whittier-heights-maintenance-association-inc-broughton-maintenance ( 2011 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-10-00351-CV
WHITTIER HEIGHTS APPELLANTS
MAINTENANCE ASSOCIATION,
INC.; BROUGHTON
MAINTENANCE ASSOCIATION,
INC.; LEYTON GROVE
MAINTENANCE ASSOCIATION,
INC.; AND OLD GROVE
MAINTENANCE ASSOCIATION,
INC.
V.
COLLEYVILLE HOME OWNERS’ APPELLEE
RIGHTS ASSOCIATION, INC.
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FROM THE 352ND DISTRICT COURT OF TARRANT COUNTY
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MEMORANDUM OPINION1
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1
See Tex. R. App. P. 47.4.
I. INTRODUCTION
This is an interlocutory appeal from a temporary injunction. Appellee
Colleyville Home Owners’ Rights Association, Inc. (CHORA) sought and obtained
a temporary injunction enjoining Appellants Whittier Heights Maintenance
Association, Inc.; Broughton Maintenance Association, Inc.; Leyton Grove
Maintenance Association, Inc.; and Old Grove Maintenance Association, Inc.
from various actions connected to Appellants’ assessment, collection, and
expenditure of homeowners’ fees on Appellants’ legal fees in defending a lawsuit
against it brought by CHORA. Appellants perfected this appeal, raising four
issues challenging the temporary injunction. For the reasons set forth below, we
will affirm the trial court’s temporary injunction.
II. FACTUAL AND PROCEDURAL BACKGROUND
CHORA is a Texas nonprofit corporation comprised of homeowners, some
of whom live in each of Appellants’ subdivisions. Each of Appellants’
subdivisions is subject to a ―Declaration of Covenants, Conditions and
Restrictions,‖ (CCRs) and each of the CCRs includes a section 4.2 that provides
substantially as follows,
Purpose of Periodic Assessment. The assessments levied by the
Declarant and/or the Maintenance Association shall be used
exclusively for the purpose of promoting the recreation, health,
safety, enjoyment and welfare of the Owners in the use of the
Addition, as may be provided in the Maintenance Association
Documents.
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During early 2010, CHORA members in the Whittier Heights and Broughton
subdivisions received notices that they would be assessed homeowners’ fees to
pay for legal fees in the underlying litigation instituted by CHORA. Quarterly
homeowners’ assessments were increased substantially, and the increases were
identified as necessary to fund the CHORA defense budget. CHORA’s counsel
was informed by Appellants’ counsel that Appellants were ready to commence
collection actions on behalf of Appellants concerning any unpaid homeowners’
assessments. CHORA filed an application for injunctive relief to enjoin collection
of assessments to fund Appellants’ legal expenses in the underlying action and
to enjoin collection actions by Appellants to recover assessments from property
owners within each of Appellants’ subdivisions. The trial court granted a
temporary injunction; Appellants perfected this appeal.
III. STANDARD OF REVIEW
The sole issue presented to a trial court at a temporary injunction hearing
is whether the applicant may preserve the status quo pending trial on the merits.
Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002); Davis v. Huey, 571
S.W.2d 859, 862 (Tex. 1978). Whether to grant or deny a temporary injunction is
within the trial court’s sound discretion. Butnaru, 84 S.W.3d at 204.
A temporary injunction is an extraordinary remedy and will not issue as a
matter of right. Id. To obtain a temporary injunction, an applicant must plead
and prove (1) a cause of action against the defendant; (2) a probable right to the
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relief sought; and (3) a probable, imminent, and irreparable injury in the interim.
Id.
On appeal, we do not review the merits of the underlying case. Davis, 571
S.W.2d at 861. Instead, we determine only whether there has been an abuse of
discretion by the trial court in granting or denying the relief. Id. at 862. In making
this determination, we may not substitute our judgment for that of the trial court
unless its decision was so arbitrary that it exceeded the bounds of
reasonableness. See Butnaru, 84 S.W.3d at 204.
Abuse of discretion does not exist if the trial court heard conflicting
evidence, and evidence appears in the record that reasonably supports the trial
court’s decision. Davis, 571 S.W.2d at 862; CRC–Evans Pipeline Int’l, Inc. v.
Myers, 927 S.W.2d 259, 262 (Tex. App.—Houston [1st Dist.] 1996, no writ). A
trial court abuses its discretion in granting or denying a temporary injunction
when it misapplies the law to the established facts. See State v. Sw. Bell Tel.
Co., 526 S.W.2d 526, 528 (Tex. 1975). Given the abuse of discretion standard,
we review the evidence submitted to the trial court in the light most favorable to
the court’s ruling, draw all legitimate inferences from the evidence, and defer to
the trial court’s resolution of conflicting evidence. See IAC, Ltd. v. Bell Helicopter
Textron, Inc., 160 S.W.3d 191, 196 (Tex. App.—Fort Worth 2005, no pet.).
IV. RECORD SUPPORTS CHORA’S STANDING
In their first issue, Appellants claim that CHORA lacks standing to bring the
underlying action because it fails to meet the first and third prongs of
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associational standing set forth in Texas Business Organizations Code section
252.007(b)(1) and (b)(3).2 CHORA responds that it possesses standing pursuant
to section 202.004(b) of the property code, which provides that ―[a] property
owners’ association or other representative designated by an owner of real
property may initiate, defend, or intervene in litigation or an administrative
proceeding affecting the enforcement of a restrictive covenant or the protection,
preservation, or operation of the property covered by the dedicatory instrument.‖
Tex. Prop. Code Ann. § 202.004(b) (Vernon 2007).3
In the trial court, Appellants filed a ―Motion to Dismiss or in the Alternative
Motion to Abate.‖ This motion alleges that Appellants seek ―a dismissal based
upon Plaintiff’s [CHORA’s] lack of associational standing pursuant to the test
adopted in Tex. Ass’n of Bus. v. Tex. Air Control Bd. & Water Comm’n, 852
2
Section 252.007(b) provides,
(b) A nonprofit association may assert a claim in its name on
behalf of members of the nonprofit association if:
(1) one or more of the nonprofit association’s members have
standing to assert a claim in their own right; [and]
....
(3) neither the claim asserted nor the relief requested requires
the participation of a member.
Tex. Bus. Org. Code Ann. § 252.007(b)(1), (3) (Vernon 2010).
3
CHORA alternatively argues that it meets the requisites of associational
standing.
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S.W.2d 440, 447 (Tex. 1993), and later codified in chapter 252 of the Texas
Business Organizations Code.‖ The order signed by the trial court denying the
motion indicates that the trial court conducted a hearing on the motion on August
26, 2010 and ruled on the motion ―after considering the evidence submitted by
the parties and the arguments of counsel.‖ No reporter’s record from the August
26, 2010 hearing is before us; only the reporter’s record from the August 19,
2010 temporary injunction hearing is before us.
At the temporary injunction hearing, numerous exhibits were admitted into
evidence, including the ―Declaration of Covenants, Conditions, and Restrictions‖
for each of Appellants’ subdivisions and correspondence and budgets from
Appellants to their members indicating an increase in assessments to fund
Appellants’ defense of the underlying CHORA litigation. Additionally, Don
Albrecht testified at the temporary injunction hearing for CHORA. Albrecht
testified that he is a vice president and board member of CHORA, as well as a
homeowner in one of Appellants’ subdivisions—Whittier Heights. As a
homeowner in one of Appellants’ subdivisions, Mr. Albrecht had been billed for a
homeowners’ special assessment that was identified as for Iegal fees, and he did
not pay it. Appellants did not put on any evidence at the hearing.
Standing to sue may be predicated upon either statutory or common law
authority. See, e.g., Williams v. Lara, 52 S.W.3d 171, 178–79 (Tex. 2001). The
common law standing rules apply except when standing is statutorily conferred.
Hunt v. Bass, 664 S.W.2d 323, 324 (Tex. 1984); see also Williams, 52 S.W.3d at
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178; In re Sullivan, 157 S.W.3d 911, 915–16 (Tex. App.—Houston [14th Dist.]
2005, orig. proceeding) (discussing separate ―statutory standing criteria‖). When
standing is statutorily conferred, the statute itself serves as the proper framework
for a standing analysis. Everett v. TK-Taito, L.L.C., 178 S.W.3d 844, 850–51
(Tex. App.—Fort Worth 2005, no pet.).
It is clear from the record before us that CHORA possesses standing to
seek a temporary injunction enjoining Appellants’ assessment pursuant to
section 4.2 for Appellants’ legal fees and expenses in the underlying litigation.
The property code specifically authorizes a property owners’ association or other
representative—such as CHORA—designated by an owner of real property to
initiate litigation affecting the enforcement of a restrictive covenant of the
property—like section 4.2—covered by the dedicatory instrument. See Tex.
Prop. Code Ann. § 202.004(b); accord Hawkins v. Walker, 233 S.W.3d 380, 389
(Tex. App.—Fort Worth 2007, no pet.) (recognizing that property owners’
association and representative designated by owner of real property possess
standing to sue under property code section 202.004(b) but that individual
property owners do not).
Appellants nonetheless contend that CHORA failed to establish
associational standing as set forth in the business organizations code. A
fundamental principle of statutory construction is that a specific statute controls
over a more general one. Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d
887, 901 (Tex. 2000). Indeed, the government code provides that general and
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specific provisions should be construed, if possible, to give effect to both, but
when they cannot be reconciled, the specific provision should prevail. See Tex.
Gov’t Code Ann. § 311.026 (Vernon Supp. 2010); State v. Alley, 137 S.W.3d
866, 868 (Tex. App.—Houston [1st Dist.] 2004), aff’d, 158 S.W.3d 485 (Tex.
2005). Because the record before us establishes CHORA’s standing pursuant to
the more specific requisites of property code section 202.004(b), we need not
address whether in the record before us CHORA also possesses standing under
the more general requirements of the business organizations code. See, e.g.,
Office of Attorney Gen. of Tex. v. Crawford, 322 S.W.3d 858, 861 (Tex. App.—
Houston [1st Dist.] 2010, pet. filed) (explaining specific statutory standing prevails
over more general standing).
We overrule Appellants’ first issue.
V. NO DERIVATIVE ACTION PLEADED
In their second issue, Appellants argue that CHORA’s lawsuit is a veiled
attempt to pursue a derivative action against Appellants. We have reviewed
CHORA’s pleadings, and we do not see, nor have Appellants pointed to, any
language, paragraphs, or relief sought by CHORA that constitutes a derivative
action.4 We overrule Appellants’ second issue.
4
Appellants’ statement that CHORA’s pleadings allege wrongs that
negatively impact the association assets is not specific enough for us to identify
any portion of CHORA’s pleading as asserting a derivative action.
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VI. JOINDER OF ALL HOMEOWNERS IN ALL OF APPELLANTS’
SUBDIVISIONS NOT REQUIRED
In their third issue, Appellants argue that the trial court erred by failing to
require the joinder of all homeowners in all of Appellants’ subdivisions as
necessary parties prior to issuance of the temporary injunction. To the extent, if
any, that all homeowners in all of Appellants’ subdivisions are necessary parties,
the trial court nonetheless did not err by failing to require their joinder prior to
issuance of the temporary injunction. See Winslow v. Duval Cnty. Ranch Co.,
519 S.W.2d 217, 226 (Tex. Civ. App.—Beaumont 1975, writ ref’d n.r.e.) (holding
that joinder of necessary parties not required prior to issuance of a temporary
injunction because rights which need preservation pending final trial could be lost
before all necessary parties could be found and joined). We overrule Appellants’
third issue.
VII. CHORA ESTABLISHED RIGHT TO TEMPORARY INJUNCTION
In their fourth issue, Appellants argue that CHORA did not establish a
probable right to recover on its causes of action and a probable, imminent, and
irreparable injury as required to obtain a temporary injunction. CHORA pleaded
causes of action for a declaratory judgment concerning ―the validity of any given
CCR, any amendment to the CCRs, and any exercise of power pursuant to the
CCRs or other Maintenance Association Documents‖ and that certain exercises
of discretionary authority by Appellants ―are invalid, because they constitute
unreasonable exercises of discretionary authority‖ pursuant to property code
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section 202.004(a). CHORA requested a temporary injunction and a
receivership.
Based on the record before us, viewing all evidence submitted to the trial
court in the light most favorable to the court’s ruling, drawing all legitimate
inferences from the evidence, and deferring to the trial court’s resolution of any
conflicting evidence, we cannot say that the trial court abused its discretion by
granting a temporary injunction. CHORA presented evidence––through
documents and Albrecht’s testimony––that Appellants, as property owners’
associations, exercised discretionary authority concerning a restrictive covenant,
namely section 4.2, to assess additional homeowners’ fees against some
CHORA members for purposes not authorized by Appellants’ ―Declaration of
Covenants, Conditions and Restrictions.‖ CHORA possesses a statutory cause
of action for an arbitrary, capricious, or discriminatory exercise of discretionary
authority by Appellants, and the evidence shows at least a probable right by
CHORA to the relief it seeks. See Tex. Prop. Code Ann. § 202.004(a); accord
Brooks v. Expo Chem. Co., 576 S.W.2d 369, 370 (Tex. 1979) (explaining that the
merits of the underlying case are not presented for appellate review in an appeal
from an order granting or denying a temporary injunction). In short, the record
before us does not establish that the trial court abused its discretion by
determining that CHORA showed a probable right to recovery on its section
202.004(a) claim. Viewing the record before us under the required deferential
standard of review, it demonstrates that CHORA members had already been
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subjected to an assessment by Appellants to fund Appellants’ defense of the
litigation instituted by CHORA. Appellants’ counsel indicated that collection
efforts would commence against all homeowners who did not pay the
assessment. Based on this evidence, we cannot say that the trial court abused
its discretion by determining that CHORA members would suffer probable,
imminent, and irreparable injury if a temporary injunction was not issued. The
trial court acted within its discretion by deciding CHORA was entitled to preserve
the status quo pending trial on the merits. See Davis, 571 S.W.2d at 862.
Having found that the record before us supports the two temporary injunction
elements challenged by Appellants, we overrule Appellants’ fourth issue.
VIII. CONCLUSION
Having overruled each of Appellants’ issues, we affirm the judgment of the
trial court.
PER CURIAM
PANEL: WALKER, MCCOY, and GABRIEL, J.J.
DELIVERED: June 2, 2011
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