Marmic Properties, L.L.C. v. Silverglen Town-Homes Homeowners Association

Affirmed and Memorandum Opinion filed August 29, 2013.
In The
Fourteenth Court of Appeals
NO. 14-12-00312-CV
MARMIC PROPERTIES, L.L.C., Appellant
V.
SILVERGLEN TOWN-HOMES HOMEOWNERS ASSOCIATION, Appellee
On Appeal from the 129th District Court
Harris County, Texas
Trial Court Cause No. 2011-23504
MEMORANDUM OPINION
After purchasing undeveloped townhome lots, appellant Marmic Properties,
Inc. (“Marmic”) failed to pay assessments to appellee Silverglen Townhomes
Homeowners Association (“the HOA”) as required under the applicable restrictive
covenants. The trial court granted summary judgment in favor of the HOA. We
affirm.
BACKGROUND
Silverglen Townhomes is a subdivision in Harris County. It is subject to the
“Declaration of Covenants, Conditions, Restrictions and Easements for Silverglen
Townhomes Ltd.” (“the Declaration”), filed on November 15, 2004. Silverglen
Townhomes Ltd., as the sole owner of the property in the subdivision, executed the
Declaration through a representative. Among other things, the Declaration
provides that a budget for operation, management, and maintenance of the
subdivision is to be funded through common assessments paid to the HOA by each
lot owner. The HOA’s board of directors is responsible for setting the common
assessment each year.
Silverglen Townhomes was planned as a development encompassing 43
townhomes, but only 26 townhomes were actually built. Marmic purchased the
remaining 17 undeveloped lots in February 2008; since that time, Marmic has
made no payments of common assessments on any of the 17 lots.
The HOA sued Marmic on April 18, 2011, seeking judicial foreclosure on
the 17 lots owned by Marmic; an order of sale for those lots; $97,031.92 in unpaid
assessments; and attorney’s fees under the Texas Property Code. The HOA filed a
motion for summary judgment, which Marmic opposed on grounds that fact issues
existed as to whether (1) the common assessments were unauthorized by the
Declaration or arbitrary and capricious, and (2) the Declaration itself was properly
recorded. On January 23, 2012, the trial court signed an order granting summary
judgment in favor of the HOA. This appeal followed.
Marmic raises two issues on appeal that parallel the arguments it made in the
trial court. It contends that the trial court erred in granting summary judgment
because (1) “there were fact issues whether the assessments for unknown uses
[were] ‘arbitrary and capricious,’” and (2) “the declaration which authorized the
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assessments was not properly recorded.”
ANALYSIS
We review summary judgments de novo. Joe v. Two Thirty Nine Joint
Venture, 145 S.W.3d 150, 156 (Tex. 2004); Raynor v. Moores Mach. Shop, LLC,
359 S.W.3d 905, 907 (Tex. App.—Houston [14th Dist.] 2012, no pet.). We take as
true all evidence favorable to the nonmovant and indulge every reasonable
inference and resolve any doubts in the nonmovant’s favor. Joe, 145 S.W.3d at
157. The movant has the burden of showing there is no genuine issue of material
fact and it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Joe,
145 S.W.3d at 157. We affirm the summary judgment if any of the theories
presented to the trial court and preserved for appellate review are meritorious. Joe,
145 S.W.3d at 157.
I. Arbitrary or Capricious Assessments
Marmic argues that, because the common assessments at issue were used to
pay for water, trash collection, and other services that have not been utilized on its
17 still-undeveloped lots, a fact issue existed as to whether the common
assessments were arbitrary and capricious under section 202.004 of the Texas
Property Code. This provision states:
An exercise of discretionary authority by a property owners’
association or any other representative designated by an owner of real
property concerning a restrictive covenant is presumed to be
reasonable unless the court determines by a preponderance of the
evidence that the exercise of discretionary authority was arbitrary,
capricious, or discriminatory.
Tex. Prop. Code § 202.004(a) (Vernon 2007).
The HOA relies on section 9.6 of the Declaration, which is titled “Uniform
Rate of Assessment” and specifies that “[b]oth Common and Special Assessments
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must be fixed at a uniform rate for all Lots.” The HOA argues that this provision
does not allow the use of discretion in setting the dollar amount of the assessments
at issue; therefore, it argues that section 202.004, which expressly applies to an
“exercise of discretionary authority,” is inapplicable. This argument calls for us to
construe the language of the Declaration.
Restrictive covenants are subject to the general rules of contract
construction. Pilarcik v. Emmons, 966 S.W.2d 474, 479 (Tex. 1998); La Ventana
Ranch Owners’ Ass’n, Inc. v. Davis, 363 S.W.3d 632 (Tex. App.—Austin 2011,
pet. denied). A court’s primary duty in construing a restrictive covenant is to
ascertain the drafter’s intent from the plain meaning of the instrument, affording
words and phrases their commonly accepted meanings. La Ventana, 363 S.W.3d
at 638.
In clear, plain language, the Declaration states that the common assessment
“must be fixed at a uniform rate for all Lots.” Marmic does not dispute this
language. Therefore, we conclude that the HOA did not exercise any discretionary
authority in charging Marmic the same common assessment it charged the owners
of the developed lots. See Tex. Prop. Code § 202.004(a); La Ventana, 363 S.W.3d
at 648 (“Section 202.004(a) creates a rebuttable presumption that a property
owners’ association or other representative acts reasonably in exercising its
discretionary authority.”) (emphasis added). Our analysis does not end there,
however.
The Declaration provides that, on an annual basis, the HOA’s board of
directors has the “right and obligation” to set the common assessment at a rate
sufficient to provide enough funding “for the proper operation, management, and
maintenance of the Subdivision.” Accordingly, even though the HOA does not
have the discretionary authority to charge lot owners anything but one uniform
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common assessment each year, the HOA enjoys discretionary authority in setting
the common assessment. In this context, we consider Marmic’s contention that the
HOA acted in an arbitrary, capricious, or discriminatory fashion in setting the
common assessments at issue in this appeal.
Marmic relies heavily on the deposition testimony of HOA President
Rosemary Bradshaw, who took office in January 2010. Bradshaw testified that,
prior to her taking office, the HOA kept records of the common assessments it had
collected but did not have documentation demonstrating the actual expenses paid
during that period. Marmic argues that “[i]t is hard to imagine how the collection
of assessments when there was no evidence of the amount of expenses or the uses
to be paid by the assessments could not be arbitrary and capricious. At a minimum
there was a question of fact.” Effectively, Marmic argues that, in the absence of
any evidence on the reasonableness of the common assessments levied between
February 2008 and January 2010, the trial court erred by granting summary
judgment on the issue.
Section 202.004 creates a presumption that a property owners’ association
exercises its discretionary authority concerning a restrictive covenant reasonably
“unless the court determines by a preponderance of the evidence that the exercise
of discretionary authority was arbitrary, capricious, or discriminatory.” Tex. Prop.
Code Ann. § 202.004. A presumption is simply a rule of procedure or an
administrative assumption that may be overcome when positive evidence to the
contrary is introduced. Uptegraph v. Sandalwood Civic Club, 312 S.W.3d 918,
932-33 (Tex. App.—Houston [1st Dist.] 2010, no pet.). Therefore, a showing by a
preponderance of the evidence that the property owners’ association exercised its
discretionary authority concerning a restrictive covenant in a way that was
arbitrary, capricious, or discriminatory merely destroys the presumption that the
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association acted reasonably. Id. at 933.
The HOA was entitled to the presumption that the exercise of its
discretionary authority concerning the common assessments from February 2008 to
January 2010 was reasonable; Marmic had the burden of introducing contrary
evidence. See id. Because Marmic did not introduce any evidence to controvert
the presumption that the HOA had acted reasonably in setting the common
assessments between February 2008 and January 2010, the presumption remains
intact and the HOA is entitled to summary judgment. See id.
Bradshaw testified that, after she took office in January 2010, the common
assessments collected by the HOA were used to pay for a variety of services:
“Water and sewer, the trash collection, the lawn maintenance, any unexpected
repairs to, you know, common area problems, street lights, the electricity
associated with, like, the front entrance or the common areas, liability insurance,
any administrative expenses, such as postage, that kind of thing, legal fees.”
Marmic argues that at least two of these services — water and trash
collection — conferred no benefit on the 17 undeveloped lots owned by Marmic
and existed “solely for the benefit and personal use of the owners of the developed
lots.” As a result, Marmic argues, “the majority of the assessments which [the
HOA] is attempting to collect from Marmic were being utilized to subsidize the
other lot owners.”
Marmic’s complaints regarding a bundle of services covered by a uniform
covered assessment neither establish arbitrary conduct on this record nor overcome
the presumption. The services described by Bradshaw easily fit within the
Declaration’s unambiguous authorization to fund “the proper operation,
management, and maintenance of the Subdivision.” A single meter monitors the
water system that services the entire subdivision of Silverglen Townhomes —
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including the undeveloped lots owned by Marmic; there is no way for the HOA to
apportion the costs of maintaining that system based on each lot’s usage. And
though Marmic claims not to have made use of the water system, the HOA has
used the funds raised through common assessments to repair a broken water pipe
on one of Marmic’s lots and to clean up vandalism to the sprinkler system on
another Marmic lot. Likewise, all lot owners benefit from the twice-weekly
curbside trash collection provided at the HOA’s expense regardless of whether
they each put out trash each week; the desirability of developed and undeveloped
lots alike would be diminished if trash were to accumulate on the occupied lots.
See, e.g., Tex. Health & Safety Code Ann. § 363.003(2) (Vernon 2010) (“[T]he
improper management of solid waste creates hazards to the public health, can
cause air and water pollution, creates public nuisances, and causes a blight on the
landscape.”).
We overrule Marmic’s first issue.
II. Improper Recording of the Declaration
Marmic next contends that the trial court erred by granting summary
judgment because two fact questions exist regarding the Declaration. The first is:
“[T]he Declaration is signed by Silverglen Townhomes, Ltd., which purports to be
the owner of the properties. . . . There is no entity in Texas by that name.” The
second is: “The Declaration was not recorded by the owner of the property.
Rather, a copy was attached to another document as an exhibit which was signed
by [the HOA].” Marmic has cited no authority in support of these arguments,
maintaining only that “[i]t is basic real property law that, only the owner of
property can file restrictions against his own property.”
An appellant’s brief “must contain a clear and concise argument for the
contentions made, with appropriate citations to authorities and to the record.” Tex.
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R. App. P. 38.1(i). An appellant’s failure to comply with this rule results in waiver
of issues on appeal. See e.g., Canton-Carter v. Baylor Coll. of Med., 271 S.W.3d
928, 931-32 (Tex. App.—Houston [14th Dist.] 2008, no pet.).
Marmic cited no authority in the trial court that supports its argument that
the Declaration was improperly recorded, and it cites no authority on appeal.
Marmic has waived this issue on appeal.
We overrule Marmic’s second issue.
CONCLUSION
Having overruled both of Marmic’s issues on appeal, we affirm trial court’s
order granting summary judgment in favor of the HOA.
/s/ William J. Boyce
Justice
Panel consists of Justices Boyce, Jamison, and Busby.
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