ACCEPTED
03-14-00660-CV
4513311
THIRD COURT OF APPEALS
AUSTIN, TEXAS
3/16/2015 2:30:04 PM
JEFFREY D. KYLE
CLERK
Cause No. 03-14-00660-CV
__________________________________________________________________
RECEIVED IN
IN THE COURT OF APPEALS FOR THE THIRD JUDICIAL 3rd COURT
REGIONOF APPEALS
OF
AUSTIN, TEXAS
TEXAS 3/16/2015 2:30:04 PM
JEFFREY D. KYLE
__________________________________________________________________
Clerk
Craig Zgabay and Tammy Zgabay
v.
NBRC Property Owners Association
__________________________________________________________________
AMICUS BRIEF OF THE TEXAS CHAPTERS OF COMMUNITY
ASSOCIATIONS INSTITUTE
__________________________________________________________________
Darryl W. Pruett
Texas State Bar No. 00784795
darryl@weichertlaw.com
George V. Basham, III
Texas State Bar No. 01868000
george@weichertlaw.com
Glenn K. Weichert
State Bar No. 21076500
glenn@weichertlaw.com
The Weichert Law Firm
3821 Juniper Trace, Suite 106
Austin, Texas 78738
(512) 263-2666
(512) 263-2698 - Facsimile
ATTORNEYS FOR AMICI CURIAE
Table of Contents
Table of Contents ...................................................................................................... ii
Index of Authorities ................................................................................................. iii
Identity and Interest of Amicus Curiae ...................................................................... v
Issues Presented ...................................................................................................... vii
Summary of the Argument......................................................................................... 1
Argument.................................................................................................................... 5
I. Short-Term Rentals Are Not A Residential Use ............................................ 5
A. The Proper Interpretation of Restrictive Covenants ................................... 5
B. Transient Rentals Are A Commercial Enterprise....................................... 7
C. The Hotel Occupancy Tax Questionnaire ................................................ 18
II. The Deleterious Effects Of Transient Rentals ............................................... 19
III. Conclusion and Prayer ................................................................................... 21
ii
Index of Authorities
Cases
Allstate Ins. Co. v. Sylvester, No. 07-00360, 2008 U.S.Dist. LEXIS 42386, at **16-
20 (Dist. Hawaii May 21, 2008)……………………………………………… 17
Benard v. Humble,
990 S.W.2d 929, 931 (Tex.App.—Beaumont 1999, pet. denied). ......... 2, 7, 8, 13
Cowling v. Colligan,
312 S.W.2d 943 (Tex. 1958) .................................................................................7
Environmental Processing Sys., L.C. v. FPL Farming Ltd.,
No. 12-0905, 2015 Tex. LEXIS 113, at *9 (Tex. Feb. 6, 2015)..........................10
Four Seahorses, LLC v. Spanish Grant Civic Ass'n, Sections 1 & 2, Inc.,
Nos. 14-04-00638-CV, 14-04-00982-CV, 2005 Tex. App. LEXIS 9081 (Tex.
App.—Houston [14th Dist.] Nov. 3, 2005, pet. denied). .......................................8
Friendswood Dev. Co. v. Smith-Sw. Indus., Inc.,
576 S.W.2d 21, 29 (Tex. 1978). ..........................................................................10
Grain Dealers Mut. Ins. Co. v. McKee,
943 S.W.2d 455 (Tex. 1997) .................................................................................5
Hagemann v. Worth,
782 P.2d 1072 (Wash. Ct. App. 1989)...................................................................7
Hyatt v. Court,
No. 2008-CA-01474-MR, 2009 Ky. App. Unpub. LEXIS 738, at *10-*11 (Ky.
Ct. App. Aug. 28, 2009)........................................................................................17
Mills v. Bartlett,
377 S.W.2d 636 (Tex. 1964) ...........................................................................8, 13
Munson v. Milton,
948 S.W.2d 813 (Tex. App.—San Antonio 1997, pet. denied).............................6
Owens v. Ousey,
241 S.W.3d 124, 129 (Tex. App.—Austin 2007, pet. denied) ..............................5
Pilarcik v. Emmons,
966 S.W.2d 474 (Tex. 1998) .................................................................................5
Quinn v. Harris,
No. 03-98-00117-CV, 1999 Tex.App. LEXIS 1576, at fn. 3 (Tex. App.—Austin
March 11, 1999, pet. denied) (not designated for publication) ..............................6
iii
Reagan National Advertising of Austin, Inc. v. Capital Outdoors, Inc.,
96 S.W.3d 490, 493 fn. 2 (Tex. App.—Austin 2002, vacated w/o ref. to merits
and remanded for settlement) .................................................................................6
Southampton Civic Club v. Couch,
322 S.W.2d 516 (Tex. 1959) ...................................................................... 8, 9, 12
Southampton Civic Club v. Foxworth,
550 S.W.2d 152 (Tex.Civ.App.—Houston [14th Dist.] 1977, writ denied n.r.e.) .9
Southland Royalty Co. v. Humble Oil & Ref. Co.,
249 S.W.2d 914, 916 (Tex. 1952) .......................................................................10
Vonderhaar v. Lakeside Place Homeowners Assoc., Inc.,
No. 2012-CA-002193-MR, 2014 Ky. App. Unpub. LEXIS 637, at *11 (Ky. Ct.
App. Aug. 8, 2014) ...............................................................................................13
Wasson Interests, Ltd. v. City of Jacksonville,
No. 12-13-00262-CV, 2014 Tex. App. LEXIS 7377 (Tex. App.—Tyler July 9,
2014, pet. filed) (mem. op.) ..................................................................................18
Wein v. Jenkins,
No. 03-04-00568-CV, 2005 Tex.App. LEXIS 7477 (Tex. App.—Austin Sept. 9,
2005, no pet.) (mem. op.)............................................... 1, 7, 10, 11, 12, 14, 15, 16
Statutes
TEX. PROP. CODE § 202.002. ..................................................................................1, 5
TEX. PROP. CODE § 202.004 .......................................................................................6
TEX. TAX CODE § 156.001 ...................................................................................3, 15
TEX. TAX CODE § 156.101 ...................................................................................3, 15
Other Authorities
ATTORNEY GENERAL OPINION NO. WW-182 (1960)…..……………………3, 16, 17
MERRIAM-WEBSTER ONLINE DICTIONARY .................................................................8
iv
IDENTITY AND INTEREST OF AMICUS CURIAE
This brief is filed on behalf of the Texas chapters of the Community
Associations Institute (“CAI”), which is an international organization. CAI has
four chapters in Texas—Austin, Dallas/Fort Worth, Greater Houston and San
Antonio. The cost for preparation of this brief is being borne solely by these
chapters. There are more than 5 million people living in the 25,000-30,000
community associations in the State of Texas.1 CAI serves its members by
providing information and education, connecting communities with service
providers, and advocating on behalf of those neighborhoods. CAI helps
communities to protect their property values, preserve the character of the
communities, and meet the expectations of their residents. CAI submits this brief
to address the following central issue: Whether an owner’s transient rental of his or
her residence violates the community’s single-family residential use restrictions.
One of the most important benefits offered to residents by their community
association is the preservation of the characteristics and qualities of the
community. And the most important attribute for the vast majority of communities
is their residential character. Like zoning laws, the restrictive covenants for many
communities contain provisions which attempt to restrict the use of property for
purposes that are believed to be incompatible with the character of the community.
1
http://www.txcaa.org/facts-about-poas
v
Having an owner utilize his or her property for commercial purposes can be
extremely detrimental to the community. Commercial uses can attract customers
and clients to the community, increase traffic and parking on the community’s
roads, and create other nuisance issues such as noise and odors. All these issues
can detract from the residential nature of a community.
Transient rentals can present their own set of additional issues for the
community. Non-resident owners sometimes fail to exercise the same level of care
and concern for their properties as that of resident owners. Transient renters have
little incentive to care for the property or behave neighborly toward homeowners
and resident families. An inattentive owner may lease the property without
discretion, attracting criminals and other unsavory characters to the community,
and potentially endangering the health, safety and welfare of residents.
Without the ability to regulate commercial activity within a community,
community associations are wholly unable to protect the residential character of
the community, which is deleterious to property values. The outcome of this case
critically impacts the interests of the above-described CAI constituents.
vi
ISSUES PRESENTED
I. Transient Rentals Are Not A Residential Use
A. The Proper Interpretation Of Restrictive Covenants
B. Transient Rentals Are A Commercial Enterprise
C. The Hotel Occupancy Tax Questionnaire
II. The Deleterious Effects On Neighborhoods Of Short-Term Rentals
III. Conclusion and Prayer
vii
SUMMARY OF THE ARGUMENT
Restrictive covenants are unambiguous if they can be given a definite or
certain legal meaning. They are only ambiguous if they are susceptible to more
than one reasonable interpretation. The primary concern for a court in interpreting
restrictive covenants is to ascertain and then give effect to the intention of the
parties as expressed in the instrument. By statute, a restrictive covenant must be
liberally construed to give effect to its purposes and intent. TEX. PROP. CODE §
202.002. Given that neither party here contends that the Restrictions are
ambiguous, the Court need not strictly construe the Restrictions.
Transient rentals are a non-residential use of property. Property that is
restricted to single-family residential purposes cannot be used for transient rentals
because: (a) such rentals are a commercial use of the property; and (b) the
transients do not have any intent to remain, and thus their use of the property is not
residential. Business is the antonym or opposite of residential. Engaging in
transient rentals and otherwise operating restricted property as a business in the
nature of a hotel is a prohibited business or commercial use. Wein v. Jenkins, No.
03-04-00568-CV, 2005 Tex. App. LEXIS 7477 (Tex. App.—Austin Sept. 9, 2005,
no pet.) (mem. op.) Using restricted property for weekend rentals is “more aptly
described as temporary, or for retreat purposes, or transient housing, rather than for
1
residential purposes.” Benard v. Humble, 990 S.W.2d 929, 931 (Tex. App.—
Beaumont 1999, pet. denied).
The single-family residential-purposes restriction here restricts the use of the
house, not merely the consanguinity of the renters. The argument that any use of
the house by a single family is per se residential is groundless, as that would mean
any rental of a hotel room for any length of time, even by the hour, would also be
residential.
Appellants’ proposed interpretation should be rejected for numerous reasons.
This Court has never adopted such a strained reading of a single-family residential
restriction. This Court has actually held one individual in contempt for violating a
permanent injunction prohibiting him from operating his transient rental business
when he rented the entire house for a family reunion weekend (and therefore
presumably to a single family). Appellants’ interpretation would allow rentals
with no durational constraints, in direct contradiction to Texas law interpreting a
“residential” use to require physical presence and an intent to remain, which a
transient tenant does not have. Appellants do not offer any principled reason why
their presence or absence from the house while it is rented for transient purposes
makes any difference. The consanguinity of the renters and whether the owner is
present may affect whether the rental violates the “single family” restriction, but
they have no relevance to determining whether the rental is a residential use. The
2
relevant nature of a hotel is not that it might limit rentals to unrelated individuals or
that the owner or manager is off-site. The relevant nature of a hotel is that it is a
place for transient stays.
As a matter of state law, a transient rental of a house means that such house
is a “hotel” for purposes of collecting the hotel occupancy tax. See TEX. TAX
CODE § 156.001 (“In this chapter, ‘hotel’ means a building in which members of
the public obtain sleeping accommodations for consideration. The term includes a
hotel, motel, tourist home, tourist house, tourist court, lodging house, inn, rooming
house, or bed and breakfast . . .”). The hotel occupancy tax is imposed on transient
renters, and is not imposed on renters who rent for at least a 30 day term. See TEX.
TAX CODE § 156.101 (tax is not imposed on “a person who has the right to use or
possess a room in a hotel for at least 30 consecutive days . . .”). These Tax Code
provisions evidence Texas public policy regarding transient rentals—such rentals
are “in the nature of a hotel,” regardless of the consanguinity of the renters.
Moreover, the Texas Attorney General has recognized that transient rental of
property “is an enterprise that is commercial in nature.” Tex. Att’y Gen. Op. No.
WW-821 (1960), at fn. 1. Therefore, when the Restrictions were adopted, the
declarant could not have intended “single family residential purposes” to include
transient rentals of residential property because transient rentals of less than 30
3
days (the rentals subject to the hotel occupancy tax) were considered to be “an
enterprise that is commercial in nature.”
The Hotel Occupancy Tax Questionnaire makes clear that transient rentals
are a business in the nature of a hotel.
Transient rentals have a deleterious effect on neighborhoods. The problems
relate to the transient nature of the occupancy, not to the lack of consanguinity of
the renters. One way of keeping these commercial businesses from infiltrating
single-family residential zones is simply to enforce the restrictive covenants as
written, and find—consistent with Texas law—that transient rentals are a
commercial, or at least non-residential, use.
Many municipal governments have chosen to regulate these transient-rental
businesses. The City of Austin, for example, limits the density of non-owner
occupied transient rentals so as to preserve the residential character of its
neighborhoods.
Transient rentals operate in a defined marketplace for their commercial
services and many times operate outside the rules. Moreover, they undermine
neighborhoods.
4
ARGUMENT
I. Short-Term Rentals Are Not A Residential Use
A. The Proper Interpretation Of Restrictive Covenants
The Declaration of Covenants, Conditions and Restrictions River Chase Unit
Three (“Restrictions”), in the Section entitled “Use Restrictions,” restricts the
Zgabays’ use of their property to “single family residential purposes.” Clerk’s
Record (“CR”) 70. Restrictive covenants are interpreted in accordance with
general rules of contract construction. Pilarcik v. Emmons, 966 S.W.2d 474, 478
(Tex. 1998). Like a contract, covenants are “unambiguous as a matter of law if
[they] can be given a definite or certain legal meaning.” Id. (citing Grain Dealers
Mut. Ins. Co. v. McKee, 943 S.W.2d 455, 458 (Tex. 1997)). Covenants are
ambiguous only if they are susceptible to more than one reasonable interpretation.
Id. The primary concern “is to ascertain and give effect to the true intention of the
parties as expressed in the instrument.” Owens v. Ousey, 241 S.W.3d 124, 129
(Tex. App.—Austin 2007, pet. denied). By statute, a restrictive covenant must be
liberally construed to give effect to its purposes and intent. TEX. PROP. CODE §
202.002. Moreover, an exercise of discretionary authority by a property owners’
association concerning a restrictive covenant is presumed reasonable unless the
court determines by a preponderance of the evidence that the exercise of
5
discretionary authority was arbitrary, capricious, or discriminatory. TEX. PROP.
CODE § 202.004.
Restrictive covenants should therefore be liberally construed to determine
the framers’ intent, and only if there is any ambiguity as to that intent should the
covenant be strictly construed. See Munson v. Milton, 948 S.W.2d 813, 816 (Tex.
App.—San Antonio 1997, pet. denied). This is the standard used by this Court in
interpreting restrictive covenants. Quinn v. Harris, No. 03-98-00117-CV, 1999
Tex. App. LEXIS 1576, at fn. 3 (Tex. App.—Austin March 11, 1999, pet. denied)
(not designated for publication) (“The Fourth Court of Appeals [in Munson] has
employed both [section 202.003(a)’s liberal and the common law’s strict]
standards to review a restrictive covenant, finding that the covenant should be
liberally construed to determine the framers’ intent, and if there is any ambiguity
as to that intent, the covenant should then be strictly construed in favor of the free
and unrestricted use of the premises. We believe the Fourth Court of Appeals has
found the proper balance between the two standards that does not conflict with
precedent or the Texas Property Code.”).2
2
While this Court subsequently held that the statute “does not conflict with the longstanding common-
law rule that if there is ambiguity or doubt as to the drafter’s intent, a covenant is to be strictly construed
against the party seeking to enforce it and in favor of the free and unrestricted use of land”, See Reagan
National Advertising of Austin, Inc. v. Capital Outdoors, Inc., 96 S.W.3d 490, 493 fn. 2 (Tex. App.—
Austin 2002, vacated w/o ref. to merits and remanded for settlement), it cited Munson for that proposition.
Therefore, the currently applicable rule appears to be the same as that articulated by the Munson court and
by the Third Court of Appeals in the Quinn case. That is, restrictive covenants are to be strictly construed
if there is any ambiguity, but in determining whether there is any ambiguity in the first instance the
restrictive covenants are to be liberally construed to give effect to their purposes and intent.
6
Significantly, neither party here contends that the Restrictions are
ambiguous. This Court should affirm the granting of the injunction against the
Zgabays because their short-term rentals are not a single family residential
purpose.
B. Transient Rentals Are A Commercial Enterprise
A residential-use restriction prohibits business or commercial use on the
restricted property. Cowling v. Colligan, 312 S.W.2d 943 (Tex. 1958) (rendering
judgment that covenant restricting use to residence purposes prohibited use of the
tract for business and commercial purposes). “The term business is the antonym of
residential and to provide residence to paying customers is not synonymous with a
residential purpose.” Hagemann v. Worth, 782 P.2d 1072, 1075
(Wash. Ct. App. 1989) (affirming injunction against use of residentially restricted
property as an elder care home). This Court has similarly recognized that engaging
in transient rentals and otherwise operating restricted property as a business in the
nature of a hotel is a prohibited business or commercial use. Wein v. Jenkins, No.
03-04-00568-CV, 2005 Tex.App. LEXIS 7477 (Tex. App.—Austin Sept. 9, 2005,
no pet.) (mem. op.). Moreover, weekend rentals are “more aptly described as
temporary, or for retreat purposes, or transient housing, rather than for residential
purposes.” Benard, 990 S.W.2d at 931-32. Transients never establish a residence
7
because they do not have any intent to remain. Id. at 932 (quoting from and citing
Mills v. Bartlett, 377 S.W.2d 636, 637 (Tex. 1964)).3
“Commercial” means “of or relating to commerce.” MERRIAM-WEBSTER
ONLINE DICTIONARY, http://www.merriam-webster.com/dictionary/commercial
(last visited March 13, 2015). “Commerce” means simply “activities that relate to
the buying and selling of goods and services.” MERRIAM-WEBSTER ONLINE
DICTIONARY, http://www.merriam-webster.com/dictionary/commerce (last visited
March 13, 2015).
In accord with this understanding of the prohibition on commercial uses, the
Texas Supreme Court held more than fifty years ago that residentially-restricted
property could not be used primarily for financial gain. In Southampton Civic
Club v. Couch, 322 S.W.2d 516 (Tex. 1959), the Texas Supreme Court held that if
an owner of residentially restricted property is: (a) operating a rooming or boarding
house on his premises as a business; or (b) is using an establishment on his
premises, separate and apart from his dwelling house, for renting as a source of
financial gain; or (c) is renting space to others in his dwelling house as a separate
housekeeping unit; or (d) is using his dwelling house primarily as a source of
financial gain rather than as a residence for himself and his family and domestic
3
In a subsequent case, the County Court at Law No. 3. Galveston County, Texas, enjoined transient
rentals because the property was restricted to single family residential purposes. Four Seahorses, LLC v.
Spanish Grant Civic Ass'n, Sections 1 & 2, Inc., Nos. 14-04-00638-CV, 14-04-00982-CV, 2005 Tex.
App. LEXIS 9081 (Tex. App.—Houston [14th Dist.] Nov. 3, 2005, pet. denied).
8
servants, that activity should be enjoined. Couch, 322 S.W.2d at 520.4
Significantly, the Texas Supreme Court did not declare that any of these uses were
more violative of the restriction than any other. They were simply equivalent
commercial uses of the property that were prohibited by a single-family residential
use restriction.
The “financial gain” referenced by the Texas Supreme Court need not be
through any formal business entity, nor need it be significant to qualify such use as
a prohibited commercial use. In Southampton Civic Club v. Foxworth, 550 S.W.2d
152 (Tex.Civ.App.—Houston [14th Dist.] 1977, writ denied n.r.e.), the court
enjoined the rental of residentially-restricted property. It rebuffed the defendants’
argument that they were not making any profit on the rentals, holding that “[t]he
fact that the Foxworths used each month’s rental for residential maintenance does
not alter the fact that this income was a source of financial gain.” Foxworth, 550
S.W.2d at 153. The Zgabays do not reside at the property and are using the
property primarily for financial gain. This is and has been a prohibited non-
residential or commercial use under Texas law for more than half a century.
It is important to apply these decisions to the transient rentals at issue.
According to the Texas Supreme Court, it “adhere[s] to prior decisions that have
established rules relating to property rights unless, or until, the Legislature
4
The Court did find that uses that were merely incidental to the owner’s use of the property as a residence
for the owner and his family were allowed. Couch, 322 S.W.2d at 520.
9
modifies those rules.” Environmental Processing Sys., L.C. v. FPL Farming Ltd.,
No. 12-0905, 2015 Tex. LEXIS 113, at *9 (Tex. Feb. 6, 2015). This is because the
“doctrine of stare decisis has been and should be strictly followed by [the Texas
Supreme Court] in cases involving established rules of property rights.”
Friendswood Dev. Co. v. Smith-Sw. Indus., Inc., 576 S.W.2d 21, 29 (Tex. 1978).
This is so, “even though good reasons might be given for a different holding.”
Southland Royalty Co. v. Humble Oil & Ref. Co., 249 S.W.2d 914, 916 (Tex. 1952)
(citations omitted). Thus, the fact that someone has created a new income stream
from selling a particular service (whole-house rentals for transient stays) does not
mean that the single-family residential purposes restriction does not apply to that
new operation.
Moreover, the restriction is clear and unambiguous. In Wein, this Court
affirmed a Travis County district court’s entry of a permanent injunction
prohibiting operation of a bed and breakfast on a lot that was restricted to “single-
family, private residential purposes.” Wein, 2005 Tex.App. LEXIS 7477, at *1-*2.
The court affirmed the trial court’s determination that use of the property for a
“bed & breakfast,” for a “commercial business in the nature of a hotel,” or for a
“venue for parties, business meetings, or retreats” was a business use, and therefore
violated the provision restricting use of the property to “single-family, private
residential purposes.” Wein, 2005 Tex.App. LEXIS 7477, at *7-*8. The court
10
stated that the trial court’s determination was “consistent with both the plain
language and the underlying purpose of the Lot Use Restriction as it existed at the
time the injunction was issued.” Wein, 2005 Tex.App. LEXIS 7477, at *7-*8. In
other words, the term “single-family, private residential purposes” was
unambiguous and prohibited using the property for a “bed & breakfast,” for a
“commercial business in the nature of a hotel,” or for a “venue for parties, business
meetings, or retreats.”
There is no significant difference between the restrictive language in the
Wein case and the present one (“single-family, private residential purposes” versus
“single family residential purposes”). Here, the restriction to “single family
residential purposes” prohibits commercial or business uses, including, but not
limited to, using the property as a “bed & breakfast,” as “a commercial business in
the nature of a hotel,” or as a “venue for parties, business meetings, or retreats.”
The Zgabays contend that the “single family residential purposes” restriction
only prohibits multiple families staying in the same building. The Court should
reject the Zgabays’ interpretation for the following reasons.
First, the Zgabays’ interpretation does not give effect to the term
“residential.” The restriction at issue is not simply and solely a restriction that only
a single family at a time can occupy the house. The use of the house must be
residential, rather than non-residential. The Zgabays’ interpretation is that any use
11
of the house by a single family is per se residential. The Zgabays argue that using
the house for activities such as brushing one’s teeth and sleeping makes the use
residential. If that were the case, any rental of a hotel room for any length of time,
even by the hour, would also be residential. The Zgabays’ interpretation is simply
untenable.
Second, this Court has never adopted such a strained reading of a single-
family residential use restriction. This Court, in an ancillary order in Wein, found
the homeowner to be in contempt of the injunction prohibiting him from operating
his transient rental business when he rented the entire house for a family reunion
weekend. See Contempt Order, attached hereto in the Appendix. According to this
Court’s rationale, renting an entire house for a family reunion (and therefore
presumably solely to members of a single family) constitutes using the property for
a business or commercial, not residential, purpose. This rationale is consistent
with the Texas Supreme Court’s holding in Southampton Civic Club v. Couch, 322
S.W.2d 516 (Tex. 1959). Nothing in this Court’s opinion in Wein nor in its
contempt order suggests that the injunction against Mr. Wein impliedly authorized
transient rentals so long as the rental was to a single family.
Third, the Zgabays’ interpretation would allow rentals with no durational
constraints, in direct contradiction to Texas law interpreting a “residential” use to
require physical presence and an intent to remain—which a transient tenant does
12
not have. Benard, 990 S.W.2d at 932 (quoting from and citing Mills v. Bartlett,
377 S.W.2d 636, 637 (Tex. 1964)). Again, the Zgabays argue that doing things
such as brushing one’s teeth and sleeping, for whatever amount of time,
necessarily means that you are using that location (whether it be a house, a hotel,
or other lodging) for residential purposes. The Zgabays’ argument is simply
wrong. While there may be many things that people can do in a house they rent
only for a weekend getaway, “it is not what the individuals do to occupy their time
while on the property that is forbidden; it is the fact that the property is being held
out for remuneration in much the same manner as a hotel or motel.” Vonderhaar v.
Lakeside Place Homeowners Assoc., Inc., No. 2012-CA-002193-MR, 2014 Ky.
App. Unpub. LEXIS 637, at *11 (Ky. Ct. App. Aug. 8, 2014).5
Fourth, the Zgabays offer no principled reason why their presence or
absence from the house while it is rented for transient purposes makes any
difference. The Zgabays’ position is that the “single family residential purposes”
restriction only applies if the Zgabays are present in the house along with their
renters. The Zgabays concede that the restriction prohibits them from renting
Bedroom A in the house to a student and Bedroom B in the house to another,
unrelated, person. The Zgabays contend, however, that the far more commercially
5
Unpublished opinions of Kentucky appellate courts may be cited, per Kentucky Rule of Civil Procedure
76.28(4)(c), “for consideration by the court if there is no published opinion that would adequately address
the issue before the court.” Ky. R. Civ. P. 76.28(4)(c). A copy of the opinion is attached in the appendix.
.
13
intensive act of moving completely out of the house, not using it as their residence,
and renting the entire house for transient stays for financial gain are somehow not a
commercial use of the property. Whether the use is residential or commercial does
not turn on whether the Zgabays are present during the rental. Their presence or
absence during the rental simply has nothing to do with determining whether the
Zgabays’ transient rentals are single-family residential purposes. Again, nothing in
this Court’s opinion in Wein nor in this Court’s contempt order suggests that the
result in the case depended upon whether Mr. Wein was renting to more than a
single family or whether he was also present at the house along with the renters.
Fifth, the consanguinity of the renters and whether the owner is present may
affect whether the rental violates the “single family” restriction, but they have no
relevance to determining whether the rental is a residential use. The single-family
residential purposes restriction does not allow non-residential or transient rentals,
regardless of whether the tenants are a single family or a group of college buddies,
and regardless of whether the owner stays in the house or is absent. This court has
made clear that operating restricted property as a business in the nature of a hotel
is a prohibited business or commercial use. Wein, 2005 Tex. App. LEXIS 7477.
The relevant nature of a hotel is not that it might limit rentals to unrelated
individuals. There are often times that entire hotels or lodging establishments are
fully rented by a single family (for reunions, weddings, etc.). The relevant nature
14
of a hotel is not that the owner or manager is off-site (there are numerous examples
of hotel owners or managers who also live at the establishment). The relevant
nature of a hotel is that it is a place for transient stays. The fact that a single family
is staying at the hotel does not change the relevant nature of the hotel, because the
consanguinity of the renters does not affect the basic nature of what a hotel is.
In any event, this Court made clear in Wein that a single-family residential
use restriction prohibits not only using the restricted property as an actual hotel,
but operating it as a business “in the nature of a hotel.” Wein, 2005 Tex. App.
LEXIS 7477 (emphasis added). This Court should hold that the Zgabays’ transient
rentals are, at the very least, “in the nature of a hotel” and therefore prohibited by
the restriction limiting use of the property to “single family residential purposes.”
As a matter of state law, a transient rental of a house means that such house
is a “hotel” for purposes of collecting the hotel occupancy tax. See TEX. TAX
CODE § 156.001 (“In this chapter, ‘hotel’ means a building in which members of
the public obtain sleeping accommodations for consideration. The term includes a
hotel, motel, tourist home, tourist house, tourist court, lodging house, inn, rooming
house, or bed and breakfast . . . .”). The hotel occupancy tax is imposed on
transient renters, and is not imposed on renters who rent for at least a 30 day term.
See TEX. TAX CODE § 156.101 (tax is not imposed on “a person who has the right
to use or possess a room in a hotel for at least 30 consecutive days . . . .”). These
15
Tax Code provisions evidence Texas public policy regarding transient rentals—
such rentals are “in the nature of a hotel,” regardless of the consanguinity of the
renters.
Moreover, immediately after passage of the first hotel occupancy tax, the
Texas Attorney General recognized that transient rental of property “is an
enterprise that is commercial in nature.” Tex. Att’y Gen. Op. No. WW-821
(1960), at fn. 1 (courtesy copy attached hereto in the Appendix). That opinion
dealt specifically with the hotel occupancy tax, and was in response to a question
whether the State Parks Board was a “person” required to collect the tax for its
transient cabin rentals. In order to determine whether the State was a “person”
required to collect the tax, Attorney General Will Wilson had to determine the
exact nature of the activity in question (transient rentals). Specifically, Attorney
General Wilson had to determine whether “the sovereign entity involved is acting
not in its sovereign capacity but rather is engaging in commercial and business
transactions such as other persons, natural or artificial, are accustomed to conduct .
. . .” Id. He noted in regard to the transient rentals: “Though the renting of cabins
in this case may, perhaps, be a non-profit activity, or designed to foster the
esthetic, it nevertheless is an enterprise that is commercial in nature.” Id. He
concluded that the State was a “person” and was required to collect the Hotel
Occupancy Tax assessed on its transient renters specifically and precisely because
16
the State was engaging in an enterprise (transient rentals) that was commercial in
nature. Id.; See also Hyatt v. Court, No. 2008-CA-01474-MR, 2009 Ky. App.
Unpub. LEXIS 738, at *10-*11 (Ky. Ct. App. Aug. 28, 2009) (being required to
pay the same taxes as is required of motels and hotels “only emphasizes the
business-related nature” of transient rentals).6
Therefore, when the Restrictions were adopted in 1999, the declarant could
not have intended “single family residential purposes” to include transient rentals
of residential property because transient rentals subject to the hotel occupancy tax
were considered to be “an enterprise that is commercial in nature.”7 See also
Wasson Interests, Ltd. v. City of Jacksonville, No. 12-13-00262-CV, 2014 Tex.
App. LEXIS 7377 (Tex. App.—Tyler July 9, 2014, pet. filed) (mem. op.) (lease
limited use of the property to residential use only; City terminated lease when
lessee engaged in transient rentals).8
6
See fn. 5, supra. A copy of the opinion is attached in the Appendix.
7
One of the largest players in the transient rental industry (what they term the “vacation rental industry”)
concedes that transient rentals are commercial activity. HomeAway, Inc., states in its latest annual report
(10-K, Part I, Item I) that HomeAway, Inc. and its subsidiaries operate “the world’s largest online
marketplace for the vacation rental industry.”
https://www.sec.gov/Archives/edgar/data/1366684/000119312515062554/d846217d10k.htm. Needless
to say, a marketplace presumes commerce. The Zgabays’ transient rentals are a part of that market and
are a commercial, or at least non-residential, use of the property.
8
Transient renting is also typically excluded from coverage under a homeowners policy through the
exclusion of “business pursuits.” Allstate Ins. Co. v. Sylvester, No. 07-00360, 2008 U.S.Dist. LEXIS
42386, at **16-20 (Dist. Hawaii May 21, 2008)(granting summary judgment to insurer that “business
use” exclusion applied when the property was rented by owners to transient renters as part of a vacation
rental business).
17
C. The Hotel Occupancy Tax Questionnaire
The Hotel Occupancy Tax Questionnaire makes clear that transient rentals
are a business in the nature of a hotel. A person seeking to engage in transient
rentals must represent to the State:
a. the person’s “principal type of business”;
b. the person’s “business location name and address”;
c. whether the person’s “business” is located within city limits;
d. the nature of the person’s “business activities for [the] location”; and
e. the “date of the first business operation in the above location that is
subject to hotel occupancy tax.”
Form AP-102, Texas Questionnaire for Hotel Occupancy Tax (attached hereto in
the Appendix). There is simply nowhere on the form for the person engaging in
transient rentals to dispute the State’s characterization of those transactions as
constituting a “business.” And, again, the statute defines such transient rental
house as a “hotel.” The transient-rental business is at least “in the nature of” a
hotel.
The State also requires each person seeking to engage in transient rentals to
classify that transient-rental business activity by stating the North American
Industry Classification System (“NAICS”) number applicable to their transient-
rental business. See Form AP-102, Item 12. The North American Industry
Classification System “is the standard used by Federal statistical agencies in
classifying business establishments for the purpose of collecting, analyzing, and
publishing statistical data related to the U.S. business economy.” UNITED STATES
18
CENSUS BUREAU, http://www.census.gov/eos/www/naics/ (last visited March 13,
2015). Given that the Questionnaire relates solely to transient-rental activities, it
becomes clear that the State of Texas recognizes transient rentals of single-family
residences to be commercial activity that may be classified using the NAICS. The
NAICS number for transient rentals of single-family dwellings is 721199 (“All
Other Traveler Accommodation”). SICCODE.COM,
http://siccode.com/en/naicscodes/721199/all-other-traveler-accommodation (Last
visited March 13, 2015). In contrast, the NAICS number for residential rentals is
531110. SICCODE.COM, http://siccode.com/en/naicscodes/531110/lessors-of-
residential-buildings-and-dwelling#tab-pane-group_naicscode_product-element
(Last visited March 13, 2015).
II. The Deleterious Effects Of Transient Rentals
Transient rentals have a deleterious effect on neighborhoods. Some of the
most egregious examples are homes that are purchased by investors, never lived in
by the investor, and simply rented out to a steady stream of different weekend
transient renters. When Asheville, North Carolina, was looking at regulating
transient rentals, they discovered numerous deleterious effects of such transient
rentals, such as transients’ intensity of activities such as car trips, late-night noise
and light, and trash generation; the fact that transient rentals tend to attract large
numbers of people, either requiring paved yards or creating parking shortages in
19
the area; and potentially leading to escalation in area home prices, which may
encourage speculative investors to purchase properties while creating conditions
that are inhospitable to permanent residents.9 These problems relate to the
transient nature of the occupancy, not to the lack of consanguinity of the renters.
Many municipal governments have chosen to regulate these transient rental
businesses. One example is the City of Austin, Texas. In order to preserve the
residential character of their neighborhoods, the City of Austin limits non-owner
occupied transient rentals such as the Zgabays to no more than 3% of the single-
family, detached residential units within the census tract of the property. CITY OF
AUSTIN CODE § 25-2-791(C)(3).10
One way of keeping these commercial businesses from infiltrating single-
family residential zones is simply to enforce the restrictive covenants as written,
and find, consistent with Texas law, that transient rentals are a commercial, or at
least non-residential, use.
9
http://www.ashevillenc.gov/Portals/0/city-
documents/cityclerk/mayor_and_citycouncil/boards_and_commissions/planning_and_zoning/PAS%20Re
search%20Response.pdf (last visited March 13, 2015).
10
Found at
https://www.municode.com/library/tx/austin/codes/code_of_ordinances?nodeId=TIT25LADE_CH25-
2ZO_SUBCHAPTER_CUSDERE_ART4ADRECEUS_SPCRESHRMREUS_S25-2-791LIRE (last
visited March 16, 2015). Many times, however, government regulation of these commercial businesses
are simply ignored. A simple Google search for “Austin short-term rental ordinance” (without the quotes)
shows the fourth result is “5 Ways to Beat Austin’s Short Term Rental Licensing Ordinance.” That web
page, http://republicofaustin.com/2013/02/19/5-ways-to-beat-austins-short-term-rental-licensing-
ordinance-during-sxsw/ (last visited March 9, 2015), advises transient rental owners to “hide your home”
and not allow the street view of your unlicensed transient rental listing so as to make it harder for the City
of Austin to uncover that illegal activity.
20
III. Conclusion and Prayer
Transient rentals operate in a defined marketplace for their commercial
services and many times operate outside the rules. Moreover, they undermine
neighborhoods. A single family residential purposes use restriction prohibits
transient rentals because such rentals are either commercial activity, which is the
opposite of residential, or because the transient nature of the rentals are more aptly
described as temporary, or for retreat purposes, or transient housing, rather than for
residential purposes. In any event, what the Zgabays are doing is using their
residentially-restricted property primarily for financial gain, which the Texas
Supreme Court has determined violates a residential use restriction. This Court
should confirm the common sense understanding of single family residential
purposes—it prohibits transient rentals. Because transient rentals are not a single
family residential purpose, but are a commercial use in the nature of a hotel, the
trial court’s judgment should be affirmed.
21
Respectfully submitted,
The Weichert Law Firm
3821 Juniper Trace, Suite 106
Austin, Texas 78738
(512) 263-2666
(512) 263-2698 - Facsimile
By: /s/ Darryl W. Pruett
Darryl W. Pruett
Texas State Bar No. 00784795
darryl@weichertlaw.com
George V. Basham, III
Texas State Bar No. 01868000
george@weichertlaw.com
Glenn K. Weichert
State Bar No. 21076500
glenn@weichertlaw.com
ATTORNEYS FOR AMICI CURIAE
CERTIFICATE OF COMPLIANCE WITH WORD LIMIT
I, Darryl W. Pruett, hereby certify that this brief (exclusive of the portions
excepted by rule) contains, according to the computer program used to prepare the
document, 5,109 words.
/s/ Darryl W. Pruett
Darryl W. Pruett
22
CERTIFICATE OF SERVICE
This is to certify that a true and correct copy of Brief of Amici Curiae has
been electronically served on the following counsel for Appellants and Appellee on
this 16th day of March, 2015:
J. Patrick Sutton
1706 W. 10th Street
Austin, Texas 78703
Telephone: (512) 417-5903
Telecopier: (512) 355-4155
ATTORNEY FOR APPELLANTS
Wade C. Crosnoe
Brian D. Hensley
Thompson, Coe, Cousins & Irons, LLP
701 Brazos, Suite 1500
Austin, Texas 78701
Telephone: (512) 708-8200
Telecopier: (512) 708-8777
Tom L. Newton, Jr.
Allen, Stein & Durbin, P.C.
6243 IH-10 West, 7th Floor
P.O. Box 101507
San Antonio, Texas 78201
Telephone: (210) 734-7488
Telecopier: (210) 738-8036
ATTORNEYS FOR APPELLEES
/s/ Darryl W. Pruett
Darryl W. Pruett
23
APPENDIX
TABLE OF CONTENTS FOR APPENDIX
1. Contempt Order in Wein v. Jenkins
2. Vonderhaar v. Lakeside Place Homeowners Assoc., Inc., No. 2012-CA-
002193-MR, 2014 Ky. App. Unpub. LEXIS 637, at *11 (Ky. Ct. App. Aug.
8, 2014)
3. Tex. Att’y Gen. Op. No. WW-821 (1960)
4. Hyatt v. Court, No. 2008-CA-01474-MR, 2009 Ky. App. Unpub. LEXIS
738, at *10-*11 (Ky. Ct. App. Aug. 28, 2009)
5. Form AP-102, Texas Questionnaire for Hotel Occupancy Tax
CONTEMPT ORDER
TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-04-00568-CV
Marc Wein, Appellant
v.
Maureen Jenkins and William E. Sherman, Appellees
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 200TH JUDICIAL DISTRICT
NO. GN103548, HONORABLE PATRICK O. KEEL, JUDGE PRESIDING
ORDER
PER CURIAM
Appellees Maureen Jenkins and William E. Sherman sued their neighbor, appellant
Marc Wein, alleging that Wein had trespassed and encroached on their property, building stairs and
a boat dock partially on their land, and was operating out of his home a commercial bed and
breakfast, violating the neighborhood’s restrictions and covenants. In late May 2004, a jury found
largely in favor of appellees. On July 28, 2004, the trial court signed a final judgment awarding
appellees monetary damages and attorney’s fees, ordering Wein to remove the offending structures
from appellees’ property, and permanently enjoining Wein from operating the bed and breakfast,
effective immediately. The trial court’s judgment was clear and unambiguous in its order that Wein
cease operating his commercial business from his home.
On September 2, Wein filed his notice of appeal; appellees received notice of his
appeal on September 7. Also on September 2, appellees filed a motion for contempt in the trial
court, asserting that Wein was violating the injunction and continuing to use his home as a bed and
breakfast. On September 20, the trial court held a hearing on appellees’ motion. At that hearing,
Wein raised the issue of the trial court’s jurisdiction, asserting that the trial court lost jurisdiction
when he filed his notice of appeal. The court conducted an evidentiary hearing, but declined to enter
an order or assess sanctions, leaving that to this Court.
On October 4, appellees filed in this Court a “motion for judgment on plaintiffs’
motion for contempt,” asking that Wein be jailed until he “purged himself” of his contempt. Wein
asserts that (1) the evidence put forth in the trial court’s hearing should be disregarded because the
trial court lacked jurisdiction, (2) he should not be jailed because there was no evidence that he is
currently violating the order, and (3) appellees should not be awarded attorney’s fees because they
did not act with due diligence in filing their motion for contempt and proceeding with the hearing
before the trial court. We held a show-cause hearing on October 27 to address this issue.
The supreme court has stated, “For appealable orders in the nature of an injunction,
in which the validity of the order alleged to have been violated is itself in issue in the appeal, the
appellate court alone is vested with jurisdiction to enforce the injunctive provisions by contempt.”
Schultz v. Fifth Judicial Dist. Court of Appeals at Dallas, 810 S.W.2d 738, 740 (Tex. 1991). In such
a case, this Court “may exercise that jurisdiction by referring to the trial court the fact finding burden
of hearing testimony and taking evidence, but the appellate court where the appeal is pending must
exercise jurisdiction to actually issue the contempt judgment.” Id. at 740-41; see In re Goldblatt,
38 S.W.3d 802, 804 (Tex. App.—Fort Worth 2001, orig. proceeding); Roosth v. Daggett, 869
S.W.2d 634, 636-37 (Tex. App.—Houston [14th Dist.] 1994, orig. proceeding); see also In re
2
Taylor, 39 S.W.3d 406, 410-11 (Tex. App.—Waco 2001, orig. proceeding) (in family law case,
portion of order allegedly violated was not mentioned in direct appeal and therefore trial court
retained jurisdiction to enforce that portion of order by contempt). Unless the injunction is void, its
propriety is not an issue—the only issue is whether the injunction was violated. See Fort Worth
Driving Club v. Fort Worth Fair Ass’n, 121 S.W. 213, 216 (Tex. Civ. App.), rev’d on other grounds,
122 S.W. 254 (Tex. 1909).
Wein urges that this Court must disregard evidence heard by the trial court because
the court lacked jurisdiction over the issue of contempt once Wein filed his notice of appeal.1 Wein
argues that instead we should remand the cause to the trial court to hold a second hearing on the
issue, essentially granting the trial court jurisdiction to hold a specific hearing. We disagree. Wein
acknowledges that we have the authority to refer the cause to the trial court for fact finding, see
1
Wein points to Morrison v. State, 132 S.W.3d 37 (Tex. App.—Houston [14th Dist.] 2004,
pet. ref’d), and Hagens v. State, 979 S.W.2d 788 (Tex. App.—Houston [14th Dist.] 1998, pet. ref’d),
both criminal cases concerning hearings on motions for new trial conducted after the trial courts lost
jurisdiction of the cases. In Hagens, the court stated:
While we may have the authority to reverse a judgment and remand the cause for
ineffective assistance of counsel manifestly appearing in the record at the hearing
on a defendant’s motion for new trial, we have no authority to extend the
deadlines for filing a motion for new trial. Because we have no authority to order
the trial court to conduct a hearing on an out-of-time motion for new trial, we
have no authority to consider the record prepared at such a hearing.
979 S.W.2d at 792 (citation omitted). In Morrison, the court refused to consider evidence brought
forth at a hearing held after the trial court denied the timely filed motion by written order and after
the motion for new trial would have been overruled as a matter of law. 132 S.W.3d at 48. Morrison
does not answer the question raised by Hagens of whether the court could extend the deadline for
the hearing in spite of the order overruling the motion and the running of the time in which the
motion would otherwise have been overruled as a matter of law.
3
Schultz, 810 S.W.2d at 740, and we have the authority to conduct our own evidentiary hearing on
a motion for contempt, although referring a cause to the trial court for fact finding generally is
preferred. In re Werblud, 536 S.W.2d 542, 544-45 (Tex. 1976); In re Reed, 901 S.W.2d 604, 610-11
(Tex. App.—San Antonio 1995, orig. proceeding). Although the trial court held an evidentiary
hearing, it did not take any “action” that would be void for lack of jurisdiction aside from verbally
finding that Wein was in contempt.2 Because we may perform a fact finding on the issue of
contempt, see Werblud, 536 S.W.2d at 544-45, we will make our own finding of contempt based on
this record. Accordingly, we disregard the trial court’s verbal finding of contempt and will consider
the evidence brought forth at the hearing before the trial court. To refer the cause to the trial court
for a second hearing on the same issues, as urged by Wein, would accomplish nothing but a waste
of time and judicial resources.
At the hearing, appellees presented evidence that Wein had continued to operate his
business after the trial court permanently enjoined him from doing so. Appellees presented
information taken from Wein’s website on September 20, 2004, still advertising his bed and
breakfast as a “unique luxury retreat.” The evidence shows that the bed and breakfast had at least
six rooms and provided breakfasts and other amenities and services. Appellees brought forth
evidence that Wein rented the entire house for a family reunion the weekend of August 6 through
August 8, billing the family about $7,000. The man who rented the house for the reunion testified
that Wein told him that the residence “was busy,” and that “some sort of wedding party . . . was
2
The jurisdictional issue appears to have been first raised in Wein’s response to appellees’
motion for contempt, filed on September 20, 2004. The trial court was faced at the time with a
motion for contempt filed before appellees learned that Wein had appealed.
4
coming in after us.” Appellees also introduced portions of Wein’s May deposition, during which
he testified about a wedding that was planned for August 11. The record does not reflect whether
that wedding was actually held at Wein’s bed and breakfast. Disregarding the trial court’s legal
conclusion that Wein had committed contempt, we find and conclude, based on the uncontroverted
evidence,3 that Wein continued to operate his bed and breakfast well after the trial court signed its
order and thus was in contempt of court.
The government code provides a limit of $500 in fines per instance of contempt. Tex.
Gov’t Code Ann. § 21.002(b) (West 2004); In re Long, 984 S.W.2d 623, 625 (Tex. 1999). In
assessing a penalty, we may not divide a single act of contempt into separate acts and assess
punishment for each allegedly separate act. Long, 984 S.W.2d at 625. Nor may we assess attorney’s
fees as sanctions for contempt. Wallace v. Briggs, 348 S.W.2d 523, 525-26 (Tex. 1961); In re
Wieses, 1 S.W.3d 246, 251 (Tex. App.—Corpus Christi 1999, orig. proceeding); Ex parte Dolenz,
893 S.W.2d 677, 680 (Tex. App.—Dallas 1995, orig. proceeding). A person in contempt may be
confined to jail “to vindicate the court’s authority,” Dolenz, 893 S.W.2d at 677, but the term of
imprisonment must be for the lesser of 18 months or end upon compliance with the court order. Tex.
Gov’t Code Ann. § 21.002(h)(2).
3
We note that, at the show-cause hearing before this Court, Wein and his attorney admitted
that Wein had rented the house for the family reunion and stated that the website had been taken
down. At the time of the show-cause hearing before this Court, Wein’s website was still operational,
and on November 8, appellees’ counsel informed the Court that as of November 5, the website was
still operating and soliciting reservations. The website has since been changed to show only a
message that states, “Site Temporarily Unavailable.” These facts alone, admitted by Wein before
this Court, are grounds for holding Wein in contempt.
5
There is no evidence that Wein is still operating his bed and breakfast and therefore
there is no evidence that he is currently in contempt of which he must be “purged.” Thus, we will
not commit Wein to jail, as requested by appellees. See id. Nor may we award attorney’s fees
incurred by appellees in pursuing these contempt proceedings. See Wallace, 348 S.W.2d at 525-26.
We may assess a fine, capped at $500 per instance of contempt. See Long, 984 S.W.2d at 625.
During August, Wein continued to operate his bed and breakfast and rented out the entire house for
at least one full weekend. Leading up to the weekend, Wein corresponded with the would-be guests,
emailing them and telling them how to get directions to the house and providing a gate code to gain
entry to the neighborhood and information about use of the boat dock. Wein continued to solicit
business through his website well into the fall of 2004. In our view, Wein’s actions amount to four
instances of contempt in total—one for each day during which Wein allowed his house to be used
in August as a bed and breakfast in violation of the trial court’s order, and one for his continuing to
solicit bed and breakfast reservations through his website after the court signed its order.
Accordingly, the Court hereby ORDERS, ADJUDGES, and DECREES that Marc
Wein is in contempt of court for violating the trial court’s order of July 28, 2004, by having let out
his home as a commercial bed and breakfast on August 6, 2004.
For this violation, the Court orders that Marc Wein shall be fined $500.00.
The Court further ORDERS, ADJUDGES, and DECREES that Marc Wein is in
contempt of court for violating the trial court’s order of July 28, 2004, by having let out his home
as a commercial bed and breakfast on August 7, 2004.
For this violation, the Court orders that Marc Wein shall be fined $500.00.
6
The Court further ORDERS, ADJUDGES, and DECREES that Marc Wein is in
contempt of court for violating the trial court’s order of July 28, 2004, by having let out his home
as a commercial bed and breakfast on August 8, 2004.
For this violation, the Court orders that Marc Wein shall be fined $500.00.
The Court finally ORDERS, ADJUDGES, and DECREES that Marc Wein is in
contempt of court for violating the trial court’s order of July 28, 2004, by continuing to operate his
website and solicit business for several months after the issuance of the trial court’s order.
For this violation, the Court orders that Marc Wein shall be fined $500.00.
We thus order Wein to pay a fine of two thousand dollars ($2,000) to the Clerk of the
Third Court of Appeals no later than 5:00 p.m. on March 17, 2005. If Wein fails to pay the fine
timely, it shall be collectible in the manner provided by law.
It is further ordered that all costs be adjudged against Marc Wein.
It is ordered on February 15, 2005.
Before Chief Justice Law, Justices B. A. Smith and Pemberton
7
Vonderhaar v. Lakeside Place Homeowners Assoc.,
Inc.
No Shepard’s Signal™
As of: March 12, 2015 8:53 PM EDT
Vonderhaar v. Lakeside Place Homeowners Ass'n
Court of Appeals of Kentucky
August 8, 2014, Rendered
NO. 2012-CA-002193-MR
Reporter
2014 Ky. App. Unpub. LEXIS 637; 2014 WL 3887913
PATRICK VONDERHAAR; CAROLEE VONDERHAAR; Opinion
RONALD ADAMS; AND LISA ADAMS, APPELLANTS v.
LAKESIDE PLACE HOMEOWNERS ASSOCIATION, INC., AFFIRMING
APPELLEE
CAPERTON, JUDGE: The Appellants, Patrick and Carolee
Notice: THIS OPINION IS DESIGNATED "NOT TO BE Vonderhaar and Ronald and Lisa Adams, appeal from the
PUBLISHED." PURSUANT TO THE RULES OF CIVIL October 5, 2012, findings of fact, conclusions of law, and
PROCEDURE PROMULGATED BY THE SUPREME summary judgment/injunction issued by the Russell Circuit
COURT, CR 76.28(4)(C), THIS OPINION IS NOT TO BE Court in favor of Appellee, Lakeside Place Homeowners
PUBLISHED AND SHALL NOT BE CITED OR USED AS Association, Inc. (hereinafter "Lakeside"), based upon the
BINDING PRECEDENT IN ANY OTHER CASE IN ANY finding that Appellants had violated the Declaration of
COURT OF THIS STATE; HOWEVER, UNPUBLISHED Covenants and Restrictions of Lakeside Place in light of the
KENTUCKY APPELLATE DECISIONS, RENDERED fact that they utilized their property for commercial
AFTER JANUARY 1, 2003, MAY BE CITED FOR purposes. Upon review of the record, the arguments of the
CONSIDERATION BY THE COURT IF THERE IS NO parties, and the applicable law, we affirm.
PUBLISHED OPINION THAT WOULD ADEQUATELY
ADDRESS THE ISSUE BEFORE THE COURT. The Appellants, the Adamses and Vonderhaars, are co-
OPINIONS CITED FOR CONSIDERATION BY THE owners in fee of a single family home located in the
COURT SHALL BE SET OUT AS AN UNPUBLISHED Lakeside subdivision, in Russell County, Kentucky.
DECISION IN THE FILED DOCUMENT AND A COPY OF Lakeside Place Homeowners Association is a homeowners
THE ENTIRE DECISION SHALL BE TENDERED ALONG association designated to preserve and protect the interest
WITH THE DOCUMENT TO THE COURT AND ALL of the real property owned by its
PARTIES TO THE ACTION. members [*2] in Lakeside Place subdivision located in
Russell County, Kentucky.
Prior History: [*1] APPEAL FROM RUSSELL CIRCUIT
COURT. HONORABLE VERNON MINIARD, JR., JUDGE. The Declaration of Covenants and Restrictions of Lakeside
ACTION NO. 09-CI-00537. Place was executed on July 20, 1988, by developers
Donald H. Byrom and Larry Kinnett. These restrictions were
Counsel: BRIEF FOR APPELLANTS: Harlan E. Judd, recorded in the Russell County Clerk's Office on January
Bowling Green, Kentucky. 20, 2002. Lakeside instigated litigation to seek injunctive
relief against Appellants, based upon the assertion that they
BRIEF FOR APPELLEE: M. Gail Wilson, Jamestown, were in violation of the Declaration of Covenants and
Kentucky. Restrictions because the Declaration restricted the use of
the land in the subdivision to single family residential
Judges: BEFORE: CAPERTON, COMBS, AND DIXON, purposes only, and there were to be no business,
JUDGES. ALL CONCUR. commercial, trade, or professional uses permitted.
Article VII of the Declaration, entitled Building and Use
Opinion by: CAPERTON
Restrictions, stated as follows:
Page 2 of 5
2014 Ky. App. Unpub. LEXIS 637, *3
disturbance, played loud music, and left trash in the
Section 1. Single Family Residential Use. Each lot roadway, in addition to leaving cars parked in the
(including land and improvements) shall be used roadways, which created problems for traffic movement on
and occupied for single family residential purposes the subdivision roads.
only. No owner or other occupant shall use or
occupy his lot, or permit the same or any part As noted, on October 5, 2012, the Russell Circuit Court
thereof to be used or occupied, for any purpose entered a judgment restricting the Appellants from any
other than as a private single family residence for rental or lease activity on their property. It is from that
the Owner or his tenant and their families. As used judgment that Appellants now appeal to this Court.
specifically, but
As their first basis for appeal, Appellants argue that the
without limitation, the [*3] use of Lots for duplex
trial court erred in determining [*5] that the Declaration
apartments, garage apartments, or other
prevents rentals because it specifies a "tenant" as a
apartment use. No lot shall be used or occupied for
any business, commercial, trade, or other permissible party and provides no specific detail as to
length of time that the property can be rented. Appellants
professional purpose either apart from or in
assert that Article VII of the Declaration plainly states that
connection with the use thereof as a private
residence, whether for profit or not. the use of the property by "tenant" for single family
purposes is acceptable, and notes that in order to preclude
The Appellants originally purchased their first lot in the Appellants' rental activities, the Declaration would have
Lakeside Place, Lot 22, in the early 1990s. At that time, the had to use the term "tenant" to clearly and specifically
Adamses sought an opinion letter from the developer, Don prohibit any "rental or leasing" of the properties subject to
Byrom, granting them the ability to rent their property in the the Declaration. Appellants assert that restrictive covenants
neighborhood on a short-term basis. That letter was written should be strictly construed against those seeking to
by Byrom. After a home was constructed on this lot, the enforce them, and that in this instance the covenant was
Appellants engaged in renting the home on Lot 22 for not specific enough to restrict rental activity of the
several years prior to the purchase of the second lot, Lot properties at issue. Appellants also assert that Kentucky
13. Appellants subsequently purchased Lot 13. should move toward accepting a more modern approach
which favors an unfettered use of land, and urge this Court
Other homeowners in Lakeside became concerned when to find accordingly.
the Appellants built a house on Lot 13 in Lakeside that they
immediately began to use as a short-term rental facility, In conjunction with their argument that the trial court erred
rather than as a single family residence. The Appellants in determining that the Declaration prevents rentals,
advertised the property for rent on various websites, Appellants argue that the trial court erred because it
including for periods of time as short as three nights. "refused to see" that Article VII was subject to
more than one [*6] interpretation and is therefore
In his deposition, Ronald Adams confirmed that the tax ambiguous. Appellants assert that though the court
returns for the [*4] years 2007 and 2008 indicated that the attempted to distinguish a "lease" from a "rental," the
rental property was listed as a "motel." The Appellants' Declaration itself makes no such distinction and is at best
income tax returns were submitted into evidence below and ambiguous on this point. Appellants assert that if ambiguity
indicated the rents received as income as well as on this issue exists, the facts make clear that the drafters of
expenses, including cleaning, maintenance, repairs, the Declaration clearly intended to allow rental
supplies, utilities, insurance, legal and professional fees, arrangements and that no specification was made as to
and depreciation of the property. Additionally, Appellants how long the property could be rented or leased.
paid the required Russell County Tourist and Convention
Commission Transient Room Tax and the Kentucky Sales Further, Appellants argue that the trial court erred in
Use and Transient Room Tax, as is required of motels, determining that Appellants' rental was a "business use," or
that, alternatively, this creates a second ambiguity in the
hotels, and persons renting their property for a short period
of time. Declaration. While the court found that the short-term
rentals of Appellants' property were a "business use,"
Lakeside asserted that Appellants made short-term rentals Appellants argue that merely receiving money for the
to large groups of people who created a noise rented property did not mean that the property was being
utilized for "non-residential," or
Page 3 of 5
2014 Ky. App. Unpub. LEXIS 637, *6
"business use" purposes. Alternatively, Appellants argue we focus solely on interpretation of the Declaration as a
that the Declaration was at best ambivalent on this point. matter of law.1 In so doing, we turn first to applicable
precedent. It is clearly established that when attempting to
In response to the first four arguments made by Appellants, construe ambiguous restrictive covenants the party's
Lakeside argues that the trial court properly determined that intention governs. See Glenmore Distilleries v. Fiorella, 273
the rental of the house located on Lot Ky. 549, 554, 117 S.W.2d 173, 176 (1938). If known, the
13 of Lakeside was [*7] in violation of Article VII of the surrounding circumstances of the development are likewise
Declaration. Lakeside asserts that by virtue of an important consideration when ambiguous language
advertisements on the internet, tax returns indicating that creates a doubt as to what the creators intended to be
the business use for the property was a "motel," and by prohibited. Brandon v. Price, 314 S.W.2d 521, 523 (Ky.
payment of the hotel and motel tax of Russell County, the 1958). Thus, the construction may not be used to defeat the
Appellants could present no proof that they were not obvious intention of the parties though that intention may
engaged in a commercial enterprise in the rental of their not be precisely expressed. Connor v. Clemons, 308 Ky. 9,
home. 213 S.W.2d
438 (1948) [*8] .
In addressing this issue, we note that interpretation of a
restrictive covenant is a matter of law appropriate for de Furthermore, we note that Kentucky has approached
novo review by this Court. Colliver v. Stonewall Equestrian restrictive covenants from the viewpoint that [*10] they are
Estates Ass'n, Inc., 139 S.W.3d 521, 522-23 (Ky. App. to be regarded more as a protection to the property owner
2003). Upon review, we note that there are no factual and the public rather than as a restriction on the use of
disputes between the parties and, accordingly, property, and that the old-time doctrine of strict construction
no longer applies. Highbaugh Enterprises
1 In addressing this issue, we also direct the parties to our previous unpublished opinion in Hyatt v. Court, 2009 Ky. App. Unpub. LEXIS
738, 2009 WL 2633659 (Ky. App. 2009), which we cite pursuant to Kentucky Rules of Civil Procedure 76.28(4), and which we believe
to be directly on point in this matter. In Hyatt, as was the case with the Appellants sub judice, the Hyatts advertised their home on the
internet, and charged a cleaning fee, security deposit, and a charge for Kentucky sales tax.
This Court ultimately found that the Hyatts were using their property as a business, stating:
Merriam-Webster's 2009 Online Dictionary defines commercial as of or relating to commerce, which is defined as the
exchange or buying or selling of commodities on a large scale involving transportation from place to place, and is
synonymous with business. There can be no doubt that the Hyatts define their rental enterprise as a business. The Hyatts
cannot label the rental of their vacation home one thing to the Internal Revenue Service and characterize it to the contrary
to this Court.
The Hyatts urge us to note that the people who rent their property engage in the very same recreational activities as do the
owners or their guests who reside in the dwellings within the Sherwood Shores subdivision. While this
may indeed be the [*9] case, it is not what the tenants do to occupy their time while on the property that is
forbidden, it is the fact that the property is being held out for remuneration in much the same manner as a
hotel or motel that is restricted.
The creators of the subdivision plainly intended to restrain deed-holders from engaging in anything more than recreation
while using their property. Such is the privilege of the creators. That the other property owners seek to enforce the
protections of the restrictive covenants is their right.
What is equally clear is that the Hyatts have gone to a great deal of trouble to treat their vacation property as a business.
The rental agreement, copyrighted web-site, check-in and check-out times, and the supply of various sundries to tenants,
underscore the appropriateness of this commercial classification. Further, the fact that the Hyatts are required to pay the
same taxes as is required of motels and hotels only emphasizes the business-related nature of their endeavor. It is
unmistakable that the Hyatts have violated the restrictive covenant as the trial court found.
Hyatt, 2009 Ky. App. Unpub. LEXIS 738, [WL] at *4.
Page 4 of 5
2014 Ky. App. Unpub. LEXIS 637, *10
Inc. v. Deatrick and James Construction Co., 554 S.W.2d other property owners seek to enforce the protections of the
878, 879 (Ky. App. 1977). restrictive covenants is their right. We are in agreement with
the court below that Appellants have violated the restrictive
Indeed, in 1952, our Supreme Court noted: covenant and, accordingly, we
believe the trial court appropriately granted summary [*12]
[W]e are among the jurisdictions which adhere to judgment.
the concept that such restrictions constitute mutual,
reciprocal, equitable easements of the nature of Having so found, we now turn to the Appellants' fifth basis
servitudes in favor of owners of other lots of a plot for appeal, namely that the trial court erred in ordering the
of which all were once a part; that they constitute Appellants to produce their income tax returns which they
property rights which run with the land so as to assert are confidential, privileged materials. Appellants
entitle beneficiaries or the owners to enforce the assert that they stipulated the fact that they were renting the
restrictions, and if it be inequitable to have property for profit as a single-family rental and that,
injunctive relief, to recover damages. Crutcher v. accordingly, their tax returns were not relevant to any
Moffett, 205 Ky. 444, 266 S.W. 6; Starck v. Foley, material issue in this matter, particularly because there is
209 Ky. 332, 272 S.W. 890, 41 A.L.R. 756; Doll v. no claim for punitive damages.
Moise, 214 Ky. 123, 282 S.W. 763; Bennett v.
Consolidated Realty Co., 226 Ky. 747, 11 S.W.2d In response, Lakeside argues that the trial court properly
910, 61 A.L.R. 453. ordered Appellants to provide their tax returns. Lakeside
asserts that as part of discovery, it had requested income
Ashland-Boyd County City-County Health Dept. v. Riggs, tax returns from Appellants which, when provided, indicated
252 S.W.2d 922, 924-25 (Ky. 1952). that the "business purpose" for the house rental was
designated as "motel" on the Schedule C for tax year 2007,
Having thus expressed the state of the law in the that expenses were deducted, and that the property was
Commonwealth concerning restrictive covenants, we now depreciated. Accordingly, Lakeside argues that the tax
turn to the factual scenario before us. Sub judice, the returns were clearly relevant as to the use of the property.
Appellants have labeled their home as a "motel," for tax We agree.
purposes, have treated it as a business, have advertised it
on various websites, have a rental agreement along with Pursuant to Kentucky Rules of Evidence 401, "relevant
check-in and check-out times, and pay taxes required of evidence" is that which has a tendency to make the
hotels and motels. Upon review of the record, it is clear that existence of any fact that is of consequence to the
the Appellants define determination of the action more [*13] probable or less
their rental enterprise as a [*11] business, and have indeed probable than it would be without the evidence. Sub judice,
stated as much to the Internal Revenue Service. They we are in agreement with Lakeside and the court below that
cannot now characterize it to the contrary to this Court. the designation of the property for tax purposes was
relevant and, accordingly, we decline to reverse on this
While the Appellants argue that the individuals who rent basis.
their property engage in the very same recreational
activities as do the owners or their guests who reside in the As their sixth and final basis for appeal, Appellants argue
dwellings permanently, or as is the case for long-term that the trial court erred in depriving them of a jury trial on
rentals, we do not find the activities of the occupants to be their "waiver" argument. Appellants assert that they had
determinative. Indeed, it is not what the individuals do to rented or leased their two properties in the subdivision for
occupy their time while on the property that is forbidden; it is years without contest from the homeowner's association.
the fact that the property is being held out for remuneration They assert that they asked Attorney Byrom if the property
in much the same manner as a hotel or motel. in the subdivision could be rented and he agreed.
Moreover, Appellants note that Byrom sent them a letter,
Upon review of the record and the testimony of the parties, which has since been misplaced, indicating that the
we believe that the creators of the subdivision did not intend property could be rented. Appellants assert that their
for properties in the subdivision to be testimony as to the contents
utilized as motels or hotels in the manner in which
Appellants are currently utilizing their property. That the
Page 5 of 5
2014 Ky. App. Unpub. LEXIS 637, *13
of this letter was uncontroverted. Accordingly, they argue of substantial value to those entitled to benefit by
that this permission, in conjunction with the length of time its provisions, they are still entitled to enforce it
they had rented the properties without objection, amounted insofar as they were not affected by the principles
to waiver of any right that might otherwise have existed. of estoppel and waiver.
In response to Appellants' argument concerning waiver,
We agree with Lakeside and the court below that there is a
Lakeside argues that the trial court properly held that
significant difference between a long-term rental of a
there [*14] was no waiver of the Declaration. Lakeside
property by one family in contrast to short-term rentals by
asserts that while other homeowners may have rented their
different individuals or families every weekend. While the
property to other parties for long-term periods of time, this
restriction may not have been rigidly enforced with respect
was different than the short-term rentals sub judice and in
to long-term rentals, Lakeside retained the right
no way constituted a waiver of the covenants and to do so with respect to the short-term rentals because [*15]
restrictions contained in the Declaration. Again, we agree.
the continued enjoyment of the subdivision by all
homeowners was an ongoing interest of substantial value.
As our Kentucky Supreme Court previously held in
Accordingly, we affirm.
Hardesty v. Silver, 302 S.W.2d 578, 582 (Ky. 1956):
Wherefore, for the foregoing reasons, we hereby affirm the
Where the restrictive covenant has not been rigidly October 5, 2012, findings of fact, conclusions of law, and
enforced, and where certain structures and uses summary judgment/injunction issued by the Russell Circuit
have been tacitly permitted which are violative of Court granting summary judgment in favor of Appellees, the
the strict terms, but where, in spite of such Honorable Vernon Miniard, Jr., presiding.
relaxation, there still remains something
ALL CONCUR.
Attorney General Opinion WW-821
March 25, 1960
Mr. E. B. Camiade Opinion No. Wk-821
State Parks Board
Austin, Texas Re: Under House Bill 11, Acts
of the 56th Legislature,
Third Called Session, 1959,
is the Texas State Parks
Board required to collect the
Hotel Occupancy Tax on rooms,
cabins and camping shelters
owned and operated by the
Dear Mr. Csmiade: Parks Board.
By your letter dated January 11, 1960, you request an
opinion on four questions relating to the application
of the Hotel Occupancy Tax to rooms, cabins and camping
shelters owned and operated by the State Parks Board.
In describing the subject accomtmdations,you state:
"The revenue derived from the charges
made for the use of said rooms, cabins and
camping shelters is deposited by the employee
of the Texas State Parks Board handling said
rentals In a local bank fund, called a Con-
cession Account. Out of said Concession
Account, the employee pays for all expenses
incurred in operating and maintaining said
rooms, cabins and camping shelters. The
Parks Board authorizes the employee to re-
tain 204%of the money left in the Concession
Account after paying all expenses of opera-
tion and maintenance, as compensation for
his work in handling said rentals. This
compensation Is handled as wages, and is
reported accordingly for social security
and withholding tax purposes by the Texas
State Parks Board. The other 80% of the
money left in the Concession Account IS
deposited in the State Treasury In the State
Parks Fund, and used for operation, maintenance
and repairs to the State Parks of Texas."
Your first question is whether the State Parks Board is
required~to collect the Hotel Occupancy Tax.
Mr. E. B. Camlade, Page 2 Opinion NO. ww-821
The tax in question is imposed upon the occupant (except
"permanent residents") of any building or buildings in
which the public may, for a consideration, obtain sleeping
accomodations where the cost of occupancy of the space
furnished is at the rate of two dollars ($2.00) or more per
See Art. 23.01 (a) Art. 23.02 (a) and Attorney General's
g&ion No. ~-706 (Sept&ber 21 1959). Only hospitals,
sanitaPiums and nursing homes &e excepted from the definition
of "hotels ' Every "person" owning, operating, managing or
controlling a "hotel" is required to collectthe tax and make
remittance to the State. Arts. 23.03 and 23.04. 'Person"
is defined to mean any Individual, company, corporation, or
association owning, operating, managing or controlling any
hotel.
The term "person" as extended to Include "corporation"
may include the State (thereby, obviously, including all State
components or "functioning arms") where such an Intention is
manifest. The fact that a State is, In the generic sense, a
corporation is a proposition having roots In judicial antiquity.
Witness the following statement from Chlsholm, Executor, v.
Geor ia 1 U.S. (Curtis) 17, 36, 2 U.S. (Dali.) 419, 447
Tide
"The word 'corporation', in Its largest
sense, has a more extensive meaning than
people generally are aware of. Any body politic,
sole or aggregate, whether its powers be re-
stricted or transcendent, is In this sense 'a
corporatlon8. The king, accordingly, in England,
is called a corporation, 10 Ce. 29, b. So also,
by a very respectable author (Sheppard, in his
abridgement, (Vol. 431) is the parliament itself.
In this extensive sense, not only each State
singly, but even the United Statesmay without
lmproprletv be ~tezmed 'corporations'. I have,
therefore, in contradistlnctien ko this large
and indefjnite term, used the term 'subordinate
corporations'; meaning to refer to such only (as
alone capable of the slightest application, for
the purpose of the objection) whose creation and
whose powers are limited by law."
The United
_ States Supreme Court haa not departed from the
foregoing Interpretation. See Cotten v';~United States, 11 How.
229, 231-232, 52 U.S. 229 (1850); Ohio v. Helverin 2
360 (1934); Georgia v. Evans, 316 U,S. 159 (1942);%eeg%~oS.
United States v. Cooper Corporation, et al., 312 U.S. 600
(1941); Stanley v. Schwalby, 147 U S 508 (189 ); Helverlng
v. Stockholms Enskilda Bank, 293 U:S: 84 ($9343 ; Far East
MP. E. B. Camiade, Page 3 Opinion NO, ww-821
Conference v, United States, 342 U.S. 570 (1952); Res ublica
v. Sweeps9 1 U.S. Dali. 41 (1779) and Relverl;g v.*
American Tobacco Company, Ltd., 69 F.2d 528 ( .C.A. 2nd
Cir. 1934) ff'd, 293 U S 9 95 In Georgiav. Evans, supra,
the wordinaaof the deflnition'of nerson was. lnsof‘aras pertinent.
identical go the definition in Issue. There the question was -.
whether the State of Georgia was a "person" within the meaning
of the Sherman Anti-Trust Act (26 State. 209, 210) for the
purpose of instituting a civil action for treble damages.
Section 8 of the act defined "person" as "corporations and asso-
ciations existing under or authorized by the laws of any of
the territories, the laws of any State, or the laws of any
foreign country." The Court, speaking through Justice Frankfurter,
pointed out that whether 'person" includes a State or the
United States depends upon its legislative environment, and
that the following may be considered in construing the term:
1 the structure of the Act; (2) its legislative history;
t3 1 the practice under It; (4) past judicial expressions.
Applying these principles, the Court held that the State of
Georgia was a "person" within the foregoing definition.
Other authorities less imcressive t&n the Supreme Court
have held that the State Is a corporation. See Burke v.
Railroad Retirement Board, 165 F.2d 24 (C.C.A., D,C. 1947)
{in which it was held that the Allegheny County, PennsylvanIa,
drphans Court was a person within the meaning of the Rail-
road Retirement Act (50 Stat. 309) because the context and
purpose of thz Act required the terms as extended to Include
'corporation, to incltie a governmen+.albody); Isner v.
Thterstate Commerce Commission, 90 F.Supp. 361 (U.S.D.C S.D.
kich. 1950) in which the Court, relying on T. & P. Ry.'&o.
v. I.C.C., 1 2 U.S. 197; RRD. Labor Board, 258 U.S. 158, and
tah State Building Comamissionv. Great American Indemnity Co.,
-_ , held that the I.C.C. Is a "corporation"):
140 P .2d 763
Indiana State Toll-Bridge Commission v. NSnor, 132 N.E:2d 282
95b) (in which it was held that the Toll-Bridge Commission,
a body politic and corporate, was a corporation); and Indiana
v. worsm, 40 Am.Dec. 378 (holding the State to be a'corporatlon"
and a "person" within the%&eaning of the statute providing‘that
all notes in writing and signed by any "person" are negotiable).
The case of United States v. Coumentaros, 165 F.Supp. 695
(U.S.D.C., Md. 1958) contains an exhaustive review of authorities
on this subject.--It is even pointed out9 in a quote from
Helvering v. Stockholms Enskllda Bank, supra, that Blackstone,
the eminent authority on all matters pertaining ,to law, had
this to say (1 Bl. 123):
"Persons are divided by the~~~law
Into
either natural persons9 or artLflcia1.
MP. E. B. Csmiade, Page 4 Opinion NO. ww-821
Natural persons are such as the God of
nature formed US; artificial aressuch as
are created and devised by human-laws-for
the purposes of society and government,
which are called corporations or bodies
politic." (Emphasis added.)
Based on its lengthy discussion, the Court concluded that the
United States Is a 'person" and "body corporate" within a
Maryland statute providing that every person and body corporate
that has the right to become a plaintiff In any action or
proceeding shall have,,,the
right to become a plaintiff in an
attachment against a non-resident. In so holding, the Court
makes the following statement which Is particularly appropos
to the instant situation:
"By analyzing those decisions holding that
the sovereign 1s a person or body corporate,
it may be found that one or more of the follow-
ing factors are present and It may be con-
cluded that their presence determines the
reasonableness of such a construction of the
statute in question and the manifestation of
legislative intent to include the sovereign.
Generally the sovereign entity involved is'
acting not In Its sovereign capacity but
rather is engaging in commercial and business
transactions such as other persons, natural
or artificial, are accustomed to conduct,
usually in addition, when a statute is construed
~80 as to include the sovereign within Its terms,
no impairment of sovereign powers results
thereby and rights and remedies are given
rather than taken away-"
Analysis of the Hotel Occupancy Tax Act In light of the
foregoing principles makes it clear that the State Is a "person"
required to collect the tax, In line with the reasoning in the
Coumantaros case, the State Parks Board is, In effect, given
a right or remedy (I.e., collection of the tax from the
occupant) In reference to an activity "such as other persons,
natural or artificial, are accustomed to conduct."1 This
position is also fortified by reference to another extrinsic
aid to statutory Interpretation, i.e., "past judicial expression."
(See discussion of Georgia v.,~
Evans, supra.)
1
Though the renting of cabins in this case may, perhaps, be a
non-profit activity, or designed to foster the esthetic, It
nevertheless Is an enterprise that is commercial In nature.
Mr. E. B. Camlade, Page 5 Opinion No. ww-821
It Is specifically noted that by the statute in question
the tax is not imposed on the State itself, rather Instead
the State merely collects the tax from those occupying the
sleeping accomodatlons. Your first question Is answered in
the affirmative.
Conditioned upon an affirmative answer to the first
question, you ask:
"Does the tax apply to a room or cabin
where the cost of occupancy for one person
is less than two dollars ($2.00) per day,
but for two or more persons is more than two
dollars ($2.00) per day?"
The tax is imposed upon the total cost of occupancy of
a rental unit, or space", regardless of the number of people
who pay for or take advantage of the privilege of occupancy.
Consequently, where more than two dollars ($2.00).per day is
charged for the same rental unit, the tax is due.
You next ask whether the tax applies "where group camp
facilities (consisting of dormitory buildings, service buildings
and showers, clothes washing equipment and sanitary facilities,
combination dining hall and kitchen, recreation hall and ad-
ministrative staff cottage) are rented to a group (that is not
exempt under paragraph (c) of Art. 23.02 of said H.B. 11) at
a charge of $35.00 a day for 50 persons,"
Under the facts presented, it must be considered that the
entire "group camp facility" is the rental unit furnished, since
there is no indication that the rental price is divided according
to the number of 'rooms' or "spaces"; nor does there appear to
be any separation of the charge for the buildings used for
sleeping accomodations from charges made for service'buildings"
or "dining" or "recreation" halls. Therefore, It appears that
the tax Is due upon the entire cost of occupancy. (On this
point, attention is directed to Opinion No. w-706, cited
supra, and In particular to Questions and Answers Nos. 1, 2 and
5 therein).
The last question Is whether the tax is to be collected
on screened-in camping shelters where nothing is furnished, "not
even a bed."
As pointed out above, a "hotel" is a building in which the
public may for a consideration, obtain "sleeping accomodations".
The term "sleeping accomodations' infers something more than
a mere overhead covering; it appears that some sort of bed,
cot, bunk, hammock, mattress, or at least a pallet, Is required.
’
m. E. B. Camiade, Page 6 Opinion No. WW-821
A person who receives none of these articles (or a sub-specie
thereof) Is not very well "accomodated" for sleeping. There -
fore, this question is answered in th? negative.
SUMMARY
The Hotel Occupancy Tax is due on the
cost of occupancy of rooms, cabinsf,camping
shelters, and "group camping units owned
by the Texas State Parks Board where the
price charged for such occupancy exceeds
two dollars ($2.00) per day per individual
rental unit. However, the tax is not due
on screened-in camping shelters where
nothing is furnished, "not even a bed."
Yours very truly,
WILL WILSON
Attorney General of Texas
JNP:cm
APPROVED:
~.OPINION COMMITTEE:
W. V. Geppert, Chairman
Richard Wells
Robert A. Rowland
'Ray Loftln
Charles Cabaniss
REVIEWEBFOR THEATTORNEYGENERAL
By: Leonard Passmore
Hyatt v. Court
Positive
As of: March 12, 2015 8:56 PM EDT
Hyatt v. Court
Court of Appeals of Kentucky
August 28, 2009, Rendered
NO. 2008-CA-001474-MR
Reporter
2009 Ky. App. Unpub. LEXIS 738; 2009 WL 2633659
SCOTT HYATT; SUSAN HYATT, APPELLANTS v. IVA Opinion
COURT, APPELLEE
AFFIRMING
Notice: THIS OPINION IS DESIGNATED "NOT TO BE
PUBLISHED." PURSUANT TO THE RULES OF CIVIL KELLER, JUDGE: This is an appeal from an order of the
PROCEDURE PROMULGATED BY THE SUPREME Marshall Circuit Court which enjoined the appellants, Scott
COURT, CR 76.28(4)(C), THIS OPINION IS NOT TO BE and Susan Hyatt, (hereinafter the Hyatts), from renting their
PUBLISHED AND SHALL NOT BE CITED OR USED AS vacation home, located on Kentucky Lake. The court found
BINDING PRECEDENT IN ANY OTHER CASE IN ANY that the Hyatts were in violation of a restrictive covenant
COURT OF THIS STATE; HOWEVER, UNPUBLISHED contained in the deed prohibiting commercial or
KENTUCKY APPELLATE DECISIONS, RENDERED manufacturing activity. In the appeal, the Hyatts argue they
AFTER JANUARY 1, 2003, MAY BE CITED FOR have not violated the restrictive covenant as the rental of
CONSIDERATION BY THE COURT IF THERE IS NO their vacation home does not rise to the level of a
PUBLISHED OPINION THAT WOULD ADEQUATELY commercial purpose. Alternatively, the Hyatts assert that
ADDRESS THE ISSUE BEFORE THE COURT. even if their behavior violates the deed, the character of the
OPINIONS CITED FOR CONSIDERATION BY THE subdivision has so changed that to do equity, the restriction
COURT SHALL BE SET OUT AS AN UNPUBLISHED should be nullified. We disagree with the Hyatt's
DECISION IN THE FILED DOCUMENT AND A COPY OF contentions, and therefore affirm the Marshall Circuit
THE ENTIRE DECISION SHALL BE TENDERED ALONG Court's judgment due to the reasons set forth below.
WITH THE DOCUMENT TO THE COURT AND ALL
PARTIES TO THE ACTION. FACTS
Prior History: [*1] APPEAL FROM MARSHALL CIRCUIT A bench trial was held in June of 2008. As the parties do
COURT. HONORABLE DENNIS R. FOUST, JUDGE. not dispute [*2] the facts found by the court, we will reiterate
ACTION NO. 07-CI-00002. those facts which are pertinent below. In the trial court, the
appellant, Iva Court, and ten others 1 (hereinafter the
Counsel: BRIEF FOR APPELLANTS: Dennis L. Null, Jr., owners), owned homes located in the Sherwood Shores
Mayfield, Kentucky. Subdivision. Citing various complaints against renters of the
Hyatt's home, including blocking access to driveways,
BRIEF FOR APPELLEE: G. Eric Long, Benton, Kentucky. trash, and vulgar language, the owners sought to enforce a
restrictive covenant found in their collective deeds. The
Judges: BEFORE: KELLER, STUMBO, AND relevant portions of the restrictions are set out as follows:
VANMETER, JUDGES. ALL CONCUR.
1. No building shall be erected or maintained on
any lot in Sherwood Shores other than a
Opinion by: KELLER
1 Due to the appellee's failure to name the additional parties in the notice of appeal, the additional persons associated with the case in the trial court are
not per se parties to this appeal, however, we shall refer to them in the plural so as to avoid confusion.
Page 2 of 4
2009 Ky. App. Unpub. LEXIS 738, *3
private residence and a private garage for the sole Lastly, the court found that the subdivision's character had
use of the owner or occupant, except those lots not changed sufficiently to warrant waiver of the restrictive
designated as commercial on the plat. covenant pursuant to Kentucky law. Therefore, the court
enjoined the Hyatts from continuing to rent their property in
2. No part of said premises shall be used for
violation of the restrictions.
commercial or manufacturing purposes, except
those lots designated as commercial on the plat As stated [*5] above, the Hyatts argue to this Court that
map. their behavior in renting their property does not constitute
commercial activity, but that even if it did, the restriction
The court found that the Hyatts had created a
should not be enforced as there has been a change in the
copyrighted [*3] website at www.bestkylakevacation.com
character of the neighborhood such that it is no longer
advertising the rental of their fully-furnished home for up to
possible to accomplish the purpose intended by the
three (3) couples or two (2) families. The rental included the
covenant.
use of their home and private dock for periods of two (2)
nights up to one (1) week. The Hyatt's charged a security STANDARD OF REVIEW
deposit, a cleaning fee, an additional amount for pets, and
included a charge of 10% Kentucky sales tax. Tenants We agree with both parties that interpretation of the
entered into a written rental agreement, which included a restrictive covenant is a question of law appropriate for de
specific check-in and check-out time, a $ 300.00 damage novo review by this Court. Colliver v. Stonewall Equestrian
deposit, and a $ 10.00 per person charge for each Estates Ass'n, Inc., 139 S.W.3d 521, 522-23 (Ky. App.
additional person over the age of ten (10). The Hyatts 2004). Furthermore, as the parties agree that there are no
provided linens, paper products, and other amenities for factual disputes, we will concentrate our evaluation as to
which there were other fees. The form specifically whether the Hyatts were entitled to a judgment in their favor
designated that the "rental is for vacation purposes only." as a matter of law.
In addition to producing a witness who testified that he also ANALYSIS
advertised his Sherwood Shores property for rent, the
Hyatts testified that there were five (5) to six (6) other The Hyatts urge us to look to other jurisdictions for our
properties, possibly in Sherwood Shores, that they believed analysis of this matter, as they believe that there is not a
likewise rented on substantially the same basis as their Kentucky case that resolves the specific question of
own. The court found that the Hyatt's tax returns for 2006 whether short-term rental of property is a "commercial
and 2007 listed the rents paid as purpose." While we believe the cases from Oregon and
income, and deducted as expenses the [*4] cleaning, Virginia cited by the Hyatts are noteworthy, we do not agree
maintenance, repairs, supplies, utilities, insurance, legal that they reflect the state of the law in our
and professional fees, as well as depreciation of the Commonwealth. Therefore, [*6] we look to our precedent,
property. Additionally, the Hyatts paid the required Marshall where the essential rule when attempting to construe
County tourist and convention commission monthly ambiguous restrictive covenants is that the party's intention
transient room tax, and the Kentucky sales use and governs. See Glenmore Distilleries v. Fiorella, 273 Ky. 549,
transient room tax, as is required of motels, hotels, and 554, 117 S.W.2d 173, 176 (1938). If known, the
persons renting their property. surrounding circumstances of the development are likewise
an important consideration when ambiguous language
When analyzing the restrictive covenant, the court found creates a doubt as to what the creators intended to be
that the phrase "commercial or manufacturing purposes" prohibited. Brandon v. Price, 314 S.W.2d 521, 523 (Ky.
was not ambiguous and therefore there was no need to 1958). Thus, the construction may not be used to defeat the
scrutinize it further. The court stated, "[r]enting or leasing a obvious intention of the parties though that intention be not
home on a daily or weekly basis, paying business taxes, precisely expressed. Connor v. Clemons, 308 Ky. 9, 213
and depreciating the asset for income tax purposes are all S.W.2d 438 (1948).
characteristics of a 'commercial purpose.' The court further
found that the fact that other Kentucky has approached restrictive covenants
residents may be renting their property in the same way from the viewpoint that they are to be regarded
that the Hyatts were, did not make the phrase ambiguous.
Page 3 of 4
2009 Ky. App. Unpub. LEXIS 738, *6
more as a protection to the property owner and the when read together raised an ambiguity, the Supreme
public rather than as a restriction on the use of Court reasoned:
property, and that the old-time doctrine of strict
construction no longer applies. Highbaugh When the grantor specifically prohibits the use of
Enterprises Inc. v. Deatrick and James property for a particular purpose, the more
Construction Co., 554 S.W.2d 878, 879 (Ky. App. reasonable construction would be that no other
1977). uses are prohibited. At least an intention to further
extend the limitations is very doubtful. It is at this
Colliver v. Stonewall Equestrian Estates Ass'n, Inc., 139 point that we must apply the rule of strict
S.W.3d 521, 523 (Ky. App. 2003). construction against a restraint on the free use of
land.
Indeed, in 1952, our Supreme Court noted:
Id., 308 Ky. at 12, 213 S.W.2d at 440.
[W]e are among the jurisdictions [*7] which adhere
to the concept that such restrictions constitute Only then, when faced with an ambiguity, did the Supreme
mutual, reciprocal, equitable easements of the Court opine that a church was not a business, and that its
nature of servitudes in favor of owners of other lots erection did not violate the restriction. Such is what we must
of a plot of which all were once a part; that they do in the instant matter; that is, decide if the restriction
constitute property rights which run with the land so and/or its language are ambiguous, define what is
as to entitle beneficiaries or the owners to enforce prohibited, and then decide if the actions
the restrictions, and if it be inequitable to have [*9] of the Hyatts rise to the level of behavior sought to be
injunctive relief, to recover damages. Crutcher v. prohibited.
Moffett, 205 Ky. 444, 266 S.W. 6; Starck v. Foley,
209 Ky. 332, 272 S.W. 890, 41 A.L.R. 756; Doll v. The trial court found that the restriction is unambiguous and
Moise, 214 Ky. 123, 282 S.W. 763; Bennett v. that it clearly sought to prevent any commercial or
Consolidated Realty Co., 226 Ky. 747, 11 S.W.2d manufacturing activity within the subdivision, except where
910, 61 A.L.R. 453. originally authorized. While we agree with the trial court on
this issue, we nevertheless undertake to further define the
Ashland-Boyd County City-County Health Dep't v. Riggs, term commercial as it is ordinarily used in legal documents.
252 S.W.2d 922, 924-25 (Ky. 1952). Black's Law Dictionary, 7th edition, 1999, does not define
commercial, but does use the term within its definition of
In Ashland-Boyd the question presented was whether or business:
not a governmental health clinic for indigents violated a
restriction against the erection of a "'business house of any Business. A commercial enterprise carried on for
kind.'" The Supreme Court sought first to define business profit; a particular occupation or employment
prior to holding that a health clinic is not a business: habitually engaged in for livelihood or gain.
The term 'business' has a broad meaning and BLACK'S LAW DICTIONARY, 7th edition, 1999.
significance and may be used with many different
connotations. It refers generally to a trade or Merriam-Webster's 2009 Online Dictionary defines
occupation or to commercial, industrial commercial as of or relating to commerce, which is defined
and professional [*8] engagements. as the exchange or buying or selling of commodities on a
large scale involving transportation from place to place, and
Id. at 925-26. is synonymous with business. There can be no doubt that
the Hyatts define their rental enterprise as a business. The
In Connor v. Clemons, 308 Ky. 9, 213 S.W.2d 438 (1948), Hyatts cannot label the rental of their vacation home one
the construction of a church was proposed on land where thing to the Internal
the deeds prohibited a "building or structure to be used for Revenue Service and characterize it to the [*10] contrary to
business purposes" and provided that "[n]ot more than one this Court.
structure to be used for residential
purposes shall be erected on any one lot." Id., 308 Ky. at The Hyatts urge us to note that the people who rent their
10, 213 S.W.2d at 439. Holding that the two restrictions property engage in the very same recreational activities
Page 4 of 4
2009 Ky. App. Unpub. LEXIS 738, *10
as do the owners or their guests who reside in the dwellings must be so drastic as to render the original purpose or
within the Sherwood Shores subdivision. While this may intent impossible:
indeed be the case, it is not what the tenants do to occupy
their time while on the property that is forbidden, it is the The fact and circumstances must be examined to
fact that the property is being held out for remuneration in determine whether the change of the character of
much the same manner as a hotel or motel that is the neighborhood is sufficient to vitiate the
restricted. The creators of the subdivision plainly intended restrictions; or, to state the question in other terms,
to restrain deed-holders from engaging in anything more whether the 'scheme of development'
than recreation while using their property. Such is the contemplated by the restrictions has been
privilege of the creators. That the other property owners abandoned sufficiently to operate ipso facto as a
seek to enforce the protections of the restrictive covenants vitiation of the restrictions.
is their right.
Logan v. Logan, 409 S.W.2d 531, 534 (Ky. 1966); see also
What is equally clear is that the Hyatts have gone to a great Goodwin Bros. v. Combs Lumber Co., 275 Ky. 114, 120
deal of trouble to treat their vacation property as a S.W.2d 1024 (1938).
business. The rental agreement, copyrighted web-site, 2
check-in and check-out times, and the supply of various Despite [*12] the other witnesses for the Hyatts, who
sundries to tenants, underscore the appropriateness of this testified that they are also engaged in renting property in
commercial classification. Further, the fact that the Hyatts Sherwood Shores, the trial court did not find evidence of
are required to pay the such an abandonment of purpose as to render the
same taxes as is required of motels [*11] and hotels only restrictions obsolete. We discern no abuse of discretion in
emphasizes the business-related nature of their endeavor. this finding. The neighborhood has not abandoned the
It is unmistakable that the Hyatts have violated the original intention of a purely residential area, which is
restrictive covenant as the trial court found. evident by simply counting the parties involved on either
side of this lawsuit.
Our analysis cannot stop here however; as the Hyatts have
alleged that the neighborhood's character has so changed For the foregoing reasons, we affirm the Marshall Circuit
that to enforce the covenants as written would violate Court's judgment enjoining the appellant's from any further
equity. Kentucky case law simply does not support their commercial activity, including the rental of their home.
argument. Before enforcement is prevented in equity,
ALL CONCUR.
change in the character of a neighborhood intended to be
created by restrictions
2 Presumably the Hyatts are attempting to prevent competition from other businesses by the use of copyright laws.
AP-102
Texas Questionnaire for Hotel Occupancy Tax
GLENN HEGAR TEXAS COMPTROLLER OF PUBLIC ACCOUNTS
GENERAL INSTRUCTIONS
WHO MUST SUBMIT THIS QUESTIONNAIRE – You must submit this questionnaire if you are an individual,
partnership, corporation or organization operating a hotel in Texas.
DEFINITIONS –
• HOTEL: A hotel is a building in which members of the public obtain sleeping accommodations for consideration.
Examples include hotels, motels, bed and breakfasts, rooming houses, skid mounted bunkhouses, tourist
houses, tourist courts, manufactured homes, residency inns, condominiums, cabins and cottages.
• BUSINESS LOCATION: Any location where you provide sleeping accommodations for consideration.
NOTE: If you have been in operation and have not submitted a questionnaire, you will need to file reports and pay
tax, plus applicable penalty and interest for the period of time you have been in business.
FOR ASSISTANCE – If you have any questions about this questionnaire, contact your nearest Texas State Comp-
troller's field office or call 1-800-252-1385.
AMERICANS WITH DISABILITIES ACT – In compliance with the Americans with Disabilities Act, this document
may be requested in alternative formats by calling 1-800-252-5555. Hearing impaired taxpayers may call via
1-800-RELAY-TX.
FEDERAL PRIVACY ACT - Disclosure of your social security number is required and authorized under law,
for the purpose of tax administration and identification of any individual affected by applicable law. 42 U.S.C.
§405(c)(2)(C)(i); Tex. Govt. Code §§403.011 and 403.078. Release of information on this form in response to a
public information request will be governed by the Public Information Act, Chapter 552, Government Code, and
applicable federal law.
If you are hiring one or more employees, please contact the Texas Workforce Commission (TWC) at 512-463-
2699 or your local TWC tax office to determine if you are liable for payroll taxes under the Texas Unemployment
Compensation Act.
Complete this application and mail it to COMPTROLLER OF PUBLIC ACCOUNTS
111 E. 17th Street
Austin, TX 78774-0100
Under Ch. 559, Government Code, you are entitled to review, request and correct information we have on file about
you, with limited exceptions in accordance with Ch. 552, Government Code. To request information for review or
to request error correction, contact us at the address or number listed on this form.
AP-102-1 (Rev.1-15/20)
AP-102-2
(Rev.1-15/20)
Below is a listing of taxes and fees collected by the Comptroller of Public Accounts. If you are responsible for reporting or paying one of the listed
taxes or fees, and you DO NOT HAVE A PERMIT OR AN ACCOUNT WITH US FOR THIS PURPOSE, please obtain the proper application by calling
1-800-252-5555 or by visiting your local Comptroller Enforcement field office.
9-1-1 Emergency Service Fee/Equalization Surcharge - If you are Off-Road, Heavy Duty Diesel Powered Equipment Surcharge - If
a telecommunications utility, a mobile service provider or a business you sell, lease or rent off-road, heavy duty diesel powered equip-
service user that provides local exchange access, equivalent local exchange ment, you must complete Form AP-201. This is in addition to the
access, wireless telecommunications connections or intrastate long-distance sales tax permit. You are required to charge both the sales tax and
service, and you are responsible for collecting emergency communications the surcharge.
charges and/or surcharges, you must complete Form AP-201.
Automotive Oil Sales Fee - If you manufacture and sell automotive oil Hotel Occupancy Tax - If you provide sleeping accommodations to
in Texas; or you import or cause automotive oil to be imported into Texas the public for a cost of $15 or more per day, you must complete Form
for sale, use or consumption; or you sell more than 25,000 gallons of AP-102.
automotive oil annually and you own a warehouse or distribution center
located in Texas, you must complete Form AP-161. International Fuel Tax Agreement (IFTA) - If you operate qualified
Battery Sales Fee - If you sell or offer to sell new or used lead acid bat- motor vehicles that require you to be licensed under the International
teries, you must complete Form AP-160. Fuel Tax Agreement, you must complete Form AP-178.
Cement Production Tax - If you manufacture or produce cement in
Manufactured Housing Sales Tax - If you are a manufacturer of
Texas, or you import cement into Texas and you distribute or sell cement
manufactured homes or industrialized housing engaged in business
in intrastate commerce or use the cement in Texas, you must complete
in Texas, you must complete Form AP-118.
Form AP-171.
Cigarette, Cigar and/or Tobacco Products Tax - If you wholesale, Maquiladora Export Permit - If you are a maquiladora enterprise
distribute, store or make retail sales of cigarettes, cigars and/or tobacco and wish to make tax-free purchases in Texas for export to Mexico,
products, you must complete Form AP-175 or Form AP-193. you must complete Form AP-153, to receive the permit.
Coastal Protection Fee - If you transfer crude oil and condensate from
TAX TYPE(S)
or to vessels at a marine terminal located in Texas, you must complete Motor Vehicle Seller-Financed Sales Tax - If you finance sales of
Form AP-159. motor vehicles and collect Motor Vehicle Sales Tax in periodic pay-
ments, you must complete Form AP-169.
Coin-Operated Machine Tax - If you engage in any business dealing
with coin-operated amusement machines OR engage in business to own
or operate coin-operated amusement machines exclusively on premises Motor Vehicle Gross Rental Tax - If you rent motor vehicles in Texas,
occupied by and in connection with the business, you must complete you must complete Form AP-143.
Form AP-146 or Form AP-147.
Crude Oil and Natural Gas Production Taxes - If you produce and/ Petroleum Products Delivery Fee - If you are required to be licensed
or purchase crude oil and/or natural gas, you must complete Form under Texas Water Code, sec. 26.3574, you must complete Form
AP-134. AP-154.
Direct Payment Permit - If you annually purchase at least $800,000 worth
of taxable items for your own use and not for resale, you must complete Sales and Use Tax - If you engage in business in Texas; AND you
Form AP-101 to qualify for the permit. sell or lease tangible personal property or provide taxable services
in Texas to customers in Texas; and/or you acquire tangible personal
Fireworks Tax - If you collect tax on the retail sale of fireworks, you must property or taxable services from out-of-state suppliers that do not
complete Form AP-201. This is in addition to the sales tax permit. You hold a Texas Sales or Use Tax permit, you must complete Form
are required to charge both the sales tax and the fireworks tax. AP-201.
Franchise Tax - If you are a general partnership or non-Texas entity
without a certificate of authority or certificate of registration, you must Sulphur Production Tax - If you own, control, manage, lease or oper-
complete Form AP-114. ate a sulphur mine, well or shaft, or produce sulphur by any method,
system or manner, you must complete Form AP-171.
Fuels Tax - If you are required to be licensed under Texas Fuels Tax Law for
the type and class permit required, you must complete Form AP-133.
Texas Customs Broker License - If you have been licensed by the
Gross Receipts Tax - If you provide certain services on oil and gas wells United States Customs Service AND want to issue export certifica-
OR are a utility company located in an incorporated city or town having a tions, you must complete Form AP-168.
population of more than 1,000 according to the most recent federal census
and intend to do business in Texas, you must complete Form AP-110.
AP-102-3
(Rev.1-15/20)
Texas Questionnaire for
Hotel Occupancy Tax
• TYPE OR PRINT • Do NOT write in shaded areas. Page 1
SOLE OWNER IDENTIFICATION
1. Name of sole owner (First, middle initial and last name)
2. Social Security Number (SSN) Check here if you DO NOT 3. Taxpayer number for reporting any Texas tax OR Texas identification number if
have a SSN. you now have or have ever had one.
NON-SOLE OWNER IDENTIFICATION --- ALL SOLE OWNERS SKIP TO ITEM 9. ---
4. Business Organization Type
Profit Corporation (CT, CF) General Partnership (PB, PI) Business Trust (TF)
Please submit a copy of the trust
Nonprofit Corporation (CN, CM) Professional Association (AP, AF) Trust (TR) agreement with this application.
Limited Liability Company (CL, CI) Business Association (AB, AC) Real Estate Investment Trust (TH, TI)
Limited Partnership (PL, PF) Joint Venture (PV, PW) Joint Stock Company (ST, SF)
Professional Corporation (CP, CU) Holding Company (HF) Estate (ES)
Other (explain)
5. Legal name of corporation, partnership, limited liability company, association or other legal entity
6. Taxpayer number for reporting any Texas tax OR Texas identification number if you now have or have ever had one. .....
1
7. Federal Employer Identification Number (FEIN) assigned by the Internal Revenue Service .......................................
3
8. Check here if you do not have an FEIN. .....................................................................................................................
9. Mailing address
Street number, P.O. Box, or rural route and box number
BUSINESS INFORMATION
City State/province ZIP code County (or country, if outside the U.S.)
10. Name of person to contact regarding day to day business operations Daytime phone
11. Principal type of business
Agriculture Transportation Retail Trade Real Estate Mining Communications
Finance Services Construction Utilities Insurance Public Administration
Manufacturing Wholesale Trade Other (explain)
12. Primary business activities and type of products or services to be sold NAICS
If you are a SOLE OWNER, skip to Item 18.
File number Month Day Year
13. If the business is a Texas profit corporation, nonprofit corporation, professional corporation or
limited liability company, enter the file number issued by the Texas Secretary of State and date....
14. If the business is a non-Texas profit corporation, nonprofit corporation, professional corporation or limited liability company, enter the state or country
of incorporation, charter number and date, and if the corporation has a Texas Certificate of Authority, enter the file number and date.
State/country of inc. Charter number Month Day Year Texas Certificate of Authority number Month Day Year
15. If the business is a corporation, has the business been involved in a merger within the last seven years? ..... YES NO If "YES," attach a
detailed explanation.
State Number
TAXPAYER INFORMATION
16. If the business is a limited partnership or registered limited liability
partnership, enter the home state and registered identification number. ............................................................
17. List general partners, principal members/officers, managing directors or managers (Attach additional sheets, if necessary.)
Name Title Phone (Area code and number)
Home address City State ZIP code
SSN or FEIN County (or country, if outside the U.S.)
Percent of
ownership _______ %
Position held Partner Officer Director Corporate Stockholder Record keeper
Name Title Phone (Area code and number)
Home address City State ZIP code
SSN or FEIN County (or country, if outside the U.S.)
Percent of
ownership _______ %
Position held Partner Officer Director Corporate Stockholder Record keeper
AP-102-4
(Rev.1-15/20)
Texas Questionnaire for
Hotel Occupancy Tax
• TYPE OR PRINT • Do NOT write in shaded areas. Page 2
18. Legal name of entity (Same as Item 1 OR Item 5)
19. Business location name and address (Attach additional sheets for each additional location.)
Business location name
Street and number (Do not use P.O. Box or rural route.) City State ZIP code County
Physical location (If business location address is a rural route and box number, provide directions – e.g., “2 miles west of Austin on FM 2222.”) Business location phone
BUSINESS LOCATION
20. Is your business located inside the city limits? ............................................................... YES NO
21. Brief description of your business activities for this location.
22. Enter the date of the first business operation in the above location that is subject to hotel occupancy tax,
or the date you plan to start such business operation (Date cannot be more than 90 days in the future.) ......................
23. Enter the number of rentable rooms .........................................................................................................................................................
24. Do you own or rent/lease property at this location? ........................................................................................ OWN RENT/LEASE
If you rent or lease the real property, enter the property owner's name and address.
Property owner's name
Property owner's address
If you purchased an existing business or business assets, complete Items 25-28.
Previous owner’s taxpayer
PREVIOUS OWNER INFORMATION
25. Previous owner’s trade name. number, if available
26. Previous owner’s legal name, address, and phone number, if available.
Name Phone (Area code and number)
Address (Street and number) City State ZIP code
27. Check each of the following items you purchased.
Inventory Corporate stock Equipment Real estate Other assets
28. Purchase price of this business or assets and the date of purchase.
Month Day Year
Purchase price $ Date of purchase
29. The sole owner, all general partners, corporation or organization president, vice-president, secretary or treasurer, Date of signature(s)
Month Day Year
managing director, or an authorized representative must sign. A representative must submit a written power of attorney.
(Attach additional sheets if necessary.)
I (We) declare that the information in this document and any attachments is true and correct to the best of my (our) knowledge and belief.
SIGNATURES
Type or print name and title of sole owner, partner, or officer Driver license number/state Sole owner, partner, or officer
Type or print name and title of partner or officer Driver license number/state Partner or officer
Type or print name and title of partner or officer Driver license number/state Partner or officer
FOR COMPTROLLER USE ONLY USERID Date
Craig Zgabay and Tammy Zgabay v. NBRC Property Owners Association
Combined Opinion