Emmett Shelton and Joyce Shelton v. John P. Obermiller and Valerie Obermiller

Shelton v. Overmiller IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,

AT AUSTIN









NO. 3-92-384-CV





EMMETT SHELTON AND JOYCE SHELTON,

APPELLANTS

vs.





JOHN P. OBERMILLER AND VALERIE OBERMILLER,

APPELLEES

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 353RD JUDICIAL DISTRICT

NO. 91-4014, HONORABLE F. SCOTT MCCOWN, JUDGE PRESIDING

PER CURIAM

This appeal arises from a suit to enforce restrictive covenants. Appellants, Joyce and Emmett Shelton, petitioned the district court for an order requiring appellees, Valerie and John Obermiller, to comply with the restrictive covenants governing a residential subdivision. In addition, the Sheltons sought statutory damages and attorney's fees. Tex. Prop. Code Ann. § 5.006 (West 1984) & § 202.004(c) (West Supp. 1993). Trial was to the court, which found that the Obermillers constructed a storage building on their property in violation of the restrictive covenants. After balancing the equities between the Sheltons and other lot owners on one hand, and the Obermillers on the other, the trial court rendered judgment allowing the Obermillers' violation to continue but requiring them to take steps to minimize it. The court awarded the Sheltons $1,250 in attorney's fees and denied all other relief. The Sheltons appeal the judgment allowing the storage building to remain and awarding attorney's fees.

BACKGROUND

The Sheltons developed the subdivision, and when the dispute arose, they owned two tracts in it. When they subdivided the property for development as a residential neighborhood, the Sheltons impressed the property with restrictive covenants; these covenants were filed in the county deed records. The covenants name Joyce and Emmett Shelton as two of the three members of the Architectural Committee, which regulated the improvements placed on each lot.

The Obermillers owned one lot in the subdivision. This lot formed a rectangle, with the Obermillers' house at one end facing Toreador Drive; the land sloped from the house to the rear of the lot, where the property opened onto a cul-de-sac, Peace Pipe Path. In 1990, the Obermillers decided to build a garage or storage building on the part of their property near Peace Pipe Path. The Obermillers' contractor, Steve Franke, began excavating for the storage building in mid-June 1990 and finished it in late July.

When the Sheltons returned from a three-week trip in August, they noticed the completed storage building and left word for the Obermillers that the garage violated the covenants. The Sheltons formally notified the Obermillers of the violation in a letter dated August 15, 1990. By letter to the Sheltons dated February 13, 1991, the Obermillers proposed to build a wall or fence, with landscaping, to hide the garage. The Obermillers hired a landscape architect, who drew plans for a wooden gate and a low stone wall that supported a wooden fence alternating with stone columns; the plans included planting trees around the fence and the storage building. According to the plans, only the top part of the building would be visible from the street. These plans were submitted to the Sheltons and were then introduced at trial.

The Sheltons alleged that the Obermillers' garage violated sections four, nine, and twelve of the restrictive covenants. These sections required that a garage be part of the main residence or attached to it; provided that no garage could face the street; and required that the Architectural Committee approve plans for any structure placed on a lot.

In its judgment, the trial court ordered the Obermillers to build the wall and gate, with landscaping, as shown in the landscape artist's rendering. It also ordered the Obermillers and their successors to maintain the wall, gate, and landscaping in good condition and to use the storage building only for garage and storage purposes. The court ordered the building to be demolished if the Obermillers or their successors failed to abide by the conditions in the judgment.

DISCUSSION

In points of error one through four, the Sheltons claim that neither legally nor factually sufficient evidence supports the trial court's findings that the Obermillers were not aware of what the covenants prohibited. In finding of fact two, the trial court stated that before finishing the storage building, the Obermillers were not aware of the provisions of the restrictive covenants. In finding of fact eight, the trial court stated that the Obermillers' violation of the restrictive covenants was innocent because they were not aware of the covenants' provisions until after they completed the storage building.

The Sheltons argue that under the evidence, the Obermillers had both actual and constructive notice of the provisions of the covenants. Fact findings two and eight, however, are directed only at the Obermillers' actual awareness of what the covenants provided. The trial court based its remedy on the balance of equities between the parties. The court did not determine whether the law charged the Obermillers with constructive notice or whether they had implied actual notice; rather, the court tried to devise a fair solution based on the particular facts of the case. One of the facts relevant to reaching a fair solution was whether the Obermillers actually knew what the covenants prohibited before finishing their building. We therefore determine whether the evidence supports the trial court's findings that the Obermillers were not actually aware of the covenants' prohibitions before they finished their building.

To review the Sheltons' no-evidence challenge, we consider only the evidence and inferences tending to support the findings. If any probative evidence supports the findings, they must be upheld. Responsive Terminal Sys., Inc. v. Boy Scouts of Am., 774 S.W.2d 666, 668 (Tex. 1989); Southern States Transp., Inc. v. State, 774 S.W.2d 639, 640 (Tex. 1989). To review appellants' factual-sufficiency challenge, we consider all the evidence and will set aside the findings only if the evidence supporting them is so weak, or the evidence to the contrary so overwhelming, as to make them clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); In re King's Estate, 244 S.W.2d 660, 661 (Tex. 1951); West v. Watkins, 594 S.W.2d 800, 802 (Tex. Civ. App.--San Antonio 1980, writ ref'd n.r.e.).

John Obermiller testified that while he knew that the restrictive covenants existed, he did not know what they prohibited. His property deed stated that the property was subject to the restrictive covenants filed in the county deed records. When John bought the house, however, he did not receive a copy of the covenants. John stated that before he built the building, he had no idea that he would violate the covenants. He admitted that he was unaware of his violation because he had not read the restrictions before starting to build and that he made the mistake of failing to check the covenants before building. Before he read the covenants, John assumed they were similar to others he knew of, which prohibited trailer houses, apartments, or more than one family's living on a lot.

During excavation for the storage building, Jeffrey Dochen, Joyce Shelton's son and a partner in the Sheltons' real estate business, drove up to see the site. Steve Franke explained to Dochen that the Obermillers were building a tennis court and a garage, with a driveway to it. Franke told him where the garage would be and what it would look like. Dochen did not complain or express any reservations about the project, but seemed concerned only that enough space be left for an easement. John Obermiller learned about the meeting with Dochen from Franke; the episode gave Obermiller no reason to believe that the Sheltons objected to the storage building.

Although the construction of the storage building was plainly visible from the adjacent street, John Obermiller testified that no one told him while it was being built that it might violate the covenants. Steve Franke testified that nobody complained to him about the storage building while he was building it. Joyce Shelton also testified that she did not know of anybody's complaining to the Obermillers about the building while they were building it. Joyce testified that she was not alleging that the Obermillers intentionally violated the covenants.

John Obermiller's uncontradicted testimony that, before he finished the storage building, he did not know what the covenants prohibited is some evidence to support the trial court's findings that the Obermillers were not actually aware of the provisions of the covenants before finishing their storage building. In addition to this testimony, John's explanation that he did not receive a copy of the covenants when he bought the house, testimony that Joyce Shelton's son visited the building site and failed to complain, and testimony that no one else objected to John or the contractor during construction of the building supply factually sufficient evidence to support the trial court's findings. We overrule points one through four.

In points of error five and six, the Sheltons contend that the trial court erred in concluding that if the Obermillers built the wall and gate, landscaped and maintained it, they should not be required to demolish the storage building. A suit to enforce restrictive covenants is an equitable proceeding. Briggs v. Hendricks, 197 S.W.2d 511, 512 (Tex. Civ. App.--Galveston 1946, no writ); Spencer v. Maverick, 146 S.W.2d 819, 824 (Tex. Civ. App.--San Antonio 1941, no writ); see Cowling v. Colligan, 312 S.W.2d 943, 945 (Tex. 1958). The trial court here balanced the equities between the Obermillers and the other lot owners, including the Sheltons, in deciding that it would be inequitable to enforce the covenants against the Obermillers. When a trial court refuses to enforce a restrictive covenant based on a balance of the equities, the disproportion between the harm to the violator and the benefit to the other lot owners caused by enforcing it must be considerable. Cowling, 312 S.W.2d at 946; Gigowski v. Russell, 718 S.W.2d 16, 22 (Tex. App.--Tyler 1986, writ ref'd n.r.e.); Gunnels v. North Woodland Hills Community Ass'n, 563 S.W.2d 334, 338 (Tex. Civ. App.--Houston [1st Dist.] 1978, no writ). We review the trial court's decision not to enforce the restrictive covenants for an abuse of discretion. E.g., Gigowski, 718 S.W.2d at 21-22; Radney v. Clear Lake Forest Community Ass'n, 681 S.W.2d 191, 198 (Tex. App.--Houston [14th Dist.] 1984, writ ref'd n.r.e.); see generally Priest v. Texas Animal Health Comm'n, 780 S.W.2d 874, 875-76 (Tex. App.--Dallas 1989, no writ) (trial court's decision to grant or deny permanent injunction is reviewed for abuse of discretion).

John Obermiller testified that he decided to build the storage building because he needed room to store his boat, wagon, and horse trailer. Before building the garage, people dumped garbage and tree limbs on the lower end of his lot because it appeared to be vacant. He thought that by developing the property he could eliminate the dumping. The Obermillers wanted to build a tennis court as well and initially planned to put the storage building nearer their house, with the tennis court at the rear of the property. Around March 1990, John conferred with his next-door neighbor Scott Willson about where to place the court and garage. The Willsons preferred to have the garage built lower on the Obermillers' property, closer to their lot, and the Obermillers built accordingly. Apart from the Sheltons, none of the neighbors complained to the Obermillers about their building.

Photographs of the storage building admitted at trial showed a light-colored building with a sloped roof and three garage doors that faced Peace Pipe Path. The building was not completely visible from the street, but was partially hidden by trees and shrubs. One resident of the subdivision testified that the storage building was not an eyesore and that it was built to blend with the Obermillers' house. Jim Frederick, a real estate appraiser, described the building as nondescript, "plain vanilla," and neither handsome nor ugly.

John Obermiller used the storage building several times a week in the summer, though only once or twice a month in the winter. He testified that he spent $28,000 to have the garage built. Steve Franke verified that the building cost the Obermillers $28,000 to construct and estimated that it would cost $5,000 to demolish. Thomas Gardner, a real estate appraiser, testified that the storage building added value to the Obermillers' property because it provided necessary storage space.

The Sheltons introduced the testimony of Jim Frederick that restrictive covenants are placed on property to preserve the property values of all owners in a subdivision. He believed that the Obermillers' violation of the covenants would reduce the value of other properties in the subdivision. Joyce Shelton and several other lot owners in the subdivision expressed concern that the violation would diminish the value of their properties. Frederick stated that the danger to values lay in a prospective homebuyer's perception that the Obermillers' violation might lead to others. Again, Shelton and other property owners in the subdivision testified that they believed the Obermillers' violation would make it harder to enforce the covenants against later violations. Frederick, however, could not quantify the diminution in market value that the Obermillers' violation would cause to the surrounding properties.

Scott Willson testified that he did not think the location of the storage building diminished the value of his property. Another property owner in the subdivision, whose house was for sale, stated that he had no indication that the Obermillers' garage posed a problem to his ability to sell his house.

The landscape artist's plans for the proposed gate and wall showed that from the street only the top part of the storage building would be visible. While one resident of the subdivision testified that the proposed wall would be detrimental to the appearance of Peace Pipe Path, another property owner testified that in his opinion the wall would be beautiful and would more than offset any objection to the presence of the storage building. Thomas Gardner testified that the proposed wall and landscaping were aesthetically pleasing and would improve the appearance of Peace Pipe Path. Jim Frederick stated that the proposed wall was handsome and that, if built, it would help the appearance of the street.

As to the proposed wall's effect on property values in the subdivision, Frederick testified that the wall would not offset the potential decrease in value caused by the perception that the Obermillers' violation set a precedent. He thought that the wall would alleviate the problem, however. One neighbor in the subdivision testified that she did not believe that the wall would enhance her property. Another property owner testified that in his opinion neither the garage nor the wall would affect his ability to resell his property.

In determining the harm caused by enforcing the covenants, the trial court could properly have considered that demolishing the building would cost the Obermillers $33,000, $28,000 to construct the building and $5,000 to remove it. The Obermillers would also lose valuable storage space and incur the risk that people would again dump refuse on their lot.

In evaluating the benefit to other lot owners of enforcing the covenants, the trial court could have considered testimony that the storage building would reduce surrounding property values. But the court could have believed from the evidence that, although the storage building was functional rather than aesthetic in appearance, it was not unsightly; the court could also have believed that the proposed wall and gate would hide most of the storage building from view. The court could have concluded that the proposed wall and gate were attractive and would mitigate any decrease in property values caused by the violation.

The trial court could also have borne in mind that the Obermillers did not intend the violation and that once the Sheltons pointed it out, the Obermillers tried to find a compromise to minimize the building's visual disruption. E.g., Gigowski, 718 S.W.2d at 22. From the evidence presented, the trial court could have determined that the costs of enforcing the covenants were disproportionate to the benefits to the other lot owners. The trial court did not specifically find that, if the Obermillers built the wall, allowing the storage building to stand would cause relatively minimal harm to the lot owners. However, the court's findings of fact and conclusions of law show that it balanced the equities, and the evidence supports the implied finding that the lot owners would suffer relatively minimal harm. Tex. R. Civ. P. 299. We therefore hold that the trial court did not abuse its discretion by refusing to order the Obermillers to demolish the storage building.

The Sheltons further contest the effectiveness of the statement in the trial court's judgment that, in spite of the Obermillers' violation, the covenants would remain in force on all lots. The Sheltons rely on Cowling, in which the trial court released a border lot in a residential subdivision from residential restrictions based on changed conditions outside the subdivision, but stated that the restriction would remain in force against all other lots in the subdivision. Cowling, 312 S.W.2d at 944. The supreme court recognized that the trial court's judgment was ineffective to prevent the removal of other lots from the restriction as the changed conditions encroached. In effect, the trial court's judgment might cause more lots to be released from the restrictions if development continued. The supreme court therefore held that changed conditions outside a residential subdivision do not justify releasing a border lot from residential restrictions. Cowling, 312 S.W.2d at 946-47.

Here, in contrast, the judgment is not based on changed conditions. The concern in Cowling that a precedent would be set for removing additional lots from the restriction as the area developed is not present. The trial court's decision allowing the storage building to remain, if walled and landscaped, is based on the particular facts and equities presented. We overrule points five and six.

In point of error seven, the Sheltons argue that the trial court erred in awarding them only half of their reasonable attorney's fee. The Sheltons sought to recover reasonable attorney's fees as allowed by the Property Code. Tex. Prop. Code Ann. § 5.006 (West 1984). At trial, the parties stipulated that $2,500 was a reasonable fee for the Sheltons' attorney. In its judgment, the trial court ordered the Obermillers to pay the Sheltons $1,250, half of their reasonable attorney's fee.

Section 5.006 authorizes the trial court to award reasonable attorney's fees to the prevailing party in a suit based on breach of a restrictive covenant. In determining the amount of the fee, the court must consider the listed factors, which include "any other factor." Prop. Code § 5.006(b). The amount of a reasonable attorney's fee is a question of fact to be determined by the trier of fact. Giles v. Cardenas, 697 S.W.2d 422, 429 (Tex. App.--San Antonio 1985, writ ref'd n.r.e.). The trial court has great latitude in fixing attorney's fees, subject to review for abuse of discretion. Fonmeadow Property Owners v. Franklin, 817 S.W.2d 104, 105 (Tex. App.--Houston [1st Dist.] 1991, no writ).

In their petition, the Sheltons sought an order requiring the Obermillers to comply with the restrictive covenants. While the trial court found that the Obermillers violated the covenants, it did not order them to comply by demolishing the storage building. The court's balancing of the equities enabled it to reach a middle ground between those concerned, neither requiring full compliance nor tolerating an unmitigated violation. The court stated in its judgment that it based the award of attorney's fees on the equities between the Obermillers and the other landowners. Given the partial nature of the relief the Sheltons obtained, the trial court did not abuse its discretion in awarding the Sheltons only half of their reasonable attorney's fee. We overrule point seven.

The judgment of the trial court is affirmed.

[Before Justices Powers, Kidd and B. A. Smith]

Affirmed

Filed: March 31, 1993

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