Carl Storck and Vicki Storck v. Tres Lagos Property Owners Association, Inc. ( 2014 )

In The
Court of Appeals
Sixth Appellate District of Texas at Texarkana
No. 06-13-00066-CV
CARL STORCK AND VICKI STORCK, Appellants
V.
TRES LAGOS PROPERTY OWNERS ASSOCIATION, INC., Appellee
On Appeal from the 62nd District Court
Franklin County, Texas
Trial Court No. 10964
Before Morriss, C.J., Carter and Moseley, JJ.
Opinion by Justice Carter
OPINION
I. Background
Carl Storck and Vicki Storck 1 purchased five lots 2 in the Tres Lagos subdivision in
Franklin County in 2008 and moved into a home located on the property. Subdivision property
ownership and membership in the Tres Lagos Property Owners’ Association, Inc. (Association)
requires compliance with certain covenants and restrictions. 3 Based on certain actions taken by
the Franklin County Commissioners’ Court in 2002 to “deplat” the five lots Storck purchased in
2008, Storck did not believe those lots were subject to subdivision restrictions, covenants, dues
or fees. Accordingly, Storck operated a commercial business 4 on the five lots at issue and never
paid dues for those lots. 5
After Storck had been living in the subdivision for approximately one year, Storck sued
the Association, complaining that it violated its bylaws and articles of incorporation by
(1) failing to maintain roadways, fencing, and the Association’s swimming pool, (2) soliciting
proxy votes, (3) holding Association meetings in which matters were decided in the absence of a
1
Because their interests are identical, Carl Storck and Vicki Storck will be referred to as “Storck.”
2
The lots, numbered 93–97, were purchased from Greg and Dana Divin in October 2008. In 1984, Storck purchased
lots numbered 98–105 in the same subdivision, but did not live on any of those lots.
3
The covenants and restrictions on and for the Tres Lagos subdivision require, among other things, that “[e]ach and
every owner of any and all lots within the subdivision unit shall become a member of the subdivision property
owners association at the time such subdivision property owners association is formed.” Further, “[a]ll lots . . . shall
be used, known and described as single-family residential lots,” and “[e]ach and every owner covenants and
promises to pay, to the property owners association, when due, any and all dues and maintenance fees.”
4
Storck acknowledges that the original and all amended covenants prohibit the operation of a commercial business
on property in Tres Lagos. Storck operates a business known as The Equipment Doctor on the disputed or deplatted
property.
5
Storck, recognizing the lots purchased in 1984 were included in the subdivision, paid dues owed on those lots.
2
quorum, (4) failing to name a registered agent for service of process, (5) failing to provide proper
notice of meetings in violation of the Texas Open Meetings Act, (6) failing to obtain and/or
maintain liability insurance for the Association’s swimming pool, (7) failing to file not-for-profit
organization filings required by the Internal Revenue Service, and (8) amending the covenants
and restrictions of the Association without a vote by members. Storck sought injunctive relief
that would require the Association to rectify all activities and/or to be replaced or monitored by
the trial court.
The Association filed a counterclaim for declaratory judgment, seeking a declaration that
(1) the five lots Storck purchased in 2008 are subject to all easements, rights-of-way, covenants,
and restrictions applicable to the subdivision, including all assessments, dues, and late fees owed
by virtue of Association membership and (2) the deplat order of the Commissioners’ Court is
void to the extent it may be interpreted to cancel the covenants and restrictions as they applied to
the five lots in question. The counterclaim also alleged that Storck removed and/or destroyed the
perimeter fence on the five lots in question and sought a money judgment for the repair or
replacement of the fence. The Association further sought to enjoin Storck from denying the
Association access across the designated easement areas for the purposes of replacing and
maintaining the perimeter fence in order to secure the subdivision.
Storck filed a general denial answer in response to the Association’s counterclaim. In
May 2011, the trial court entered an order on the Association’s counterclaim declaring that the
Commissioners’ Court did not have jurisdiction or authority to cancel, modify, or otherwise
change or limit the subdivision restrictions, covenants, or conditions with respect to lots 93
3
through 97 of the Tres Lagos Subdivision. Accordingly, the trial court found that the subject lots
continuously have been subject to the obligations imposed under the covenants and restrictions
applicable to the subdivision.
In May 2013, after a bench trial, the trial court entered its judgment (1) finding that all
lots owned by Storck that are within the subdivision are subject to the covenants, restrictions,
and easements of the subdivision; (2) permanently enjoining Storck from operating a commercial
business “on lots in the Subdivision,” because the operation of such business violates the
subdivision covenants and restrictions; (3) finding that Storck owes unpaid dues and assessments
in the sum of $4,000.00; (4) finding that the Association’s board of directors is composed of
James Rose, Barbara Lester, Jeff Lester, and Gail Cerveny; (5) finding that the Association is not
subject to the Texas Open Meetings Act; and (6) finding that the Association’s bylaws are not a
dedicatory instrument required to be filed in the Office of the County Clerk of Franklin County.
The trial court further determined that the Association owns the perimeter fence and, thus, has
the right to replace and reinstall the fence along the northern boundary of lots 93 through 97.
However, the trial court did find that Storck may, at his own expense, place a gate at the
intersection of the existing gravel drive and FM 2723 for ingress and egress. Finally, the
judgment awarded attorney fees to the Association.
At Storck’s request, the trial court entered findings of fact and conclusions of law.
Thereafter, Storck filed a motion for new trial challenging the trial court’s findings and
conclusions, alleging the affirmative defense of the statute of limitations, and otherwise alleging
the existence of new evidence, i.e., that the Association’s members formed an election
4
committee and elected a new board of directors. Thereafter, Storck filed his first amended
motion for new trial raising an additional allegation of new evidence, i.e., that a member of the
Association’s board operates a commercial business within the subdivision. In addition, Storck
filed a motion for judgment notwithstanding the verdict. After a hearing, the trial court denied
Storck’s post-trial motions.
On appeal, Storck seeks reversal because (1)(a) the Association’s board of directors was
not validly elected and (b) because a summary judgment order in a different lawsuit found that
the Association’s board is not valid, (2) there is new evidence that an Association member
operates a commercial business in the subdivision, (3)(a) Storck is a bona fide innocent
purchaser and (b) all claims alleged in the counterclaim are barred by limitations, and (4) the trial
court abused its discretion in failing to address the inaction of the Association’s board of
directors.
II. The Election of the Association’s Board of Directors in July 2012 Was Invalid
A. Standard of Review
Findings of fact entered in a case tried to the court, as here, “‘are of the same force and
dignity as a jury’s answers to jury questions.’” Lambright v. Trahan, 322 S.W.3d 424, 430 (Tex.
App.—Texarkana 2010, pet. denied) (quoting .39 Acres v. State, 247 S.W.3d 384, 387 (Tex.
App.—Texarkana 2008, pet. denied)). “The trial court’s findings of fact are reviewable for legal
and factual sufficiency . . . by the same standards that are applied in reviewing the legal or
factual sufficiency of the evidence supporting a jury’s answer to a jury question.” .39 Acres v.
State, 247 S.W.3d 384, 387 (Tex. App.—Texarkana 2008, pet. denied) (citing Ortiz v. Jones, 917
5
S.W.2d 770, 772 (Tex. 1996); Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994)); see
Trahan, 322 S.W.3d at 430.
The test for legal sufficiency is “whether the evidence at trial would enable reasonable
and fair-minded people to reach the verdict under review.” City of Keller v. Wilson, 168 S.W.3d
802, 827 (Tex. 2005). In our review, we must credit evidence favorable to the judgment if a
reasonable fact-finder could, disregard contrary evidence unless a reasonable fact-finder could
not, and reverse the fact-finder’s determination only if the evidence presented in the trial court
would not enable a reasonable and fair-minded fact-finder to reach the judgment under review.
Id.; Trahan, 322 S.W.3d at 430. We will sustain the appellants’ legal-sufficiency challenges if
the record reveals (1) the complete absence of evidence of a vital fact, (2) that the court is barred
by rules of law or evidence from giving weight to the only evidence offered to prove a vital fact,
(3) that the evidence offered to prove a vital fact is no more than a mere scintilla, or (4) that the
evidence conclusively establishes the opposite of a vital fact. See Wilson, 168 S.W.3d at 810.
“[M]ore than a scintilla of evidence exists if the evidence ‘rises to a level that would enable
reasonable and fair-minded people to differ in their conclusions.’” Ford Motor Co. v. Ridgway,
135 S.W.3d 598, 601 (Tex. 2004) (quoting Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d
706, 711 (Tex. 1997) (quoting Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex.
1995) (quoting Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 25 (Tex.1994)))).
When considering a factual sufficiency challenge, we must consider and weigh all the
evidence, not just the evidence that supports the trial court’s judgment. Trahan, 322 S.W.3d at
430. We will set aside the judgment only if it is so contrary to the overwhelming weight of the
6
evidence that it is clearly wrong and unjust. Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 406–
07 (Tex. 1998). Under either standard of review, we must be mindful that the trial court, as
finder of fact, is the sole judge of the credibility of the witnesses and the weight to be given their
testimony. McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex. 1986).
We review de novo the trial court’s conclusions of law. BMC Software Belgium, N.V. v.
Marchand, 83 S.W.3d 789, 794 (Tex. 2002). Although appellants may not challenge a trial
court’s conclusions of law for factual sufficiency, an appellate court may review the trial court’s
legal conclusions drawn from the facts to determine whether the conclusions are correct. Id.
The Association contends that, because Storck failed to make a specific complaint or
objection to any findings of fact regarding its first appellate point, such findings are conclusively
established. See Looney v. Gibraltar Sav. Ass’n., 695 S.W.2d 336, 340 (Tex. App.—Amarillo
1985, no writ) (factual findings not attacked on appeal accepted as conclusive). Although Storck
does not explain which fact-findings or legal conclusions he is challenging, we have reviewed
the substance of his first appellate argument to determine, as best we can, which fact-findings
and legal conclusions Storck implicitly challenges. See Howeth Invs., Inc. v. City of Hedwig
Village, 259 S.W.3d 877, 888 (Tex. App.—Houston [1st Dist.] 2008, pet. denied) (construing
appellant’s challenges, which failed to link to specific findings and conclusions, as challenging
pertinent findings and conclusions that supported complained-of aspects of judgment); City of
Pasadena v. Gennedy, 125 S.W.3d 687, 981 (Tex. App.—Houston [1st Dist.] 2003, pet. denied)
(same); see also TEX. R. APP. P. 38.9; Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex.
7
1989) (points of error construed liberally “in order to obtain a just, fair[,] and equitable
adjudication of the rights of the litigants”).
B. Analysis
Storck initially complains that the Association’s board of directors is invalid due to an
invalid election. Storck bases this argument on the Association’s alleged violation of Section
209.014 of the Texas Property Code, which requires the board of a property owners’ association
to call an annual meeting of the association’s members. 6 Although a membership meeting was
called in September 2011, 7 the notice of this meeting indicated that only members in good
standing, i.e., those members who were current on Association dues, would be permitted to vote.
The September meeting came to a halt when the directors were advised by one of the
Association’s members that the voting requirements had changed and that, in fact, even members
not current on their dues were entitled to vote. In light of this development, no business was
conducted at the September 2011 meeting, which was reconvened in July 2012. Barbara Lester,
then treasurer of the Association, testified that a quorum of members was present at the July
2012 meeting. In making this determination, the proxies from the September 2011 meeting were
counted since the July 2012 meeting was reconvened from the September 2011 meeting. In
effect, a quorum was established by counting members in good standing (i.e., those current on
6
Section 209.014(a) of the Property Code states, “Notwithstanding any provision in a dedicatory instrument, a board
of a property owners’ association shall call an annual meeting of the members of the association.” TEX. PROP. CODE
ANN. § 209.014(a) (West Supp. 2013).
7
Storck testified that the last meeting for which he had received notice was in 2009.
8
their dues) as of the September 2011 meeting. The July 2012 meeting resulted in an election of
the Association’s board members. The then-current board members were re-elected. 8
Storck disputes the validity of this election and takes the position that, at least as of July
2012, the Association did not have a valid board of directors because (1) Association members
who were not current on their dues were excluded from voting in violation of Section
209.0059(a) of the Texas Property Code, (2) Association members who were not current on their
dues were not counted for purposes of establishing a quorum, and (3) the Association’s board of
directors improperly amended the Association’s covenants and restrictions, giving each member
one vote rather than allocating one vote per lot owned. This course of events, claims Storck,
means that the Association failed to conduct a valid election in either 2011 or 2012.
Consequently, Storck’s argument continues, the two appointed board members whose terms
expired in 2011—Gayle Cerveny and Barbara Lester—were, according to Storck, no longer
board members as of January 1, 2012. See TEX. PROP. CODE ANN. § 209.00593(a) (West Supp.
2013) (board member appointed to fill vacant position on board shall serve remainder of
position’s unexpired term). 9
8
Those re-elected to the board at the July 2012 meeting were: James Rose, president; Jeff Lester, vice-president;
Gayle Cerveny, secretary; and Barbara Lester, treasurer.
9
Section 209.00593 provides,
(a) Notwithstanding any provision in a dedicatory instrument, any board member
whose term has expired must be elected by owners who are members of the property owners’
association. A board member may be appointed by the board to fill a vacancy on the board. A
board member appointed to fill a vacant position shall serve for the remainder of the unexpired
term of the position.
(b) The board of a property owners’ association may amend the bylaws of the
property owners’ association to provide for elections to be held as required by Subsection (a).
9
The trial court entered the following findings of fact and conclusions of law relative to
the above-referenced complaints:
FINDINGS OF FACT
....
8. The Board of Directors for Tres Lagos Property Owners
Association, Inc. held an annual meeting of members on September 1, 2011, that
was adjourned and reconvened with a quorum present on July 21, 2012. A Board
of Directors for Tres Lagos Property Owners Association, Inc., was elected at the
July 21, 2012, meeting to serve two-year terms ending December 1, 2013. The
Board of Directors of Tres Lagos Property Owners Association, Inc., who were
lawfully elected to serve two-year terms ending December 1, 2013, or until
otherwise replaced, are: James Rose, Barbara Lester, Jeff Lester and Gayle
Cerveny.
....
15. There was no evidence or there was insufficient evidence to show
property owners’ and members’ meetings September 1, 2011, and July 21, 2012,
were held and votes taken when there was no quorum present. There was
evidence to show a quorum was present, either in person or by proxy, at the
meetings on September 1, 2011, and July 21, 2012, at which a Board of Directors
was elected.
(c) The appointment of a board member in violation of this section is void.
(d) This section does not apply to the appointment of a board member during a
development period. In this subsection, “development period” means a period stated in a
declaration during which a declarant reserves:
(1) a right to facilitate the development, construction, and marketing of the
subdivision; and
(2) a right to direct the size, shape, and composition of the subdivision.
(e) This section does not apply to a representative board whose members or
delegates are elected or appointed by representatives of a property owners’ association who are
elected by owner members of a property owners’ association.
TEX. PROP. CODE ANN. § 209.00593.
10
16. The Board of Directors serving on September 1, 2011, continued to
serve as the Board of Directors of Tres Lagos Property Owners Association, Inc.,
until the election of a replacement Board of Directors at the July 21, 2012,
meeting. The Articles and Bylaws of Tres Lagos Property Owners Association,
Inc. provide that Directors shall serve for a two-year term or until a successor is
elected.
....
CONCLUSIONS OF LAW
....
4. As a matter of law, the Bylaws of Tres Lagos Property Owners
Association, Inc. are not a “dedicatory instrument” under Section 202.001(1) or
Section 209.002(4) of the Texas Property Code and are not required to be filed for
record in the Office of the County Clerk of Franklin County, Texas.
5. As a matter of law, Plaintiffs pleadings did not allege or support a
cause of action that Defendant failed to comply with any applicable section of
Article 209 of the Texas Property Code and no trial amendment was requested.
....
7. As a matter of law, the election of the board of directors at the
July 21, 2012, meeting renders Plaintiffs’ argument that a valid board of directors
was not in place moot.
Storck initially contends the election of board members was invalid because the
Association’s members who were not current on their dues were excluded from voting in
violation of Section 209.0059(a) of the Texas Property Code, which provides that “[a] provision
in a dedicatory instrument that would disqualify a property owner from voting in a property
owners’ association election of board members or on any matter concerning the rights or
responsibilities of the owner is void.” TEX. PROP. CODE ANN. § 209.0059(a) (West Supp. 2013).
11
The Association’s bylaws state, “The rights of membership are subject to the payment of
monthly and special assessments levied by the Association, the obligation of which assessments
is imposed against each Owner of, and becomes a lien upon, the Lot against which such
assessments are made as provided by the Declaration.” The bylaws continue, “The membership
rights of any person whose interest in the Properties is subject to assessment, whether or not he
or she be personally obligated to pay such assessment, may be suspended by action of the Board
of Directors during the period when the assessment remains unpaid . . . .” The bylaws enumerate
three types of Association membership rights—voting rights, property rights, and the right of
enjoyment of the common properties. Read in conjunction, Sections 2 and 3 of Articles Three
and Four of the Association’s bylaws permit the board of directors to suspend the voting rights of
those members who have outstanding monthly and/or special assessments. Admittedly, only
those members who were in good standing were permitted to vote at the July 2012 meeting. At
that meeting, only the proxies and votes cast by members in good standing (i.e., those current on
their dues) were counted. 10
The issue before this Court is whether the restricted vote in July 2012, limited to
members in good standing, violates Section 209.0059(a) of the Property Code. See TEX. PROP.
CODE ANN. § 209.0059(a). There is no contention that the limitation on a member’s voting
rights is contained in any document other than the Association bylaws. Storck contends that this
limitation, contained only in the bylaws, is a violation of the Property Code.
10
Approximately twelve members were disqualified from voting on this basis.
12
“Dedicatory Instrument” is defined as
each governing instrument covering the establishment, maintenance, and
operation of a residential subdivision. The term includes restrictions or similar
instruments subjecting property to restrictive covenants, bylaws, or similar
instruments governing the administration or operation of a property owners’
association, to properly adopted rules and regulations of the property owners’
association, and to all lawful amendments to the covenants, bylaws, rules, or
regulations.
TEX. PROP. CODE ANN. § 209.002(4) (West Supp. 2013). The trial court concluded that the
Association’s bylaws are not a dedicatory instrument as defined in this section of the Property
Code. 11 We concur in that conclusion. We do not believe the definition of dedicatory
instrument in the Property Code was intended to establish a definitive list of documents to be
considered dedicatory instruments. Instead, we interpret the phrase “subjecting property to” as
modifying “restrictions or similar instruments.” The list of various instruments in the statute is
included in the definition to indicate the types of documents that make restrictions or other
similar instruments into dedicatory instruments. So, for example, an instrument which subjects
property to bylaws is a dedicatory instrument, although the bylaws may not fall within this
11
Section 209.0059(a) of the Property Code utilizes the term dedicatory instrument, as that term is defined in Section
209.002(4) of the Code. TEX. PROP. CODE ANN. §§ 209.002(4), 209.0059(a).
In addition, the trial court found that Storck’s pleadings did not allege or support a cause of action premised
on the Association’s failure to comply with any applicable provision of Article 209 of the Texas Property Code, and
no trial amendment was requested. This conclusion is erroneous as it applies to Section 209.0059(a) of the Property
Code. Assuming the trial court was correct in finding that the issue of Association membership voting rights was
not raised by the pleadings (an issue we do not decide), the propriety of the July 2012 vote, including the issue of
whether members not current on their dues could be excluded from voting for the Association’s board of directors,
was tried by consent. The record is replete with testimony and argument regarding this issue. See TEX. R. CIV. P.
67 (when issues not raised by pleadings are tried by express or implied consent of parties, they “shall be treated in
all respects as if they had been raised in the pleadings”). Failure to amend pleadings “shall not affect the result of
the trial of these issues[,] provided that written pleadings, before the time of submission, shall be necessary to the
submission of questions . . . .” Id. Here, no questions were submitted as the case was tried to the bench. Because
the evidence in question was not objected to at trial on the ground that it was beyond the scope of the issues raised
by the pleading, a trial amendment was not required. See TEX. R. CIV. P. 66.
13
category. 12 In this case, the “Amended Covenants & Restrictions On and [F]or the Tres Lagos
Development” (dedicatory instrument) specifically requires compulsory membership in the
Association. The instrument further requires that the Association “shall be governed by the
Articles of Incorporation . . . and by the Covenants & Restrictions and Bylaws of the Association
pursuant thereto and the amendments thereto.” The dedicatory instrument, as described in the
statute, subjects Association property to the Association bylaws. 13
This interpretation of Section 209.002(4) is consistent with the definition of dedicatory
instrument found in Section 202.001 of the Property Code, which controls the construction and
enforcement of restrictive covenants. Section 202.001 defines dedicatory instrument as
each document governing the establishment, maintenance, or operation of a
residential subdivision, planned unit development, condominium or townhouse
regime, or any similar planned development. The term includes a declaration or
similar instrument subjecting real property to:
12
We note, however, that the Amarillo Court of Appeals found a set of recorded bylaws to be part of the dedicatory
instruments that controlled the operation of the homeowners’ association and allowed the board to establish, levy,
and collect annual assessments in the amount of the lien which attached. Goddard v. Northhampton Homeowners
Assoc., Inc., 229 S.W.3d 353, 358 (Tex. App.—Amarillo 2007, no pet.). Here, the bylaws were not filed in the real
property records. See TEX. PROP. CODE ANN. § 202.006 (West Supp. 2013) (dedicatory instrument has no effect
until filed in accordance with this section).
13
Article One of the dedicatory instrument provides,
“Association” or “Tres Lagos POA” shall mean and refer to Tres Lagos Property Owners
Association, a non-profit incorporated organization which is comprised of the Owners of the
Development. Membership in this organization shall be compulsory and shall be a condition
under any deed and/or assignment of any lot within the Development. Membership in the
Association shall pass with the title to the lot. The Association shall be governed by the Articles
of Incorporation adopted & filed with the Secretary of State of Texas August 3, 1984 and by the
Covenants & Restrictions and Bylaws of the Association pursuant thereto and the amendments
thereto. All sections of the Development shall function through one Association.
The directors shall be selected and serve according to the provisions of the Bylaws. All
administrative control over the Development shall be through the Board of Directors and the
committees selected by the Board and shall henceforth bind all Owners of lots within the
development to the extent allowed by law.
14
(A) restrictive covenants, bylaws, or similar instruments governing the
administration or operation of a property owners’ association;
(B) properly adopted rules and regulations of the property owners’
association; or
(C) all lawful amendments to the covenants, bylaws, instruments,
rules, or regulations.
TEX. PROP. CODE ANN. § 202.001(1) (West Supp. 2013). From the wording of this section, it is
evident that items (A) through (C) are the same as those items listed in Section 209.002(4) and
are merely descriptive of the types of related documents that make any given declaration or
similar instrument a dedicatory instrument. Chapter 202 of the Property Code “applies to all
restrictive covenants regardless of the date on which they were created.” TEX. PROP. CODE ANN.
§ 202.002(a) (West 2007). We, thus, conclude that the trial court was correct in its determination
that the instrument containing the Association’s bylaws is not a dedicatory instrument as defined
by Section 209.002(4) of the Property Code. TEX. PROP. CODE ANN. § 209.002(4).
This conclusion, though, does not answer the question of whether the restrictive voting
provision in the bylaws is prohibited under the statute. To conclude that such a provision in the
bylaws is valid, when the Legislature has declared all such provisions in dedicatory instruments
void, would essentially eviscerate the purpose of the statute. Here, the dedicatory instrument
specifically subjects Association property to the Association bylaws, stating that the Association
“shall be governed by . . . the . . . Bylaws of the Association . . . .” The bylaws of the
Association effectively suspend a property owner’s voting rights when that owner’s assessments
are unpaid. Because the bylaws have effectively been incorporated into the dedicatory
instrument and because the bylaws include a voting restriction which would be invalid if set out
15
directly in the dedicatory instrument, we conclude that the voting restriction in the bylaws is
void. See TEX. PROP. CODE ANN. § 209.0059(a).
The trial court determined that the evidence was insufficient to show that the 2011 and
2012 meetings “were held and votes taken when there was no quorum present.” Conversely, the
trial court found that the Association “held an annual meeting of members on September 1, 2011,
that was adjourned and reconvened with a quorum present on July 21, 2012.” These findings fail
for lack of legal and factual sufficiency.
The Association bylaws provide that “[m]embers holding twenty-five (25%) percent of
the votes entitled to be cast, represented in person or by proxy,” shall constitute a quorum.
Further, “[t]he vote of the majority of the votes entitled to be cast by the Members present, or
represented by proxy, at a meeting at which a quorum is present shall be the act of the Members
meeting.” The evidence is uncontroverted that members not current on their dues were excluded
from voting. The Association consisted of 274 property owners at the time of trial. Lester
testified that 184 members were current on their dues and that the required twenty-five percent
quorum was calculated from that number. Because all property owners were entitled to vote in
the July 2012 Association board election, the quorum should have been calculated based on the
total number of property owners. A quorum of all members entitled to vote would have
consisted of 68 property owners. A quorum of only those members current on their dues
consisted of 46 property owners. Because a quorum for purposes of the July 2012 election was
calculated to be 46 property owners—far less than the 68 owners required for an actual
quorum—the evidence conclusively establishes the absence of a quorum. Because the July 2012
16
election was held in the absence of a quorum as provided by the Association’s bylaws, the
election was invalid. The trial court erred in finding otherwise. 14
In light of this conclusion, we are faced with the issue of whether the Association was, at
some point, simply without authority to act, as alleged by Storck in his motion for declaratory
judgment and at trial. The trial court correctly found that under the Association’s bylaws,
directors shall serve for a two-year term or until a successor is elected. 15 Assuming each of the
four directors was elected, they each could presumably continue to serve until a successor is
elected. Because the July 2012 election was invalid, no successors were elected at that time.
Thus, the four directors would, presumably, continue to serve as directors until such time as a
valid election took place.
This is not, however, the scenario with which we are faced. At trial, it was established
that two of the directors—Cerveny and Barbara Lester—were appointed by the board. Lester
testified that she was appointed to the board of directors in 2011 to fill an empty position. Storck
testified that the two appointed board members’ terms expired on September 24, 2011. This is
the date of the Association meeting that subsequently adjourned and was reconvened in July
2012. Storck admitted that this was his “interpretation.” Because the Association failed to
conduct a valid election in 2011 or 2012, Storck contends the two appointed board members’
14
Because we conclude that the July 2012 election was invalid, we need not address any remaining arguments
concerning the validity of the election.
15
The bylaws state, “[T]he directors shall be elected at the annual meeting of the Members, except as provided in
Section 2 of this Article, and each director elected shall hold office for a term of two (2) years or until his or her
successor is elected and qualified.” The referenced Section 2 provides, “Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of
the Board of Directors. A director elected to fill a vacancy shall be elected for the unexpired term of his or her
predecessor in office.”
17
terms expired on December 31, 2011. Because Association bylaws require at least a three-
member board, Storck contends the Association ceased to function with a valid board of
directors on December 31, 2011.
In support of this contention, Storck relies on Section 209.00593(a) of the Property Code,
which provides,
Notwithstanding any provision in a dedicatory instrument, any board member
whose term has expired must be elected by owners who are members of the
property owners’ association. A board member may be appointed by the board to
fill a vacancy on the board. A board member appointed to fill a vacant position
shall serve for the remainder of the unexpired term of the position.
TEX. PROP. CODE ANN. § 209.00593(a). The statute provides that an appointed board member
shall serve for the remainder of the unexpired term of the position. On the evidence before us,
we are unable to conclude when the terms of the appointed officers expired. There is no
evidence to show when Cerveny was appointed, and the evidence as to Lester shows only that
she was appointed to the board in 2011. Most importantly, there is no evidence showing the
length of the unexpired terms of the two appointed positions. We acknowledge Storck’s
testimony that both terms expired on September 24, 2011, but this testimony is simply Storck’s
opinion or legal conclusion that those terms expired because a members’ meeting was held on
that date. This is not evidence establishing the length of the unexpired term of service for either
of the appointed directors. The evidence does show that an annual meeting was held sometime
in 2010 for purposes of voting on board members. There is no evidence as to the date of that
meeting.
18
In the absence of evidence showing when Cerveny’s and Lester’s terms expired, we
cannot conclude that the board of directors consisted of only two members at any given point in
time. We, therefore, must reject Storck’s assertion that the Association ceased to function with a
valid board of directors on December 31, 2011.
III. The Motion for New Trial Was Properly Denied
Storck filed a motion for new trial alleging, among other things, that Steven J. Cerveny,
the husband of Gayle Cerveny (one of the three members of the Association’s board as
determined by the trial court) operates a business called Garage Doors and More at 287
Timberwood Drive, Mount Vernon, Texas, which is allegedly located within the Tres Lagos
subdivision. In his motion, Storck alleged that, under the doctrine of clean hands, the
Association is not entitled to injunctive relief against him, in light of this new evidence. After a
hearing, the trial court denied Storck’s motion for new trial. We interpret this point of error as a
complaint of error regarding the trial court’s denial of Storck’s motion for new trial.
We review a trial court’s denial of a motion for new trial under an abuse of discretion
standard. In re R.R., 209 S.W.3d 112, 114 (Tex. 2006) (per curiam). “Under this standard, we
may not overrule the trial court’s decision unless the trial court acted unreasonably or in an
arbitrary manner, without reference to guiding rules or principles.” El Dorado Motors, Inc. v.
Koch, 168 S.W.3d 360, 368 (Tex. App. Dallas—2005, no pet.) (citing Beaumont Bank, N.A. v.
Buller, 806 S.W.2d 223, 226 (Tex. 1991)). In our review, we indulge every reasonable
presumption in favor of the trial court’s refusal of a new trial. Id. A party seeking a new trial on
the ground of newly discovered evidence must show that (1) the evidence has come to his
19
knowledge since the trial, (2) it was not owing to want of due diligence that the evidence did not
come to his attention sooner, (3) the evidence is not cumulative, and (4) the evidence is so
material that it would probably produce a different result if a new trial were granted. In re
O.R.F., 417 S.W.3d 24, 41 (Tex. App.—Texarkana 2013, pet. denied).
The sole evidence of the existence of a commercial business on subdivision property is a
certified copy of an assumed name certificate listing a business name of “Garage Doors & More”
with a business address of 287 Timberwood Dr., Mt. Vernon, Texas. The certificate, dated
April 15, 2010, indicates that the business owner is Steven J. Cerveny.
The trial took place on April 29, 2013. There was no evidence presented at the hearing
on Storck’s motion for new trial indicating (1) that this evidence came to Stork’s attention since
the trial or (2) that it was not owing to want of due diligence that the evidence did not come to
Storck’s attention sooner. Further, there was no testimony that the business described in the
assumed name certificate was actually being operated within the subdivision, or at all.
Contrarily, Barbara Lester testified at the hearing on Storck’s motion for new trial that, although
Cerveny is a resident of Tres Lagos, she was not aware of any business operation at the Cerveny
residence. Lester testified that Cerveny does not maintain any kind of a workshop or onsite
inventory at his residence in Tres Lagos.
The trial court did not abuse its discretion in overruling Storck’s motion for new trial
based on this purported newly discovered evidence.
Storck next contends that the trial court erred in overruling his motion for new trial based
on alleged perjury by Barbara Lester. This allegation is based on two different complaints, the
20
first of which concerns Lester’s position within the Tres Lagos organization. Storck contends
that Lester filed an affidavit in a different lawsuit stating that she is the president of the
Association. In the trial of the instant case, however, Lester testified that she is the Association’s
treasurer. At the hearing on Storck’s motion for new trial, the trial court took judicial notice of
cause number 11,300, where it noted that an affidavit signed by Lester indicated that she marked
through the title president and wrote in the title treasurer.
The second alleged incident of perjury by Lester stems from her testimony that a box of
records was stolen from the Association. Storck claims that Lester provided different testimony
at a hearing on a motion for new trial in cause number 11,300 when she stated that only certain
records were stolen, as opposed to an entire box of records. Storck has failed to provide this
Court with the alleged testimony from cause number 11,300 on which he relies.
The trial court did not err in overruling Storck’s motion for new trial based on alleged
perjury.
IV. Tres Lagos’ Counterclaim Was Not Barred by the Bona Fide Innocent Purchaser
Doctrine or the Statute of Limitations
Storck contends that the trial court erred in granting relief to Tres Lagos on its
counterclaim 16 as such claims were barred by the bona fide innocent purchaser doctrine and the
statute of limitations. Storck filed a general denial answer to the counterclaim.
A. Bona Fide Purchaser for Value Without Notice
16
The trial court ruled, relative to the counterclaim, that the lots Storck purchased in 2008 are subject to all
covenants, restrictions, and easements of the subdivision and enjoined Storck from operating a commercial business
within the subdivision as such operation violates the covenants and restrictions. Storck was further ordered to pay
$4,000.00 in unpaid dues and assessments.
21
A bona fide purchaser is one who acquires property in good faith, for value, and without
notice, actual or constructive, of any third-party claim or interest. See Madison v. Gordon, 39
S.W.3d 604, 606 (Tex. 2001) (per curiam). The crux of Storck’s bona fide purchaser argument
relates to the purchase of lots 93 through 97, which he claims was without exceptions or
restrictions. The deed to this property states that the tract subject to deed was “formerly known
as Lots 93, 94, 95, 96, & 97 of TRES LAGOS SUBDIVISION,” and states that “this tract is now
a Deplat per Commisioner’s [sic] Minutes . . . .” The policy of title insurance covering this
property did not include exceptions or restrictions. Storck, thus, contends that he purchased the
property in good faith, for value, and without notice of any third-party claims or interests. Based
on the assertion that he is a good-faith purchaser for value without notice, Storck asks this Court
to reverse the judgment of the trial court as it relates to Tres Lagos’ counterclaim.
Storck concedes that the status of a bona fide purchaser for value without notice is an
affirmative defense. Madison v. Gordon, 39 S.W.3d 604, 606 (Tex. 2001) (per curiam). Rule 94
of the Texas Rules of Civil Procedure requires a party to plead affirmatively those affirmative
defenses listed in the rule “and any other matter constituting an avoidance or affirmative
defense.” TEX. R. CIV. P. 94. “‘If an affirmative defense is not pleaded or tried by consent, it is
waived,’ and the trial court has no authority to make a fact finding on that issue.” See Compass
Bank v. MFP Fin. Servs., Inc., 152 S.W.3d 844, 851 (Tex. App.—Dallas 2005, pet. denied)
(quoting RE/MAX of Tex., Inc. v. Katar Corp., 961 S.W.2d 324, 327–28 (Tex. App.—Houston
[1st Dist.] 1997, pet. denied)); Matter of Marriage of Collins, 870 S.W.2d 682, 685 (Tex. App.—
Amarillo 1994, writ denied). “The party asserting the affirmative defense bears the burden of
22
pleading and proving its elements.” Compass Bank, 152 S.W.3d at 851 (citing Welch v. Hrabar,
110 S.W.3d 601, 606 (Tex. App.—Houston [14th Dist.] 2003, pet. denied)).
Tres Lagos contends that, because Storck did not plead his alleged status as a bona fide
purchaser for value, as an affirmative defense to the counterclaim, that defense is waived. Storck
counters that the defense claim was pled in his original petition. By definition, an affirmative
defense cannot be pled in an original petition. Further, even if it could, Storck did not raise the
issue in his original petition. 17
Storck does not contend that the issue of his status as a bona fide purchaser for value and
without notice was tried by implied consent. And, although the record includes testimony on this
issue, 18 we decline to find trial by consent on these facts. “Trial by consent applies in the
exceptional case where it clearly appears from the record as a whole that the parties tried an
unpled issue.” Reed v. Wright, 155 S.W.3d 666, 670 (Tex. App.—Texarkana 2005, pet. denied)
(citing; Mastin v. Mastin, 70 S.W.3d 148, 154 (Tex. App.—San Antonio 2001, no pet.)). “To
determine whether an issue was tried by consent, the court must examine the record not for
17
On review of the record, however, we note that Storck alleged that he was a bona fide purchaser of the 2008 lots in
a response to Tres Lagos’ motion for summary judgment. Although there is authority to support the proposition that
an unpleaded plea in avoidance may serve to preclude summary judgment if it is raised in a summary judgment
response and if the opposing party does not object to it in reply or before the rendition of judgment, Haase v.
Abraham, Watkins, Nichols, Sorrels, Agosto & Friend, LLP, 404 S.W.3d 75, 86 (Tex. App.—Houston [14th Dist.]
2013, no pet.), a summary judgment was not entered in this case.
18
Storck testified that he purchased the property, that the title insurance company issued a policy covering the
property without restriction, that the property was described in the deed in metes and bounds, and that he was a bona
fide purchaser of the property.
On cross-examination, Storck conceded that his deed to the subject property stated that the conveyance was
subject to “[a]ny and all restrictions, covenants, conditions and easements, whether for utilities or rights-of-way and
whether apparent or a public record . . . relating to the . . . property, and to all zoning laws, regulations, and
ordinance of any governmental authorities . . . .” However, he understood that “the deplat by the county
commissioners eliminated all of the covenants and restrictions.”
23
evidence of the issue, but rather for evidence of trial of the issue.” Mastin v. Mastin, 70 S.W.3d
148, 154 (Tex. App.—San Antonio 2001, no pet.) (citing Stephanz v. Laird, 846 S.W.2d 895,
901 (Tex. App.—Houston [1st Dist.] 1993, writ denied)). Here, although the record includes
evidence of the issue, it is not at all clear the issue was actually tried. Moreover, while the trial
court entered findings of fact, it did not include a finding on this issue. Finally, Storck does not
contend the issue was tried by consent. We, therefore, conclude that, because the affirmative
defense of Storck’s status as a bona fide purchaser for value was not pled in accordance with
Rule 94 of the Texas Rules of Civil Procedure, this issue was waived.
B. Statute of Limitations
Storck contends that the four-year statute of limitations for filing a claim regarding deed
restrictions effectively bars Tres Lagos’ claims that the lots Storck purchased in 2008 are subject
to the subdivision restrictions. See Malmgren v. Inverness Forest Residents Civic Club, Inc., 981
S.W.2d 875, 877 (Tex. App.—Houston [1st Dist.] 1998, no pet.) (actions to enforce restrictive
covenants are subject to four-year statute of limitations). This argument is based on the premise
that, because the lots in question were purportedly deplatted by the previous owners in 2002, the
statute of limitations to enforce the restrictive covenants as to the deplatted property commenced
in 2002.
Without addressing the substance of this argument, Tres Lagos contends that, because the
statute of limitations was an unpled affirmative defense, it has been waived. See TEX. R. CIV. P.
94. There is no dispute that this affirmative defense was not raised in Storck’s answer to Tres
Lagos’ counterclaim. Storck contends, however, that the statute of limitations was pled in his
24
first amended response to Tres Lagos’ motion for summary judgment and in his motion to
reconsider the ruling on that motion, as well as in his motion for new trial and his first amended
motion for new trial. While Storck’s amended response to Tres Lagos’ motion for summary
judgment raised the statute of limitations’ defense, that was not a proper Rule 94 pleading in the
case. See TEX. R. CIV. P. 94; see also Haase, 404 S.W.3d at 86 (citing Roark v. Stallworth Oil &
Gas, Inc., 813 S.W.2d 492, 494 (Tex. 1991)) (“unpleaded plea in avoidance may . . . serve to
preclude summary judgment if it is raised in a summary judgment response and if the opposing
party fails to object to it in a reply or before the rendition of judgment”). Because the trial court
did not enter a summary judgment, the limited exception enunciated in Haase does not apply
here. 19 We, therefore, conclude that, because Storck failed to plead the affirmative defense of
the statute of limitations in accordance with Rule 94 of the Texas Rules of Civil Procedure, such
defense was waived. See TEX. R. CIV. P. 94.
19
Tres Lagos’ motion for declaratory judgment and/or motion for partial summary judgment as to liability asked the
trial court to (1) declare the legal effect of a deplat order entered by the Franklin County Commissioners’ Court with
respect to Storck’s subdivision property and (2) enter a partial summary judgment as to liability establishing that
Storck and Storck’s deplatted property remain subject to the obligations imposed under the covenants and
restrictions applicable to the subdivision and its property owners. The trial court entered an order on counter-
plaintiff’s motion for declaratory judgment and motion for partial summary judgment as to liability on May 12,
2011. The order declared that “Section 232.008 of the Local Government Code does not grant jurisdiction or
authority to the Commissioners Court to remove, cancel, modify or otherwise change, limit or affect the Tres Lagos
Subdivision restrictions, covenants or conditions.” The order thus declared that lots 93 through 97 of the Tres Lagos
subdivision “remain subject to the obligations imposed under the covenants and restrictions applicable to the . . .
Subdivision as they existed on such date . . . .” The court took no action on the motion for partial summary
judgment as to liability, reserving “any decision on counterdefendant’s motion for partial summary judgment as to
liability pending resolution of issues of fact that are not otherwise resolved by this declaratory judgment.”
25
V. The Trial Court Addressed the Alleged Inaction of the Association’s Board
In his final point of error, Storck complains that the trial court abused its discretion in
refusing to address Storck’s claims regarding the inaction of the Association’s board, 20 as alleged
in Storck’s first amended petition, including (1) the lack of common area maintenance,
roadways, fencing, and the Association’s swimming pool, (2) the solicitation of proxy votes in
violation of the Association’s articles of incorporation and bylaws, (3) holding Association
meetings in the absence of a quorum, (4) failing to name and/or appoint a registered agent for
service of process for the Association, (5) violating the Texas Open Meetings Act by giving
improper notice of meetings, (6) failing to obtain and/or maintain liability insurance for the
Association’s swimming pool, (7) failing to file not-for-profit organization filings required by
the Internal Revenue Service, and (8) amending the covenants and restrictions of the Association
without a vote by members as is required. Storck asked for an injunction ordering the
Association’s board to rectify each of the above-listed matters.
Contrary to Storck’s complaint, the trial court entered specific findings of fact and at least
one conclusion of law addressing the listed complaints. 21 We, therefore, find no merit in
Storck’s complaint that the trial court abused its discretion in failing to address these complaints.
Additionally, the trial court found that there was no evidence and/or that there was insufficient
20
At the hearing, the trial court indicated that “this Court is not going to get into directing the Association on how
they are to manage their affairs. . . . That’s up to the Association. The members remedy is to vote out the directors
and get new directors. Now, if they’re legally required or otherwise bound by some of their documents to do
something and they have not, then I can take up that issue.” The trial court subsequently issued findings of fact and
conclusions of law regarding the Association’s alleged failure to fulfill its obligations to the membership.
21
These matters were addressed in findings 11, 12, 15, 17–20, and conclusion 3.
26
evidence to show Storck would suffer irreparable harm necessitating injunctive relief or for
which Storck did not have an adequate remedy at law. This finding is not challenged.
The trial court addressed each of Storck’s claims and in all instances found against
Storck. Because Storck’s complaint in his final point of error is simply that the trial court failed
to act and since no issue is raised regarding the propriety of the trial court’s referenced findings
and conclusions, we overrule Storck’s final point of error.
VI. Tres Lagos’ Appellate Cross-Point
The trial court found that there is an existing gravel drive from Storck’s residence that is
used for direct access to FM 2723 from lots 95 and 96, through and across the perimeter fence of
the Tres Lagos subdivision. The judgment granted Storck the right, at his own expense, to place
a gate at the intersection of the existing gravel drive and FM 2723 for ingress and egress. In its
sole cross-issue on appeal, Tres Lagos contends that the trial court abused its discretion in
granting Storck an easement for ingress and egress over and through the Association’s perimeter
fence. In support of this contention, Tres Lagos points to the lack of any pleading which might
support this relief.
Storck contends that Tres Lagos failed to file a notice of appeal in support of its cross-
issue, and therefore that this issue is not properly before the Court. Rule 25.1(c) of the Texas
Rules of Appellate Procedure requires a party “who seeks to alter the trial court’s judgment” to
file a notice of appeal with the trial court and prohibits an appellate court from granting any party
who does not file a notice of appeal “more favorable relief than did the trial court except for just
27
cause.” TEX. R. APP. P. 25.1(c); Helton v. R.R. Comm’n of Tex., 126 S.W.3d 111, 120 (Tex.
App.—Houston [1st Dist.] 2003, pet. denied).
Tres Lagos asks this Court to modify the judgment by denying Storck’s access easement
through the perimeter fence adjoining FM 2723. This request seeks to alter the trial court’s
judgment. Accordingly, Tres Lagos was required, under Rule 25.1(c), to file a notice of appeal
in order to raise its cross-point on appeal. No such notice of appeal was filed. Because Tres
Lagos asks for greater relief than was granted by the trial court, it was required to show “just
cause” for failing to file a notice of appeal. See TEX. R. APP. P. 25.1(c). No such showing was
made or even attempted. Because Tres Lagos has not met the requirements of Rule 25.1(c), its
cross-issue may not be considered by this Court, and is, thus, overruled.
VII. Conclusion
We reverse the trial court’s judgment to the extent that it finds that the July 2012 board of
directors’ election of the Tres Lagos Property Owners Association, Inc., was valid and render
judgment that this election was invalid.
We affirm the trial court’s judgment in all other respects.
Jack Carter
Justice
Date Submitted: June 11, 2014
Date Decided: August 8, 2014
28