ACCEPTED
03-14-00660-CV
4034632
THIRD COURT OF APPEALS
August 28, 2015 AUSTIN, TEXAS
2/5/2015 11:53:54 AM
JEFFREY D. KYLE
CLERK
No. 03-14-00660-CV
RECEIVED IN
3rd COURT OF APPEALS
In The Court of Appeals For the Third AUSTIN, TEXAS
2/5/2015 11:53:54 AM
District of Texas at Austin JEFFREY D. KYLE
Clerk
CRAIG ZGABAY AND TAMMY ZGABAY,
Appellants,
v.
NBRC PROPERTY OWNERS ASSOCIATION,
Appellee.
On Appeal from the 433rd District
Court of Comal County, Texas
Trial Court Cause No. C2014-0501C
AMENDED REPLY BRIEF OF APPELLANTS
J. Patrick Sutton
SBOT 24058143
1706 W. 10th Street
Austin Texas 78703
Tel. (512) 417-5903
Fax. (512) 355-4155
jpatricksutton@jpatricksuttonlaw.com
Counsel for Appellants
February 5, 2015
TABLE OF CONTENTS
INTRODUCTION ....................................................................................... 1
FACTS IN REPLY ...................................................................................... 3
ARGUMENT AND AUTHORITIES .......................................................... 4
I. "Single family" does not restrict or relate to serial residency,
occupancy, or leases................................................................................. 4
II. Multi-owner homes are equivalent to STR’s ................................... 6
III. The Zgabays didn't waive the owner-occupancy argument .......... 7
IV. The meaning of the injunction is the problem ............................... 9
CONCLUSION ......................................................................................... 11
CERTIFICATE OF SERVICE ................................................................. 12
CERTIFICATE OF COMPLIANCE ........................................................ 12
INDEX OF AUTHORITIES
Cases
Benard v. Humble, 990 S.W.2d 929 (Tex. App.—Beaumont 1999,
pet. denied) ........................................................................................... 11
McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337 (Tex.
1993) .................................................................................................... 7, 8
Vaughn v. Drennon, 202 S.W.3d 308 (Tex. App.-Tyler 2006) ......... 10
Wilmoth v. Wilcox, 734 S.W.2d 656 (Tex. 1987) .................................. 1
Statutes and Rules
Tex. Bus. Orgs. Code § 101.052 .............................................................. 6
Tex. Prop. Code § 92.010 ......................................................................... 6
Other Authorities
NBRC POA DCCRs, Draft 2015-1-21 .................................................... 3
ii
INTRODUCTION
Homebuyers buy into restrictive covenants. Buyers have
many choices; the variety of restrictive covenants is endless. See,
e.g., Wilmoth v. Wilcox, 734 S.W.2d 656, 658 (Tex. 1987) ("[J.B.
Overturf], his brother and a surveyor named Hodges sat around
the table and created the restrictions"). And the restrictions can
always be found and read in the county records.
Some restrictive covenants clearly and unambiguously limit
the duration of leasing so that anyone can comprehend the
limitations on their property rights. CR43, 46-47. Some restrictive
covenants regulate leasing little if at all. That is the case here,
where the covenants do not differentiate leasing and owner-
residency apart from a brief mention of signage. And though the
restrictive covenants in this case do address duration issues in
some residency-related contexts, they do not do so as regards
leasing. Appendix 0016, 0018.
The HOA and the Zgabays are in accord that the restrictive
covenants are clear and unambiguous, but the HOA's takeaway is
that the conspicuous omissions restrict the Zgabays' leasing rights.
Furthermore, that the conspicuous omissions impose, very
precisely, a minimum duration, not a maximum duration; that the
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minimum duration has no fixed number; and that the minimum
duration applies to tenant "residents" but not to owner "residents."
In the HOA's view, not only the complete absence, but even the
conspicuous omission of lease duration restrictions, must be
interpreted against property owners.
The HOA never does address the profound question at the
heart of this case: How could the Zgabays or anyone else know that
the complete and conspicuous absence of duration limits equates to
a ban on leasing (but not owner residency) for some undefined
minimum term? Restrictive covenants exist for precisely the
purpose of telling people in readily comprehensible terms what
they can and cannot do with their land. Their land.
And restrictive covenants can readily be amended to redefine
all the use parameters, according to the collective democratic will
of the owners. All the HOA in this case had to do was get together
a community vote on the issue of short-term rentals. Instead its
board, acting alone, prestidigitated something from nothing and
declared it the law.
2
FACTS IN REPLY
The record does not support the HOA's assertion that the
Zgabays did not read the restrictive covenants at all until after
they purchased. Brief of HOA at 1. Mr. Zgabay testified merely
that long after he bought his land and built a house on it, he read
the restrictive covenants concerning leasing restrictions. CR50.
Short-term rentals via the web didn't exist when the Zgabays
bought their land in 2000.
The Zgabays moved below to strike the HOA's affidavits
concerning alleged misbehavior by tenants, and the Zgabays
submitted evidence rebutting the HOA's allegations. CR104-105,
CR112.
The Zgabays ask this Court to take judicial notice of the fact
that the HOA in January, 2015, published on its website draft
amendments to the restrictive covenants that would bar rentals
with a duration of 30 days or less. NBRC POA DCCRs, Draft 2015-
1-21 §§ 1.12(e), 3.16. 1 The various documents published on the site
establish that it is the HOA itself, not a third party, that is
making the proposal. In addition, all indications on the non-
password-protected web page are that the Appellee owns and is
1Accessed Feb. 4, 2015, at:
http://riverchasepoa.org/river_chase_poa_ee/index.php?/riverchase/home_page/
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responsible for the content therein and intends to disseminate the
information broadly. In addition, the Whois record for
http://riverchasepoa.org indicates that the Appellee in this case is,
in fact, the registrant for the website in question. 2 Finally,
meeting minutes published therein reference "the current lawsuit"
and that amendments to the restrictive covenants are intended "to
clarify short-term rental language in the DCCRs," a clear reference
to this case. 3 The Zgabays offer this fact to show that drafters of
restrictive covenants can and do employ specific numbers to denote
minimum allowed rental durations so that everyone is clear what
is intended.
ARGUMENT AND AUTHORITIES
I. "Single family" does not restrict or relate to serial
residency, occupancy, or leases
The HOA asserts in two places that "[e]ntering into a series
of short-term rentals with separate families (or other groups) is
not a 'single family' use." Brief of HOA at 12, 14. That is
preposterous. Investor-owners always engage in serial leasing,
whether for days, weeks, months, years, or decades at a time.
2Accessed Feb. 5, 2014, at: http://whois.domaintools.com/riverchasepoa.org
3Accessed Feb. 5, 2015, at:
http://riverchasepoa.org/river_chase_poa_ee/images/riverchase/2015_01_12_BOD_m
tg.pdf
4
Some people purchase shares in properties precisely for serial
short-term use on the part of multiple owners, and that's
functionally equivalent to serial leases. The HOA's argument
demands the conclusion that once someone has purchased a home
and lived in it, they can never lease it to someone else; or having
leased it out once, they can never lease it out again. The HOA has
focused very narrowly on one fact pattern -- the owner-occupied,
one-owner subdivision dwelling not even implicated by this case -
- without taking into account the many ways in which property is
owned and used. Based on one narrow conception of "use" that is
nowhere accorded special status in the restrictive covenants
themselves, the HOA would literally limit a home’s use to one
single family!
This points up, again, how the HOA shies away from
explaining how a point on the timeline changes the character of
an ordinary family’s use of a dwelling for sleeping, eating,
brushing teeth, and watching the Super Bowl. Some deed
restrictions do declare a duration marker. Even the HOA's
proposed restrictions contain a clear minimum duration. The
current deed restrictions simply do not, and that is the crux of
this case.
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II. Multi-owner homes are equivalent to STR’s
Any number of unrelated persons can be co-owners of a
home. Multiple owners can divvy up the time shares into small
increments. That can be accomplished formally by placing
ownership in an LLC, then using a detailed company agreement
to set out co-owners’ time-shares. The company agreement can
even permit shares to be transferred or conveyed. See generally,
Tex. Bus. Orgs. Code § 101.052.
Texas law restricts the maximum occupancy of leased homes
but not owner-occupied homes. Tex. Prop. Code § 92.010 (3 adults
per bedroom).
There is no functional difference between LLC-owned homes
with time-sharing co-owners and one-owner homes leased serially
to different tenants. Different paperwork is involved, but from
the perspective of a neighbor with concerns about traffic,
maximum occupancy, noise, or any other aspect of the human
incidents of dwelling-house habitation, both legal arrangements
involve a succession of different families moving in and out for
short terms in a furnished home. In the case of the home with
many owners, there does not even appear to be a statutory
occupancy limit as there is for a leased home, making the
arrangement potentially worse from a neighbor's perspective. The
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problem with all the HOA’s arguments in this case is that they
depend upon a distinction between tenants and owners that the
restrictive covenants do not support. There are many legal ways
to address the problems caused by bothersome neighbors,
whether owners or tenants, but torturing the restrictive
covenants is not one of them.
III. The Zgabays didn't waive the owner-occupancy
argument
The HOA contends it didn't get fair notice from the Zgabays'
motion for summary judgment of the Zgabays’ contention that the
restrictive covenants do not bar short-term rentals. Brief of HOA
at 13. But there was no brief apart from the motion in this case,
which is the issue dealt with in the McConnell decision the HOA
cites. See McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d
337, 338 (Tex. 1993) ("This case presents the question whether
grounds for summary judgment must be expressly presented in
the motion for summary judgment itself or whether such grounds
may be presented in . . . a brief filed contemporaneously with the
motion."). Furthermore, the HOA filed a motion for summary
judgment involving all the same issues.
In any event, McConnell requires a party to “address the
cause of action” in a meaningful way so as to give fair notice what
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grounds a party is asserting. 858 S.W.2d at 340 (internal citation
omitted). The grounds for the Zgabays’ case has always been that
the restrictive covenants do not impose duration limits on
leasing. Their motion for summary judgment argues their cause
of action for a declaratory judgment as to the meaning of the
restrictive covenants. It strains credulity for the HOA to assert it
was confused what the Zgabays were contending, which is the
rationale behind the rule in McConnell. Id. at 343-44. The parties
vigorously argued their respective mirror-image DJ claims in the
motions and hearing below.
There is no authority that a summary judgment motion
must refine every argument of counsel to the n th degree or
anticipate every conclusion the trial court might draw from the
parties' arguments. If that were so, then decisive arguments
made at hearing would be waived merely because there was no
reporter’s record.
The Zgabays raised the owner-occupancy issue in their
response to the HOA's cross-motion, if not developed to the
degree it has been on appeal. CR104. They also argued at length
that the restrictive covenants contain no duration limits, and
their arguments on appeal are extensions of those and, more
8
fundamentally, stem from the same few words in the contract
that have consistently been the basis for contention. The
arguments the Zgabays honed for this appeal arise as well from
the trial court's order, which either does or does not contain the
errors in logic and contract interpretation the Zgabays have
asserted. As a general proposition, it would hamstring lawyers if
they were not allowed to refine and extend on appeal the
arguments made at the trial court level. That is particularly true
here, where the bone of contention has always been, both below
and on appeal, the meaning of the contract on a narrow issue in
contention (whether short-term rentals are a residential use),
and where the record plainly demonstrates extensive argument
below on an important issue of law for which there is no clear
appellate precedent.
IV. The meaning of the injunction is the problem
The Zgabays have not asserted that the “reasons” for the
injunction aren’t clear. Brief of HOA at 18. They are: the trial
court agreed with the HOA that short-term rentals violate the
restrictive covenants. It’s the vagueness of the injunction that’s
objectionable. A permanent injunction “must be definite, clear,
and concise, leaving the person enjoined in no doubt about his
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duties, and should not be such as would call on him for
interpretations, inferences, or conclusions.” Vaughn v. Drennon,
202 S.W.3d 308, 316 (Tex. App.-Tyler 2006). The Vaughan court
invalidated a permanent injunction because it “[was] not clear
and [did] not contain sufficient detail for the Vaughns to
determine exactly what the court want[ed] them to do.” Id. at
317.
The injunction in this case is not clear and does not contain
sufficient detail for the Zgabays to determine exactly what the
trial court wants them to do. Many restrictive covenants and
local ordinances provide a numerical definition for minimum
rental terms because owners need certainty how to avoid onerous
legal consequences. The HOA's own draft amendments to the
restrictive covenants make the proposed minimum rental
duration clear. Undersigned counsel has litigated cases where the
owners in the HOA mooted the STR dispute mid-stream by
amending the restrictive covenants to impose a specific minimum
duration for rentals. The restrictive covenants in this case are
full of specific numerical deadlines for various things, just not
leases. Even the Benard decision that the HOA relies upon says
90 days, which at least has the virtue of clarity. Benard v.
10
Humble, 990 S.W.2d 929 (Tex. App.—Beaumont 1999, pet.
denied).
The Zgabays urge this court, if it concludes that typical,
bare-bones “residential use” wording in and of itself bars short-
term rentals, to give clear guidance to the many property owners
around the state who stand to be affected.
CONCLUSION
HOA’s are, in effect, local-local government that subdivision
owners control. Restrictive covenants are mini-Constitutions that
owners pay money to live under. Courts that substitute their views
for those of the subdivision homeowners acting collectively do a
disservice to those people and their local-local democratic
processes.
Respectfully submitted,
/s/ JPS
J. Patrick Sutton
Texas Bar No. 24058143
1706 W. 10th Street
Austin Texas 78703
Tel. (512) 417-5903
Fax. (512) 355-4155
jpatricksutton@
jpatricksuttonlaw.com
Attorney for Appellants
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CERTIFICATE OF SERVICE
I certify that on February 5, 2015, per T.R.A.P. 6.3(b), a true
and correct copy of this amended brief was served by efiling and
email on:
Tom Newton
Allen Stein & Durbin, P.C.
6243 IH-10 West, 7th Floor
San Antonio, Texas 78201
TNewton@ASDH.com
Brian Hensley
Thompson, Coe, Cousins & Irons, L.L.P.
701 Brazos, Suite 1500
Austin, Texas 78701
Ph (512) 708-8200
Fax (512) 708-8777
BHensley@thompsoncoe.com
/s/ J. Patrick Sutton
Attorney for Plaintiffs-Appellants
CERTIFICATE OF COMPLIANCE
This document complies with the typeface requirements of Tex. R.
App. P. 9.4(e) because it has been prepared in Century Schoolbook
14-point for text and 12-point for footnotes. Spacing is expanded
by .6 point for clarity. This document also complies with the word-
count limitations of Tex. R. App. P. 9.4(i), if applicable, because it
contains 2075 words, excluding any parts exempted by Tex. R.
App. P. 9.4(i)(1).
/s/ J. Patrick Sutton
Attorney for Appellants
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