Mark William Ivey v. State

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

444444444444444444444444444
ON MOTION FOR REHEARING
444444444444444444444444444

NO. 03-05-00329-CV

Appellants, Robert L. Owens, Jr. and Sylvia Lee Owens//Cross-Appellees, Michael Ousey,
Kirsten Ousey, Robert F. West and Elizabeth West

v.

Appellees, Michael Ousey, Kirsten Ousey, Robert F. West and Elizabeth West//Cross-
Appellants, Robert L. Owens, Jr. and Sylvia Lee Owens

FROM THE DISTRICT COURT OF HAYS COUNTY, 207TH JUDICIAL DISTRICT
NO. 03-1778, HONORABLE CHARLES R. RAMSAY, JUDGE PRESIDING

OPINION

We withdraw our opinion and judgment issued June 8, 2007, and substitute the

following in its place. We overrule appellees’ motion for rehearing.

This is an appeal from a final judgment granting a mandatory permanent injunction

to enforce restrictive covenants. The injunction compelled Robert L. Owens, Jr. and Sylvia Lee

Owens to remove a mobile home from a lot they owned adjacent to lots owned by Michael and

Kirsten Ousey and Robert and Elizabeth West. The Owenses appeal, contending that the injunction

purported to enforce restrictive covenants that had expired in 2001, that purported 2003

“amendments” to “extend” the covenants were void, and that the covenants cannot be enforced under
an implied negative reciprocal easement theory. Appellees bring a cross-appeal contending that the

district court erred in refusing to award them damages for the Owenses’ breaches of restrictive

covenants both on the lot in question and on an adjacent Owens-owned lot where the Owenses had

initially placed the mobile home. For reasons explained below, we affirm in part, reverse in part,

render in part, and remand in part.

BACKGROUND

Appellees and the Owenses own adjoining properties in a residential, unincorporated

area of Hays County near San Marcos. The Owenses own two adjoining lots, a .23-acre lot located

to the immediate west of, and sharing a common boundary with, a .715-acre lot. The Owenses’ lots

are located at essentially the southeast corner of three lots owned by appellees. Along the north and

west boundaries of the Owenses’ .23-acre lot are two lots totaling roughly 15 acres owned by the

Ouseys. The Wests own a .716-acre lot bordering the Owenses’ .715-acre lot to the north and one

of the Ouseys’ lots to the east.1

The deeds to both of the Owenses’ lots contain restrictive covenants prohibiting,

among other things, the placement of mobile homes on the property. The deed to the .715-acre lot,

executed in 1976, specifies that the restrictive covenants:

shall be in full force and effect for a period of twenty-five years. However, any
restrictive covenant or covenants may be renewed at the end of said 25 year period,
or may, at any time, be altered amended or cancelled by a majority vote of the owners
of the property, each lot, whether owned by one or more persons, having and being
entitled to one vote, on any question of alteration, amendment of [sic] cancellation

1
A survey plat illustrating the locations of the lots is attached as Appendix A.

2
 of any restriction.2

By contrast, the deed to the .23-acre lot, executed in 1984, does not specify a time limit or term for

its restrictive covenants.

In October 2003, the Owenses placed a mobile home on the .23-acre lot. Appellees

notified the Owenses of their objection to the placement of the mobile home on that lot, maintaining

that it violated restrictive covenants on the property. On October 22, 2003, appellees voted to

“amend” and “extend” the deed restrictions on the .715-acre lot. On the same date, appellees

notified the Owenses of this action. Thereafter, on or about November 3, 2003, the Owenses moved

the mobile home to their .715-acre lot. On or about November 6, 2003, appellees recorded a

document entitled “Amendment/Extension of Deed Restrictions,” pertaining to the Owenses’ .715-

acre lot, in the real property records of Hays County. This document purported to “extend and

amend the covenants” applicable to the .715-acre lot, including those prohibiting mobile homes, and

added some new restrictions.

After the Owenses refused to remove the mobile home from their .715-acre lot,

appellees sued for damages and a mandatory permanent injunction requiring the Owenses to remove

the mobile home from their property. Appellees asserted claims that (1) the Owenses violated “a

deed restriction” applicable to the .23-acre lot by placing a mobile home there on or about October

1 and refusing to remove it until on or about November 4, 2003; (2) the Owenses violated

“applicable deed restrictions” on the .715-acre lot by “moving and installing a mobile home” there

and refusing to remove it; and alternatively, (3) the placement of the mobile home on either lot

2
The parties dispute whether the deed clearly identifies “owners of the property” authorized
to amend the restrictions. Ultimately, we need not reach that issue.

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violated implied reciprocal negative easements applicable to both lots. Appellees also alleged that

the Owenses’ actions constituted a nuisance. The Owenses counter-claimed alleging that appellees’

“Amendment/Extension of Deed Restrictions” “creates a cloud on Counter-Plaintiffs’s land title”

and requested a declaratory judgment that the instrument “is void and of no force or effect.”

The case was tried to the court on mostly stipulated facts. The district court rendered

judgment that:

1. The Owenses violated deed restrictions applicable to their .23-acre lot (those without a
specified term or duration) by placing a mobile home there between October 1 and
November 3, 2003.

2. The Owenses violated deed restrictions applicable to their .715-acre lot (those effective “for
a period of twenty-five years”) by placing a mobile home on that lot on November 3, 2003,
and refusing to remove it. The court granted a mandatory injunction compelling the
Owenses to move the mobile home off their property within thirty days after the judgment
was signed.

3. “The Court finds for [the Owenses] as to [appellees’] claims of nuisance . . . and denies
[appellees’] claim.”

4. “[Appellees] not recover actual damages or any other kind of damages or interest from [the
Owenses] and [the Owenses] not recover actual damages or any other kinds of damages from
[appellees].”

5. Neither party would be awarded attorney’s fees but, in the event of an appeal, each party
would recover appellate attorney’s fees if successful.

The district court subsequently entered findings of fact and conclusions of law.

Among other facts, the court found that appellees had proven statutory damages as to the Owenses’

.23-acre lot of $6,000 and $99,000 as to the Owenses’ .715-acre lot. See Tex. Prop. Code Ann.

§ 202.004(c) (West 2007) (providing that a court “may assess civil damages for the violation of a

restrictive covenant in an amount not to exceed $200 for each day of the violation”). It also found

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that the Wests had incurred loss of value to their property of $36,000 and that the Ouseys had

incurred a loss of $60,000. However, the district court concluded that “[i]n accordance with the

Court’s discretion,” appellees were “not entitled to recover damages” or interest.

The district court also found that appellees had incurred $14,024.70 in attorney’s fees

through trial, that the Owenses had incurred $20,000 in attorney’s fees through trial, and that each

party would incur $5,000 and $3,000 in attorney’s fees on appeal to the court of appeals and the

supreme court, respectively. The court concluded that “[i]n accordance with the Court’s discretion,”

neither party was entitled to recover their attorney’s fees through judgment, but each party could

recover their appellate attorney’s fees if successful.

ANALYSIS

The Owenses bring eight issues on appeal. They do not challenge the judgment that

they violated restrictive covenants encumbering their .23-acre lot (where they initially placed the

mobile home) but assert that the district court erred in rendering judgment that they violated

restrictive covenants encumbering their .715-acre lot and in awarding mandatory injunctive relief.

In their first issue, the Owenses argue that the restrictions encumbering their .715-acre lot made the

basis for appellees’ claims expired by their terms in August 2001 and could not be “amended” or

“extended” by appellees’ actions over two years after that date. The Owenses contend in their eighth

issue that the district court erred in refusing to grant their request for a declaration that appellees’

purported “amendment” or “extension” of the deed restrictions is void. In their second and seventh

issues, the Owenses assert that appellees lack standing to enforce the restrictive covenants

encumbering their .715-acre lot. The Owenses’ remaining issues challenge the applicability of the

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implied negative restrictive easement theory on several grounds, including their contention that this

theory cannot apply when, as here, the subject property is covered by express deed restrictions that

had expired by their terms.

Appellees bring a cross-appeal asserting that the district court abused its discretion

in denying their claims for statutory damages, common-law damages as to the .715-acre lot,3 and

attorney’s fees. They also complain that the district court abused its discretion in awarding the

Owenses conditional appellate attorney’s fees.

The Owenses’ appeal

Applicability of express deed restriction

We consider first whether express deed restrictions applied to the Owenses’ .715-acre

lot. When construing restrictive covenants, we apply the general rules of contract construction.

Pilarcik v. Emmons, 966 S.W.2d 474, 478 (Tex. 1998). We examine the covenants as a whole in

light of the circumstances present when the parties entered into the agreement. Id. Our primary

concern is to ascertain and give effect to the true intention of the parties as expressed in the

instrument. See Gulf Ins. Co. v. Burns Motors, 22 S.W.3d 417, 424 (Tex. 2000). Like other

questions of law, we review a trial court’s construction of restrictive covenants de novo. Raman

Chandler Props., L.C. v. Caldwell’s Creek Homeowners Ass’n, 178 S.W.3d 384, 390

(Tex. App.—Fort Worth 2005, pet. denied); City of Pasadena v. Gennedy, 125 S.W.3d 687, 692

(Tex. App.—Houston [1st Dist.] 2003, pet. denied).

3
On rehearing, appellees have clarified that “[n]o common law damages were sought for
the .23 acre lot deed violation.”

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 The deed to the Owenses’ .715-acre lot contains restrictive covenants prohibiting

“noxious or other offensive activity,” structures other than “one single family dwelling unit not to

exceed two stories in height,” any “mobile home, house trailer, tent, shack, garage or other out

building [that] shall be used for residential purposes,” or moving a dwelling situated outside the lot

onto the lot or allowing it to remain there. It further provided that these restrictions:

shall be in full force and effect for a period of twenty-five years. However, any
restrictive covenant or covenants may be renewed at the end of said 25 year period,
or may, at any time, be altered, amended or cancelled by a majority vote of the
owners of the property, each lot . . . having and being entitled to one vote, on any
question of extension of said restrictions, and on any question of alteration,
amendment of [sic] cancellation of any restriction.

The deed was executed on October 22, 1976. Under its terms, the restrictive

covenants were to remain “in full force and effect for a period of 25 years,” or only until

October 22, 2001. Appellees contend that the “amendments” and “extension” of the deed

restrictions that they voted to approve on October 22, 2003, and recorded on or about November

3—two years after the 25-year period had expired—made the restrictions effective through the

relevant period. The Owenses contend that because the deed restrictions expired by their terms in

October 2001, appellees necessarily could not have “extended” or “amended” the restrictions two

years thereafter. Appellees point to the provisos that “any restrictive covenant or covenants may be

renewed at the end of said 25 year period, or may, at any time, be altered, amended or cancelled.”

(Emphasis added.) They urge that these terms allow them to amend the restrictions “at any time,”

even two years after the “end of said 25 year period.” We agree with the Owenses.

We must construe restrictive covenants as a whole, give effect to every sentence,

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clause, and word of a covenant, and avoid constructions that would render parts of the covenant

superfluous or inoperative. See City of San Antonio v. City of Boerne, 111 S.W.3d 22, 29

(Tex. 2003). Appellees’ construction, while literally supported by the words “at any time” if read

in isolation, is inconsistent with the deed restrictions as a whole and renders the explicit 25-year term

superfluous. Read in its proper context, the provision necessarily means that the restrictions may

be amended “at any time” while they remain in effect. Similarly, the provision that the restrictions

may be extended “at the end of said 25 year period” does not contemplate a time two years after the

end of that period. (Emphasis added.) The fact that the property code requires restrictive covenants

to be “liberally construed,” see Tex. Prop. Code Ann. § 202.003(a) (West 2007), does not change

our analysis—even under a liberal construction, the plain language of the deed states that the

restrictive covenants are in effect for a 25-year period.

For these reasons, we conclude that the express restrictive covenants in the deeds to

the Owenses’ .715-acre lot had expired long before October 2003, when the Owenses moved a

mobile home onto the property, and that appellees’ purported “extensions” and “amendments” to the

restrictions were void and ineffective. We sustain the Owenses’ first and eighth issues, and need not

reach their second and seventh issues, which concern appellees’ standing to enforce these

restrictions.

Implied reciprocal negative easement

In the alternative, appellees plead that even if the express deed restrictions had

expired, the Owenses were still barred from placing a mobile home on their property under an

implied reciprocal negative easement theory. An implied reciprocal negative easement may arise

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or operate when:

an owner of real property subdivides it into lots and sells a substantial number of
those lots with restrictive covenants designed to further the owner’s general plan or
scheme of development. The central issue is usually the existence of a general plan
of development. The lots retained by the owner, or lots sold by the owner from the
development without express restrictions to a grantee with notice of the restrictions
in the other deeds, are burdened with what is variously called an implied reciprocal
negative easement, or an implied equitable servitude, or negative implied restrictive
covenant, that they may not be used in violation of the restrictive covenants
burdening the lots sold with the express restrictions.

Evans v. Pollock, 796 S.W.2d 465, 466 (Tex. 1990). The Owenses challenge the application of this

principle on several grounds,4 including that an implied reciprocal negative easement cannot arise

where, as here, the subject property was sold with express restrictions that are the same as those

allegedly implied. We agree with the Owenses.

As the supreme court observed in Evans, the implied reciprocal negative easement

doctrine applies to enforce restrictions against lots “retained by the owner, or lots sold . . . without

express restrictions to a grantee with notice of the restrictions in the other deeds.” Id. (Emphasis

added). The reason courts imply restrictions on these lots is to give effect to the general

development scheme intended by the grantor. Id. But here, the deed to the Owenses’ .715-acre lot

contains express restrictions that reflect the grantor’s intent. We conclude that no restrictions may

be implied in the face of the express deed restrictions. We sustain the Owenses’ third issue and need

4
It is unclear whether the district court’s judgment is also predicated on this theory. The
court did not explicitly address this theory, although it made fact findings that appear possibly to
address some but not all of its elements. To avoid deemed findings, the Owenses requested
additional fact findings regarding each element, which the district court declined to make. However,
because both parties briefed the issue, and because we ultimately conclude that the implied reciprocal
easement theory cannot apply here, we proceed to address it.

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not reach their remaining issues.

Disposition

In light of our disposition of the Owenses’ issues, we must reverse the portions of the

district court’s judgment holding that the Owenses violated restrictive covenants encumbering their

.715-acre lot and granting injunctive relief compelling them to move the mobile home off this lot.

The Owenses are also entitled to a declaration that appellees’ post-expiration “extension” or

“amendment” of the restrictive covenants applicable to the .715-acre lot is void.

As the Owenses are now the prevailing party on their declaratory judgment claim, we

will remand the issue of their attorney’s fees to afford the district court the opportunity to exercise

its discretion to decide whether to award them. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009

(West 1997); McMillin v. State Farm Lloyds, 180 S.W.3d 183, 211 (Tex. App.—Austin

2005, pet. denied).

On rehearing, appellees complain that this Court erred in its original opinion in

rendering a declaratory judgment in favor of the Owenses and remanding the issue of their attorney’s

fees under that cause of action. Appellees insist that the Owenses’ declaratory-judgment

counterclaim presented no new controversy apart from the issues raised in appellees’ suit and

therefore could not support an attorney’s fee award. We disagree.

The “Declaratory Judgment Act is not available to settle disputes already pending

before a court,” BHP Petroleum Co. v. Millard, 800 S.W.2d 838, 841 (Tex. 1990), and it cannot be

used as a vehicle for defendants to obtain attorney’s fees merely for resisting the plaintiff’s right to

recover. See HECI Exploration Co. v. Clajon Gas Co., 843 S.W.2d 622, 638-639

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(Tex. App.—Austin 1992, writ denied). However, a counterclaim for declaratory relief is

appropriate where it is more than a mere denial of the plaintiff’s claim and it has greater

ramifications than the original suit. BHP Petroleum Co., 800 S.W.2d at 842. “A counterclaim has

greater ramifications than the original suit if it seeks affirmative relief.” Howell v. Mauzy,

899 S.W.2d 690, 706 (Tex. App.—Austin 1994, writ denied). To state a claim for affirmative relief,

a defendant must allege a cause of action “independent of the plaintiff’s claim on which the

defendant could recover benefits, compensation, or relief, even if the plaintiff were to abandon or

fail to establish his cause of action.” Id. For example, in the context of suits asserting breaches of

contracts or deeds, declaratory counterclaims seeking construction of such instruments may

constitute claims for affirmative relief because, in contrast to a “one-time occurrence” giving rise

to the plaintiff’s suit, they concern the parties’ ongoing and future relationship. BHP Petroleum Co.,

800 S.W.2d at 840-42; Indian Beach Prop. Owners’ Ass’n v. Linden, 222 S.W.3d 682, 702

(Tex. App.—Houston [1st Dist.] 2007, no pet.).

Appellees attempt to equate this case with decisions of this Court holding that certain

declaratory counterclaims failed to state claims for affirmative relief. In Howell v. Mauzy, Howell

sued Mauzy for violating the Texas Election Code and Mauzy counterclaimed for a declaratory

judgment that all of his campaign activities complied with the Election Code. Howell, 899 S.W.2d

at 706. This Court found that Mauzy was not entitled to recover on his declaratory judgment

counterclaim because the claim “was expressly confined to denying liability on the claims Howell

raised in his pleadings, and did not seek independent relief.” Id. at 706-707. Similarly, in HECI

Exploration Co., this Court held that a defendant gas company could not recover attorney’s fees on

11
its counterclaim in which it sought a declaration of its rights and obligations under a gas-purchasing

contract with the plaintiff. HECI Exploration Co., 843 S.W.2d at 638-639. This Court noted that

the parties had no ongoing relationship and that the alleged harm resulted from a one-time

occurrence that was fully covered by the plaintiff’s original suit. Id. Because the defendant’s

declaratory-judgment counterclaim sought nothing more than to avoid liability for its allegedly

deficient performance under the contract, the defendant could not recover attorney fees under the

declaratory judgments act. Id.

The Owenses’ declaratory-judgment counterclaim is distinguishable from those in

Howell and HECI because it seeks affirmative relief beyond the subject of appellees’ suit. While

appellees’ suit is predicated on the violation of restrictive covenants prohibiting the placement of

mobile homes on the Owenses’ property, the Owenses counterclaim alleges that appellees’

“Amendment/Extension of Deed Restrictions” “creates a cloud on Counter-Plaintiffs’ land title” and

seeks a declaration that the instrument is void in its entirety. The restrictions contained in the

instrument include not only prohibitions against mobile homes, but also a ban on using the property

for “any business, commercial, trade, mercantile or professional purpose”; a prohibition against

subdividing the property; limitations on structures to single-family dwellings, minimum and

maximum size restrictions on same, and prohibitions against using “modular, prefabricated or pre-

built exterior or interior walls, or wall sections” in such structures; bans on the raising, breeding, or

keeping of rabbits, poultry, dogs, cats or other animals other than household pets (“so long as no

such household pets are kept in such numbers as to constitute an annoyance or nuisance to owners

of other lots”); and a prohibition on “oil drilling, refining, or mining” on the lot. By seeking to

12
invalidate these and other restrictions contained in the “Amendment/Extension of Deed

Restrictions,” the Owenses’ counterclaim is one for affirmative relief extending beyond the subject

matter of appellees’ suit. We further observe that the declaration sought does not merely concern

a past or current violation of restrictive covenants, but clarifies and defines the parties’ ongoing

relationship into the future. BHP Petroleum Co., 800 S.W.2d at 840-42; Indian Beach Prop.

Owners’ Ass’n., 222 S.W.3d at 702. We hold that the Owenses asserted a proper declaratory-

judgment claim that potentially could support an award of attorney’s fees, if the district court

exercises its discretion to award them. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009.

Appellees’ cross-appeal

Damages

In their first issue, appellees complain that the district court abused its discretion in

refusing to award them statutory damages on their claims to enforce the restrictive covenants

applicable to the Owenses’ two lots. Section 202.004 of the property code authorizes trial courts to

assess civil damages for the violation of a restrictive covenant for an amount up to $200 per day of

violation. See Tex. Prop. Code. Ann. § 202.004(c). The district court found that appellees had

proven statutory damages of $6,000 from the roughly one-month period in which the Owenses had

placed the mobile home on their .23-acre lot, and $99,000 from the period after the Owenses moved

the mobile home to their .715-acre lot. Section 202.004, however, states that the court “may” award

these damages, see Tex. Prop. Code. Ann. § 202.004(c), and the district court exercised its discretion

not to award appellees any statutory damages.

Having held that the restrictive covenants in the deed to the Owenses’ .715-acre lot

13
were no longer in effect when they placed the mobile home on that property, we affirm the district

court’s judgment denying appellees statutory damages based on those acts. However, the Owenses

have not challenged the district court’s judgment that they violated the restrictive covenants on their

.23-acre lot. The district court chose to exercise its discretion to deny appellees statutory damages

for these violations in the context of rendering a judgment that granted appellees mandatory

injunctive relief compelling them to remove the mobile home from their other lot. Now that we have

reversed that injunction, we believe that the district court should have the opportunity to revisit how

it should exercise its discretion in deciding whether to award appellees statutory damages for the

Owenses’ breach of the restrictive covenants on their .23-acre lot. Accordingly, we will remand this

issue to the district court.

Appellees also complain that the district court abused its discretion in refusing to

award them common-law damages for the Owenses’ breach of restrictive covenants on the .715-acre

lot. For the same reasons that they were not entitled to injunctive relief based on the Owenses’

placement of a mobile home on this lot, appellees were not entitled to damages from those acts.

Further, having reviewed the record, we find no evidence of such damages. Consequently, the

district court did not abuse its discretion in its ultimate determination not to award appellees

common-law damages for the Owenses’ breach of restrictive covenants on the .715-acre lot.

Appellees’ attorney’s fees

Appellees also contend that the district court abused its discretion in refusing to award

the $14,024 that it found they had incurred in attorney’s fees. Appellees rely on section 5.006 of the

property code, which provides that a trial court “shall allow as to a prevailing party” who asserted

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an action based on breach of restrictive covenant “reasonable attorney’s fees.” Tex. Prop. Code Ann.

§ 5.006(a) (West 2003) (emphasis added). Appellees are no longer a prevailing party on their claims

that the Owenses breached restrictive covenants encumbering their .715-acre lot. However, they

remain a prevailing party on their claims concerning the Owenses’ .23-acre lot. Accordingly, we

remand to the district court to segregate and award the attorney’s fees relating to this claim. See

Varner v. Cardenas, 218 S.W.3d 68, 69 (Tex. 2007); Tony Gullo Motors I, L.P. v. Chapa,

212 S.W.3d 299, 314 (Tex. 2006) (remanding because evidence of attorney’s fees for entire case is

some evidence of what amount of segregated fees should be).

The Owenses’ appellate attorney’s fees

Finally, appellees contend that the district court erred as a matter of law in awarding

the Owenses appellate attorney’s fees conditioned on their success on appeal. They observe that,

under the court’s original judgment, the Owenses had no statutory or contractual basis for an

attorney’s fees award. The Owenses do not dispute this argument. We reverse this award but

remand the issue to the district court for consideration alongside the Owenses’ entitlement to

attorney’s fees under their declaratory judgment action.

CONCLUSION

We reverse the portions of the district court’s judgment holding that the Owenses’

.715-acre lot was encumbered by restrictive covenants past August 2001, that they violated such

restrictions by placing a mobile home on that lot, and enjoining them to remove the mobile home

from that property. We render judgment declaring that appellees’ 2003 post-expiration “extensions”

15
or “amendments” to these deed restrictions are void and ineffective. We affirm the district court’s

judgment denying appellees recovery of statutory and common-law damages for the Owenses’

alleged breach of restrictive covenants on the .715-acre lot.

To enable the district court to exercise its discretion in light of our ruling, we reverse

and remand the issues of (1) whether the Owenses should be awarded attorney’s fees under their

declaratory judgment claim, including appellate attorney’s fees, and (2) whether appellees should

be awarded their statutory damages under section 202.004 of the property code relating to the

Owenses’ breach of restrictive covenants encumbering their .23-acre lot. We also remand the issue

of appellees’ attorney’s fees under section 5.006(a) of the property code so the district court can

segregate and award the portion relating to the .23-acre lot.

__________________________________________

Bob Pemberton, Justice

Before Chief Justice Law, Justices Pemberton and Waldrop

Affirmed in part; Reversed and Rendered in part; Reversed and Remanded in part on
Motion for Rehearing

Filed: August 30, 2007

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APPENDIX A

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