Double Diamond-Delaware, Inc., Double Diamond, Inc., White Bluff Club Corporation, National Resort Management Company, R. Michael Ward, Fred Curran, and White Bluff Property Owners Association, Inc. v. Jeanette Alfonso, Eugenio Corpus, Fe Huevos, Elezar Nuique, Editha and Reynaldo Pepito, Simonette and Julito Pepito, Cherry Somosot, and Nelia Vicente ( 2015 )

ACCEPTED
13-14-00324-CV
THIRTEENTH COURT OF APPEALS
CORPUS CHRISTI, TEXAS
7/31/2015 11:48:37 AM
CECILE FOY GSANGER
CLERK
No. 13-14-00324-CV
FILED IN
In the Thirteenth Court ofCORPUS
Appeals
13th COURT OF APPEALS
CHRISTI/EDINBURG, TEXAS
Corpus Christi, Texas7/31/2015 11:48:37 AM
CECILE FOY GSANGER
Clerk
DOUBLE DIAMOND-DELAWARE, INC., DOUBLE DIAMOND, INC., WHITE BLUFF
CLUB CORP., NATIONAL RESORT MANAGEMENT CO., R. MICHAEL WARD, FRED
CURRAN, WHITE BLUFF PROPERTY OWNERS ASSOCIATION,
Appellants
V.
JEANETTE ALFONSO, EUGENIO CORPUS, FE HUEVOS, EDITH PEPITO, REYNALDO
PEPITO, SIMONETTE PEPITO, JULITO PEPITO, ELEZAR NUIQUE, CHERRY
SOMOSOT, NELIA VINCENTE,
Appellees
APPEAL FROM CAUSE NO. C-2259-11-F(1)
332ND DISTRICT COURT OF HIDALGO COUNTY, TEXAS
HON. MARIO EFRAIN RAMIREZ, JR. PRESIDING
APPELLANTS’ REPLY BRIEF
Brandy Wingate Voss Richard A. Sayles
State Bar No. 24037046 State Bar No. 17697500
D. Todd Smith Shawn Long
State Bar No. 00797451 State Bar No. 24047859
SMITH LAW GROUP, P.C. SAYLES WERBNER
820 E. Hackberry Ave. 4400 Renaissance Tower
McAllen, Texas 78501 1201 Elm Street
(956) 683-6330 (Telephone) Dallas, Texas 75270
(956) 225-0406 (Fax) (214) 939-8700 (Telephone)
brandy@appealsplus.com (214) 939-8787 (Fax)
dsayles@swtriallaw.com
Counsel for Appellants
Double Diamond-Delaware, Inc., et al.
TABLE OF CONTENTS
Index of Authorities .................................................................................................. ii
Argument....................................................................................................................1
I. The Governing Documents for White Bluff authorized the fees
and assessments Appellees challenge, and all on point Texas
case law validates the WBPOA’s actions imposing and
spending such assessments. ...................................................................1
A. Texas case law overwhelmingly shows that the
Governing Documents authorized the maintenance fees
and assessments...........................................................................1
B. The Court should reject Appellees’ unsupported assertion
that the WBPOA’s expenditures were improper under
Article II Section 9 of the Declaration. .......................................6
C. Neither Texas case law nor the Governing Documents
support Appellees’ reliance on the definition of
“Common Properties” to support their claims. ...........................8
II. Appellees’ disgorgement remedy fails on several grounds. ...............11
III. The venue evidence submitted by Appellees remains
incompetent, and Appellees have not established that Hidalgo
County was even the proper venue for this action. .............................14
A. Appellants properly challenged all venue facts. .......................14
B. Appellees’ venue evidence was woefully deficient. .................16
C. Even considering Appellees’ evidence, they failed to
establish venue in Hidalgo County. ..........................................18
Conclusion and Prayer .............................................................................................23
Certificate of Compliance ........................................................................................25
Certificate of Service ...............................................................................................26
i
INDEX OF AUTHORITIES
Cases Page(s)
American Golf Corp. d/b/a Walden on Lake Houston Golf and Country
Club v. Colburn,
65 S.W.3d 277, 278-79 (Tex. App.—Houston [14th Dist.] 2001,
pet. denied) ........................................................................................... 7, 8, 10
Beadles v. Lago Vista Owners Ass’n, Inc.,
No. 03-02-00228-CV, 2002 WL 31476657 (Tex. App.—Austin
Nov. 7, 2002, pet. denied) (not designated for publication) ............................5
Bleeker v. Villarreal,
941 S.W.2d 163 (Tex. App.—Corpus Christi 1996, writ dism’d by
agreem’t) ........................................................................................................16
Burrow v. Arce,
997 S.W.2d 229 (Tex. 1999) .........................................................................13
Candlelight Hills Civic Ass’n, Inc. v. Goodwin,
763 S.W.2d 474 (Tex. App.—Houston [14th Dist.] 1988, writ
denied) .........................................................................................................4, 5
Creative Thinking Sources, Inc. v. Creative Thinking, Inc.,
74 S.W.3d 504 (Tex. App.—Corpus Christi 2002, no pet.) ..........................12
Crooks v. Moses,
138 S.W.3d 629 (Tex. App.—Dallas 2004, no pet.) .....................................16
DiGrazia v. Old,
900 S.W.2d 499 (Tex. App.—Texarkana 1995, no writ) ..............................22
Head v. U.S. Inspect DFW, Inc.,
159 S.W.3d 731 (Tex. App.—Fort Worth 2005, no pet.) .............................21
Hsin-Chi-Su v. Vantage Drilling Co.,
No. 14-14-00461-CV, 2015 WL 4249265 (Tex. App.—Houston
[14th Dist.] July 14, 2015, no pet. h.) ............................................................13
ii
In re Socorro Ind. Sch. Dist.,
No. 13-09-00500-CV, 2010 WL 1138451 (Tex. App.—Corpus
Christi-Edinburg March 22, 2010, no pet.) ............................................ 15, 20
Lavaca Bay Autoworld, L.L.C. v. Marshall Pontiac Buick Oldsmobile,
103 S.W.3d 650 (Tex. App.—Corpus Christi 2003, no pet.,
judgm’t withdrawn by agr.) ...........................................................................12
Lucke v. Kimball,
No. 13-01-362-CV, 2004 WL 102830 (Tex. App.—Corpus Christi
2004, pet. denied) (mem. op.) ........................................................................12
Newman Oil Co. v. Alkek,
585 S.W.2d 340 (Tex. App.—Dallas 1979, no writ).....................................17
Swinnea v. ERI Consulting Eng’rs, Inc.,
236 S.W.3d 825 (Tex. App.—Tyler 2007), aff’d in part, rev’d in
part, 318 S.W.3d 967 (Tex. 2010).................................................................11
Wilchester West Concerned Homeowners LDEF, Inc. v. Wilchester West
Fund, Inc.,
177 S.W.3d 552 (Tex. App.—Houston [1st Dist.] 2005, pet.
denied) .................................................................................................. 2, 3, 10
Yalamanchili v. Mousa,
316 S.W.3d 33 (Tex. App.—Houston 2010, pet. denied) .............................14
Statutes Page(s)
TEX. CIV. PRAC. & REM. CODE § 15.006........................................................... 20, 21
Rules Page(s)
TEX. R. CIV. P. 87(3)(a)............................................................................................18
TEX. R. CIV. P. 88 .............................................................................................. 16, 17
TEX. R. CIV. P. 197.3 ......................................................................................... 16, 17
TEX. R. CIV. P. 198.3 ......................................................................................... 16, 17
iii
ARGUMENT
I. The Governing Documents for White Bluff authorized the fees and
assessments Appellees challenge, and all on point Texas case law
validates the WBPOA’s actions imposing and spending such
assessments.
Buried on page 50 of Appellees’ Brief is their response to the central issue in
the present dispute—were the actions undertaken by Appellant White Bluff
Property Owners’ Association, Inc. (the “WBPOA”) authorized under the
Declaration Regarding the Establishment of White Bluff Property Owners’
Association, Inc. (the “Declaration”), among other Governing Documents for the
White Bluff community? Texas case law establishes that the answer to this critical
question is “yes.” Thus, the challenged golf course maintenance fees and food and
beverage assessments are wholly valid and enforceable.
A. Texas case law overwhelmingly shows that the Governing
Documents authorized the maintenance fees and assessments.
In Article II of the Declaration (its “Purposes and Powers”), this document
contains not one but two grants of authority to the WBPOA that establish its power
to impose the challenged fees and assessments. First, pursuant to Section 9 of
Article II, the WBPOA may “do any other thing that, in the opinion of the Board of
Directors of the Association, will promote the common benefit and enjoyment of
the Owners and residents of the Property . . . .” (4RR1876). Likewise, Section 2 of
Article II authorizes the WBPOA “to promote the health, safety and welfare of the
1
Owners and residents of the Property.” (Id.). While Appellees attempt to castigate
these provisions as giving the WBPOA “unbridled authority” (a rather hyperbolic
assertion), all Texas courts addressing similar actions by property owners’
associations possessing similar grants of authority in the governing documents
have determined that the “common benefit” language absolutely authorizes the
imposition of fees such as those being challenged in the present lawsuit.
In Wilchester West Concerned Homeowners LDEF, Inc. v. Wilchester West
Fund, Inc., the appellate court addressed and evaluated pre-amendment deed
restrictions almost identical to the current restrictions at issue. 177 S.W.3d 552,
564 (Tex. App.—Houston [1st Dist.] 2005, pet. denied). There, the court upheld
the Wilchester West HOA’s decision to increase yearly assessments by $160
through a “Use Agreement” designed to fund a nearby tennis and swimming club
owned by a third party. The First Court of Appeals is clear about the nature of its
analysis and in no way characterizes any of its holding about the deed restrictions
at issue as dictum. Id. at 564-66. In fact, the court specifically held the assessments
were authorized by language that was nearly identical to those in the WBPOA’s
Declaration:
The association’s decision to enter into the Use Agreement is
supported by both the pre-amended and amended restrictions. The
pre-amended restrictions stated that maintenance charges should be
used to “promote the health, safety, welfare, and common benefit of
the residents” and for “other things necessary or desirable, in the
2
opinion of the Corporation, to maintain or improve the Property or
which is considered of benefit to the Owners.”
Id. at 564. Again, the Declaration indisputably allows the WBPOA “do any other
thing that, in the opinion of the Board of Directors of the Association, will promote
the common benefit and enjoyment of the Owners and residents of the Property”
and “to promote the health, safety and welfare of the Owners and residents of the
Property.” (4RR1876).
Appellees attempt to downplay this broad grant of authority by arguing that,
in Wilchester West, the expenditures of maintenance fees for the homeowners’
“common benefit” were specifically authorized by the deed restrictions. However,
the same is true with respect to the White Bluff community—Section 7 of Article
II in the Declaration details the wide scope by which the WBPOA can spend the
proceeds it receives from assessments.
Specifically, the WBPOA is granted the authority “[t]o fix, levy, collect and
enforce payment by any lawful means, all charges, fees or assessments provided
for by the terms of the Covenants and to pay all expenses in connection therewith
and all office and other expenses incident to the conduct of the business of the
Association . . . .” (4RR1876) (emphasis added). Likewise, Section 2 of Article III
of the Declaration authorizes the WBPOA to increase or decrease maintenance fees
provided such changes in fees are “deemed reasonably necessary by the Board of
3
Directors of the Association to adequately maintain the Property or to perform the
Association’s functions.” (4RR1877) (emphasis added).
In effect, Appellees’ argument that the WBPOA’s power to act for the
“common benefit” of White Bluff residents does not apply to the expenditure of
maintenance fees is nothing more than a contention that promoting the common
benefit and enjoyment of WBPOA residents (or their health, safety, and welfare)
does not constitute the WBPOA conducting its business or its functions. Such an
argument strains credulity, as the Governing Documents specifically state that the
“Purpose and Powers” of the WBPOA include promoting items such as the
common benefit, enjoyment, health, safety, and welfare of the residents at White
Bluff. Frankly, the Declaration could not be clearer—such actions are absolutely
the business and function of the WBPOA. Appellees’ argument is nothing more
than an effort to deny the plain meaning of the Declaration (and related governing
documents) in an attempt to manipulate a favorable result in this litigation.
Other cases involving a homeowners’ association’s expenditure of its funds
in connection with recreational facilities are also instructive. In Candlelight Hills
Civic Ass’n, Inc. v. Goodwin, the Fourteenth Court of Appeals upheld the
homeowners’ association’s purchase of a recreational facility on the basis that its
funds could be spent “doing any other thing necessary or desirable in the opinion
of the Trustees of the Association to keep the property in the Subdivision neat and
4
in good order, or which they consider of general benefit to the owners or occupants
of the Subdivision.” 763 S.W.2d 474, 477-79 (Tex. App.—Houston [14th Dist.]
1988, writ denied). The court made clear that purchasing a recreational facility
benefitted the welfare of the community: “The purchase of real property is
consistent with the promotion of social and recreational activities and with taking
concerted action on matters affecting the welfare of the community.” Id. at 479.
Similarly, in Beadles v. Lago Vista Owners Ass’n, Inc., the Austin Court of
Appeals held that spending maintenance fees on the purchase and upkeep of
certain common-area facilities (such waterfront parks, boat launches, a marina, and
an activity center) was authorized by language in the restrictive covenants giving
the homeowners’ association the authority to use them on anything the association
found “necessary or desirable.” No. 03-02-00228-CV, 2002 WL 31476657, at *5-7
(Tex. App.—Austin Nov. 7, 2002, pet. denied) (not designated for publication).
Again, all of the cases evaluating similar situations to the WBPOA’s assessment of
golf course maintenance and food and beverage fees have been decided fully in
favor of giving a property owners’ association broad discretion by which to
promote the common benefit, enjoyment, health, safety, and welfare of its owners
and residents.
5
B. The Court should reject Appellees’ unsupported assertion that the
WBPOA’s expenditures were improper under Article II Section 9
of the Declaration.
Moreover, Appellees’ argument that Section 9 of Article II of the
Declaration1 establishes improper expenditures by the WBPOA is baseless. See
Appellees’ Br. at 52. First, Appellees asserted no such challenge at the court
below. Second, there has been no proof offered that the expenditures were paid to a
“Member, director or officer of the Association, or any private individual,” as not
all Appellants fit these categories, and Appellees’ lack of a record cite for this
claim evidences the same. See Appellees’ Br. at 53. Third, such a challenge is
inherently a fact issue because the Declaration specifically allows an exception to
any limitations for “reasonable compensation [to] be paid for service rendered to or
for the Association related or pertaining to one or more of its purposes.”
(4RR1876) (emphasis added). To the extent that Appellees assert improper
1
The entirety of section 9 grants the WBPOA power to:
Insofar as permitted by law, to do any other thing that, in the opinion of the Board
of Directors of the Association, will promote the common benefit and enjoyment
of the Owners and residents of the Property; provided, however, that no part of
the net earnings of the Association shall inure to the benefit of or be distributable
to any Member, director, or officer of the Association, or any private Individual
(expect [sic] that reasonable compensation may be paid for service rendered to or
for the Association related or pertaining to one or more of its purposes); and
provided further that no part of the activities of the Association shall include
carrying on propaganda, or otherwise attempting to influence legislation, or
participating in, or intervening in (including the publication or distribution or
statements) any political campaign on behalf of any candidate for public office.
(4RR1876) (emphasis added).
6
inurement by an Appellant, they must establish that such compensation paid to that
Appellant was unreasonable in light of the service rendered. (See id.). Before this
briefing, Appellees have neither made such an argument nor provided such
evidence (which, again, would have constituted a fact issue for a jury).
In fact, the only case cited by Appellees in connection with the crucial issue
of the WBPOA’s authority to impose and spend the golf course maintenance and
food and beverage fees and assessments is also supportive of Appellants’ position
in this case. In American Golf Corp. d/b/a Walden on Lake Houston Golf and
Country Club v. Colburn, a third-party (as opposed to a POA or HOA board)
attempted to use the Declaration of Covenants, Conditions and Restrictions for
Walden on Lake Houston to impose a “Minimum Dining Fee” on members of the
Walden on Lake Houston Golf and Country Club. 65 S.W.3d 277, 278-79 (Tex.
App.—Houston [14th Dist.] 2001, pet. denied). More specifically, the owners of
lots in this community were charged, pursuant to the Declaration, both General
Assessments owed to the homeowners’ association and membership dues in
connection with their mandatory membership at the Country Club. Id. at 279. The
Fourteenth Court of Appeals found that American Golf Corporation lacked the
authority to impose a “Minimum Dining Fee” on the members of the Country Club
through the Declaration because the only permissible charges were “dues.” Id. at
279-80. Therefore, although it was appropriate for the governing documents to
7
require every property owner to be a dues-paying member of the Country Club,
these dues were the only charges that could be levied by the Country Club under
the Declaration. Id.
Assessing the Colburn decision, this Court should note that the Fourteenth
Court of Appeals took absolutely no issue with a deed restriction compelling
property owners to pay mandatory dues to an entity owned by a third party to the
homeowners’ association. Here, Appellees challenge exactly that type of payment,
objecting to the imposition of golf course maintenance fees and food and beverage
assessments ultimately paid to third parties. Ostensibly, Appellees’ best case is
supportive of exactly the sort of mandatory payment they attack in the present
lawsuit.
C. Neither Texas case law nor the Governing Documents support
Appellees’ reliance on the definition of “Common Properties” to
support their claims.
Similarly, the Texas case law applicable to the present action disposes of
another oft-repeated but effectively irrelevant argument continually advanced by
Appellees herein—that regarding the definition of “Common Properties” contained
in the various Governing Documents for White Bluff. Appellees have asserted,
without any real support, that somehow the WBPOA’s expenditures are limited to
maintaining “Common Properties,” “common facilities,” and “Association
Property.” Appellees’ Br. at 36-39. Appellees then cite to the Articles of
8
Incorporation for White Bluff to contend that the definition of “Common
Properties” does not specifically include “golf courses” that are outside that
recorded plat for the White Bluff community.2 Id. at 38-39.
First, as previously addressed in Appellant’s Brief on pages 44-45, this
argument ignores the fact that the 1990 Bylaws do include the term “golf courses”
within the definition of “Common Properties.” (5CR1937). Likewise, the amended
Bylaws in 2010 also explicitly state that the WBPOA had the obligation to “fund
the maintenance of the golf courses.”3 (5CR1957).
More importantly, however, there is nothing in the Governing Documents
limiting the WBPOA’s authority to expend its funds on matters that are not
“Common Properties” (however that definition is construed). Appellees’ entire
argument rests on the fallacy that their interpretation of “Common Properties” and
related terms imposes a specific limitation on how WBPOA funds can be spent. As
2
Though unrelated to the legal issues in play, Appellees’ characterization of the
WBPOA’s alleged lack of involvement with the golf courses is insupportable. See Appellees’ Br.
at 43. For example, the Greens Committee of the WBPOA is responsible for “handl[ing] overall
maintenance of the golf courses.” (7CR3824).
3
Moreover, despite the Appellees’ claim in the footnote of page 7 of their Brief,
Appellants have absolutely challenged the finding by the trial court that the 2010 Bylaws were
not lawfully enacted. See, e.g., Appellants’ Br. at 4, 44-45. To reiterate this challenge to that
finding, the Bylaws allowed for amendment by a vote of the membership or by a vote of the
membership to delegate that authority to the Board of Directors. (5CR1950). In 1990, the sole
member of the WBPOA delegated the power to amend the Bylaws to the Board of Directors.
(8CR3971). Accordingly, there was nothing improper about the Board of Directors later
amending the Bylaws to expressly allow maintenance of golf courses, as the Board had been
appropriately delegated this power some time before. (Id.).
9
set forth above, this argument cannot withstand logical scrutiny. First, should the
Governing Documents of the WBPOA have been intended to impose specific
limitations on the expenditure of WBPOA funds, such documents could have
specifically stated them. They do not. Second, the Declaration itself indisputably
states that the WBPOA is obligated “to pay all expenses . . . incident to the conduct
of the business of the Association . . . .” (4CR1876). It also states that the WBPOA
can increase or decrease maintenance fees as necessary “to perform the
Association’s functions.” (4CR1877). This business and these functions—by the
very terms of the Declaration—include providing for the common benefit,
enjoyment, health, safety, and welfare of the owners and residents in White Bluff.
And all Texas case law, even the sole case cited by Appellees on the issue, fully
supports the WBPOA’s payment of these funds to a third-party owner of
recreational facilities being used to benefit the WBPOA’s members. See Wilchester
West, 177 S.W.3d at 564-66; see also Colburn, 65 S.W.3d at 279-80.
In summary, Appellees’ various challenges to the validity of the golf course
maintenance fees and food and beverage assessments fail both under the terms of
the WBPOA’s governing documents and the Texas jurisprudence on the relevant
issues.
10
II. Appellees’ disgorgement remedy fails on several grounds.
Appellees continue to lack a legal basis for the disgorgement remedy they
seek against all Appellants. In their Brief, Appellees barely address the fact that the
Final Judgment awards a blanket disgorgement remedy against all Appellants,
regardless of whether it was established that a particular Appellant even received
any funds paid by WBPOA members. See Appellees’ Br. at 64 n.28. Appellees
somehow try to justify this blanket remedy by stating that Appellees themselves
will not obtain a double or triple recovery. Id. That argument is irrelevant—the
issue raised by Appellants relates to the potential obligation of a non-WBPOA
Appellant to pay disgorgement damages for funds it never received (or potentially
had involvement). In fact, Appellees’ own Brief cites Swinnea v. ERI Consulting
Eng’rs, Inc., for the proposition that “disgorgement is an equitable remedy by
which the wrongdoer is divested of ill gotten gains.” 236 S.W.3d 825, 841 (Tex.
App.—Tyler 2007), aff’d in part, rev’d in part, 318 S.W.3d 967 (Tex. 2010).
When making this assertion of law, Appellees apparently miss the irony of the
disgorgement remedy they seek to uphold herein being applied against Appellants
other than the WBPOA, as the fees and assessments they challenge were instituted
and collected by the WBPOA. And, Appellees have made no effort whatsoever to
show what, if anything, was received by the other Appellants. How can an
Appellant legally be “divested of ill-gotten gains” it never even received? Put
11
simply, Appellees lack an answer as to how a blanket disgorgement remedy can be
justified in this case.
Moreover, Appellants reiterate that disgorgement is simply not a remedy
available to be piled on top of declaratory judgment, which is itself a remedy. See
Creative Thinking Sources, Inc. v. Creative Thinking, Inc., 74 S.W.3d 504, 513
(Tex. App.—Corpus Christi 2002, no pet.) (holding that a declaratory judgment is
an additional and cumulative remedy that does not supplant any existing remedies).
Appellees do not even dispute that disgorgement is a remedy utilized in breach of
fiduciary duty cases, and fail to cite one case in the entire state of Texas in which
the disgorgement of allegedly ill-gotten gains was ordered pursuant to declaratory
relief (or for that matter, a cause of action other than breach of fiduciary duty).4 In
fact, in a case recently decided by the Fourteenth Court of Appeals, the remedy of
disgorgement is again clearly spelled out: “Disgorgement of profits is an equitable
remedy appropriate when a party has breached his fiduciary duty; its purpose is to
4
The cases cited in Appellees’ Brief regarding the award of monetary damages are not
disgorgement cases and are thus distinguishable from the relief sought by and awarded to
Appellees. In Lavaca Bay Autoworld, L.L.C. v. Marshall Pontiac Buick Oldsmobile, the plaintiff
therein brought a declaratory judgment claim asserting that it was not the recipient of overpaid
funds and was contractually entitled to funds previously paid to it. 103 S.W.3d 650, 652 (Tex.
App.—Corpus Christi 2003, no pet., judgm’t withdrawn by agr.). The defendant then
counterclaimed for declaratory judgment, breach of contract, and other causes of action in
connection with the same sum of funds the plaintiff alleged it was entitled to retain. Id. When the
appellate court determined the defendant’s contractual interpretation was proper, repayment of
the agreed-upon amount in dispute was ordered. Id. at 660. Likewise, the Lucke v. Kimball
decision involved a jury finding of the value of a partnership interest at dissolution and possesses
no relation whatsoever to a disgorgement remedy. No. 13-01-362-CV, 2004 WL 102830, at *8
(Tex. App.—Corpus Christi 2004, pet. denied) (mem. op.).
12
protect relationships of trust by discouraging disloyalty.” Hsin-Chi-Su v. Vantage
Drilling Co., No. 14-14-00461-CV, 2015 WL 4249265, at *10 (Tex. App.—
Houston [14th Dist.] July 14, 2015, no pet. h.). While Appellees had at one time
asserted breach of fiduciary duty causes of action against various defendants in this
case (most of whom are no longer parties herein), Appellees non-suited their
fiduciary duty cause action while the parties’ competing motions for summary
judgment were pending. (8CR3940-43, 4236-39). Thus, Appellees eliminated the
one claim pursuant to which disgorgement was an available remedy. Without a
favorable finding on the merits regarding the claim that gives rise to a
disgorgement remedy, Appellees cannot be awarded this relief. See Burrow v.
Arce, 997 S.W.2d 229, 239-40 (Tex. 1999) (determination of “clear and serious
violation of [fiduciary] duty” necessary for disgorgement of fees paid to attorney).
Moreover, disgorgement is designed to “protect relationships of trust from an
agent’s disloyalty or other misconduct”—a consideration not present in this case.5
See id.
Finally, Appellees’ contention regarding the alleged waiver of the
disgorgement appeal issue cannot stand, as a trial court cannot properly grant
5
Likewise, in the present case, the benefit received by Appellees, both specific to the fees
themselves (such as the 36 free rounds of golf available each year for WBPOA members and
Appellees’ use of credits provided in connection with the food and beverage assessments) and
general to the White Bluff community, in connection with the amounts paid to the WBPOA is a
material consideration that is no way addressed by the proposed blanket disgorgement remedy.
(7CR3773, 3781-82).
13
summary judgment on a legally insufficient ground (such as disgorgement remedy
unavailable in a declaratory judgment action). See Yalamanchili v. Mousa, 316
S.W.3d 33, 40 (Tex. App.—Houston 2010, pet. denied). Moreover, Appellees fail
to mention that they did not even put the sums to be disgorged at issue until after
their summary judgment motion had been granted—an issue that was raised in and
addressed by Appellants’ summary judgment response. (8CR3963). At that point
the disgorgement issue was briefed by both sides.
III. The venue evidence submitted by Appellees remains incompetent, and
Appellees have not established that Hidalgo County was even the proper
venue for this action.
Despite Appellees’ best efforts, they cannot overcome the deficiencies in
their venue proof. Appellees’ contention that Appellants somehow failed to
specifically deny venue facts is not supported by the record. But even considering
the evidence Appellees presented, they failed their burden to establish venue in
Hidalgo County.
A. Appellants properly challenged all venue facts.
In their Brief, Appellees first attack Appellant’s venue argument by
contending that Appellants failed to specifically deny the claim that prospective
property purchasers were contacted via phone calls from Double Diamond.
Appellees’ Br. at 21. Appellants then contend that the failure to deny a specifically
alleged venue fact relieves them of providing prima facie proof of that venue fact
14
and establishes venue in Hidalgo County. Id. However, in paragraph 3 of the
Affidavit of Stephen Miller attached to Defendants’ Reply in Support of Motion to
Transfer Venue, Miller specifically states that “Double Diamond has never
directed marketing efforts at Hidalgo County for the purpose of soliciting new
property owners from Hidalgo County.” (3CR1654).
Likewise, the venue reply briefing points out that Appellees offer no
evidence of being the recipients of any false statements via mailers, phone calls, or
presentations in connection with their decision to purchase property at White Bluff.
(3CR1637-41). Because the Court can consider the totality—including reply
briefing—of the “allegations regarding venue in determining whether or not [the
defendant] has specifically denied the venue facts,” Appellants’ denial of the
claims about pre-purchase contacts with Hidalgo County residents requires
Appellees to provide prima facie proof of these alleged contacts. See In re Socorro
Ind. Sch. Dist., No. 13-09-00500-CV, 2010 WL 1138451, at *4 (Tex. App.—
Corpus Christi-Edinburg March 22, 2010, no pet.) (considering the denial of venue
facts contained in reply briefing when determining whether the defendant had
made a specific denial of the venue facts pled by the plaintiff and ultimately
granting mandamus on the basis of the plaintiff’s failure to establish venue).
15
B. Appellees’ venue evidence was woefully deficient.
As set forth in careful detail in Appellants’ Brief, Appellees utterly failed to
offer admissible evidence providing prima facie proof that venue is proper in
Hidalgo County. See Appellants’ Br. at 19-30. The only evidence Appellees put
before the court was their own self-serving answers to interrogatories and
responses to requests for admissions, supposedly “proved up” by their attorney
Lynda Weaver. (2CR161-1567). But neither plaintiffs’ answers to interrogatories
nor their responses to admissions served on them constitute admissible evidence.
Under Texas Rule of Civil Procedure 197.3, “answers to interrogatories may
be used only against the responding party”—not by the responding party. See also
Crooks v. Moses, 138 S.W.3d 629, 641 (Tex. App.—Dallas 2004, no pet.) (holding
that it was improper for a party to utilize its own interrogatory responses to defeat
summary judgment, even if the other side did not object to such use). Similarly,
requests for admissions are to be utilized against, not for, the specific party
responding to the requests. See TEX. R. CIV. P. 198.3 (“A matter admitted under
this rule is conclusively established as to the party making the admission . . . .”);
see also Bleeker v. Villarreal, 941 S.W.2d 163, 168 (Tex. App.—Corpus Christi
1996, writ dism’d by agreem’t).
Appellees cite to Texas Rule of Civil Procedure 88 in an effort to undermine
the limitations on the use of interrogatories and requests for admissions set forth in
16
Rules 197.3 and 198.3 and Texas case law. See Appellees’ Br. at 23-24. However,
as Appellees’ Brief hints and a review of the case law associated with this Rule
establishes, there is nothing that indicates Rule 88 in any way authorizes the use of
otherwise incompetent evidence in connection with a venue dispute or in any way
trumps Rules 197.3 and 198.3. Moreover, the purpose of this Rule “is to enable the
parties to proceed with preparation for trial on the merits, promptly and
unhampered, so that the plea of privilege will not delay final disposition of the
suit.” Newman Oil Co. v. Alkek, 585 S.W.2d 340, 341 (Tex. App.—Dallas 1979, no
writ). There is simply no support for the proposition that the intent of this rule is to
allow the Court to consider otherwise inadmissible evidence when making a venue
determination.
In addition to Appellees’ illegitimate effort to rely upon their own written
discovery responses to establish venue, this purported evidence from Appellees is
also inadmissible. In her Affidavit seeking to “prove up” plaintiffs’ venue
evidence, Lynda Weaver in no way testifies that she possesses personal knowledge
of the alleged facts stated in her clients’ discovery responses, only noting that she
is attaching true and correct copies of her clients’ responses. (2CR1566). More
importantly, her own clients’ verifications note that the “facts set forth” in their
discovery answers—the only prima facie venue “evidence” offered by Appellees—
“are within my personal knowledge or based on information and belief . . . .” (See,
17
e.g., 2CR171; see also 3CR1689-1711). There is no delineation which alleged
venue facts are within the personal knowledge of Appellees and which are
apparently based upon information and belief. (Id.). This, coupled with Appellees’
improper attempt to rely on their own written discovery answers as venue
evidence, can in no way satisfy the requirement that “[a]ffidavits shall be made on
personal knowledge, [and] shall set forth specific facts as would be admissible in
evidence.” See TEX. R. CIV. P. 87(3)(a).
C. Even considering Appellees’ evidence, they failed to establish
venue in Hidalgo County.
Even when the incompetent evidence on which Appellees attempt to rely is
considered, venue has not been established in Hidalgo County. The causes of
action at issue in this case arise from Appellees’ decision to purchase lots in the
White Bluff community, the alleged misrepresentations made to them (or
disclosures withheld from them) in the context of that purchase decision, and the
effect of making that purchase decision (such as the fees and assessments
associated with owning a lot). Looking at the discovery answers submitted by the
Appellees in this case (which have previously been detailed on pages 28 and 29 of
Appellant’s Brief), not one of the Appellees makes a specific factual claim
providing a nexus between his or her own purchase decision and representations or
actions directed by defendants to Hidalgo County. Despite this reality, in their own
Brief, Appellees claim that “Double Diamond unquestionably targeted” plaintiffs
18
in Hidalgo County and “actively recruited the Plaintiffs in Hidalgo County.”
Appellees’ Br. at 25-26.
In fact, what Appellees’ purported evidence shows is that they were
contacted by Appellants after the purchase decision giving rise to the claims made
herein and asked to solicit other potential buyers. See Appellants’ Br. at 27-29.
Even if true, such a fact has absolutely no nexus to the property purchase
transaction presently in dispute and seems to potentially relate more to the
purchase decisions of unknown third parties. This is the reason Appellees literally
offer no case law support in connection with this venue argument centered upon
post-purchase contact between themselves and defendants.
Somewhat amusingly, on page 27 of their Brief, Appellees even cite to
Appellants’ own venue evidence showing that the Hidalgo County-based contact
between plaintiffs and defendants occurred after their purchase decision.
Appellees’ Br. at 27. Here, Appellees mischaracterize the minor pre-purchase
contact between the parties in Hidalgo County, omitting the statement from
Stephen Miller’s affidavit that the letters sent to prospective purchasers who had
already agreed to tour White Bluff “simply confirm[ed] the time and date of the
scheduled tour.” (3CR1654). Again, such evidence completely fails to establish a
connection between the property purchase decision and related events giving rise
to the causes of action and Hidalgo County.
19
Appellees move forward to contend that the damages were “felt” in Hidalgo
County when Appellees were required to pay the challenged fees and assessments
from their homes there. Appellees’ Br. at 28. While Appellees again cite no case
law for this proposition, the reality is that Appellees undertook the obligation to
pay such fees and assessments upon purchasing a lot while in Hill County, not
upon any actions undertaken in Hidalgo County. See TEX. CIV. PRAC. & REM.
CODE § 15.006 (“A court shall determine the venue of a suit based on the facts
existing at the time the cause of action that is the basis of the suit accrued.”); see
also In re Socorro, 2010 WL 1138451, at *2. Particularly where Appellees are
seeking to uphold a declaratory judgment finding that the fees and assessments
were per se invalid (in addition to their other misrepresentation and transaction-
based claims), the present causes of action accrued at the point of purchase, not at
some later time. Again, prima facie evidence supporting Hidalgo County as the
proper venue is lacking.
Finally, again without citing any case law, Appellees make an extensive
argument that defendants’ alleged “failures to disclose” various matters related to
the purchase transaction establishes venue in Hidalgo County. Appellees’ Br. at
30-34. Among other non-disclosure allegations, Appellees claim that defendants
did not disclose the “assessment scheme,” did not disclose that lot owners pay
assessments to maintain property not owned by the WBPOA, did not disclose the
20
amounts of fees and assessments, and made conflicting statements about the
assessments and that Appellees were handed a large stack of paperwork at the time
of sale and were subject to high pressure sales tactics. (Id.). However, to the extent
such wrongdoing occurred (and Appellants entirely deny it did), it occurred in Hill
County during the sales presentations or at the point of sale. Inherently, a failure to
disclose argument is premised upon non-disclosures and inaction that took place
prior to the plaintiffs’ decision to purchase at White Bluff—made in Hill County—
and upon which plaintiffs relied when making their purchase decision. See TEX.
CIV. PRAC. & REM. CODE § 15.006; see also Head v. U.S. Inspect DFW, Inc., 159
S.W.3d 731, 744 (Tex. App.—Fort Worth 2005, no pet.) (the elements of a failure
to disclose under the DTPA include a failure to disclose information, the
information being known at the time of the transaction, the failure to disclose being
intended to induce the purchaser into a transaction, and the purchaser would not
have entered into the transaction had the disclosure been made). Had no purchase
been made in Hill County, there cannot be a failure to disclose allegation.
In fact, plaintiffs’ own live pleading at the time of the venue hearing
specifically identifies the issue to which Appellees’ later “discovery” of the alleged
failures to disclose is relevant. In paragraph 46 of Plaintiffs’ Third Amended
Petition, plaintiffs allege that “fraudulent concealment” by defendants tolled the
running of the statutes of limitations against plaintiffs’ claims. (1Supp.CR70.)
21
However, fraudulent concealment is itself a defense to a statute of limitations
affirmative defense, and is not an affirmative cause of action relevant to a venue
analysis. See DiGrazia v. Old, 900 S.W.2d 499, 502-04 (Tex. App.—Texarkana
1995, no writ) (detailing the nature of a fraudulent concealment defense).
Finally, Appellees argue that, because they possessed seven days with which
to back out of the lot purchase transaction in White Bluff, venue is appropriate in
Hidalgo County (as the residence of plaintiffs). Appellees’ Br. at 33. That said,
Appellees have cited to no evidence that any of them considered backing out of the
purchase transaction in this seven-day period (while located in Hidalgo County or
elsewhere). Id. Appellees likewise offer no evidence that they were even in
Hidalgo County at this time. Id. This evidence is lacking because Appellees have
raised this argument for the first time on appeal, and it has thus been waived.
In summary, defendants specifically denied the venue facts pleaded by
plaintiffs, and have demonstrated here and in their prior Brief that Hidalgo County
is not a proper venue for this dispute and Dallas County is. Appellees not only rely
entirely on inadmissible and incompetent evidence in this venue dispute, but their
own arguments also establish that their causes of action did not accrue based on
conduct occurring in Hidalgo County. As such, from its beginning, this case should
have been heard in Dallas County (alongside the larger action already pending
there).
22
CONCLUSION AND PRAYER
For the foregoing reasons, the trial court erred when granting summary
judgment against Appellants declaring that the WBPOA lacked the authority to
impose and collect golf course maintenance fees and food and beverage
assessments from Appellees, as well as ordering the disgorgement of any such fees
collected by the WBPOA. Likewise, the trial court erred by denying Appellants’
motion to transfer venue, and as such the judgment must be reversed. Appellants
request that the Court reverse the final judgment in favor of Appellees and render
the judgment that the trial court should have rendered—granting Appellants’
motion for summary judgment and/or transferring this action to Dallas County.
Alternatively, Appellants request that the Court remand this matter to the trial court
on any outstanding issues yet to be heard. Finally, Appellants request that costs of
this appeal be assessed against Appellees and that the Court grant Appellants any
other and further relief to which they are justly entitled.
Respectfully submitted,
/s/ Brandy Wingate Voss
Brandy Wingate Voss
State Bar No. 24037046
SMITH LAW GROUP, P.C.
820 E. Hackberry Ave.
McAllen, TX 78501
(956) 683-6330 (Telephone)
(956) 225-0406 (Facsimile)
brandy@appealsplus.com
23
John D. Sloan, Jr.
State Bar No. 00792080
Douglas W. Lukasik
State Bar No. 24046326
Abigail Mathews
State Bar No. 24013114
SLOAN MATNEY, LLP
3838 Oak Lawn, Suite 1200
Dallas, Texas 75219
Sloan Telephone: (214) 253-0101
Lukasik Telephone: (214) 253-0103
Mathews Telephone: (213) 253-0105
Facsimile: (214) 237-5474
jsloan@sloanmatney.com
dlukasik@sloanmatney.com
amathews@sloanmatney.com
Chris Franz
State Bar No. 00792514
Gil Peralez
State Bar No. 00791426
PERALEZ FRANZ LAW
1416 Dove Avenue
McAllen, Texas 78504
Telephone: (956) 682-3660
Facsimile: (956) 682-3848
ccf@peralezfranzlaw.com
gpp@peralezfranzlaw.com
Counsel for Appellants Double Diamond
Delaware, Inc., Double Diamond, Inc.,
White Bluff Club Corp., National Resort
Management Co., R. Michael Ward, and
Fred Curran
/s/ Shawn Long with permission by Brandy
Wingate Voss
Richard A. Sayles
State Bar. No. 17697500
Shawn Long
24
State Bar No. 24047859
Darren Nicholson
State Bar No. 24032789
SAYLES WERBNER
4400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Telephone: (214) 939-8700
Facsimile: (214) 939-8787
dsayles@swtriallaw.com
slong@swtriallaw.com
dnicholson@swtriallaw.com
Mike Mills
ATLAS & HALL, L.L.P.
818 Pecan Blvd.
P.O. Box 3725
McAllen, Texas 78502-3725
Telephone: (956) 682-5501
Facsimile: (956) 686-6109
mkmills@atlashall.com
Counsel for Appellant White Bluff Property
Owners Association, Inc.
CERTIFICATE OF COMPLIANCE
This document complies with the typeface requirements of Texas Rule of
Appellate Procedure 9.4(e) because it has been prepared in a conventional typeface
no smaller than 14-point for text and 12-point for footnotes. This document also
complies with the word-count limitations of Rule 9.4(i), if applicable, because it
contains 5,643 words, excluding any parts exempted by Rule 9.4(i)(1).
/s/ Brandy Wingate Voss
Brandy Wingate Voss
25
CERTIFICATE OF SERVICE
On July 31, 2015, in compliance with Texas Rule of Appellate Procedure 9.5
or Local Rule 3(c), I served this document on the following counsel of record by e-
service, e-mail, and/or first-class United States mail:
Thad D. Spalding Lynda Lee Weaver
F. Leighton Durham LAW OFFICES OF LYNDA LEE WEAVER
KELLY, DURHAM & PITTARD, LLP 3500 Maple Avenue, Suite 900
P.O. Box 224626 Dallas, Texas 75219
Dallas, Texas 75222 Email: llw@llweaverlaw.com
Email: tspalding@texasappeals.com
Martin E. Rose Barbara T. Hale
Christopher M. McDowell BLANSCET, HOOPER & HALE, LLP
ROSE WALKER, LLP 14285 Midway Road, Suite 400
3500 Maple Avenue, Suite 900 Addison, Texas 75001
Dallas, Texas 75219 Email: bhale@metrocrestlaw.com
Email: cmcdowell@rosewalker.com
Preston Henrichson
LAW OFFICES OF PRESTON
HENRICHSON, P.C.
222 West Cano
Edinburg, Texas 78539
Email: preston@henrichsonlaw.com
/s/ Brandy Wingate Voss
Brandy Wingate Voss
26