
Assessment[] Lien in the manner provided for in Section 51.002 of
the Texas Property Code (or any successor statute). The
Association, though duly authorized agents, shall have the power to
bid on the Lot at foreclosure sale and to acquire and hold, lease,
mortgage and convey the same.
....
. . . . All late charges, collection fees, service charges[,] and
attorneys’ fees assessed or incurred due to late payment of
2
The declaration defines “assessments” as “the Maintenance
Assessments, Special Assessments and Special Individual Assessments
provided for in Article 6.”
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Assessments shall be charged to an Owner’s Assessment account
which shall be part of the delinquent Assessment and shall be
payable and secured in the same manner as herein provided with
regard to Assessments.
Sunset Hills alleged that Carroll owed $4,737.19 in past due assessments,
interest, late fees, costs of collection, and attorney’s fees, and it attached to its
original petition a statement of Carroll’s account showing the amount owed.3
Sunset Hills made demand upon Carroll for payment of the amount owed,
but Carroll had failed and refused and continued to fail and refuse to pay the
amount owed. Sunset Hills also filed an assessment lien affidavit in the Tarrant
County real property records to provide further notice of the assessment lien.
On April 9, 2014, Carroll was served with citation and the petition by
personal service at 3844 Drexmore Road, Keller, Tarrant County, Texas, 76244.
Sunset Hills filed a motion for default judgment on May 13, 2014, asserting that
Carroll was served by personal service on April 9, 2014, the returned citation had
been on file for more than ten days, and Carroll failed to file an answer with the
trial court. Sunset Hills attached to its motion a certificate of last known address,
an affidavit stating Carroll was not in military service, and the affidavit of Adam
Pugh, Sunset Hills’s attorney. Pugh testified that Sunset Hills had incurred
reasonable and necessary attorney’s fees of not less than $1,500 “for the
necessary legal representation and services that have been and will be provided
3
The statement reflects that the $4,737.19 was comprised of assessments,
late charges, collection fees, and attorney’s fees. It does not reflect any interest
charges.
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to [Sunset Hills] through entry of judgment, and that will be reasonably necessary
in order to effectuate the enforcement and collections of the judgment rendered
in favor of [Sunset Hills] in this case.”
The trial court granted Sunset Hills a default judgment against Carroll,
awarding Sunset Hills $4,737.19 in damages and $1,500 in attorney’s fees, plus
costs and postjudgment interest at the rate of five percent per annum. The trial
court struck through proposed language in the default judgment providing for
foreclosure of the assessment lien. Sunset Hills appealed.
Analysis
In its sole issue, Sunset Hills argues that the trial court erred by refusing to
include in the default judgment an order authorizing it to foreclose on the
assessment lien because the declaration provides for foreclosure.
We review a trial court’s granting of a default judgment for an abuse of
discretion. Cottonwood Valley Home Owners Ass’n. v. Hudson, 75 S.W.3d 601,
603 (Tex. App.—Eastland 2002, no pet.). A trial court abuses its discretion if the
court acts without reference to any guiding rules or principles, that is, if the act is
arbitrary or unreasonable. Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007); Cire
v. Cummings, 134 S.W.3d 835, 838–39 (Tex. 2004). An appellate court cannot
conclude that a trial court abused its discretion merely because the appellate
court would have ruled differently in the same circumstances. E.I. du Pont de
Nemours & Co. v. Robinson, 923 S.W.2d 549, 558 (Tex. 1995); see also Low,
221 S.W.3d at 620.
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At any time after a defendant is required to answer, a plaintiff may take a
judgment by default against the defendant if the defendant has not previously
filed an answer and the citation with proof of service has been on file with the
clerk of the court for ten days. Tex. R. Civ. P. 107, 239. A no-answer default
judgment operates as an admission of the material facts alleged in the plaintiff’s
petition, except for unliquidated damages. See Holt Atherton Indus., Inc. v.
Heine, 835 S.W.2d 80, 83 (Tex. 1992). Proof is required only with respect to
damages that are either unliquidated or not proved by a written instrument. Tex.
R. Civ. P. 241, 243.
Landowners “may contract with respect to their property as they see fit,
provided the contracts do not contravene public policy.” Inwood N. Homeowners’
Ass’n, Inc. v. Harris, 736 S.W.2d 632, 634 (Tex. 1987). The developer of a
subdivision, as owner of all land subject to the declaration, is entitled to create
liens on its land to secure the payment of assessments. Id. “Creation of a
contractual lien depends only on evidence apparent from the language of the
agreement that the parties intended to create a lien.” Id.; see Pilarcik v.
Emmons, 966 S.W.2d 474, 478 (Tex. 1998) (noting restrictive covenants subject
to same rules of construction and interpretation as contracts). We consider the
assessment provisions and lien as a whole and give effect to “the clear and
explicit intentions of the parties.” Harris, 736 S.W.2d at 634; see Sloan v.
Owners Ass’n of Westfield, Inc., 167 S.W.3d 401, 404 (Tex. App.—San Antonio
2005, no pet.). Although the “remedy of foreclosure may seem harsh especially
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when a small sum is due, the court is bound to enforce the agreements
homeowners enter into concerning the payment of assessments.” Hudson, 736
S.W.3d at 603.
In order to foreclose on the assessment lien, Sunset Hills was required to
prove (1) the existence of a lien against Carroll’s property securing payment of
the assessments, late charges, collection fees, and attorney’s fees; (2) Carroll’s
failure to pay the debt secured by the lien; and (3) entitlement to foreclosure on
the lien against Carroll’s property to satisfy the debt. See Vill. Green
Homeowners Ass’n, Inc. v. Leeder, No. 04-10-00522-CV, 2011 WL 721260, at *2
(Tex. App.—San Antonio Mar. 2, 2011, no pet.) (mem. op.) (citing Sloan, 167
S.W.3d at 403–04). In addition, section 209.0091 of the Texas Property Code
required Sunset Hills to send a written notice of Carroll’s delinquent assessments
and opportunity to cure the delinquency to holders of recorded deed of trust liens
that were inferior or subordinate to Sunset Hills’s lien:
(a) A property owners’ association may not foreclose a property
owners’ association assessment lien on real property by giving
notice of sale under Section 51.002 or commencing a judicial
foreclosure action unless the association has:
(1) provided written notice of the total amount of the
delinquency giving rise to the foreclosure to any other holder
of a lien of record on the property whose lien is inferior or
subordinate to the association’s lien and is evidenced by a
deed of trust; and
(2) provided the recipient of the notice an opportunity to cure
the delinquency before the 61st day after the date the
recipient receives the notice.
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(b) Notice under this section must be sent by certified mail, return
receipt requested, to the address for the lienholder shown in the
deed records relating to the property that is subject to the property
owners’ association assessment lien.
Tex. Prop. Code Ann. § 209.0091 (West 2014).
There are no allegations in the petition stating that Sunset Hills satisfied
the requirements of section 209.0091, nor are there any allegations in the petition
that there were no holders of recorded deed of trust liens that were inferior or
subordinate to Sunset Hills’s lien. Thus, we conclude the trial court did not abuse
its discretion by refusing to include in the default judgment an order authorizing
Sunset Hills to foreclose on the assessment lien. Accordingly, we overrule
Sunset Hills’s sole issue.
Conclusion
Having overruled Sunset Hills’s sole issue, we affirm the trial court’s
judgment.
/s/ Anne Gardner
ANNE GARDNER
JUSTICE
PANEL: DAUPHINOT, GARDNER, and WALKER, JJ.
DELIVERED: June 11, 2015
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