ACCEPTED
01-14-00216-CV
FIRST COURT OF APPEALS
HOUSTON, TEXAS
3/20/2015 7:55:00 PM
CHRISTOPHER PRINE
CLERK
01-14-00216-CV
FILED IN
1st COURT OF APPEALS
IN THE COURT OF APPEALS HOUSTON, TEXAS
FOR THE FIRST DISTRICT OF TEXAS 3/20/2015 7:55:00 PM
HOUSTON, TEXAS CHRISTOPHER A. PRINE
Clerk
VICTOR S. ELGOHARY
Appellant / Cross Appellee
V.
LAKES ON ELDRIDGE NORTH COMMUNITY ASSOCIATION, INC.;
REALMANAGE, LLC; DARLA KITCHEN; DON BYRNES; MICHAEL
ECKLUND; LAURA VASALLO LEE; JOHN KANE; JULIE ANN BENNETT;
RICK HAWTHORNE; CARA DAVIS; CHRISTI KELLER; JIM FLANARY;
JILL RICHARDSON; NEIL McLAURIN; WALTER SPEARS
Appellees,
V.
LAKES ON ELDRIDGE NORTH COMMUNITY ASSOCIATION, INC.
Cross Appellant
APPELLEES’ BRIEF
LeClairRyan Bartley & Spears
BRIANNE W. RICHARDSON Walter E. Spears
Email: E-mail:
brianne. richardson@leclairryan.com wspears@bartleyspears.com
JAMES J. McCONN Neil H. McLaurin, IV
Email: E-mail:
james.mcconn.com@leclairryann.com nmclaurin@bartleyspears.com
1233 West Loop South, Suite 1000 14811 St. Mary’s Lane, Suite 270
Houston, Texas 77027 Houston Texas 77079
Telephone: 713-654-1111 Telephone: 281-531-0501
Facsimile: 713-650-0027 Facsimile: 281- 493-1539
ATTORNEYS FOR APPELLEES
ORAL ARGUMENT REQUESTED
IDENTITY OF PARTIES
Appellant Counsel for Appellant
Victor S. Elgohary Victor S. Elgohary
Bar No. 24067587
6406 Arcadia Bend Ct.
Houston, Texas 77041
Rosemary Jackson
Rosemary Jackson, P.C.
Bar No. 11671100
2016 Main
Houston, Texas 77002
Appellees Counsel for Appellee
Lakes on Eldridge North Community LeClairRyan
Association, Inc.; RealManage, LLC; Brianne W. Richardson
Darla Kitchen; Don Byrnes; Michael Bar. No. 24056500
Ecklund; Laura Vasallo Lee; John Email:brianne.richardson@leclairryan.com
Kane; Julie Ann Bennett; Rick James J. McConn
Hawthorne; Cara Davis; Christi Keller; Bar No. 13439700
Jim Flanary; and Jill Richardson Email: james.mcconn@haysmcconn.com
1233 West Loop South, Suite 1000
Houston, Texas 77027
Telephone: 713-654-1111
Facsimile: 713-650-0027
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Cross-Appellant and Appellees Counsel Cross-Appellant and Appellees
Lakes on Eldridge North Community Walter E. Spears
Association, Inc. (cross-appellants); Bar No.
Walter Spears* E-mail: wspears@bartleyspears.com
Neil McLaurin* Neil H. McLaurin, IV
Bar No.
E-mail: nmclaurin@bartleyspears.com
14811 St. Mary’s Lane, Suite 270
Houston Texas 77079
Telephone: 281-531-0501
Facsimile: 281- 493-1539
*Walter Spears and Neil McLaurin were never named as parties in the underlying
lawsuit. Additionally, the record does not reflect that they were served with
citation or made an appearance as parties. Accordingly, Elgohary’s identification
of Spears and McLaurin as “Appellees” in this proceeding is improper.
iii
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TABLE OF CONTENTS
INDENTITY OF THE PARTIES & COUNSEL ..................................................... ii
TABLE OF CONTENTS ..........................................................................................iv
TABLE OF AUTHORITIES ................................................................................. viii
STATEMENT OF THE CASE ............................................................................... xii
STATEMENT REGARDING ORAL ARGUMENT ........................................... xiii
STATEMENT REGARDING THE RECORD ..................................................... xiii
IDENTIFICATION OF PARTIES .........................................................................xiv
ISSUES FOR REVIEW ...........................................................................................xv
STATEMENT OF FACTS ........................................................................................2
A. The Association’s board of directors addresses LOEN safety
concerns by regulating the use of an access gate and placing
signs on Association property.......................................................................... 2
B. Elgohary initiates this lawsuit against the Association, the
Directors, and RealManage, and the Association files
counterclaims under the Declaratory Judgment Act ....................................... 4
C. The trial court grants Appellees’ summary judgment and
dismisses all of Elgohary’s claims................................................................... 5
D. The trial court denies Elgohary’s request to join all LOEN
property owners, and grants the Association’s motion for
protection .........................................................................................................7
E. Following a bench trial on the Association’s declaratory
judgment claims, the trial court rules in favor of the Association
and awards it attorney’s fees. .......................................................................... 8
SUMMARY OF THE ARGUMENT ......................................................................10
iv
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ARGUMENT .................................................................................................13
I. THE TRIAL COURT PROPERLY DISMISSED ALL OF ELGOHARY’S
CLAIMS BY SUMMARY JUDGMENT. .................................................................13
A. Elgohary’s Acknowledged Receipt of the Notice of Hearing and
Motion for Summary Judgment Establishes that the Notice
Requirements of Rules 21a and 166a were Satisfied. ..............................13
B. Elgohary Failed to Present Sufficient Summary Judgment
Evidence in Response to Appellees’ No-Evidence Motion and
Therefore the Trial Court’s Summary Judgment Was Proper. ................ 16
1. Appellees’ did not waive their no-evidence summary
judgment motions. ...............................................................................17
2. Elgohary failed to establish that he needed additional time
for discovery as required by Rule 166a, and therefore, the
trial court did not abuse its discretion by granting the no
evidence motion for summary judgment.............................................19
3. The trial court properly dismissed the claims when Elgohary
failed to raise a fact issue in response to Appellees’ no-
evidence summary judgment motion ..................................................22
C. The Trial Court Properly Granted Appellees’ Traditional
Motion for Summary Judgment on Elgohary’s Claims Against
the Association, and its Directors. ............................................................24
1. The summary judgment evidence establishes that the actions
of the Association, the Directors and RealManage were
authorized by: (a) the covenants, by-laws, and articles of
incorporation; and (b) Texas Property Code §202.004. ......................26
a. The uncontroverted summary judgment evidence
establishes that the Association, the Directors, and
RealManage were authorized to manage the use of the
community access gates. ................................................................27
b. The uncontroverted summary judgment evidence
establishes that Appellees’ placement of signs in the
community did not violate the restrictive covenants .....................31
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05267.183 / 1649190.1
c. The uncontroverted summary judgment evidence
establishes that the Association, the Directors, and
RealManage managed and utilized LOEN funds and
property reasonably and in good faith ......................................32
2. The Directors’ affidavits are based on personal knowledge
and supported by specific facts and examples of actions
taken by the Directors for the safety and general welfare of
the community. ....................................................................................36
3. Elgohary’s Requests for Sanctions Are Not Independent
Causes of Action, and Therefore the Trial Court’s Summary
Judgment Disposed of All of His Claims ............................................39
4. The trial court properly declined to write new law regarding
derivative claims against non-profit organizations and
dismissed Elgohary’s derivative claims against the Directors
and RealManage ..................................................................................41
5. The trial court properly granted summary judgment in favor
of the Directors based on their immunity under the
Volunteer Protection Act and Texas Business Organizations
Code §22.235.......................................................................................42
II. THE TRIAL COURT PROPERLY RENDERED JUDGMENT ON LOEN’S
DECLARATORY JUDGMENT CLAIMS. ...............................................................45
A. The Trial Court Did Not Err in Refusing to Abate the
Association’s Counterclaims in order to Join Every LOEN
Property Owner. .......................................................................................47
B. The Trial Court Properly Determined That the Association’s
Governing Documents Only Prohibit the Placement of Signs in
the Subdivision under Certain Circumstances. ........................................53
C. The Association’s Request for a Declaratory Judgment
Regarding the Regulation of the West Little York Entry/Exit
Was a Justiciable Controversy and the Court Did Not Err in
Issuing a Declaratory Judgment against Elgohary Regarding
Same. ....................................................................................................... 57
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05267.183 / 1649190.1
III. THE TRIAL COURT PROPERLY GRANTED APPELLEES’ MOTION FOR
PROTECTION. ..................................................................................................62
IV. THE TRIAL COURT PROPERLY AWARDED THE ASSOCIATION ITS
ATTORNEY’S FEES, BUT THIS COURT SHOULD REFORM THE AWARD
TO REFLECT THE FEES ACTUALLY INCURRED. ............................................... 64
A. Elgohary Failed to Preserve This Issue for Appeal. .................................65
B. An Award of Attorney’s Fees Under the Uniform Declaratory
Judgments Act Was Appropriate and Authorized by Statute................... 65
C. The Record Supports An Award of Attorney’s Fees. ..............................67
D. Elgohary Was Timely Served With Exhibits Relating to
Attorney’s Fees. ........................................................................................68
E. The Association Established Reasonable, Necessary, Equitable
and Just Attorney’s Fees Independent of Attorney Fee Invoices............. 70
F. Elgohary Presented No Testimony as to Attorney’s Fees ........................73
PRAYER ..................................................................................................................74
CERTIFICATE OF SERVICE ................................................................................76
CERTIFICATE OF COMPLIANCE .......................................................................76
INDEX OF APPENDICES ......................................................................................77
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TABLE OF AUTHORITIES
CASES
Aquaduct, L.L.C. v. McElhenie,
116 S.W.3d 438 (Tex. App.—Houston [14th Dist.] 2003, no
pet.) ................................................................................................................64
Albertson's, Inc. v. Sinclair,
984 S.W.2d 958 (Tex. 1999) .........................................................................42
Am. First Nat'l Bank v. Jordan-Lewis Dev., L.P.,
No. 01-09-00990-CV 2011 Tex. App. LEXIS 5347(Tex. App—
Houston [1st Dist.] July 14, 2011, no pet.)....................................................45
Barshop v. Medina County Underground Water Conservation Dist.,
925 S.W.2d 618, 629 (Tex. 1996) .................................................................66
Bliss & Glennon Inc. v. Ashley,
420 S.W.3d 379 (Tex. App.—Houston [1st Dist.] 2014, no pet.)................. 18
Bocquet v. Herring,
972 S.W.2d 19 (Tex. 1998) ...........................................................................64
Brooks v. Northglen Ass'n,
141 S.W.3d 158 (Tex. 2004) .........................................................................48
Brown v. Brown,
236 S.W.3d 343 (Tex. App. Houston 1st Dist. 2007, no pet.) ......................46
Brown v. Capital Bank, N.A.,
703 S.W.2d 231 (Tex.App—Houston [14th Dist.] 1985, no
writ)................................................................................................................14
Caldwell v. Callender Lake Property Owners Improvement
Association,
888 S.W.2d 903 (Tex.App.—Texarkana 1994, no pet.) ...............................48
Chapman v. Marathon Mfg. Co.,
590 S.W.2d 549 (Tex. Civ. App.—Houston [1st Dist.] 1979, no
writ)................................................................................................................60
viii
05267.183 / 1649190.1
City of Keller v. Wilson,
168 S.W.3d 802 (Tex. 2005) .........................................................................45
Compton v. Calabria,
811 S.W.2d 945 (Tex. App.—Dallas 1991, no pet.) .....................................24
Denso Corp. v. Hall,
396 S.W.3d 681, 688 (Tex. App—Houston [14th Dist.] 2013,
no pet.) ...........................................................................................................60
Doe v. Roman Catholic Archdiocese,
362 S.W.3d 803 (Tex.App.—Houston [14th Dist.] 2012, no
pet.) ....................................................................................................19, 20, 22
Epernay Cmty. Ass'n v. Shaar,
349 S.W.3d 738 (Tex.App.—Houston [14th Dist.] 2011, no
pet.) ....................................................................................................48, 49, 51
Ford Motor Co. v. Ridgway,
135 S.W.3d 598 (Tex. 2004) .........................................................................16
Goforth v. Bradshaw,
296 S.W.3d 849 (Tex.App.—Texarkana 2009, no pet.) ...............................14
Gonzales v. Surplus Ins. Servs.,
863 S.W.2d 96, 101 (Tex.App.—Beaumont 1993, no pet.) ..........................14
Goodyear Tire & Rubber Co. v. Jefferson Constr. Co.,
565 S.W.2d 916 (Tex. 1978) .........................................................................65
Jarvis v. Rocanville Corp.,
298 S.W.3d 305 (Tex.App.—Dallas 2009, pet. denied) ..............................71
Joe v. Two Thirty Nine J.V.,
145 S.W.3d 150 (Tex. 2004) .......................................................19, 20, 21, 22
Lane Bank Equip. Co. v. Smith S. Equip., Inc.,
10 S.W.3d 308 (Tex. 2000) .....................................................................39, 40
Long v. State Farm Fire & Casualty Co.,
ix
05267.183 / 1649190.1
828 S.W.2d 125 (Tex. App.—Houston [1st Dist.] 1992, no pet.)................. 24
Mantri v. Bergman,
153 S.W.3d 715 (Tex.App.—Dallas 2005, pet. denied) ...............................39
McNeil v. Time Ins. Co.,
205 F.3d 179 (5th Cir. 2000, cert. denied) ....................................................41
Nelson v. Big Woods Springs Improvement Ass'n,
322 S.W.3d 678 (Tex.App.—Texarkana 2010, pet. denied) ........................65
Netherland v. Wittner,
662 S.W.2d 786 (Tex.App.—Houston [14th Dist.] 1983, no
writ)................................................................................................................14
Noble Mortg. & Invs. LLC v. D&M Vision Invs., LLC,
340 S.W.3d 65, 74-75 (Tex. App.—Houston [1st Dist.] 2011,
no pet.) .....................................................................................................46, 53
Petroleum Analyzer Co. LP v. Olstowski,
2010 Tex. App. LEXIS 5581 at *47-48 (Tex.App.—Houston
[1st Dist.] July 15, 2010, no pet.) ..................................................................64
Priddy v. Rawson,
282 S.W.3d 588 (Tex. App.—Houston [14th Dist.] 2009, pet.
denied) ...........................................................................................................18
Pulido v. Gonzalez,
2013 Tex. App. LEXIS 11096, 2013 WL 4680415 (Tex. App—
Houston [1st Dist.] 2013, no pet.) ...........................................................16, 17
Rizkallah v. Conner,
952 S.W.2d 580 (Tex. App.—Houston [1st Dist.] 1997)..............................23
Rockwall Commons Assocs. v. MRC Mortg. Grantor Trust I,
331 S.W.3d 500 (Tex.App—El Paso, 2010) .................................................37
Royal Petroleum Corp. v. Dennis,
332 S.W.2d 313 (Tex. 1960) .........................................................................47
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Shih v. Tamisiea,
306 S.W.3d 939 (Tex.App—Dallas 2010, no pet.) .......................................13
Tovar v. Mazza,
1999 Tex. App. LEXIS 2222, 1999 WL 174064 *4 (Tex.
App.—San Antonio Mar. 31, 1999, no pet....................................................65
Unifund CCR Partners v. Villa,
299 S.W.3d 92 (Tex. 2009) ...........................................................................40
Union Bankers Ins. Co. v. Shelton,
889 S.W.2d 278 (Tex. 1994) .........................................................................41
Uptegraph v. Sandalwood Civic Club,
312 S.W.3d 918 (Tex. App.—Houston [1st Dist.] 2010, no pet.)...........26, 27
Western Invs., Inc. v. Urena,
162 S.W.3d 547 (Tex. 2005) .........................................................................13
Williams v. County of Dallas,
194 S.W.3d 29 (Tex. App—Dallas 2006, pet. denied.) ................................70
STATUTES AND RULES
42 U.S.C.S. § 14503 .................................................................................................43
TEX. BUSINESS ORGANIZATIONS CODE § 22.001 ......................................................44
TEX. BUSINESS ORGANIZATIONS CODE § 22.235 ................................................ 42, 43
TEX. CIV. PRAC. & REM. CODE §10.002 ...................................................................39
TEX. CIV. PRAC. & REM. CODE § 37.006 ..................................................................48
TEX. CIV. PRAC. & REM. CODE § 37.009 ..................................................................66
TEX. CIV. PRAC. & REM. CODE § 37.010 ..................................................................45
TEX. PROP. CODE § 202.004 .....................................................................................26
TEX. R. APP. P. RULE 33 ...........................................................................................65
xi
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TEX. R. CIV. P. 21A ...................................................................................................14
TEX. R. CIV. P. 39 .....................................................................................................47
TEX. R. CIV. P. 66 .....................................................................................................45
TEX. R. CIV. P. 94 .....................................................................................................44
TEX. R. CIV. P. 166A .................................................................................................19
Tex. R. Civ. P. 193 ...................................................................................................69
TEX. GOV'T CODE § 312.005.....................................................................................41
xii
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STATEMENT OF THE CASE
Nature of the This lawsuit arises from dispute between a homeowner and
Case and his homeowners’ association (“HOA”), its directors, and
Parties: property management company. The homeowner initiated
the lawsuit against the HOA, its directors and property
management company asserting individual and
representative claims for breach of fiduciary duty,
negligence, conversion, theft liability act, conspiracy, aiding
and abetting, piercing the corporate veil, trespass, breach of
contract, and ultra vires acts. Each of these claims was based
on the homeowner’s unsubstantiated claims that the
defendants misappropriated funds, regulated the use of
certain access gates, and placed signs around the
neighborhood in violation of the covenants and by-laws. The
HOA filed counterclaims against the homeowner seeking a
declaration that it had authority to: (1) regulate the use of
entry/exit gates; and (2) place signs in the community.
Trial Court: The Honorable Wesley Ward, in the 234th District Court of
Harris County, Texas. Cause No. 2013-17221, Elgohary v.
Lakes on Eldridge North Community Assoc., Inc. et al.
Trial Court The HOA, its directors, and property management company
Disposition: filed a hybrid, traditional and no-evidence motion for
summary judgment on all of the homeowner’s claims against
them based on multiple grounds. The motion was granted in it
its entirety without specifying the grounds for summary
judgment. (App.1) The court later denied the homeowner’s
motion for sanctions against the HOA’s attorneys. The
HOA’s declaratory judgment claims were tried to the court.
The court rendered judgment in favor of the HOA and
awarded attorney’s fees of $20,000. (App.2.)
xiii
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STATEMENT REGARDING ORAL ARGUMENT
Due to the factual background and the multiple issues raised by the appeal
and cross-appeal, Appellees believe that oral argument might aid this Court in its
understanding of the facts. For this reason, oral argument is requested.
STATEMENT REGARDING THE RECORD
The clerk’s record is comprised of one original volume and a first
supplemental volume. The original volume will be referred to as (CR) and the first
supplemental volume will be referred to as (1-CR).
The reporter’s record is comprised of seven volumes, which will be referred
to as 1-RR, 2-RR, 3-RR, 4-RR, 5-RR, 6-RR, and 7-RR respectively.
xiv
05267.183 / 1649190.1
IDENTIFICATION OF THE PARTIES
In this case, a homeowner (Appellant-Elgohary) has filed a lawsuit against
the homeowner’s association (Lakes of Eldridge North Community Association,
Inc.), past and former volunteer directors on the association’s board, a property
management community (RealManage, LLC), and the lawyers representing them
(Walter Spears and Neil McLaurin)(collectively referred to as “Appellees”). In
light of the parties, claims, and cross-claims, the following summary is provided
regarding party identification for the convenience of the Court:
Party Referred to as:
Appellant/Cross-Appellee: Elgohary
Victor Elgohary
Appellee/Cross-Appellant: The Association
Lake of Eldridge North Community
Association, Inc.
Appellees: Collectively referred to as RealManage
RealManage, LLC
Christi Keller
Appellees: Collectively referred to as the
Darla Kitchen “Directors”
Don Byrnes
Michael Ecklund
Laura Vasallo Lee
John Kane
Julie Ann Bennett
Rick Hawthorne
Cara Davis
Jim Flanary
Jill Richardson
Appellees: Collectively referred to as Association’s
Walter Spears Counsel
Neil McLaurin
xv
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ISSUES FOR REVIEW
ISSUE 1: Whether the Trial Court Properly Granted Summary Judgment
Dismissing All of Appellant’s Individual and Derivative Claims
Against Appellees?
Sub-issue 1: Whether Appellant can challenge the sufficiency of notice after
he: (1) conceded actual receipt summary judgment motion and
notice of hearing; (2) agreed to resetting of submission date in
open court, and (3) participated in summary judgment
proceedings?
Sub-issue 2: Whether Appellees’ clarification that they “only seek traditional
summary judgment” on issues related to authority and
immunity constitutes a waiver of their no-evidence motion for
summary judgment in the absence of an express statement of
waiver?
Sub-issue 3:Whether a trial court abuses its discretion by denying a
continuance of summary judgment proceeding when the non-
movant fails to meet the evidentiary requirements of Rule 166a
regarding continuances?
Sub-issue 4: Whether Appellees’ summary judgment evidence established
the Association’s actions were authorized by the community’s
governing documents?
Sub-issue 5: Whether Appellees’ summary judgment affidavits were
sufficiently supported by controvertible facts and examples?
Sub-issue 6: Whether a sanctions motion asserted against a party’s counsel
constitutes a “cause of action” which requires adjudication
before final judgment?
Sub-issue 7: Whether a derivative claims can be asserted against a non-profit
organization under the Texas Business Organizations Code?
Sub-issue 8: Whether Appellees established that volunteer directors on a
homeowner’s association are protected by the Volunteer
Protection Act and/or Texas Business Organizations Code
§22.235 as a matter of law?
xvi
05267.183 / 1649190.1
ISSUE 2: Whether the Trial Court Properly Rendered Judgment on the
Association’s Declaratory Judgment Claims against Appellant?
Sub-issue 1: Whether the trial court abused its discretion when it refused to
abate the Association’s claims and join all homeowners in the
subdivision to the lawsuit?
Sub-issue 2: Whether the trial court properly determined that there was a
justiciable controversy regarding the LOEN’s covenants and
that the plain language of LOEN’s covenants established that:
(1) the Association could regulate its entry/exits gates; and (2)
the Association could place signs on LOEN property provided
that it the signs did not relate to construction, improvement,
alteration, or addition to the Lots?
ISSUE 3: Whether the Trial Court Abused its Discretion When it Determined
that Appellees were entitled to protection from Appellant’s discovery
requests?
ISSUE 4: Whether the Trial Court’s Award of Attorneys’ Fees in Favor of the
Association on its Declaratory Judgment Claims Constituted an Abuse
of Discretion?
xvii
05267.183 / 1649190.1
01-14-00216-CV
IN THE COURT OF APPEALS
FOR THE FIRST DISTRICT OF TEXAS
HOUSTON, TEXAS
VICTOR S. ELGOHARY
Appellant / Cross Appellee
V.
LAKES ON ELDRIDGE NORTH COMMUNITY ASSOCIATION, INC.;
REALMANAGE, LLC; DARLA KITCHEN; DON BYRNES; MICHAEL
ECKLUND; LAURA VASALLO LEE; JOHN KANE; JULIE ANN BENNETT;
RICK HAWTHORNE; CARA DAVIS; CHRISTI KELLER; JIM FLANARY;
JILL RICHARDSON; NEIL McLAURIN; WALTER SPEARS
Appellees,
V.
LAKES ON ELDRIDGE NORTH COMMUNITY ASSOCIATION, INC.
Cross Appellant
APPELLEES’ BRIEF
TO THE HONORABLE COURT OF APPEALS:
APPELLEES, Lakes on Eldridge North Community Association, Inc. (“the
Association”), RealManage, LLC and Christi Keller (collectively “RealManage”),
Darla Kitchen, Don Byrnes, Michael Ecklund, Laura Vasallo Lee, John Kane, Julie
Ann Bennett, Rick Hawthorne, Cara Davis, Jim Flanary, and Jill Richardson
(collectively the “Directors”), submit their Appellees’ Brief and request that this
Honorable Court: (1) affirm the trial court’s October 12, 2013 summary judgment
1
05267.183 / 1649190.1
order dismissing Elgohary’s claims in its entirety; and (2) affirm the March 13,
2014 judgment. By cross-appeal, the Association requested that this Honorable
Court reform the amount of the attorneys’ fees award as set forth in its previously
filed Cross-Appellant’s Brief. 1
Neil McLaurin and Walter Spears were never named as parties to the
underlying action or served with citation. Accordingly, the Association’s counsel
should not have been identified as parties to this appeal.
STATEMENT OF FACTS
The Lakes of Eldridge North is a Harris County subdivision (“LOEN”)
managed by Appellee, the Association. (CR.196-97.) The Association is a non-
profit homeowner’s association organized under the Texas Non-profit Corporation
Act that is authorized to “enforce and manage the Declaration of Covenants,
Conditions and Restrictions” (“LOEN’s Deed Restrictions”) applicable to the
Subdivision. (CR.239.) To assist with the enforcement of LOEN’s Deed
Restrictions, the Association retains the services of a property management
company, Appellee, RealManage. (CR.177.)
A. The Association’s board of directors addresses LOEN safety
concerns by regulating the use of an access gate and placing signs
on Association property.
1
http://www.search.txcourts.gov/SearchMedia.aspx?MediaVersionID=01d01a75-14ee-4b3f-
8913-30f53c3fce11&coa=coa01&DT=Brief&MediaID=9def6c7f-e277-41d7-af74-
25908ce769ec
2
05267.183 / 1649190.1
LOEN is a gated community with two entry gates: (1) a primary, guarded
entry gate at Tanner Road; and (2) an unguarded entry gate at West Little York.
(CR.105, 156; see e.g. App.7) After learning of safety concerns of other LOEN
residents, the acting Directors 2 on the Association’s board “decided to restrict
access through the access gate located West Little York between 11:00 pm and 5
am. (CR.246, 249, 254, 257, 268, 270; see e.g. App.7) Specifically, community
members had raised concerns regarding tailgating at the security gate and security
issues regarding the property in general. (Id.) The issue was decided by a vote of
the acting board in accordance with LOEN’s Deed Restrictions and other
governing documents. (Id.) The Association also decided to place signs in the
neighborhood to direct visitor traffic. (Id.)
After changing the access schedule, the Association continued to investigate
whether the changes benefited the community. (Id.) Several town hall meetings
were held so that any resident could comment on the gate access issues or any
other community management issues. (CR.246; App.7.). A survey was conducted
to ascertain whether the residents preferred restricting late night access through the
2
The record reflects that Appellees, Kitchens, Byrnes, Vassallo-Lee, Kane, Flanary, and
Richardson were active board members that took part in decision to regulate the gate. (CR.246,
249, 254, 257, 268, 270; App.7) Appellees, Davis, Hawthorne, and Bennett started their terms on
the Association board after these actions were taken. (CR.260, 263, 265.) Additionally,
Appellee, Ecklund was not on the board at the time these decision were made (CR.251.)
Appellee, Flanary did not participate in the decision to place signs. (CR.267; see also CR.175,
n.1.)
3
05267.183 / 1649190.1
West Little York access gate. (CR.249; App.7.) Additionally, the Directors
consulted with the Harris County Fire Marshal and the CyFair Volunteer Fire
Department to ensure that emergency vehicles could utilize the gates during the
restricted hours. (Id.; App.7.) They also consulted a real estate expert to make
certain the changes did not violate any city ordinances or create easement issues.
(Id.; App.7) At all times, the Directors followed the procedures set forth in the
Covenants and Subdivision By-laws regarding the management of the property.
(CR.246; CR.249; CR.254; CR.257; CR.268; CR.270; App.7.)
B. Elgohary initiates this lawsuit against the Association, the
Directors, and RealManage, and the Association files
counterclaims under the Declaratory Judgment Act.
Appellant, Elgohary owns a single family home located within the LOEN.
(CR.101.) Elgohary disputed the Association’s actions with regard to the access
gates and addition of traffic signs as well as its use of LOEN funds. (CR.103-105;
CR.107-109; CR.156-157.) After demanding the Association’s records, Elgohary
was given the opportunity to review the records regarding his dispute. (CR.595.)
He subsequently filed this lawsuit asserting: (1) individual claims of trespass
to real property and breach of contract, and (2) “derivative” claims including
breach of fiduciary duty, negligence, conversion, Theft Liability Act, aiding and
abetting, and piercing the corporate veil. (CR.109-112.) These claims allegedly
arose from his belief that: (1) the Association did not have authority to restrict the
4
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use of the access gates; (2) the Association did not have authority to place any
signs anywhere on community property; and (3) the Association, the Directors,
and/or RealManage had misappropriated and/or mismanaged LOEN’s funds.
(CR.102-109.) Elgohary later amended his petition to include a sanctions motion
against the Association’s counsel, Neil McLaurin and Walter Spears. (CR.113.) He
did not assert any causes of action against the Association’s counsel, name them as
parties, or serve them with citations. Accordingly, the Association’s counsel were
never added as parties to the case.
Due to the ongoing disputes between the Association and Elgohary beyond
the scope of Elgohary’s affirmative claims, the Association filed counterclaims
under the Texas Declaratory Judgment Act to affirm its authority under the deed
restrictions and secure a final resolution between the parties. (CR.154-169.)
Specifically, the Association asked the trial court to declare that, pursuant to the
LOEN’s Deed Restrictions:
1. The Association is permitted to regulate the use of the West
Little York access gate. (CR.158.)
2. The Association is not prohibited from placing signs on
Subdivision property. (CR.159.)
C. The trial court grants Appellees’ summary judgment and
dismisses all of Elgohary’s claims.
On August 21, 2013, Appellees filed a hybrid no-evidence and traditional
motion for summary judgment. (CR.174-271.) Appellees’ no-evidence motion
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challenged each of Elgohary’s causes of action against them. (CR.189-194.)
Additionally, Appellees presented evidence to support their traditional summary
judgment arguments that: (1) Elgohary is not permitted to sue derivatively; (2) the
Directors acted within the scope of their authority pursuant to the Subdivision’s
governing documents and Texas Property Code §202.004; and (3) the Directors are
volunteers that are immune from liability under the Volunteer Protection Act and
Texas Business Organizations Code §22.235. (CR.178-179; CR.196-271.)
That same day, Appellees also filed objections and a motion for protection
from Elgohary’s voluminous discovery requests to each of the Appellees. (CR.560;
CR.272-510.) Elgohary had served Appellees with approximately 590 separate
discovery requests related to a wide variety of issues. (CR.283-510.) Among its
objections, Appellees requested that the trial court stay their discovery responses
until it had ruled upon on its summary judgment motions. (CR.277.)
Both Appellees’ summary judgment motion and motion for protection were
served on Elgohary by e-mail pursuant to a prior agreement between the parties.
(CR.174; CR.195; CR.560; CR.569.) Despite both motions being emailed the same
day, Elgohary claimed to receive the motion for protection on August 21, 2013
(CR.560) and the motion for summary judgment “five to ten days” later “at most.”
(3-RR at12:15-20.) Elgohary timely responded to both motions prior to the oral
hearing on both motions held on September 16, 2014. (3-RR; CR.532-561.)
6
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At the oral hearing, Elgohary complained that he had not received proper
notice of the summary judgment motion. (3-RR.10:25-16:15.) The trial court
verified that Elgohary had received actual service of notice and the motion itself.
(Id. at 12:15-20.) The trial court then asked both parties if resetting the summary
judgment motion for twenty one days from the original hearing date would be
sufficient. (Id. at 13:16-19.) He further stated that he would reset the oral hearing
on Appellee’s motion for protection after the summary judgment submission date.
(Id. at 14:21-15:12). No party objected to the court’s scheduling. (3-RR.10:25-
16:15.)
In the time between the original hearing and the re-set submission date,
Elgohary filed an amended summary judgment response supported only by his own
affidavit. (CR.578-599.)
After considering the summary judgment motions by submission, the trial
court granted the traditional and no-evidence summary judgment motions in their
entirety. (CR.606.)
D. The trial court denies Elgohary’s request to join all LOEN
property owners, and grants the Association’s motion for
protection.
Elgohary first raised the issue of joinder in special exceptions (CR.42-43), in
which he indicated that the proper parties to the Association’s counterclaim would
be:
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all of the homeowners in the Lakes on Eldridge North
subdivision that are bound by these declarations of
covenants, conditions and restrictions. (CR.43.)
The trial court overruled Elgohary’s special exception on this issue on June 10,
2013 after a hearing on the same. (CR 171.)
Elgohary next raised the issue of joinder in his Plea in Abatement and
Special Exceptions. (CR 611-616.) In neither of his original special exceptions, his
plea to the jurisdiction nor his second round of special exceptions did Elgohary ask
that the City of Houston or any other municipality be joined, which he now raises
on appeal. The Court denied Elgohary’s plea in abatement and overruled his
second special exception on the joinder issue on December 9, 2013 after a hearing
on same. (CR 617.)
Additionally, as discussed above, Appellees filed global objections and
motion for protection from Elgohary’s preliminary 590 discovery requests.
(CR.272-509.) After Elgohary’s claims were dismissed, the Association filed
another motion for protection in response to notice of deposition and continued
overbroad requests for discovery. (CR.633-706.) Following a hearing on the
motions, the trial court granted the Association’s motion for protection on January
27, 2014. (CR.879-80.)
E. Following a bench trial on the Association’s declaratory judgment
claims, the trial court rules in favor of the Association and awards
it attorney’s fees.
8
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The Association’s counterclaims under the Declaratory Judgment Act were
tried to the court on March 13, 2014. After presenting its case regarding the deed
restrictions at issue in its counterclaims, the Association introduced the expert
testimony of attorney Neil Hugh McLaurin, IV (“McLaurin”) in support of its
claim for attorney’s fees (RR6, p. 66, line 10–p. 85, line 10; APP 3). The
Association also introduced into evidence invoices relating to the requested
attorney’s fees (7-RR, Exhibit 14 at p. 68–136.)
McLaurin testified in detail as to the work performed by the Association’s
attorneys in prosecuting its claims against Elgohary from February 2013 through
trial in March 2014 (6-RR.69-77.) He clarified that his testimony only related to
the fees incurred relating to the Association’s counterclaim, as opposed to other
claims in the litigation. (Id. at 69-76.) McLaurin testified as to the factors he
considered in forming an opinion on what amount of fees would be reasonable,
necessary, equitable and just relating to the Association’s counterclaim, as well as
a range of amounts for said attorney’s fees. (Id. at 77–78). McLaurin stated that in
his opinion, the majority of attorney’s fees incurred by the Association were a
result of actions by Elgohary. (Id. at 78-79). In summary, McLaurin opined that
the total attorney’s fees incurred would be $42,450.00. (Id. at 77:4-9.)
Elgohary did not present any testimony to the trial court as to what amount
of fees would be reasonable, necessary, equitable and/or just. He also did not
9
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present any evidence or testimony whatsoever to rebut the expert testimony of
McLaurin. (Id. at 85:18-23.) The trial court stated the following with regard to the
award of attorney’s fees through trial:
Now, I'm going to arbitrarily reduce the award for attorney's fees in
this case to $20,000. If you’re unhappy with that reduction, you can
certainly take that up on appeal. If there's appeal of this matter, you
can certainly take up my completely arbitrary reduction from your
$42,000 request, which is probably and, in fact, I do find is
completely reasonable and necessary attorney's fees, but I’m going to
arbitrarily strike it down to $20,000. (Id. at 94:6-15.)
The trial court rendered judgment in favor of the Association, and issued the
following declarations:
1. …the Association is permitted to regulate the use of the West
Little York entry/exit gate.
2. …the Association is not prohibited from placing signs on
Associations property, so long as said signs do not relate to the
construction, improvement, alteration, or addition to Lots
within the Subdivision.
The final judgment entered in this case on March 13, 2014 awarded $20,000 for
attorney’s fees to LOEN through trial (App.2.)
SUMMARY OF THE ARGUMENT
This case arises from ongoing disputes between a homeowner(Appellant-
Elgohary) and his homeowner’s association (Appellee-the Association) regarding
certain actions taken by the homeowner’s association. Specifically, the homeowner
disputes the following actions of the Association: (1) the decision to restrict late-
10
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night access at one of the community’s two gates; (2) the decision to place signs on
Association property directing visitor traffic; and (3) unspecified expenditures and
management of the community’s funds. Based on these complaints, the
homeowner filed individual and derivative claims against the Association, its past
and present board of directors and its property management company. Due to the
ongoing nature of the disputes with the homeowner regarding the gates and signs,
the Association filed counterclaims seeking a declaration regarding its authority to
regulate the gates and place signs under the applicable community restrictive
covenants.
The appeal raises a combination of procedural issues and substantive issues
related to the dismissal of the Appellant’s claims by summary judgment and the
rendering of declaratory judgment and award of attorneys’ fees in favor of the
Association.
Summary judgment issues: In response to Appellees’ hybrid no-evidence
and traditional motion for summary judgment on his claims, Elgohary failed to
present competent summary judgment to raise a fact issue regarding any of his
claims. Instead, he sought to avoid summary judgment on technical and
procedural grounds. The trial court properly granted summary judgment after
determining that: (1) Elgohary had received sufficient notice of the motion and
submission; (2) Elgohary had adequate time to secure discovery; (3) Appellees’
11
05267.183 / 1649190.1
summary judgment evidence, including their affidavits, constituted competent
summary judgment evidence, and (4) the summary judgment evidence warranted
dismissal of all of Elgohary’s claims as a matter of law.
Declaratory judgment issues: At a bench trial regarding the interpretation of
the Association’s restrictive covenants, the trial court properly determined that the
Association’s counterclaims were separate and distinguishable from Elgohary’s
dismissed claims and that the counterclaims involved a justiciable controversy
existed between the parties. After hearing the uncontroverted testimony of the
Association’s counsel regarding attorneys’ fees, the trial court, in its discretion,
awarded attorneys’ fees to the Association. Prior to trial, the trial court also
determined that the Association’s counterclaims did not require the joinder of all
homeowners within the community in accordance with well-settled law regarding
the joinder of parties. Specifically, the court determined that the declaratory
judgment sought by the Association would not adjudicate new rights related to
other property owners, but rather reaffirm the Association’s pre-lawsuit position
that it had authority to regulate community gates and place signs on community
property. Additionally, the court’s decision to preclude Elgohary’s voluminous
discovery in a declaratory judgment case that required only the review and
interpretation of deed restrictions is consistent with the requirements of the Texas
Rules of Civil Procedure.
12
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On appeal, Elgohary fails to raise any issue or point to any evidence in the
record to warrant reversal of either of the trial court’s judgments. Accordingly, the
trial court’s judgment should be affirmed.
ARGUMENT
I. THE TRIAL COURT PROPERLY DISMISSED ALL OF ELGOHARY’S CLAIMS
BY SUMMARY JUDGMENT.
On October 12, 2013, the trial court granted the Association, RealManage,
and the Directors’ traditional and no-evidence summary judgment motion and
dismissed all of Elgohary’s individual and derivative claims with prejudice.
(CR.606.) The order reflected that it found the summary judgment motion to be
with merit in its entirety and did not specify a particular grounds for summary
judgment. (Id.)
When a trial court’s summary judgment order does not specify the ground
upon which it was rendered, the appellate court must affirm the summary judgment
if any of the grounds stated in the motion is meritorious. Western Invs., Inc. v.
Urena, 162 S.W.3d 547, 550 (Tex. 2005). Accordingly, a party challenging such
an order must negate all possible grounds upon which summary judgment could
have been granted to prevail on appeal. Shih v. Tamisiea, 306 S.W.3d 939, 944
(Tex.App—Dallas 2010, no pet.)
A. Elgohary’s Acknowledged Receipt of the Notice of Hearing and
Motion for Summary Judgment Establishes that the Notice
Requirements of Rules 21a and 166a were Satisfied.
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05267.183 / 1649190.1
The purpose of the service requirements under Rule 21a and 166a are “to
achieve actual notice and to set up presumptions to use in disputes about whether
notice was achieved.” Goforth v. Bradshaw, 296 S.W.3d 849, 854 (Tex.App.—
Texarkana 2009, no pet.)(holding that timely service by regular mail fulfilled 21a
requirements). Accordingly, courts have repeatedly held that proof of actual notice
and opportunity to respond will establish compliance with Rule 21a. Id.; see also
Netherland v. Wittner, 662 S.W.2d 786, 787 (Tex.App.—Houston [14th Dist.]
1983, no writ)(holding that an appellant’s admission of actual receipt of trial
setting and full participation in trial fulfill Rule 21a requirements); Brown v.
Capital Bank, N.A., 703 S.W.2d 231, 233 (Tex.App—Houston [14th Dist.] 1985,
no writ)(holding that party could not complain about insufficient notice of hearing
re-set on multiple occasions and by trial court.). Further, “under certain
circumstances, a party's actions or non-action can constitute a waiver of procedural
due process rights” regarding service of summary judgment. Gonzales v. Surplus
Ins. Servs., 863 S.W.2d 96, 101 (Tex.App.—Beaumont 1993, no pet.)
The record reflects that Elgohary received the summary judgment motion
and notice of the submission date regarding his causes of action against Appellees
more than twenty-one (21) days prior to the submission date and the court’s order.
(3-RR.10-16.) The summary judgment motion was filed and served on Elgohary
on August 21, 2013, in accordance with Elgohary’s agreement to receive service
14
05267.183 / 1649190.1
by e-mail. (CR.174, 195, 569.) Elgohary acknowledged receiving the summary
judgment in his timely filed response. (CR.550 at ¶13)(stating that “[t]his summary
judgment motion was only sent to me by email.”).
Appellees provided Elgohary with twenty-six days notice of the first oral
hearing on the motion. (CR.174;195,570, 3-RR.1.) During the preliminary oral
hearing on the summary judgment motion, Elgohary objected based on insufficient
service. (3-RR.10-16.) When directly asked by the trial court if he conceded
receipt of the motion, he stated “I got it by e-mail.” (Id. at 12:4-7.) He stated that
he received “actual notice of when I actually read this was probably later that
week, probably five to ten days at the most after it was in my inbox.” (Id. at 12:15-
20.)
When the court asked if a twenty-one day re-setting of the summary
judgment motion would be sufficient, Elgohary did not oppose or object. (Id. at
12:14-16:5.) Elgohary then filed a timely amended summary judgment response to
the re-set hearing date. (CR.578.) Accordingly, Elgohary had forty-seven days
notice from the date that the motion was sent. Assuming that Elgohary “received”
the motion ten days after the e-mail was sent, the record shows that he had thirty-
seven days notice of the October 7, 2013 submission date that was set by the trial
court.
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The record also reflects that Elgohary was selective as to which motions he
accepted by email. Appellees served a motion for protection contemporaneously
with their summary judgment motion. (CR.195; CR.549.) In an affidavit
supporting his summary judgment response, Elgohary stated that he received the
motion for protection “on August 21, 2013 by email.” (CR.549.) In the same
affidavit, he swears that he received the summary judgment by email. (CR.550).
Elgohary should not be permitted to selectively receive service of some documents
by e-mail after proposing that the parties accept such service methods.
After receiving actual notice of the submission date and fully and timely
participating in the summary judgment proceedings, Elgohary cannot now
complain that he did not have sufficient notice under the Rules. In light of
Elgohary’s concession that he received actual notice of the summary judgment
motion, his claims on appeal regarding insufficient service should be rejected.
B. Elgohary Failed to Present Sufficient Summary Judgment Evidence
in Response to Appellees’ No-Evidence Motion and Therefore the
Trial Court’s Summary Judgment Was Proper.
When a hybrid motion for traditional and no-evidence summary judgment is
filed, the court should consider the no-evidence motion for summary judgment
first. Pulido v. Gonzalez, 2013 Tex.App. LEXIS 11096 *3, 2013 WL 4680415 *1
(Tex. App—Houston [1st Dist.] 2013, no pet.)(citing Ford Motor Co. v. Ridgway,
135 S.W.3d 598, 816 (Tex. 2004)). If the movant presented a proper no-evidence
16
05267.183 / 1649190.1
motion for summary judgment and the non-movant failed to produce more than a
scintilla of evidence to support its claims, there is no need to analyze the traditional
motion for summary judgment. Id.
On appeal, Elgohary only challenges the no-evidence summary judgment on
the grounds that: (1) the motion was waived; and (2) he did not have adequate time
for discovery. See Appellant’s Brief.15-20. He does not argue that he presented
sufficient summary judgment evidence to raise a fact issue in response to
Appellees’ no-evidence summary judgment motion. (Id.) Similarly, Elgohary’s
summary judgment response does not respond to any of Appellees’ no-evidence
arguments or present evidence to support the elements of his claims. (CR.578-99.)
Appellees’ no-evidence motion addressed each and every claim asserted by
Elgohary in his live pleading. (Compare CR.109-113 to CR.189-194.)
Accordingly, if Elgohary does not prevail on his waiver and continuance
arguments, the trial court’s summary judgment order should be affirmed based on
Appellees’ no-evidence motion alone.
1. Appellees’ did not waive their no-evidence summary judgment
motions.
Elgohary’s first issue on appeal confuses both procedural rules and the facts
of the case. Elgohary attempts to argue that the Association waived its no-
evidence arguments by confusing two distinct procedural issues: (1) argument
waiver and (2) judicial admission that results in claim waiver. Argument waiver
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05267.183 / 1649190.1
occurs when a party fails to expressly present an argument to the trial court. Priddy
v. Rawson, 282 S.W.3d 588, 597 (Tex. App.—Houston [14th Dist.] 2009, pet.
denied). Claim waiver by judicial admission occurs when a party makes a
statement that dispenses with the production of evidence regarding the substantive
elements of a party’s claims or defenses. Bliss & Glennon Inc. v. Ashley, 420
S.W.3d 379, 393 (Tex. App.—Houston [1st Dist.] 2014, no pet.) In this case,
Appellees’ did not waive any summary judgment arguments or judicially admit
any facts contrary to their claims and/or defenses.
Elgohary further convolutes the issue by misinterpreting a clarification in
Appellees’ summary judgment reply with a “judicial admission” of waiver. In his
summary judgment response, Elgohary argued that Appellees’ summary judgment
should be denied because “Defendants have not negated any of Plaintiff’s elements
on each cause of action” (CR.585.)
To clarify its traditional summary judgment argument, Appellees’ reply to
Elgohary’s summary judgment response stated:
Defendants seek only a traditional motion for summary judgment on
their arguments and authorities concerning Association governing
documents and statutes which provide immunity to them. (CR.601.)
Appellees’ reply point does not mention any of the no evidence arguments which
are expressly presented in the Association’s summary judgment motion. (CR.189-
194.) It does not indicate any intent to abandon or waive its no-evidence
18
05267.183 / 1649190.1
arguments. (Id.) Indeed, the title of Appellees’ reply motion—“Defendants’ Reply
to Plaintiff’s Response to Defendants’ Traditional and No Evidence Motion for
Summary Judgment—reflects that Appellees’ maintained their no-evidence
arguments throughout the summary judgment proceedings. (CR.600.)
Additionally, Appellees’ clarification statement was made after Elgohary’s
summary judgment response to Appellees’ no-evidence motion had been filed.
(CR.600.) The trial court set Appellees’ traditional and no-evidence summary
judgment motion for submission on October 7, 2013. (3-RR.13:23-15:10.) His
deadline to present a scintilla of evidence supporting his claims was September 30,
2013. Tex. R. Civ. P. 166a. Elgohary failed to do so, and therefore the trial
court’s order granting Appellees’ summary judgment on no-evidence grounds
should be affirmed.
2. Elgohary failed to establish that he needed additional time for
discovery as required by Rule 166a, and therefore, the trial
court did not abuse its discretion by granting the no evidence
motion for summary judgment.
A party arguing that it has not had adequate time to conduct discovery prior
to a summary judgment deadline must file an affidavit explaining the need for
further discovery or verified motion for continuance. Tex. R. Civ. P. 166a; Doe v.
Roman Catholic Archdiocese, 362 S.W.3d 803, 809 (Tex.App.—Houston [14th
Dist.] 2012, no pet.)(citing Joe v. Two Thirty Nine J.V., 145 S.W.3d 150, 161 (Tex.
2004)). The affidavit must specifically explain the evidence needed and why the
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05267.183 / 1649190.1
continuance is necessary. Doe, 362 S.W.3d at 809. “[C]onclusory allegations are
insufficient.” Id.
A trial court’s ruling on a motion for continuance under Rule 166a is
reviewed for abuse of discretion. Joe, 145 S.W.3d at 161. A reviewing court may
consider the following non-exclusive factors when determining whether a trial
court’s denial of a continuance constituted an abuse of discretion: (1) the length of
time the case has been on file; (2) the materiality and the purpose of the discovery
sought; and (3) the diligence exercised by the party seeking the continuance to
obtain the discovery sought. Id.
In Doe, the court of appeals affirmed a trial court’s denial of a motion to
continue summary judgment proceedings despite the non-movant’s sworn
testimony. 362 S.W.3d at 812. The non-movant’s affidavit recited the following:
(1) the case had been on file less than four months; (2) additional time was needed
to conduct full discovery; (3) the discovery would assist non-movant with proving
that limitations had tolled; and (4) the particular documents and depositions that he
needed. Id. The appellate court noted that the non-movant did not describe the
relevant facts that he expected to discover or how the facts would help him defeat
the summary judgment motion. Id. The court concluded that “[b]ecause Doe failed
to explain how the additional discovery he sought was in any way material, the trial
court did not abuse its discretion in denying the motion for continuance.” Id.
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Similarly, in Joe, the Texas Supreme Court determined that the trial court
did not abuse its discretion when it granted a no-evidence summary judgment that
had been filed two months after the lawsuit was first initiated. Joe, 145 S.W.3d at
162. The non-movant’s motion for continuance generally alleged that it needed
additional discovery and depositions regarding elements of the movant’s
affirmative defense, but failed to set forth the materiality of the evidence to the
summary judgment motion. Id. at 161. The court noted that “none of the discovery
described could have raised a fact issue” and therefore the trial court did not abuse
its discretion. Id at 162.
At the time that summary judgment was rendered, this lawsuit had been on
file for nearly seven months. (See CR.9 and CR.606.) In response to the summary
judgment motion, Elgohary did not file a verified motion for continuance
explaining the need for a continuance. Rather, in his summary judgment response,
he summarily argued that the case had not been on file long and that he had not
received responses to his discovery requests. (CR.589-90.) Neither his response
nor his summary judgment affidavit identified which of his 590 discovery requests
were material to the summary judgment motions or explained how the information
would raise a fact issue regarding his claims. (Id.) He did not identify individuals
that he needed to depose or the information he expected to elicit from them. (Id.)
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He also failed to explain why he could not present facts by affidavit to support his
opposition as required by Rule 166a(g).
Additionally, Elgohary did not object to the trial court’s re-setting of the
summary judgment proceedings prior to its hearing on Appellees’ discovery
objections and motion for protection. (3-RR.13:16-16:6.) The trial court made
clear that it was setting the summary judgment for submission prior to the oral
hearing on the motion for protection regarding the Elgohary’s discovery requests.
(Id.) As he stood before the court, Elgohary did not suggest that his discovery
issues needed to be resolved prior the court’s consideration of the summary
judgment motion.
The fact that a non-movant tried to obtain discovery prior to summary
judgment is not enough to warrant a continuance. Joe, 145 S.W.3d at 162. Further,
the time a case has been on file, alone, does not establish that a trial court abused
its discretion by denying a continuance. Doe, 362 S.W.3d at 813. The record
reflects that Elgohary failed to meet his burden Rule 166a to establish the need for
a continuance, and therefore the trial court did not abuse its discretion by granting
Appellees’ no-evidence summary judgment.
3. The trial court properly dismissed the claims when Elgohary
failed to raise a fact issue in response to Appellees’ no-evidence
summary judgment motion.
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Even if this Court finds that Elgohary was authorized to bring representative
claims under Tex. Bus. Org. Code §20.002, Elgohary’s claims should still be
dismissed based on his failure to meet his evidentiary burden in response to
Appellees’ no-evidence summary judgment motion. (Compare CR.189-194 to
CR.594-599.) Elgohary presented only his own affidavit to support his summary
judgment response which fails to provide any summary judgment evidence
supporting his causes of action. (CR.579-581; CR.594-599.) As Elgohary points
outs, affidavits based exclusively on conclusory legal or factual statements are not
competent summary judgment evidence. Rizkallah v. Conner, 952 S.W.2d 580,
587 (Tex. App.—Houston [1st Dist.] 1997).
In his affidavit, Elgohary summarily claims that he reviewed some of the
Association’s records and found them to be insufficient. (CR.595-596.) His
conclusory remarks regarding “missing minutes” and payments to unidentified
board members, family members, and “selected neighbors” are unsupported by any
specific examples or facts reflecting any such action. (Id.) Further, Elgohary does
not controvert the facts stated in the affidavits of the individual Directors regarding
the actions taken to ensure compliance with the by-laws, deed restrictions, local
ordinances and statutes. (Id.) Accordingly, the summary judgment evidence fails
to raise an issue of material fact regarding any alleged ultra vires act or cause of
action. Indeed, neither his summary judgment response nor his pleading articulate
23
05267.183 / 1649190.1
any specific act that should be construed as “ultra vires.” (CR.109-13 and CR.579-
92.)
C. The Trial Court Properly Granted Appellees’ Traditional Motion for
Summary Judgment on Elgohary’s Claims Against the Association,
and its Directors.
A defendant can establish its right to a traditional summary judgment by
negating at least on element of the plaintiff’s claim. Compton v. Calabria, 811
S.W.2d 945, 949 (Tex. App.—Dallas 1991, no pet.). Once the movant has
established a right to summary judgment, the burden shifts to the non-movant.
Long v. State Farm Fire & Casualty Co., 828 S.W.2d 125, 127 (Tex. App.—
Houston [1st Dist.] 1992, no pet.).
Elgohary’s argument regarding “unproven and unpled affirmative defenses”
misconstrues Appellees’ traditional summary judgment motion. Each of
Elgohary’s individual and derivative claims required a finding that the either the
Association, the Directors, or RealManage acted in a manner that was not
authorized by the applicable restrictive convenants, by-laws, and/or articles of
incorporation (also referred to as “governing documents”). (CR.109-11.) For
example, authorized actions cannot constitute a breach of contract or fiduciary
duty. (Id.) Similarly, claims that property and funds had been converted or stolen
from the Association fail if the deed restrictions authorize the Directors and/or
RealManage to manage and/or utilize the funds at issue in the manner described.
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(Id.) The following chart summarizes the elements negated by Appellees’ proof
that the Association, Directors, and RealManage had authority to engage in the
actions at issue:
Elgohary’s Claim Element Negated by Appellees’ Summary
Judgment Evidence of Authority
Breach of fiduciary duty Cannot establish that there was a breach of
fiduciary duty if acting within authority provided
by governing documents. (CR.189)
Negligence Cannot establish that there was a breach of duty
of care if acting within authority provided by
governing documents. (CR.190.)
Conversion Cannot establish Appellees wrongfully exercised
dominion or control over personal property if
authorized to do so by the governing documents.
(CR.190.)
Theft Liability Act Cannot establish that Appellees unlawfully stole
property and services if Appellees were
authorized to use property and services under the
governing documents. (CR.191.)
Conspiracy Cannot establish that Appellees engaged in
combined efforts for an unlawful purposes if
their actions were authorized by the governing
documents. (CR.191.)
Aiding and Abetting Cannot establish that Appellees committed a tort
or assisted in the commission of a tort if all
actions were authorized by the governing
documents. (CR.192.)
Piercing the Corporate Veil Cannot establish that the Association was formed
to commit fraud or evade legal obligations if the
actions of the Association were authorized by the
governing documents. (CR.192.)
Trespass Cannot establish that Appellees’ physically,
intentionally, and voluntarily interfered with
Elgohary’s right to possess real property if
alleged “interference” was authorized by
governing documents. (CR.193.)
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Breach of Contract Cannot establish a breach of any contract if the
actions at issue were authorized by the alleged
contract. (CR.194.)
Accordingly, elements in each of Elgohary’s claims are negated by the summary
judgment evidence proving Appellees’ authority to engage in the actions at issue as
a matter of law. (CR.182-189.)
1. The summary judgment evidence establishes that the actions of
the Association, the Directors and RealManage were
authorized by: (a) the covenants, by-laws, and articles of
incorporation; and (b) Texas Property Code §202.004.
In Issues (B) and (D) of their summary judgment motion, Appellees argued
that the actions of the Association, the Directors and RealManage were authorized,
as a matter of law, by: (a) the Covenants, By-laws and Article of Incorporation and
(b) Texas Property Code §202.004. (CR.182-189.) In summary, LOEN’s
Covenants, By-Laws and Articles of Incorporation a concern real property and
give the Directors and the Association discretionary authority to take the actions at
issue in this lawsuit. Uptegraph v. Sandalwood Civic Club, 312 S.W.3d 918, 925
(Tex. App.—Houston [1st Dist.] 2010, no pet.);(CR.196-243.) Texas Property
Code §202.004 creates statutory presumption that any of these actions taken
pursuant to this discretionary authority are reasonable. This presumption can only
be rebutted by a preponderance of evidence that the actions were “arbitrary,
capricious, or discriminatory.” Id. at 932-33.
26
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A court reviews restrictive covenants subject to the general rules of contract
construction. Uptegraph, 312 S.W.3d at 925. The primary duty of the court is to
ascertain the drafter’s intent by examining the covenants as a whole in light of the
circumstances when the covenant was made. Id. Although the parties in this case
do not argue that the restrictive covenants at issue are ambiguous, the trial court
decides whether an ambiguity exists. Id. A disagreement over the interpretation of
a restrictive covenant does not render the covenant ambiguous. Id.at 926.
Appellate courts review a lower court’s interpretation of a restrictive covenant de
novo. Id. at 925.
a. The uncontroverted summary judgment evidence
establishes that the Association, the Directors, and
RealManage were authorized to manage the use of the
community access gates.
In his petition, Elgohary complains that the Directors “fundamentally
changed” the operation of the community’s access gate “located on the northern
portion” of LOEN’s boundaries, and these fundamental changes constituted a
trespass of his individual property rights and breach of contract. (CR.109-110.) In
order to raise a fact issue regarding the issues of trespass and breach, however,
Elgohary had the burden to establish that the actions were not authorized.
The following provisions are relate to the authority of the Association to
control and manage the access gates in the community:
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ARTICLE I
GENERAL
Section 1. Definitions. The following words, when used
in this Declaration, unless the context shall prohibit, shall
have the following meanings:
b. “Association” shall mean and refer to The Lakes on
Eldridge North Community Association, Inc., a non-profit
corporation, which will have the power, duty and
responsibility of maintaining and administering the
Common Areas, Common Facilities, Common
Personalty, Detention Areas and all Landscaping in the
Common Areas, and administering and enforcing these
covenants, conditions and restrictions and collecting
and disbursing the assessments and charges hereinafter
prescribed. (App.4.)
…
d. “Common Areas” shall mean and refer to areas of land,
owne, leased or used by the Association, and/or easement
areas for walls or fences, lakes/detention areas,
entryways, access or walkways, recreational facilities,
and other purposes benefitting the Members, including
improvements and landscaping located thereon, for the
common use, enjoyment and benefit of the Members of
the Association. (App.4.)(Emphasis added).
Further Article VIII, Section 3(a) of the Covenants provides that it shall be
“[t]he right of the Association to prescribe rules and regulations for the use,
enjoyment, and maintenance of the Common Areas.” (App.4.)
LOEN’s By-laws vests the Directors with authority to manage “the
Association” stating specifically that “[t]he property, business and affairs of the
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Association shall be managed by the Board of Directors who may exercise all
such powers of the Association.” (App.5)(emphasis added.) Further:
[t]he Directors shall have all of the powers, authority and duties
of the Association existing under the Act, the Restrictions and
these By-Laws, which shall be exercised exclusively by the Board, its
agents, contractors or employees, subject only to approval by
Members when such is specifically required by law, the Restrictions
or these By-Laws.” (App.5)(emphasis added.)
LOEN’s Articles of Incorporation state that LOEN is:
a. (ii) to provide the management, maintenance, preservation
and architectural control of Subdivision.
b. Generally:
(i) to promote the health, safety and welfare of the owners
of the Subdivision;
(ii) to exercise all the powers and privileges and to perform
all the duties and obligations of the Association as set
forth in the Restrictions and the By-laws of the
Association. (App.6.)
These provisions authorize the Association and the Directors to make decisions
and changes regarding the management of the property, including but not limited
to managing the entryways and access gates to the community. (App.4; App.5;
App.6.)
The affidavits of the individual Directors establish that they decided to
restrict late night access to the community through the West Little York entry gate
as a result of safety concerns and comments from members of the community.
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(CR.246, 249, 254, 257, 268, 270; see e.g. App.7.) Prior to initiating the proposed
changes, the Directors discussed whether restricting the gates would benefit the
community, relieve tailgating issues at the gates, and protect and promote the
welfare of the community members. (Id.) Additionally, the Directors surveyed the
community and held town hall meetings on two occasions to determine the
community amenability to the changes. (Id.) The Directors consulted with the
Harris County Fire Marshal and the CyFair Volunteer Fire Department to ensure
that emergency vehicles would still have access during non-operational hours. (Id.)
The Directors also contacted a real estate expert to verify that the restricted access
would not violate any city ordinances. (Id.)
Elgohary’s summary judgment response and affidavit fail to controvert any
of the facts established by the Directors’ affidavits. (App.8.) He does not deny or
dispute that the Association and its Directors investigated multiple issues related to
the access gates including community needs and opinions, access for emergency
vehicles, the violation of city ordinances, and other safety concerns. (Id.) His
summary judgment response also fails to raise fact issue regarding any purported
right or easement of unrestricted access through the gate at issue. (Id.)
Additionally, Elgohary did not object to or dispute the content of the governing
documents as reflected in Appellees’ summary judgment evidence or claim that
they were ambiguous. (CR.196-245.)
30
05267.183 / 1649190.1
Further, Texas Property Code §202.004 creates a presumption that
Appellees’ actions are reasonable in the absence of any evidence that the Directors
acted in a manner that was arbitrary, discriminatory and/or capricious. Appellees’
summary judgment evidence affirms this presumption of reasonableness.
(CR.245-271; see e.g. App.7.); alternatively, Elgohary’s summary judgment
evidence fails to present even a scintilla of evidence that their actions were
arbitrary, discriminatory or capricious. (App.8.)
b. The uncontroverted summary judgment evidence
establishes that Appellees’ placement of signs in the
community did not violate the restrictive covenants.
Elgohary’s petition also included factual allegations regarding the
Association’s placement of signs in the community. (CR.104.) It is unclear,
however, which causes of action, if any, relate to these allegations. (CR.109-116.)
To the extent that his complaints regarding sign placement form the basis of any
cause of action, the summary judgment evidence establishes that the placement of
the signs at issue were authorized as a matter of law.
The sign dispute arises from the interpretation of the following provision
found in Article V of LOEN’s Covenants:
Section 1. Covenants Applicable. The following shall be applicable
to any and all construction, improvement, alteration, or addition to
the Lots.
b. No sign, including political, advertisement, billboard or advertising
structure of any kind shall be displayed, maintained or placed in the
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05267.183 / 1649190.1
public view on or from any part of the Property or on any Lot, except
signs temporarily used by Declarant or any Owner on a Lot, of not
more than six (6) square feet, advertising the Lot for sale or rent, or
signs of architects and builders during the period of construction and
sale of improvements on any Lot.
The unambiguous language limits the restriction on sign placement to signs related
to “construction, improvement, alteration or addition to the Lots.” Elgohary,
however, interprets this provision to be a prohibition against all signs, anywhere in
the subdivision. (CR.104-05; CR.107;6-RR.27.) As the trial court later noted
during trial, such a reading would preclude the placement of safety signs
surrounding the community pool. (6-RR.89:) Indeed, such a broad interpretation
of narrowed language would even prohibit the placement of standard traffic and
street signs.
The plain language of the sign provision at issue and those authorizing the
Association to provide for the safety and welfare of LOEN authorized the
Association to place the signs directing visitor traffic signs about which Elgohary
complains. In light of this authority, Elgohary cannot maintain any of his claims,
individual or derivative, against the Directors, the Association or RealManage
based on the improper placement of signs. Accordingly, the trial court’s order
granting traditional summary judgment should be affirmed.
c. The uncontroverted summary judgment evidence
establishes that the Association, the Directors, and
RealManage managed and utilized LOEN funds and
property reasonably and in good faith.
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05267.183 / 1649190.1
Appellees’ summary judgment motion further challenged Elgohary’s
individual and derivative causes of action based on his allegations that the
Directors and/or RealManage had mismanaged, misrepresented, misappropriated,
stolen and/or defalcated LOEN funds. (CR.182-89.) In support of their argument
that the management of LOEN’s funds was authorized and performed in good
faith, Appellees presented: (1) LOEN’s Covenants granting them “absolute and
final” discretion to manage LOEN funds; and (2) affidavit testimony establishing
that funds were managed in accordance with the requirements of the Covenants
and By-laws. (CR.201; CR.245-71; see e.g. App.7.)
Article III of LOEN’s Covenants contains the following provisions
authorizing the Directors to manage the collection and expenditure of LOEN’s
funds:
Section 2. Purpose of Assessments.
The assessments levied by the Association shall be used
exclusively for the purpose of protecting and promoting the
comfort, collective mutual enjoyment, health and welfare of the
Owners of the Property…The judgment of the Board of
Directors of the Association in determining the functions to be
performed by the Association, in determining the amount of
Regular Annual Assessments, Special Assessments and Special
Member Assessments, and in the expenditure of funds shall be
final and conclusive so long as its judgment is exercised in
good faith. (App.4)(emphasis added.)
Section 3. Regular Annual Assessments.
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05267.183 / 1649190.1
a. Purpose. …Regular annual Assessments may be used to
finance in particular, but not by way of limitation, the
following:
(1) Operation, maintenance, repair, replacement and
improvement of the Common Areas…
….
(4) Paying the cost and fees of a manager or firm retained to
carry out the duties of the Association or to manage the affairs
and property of the Association;
…
(13) Payment of any expenses necessary for the Association or
the Subdivision;
(14) Payment of and providing for access control;
(15) Carrying out the duties of the Board of Directors of the
Association
The Directors testified that assessments were collected and used for the benefit of
the community. (See e.g. 246-47, 249-50, 254-55, 257-58, 261, 264, 266, 270-71;
App.7.) They averred that their management of the funds complied with the
procedures set forth in the Covenant, By-laws and Articles of Incorporation. (Id.)
They provided examples of expenditures being made to reward community
members who had provided volunteer services for the benefit of the community.
(See e.g. CR.270 at ¶7.) Further, each of the Directors averred that they did not
receive compensation for their service on the Bboard. (CR.245, 248, 251, 253, 256,
260, 265, 267, 269.) The summary judgment evidence presented by Appellees,
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05267.183 / 1649190.1
therefore, established that Directors acted within the scope of their authority
regarding the management of LOEN’s funds.
In his response, Elgohary relied solely on his own hearsay testimony
regarding alleged payments made with LOEN funds but did not raise a fact issue
regarding the propriety of such payments. (App.8.) As discussed above,
conclusory factual allegations such as these do not constitute competent summary
judgment evidence. Rizkallah v. Conner, 952 S.W.2d at 587. Elgohary summarily
stated that the Association had made payments to the Directors’, their family
members and “selected neighbors” without identifying the parties involved,
amounts of payment, or date of payment. (Id. at 595.) In light of Elgohary’s failure
to provide any specific information regarding the alleged “misappropriation”, it is
impossible to determine whether such payment was a reimbursement for a valid
LOEN expense or a gratuitous gift, the trial court properly determined that such
conclusory allegations did not raise a fact issue. His evidence did not reflect that
any alleged payments “inured to the benefit of a private individual” in violation of
the Articles of Incorporation. (CR.595.) Further, Elgohary and did not controvert
any of the statements made in the Directors’ affidavits. (Id.)
Elgohary’s argument ignores other provisions contained in the LOEN’s By-
laws and Articles of Incorporation. For example, the By-laws expressly authorize
the directors “to be paid their expenses, if any, of attendance at each meeting of the
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Board of Directors.” (CR.231.) The fact that a payment was made does not raise a
fact issue as to whether the payment was unauthorized, improper, a theft,
defalcation or misappropriation.
Additionally, Elgohary’s affidavit states that “there were no financial
controls in place” but fails to point to any Covenant, By-law or Article of
Incorporation requiring “controls” beyond those set forth in the governing
documents. (CR.595.) He presents no evidence that the Director’s management of
LOEN funds did not comply with the provisions set forth in the governing
documents. Further, as discussed above, Elgohary never presented any evidence
that the Association’s actions were arbitrary, capricious or discriminatory, as
required to rebut the presumption of reasonableness established by Texas Property
Code §202.004.
Accordingly, even assuming the statements made in Elgohary’s affidavit are
true, they do not raise a fact issue sufficient to avoid summary judgment on his
claims. The trial court therefore properly granted Appellees’ traditional summary
judgment on all of Elgohary’s derivative and individual claims based on his
allegations related to the management of LOEN funds.
2. The Directors’ affidavits are based on personal knowledge and
supported by specific facts and examples of actions taken by
the Directors for the safety and general welfare of the
community.
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05267.183 / 1649190.1
“A summary judgment may be based on uncontroverted testimonial
evidence of an interested witness…, if the evidence is clear, positive and direct,
otherwise credible and free from contradictions and inconsistencies, and could
have been readily controverted.” Tex. R. Civ. P. 166a. An appellate court reviews a
trial court’s decision to consider or exclude summary judgment evidence for an
abuse of discretion. Rockwall Commons Assocs. v. MRC Mortg. Grantor Trust I,
331 S.W.3d 500, 512 (Tex.App—El Paso, 2010)
Rather than controvert the facts established by the Directors’s affidavits,
Elgohary asks this Court to disregard the affidavits on the grounds that they are
conclusory. “A conclusory statement is one that does not provide the underlying
facts to support the conclusion and, therefore, is not proper summary-judgment
proof.” Id. Conclusory statements are not susceptible to being readily
controverted. Id.
Each of the affidavits at issue are supported by specific factual statements
and examples of actions taken by the Directors to “promote the health, safety and
welfare of the LOEN community.” (CR.247-271; see e.g. App.7.) For example,
with regard to the statements:
“…all of the discussions, procedures, and investigations
regarding the decision of restricting the access were done in
good faith and in the best interest of the LOEN members;” (See
e.g. CR.246 at ¶6.)
and
37
05267.183 / 1649190.1
“…the Board, followed the proper procedure outlined in the
dedicatory instruments in making these decisions;”
the Directors stated that they discussed and voted on the propositions. (See e.g.
App.7 at ¶4.) They surveyed the community for feedback to determine whether
members wanted restricted access. (App.7 at ¶5.) The Directors also held town hall
meetings to allow members to voice their opinions regarding these issues. (Id.)
The Directors consulted with two fire departments and a real estate expert to
ensure they were not violating city ordinances or encumbering emergency vehicles.
(App.7 at ¶6.)
Additionally, with regard to the statements that,
“…the expenditures of the LOEN funds were made in good faith in
order to benefit the community,”
the affidavits included specific examples of “good faith” expenditures, such as the
purchase and donation of gift cards to members providing volunteer services to the
community. (See e.g. App.7 at ¶8.) The affidavits further state less than 2% of the
annual assessment was spent on social or volunteer awards. (Id.) The Directors
further testified that the board operated the Association and community affairs
below the budget and have been able to fund an operating reserve and capital
replacement reserve without reducing services to the community. (App.7 at ¶10.)
Further, the statement that “as officer of LOEN, I am unaware of any
misrepresentations made to the IRS concerning LOEN” is not conclusory on its
38
05267.183 / 1649190.1
face. It would be impossible to provide additional details or examples of
something that did not happen. This statement, however, could have been
controverted with evidence of a specific misrepresentation if such evidence had
existed.
These specific factual statements and examples support the excerpted
statements Elgohary addresses in his brief. Each of the factual statements could
have been controverted by evidence or affidavits indicating that town hall meetings
had not taken place or that the Directors had been over-budget and had reduced
services. Elgohary, however, failed to present any such controverting evidence in
his summary judgment response. Accordingly, the trial court properly declined to
exclude the affidavits from summary judgment evidence.
3. Elgohary’s Requests for Sanctions Are Not Independent
Causes of Action, and Therefore the Trial Court’s Summary
Judgment Disposed of All of His Claims.
“Texas courts have treated proceedings for sanctions as motions, not as
independent causes of action.” Lane Bank Equip. Co. v. Smith S. Equip., Inc., 10
S.W.3d 308, 312 (Tex. 2000); see also Mantri v. Bergman, 153 S.W.3d 715,717-18
(Tex.App.—Dallas 2005, pet. denied). For this reason, “a pending motion for
sanction does not make interlocutory an otherwise-final judgment.” Mantri, 153
S.W.3d at 717-18. Further, TEXAS CIVIL PRACTICE & REMEDIES CODE §10.002
specifically provides that the trial court may enter a sanctions order “on its own
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05267.183 / 1649190.1
initiative.” A trial court’s ruling on a motion for sanctions is reviewed for abuse of
discretion. Unifund CCR Partners v. Villa, 299 S.W.3d 92, 97 (Tex. 2009).
In his brief, Elgohary asks this Court to construe his motion for sanctions as
causes of action against the Association’s counsel, which required disposition by
summary judgment and notice under Rule 166a. It is well-established that a
request for sanctions is not an independent cause of action, but rather a procedural
device. Elgohary has failed to cite to any case indicating that a party is entitled to
summary judgment or any notice prior a court’s disposition of its request for
sanctions. Accordingly, the trial court had full authority to sign its order denying
sanctions on January 27, 2014 after disposing of the summary judgment motion.
(CR.818).
Further, the trial court’s October 12, 2013 summary judgment order
dismissing “Plaintiff’s derivative and individual claims” with prejudice is
consistent with content of Appellees’ summary judgment motion. (App.1.)
Appellees’ do not dispute that Rule 166a requires that a summary judgment motion
must state the grounds for judgment. Appellees, however, were not required to
address Elgohary’s sanctions allegations in order to obtain a dismissal of all of his
claims, because sanctions actions do not constitute claims. Lane Bank, 10 S.W.3d
at 312.
40
05267.183 / 1649190.1
Elgohary’s argument is further belied by the fact that Neil McLaurin and
Walter Spears were never served with citation, joined to the lawsuit, or appeared as
parties to the lawsuit. Elgohary cannot complain that the summary judgment is not
a final disposal of all claims and parties when he failed to serve and join the
purported “parties” and properly join them.
For these reasons, this Court should affirm the summary judgment of the
trial court and overrule the Elgohary’s argument in Issue Two(II).
4. The trial court properly declined to write new law regarding
derivative claims against non-profit organizations and
dismissed Elgohary’s derivative claims against the Directors
and RealManage.
In its summary judgment motion, Appellees argued that the Texas Business
Organizations Code does not authorize the derivative actions against non-profit
organizations as a matter of law. (CR.180-182.) The argument raises a statutory
construction issue regarding the interpretation Elgohary’s pleadings under the
Texas Business Organizations Code rather than an issue of evidence.
Statutory construction issues require the court to “ascertain the ‘legislature’s
intent.” McNeil v. Time Ins. Co., 205 F.3d 179, 183 (5th Cir. 2000, cert.
denied)(citing Union Bankers Ins. Co. v. Shelton, 889 S.W.2d 278, 280 (Tex.
1994)); see also TEX. GOV'T CODE § 312.005. To discern legislative intent, courts
should consider the entire act, its nature, its object and the consequences that
41
05267.183 / 1649190.1
follow from its construction. Albertson's, Inc. v. Sinclair, 984 S.W.2d 958, 961
(Tex. 1999).
In Flores v. Star Cab Coop. Ass'n, the court determined that the Texas
Business Organization Code did not authorize derivative suits against non-profit
corporations. 2008 Tex. App. LEXIS 6582, 2008 WL 3980762 *19-22
(Tex.App.—Amarillo 2008, pet. denied). The court pointed out that the Texas
Non-Profit Corporation Act “does not contain a provision like the Business
Corporation Act article 5.14 authorizing a derivative action” and therefore declined
the invitation to “fashion a remedy” not provided by the express terms of the
statute. Id.
Elgohary’s claims, in effect, constitute derivative claims on behalf of the
Association against the Directors and RealManage. (CR.99-117.) In his claims for
damages, he seeks to recover from the Association and on behalf of the
Association/ (CR.113.) Such claims sound in a derivative capacity akin to the
claims in Flores, and accordingly should be dismissed.
5. The trial court properly granted summary judgment in favor
of the Directors based on their immunity under the Volunteer
Protection Act and Texas Business Organizations Code
§22.235.
The Directors’ summary judgment evidence further establishes that they are
volunteers, and therefore fall within the purview of immunity provided by the
Volunteer Protection Act and Texas Business Organizations Code §22.235.
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05267.183 / 1649190.1
(CR.245, 248, 251, 253, 256, 260, 263, 267, and 269.) The Volunteer Protection
Act states:
[N]o volunteer of a nonprofit organization or
governmental entity shall be liable for harm caused by an
act or omission of the volunteer on behalf of the
organization or entity if—
(1) the volunteer was acting within the scope of the
volunteer's responsibilities in the nonprofit organization
or governmental entity at the time of the act or omission;
…
(3) the harm was not caused by willful or criminal
misconduct, gross negligence, reckless misconduct, or a
conscious, flagrant indifference to the rights or safety of
the individual harmed by the volunteer.
….
42 U.S.C.S. § 14503.
Additionally, Chapter 22 of the Texas Business Organizations Code sets
forth the elements for an officer’s liability to a non-profit corporation:
(a) An officer is not liable to the corporation or any other person
for an action taken or omission made by the officer in the
person's capacity as an officer unless the officer's conduct was
not exercised:
(1) in good faith;
(2) with ordinary care; and
(3) in a manner the officer reasonably believes to be in the
best interest of the corporation.
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05267.183 / 1649190.1
Tex. Business Organizations Code § 22.235. "Ordinary care" is defined as "the
care that an ordinarily prudent person in a similar position would exercise under
similar circumstances." Tex. Business Organizations Code § 22.001.
Each Director was acting within the course and scope of their duties as
volunteers when the decisions of which Elgohary complains were made. (CR.245-
271; App. 7.) Further, each acted in good faith in making the decisions and taking
the action which are the basis of this lawsuit. (Id.) These actions were carefully
considered and evaluated by the Directors, as the affidavits clearly set forth. (Id.)
Each Director used ordinary care in their role as officer in making the decisions for
the Association, and each did so with the reasonable belief that the decisions and
actions for the LOEN community were done in the best interest of the Association.
(Id.) Therefore, the summary judgment evidence established that each individual
Director was entitled to statutory immunity under (1) the federal Volunteer
Protection Act, and (2) Texas Business Organizations Code.
Appellees do not dispute that their answer did not reference the Volunteer
Protection Act and/or the Texas Business Organizations Code. Texas Rule of Civil
Procedure 94 does not expressly set forth immunity under these statutes as an
affirmative defense, and therefore it was not required that their answer include
them. Tex. R. Civ. P. 94. Additionally, the burden was on Elgohary to prove that
summary judgment based on the issue of immunity caused surprise or prejudice.
44
05267.183 / 1649190.1
Tex. R. Civ. P. 66. The record does not reflect that Elgohary presented any such
evidence, and therefore summary judgment based on the Directors’ immunity
should be affirmed.
II. THE TRIAL COURT PROPERLY RENDERED JUDGMENT ON LOEN’S
DECLARATORY JUDGMENT CLAIMS.
Declaratory judgments are reviewed under the same standards as all other
judgments. Tex. Civ. Prac. & Rem. Code § 37.010. When the trial court enters a
declaratory judgment after a bench trial, an appellate court applies a sufficiency of
the evidence review to the trial court's factual findings and reviews its conclusions
of law de novo. Am. First Nat'l Bank v. Jordan-Lewis Dev., L.P., No. 01-09-
00990-CV 2011 Tex. App. LEXIS 5347, at *10 (Tex. App—Houston [1st Dist.]
July 14, 2011, no pet.) The trial court’s determination must be upheld if it can be
sustained upon any legal theory supported by the evidence. Id.
In evaluating the factual sufficiency of the evidence, the court must consider
evidence that favors the finding if a reasonable fact-finder could consider it, and
must disregard evidence contrary to the challenged finding unless a reasonable
fact-finder could not disregard it. See City of Keller v. Wilson, 168 S.W.3d 802,
827 (Tex. 2005). A legal insufficiency, or "no evidence," point may not be
sustained unless the record demonstrates (1) a complete absence of evidence of a
vital fact; (2) that the court is barred by rules of law or of evidence from giving
weight to the only evidence offered to prove a vital fact; (3) that the evidence
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05267.183 / 1649190.1
offered to prove a vital fact is no more than a mere scintilla; or (4) that the
evidence conclusively establishes the opposite of the vital fact. Id.
The trial court’s conclusions of law are review de novo and will be upheld if
the judgment can be sustained on any legal theory supported by the evidence.
Noble Mortg. & Invs. LLC v. D&M Vision Invs., LLC, 340 S.W.3d 65, 74-75 (Tex.
App.—Houston [1st Dist.] 2011, no pet.) The trial court's conclusions of law
cannot be challenged for lack of factual sufficiency, but may be reviewed as to the
legal conclusions drawn from the facts to determine their correctness. Brown v.
Brown, 236 S.W.3d 343, 348 (Tex. App. Houston 1st Dist. 2007, no pet.).
The Association was granted two declaratory judgments relating to its pre-
suit interpretation of provisions of its governing documents disputed by Elgohary:
1. that the Association is permitted to regulate the use of the West Little
York entry/exit; and
2. that the Association is not prohibited from placing signs on
Association property, so long as said signs do not relate to the
construction, improvement, alteration, or addition to Lots within the
Subdivision. (App.2.)
Elgohary fails to present any argument on appeal suggesting that the evidence is
legally or factually insufficient to support the two declarations made in the
judgment. Accordingly, his Issue 3 should be denied and the trial court’s judgment
affirmed.
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A. The Trial Court Did Not Err in Refusing to Abate the
Association’s Counterclaims in order to Join Every LOEN
Property Owner.
Elgohary sought to abate the Association’s counterclaim for declaratory
judgments in order to join all property owners in LOEN and the City of Houston.
(CR.42-43; CR.611-16.) The Association, however, only sought declarations
confirming their pre-suit position regarding its authority to regulate its access gates
and place signs in the community under LOEN’s existing deed restrictions.
(CR.155-61.) They did not seek to adjudicate new rights or new restrictions with
respect to non-party property owners. (Id.) Elgohary failed to establish his joinder
burden in the trial court because Texas law makes clear that joinder of additional
parties was not required to adjudicate the Association’s counterclaims.
Trial courts have “broad discretion” regarding the issue of joinder. Royal
Petroleum Corp. v. Dennis, 160 Tex. 392, 332 S.W.2d 313, 398 (Tex. 1960). The
party seeking joinder bears the burden to prove that the joinder requirements are
met under Texas Rule of Civil Procedure 39 which states:
A person who is subject to service of process shall be
joined as a party in the action if (1) in his absence
complete relief cannot be accorded among those already
parties, or (2) he claims an interest relating to the subject
of the action and is so situated that the disposition of the
action in his absence may (i) as a practical matter impair
or impede his ability to protect that interest or (ii) leave
any of the persons already parties subject to a substantial
risk of incurring double, multiple, or otherwise
inconsistent obligations by reason of his claimed interest.
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See also Epernay Cmty. Ass'n v. Shaar, 349 S.W.3d 738, 746-47 (Tex.App.—
Houston [14th Dist.] 2011, no pet.); Brooks v. Northglen Ass'n, 141 S.W.3d 158,
162 (Tex. 2004). Additionally, Tex. Civ. Prac. & Rem. Code § 37.006 provides
that a declaration does not prejudice the rights of a person not a party to the
proceeding.
Texas courts have repeatedly held that declaratory judgment claims
regarding the interpretation of deed restriction do not require the joinder of all
residents in a community. In Caldwell v. Callender Lake Property Owners
Improvement Association, the court held that all property owners in a community
did not need to be joined to a homeowner’s association’s declaratory judgment
action. 888 S.W.2d 903, 907 (Tex.App.—Texarkana 1994, no pet.) The court
determined that since no new rights were adjudicated with respect to the non-
joining property owners and the declaratory judgment only confirmed the validity
of the association's pre-suit position, the rights of the non-joining owners were not
infringed upon or affected. Id.
Similarly, in Epernay Community Association, the homeowners' association
for a neighboring subdivision sought to collect fees from two homeowners relating
to the maintenance of certain recreational areas used by members of both
associations. Id. The homeowners filed a lawsuit seeking relief relating only to
them, not any other owners, even though the fees addressed in the case were
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sought from all owners in their subdivision. Id. The defendant association filed a
counterclaim seeking a declaratory judgment regarding the validity of the
agreement on which the fees were based, and requested a joinder of all property
owners. Id. The trial court’s denial of the homeowner’s association’s plea in
abatement and request for joinder was affirmed. Id. In its analysis, the appellate
court held that the homeowner’s association “did not provide the trial court with
any evidence as to the identity, number, or interests of these other
homeowners” and therefore the trial court did not err by impliedly finding that
[the association] had failed to show that Rule 39(a) required the joinder of the
other homeowners in Subdivision Two.” Id.(emphasis added).
In this case, Elgohary did not provide the trial court with any evidence as to
the identity, number and interests of the other homeowners regarding the
declarations sought by the Association. Elgohary has failed to demonstrate how
other owners in the LOEN Subdivision are necessary parties to the Association’s
counterclaim under this standard. Elgohary has failed to provide any evidence as
to:
a. How complete relief could not be accorded among the existing parties
to the Association’s counterclaim;
b. How any other persons claim an interest relating to the subject of the
action against Elgohary;
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c. How the Court entering a judgment against Elgohary in the
counterclaim would impair or impede the ability of any other owner to
protect his or her interest; or
d. How the Court entering a judgment against Elgohary in this case
would leave Elgohary subject to a substantial risk of incurring double,
multiple or otherwise inconsistent obligations.
The Association presented this point to the trial court in its Objections & Response
to Counter-Defendant Victor S. Elgohary’s Plea in Abatement and Special
Exceptions, filed December 6, 2013 (CR Supp 6-14), but Elgohary still failed to
provide any evidence regarding the above-referenced requirements at the
December 9, 2013 hearing on same. (RR4 4-9.) Throughout the case, the
Association sought only to confirm the validity of its pre-suit position. (CR.155-
161.) The Association did not seek to adjudicate any new rights with respect to
non-joining property owners. (Id.) Specifically, the Association sought two
declaratory judgments against Elgohary in order to validate its pre-suit position as
to two issues under the Association’s governing documents which were disputed
by Elgohary alone. (CR 156-161.)
Additionally, Elgohary presented no evidence at the two hearings that were
held on June 10, 2013 and December 9, 2013, on his special exceptions and plea in
abatement. (2-RR.17-23; 4-RR.4-9.) Other than vague references that “a
determination by this Court on those issues... affects all Lakes on Eldridge North
lot owners...” (CR 613) and “all necessary 1,081 Lakes on Eldridge North lot
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owners...” (CR 614), the record contains no information or evidence as to what
specific claims or interests of said owners would be affected by the trial court’s
granting of the declarations sought by the Association against Elgohary. (See
generally 2-RR and 4-RR.).
Elgohary mistakenly cites Dahl v. Hartman in support of his argument that
the trial court should have abated the Association’s counterclaim and required
joinder of additional owners. The Epernay court made the following distinction
with regard to Dahl v. Hartman:
Association One relies upon Dahl v. Hartman. See 14
S.W.3d 434, 435-36 (Tex. App.—Houston [14th Dist.]
2000, pet. denied). In Dahl, the plaintiff sought
declarations that the property owners' association for a
subdivision was not validly formed and that the [sic] all
of the subdivision's deed restrictions had not been validly
extended beyond their original expiration date. See id.
This relief was much broader than the relief sought by
the Shaars when the trial court denied Association One's
plea in abatement. See id. In addition, in Dahl, the trial
court granted the defendant's plea in abatement and
ordered the plaintiff to serve all property owners in the
subdivision. See id. The trial court in Dahl found that
the plaintiff sought a declaration that the deed
restrictions were invalid and that this declaration would
affect the interests of all property owners in the
subdivision. See id. In the case under review, the trial
court made no such rulings or findings. The Dahl case
is not on point. [emphasis added]
Epernay, 349 S.W.3d at 349, n. 6.
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This logic applies in the instant case. The trial court made no rulings or
findings that the declarations sought by the Association would affect the interests
of all property owners in Elgohary’s subdivision. (CR.617.) By denying Elgohary’s
special exceptions and plea to the jurisdiction, the trial court actually found the
opposite to be the case. As a result, the Dahl case is not on point, and the trial court
did not abuse its discretion in denying Elgohary’s request for abatement and
joinder.
The declarations granted in favor of the Association by the Trial Court will
have no substantive effect on the rights of other owners of lots in Elgohary’s
subdivision—as the net effect of same is simply to validate the Association’s pres-
suit position and interpretation of these 2 issues—that the Association already had
authority to regulate the West Little York gate and that signs were already
permissible under certain circumstances within the subdivision. No new rights
were created or destroyed by the declarations granted by the trial court, and no
rights were expanded or curtailed by the declarations. The result of the court’s
judgment was to quiet Elgohary’s and only Elgohary’s disputes as to the
Association’s pre-suit position.
As a result, the trial court’s judgment in the instant case has no preclusive
effect on the ability of other property owners within the LOEN Subdivision to seek
an adjudication of any of the issues addressed in the Association’s counterclaim.
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The trial court properly found that it had sufficient jurisdiction over the
existing parties to the case and that joinder of additional parties was unnecessary
when it overruled both of Elgohary’s special exceptions and denied his plea in
abatement after hearings on same. (CR.617.)
B. The Trial Court Properly Determined That The Association’s
Governing Documents Only Prohibit the Placement of Signs in
the Subdivision under Certain Circumstances.
The trial court’s interpretation of the Association’s Covenants must be
upheld if the same can be sustained upon any legal theory supported by the
evidence. Noble Mortg. & Invs. LLC, 340 S.W.3d at 74-75. One of the declarations
issued by the trial court is as follows:
The Association is not prohibited from placing signs on
Association property, so long as said signs do not relate
to the construction, improvement, alteration, or addition
to Lots within the Subdivision. (CR.939.)
Said language tracks the plain wording of the Covenant and comports with the trial
court’s reading and interpretation of same.
As discussed above in Section I(B)(1)(b) of this Brief, the Article V of the
Association’s Covenants provide the following:
Section 1. Covenants Applicable. The following shall be applicable
to any and all construction, improvement, alteration, or addition to
the Lots.
b. No sign, including political, advertisement, billboard or advertising
structure of any kind shall be displayed, maintained or placed in the
public view on or from any part of the Property or on any Lot, except
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signs temporarily used by Declarant or any Owner on a Lot, of not
more than six (6) square feet, advertising the Lot for sale or rent, or
signs of architects and builders during the period of construction and
sale of improvements on any Lot. (CR.209)(emphasis added)
The covenant prohibiting the display, maintenance or placement of signs in
the subdivision is specifically qualified and restricted by its heading, which
clarifies that same is “applicable to any and all construction, improvement,
alteration, or addition to the Lots.” (CR 290.)
So, for instance, if an owner wanted to place a sign on her lot or on a
common area esplanade, advertising that “Joe’s Construction” was performing an
alteration to her pool, said sign would be prohibited as it clearly would constitute a
sign placed in public view in the subdivision relating to the construction or
alteration of a lot. However, if the Association were to place a sign at the
subdivision’s common area pool, instructing owners not to leave children
unattended while swimming, it would not be prohibited, as such a sign does not
relate in any way to the construction, improvement, alteration of or addition to any
owner’s lot.
Elgohary has contrived an interpretation of the sign provisions of the
Covenant that is unsupported by the language therein, arguing that it prohibits the
placement of any sign by any party anywhere in the entire subdivision—whether
on private lots or on common areas—except for signs for the sale of a lot. Elgohary
testified as follows at trial:
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Q. (BY MR. MCLAURIN, IV)[Association’s counsel]
So, is it your contention that the association's governing
documents prohibit the placement of signs by the
association in the subdivision?
A. [Elgohary] Yes.
Q. Okay. All signs?
A. It says: Except for certain permitted signs for the sale
of your -- of individual lots. (6-RR.27).
…
Q. Okay. So -- so there shouldn't be any signs in the
subdivision whatsoever; is that your testimony?
A. That is -- that is -- that is how this written. Yes, sir.
Q. Okay. So, no signs at the pool alerting kids not to run
at the pool?
A. Correct.
Q. No signs telling people when they can use the tennis
court?
A. That is what is written. (Id. at 32-33.)
The trial court found that the provisions of the Covenant were unambiguous:
THE COURT: Okay. I've reviewed the declarations and
do not seem unclear to me at all. (Id. at 91.)
The trial court also agreed with the Association’s interpretation and stated the
following at trial:
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THE COURT: Your position has been that they can't put
up any signs, including signs at the swimming pool that
say: No running at the pool, right?
MR. ELGOHARY: As a strict interpretation, that's
correct. (6-RR.89.)
…
THE COURT: Article VIII relates to common properties.
And Section 3(a) says that, "The Association has the
right to prescribe rules and regulations for the use,
enjoyments, and maintenance of the Common Areas." As
well as, "The Association has the right to establish
reasonable rules and regulations governing the Members'
use and enjoyment of the Common Areas, and the right
of the Association to charge reasonable admission and
other fees for the use of recreational facilities which are
part of the Common Areas." All of that.
And -- and I'm -- I'm not finding -- maybe it's under IX 3:
Enforcement. "Enforcement of the covenants, conditions,
restrictions shall be by any proceeding at law or in
equity," which seems to me to give the board of directors
the ability to put people on notice of various rules related
to access, as well as other issues related to the common
area via such things as signs telling people: These are the
rules. (6-RR.92-93.)
…
THE COURT: Also, the ordered, adjudged and decreed,
I am going to sign that the association is not prohibited
from placing signs on association property, meaning
common area, so long as the signs are not related to the
construction, improvement, alteration, or addition to the
lots within the subdivision. (6.RR.93-94.)
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The trial court held that the Article V, Section 1(b) regarding signs was
unambiguous and that its terms authorize the Association to place signs in the
subdivision. The trial court’s interpretation of the covenant was clearly set forth
on the record. As this Court has previously held, the trial court’s ruling must be
upheld if the judgment can be sustained on any legal theory supported by the
evidence. Therefore the declaration relating to the placement of signs must be
upheld.
C. The Association’s Request for a Declaratory Judgment Regarding
the Regulation of the West Little York Entry/Exit Was a
Justiciable Controversy and the Court Did Not Err in Issuing a
Declaratory Judgment against Elgohary Regarding Same.
The second declaration issued by the trial court in this case is as follows:
The Association is permitted to regulate the use of the
West Little York entry/exit. (CR 939.)
Following is what the Association asked for in its live pleading as of the time of
trial with regard to the regulation of its West Little York gate:
The Subdivision has two primary entry/exit points: one
on Tanner Road (“Tanner” or “Main”) which is manned
by personnel, and one on West Little York (“WLY” or
“Back”), which is unmanned. The Association–pursuant
to authority contained in its dedicatory instruments to
regulate common areas–has restricted the use of the
WLY entry/exit between the hours of 11 p.m. and 5
a.m., and posted signs related to said regulation. It has
done so after seeking the input of the owners of
property in the Subdivision and for the security of all
residents in the Subdivision. The Main entrance is
approximately 1.2 miles from Elgohary’s residence. The
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WLY entrance is approximately 0.3 miles from
Elgohary’s residence. Elgohary desires access to the
WLY entry/exit at all times and to be able to do so on a
bicycle in addition to a motor vehicle. Elgohary does
not agree with the Association’s decision and believes
that the Association is prohibited from regulating this
common area as described herein. Although Elgohary
has brought suit against the Association alleging a
trespass to his alleged easement and breach of contract,
the relief the Association seeks in this counterclaim is
greater in scope and concerns the underlying
disagreement between the parties as to the interpretation
of the Association’s dedicatory instruments. In the event
Elgohary were to dismiss his claims or to fail to succeed
on his limited causes of action against the Association,
the Association would achieve no finality or resolution
regarding its disagreement with Elgohary as to its
interpretation of its own dedicatory instruments.
[emphasis added] (CR 156-157.)
Elgohary specifically complained of the Association’s regulating of the gate in his
pleadings:
Over the past couple of years, LOEN’s board of directors
has fundamentally changed the operation and use of the
restricted access gate located on the northern portion of
Lakes on Eldridge North’s boundaries. It has not only
enacted new limited times of operation and reduced the
vehicle size restrictions, but it has made resident access
into or out of the northern access point of the subdivision
impossible unless utilizing a motor vehicle. (CR 107.)
Thus the issue presented to the trial court by the Association—the real and
substantial controversy between the parties—was whether or not the Association
was and is authorized to regulate its gate pursuant to its Covenant. Elgohary is the
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only owner in the subdivision who has argued that the Association is not
authorized to regulate the gate in such a manner.
In his brief Elgohary ignores the specifics of the Association’s counterclaim
and instead erroneously and improperly addresses the claims he allegedly made
against the Association in his own dismissed lawsuit. Although he now claims that
there was no justiciable controversy between the parties as to the regulation of the
gate, Elgohary never pleaded the same in the form of an answer or affirmative
defense (CR.608-610)—only as an argument at trial when it appeared that the
Court was inclined to grant the declaration against him.
Elgohary ignores the pleadings and trial transcript and attempts to re-frame
the scope and specifics of the Association’s counterclaim. He describes for this
Court the controversy alleged in his lawsuit against the Association, but those
allegations are irrelevant to the claims brought by the Association against
Elgohary. He essentially argues that the Association just doesn’t understand the
actual argument between the parties—that his cause of action against the
Association was about fire codes, barricades, breach of contract and alleged
trespasses to easement rights. Elgohary states “[b]ut the substantive controversy
between Elgohary and the Association is in barricading of Enclave Vista Lane…”
(Appellant’s Brief at 53). That may very well be accurate as to Elgohary’s claims
against the Association, but it has nothing to do with the declaration sought by the
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Association against Elgohary. The Association has the right to define the scope of
its own lawsuit, despite Elgohary’s claims to the contrary. Cf. Denso Corp. v. Hall,
396 S.W.3d 681, 688 (Tex. App—Houston [14th Dist.] 2013, no pet.)
This Court has clearly set out the standard for a justiciable controversy in a
declaratory judgment action in Chapman v. Marathon Mfg. Co., 590 S.W.2d 549,
552 (Tex. Civ. App.—Houston [1st Dist.] 1979, no writ):
To constitute a justiciable controversy for declaratory
judgment purposes, there must be a real and substantial,
rather than a theoretical, controversy involving a genuine
conflict of tangible interests. Sub-Surface Construction
Company v. Bryant-Curington, Inc., supra; Board of
Water Engineers v. City of San Antonio, 155 Tex. 111,
283 S.W.2d 722 (1955). Once this is established it must
appear that the matter in controversy is within the general
jurisdiction of the court. Great American Insurance
Company v. Murray, 437 S.W.2d 264 (Tex. 1969). The
evidence supports the district court's conclusion that it
had subject matter jurisdiction of the declaratory
judgment action.
The real and substantial controversy between Elgohary and the Association, as
described in the Association’s pleadings, was directly addressed by the trial court
at trial:
THE COURT: -- that's why we're here today is to resolve
whether or not your interpretation of the rules of the
declaration is correct or not.
MR. ELGOHARY: I just –
THE COURT: And if you had not taken that position, we
wouldn't be here today, would we?
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MR. ELGOHARY: Well, there were two. We're also
taking the position on the gates.
THE COURT: Okay. If you hadn't taken those positions,
we wouldn't be here today, would we?
MR. ELGOHARY: Well, if nobody had filed the lawsuit,
that's correct.
THE COURT: And you're the only one that filed the
lawsuit, right?
MR. ELGOHARY: That's correct. (6-RR.89-90).
Clearly the trial court took the view that a justiciable controversy existed between
the parties with regard to the claim asserted by the Association in its counterclaim
against Elgohary.
The trial court first found that the provisions of the Covenants were
unambiguous:
THE COURT: Okay. I've reviewed the declarations
and do not seem unclear to me at all. (6-RR.91.)
The trial court then clearly delineated for the parties its reading of the Covenant as
a whole and its agreement with the Association that the Association is within its
rights to regulate the West Little York entry/exit gate:
Article VIII relates to common properties. And Section
3(a) says that, "The Association has the right to prescribe
rules and regulations for the use, enjoyments, and
maintenance of the Common Areas." As well as, "The
Association has the right to establish reasonable rules and
regulations governing the Members' use and enjoyment
61
05267.183 / 1649190.1
of the Common Areas, and the right of the Association to
charge reasonable admission and other fees for the use of
recreational facilities which are part of the Common
Areas." All of that.
And -- and I'm -- I'm not finding -- maybe it's under IX 3:
Enforcement. "Enforcement of the covenants, conditions,
restrictions shall be by any proceeding at law or in
equity," which seems to me to give the board of directors
the ability to put people on notice of various rules related
to access, as well as other issues related to the common
area via such things as signs telling people: These are the
rules.
Given all of that, I find that it is proper to issue a
declaratory judgment in this case. That the association
permitted to regulate the use, as I said under the access
portions of the designations, to regulate the use of the
West Little York entry and exit. Those are issues that if
they -- if you don't like the way it's being dealt with, deal
with the board. [emphasis added] (RR6 92-92.)
In his brief and point of error, Elgohary tries to re-frame the scope of the
Association’s claim against him by saying there was no controversy between him
and the Association with regard the Association regulating the gate. The record
above clearly shows otherwise. As this Court has previously held, the trial court’s
determination must be upheld if it can be sustained upon any legal theory
supported by the evidence. The trial court explicitly stated its logic regarding the
gate declaration and the evidence supporting it. As a result, the declaratory
judgment must be upheld.
III. THE TRIAL COURT PROPERLY GRANTED APPELLEES’ MOTION FOR
PROTECTION.
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It is well-established that a party cannot use overly broad discovery requests
as a fishing expedition for evidence. Texaco, Inc. v. Sanderson, 898 S.W.2d 813,
815 (Tex. 1995). The Texas Rules of Civil Procedure require that discovery
requests be narrowly tailored to lead to the discovery of admissible evidence, and it
is on the drafting party to tailor the request. Id. A trial court’s ruling on a motion
for protection or discovery order is reviewed for an abuse of discretion. Id.
After initiating this lawsuit, Elgohary served 590 separate discovery request
on each of the Appellees. (CR.283-509.) Additionally, he served multiple
deposition notices on certain Directors and Christi Keller after his claims against
them had been dismissed and they were no longer parties to the case. (CR.665-
678.) In response to the voluminous requests, the Association, the Directors, and
RealManage filed global objections to the discovery and motions for protection
(CR.272-531; CR.633-661; CR.679-707).
An oral hearing on the motions for protection and motion to quash the
deposition was held on January 27, 2014. (5-RR.) At the time of the hearing, the
only causes of action remaining at issue were the Association’s declaratory
judgment claims seeking an interpretation of LOEN’s Covenants. (5-RR.8:23-
15:18.) As the Association pointed out, the only issue for the trial court to review
and interpret was the validity of the language of the deed restrictions. (Id.) It did
not need to review evidence related to the application of deed restriction to specific
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activities in light of the dismissal of Elgohary’s claims. (Id.) Accordingly, the trial
court properly determined that Elgohary’s discovery requests and requests for
depositions were not reasonably tailored to lead to the discovery of admissible
evidence and therefore unnecessary in the pending lawsuit. (App.3.) Elgohary’s
Issue Four should therefore be rejected and the order granting protection and final
judgment affirmed.
IV. THE TRIAL COURT PROPERLY AWARDED THE ASSOCIATION ITS
ATTORNEY’S FEES, BUT THIS COURT SHOULD REFORM THE AWARD TO
REFLECT THE FEES ACTUALLY INCURRED.
Texas courts review an award of attorney’s fees pursuant to TEX. CIV. PRAC.
& REM. CODE § 37.009 under an abuse of discretion standard. Bocquet v. Herring,
972 S.W.2d 19, 21 (Tex. 1998). “A trial court abuses its discretion if its decision is
arbitrary, unreasonable, and without reference to guiding principles.” Petroleum
Analyzer Co. LP v. Olstowski, 2010 Tex. App. LEXIS 5581 at *47-48 (Tex.App.—
Houston [1st Dist.] July 15, 2010, no pet.). Under the abuse of discretion standard,
evidence should be viewed in the light most favorable to the trial court’s ruling and
the reviewing court should indulge every presumption in its favor. Aquaduct,
L.L.C. v. McElhenie, 116 S.W.3d 438, 444 (Tex. App.—Houston [14th Dist.] 2003,
no pet.).
Since no findings of fact or conclusions of law were requested by Elgohary
or made by the trial court, this Court must uphold judgment if it can be sustained
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upon any legal theory supported by the evidence, and it is implied that the Trial
Court made all the necessary findings to support its judgment. Goodyear Tire &
Rubber Co. v. Jefferson Constr. Co., 565 S.W.2d 916 (Tex. 1978).
A. Elgohary Failed to Preserve This Issue for Appeal.
In Nelson v. Big Woods Springs Improvement Ass'n,, the attorney for the
prevailing association only testified as to the rates he and his legal assistant billed
for work performed on the case, the number of hours worked on the case and the
amount requested in fees. 322 S.W.3d 678, 684 (Tex.App.—Texarkana 2010, pet.
denied). The court noted that the association’s opponent made no objection or
argument on the issue of fees until the appeal, and found that the issue was not
preserved for purposes of appeal under TEX. R. APPL. P. 33.1(a)(1). Id. at 684-685.
In the instant case, Elgohary presented no testimony or evidence on the issue
of attorney’s fees. (6-RR.85.) Elgohary made no objections or argument as to the
attorney’s fees at trial, other than a statement in closing argument. (6-RR.90-91.)
Closing statements do not constitute evidence. Tovar v. Mazza, 1999 Tex. App.
LEXIS 2222, 1999 WL 174064 *4 (Tex. App.—San Antonio Mar. 31, 1999, no
pet.). Thus Elgohary did not properly preserve the issue of the attorney’s fee award
to the Association for review under Tex. R. App. P. Rule 33.1(a)(1).
B. An Award of Attorney’s Fees Under the Uniform Declaratory
Judgments Act Was Appropriate and Authorized by Statute.
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Tex. Civ. Prac. & Rem. Code § 37.009 provides that a trial court may award
attorney’s fees in a declaratory judgment action. The “the award of attorney's fees
in declaratory judgment actions is clearly within the trial court's discretion and is
not dependent on a finding that a party ‘substantially prevailed.’" Barshop v.
Medina County Underground Water Conservation Dist., 925 S.W.2d 618, 629
(Tex. 1996).
The Association filed a counterclaim against Elgohary seeking two
declaratory judgments as well as recover of its attorney’s fees. (CR.161.) Elgohary
argues that the Association should not have been awarded fees because it did not
seek damages or injunctive relief in its counterclaim. Elgohary cites no authority in
support of this proposition and Texas law does not support such a proposition.
The Association presented expert testimony as to the matter of fees and after
hearing same the Trial Court found that fees in the amount of $42,000.00 were
reasonable and necessary for the work performed by the Association’s attorneys in
the counterclaim:
Now, I'm going to arbitrarily reduce the award for
attorney's fees in this case to $20,000. If you're unhappy
with that reduction, you can certainly take that up on
appeal. If there's appeal of this matter, you can certainly
take up my completely arbitrary reduction from your
$42,000 request, which is probably and, in fact, I do
find is completely reasonable and necessary attorney's
fees, but I'm going to arbitrarily strike it down to
$20,000. (6-RR.94.)
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Despite finding that $42,000.00 in attorney’s fees were reasonable and
necessary, the trial court “arbitrarily” reduced the award of fees to the Association
to $20,000.00. (6-RR.94.) The Association properly pleaded for attorney’s fees
under the Uniform Declaratory Judgments Act. The court heard evidence on the
matter of attorney’s fees and awarded fees pursuant to its authority under Texas
law.
C. The Record Supports An Award of Attorney’s Fees.
At trial on March 13, 2014, the Association provided the expert testimony of
attorney Neil H. McLaurin, IV (“McLaurin”) in support of its claim for attorney’s
fees. (6-RR.66-85.) McLaurin testified in detail as to the attorney services
performed on behalf of the Association with regard to its counterclaim, and the
fees and costs charged with regard to same. (Id.) McLaurin also testified as to the
factors considered in arriving at an opinion of the amount of fees that would be
reasonable, necessary, equitable and just for the case. (6-RR.77-79.) The
Association introduced into evidence 69 pages of attorney invoices (7-RR.8-136;
Exhibit CP LOEN.14). McLaurin was cross-examined on the issue of attorney’s
fees by Elgohary (6-RR.79-85). Elgohary presented no testimony or evidence
regarding attorney’s fees. (6-RR.85). There is ample evidence in the record
supporting the trial court’s decision to award attorney’s fees to the Association
relating to its counterclaim.
67
05267.183 / 1649190.1
D. Elgohary Was Timely Served With Exhibits Relating to
Attorney’s Fees.
Elgohary claims that attorney fee invoices were not delivered to him until
the eve of trial. (Appellant’s Brief 64.) That statement is false and not substantiated
by the record. McLaurin testified under oath that invoices were tendered to
Elgohary in compliance with the court’s trial preparation order, which required the
exchange of exhibits on or before February 14, 2014:
MR. MCLAURIN, IV: Your Honor, we produced copies
of our invoices to Mr. Elgohary along with all of trial
exhibits pursuant to the Court's trial preparation order.
We also e-mailed copies of the invoices after the
hearing, in which I told Your Honor and Mr. Elgohary
that [w]e would give him the invoices. That was one of
the conditions to Your Honor's ruling on discovery. (6-
RR.67.)
The Association’s attorney fee invoice shows that exhibits were forwarded to
Elgohary by hand-delivery on February 14, 2014:
02/14/14 020 Prepare trial exhibits; file trial
preparation statement, exhibit list and witness list;
forward copies of same to Elgohary by messenger…
(RR7 135.)
Said invoice also reflects a messenger charge in the amount of $26.74
incurred on February 14, 2014 (7-RR.136).
Additionally, the trial court properly overruled Elgohary’s objections to the
introduction of CP LOEN 14, the Association’s exhibit containing attorney fee
invoices (6-RR.67). The trial court stated that “the basis for my ruling is that I don't
68
05267.183 / 1649190.1
-- I don't -- based upon the types of records that are involved here and the types of
cases and the claims that have been made, there's no unfair prejudice or surprise.”
(6-RR.67-68.)
Texas Rule of Civil Procedure 193 provides that a party who fails to make,
amend or supplement a discovery response in a timely manner may not introduce
material or information not timely disclosed, unless the court finds that:
(1) there was good cause for the failure to timely make,
amend, or supplement the discovery response; or
(2) the failure to timely make, amend, or supplement the
discovery response will not unfairly surprise or unfairly
prejudice the other parties.
However, Elgohary did not object to CP LOEN 14 on the grounds that the
Association made an untimely response to discovery or that the Association
failed to timely provide Elgohary with attorney fee invoices—his actual
objection was: “this was one of the things I asked for in discovery that was
quashed.” (6-RR.67.) Elgohary did not argue that he was surprised or prejudiced.
(Id.) As a result, Elgohary failed to preserve a complaint under 193.6 for appeal.
TEX. R. APP. P. 33.1. The discovery request he references had in fact not been
quashed. The order issued by the trial court on January 27, 2014, with regard to
discovery specifically indicated that the Association was to provide Elgohary with
invoices (no deadline specified in same). (CR.879-880.)
69
05267.183 / 1649190.1
Additionally, Elgohary did not establish anywhere in the record that the
Association failed to make, amend or supplement any discovery response in a
timely manner. While he argues in his brief that invoices were not timely
delivered to him, there is nothing in the record substantiating that accusation.
Elgohary presented no witnesses at trial (6-RR.85) and did not file any pleading
objecting to untimely discovery responses prior to trial.
Even if Mr. Elgohary had established that the Association had failed to
timely supplement a discovery response, the trial court explicitly stated on the
record that the introduction of the attorney fees invoices of the Association’s
counsel did not cause any unfair prejudice or surprise to Elgohary (6-RR.68). This
ruling is supported by the record. (6-RR.67; 7-RR.135; 7-RR.136.)
A trial court's ruling on the admissibility of evidence is reviewed under an
abuse of discretion standard, and a reviewing court shall uphold the trial court’s
ruling if there is any legitimate basis for the ruling. Williams v. County of Dallas,
194 S.W.3d 29, 31-32 (Tex. App—Dallas 2006, pet. denied.) Here there was
clearly a legitimate basis for the Court’s ruling, as Elgohary did not object to
evidence or preserve a complaint under Rule 193.6 and the Court found that there
was evidence in the record of no unfair surprise or prejudice to Elgohary.
E. The Association Established Reasonable, Necessary, Equitable
and Just Attorney’s Fees Independent of Attorney Fee Invoices.
70
05267.183 / 1649190.1
Even if the invoices were excluded, the Association presented sufficient
evidence to support an award of attorney’s fees. “Documentary evidence is not a
prerequisite to an award of attorneys' fees.” Jarvis v. Rocanville Corp., 298 S.W.3d
305, 319 (Tex.App.—Dallas 2009, pet. denied). “Testimony from a party's
attorney is taken as true as a matter of law and is alone sufficient to support an
award of attorneys' fees if the testimony is clear, positive, direct, and free from
contradiction.” Id. “This is especially true where the opposing party had the means
and opportunity to disprove the testimony but failed to do so.” Id.
At trial, the Association’s attorney, McLaurin, testified with particularity as
to the work performed on the counterclaim month by month since the beginning of
the case, providing detail as to the number of hours worked and the billable rate for
that work for each month. (RR6 69-79.) While the invoices contained in Counter-
Plaintiff’s exhibit CP LOEN 14 provided evidence as to the attorney work
performed on the case, said invoices were only one component in the evidence
offered to the trial court on the issue of reasonable, necessary, equitable and just
fees.
The trial court gave no indication that its judgment on attorney’s fees was
based solely or even primarily upon the invoices. After McLaurin’s month by
month detailed testimony as to the work performed in the case and the charges for
71
05267.183 / 1649190.1
same, he testified as follows regarding attorneys fees incurred by the Association
through trial:
Having reviewed the invoices and the work performed in
the prosecution of this counterclaim and considering
factors, such as: Time and labor required, novelty and
difficulty of the questions involved, the skill requisite to
perform the legal services properly, and preclusion of
other work, the fees customarily charged in Harris
County for similar legal services, and the experience,
reputation, and ability of the attorneys performing the
services, it is my opinion that a range of reasonable and
necessary attorney's fees for the work performed in this
case by counterclaim plaintiff's attorney is from $40,000
to $45,000. It is also my opinion that the fees charged by
Bartley & Spears in this counterclaim have been
reasonable and necessary, and that an award to the
association of $42,450 would be equitable and just.
…
Finally, it is my opinion that the majority of fees in this
case were caused by Mr. Elgohary. He filed two rounds
of special exceptions which were -- which were
overruled, both of which required hearings. He filed a
motion to disqualify all counsel for the association which
was denied. He filed a plea in abatement which was
denied. He presented the association with multiple
harassing discovery that wasn't relevant to the
counterclaim, and set and cancelled hearings without
notification to counsel. (6-RR.77-79.)
The testimony offered in support of the Association’s attorney’s fees (6-RR.66-85)
clearly comports with the standard of “clear, positive, direct and free from
contradiction,” particularly in light of the fact that Elgohary presented no
testimony or evidence on the issue of attorney’s fees. (RR6 85.) Accordingly, even
72
05267.183 / 1649190.1
if this Court were to presume that the invoices were untimely, it has ample,
independent evidence of the fees to uphold the award in this matter.
F. Elgohary Presented No Testimony as to Attorney’s Fees.
While Elgohary cross-examined McLaurin regarding his testimony on
attorney’s fees (RR6 79-85), he presented no testimony or evidence to controvert
the issue of the Association’s attorney’s fees:
THE COURT: Okay. Mr. Elgohary, do you have any
witnesses?
MR. ELGOHARY: I do not. I think I've made -- I think I
have made my case in chief.
THE COURT: Okay. Defendant rests. (6-RR.85.)
Thus the only evidence presented to the Court on the issue of attorney’s fees
and what award of attorney’s fees would be reasonable, necessary, equitable and
just was the testimony of the Association’s expert witness. Elgohary has
demonstrated no abuse of discretion by the trial court in awarding attorney’s fees
to the Association in this case. Elgohary presented no witnesses or evidence
regarding attorney’s fees. The evidence introduced by the Association to the Trial
Court, viewed in the light most favorable to the Trial Court’s ruling, clearly
supports the judgment in this case. Therefore the judgment should be affirmed as
to the award, but reformed as to the amount as set forth in Cross-Appellant’s Brief.
73
05267.183 / 1649190.1
PRAYER
For the reasons stated above Appellees Lakes on Eldridge North Community
Association, Inc., RealManage, LLC and Christi Keller, Darla Kitchen, Don
Byrnes, Michael Ecklund, Laura Vasallo Lee, John Kane, Julie Ann Bennett, Rick
Hawthorne, Cara Davis, Jim Flanary, and Jill Richardson, and Neil McLaurin and
Walter Spears pray that this Honorable Court: (1) affirm the trial court’s October
12, 2013 summary judgment order dismissing Elgohary’s claims in their entirety;
(2) affirm the March 13, 2014 judgment on the Association’s claims. By Cross-
appeal, the Association prays that this Court reform the amount of the trial court’s
attorney’s fees award from $20,000 to $42,000. Appellees further request any
relief to which they may be entitled.
74
05267.183 / 1649190.1
Respectfully submitted,
LeClairRyan Bartley & Spears, P.C.
By:/s/ Brianne W. Richardson_____ By:/s/ Neil H. McLaurin_____________
Brianne W. Richardson Walter E. Spears
State Bar No. 24056500 State Bar No.: 18898350
Email: E-mail: wspears@bartleyspears.com
brianne.richardson@leclairryan.com Neil H. McLaurin, IV
James J. McConn State Bar No. 24007657
Email: E-mail: nmclaurin@bartleyspears.com
james.mcconn@leclairryan.com Bartley & Spears
1233 West Loop South, Suite 1000 14811 St. Mary’s Lane, Suite 270
Houston, Texas 77027 Houston Texas 77079
Telephone: 713-654-1111 Telephone: 281-531-0501
Facsimile: 713-650-0027 Facsimile: 281- 493-1539
ATTORNEYS FOR ATTORNEYS FOR APPELLEES,
APPELLEES, LAKES ON ELDRIDGE NORTH
LAKES ON ELDRIDGE COMMUNITY ASSOCIATION,
NORTH COMMUNITY INC., NEIL McLAURIN & WALTER
ASSOCIATION, INC.; SPEARS
REALMANAGE, LLC; DARLA
KITCHEN; DON BYRNES;
MICHAEL ECKLUND; LAURA
VASALLO LEE; JOHN KANE;
JULIE ANN BENNETT; RICK
HAWTHORNE; CARA DAVIS;
CHRISTI KELLER; JIM
FLANARY; JILL
RICHARDSON
75
05267.183 / 1649190.1
CERTIFICATE OF SERVICE
As required by Texas Rule of Appellate Procedure 6.3 and 9.5(b), (d), (e), I certify
that I have served this document on all other parties which are listed below on
March 20, 2015:
Victor S. Elgohary
6406 Arcadia Bend Ct.
Houston, Texas 77041-6222
ROSEMARY B. JACKSON
Rosemary B. Jackson, P.C.
State Bar No. 11671100
2016 Main
Houston, TX 77002
/s/ Brianne W. Richardson________
Brianne W. Richardson
CERTIFICATE OF COMPLIANCE
As required by Texas Rule of Appellate Procedure 9, I certify that this document
complies with the typeface requirements of Tex. R. App. P. 9.4(e) because it has
been prepared in a conventional typeface no smaller than 14-point for text and 12-
point for footnotes. This document also complies with the word-count limitations
of Tex. R. App. P. 9.4(i), if applicable, because it contains 19,914 words in its
entirety, including all parts exempted by Tex. R. App. P. 9.4(i)(1). The word-
court for all sections excluding those exempted by Tex. R. App. P. 9.4(i)(1) is
16,721 words.
/s/ Brianne W. Richardson________
Brianne W. Richardson
76
05267.183 / 1649190.1
01-14-00216-CV
IN THE COURT OF APPEALS
FOR THE FIRST DISTRICT OF TEXAS
HOUSTON, TEXAS
VICTOR S. ELGOHARY
Appellant / Cross Appellee
V.
LAKES ON ELDRIDGE NORTH COMMUNITY ASSOCIATION, INC.;
REALMANAGE, LLC; DARLA KITCHEN; DON BYRNES; MICHAEL
ECKLUND; LAURA VASALLO LEE; JOHN KANE; JULIE ANN BENNETT;
RICK HAWTHORNE; CARA DAVIS; CHRISTI KELLER; JIM FLANARY;
JILL RICHARDSON; NEIL McLAURIN; WALTER SPEARS
Appellees,
V.
LAKES ON ELDRIDGE NORTH COMMUNITY ASSOCIATION, INC.
Cross Appellant
INDEX OF APPENDICES
APPENDIX DESCRIPTION RECORD CITE
NUMBER
1 Order granting the Summary Judgment CR.606-607
Dismissing All of Elgohary’s Claims
2 Final Judgment on the Association’s CR.939-940
Declaratory Judgment Claims
3 Order Granting Motion for Protection CR.879-880
4 Excerpts from LOEN’s Deed Restrictions CR.196-97; CR.201l
CR.209; CR.218
5 Excerpts from LOEN’s By-Laws CR.224; CR.227
6 Excerpts from LOEN’s Articles of CR.239-240
Incorporation
7 Affidavit of Director/Appellee Darla CR.245-247
77
05267.183 / 1649190.1
Kitchens in support of summary
judgment motion
8 Affidavit of Elgohary in support of CR.594-599
summary judgment response
78
05267.183 / 1649190.1
APPENDIX 1
08/21/2013 03:15:35 PM 713-755-1451 Page 1/2
, l
Filed 13 August 21 P3:16
Chris Daniel - District Clerk
Harris County
FAX15551016
CAUSE NO. 2013-17221
Ck,_
VICTORS. ELGOHARY § IN THE DISTRICT COURT OF
§
Plaintiff §
§
VICTORS. ELGOHARY, DERIVATIVELY §
ON BEHALF OF NOMINAL DEFENDANT §
LAKES ON ELDRIDGE NORTH §
COMMUNITY ASSOCIATION, INC. §
§
v. §
§ HARRIS COUNTY, TEXAS
LAKES ON ELDRIDGE NORTH §
COMMUNITY ASSOCIATION, INC.; §
REALMANAGE, LLC; DARLA KITCHEN; §
DON BYRNES; MICHAEL ECKLUND; §
LAURA VASALLO LEE, JOHN KANE; §
JULIE ANN BENNETT; RICK RAWTRORNE; §
CARA DAVIS; CHRISTI KELLER, §
JIM FLANARY AND JILL RICHARDSON §
§
Defendants § 234TH JUDICIAL DISTRICT
ORDER
On this day came on to be heard Defendants Lakes on Eldridge North Community
Association, Inc. ("LOEN"), ReaiManage, LLC., Darla Kitchen, Don Byrnes, Michael Ecklund,
Laura Vasallo Lee, John Kane, Julie Ann Bennett, Rick Hawthorne, Cara Davis, Christi Keller,
Jim Flanary and Jill Richardson Traditional and No Evidence Motion for Summary Judgment.
The Comt, having reviewed 1he Motion, any response thereto, and argument of counsel, finds
that Defendants' Motion is with merit and is granted. It is therefore:
ORDERED, ADruDGED, AND DECREED, that:
Plaintiffs derivative and individual claims are hereby dismissed with prejudice.
q'\ ~
SIGNED this the I d-. day of Q (ho6"'-. , 2013.
OCT 1 2 2013 ADGE pRj;~
RECORDER'S MEMORAND~M
23 This instrument is of poor quality
atlhe time of imaging
05267.188 /1576100.1
606
,08/2./2013 03:15:35 PM 713-755-1451 Page 2/2
APPROVED AND ENTRY REQUESTED:
HAYS, McCONN, RICE & PICKERING
By: _______________________
JAMES J. McCONN, JR.
State Bar No. 13439700
JANE LEA HAAS
State Bar No. 24032655
1233 West Loop South Suite 1000
Houston, Texas 77027
Telephone : (713) 654-1111
Facsimile : (713) 650-0027
Attorneys for Defenda1lfs
24
05267.188/1576100.1
607
APPENDIX 2
t2-
NO. 2013-17221 ~
VICTORS. ELGOHARY §
§
IN THE DISTRICT COURT~ -I
VICTORS. ELGOHARY, DERIVATIVELY §
ON BEHALF OF NOMINAL DEFENDANT §
LAKES ON ELDRIDGE NORTH §
COMMUNITY ASSOCIATION, INC. §
§
vs. §
§
LAKES ON ELDRIDGE NORTH §
COMMUNITY ASSOCIATION, INC.; §
REALMANAGE, LLC; DARLA KITCHEN; §
DON BYRNES; MICHAEL ECKLUND; §
LAURA V ASALLO LEE; JOHN KANE; §
JULIE ANN BENNETT; RICK §
HAWTHORNE; CARA DAVIS; CHRISTI §
KELLER; llM FLANARY; JILL §
RICHARDSON §
FINAL JUDGMENT
On the 13th day of March, 2014, came on to be heard the trial ofCounter-PlaintiffLakes on
Eldridge North Community Association, Inc. and Counter-Defendant VictorS. Elgohary. Counter-
Plaintiff and Counter-Defendant appeared by and through counsel of record and announced ready
for trial. The Court proceeded to hear the evidence and arguments presented by the parties supporting
the entry 7 f Judgment and finds that the Judgment should be entered. It is therefore,
ORDERED, ADJUDGED and DECREED that, pursuant to the Uniform
Declaratory Judgments Act, the Association is permitted to regulate the use of the West Little York
entryIexit.:I further,
ORDERED, ADJUDGED and DECREED that, pursuant to the Uniform
Declaratory Judgments Act, the Association is not prohibited from placing signs on Association
property, so long as said signs do not relate t~ the construction, improvement, alteration, or addition
to ~s within the Subdivision. It is further
____J__ ORDERED, ADJUDGED and DECREED that Counter-Plaintiff Lakes on
Eldridge North Community Association, Inc. shall have and recover from Counter-Defendant Victor
S. Elgohary $). O, 0,$10 in reasonable and necessary attorneys fees through the trial of this case;
It is further,
031314VJ7 540 102- JUDGMENT wpd
939
/ ORDERED, ADJUDGED and DECREED that Counter-Plaintiff Lakes on
Eldridge North Community Association, Inc. shall have and recover from Counter-Defendant Victor
S. Elgohary: $ ~ S~O in additional reasonable and necessary attorneys fees in the event
Counter-Defendant files an unsuccessful motion for new trial or other similar motion,$ f 5o:::>
in additional reasonable and necessary attorney's fees in the event Counter-Defendant should file an
unsuccessful appeal with the court of appeals;$ I 5 0'? in additional reasonable and necessary
attorney's fees in the event Counter-Defendant files an unsuccessful petition for review to the
Supreme Court of Texas and$ So::;C) in additional reasonable and necessary attorney's fees
in the event a petition for review is granted but Counter-Defendant prosecutes an unsuccessful appeal
to the Supreme Court of Texas. It is further,
ORDERED, ADJUDGED and DECREED that all costs of court expended or incurred in this
cause are hereby adjudged against the Counter-Defendant. It is hereby
ORDERED, ADJUDGED and DECREED that this judgment shall bear interest at the rate
of 5.00% per annum until satisfied;
This Final Judgment incorporates the order of this Court entered October 12, 2013,
dismissing with prejudice all of Plaintiff VictorS. Elgohary's derivative and individual c~aims.
This judgment is final and appealable and disposes of all parties and claims herein.
SIGNEDthisRdayof MfXctt b' '2014.
JUDGE PRESIDING/
2
940
031314VJ7 540 102 ·JUDGMENT wpd
APPENDIX 3
!
;
!!
NO. 2013-17221
I
VICTORS. ELGOHARY §
§
IN THE DISTRICT COURT OF I
VICTORS. ELGOHARY, DERIVATIVELY §
ON BEHALF OF NOMINAL DEFENDANT §
LAKES ON ELDRIDGE NORTH
COMMUNITY ASSOCIATION, INC.
§
§
I l
i
§
VS. § HARRIS COUNTY, T EX A S
!
§ I
l
,
LAKES ON ELDRIDGE NORTH § !
COMMUNITY ASSOCIATION, INC.; § '
!
REALMANAGE, LLC; DARLA KITCHEN; §
DON BYRNES; MICHAEL ECKLUND; § !
LAURA VASALLO LEE; JOHN KANE; § f
JULIE ANN BENNETT; RICK
HAWTHORNE; CARA DAVIS; CHRISTI
§
§
I r
5
KELLER; JIM FLANARY; JILL § I
RICHARDSON § 234TH JUDICIAL DISTRICT l~
~
~
ORDER '
f
i
!
I
BE IT REMEMBERED that on this day came on to be heard Counter-Plaintiff Lakes on
l
~
Eldridge North Community Association, Inc.'s Objections to Discovery and Motion for Protection
f
l
ia'
from Discovery propounded by VictorS. Elgohary and the Court having considered the Objections
and Motion for Protection, and any responses thereto, the evidence on file, and any arguments of i
f
counsel, finds that such Objections and Motion for Protection are with merit, and
ORDERS that Counter-Plaintiffs Objections to Discovery are hereby SUSTAINED. The
Comt fmther
ORDERS that Counter-Plaintiffs Motion for Protection from Discovery IS hereby
GRANTED, and futher
ORDERS that Lakes on Eldridge North Community Association, Inc. shall file no responses Il
l
to Elgohary's Request for Production of Documents, except as set forth herein, and further j
j
1
RECORDER'S MEMORANDUM
Thrs Instrument rs of poor qualrty
f
at the trme of rmagrng
879
ORDERS that Lakes on Eldridge North Community Association, Inc. shall produce in
response to Elgohary's Request for Production No.6 copies of invoices for attorney's fees incurred
in this lawsuit and further
ORDERS that Elgohary shall not take the depositions of the corporate representative(s) of
Lakes on Eldridge North Community Association, Inc., Cara Davis, Don Byrnes, Laura Vassalo-Lee,
John Kane, Michael Ecklund, Darla Kitchen, Christi Keller or Michael Dach or any other person in
relation to this matter and further
ORDERS that the subpoena duces tecum relating to Michael Dach is hereby QUASHED.
SIGNED on dt J/.\,.-1 \JI\V( '2014.
JUD E PRESIDING
2
880
APPENDIX 4
08/21/2013 03:16:08 PM 713-755-1451 Page 1 /76
/IJI
:r: THE LAKES ON ELDRIDGE NORTH
XXX-XX-XXXX
/~
DECLARATION OF COVENANTS, CONDITIONS & RESTIUCTIONS
0~/07/99 300323085 195£B~7 ~&3.QD
STATE OF TEXAS §
KNOW ALL PERSONS BY TIIESE PRESENTS:
COUNTY OF HARRIS §
THIS DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS is made thls
2nd day of September, 1999, by The Lakes On Eldridge North, ~td., a limited partnership formed
pursuant to the applicable provisions of the Texas Revised Lhnited Partnership Act (hereinafter
sometimes referred to as "Declarant"),
WITNESSETH:
Wl-ffiREASj the Declarant is the owner of the land witlrin The Lakes on Eldridge North,
a subdivision of land in Harris County, Texas, which presently is composed of Section One (1)
through and including Section Four (4), according to the four (4)'plats thereof recorded under Film
Code Numbers 425020, 425023, 425026 and 425029 in the Map Records of Harris County, Texas
(all of such land so owned and the improvements now or hereafter situated thereon being
hereinafter referred to as the 11 Property"); and
WHEREAS, it is the desire and intention of Declarant to restrict said Property according
to a common plan as to use, permissible construction, and common ~uuenlties so that all land
within the Property shall be benefitted and each successive own~r of all or a part of said land shall
be benefitted by preserving tho values and the character of said land; and
WHEREAS) Declarant desires to take advantage of the geograpl1ical features of the
Propeity and proposes 10 establish a residential living environment which is dependent upon and
in furtherance of aesthetic considerations in order to create a residential community having
common areas, facilities and landscaping, and to provide for the maintenance, repair, operation
and improvement of same; and, to this end, desires to subject the Property to the covenants,
conditions, restrictions, easements, charges and liens hereinafter set forth, to be binding upon each
owner of a Lot or Lots within the Property, and which restrictions, covenants and conditions will
a1so comply with the requirements of local governmental authorities and tl1e zoning and
subdivision ordinances and regulations of Harris County, Texas; and
.. h • ,
WHEREAS, Declarant has deemed it desirable, and ill the best interests of the residents
and future residents of the Property, for the efficient preservation of the values and amenities in
the Properly and the maintenance, repair, operation and improvement of the common areas,
facilities and landscaping, to create an~utity to which would be delegated and assigneJ.the powers
of maintaining and admirristering same and enforcing these restrictions, covenants, easements,
5744 .2'!508GAM. D5A. KL(Restrictions), wpd -1~ EXHIBIT
I l
196
08/21/2013 03:16:08 PM 713-755-1451 Page 2/76
charges and liens, and collecting and disbursing the assessments and charges hereinafter created;
and
WHEREAS, Declarant has caused to be incorporated The Lakes on Eldridge North
Community Association, a Texas non-profit corporation, and has designated it as such entity; and
NOW, THEREFORE, Declarant, for and in consideration of, and expressly for the benefit
oft and to bind, its successors in interest, does hereby agree and declare that the Property.
including such additions thereto as may hereafter be made pursuant to Article 1, Section 3 hereof,
shall be held, transferred, sold, conveyed and occupied subject to the covenants, conditions,
restrictions, easements, charges and liens hereinafter set forth, which shall run with the land and
shall be binding upon all parties having any right, title, or interest in or to the Property, or any
part tl1ereof, and their heirs, successors, representatives and assigns. The covenants. conditions,
restrictions, easements, charges and liens hereinafter set forth are covenants running with the land
at law as well as in equity.
ARTICL&I...
GENERAL
Section 1. Definitions. 'l'he following words, when used in this Declaration, unless the
context shall prohibit, shall have the following meanings:
a. "Area 11 , when followed by a Roman numeral, shall mean and refer to a specific
location which shall have been described and defmed either in Section 2 of this
Article I or in one of the Supplementary Declarations provided for in Section 3
of this Article I.
b. "Association'' shall mean and refer to The Lakes on Eldridge North Community
Association, Inc., a Texas non-profit corporation, which will have the power, duty
.and responsibility of :maintaining and administering the Common Areas, Common
Facilities. Connnon Personalty, Detention Areas and all Landscaping in the
Common Areas, and administering and enforcing these covenants, conditions and
restrictions and coJlecting and disbursing the assessments and charges hereinafter
prescribed. ,
c. "Builder" shall mean and refer to any person or entity undertaking the construction
of a residence on a Lot.
d. "Common Areas 11 shall mean and refer to areas of land owned, leased or used by
the Association, and/or easement areas for walls or fences, lakes/detention areas,
entryways, access or walk\vays, recreational facilities, and other purposes
benefitting the Members, including any improvements illld landscaping located
thereon, for the common use, e1~oyment and'benefit oi' the Members of the
Association.
5744.275D30M.:L05A. KL(Reotrictiom) ,wpd -2-
197
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SZT-92-1078
Section 4. Tennination of Membership. The membership of a person or entity in the
Association shall tenninate automatically whenever such person or entity ceases to be an Owner,
except that such tennination shall not release or relieve any such person or entity from any liability
or obligation incurred under or in any way connected with the Association or this Declatation
during the period of ownership, nor impair any rights or remedies ythich the Association or any
other owner has with regard to such former Owner.
ARTICLEID.
ASSESSMENTS
Section 1. Covenants for Assessments. The Declarant, for each Lot owned by it within the
Property (being all Lots within the Property), hereby covenants to pay and each purchaser of any
such Lot by acceptance of a deed therefor, whether or not it shall be so expressed in any such deed
or other conveyance, shall be deemed to covenant and agree to pq.y, to the Association: (1) Regular
Atmual Assessments or charges (as specified in Section 3 of this Article ill); (2) Special
Assessments (as specified in Section 4 of this Article ill), and (3) Special Member Assessments
(as specified in Section 5 of this Article III), all of such asstJtlsruents to be fiXed, established and
collected as hereinafter provided.
Section 2. Purpose of Assessments. The assessments levied by the Association shall be
used exclusively for the purpose of protecting and promoting the comfort, collective mutual
enjoyment~ health and welfare of the Owners of the Property, Ot'"any part thereof, and for carrying
out the purposes of the Association as stated in its Articles of Incorporation and this Declaration.
The judgment of the Board of Directors of the Association in determining the functions to be
performed by the Association, in determining the amount of Regular Annual Assessments, special
Assessments and Special Member Assessments, and in the expenditure of funds slmll be f:m.al and
conclusive so long as its judgment is exercised in good faith.
Section 3. Regular Annual Assessments .. Each 0\vner of a Lot shall pay Rcgu1ar Annual
Assessments to the Association.
a. Purnose. Regular Annual Assessments shall be levied upon each Lot to provide
funds for the use and benefit of the Owners in the Property. Regular Aminal
Assessments may be used to fmance in particular, but not by way of limitation, the
following:
(1) · Operation, maintenance, repair, replacement and improvement of the
Common Areas, the Common Facilities, Common Personal Property,
Detention Areas and all Landscaping in the Common Areas, including
funding of appropriate reserves for future repair, replacement and
improvement of same;
(2) Payment of taxes and premiums for insurance coverage;
5744.Z7508GAM.05A.KL(Resnictions).wpd -6-
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XXX-XX-XXXX
Section 8. Fees. The Architectural Control Committee shall have the right to charge a
review fee, to be established by the Board of Directors, for review of any plans or specifications
submitted for approval. The Architectural Control Committee shall also have the right to charge
a fee as a deposit, to be established by the Board of Directors to ensure compliance with the time
constraints established herein for commencement and completion of construction. Said deposit
shall be applied by the Architectural Control Committee to its costs to obtain compliance with said
constraints. If the deposit is insufficient to pay the cost, the Owner shall pay the balance on
demand.
ARTICLE V.
PROTECTIVE COVENANTS AND RESTRICTIONS
· Section 1. Covenants Applicable. The following provisions shall be app1icable to any and
all construction, improvement, alteration, or addition to the Lots.
a. Each Lot shall be used exclusively for single frunily residential dwelling purposes
only not to exceed the greater of two and one-half (2 1h) stories in height, or forty
feet (40') above nearest curb elevation. No building or structure intended for or
adapted to business purposes, and no apartment house, hospital, sanatorium or
doctor's office, or other multifamily dwelling shall be erected, placed, permitted
or maintained on any Lot, or on any part thereof, No improvement or structure
whatsoever, other than a first-class private dwelling house, patio walls, swimming
pool, and customary outbuildings, garage for not more than three (3) cars, except
custom home Sections may have a garage for four (4} cars, porte' cochere, bona
fide servants' quarters, waterfront structures, or bona fide guest house, may be
erected, placed, or maintained on any Lot. No other Improvements on the Lot shall
exceed the height of the main dwelling house,
b. No sign, including political signs, advertisement, biUboard or advertising structure
of any kind shall be displayed, maintained or placed in the public view on or from
any part of the Property or on any Lot, except signs temporarily used by Declarant
or any Owner on a Lot, of not more than six (6) ,square feet, advertising the Lot for
sale or rent, or signs of architects and builders during the period of construction
and sale of improvements on any Lot.
c. The total living area of any single-story dwelling, exclusive of porches, servants'
quarters, customary outbuildings and garages, shall not be less than 2,000 square
feet, except for patio homes for which the minimum living area of 1,500 square
feet will be required for single story dwelHngs.
d. The living area of any two-story dwelling constructed on any Lot. exclusive of
open porches, servants' quarters and garages, shall not be less than 1,700 square
feet on the ground floor and not less than 2,300 for the total living area, and the
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52?-92-1095
Section 3. Extent of Easements. The rights and easements of enjoyment created hereby
shall be subject to the following:
a. The right of the Association to prescribe rules and regulations for the use,
enjoyment, and maintenance of the Common Areas.
b. The right of the Association to sell, convey or dedicate to the appropriate
governmental autholity, the Common Areas, or any part thereof, provided such
sale, conveyance or dedication is approved by a majority of the total eligible votes
of each class of the Members of the Association, voting in perSOIJ- or by proxy, at
a meeting duly called for such purpose, written notice of which shall be given to
all Members at least thirty (30) days in advance of the meeting and shall set forth
the purpose of the meeting.
c. The right of the Association to borrow money for the purpose of improving,
maintaining, or repairing the Common Areas and/or Common Facilities, or any
part thereof, and to mortgage the Common Areas, Common Facilities, or any pa1t
thereof1 provided the mortgaging of the Common Areas is approved by a majority
of the total eligible votes of each class of Members of the Association voting in
person or by proxy, at a meeting duly called for such purpose.
d. The right of the Association to take such steps as are reaso~bly necessary to
protect the Common Areas and/ or Common Facilities; m any part thereof, against
foreclosure.
e. The right of the Association to suspend the voting rights and right to use the
Common Facilities of any Member for any period durhig which any assessment or
other amount owed by the Member to the Association remains unpaid or during
which such Member is in violation of any of the provisions of this Declaration.
f. The right of the Association to establish reasonable rules ~nd regulations governing
the Members, use and enjoyment of the Cmnmon Art::las, and to suspend the
enjoyment rights of any Member for any period ·not to exceed sixty (60) days for
any infraction of such rules and regulation.
g, The right of the Association to charge reasonable admission and other fees for the
use of any recreational facilities which are a part of the Common Areas.
5744.27508GAM .05A .KL{Rcstdctioruo). wptl -23-
218
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' '
FOURTH AMENDED AND RESTATED
BY-LAWS OF
LAKES ON ELDRIDGE NORTH COMMUNITY ASSOCIATION, INC.
A NON-PROFIT CORPORATION
LAKES ON ELDRIDGE NORTH COMMUNITY ASSOCIATION, INC. (the
"Association") is the association. referred to in the Lakes on Eldridge Declaration of Cove-
nants, Conditions and Restrlct\ons (the "Restrictions"), filed in the Official Public Records of
Real Property of Houston, Harris County, Texas. The terms .used in these By-Laws shall
have the same meanings given to them in the Restrictions, unless otherwise specificaHy
provided herein. In the event of any conflict between the terms and provisions of these By-
Laws and the Restrictions, the Restrictions shall control. These amended and restated by-
laws take effect July 24, 2008.
ARTICLE I.
REGISTERED AND PRINCIPAL OFFICE
1.1 Registered Office and Agent. The registered agent and office may change
from time to time. The Texas Secretary of State will be notified of any such change.
1.2 Principal Office. The principal office ofthe Association shall be located in the
City of Houston, Harris County, Texas.
1. 3 Other Offices. The Association may also have offices at such ·other places
both in and out of the State of Texas as the Board of Directors may from time to time
determine or the business of the Association may require.
ARTICLE II.
MEMBERS, MEETINGS AND VOTING RIGHTS
2.1 Members.
{a) Each and every person, persons, or legal entity who shall own any Lot, shall
automatically be, and must remain, a Member of the Association. Such membership shall
be appurtenant to each lot and may not be severed from or held separately there from.
Provided, that any person or entity who holds such an interest merely as security for the
performance of any obligation shall not be a Member. No Member shall have any right or
EXHIBIT
-1-
4TH_AMENDED_AND_RESTATED_BYLAWS
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2.8 Organization. The President shall preside at all meetings of the Members. In
his absence a Vice President shall preside. In the absence of all of these officers any
Member or the duly appointed proxy of any Member may call the meeting to order and a
chairman shall be elected from among the Members present
The Secretary of the Association shall act as secretary at all meetings of the
Members. In his absence an assistant secretary shall so act and in the absence of all of
these officers the presiding officer may appoint any person to act as Secretary of the
meeting.
2.9 Action Without Meeting. Any action required by any provision of law or of the
Articles of Incorporation or these By-Laws to be taken at a meetrng of the Members or any
action which may be taken at a meeting of the Members may be taken without a meeting if
a consent in writing, setting forth the actions so taken, shall be signed by a majority of the
Members entitled to vote with respect to the subject matter thereof, and such consent shall
have the same force and effect as an unanimous vote of the Members. The consent may
be in more than one counterpart.
2.10 Tefephone and Similar Meetings. Members, directors and committee
members may participate in and hold a meeting by means of conference telephone or
similar communications equipment by means of which all persons participating in the
meeting can communicate with each other. Participation in such a meeting shall constitute
presence in person at the meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the ground that the
m·eeting is not lawfully called or convened.
2.11 Order of Business at Meetings. The order of business at annual meetings
and so far as practicable at other meetings of Members shall be determined by the Board
of Directors.
ARTICLE THREE
BOARD OF DIRECTORS
3.1 Management. The property, business and affairs of the Association shall be
managed by the Board of Directors who may exercise all such powers of the Association
and do all such lawful acts and things as are not (by statute or by the Articles of
Incorporation or by these By-Laws) directed or required to be exercised or done by the
Members. The Directors shall have all of the powers, authority and duties of the
Association existing under the Act, the Restrictions and these By-Laws, which shall be
exercised exclusively by the Board, its agents, contractors or employees, subject only to
approval by Members when such is specifically required by law, the Restrictions or these
By-Laws.
-4-
4TH_AMENDED_AND_RESTATED_8YLAVVS
227
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FOUTS & MOORE
f6 002
FILED
1
Secre1 the Office of ~he
e, transfer, dedicate for public use or
otherwise to dispose of real or personal property in connection with the
affairs of the Associatioi1;
(v) To borr-ow money. to mortgage, to pledg(.':, to det:"d in trust, or to
hypothecate any or all of the Assoc1ation real or personal propeey as
security fo~ money borrowed or debts inc:u.rred;
(vi) To have aDd to exerciSe any and aU powers, tights, and privileges that a
corporation organized under the Texas Non-Profit Corporation Act, by law t
may now or at a later time have or ex.ercit~e; and
(vii) To act in the capacity of prl.n.cipal, agent~ joint venturet, partner or
otherwise in furtherance of the primary :purpose of the Association..
c. Notwithstanding any of the above statements ofpurpose, the AssoGiatlon shall not,
except to an insubstantial degree, engage in any activities or exercise any powers.
that are not in furt:herance of the primary purpose of the Association. Further, the::
Association is organized and shall be operated exclusively for the civic and
comru.unity. service: s:ct forth herein and no part of any net earnings shall inure
(other than by acquiring. constructing, or providing management, maintenance and
care of the Association propert)' or by a rebate of e-xcess membership dues, ft:es or
assessments) to the benefit of any private individual.
ARTICLE V
The street address ofits initial registered office is 9801 Westheimer, Suite 701, Houston,
Texas 77042, and the name ofits initial registered at such address is Bassam Barazi.
240
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CAUSE NO. 2013-17221
VICTOR S. ELGOHARY § IN THE DISTRICT COURT OF
§
Plaintiff §
§
VICTORS. ELGOHARY, DERIVATIVELY §
ON BEHALF OF NOMINAL DEFENDANT §
LAKES ON ELDRIDGE NORTH §
COMMUNITY ASSOCIATION, INC. §
§
v. §
§ HARRIS COUNTY, T EX A S
LAKES ON ELDRIDGE NORTH §
COMMUNITY ASSOCIATION, INC.; §
REALMANAGE, LLC; DARLA KITCHEN; §
DON BYRNES; MICHAEL ECKLUND; §
LAURA VASALLO LEE, JOHN KANE; §
JULIE ANN BENNETT; RICK HAWTHORNE; §
CARA DAVIS; CHRISTI KELLER. §
JIM FLANARY AND JILL RICHARDSON §
§
Defendant:• § 234TH JUDICIAL DISTRICT
AFFIDAVIT OF DARI,A KITCHEN
Before me, the undersigned notary, on this day personally appeared Darla Kitchen, the
affiant, a person whose identity is known to me. After I administered the oath to affiant. affiant
testified:
1. "My name is Darla Kitchen. I am over the age of 18 and am otherwise competent to
execute this affidavit. I have personal knowledge of the matters set forth herein and all
the matters set forth herein are true and correct.
2. I was a volunteer who served on the Board of Directors on the Lakes of Eldridge North
Community Association, Inc. (hereinafter called "LOEN") from 2010 to February 2013,
wherein I held various offices on the Board. I did not receive compensation for this
service to LOEN. I was also a member of LOEN, and owned my residence within the
LOEN commllility for 12 and a 1(2 years.
3. In my role as a Board member, I had personal knowledge and was familiar with the
Declaration of Covenants, Conditions and Restrictions, the Fourth Amended and Restated
By-Laws of Lakes on Eldridge North Community Association, Inc., and the Articles of
Incorporation of Lakes on Eldridge North Community Association (hereinafter called the
"dedicatory instruments"). In my role on the Board of Directors, I acted within the
authority given to the Board of Directors via the dedicatory instruments and the decisions
made were to promote the health, safety and welfare of the LOEN community, as well as
to promote the expressed purpose of the LOEN within the dedicatory instruments as the
below explanations will support.
EXHIBIT
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4. As an officer of LOEN and acting within the authority contained in the dedicatory
instruments, I, as part of the Boarcl made the decisions to (1) regulate the conunon areas
by restricting the use ofthe West Little York entry/exit between the hours of ll:OOpm to
5:00am, and (2) place signs to direct visitor traffic. I made these decisions based on
issues which the members of the LOEN had raised regarding tailgating at the gate,
security and safety concerns for the property in general, and in order to assist visitors to
the manned gate by which they should enter LOEN. To my knowledge, we, the Board,
followed the proper procedure outlined in the dedicatory instruments in making these
decisions. We held Board meetings, and voted on these issues. Prior to our voting to
implement the restricted access through the gate at issue, and placing signs for visitors to
direct them to the proper manned gate entry, we discussed and considered whether
restricting the gate at West Little York and placing the signs of which Plaintiff complains
would be in the best interest of the members of the LOEN, would relieve some of the
problems with tailgating into the community, would assist visitors with entering the
property through the manned gate, and thus, would help protect and promote the welfare
ofthe LOEN members.
5. Further, after our decision to restrict the hours of operation for that access gate, the Board
conducted a survey of the LOEN members in order to ascertain whether the members
wanted the access gate to be locked between I 1:00pm to 5:00am or not, and whether they
would prefer fewer restricted hours. Further, we had town hall meetings two or three
times a year where all residents could speak about any topic they wanted to address.
6. Still further, the Board continued to investigate whether restricting the operational hours
of this particular gate was beneficial to its LOEN members by contacting the CyFa.lr
Volunteer Fire Department as well as the Harris County Fire Marshal to ensure that
emergency vehicles could access the property during the non-operational hours. We
further contacted a real estate expert in order to investigate the Houston ordinances and
permanent access easements issues. Again, in my role as officer, all of the discussions,
procedures, and investigations regarding the decision of restricting the access at West
Little York gate were done in good faith and in the best interest of the LOEN members.
7. In my volunteer role as officer for LOEN, I was familiar with the Mr. Elgohary's
allegations that funds have been misappropriated from LOEN by its Board of Directors
and the management company RealManage as well as by Ms. Keller, individually. The
Board also contacted the office of the Harris County Fire Marshal's otlice who conducted
an onsite inspection requesting a minor modification which was done and then approved
the gates operation and its closing. I had personal knowledge that the assessments illld
fees collected on behalf of the LOEN community from its members were taken and used
for the benefit of the community, the purpose of which is to protect and promote the
comfort, collective mutual enjoyment, health and welfare of the Ovmers of the Property
pursuant to the "Purpose of Assessments" in the Declaration of Covenants, Conditions &
Restrictions.
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8. In my capacity as Board member, via the Declaration of Covenants and By-Laws. I
believe that the expenditures of the LOEN funds were in good faith in order to benefit the
community. For example, gift cards were given to the volunteers within the LOEN
community who performed outstanding service for special community wide projects.
This was done in order to promote volunteerism within the community and to better the
community in general by having more volunteers come forward to large community
projects. The amount of funds spent on social! community and/or voltu1teer awards were
a very small portion of the LOEN budget, meaning that the assessment for these
activities/awards was less than 2% of the annual assessment to each household.
9. Pursuant to my authority as officer vv:ithin the By-Laws, T believe that I managed the
business and affairs of the LOEN, including adherence to the accounts payable process
for all expenditures of the fees and assessments collected from the LOEN members.
Again, each expenditure decision has been made by the Board of Directors by following
the procedure for such decisions set forth in the Declarations and the By-Laws for the
LOEN. Further, each expenditure was a part of the accounts payable process which was
kept and maintained by the Board of Directors and LOEN's management company,
RealManage, including Ms. Keller,
10. Further, the LOEN Association hires a CPA for its tax reporting to the IRS, and has since
2006, I believe. As officer of LOEN, I am unaware of any misrepresentations made to the
IRS concerning the LOEN. Still further, as a Board member, I am personally aware that
the Board has managed the financial affairs of LOEN by bringing the operations in below
budget while also being able to fund the operating reserve and capital replacement
reserve without reducing any of the services to the LOEN community.
Further Affiant sayeth not.
JJ.fL
/), . SWORN TO AND SUBSCRIBED before me, Notary Public, on this the ..f.l!_ day of
t~&f4uoi-- ·~2013. ~.LL _
- ~;)[oz~
Not~ For
the State of Texas
My Commission Expires; _ _ _ _ __
05267.188 /1582556.1
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Filed 13 September 30 P2:50
Chris Daniel - District Clerk
Harris County
FAX15582830
No. 2013-17221
VictorS. Elgohary, § IN THE DISTRICT COURT
~~~ff §
§
VictorS. Elgohary, Representatively on §
behalf of Nominal Defendant Lakes on §
Eldridge North Community Association, Inc. §
§
V. §
§
Lakes on Eldridge North §
Community Association, Inc.~ § HARRIS COUNTY, TEXAS
RealManage, LLC~ Darla Kitchen~ §
Don Byrnes~ Michael Ecklund; §
Laura Vasallo Lee~ John Kane~ §
Julie Ann Bennett: Rick Ha\vthorne~ §
Cara Davis; Christi Keller, Jim Flanaty §
Jill Richardson §
§
Defendants § 234th JUDICIAL DISTRICT
AFFIDAVIT OF VICTOR ELGOHARY
STATE OF TEXAS §
§
COUNTY OF HARRIS §
BEFORE ME, the undersigned notary public, on this day personally appeared
VictorS. Elgohary, attorney of record for Plaintiffs in the above entitled cause, who, being
by me duly sworn, on his oath stated as follows:
1. My name is Victor Elgohary. I am an attorney at law and Certified Public
Accountant duly admitted to practice in the State of Texas and before this Honorable Court, I
am over the age of eighteen (18) years and am fully competent to make this Affidavit. I have
personal knowledge of the facts set out in this affidavit and those facts are true and correct.
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2. I first contacted the officers and directors in June 2011 regarding the community
association's use of funds for extraneous charitable fundraising purposes and altering the
easements of residents that recorded in the Harris CountY Clerk's office. At that time I also
made a request to review the books and records of the association.
3. After weeks of discussion and negotiation, I received a very limited set of
documents from the association's attorney on August 3, 2011. I made several additional
requests for the remaining documents that \Vere requested, many of which were never tendered
due to loss, destruction, or claims of privacy. I received a few additional documents on
August 5, 2011.
4. In my review ofthose limited documents at the time, I noted that a majority of
the corporate minutes for the association over the past six years were missing. I also found
that there were numerous entries where the corporation's funds were tendered directly to board
members, their immediate family members, and their selected neighbors that were
undocumented as to their purpose or necessity in regards to the operation of the association
and \Vere not in compliance \Vith the atiicles of incorporation for Lakes on Eldridge North.
5. I also noted in my revie\v of the limited documents that there were no financial
controls in place in terms of separation of duties and payment approvals that would prevent
defalcation ofthe corporation's funds.
6. In addition to the lack of financial controls that were then in place for the
association, I noted in my review of the documents that the officers and the agents of the
association made written misrepresentations to the audit firm in regards to the operations of
the association.
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7. In my review ofthe financial documents that were tendered, I saw that the
association represented to the United States Internal Revenue Service in an application for
exemption hom taxation that there are no restrictions to access the community's common area
property. That assertion is untrue and a blatant misrepresentation given the limited access into
and out of the community w-ithout authorization either through the use of a gate pass or
registering at the entrance \Vith the security guard.
8. On August 27, 2012, I met with Kristi Keller and was able to view additional
documents that I had requested. I was not permitted to retain any copies of the documents I
viewed on her computer, but my review ofthe electronic documents with her revealed futiher
defalcations and misappropriation of funds, improper tax reporting, and overall
mismanagement of the corporation's assets.
9. I personally served discovery of interrogatories and production of documents on
Defendants by hand delivety on August 5, 2013 at the offices of Hays, McConn, Rice &
Pickering.
10. I received a copy ofDefendants Objections to Plaintiff's Discovery, Motion for
Protection hom Plaintiff's Written Discovery, and Motion to Stay Discovery Pending Ruling
on Defendants' Motion for Summary Judgment on August 21,2013 by email. In the email,
Mr. McConn asked if we are opposed to the motion.
11. The next day, I responded to Mr. McConn by reply email stating that I would be
happy to confer with him regarding the discovery that was sent to the Defendants. In that
same email I reminded Mr. McConn that Judge Ward made it clear at the last hearing that the
lawyers must confer on all items before filing them. I suggested that e-mails of a proposed
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filing, without more, would unlikely be considered a "conference" from what I understood of
the judge's directive to the parties back in June 2013.
12. Mr. McConn telephoned me on the afternoon of August 22, 2013. In our
conversation I reiterated that I would be happy to go through the discovery and discuss his
objections. He responded to me that they were all overbroad and I should wTite him a letter
stating \vhy each request was proper and would lead to the discovery of admissible evidence. I
told Mr. McConn I was opposed to the blanket objections in his motion but would be happy to
deal with and discuss objections as they applied to each individual request for production and
interrogatory. Mr. McConn declined my invitation to confer futiher and tiled the motion
sometime that same day. Our telephone conversation lasted 12 minutes.
13. Mr. McConn never delivered the motion for summary judgment and the notice
of hearing to me pursuant to Rule 21a. This summary judgment motion was only sent to me
bv email.
14. Mr. McConn delivered an Amended Motion for Protection ti-om Plaintiff's
Written Discovery, and Motion to Stay Discovery Pending Ruling on Defendants' Motion for
Summary Judgment to me pursuant to Rule 21a on September 4, 2013. I received the motion
on September 6, 2013 along \Vith a notice of hearing set for September 16, 2013.
15. I have still not received Defendants' Motion for Traditional and No Evidence
Summary Judgment or a notice of hearing on this motion pursuant to Rule 21a.
16. I have not signed a Rule 11 agreement with Mr. McConn that alters notice or
delivery requirements under the Texas Rules of Civil Procedure.
17. I maintain an office for the practice of law in Houston Texas. I am the attorney
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responsible for this file, and I am familiar \\~th its contents and the time extended thereon. It is
my practice to maintain time records, and my fees are generally computed on an hourly basis.
In addition, I consider the follo\\~ng factors:
a. the novelty and difficulty of the questions involved and the skill requisite
to perform the legal services properly;
b. likelihood that the acceptance of the particular employment would
preclude other employment;
c. the fee customarib·J charaed
0 in the localitv.; for similar leaal
0 services·
~
d. the dollar amount involved and the results obtained;
e. the time limitations imposed by the client or the circumstances~
f. the nature and length of the professional relationship with the client; and
g. my experience, reputation and ability.
18. The following services were rendered in connection with the above entitled
motion and the response:
Researching the legal issues, responding and attending hearings on motion for
summary judgment and motion to quash discovery; reviewing the 10 affidavits
from the directors/officers ofLOEN ' sendina0 opposina0 counsel emails and
letters; responding to Defendants' motions for protection; leaving voice mails
and emails in an attempt to reschedule hearings
- '
and conferrina0 with opposina0
counsel.
19. The above services were reasonable and necessary in this action for responding
to the actions of defense counsel that were groundless and were brought in bad faith intended
solely to delay and increase the costs of litigation in this case.
20. In my professional opinion, in view of the time that was expended on responding
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to the motion for summary judgment, reviewing the eleven affidavits, attending hearings on
the motion for summary judgment, filing responses to motions for protection from discovery,
making requests to confer on discovery issues, responding to motions to quash, the services to
be provided to the Plaintiffs and the other factors considered by me, reasonable and necessary
attorneys' fees and costs in these motions are in the amount of $8,255.05.
SUBSCRIBED AND SWORN to before me, the undersigned notary public, on
this 27th day of September 2013.
599
Victor S. Elgohary, Representatively on Behalf of Nominal Lakes on Eldridge North Community Association, Inc. v. Lakes on Eldridge North Community Association, Inc. RealManage, LLC Darla Kitchen Don Byrnes Michael Ecklund Laura Vasallo Lee John Kane Julie Ann Bennett Rick Hawthorne Cara Davis Christi Keller Jim Flanary Jill Richardson
Combined Opinion