Elwyn D. Shumway v. Whispering Hills of Comal County Texas Property Owners Association, Inc.

ACCEPTED 03-15-00513-CV 7995173 THIRD COURT OF APPEALS AUSTIN, TEXAS 11/25/2015 2:31:06 PM JEFFREY D. KYLE CLERK CAUSE NO. 03-15-00513-CV

=================================================== In The Court Of Appeals Third Court Of Appeals District Austin, Texas

=================================================== ELWYN D. SHUMWAY, APPELLANT

VS.

WHISPERING HILLS OF COMAL COUNTY, TEXAS PROPERTY OWNERS ASSOCIATION, INC., APPELLEE

===================================================

APPEAL FROM CASE NO. C2015-0215A; 22ND JUDICIAL DISTRICT COMAL COUNTY, TEXAS HON. DIBRELL WALDRIP, PRESIDING

===================================================

BRIEF OF APPELLEE

ZACHARY B. AOKI State Bar No. 01275870 zaoki@thurman-phillips.com MICHAEL B. THURMAN State Bar No. 2006500 4093 De Zavala Road San Antonio, Texas 78249 (210) 341-2020 – Telephone (210) 344-6460 – Facsimile COUNSEL FOR APPELLEE, WHISPERING HILLS OF COMAL COUNTY, TEXAS PROPERTY OWNERS ASSOCIATION, INC.

CAUSE NO. 03-15-00513-CV

=================================================== In The Court Of Appeals Third Court Of Appeals District Austin, Texas

=================================================== ELWYN D. SHUMWAY, APPELLANT

VS.

WHISPERING HILLS OF COMAL COUNTY, TEXAS PROPERTY OWNERS ASSOCIATION, INC., APPELLEE

===================================================

APPEAL FROM CASE NO. C2015-0215A; 22ND JUDICIAL DISTRICT COMAL COUNTY, TEXAS HON. DIBRELL WALDRIP, PRESIDING

===================================================

BRIEF OF APPELLEE

TO THE HONORABLE COURT OF APPEALS:

Appellee, Whispering Hills of Comal County, Texas Property Owners Association, Inc., files this Brief for Appellee and respectfully states:

IDENTITY OF PARTIES AND COUNSEL

In addition to the parties and counsel named by Appellant, the following is a party to the trial court’s judgment appealed from:

Defendant/Appellee: Whispering Hills of Comal County, Texas Property Owners Association, Inc.

Represented By:

Michael B. Thurman State Bar No. 2006500 Zachary B. Aoki State Bar No. 01275870 Thurman & Phillips, P.C. 4093 De Zavala Road San Antonio, Texas 78249

Mr. Thurman is not a party to the judgment. Mr. Aoki is not a party to the judgment. Hon. Dibrell Waldrip is not a party to the judgment.

ii

TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL ii TABLE OF CONTENTS iii INDEX OF AUTHORITIES iv STATEMENT OF THE CASE v

STATEMENT REGARDING ORAL ARGUMENT vii ISSUES PRESENTED viii

STATEMENT OF FACTS 2 SUMMARY OF THE ARGUMENT 4

ARGUMENT 5 I. STANDARD OF REVIEW 5

II. TAKING ALL FACTS AS TRUE, APPELLANT CANNOT OBTAIN THE RELIEF SOUGHT AS A MATTER OF LAW 5

III. THE TRIAL COURT DID NOT ERR WHEN IT GRANTED APPELLEE’S MOTION TO DISMISS BASED ON LIMITATIONS 7

A. The trial court assumed all facts to be true. 7

B. The trial court properly ruled that the cause of action arose more than four years before the suit was filed. 7

CONCLUSION 9 PRAYER 10

CERTIFICATE OF COMPLIANCE 11 CERTIFICATE OF SERVICE 12

APPENDIX 13 iii

INDEX OF AUTHORITIES Cases

City of Austin v. Liberty Mut. Ins., 431 S.W.3d 817, 821-22 (Tex. App. – Austin 2014, no pet) 5 GoDaddy.com, LLC v. Toups, 429 S.W.3d 752, 754 (Tex. App. – Beaumont 2014, pet. denied) 7 Mann v. Adams Realty Co., 556 F.2d 288, 293 (5th Cir.1977) 7 Prestige Ford Garland Ltd. P’ship v. Morales, 336 S.W.3d 833 (Tex.App.-Dallas 2011, no pet.) 8 Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 221 (Tex. 2003) 8 Roark v. Allen, 633 S.W.2d 804, 810 (Tex.1982) 5 Tawes v. Barnes, 340 S.W.3d 419, 425 (Tex. 2011). 6 Weizhong Zheng v. Vacation Network, Inc., 468 S.W.3d 180, 183-84 (Tex.App. --Houston [14th Dist.] 2015, pet. denied). 5 Rules Fed. R. Civ. P. 12(b)(6) 7 TEX. R. CIV. P. 91a (West 2015) 4, 5, 7

iv

STATEMENT OF THE CASE 1

This is an appeal of an order granting a motion to dismiss. Appellee filed its motion to dismiss on April 28, 2015. (CR 13)

Appellant filed his Original Petition on February 10, 2015, which was assigned to the 22nd Judicial District Court, Comal County, Texas. (CR 4) in his First Amended Petition, Appellant pled for a declaratory judgment seeking a determination of his rights pursuant to a deed he received for certain property in Comal County, Texas. (CR 9) Appellee requested that the Court enter a final judgment that he could use his Property for nonresidential purposes. In its motion to dismiss, Appellee contended that the petition and attachments thereto demonstrated that as a matter of law the Appellant could not receive the relief he sought. On July 7, 2015, Appellant filed his Second Amended Original Petition after the trial court gave permission to amend or seek counsel.

The trial court heard argument on the Motion to Dismiss on June 17, 2015 and July 14, 2015. (RR vol. 2, p. 1, vol. 3, p. 1) Appellee appeared through its attorney and appellant, pro se.

1 References to the Clerk’s Record are designated (CR ___). References to the Reporter’s Record are designated (RR ___). v

At the initial hearing, the trial court considered the arguments of both parties and reviewed the pleadings. The trial court reset a hearing on the matter to allow the Appellant to amend his petition and state a cognizable cause of action. (RR Vol. 2, p. 35-37, 42-43, 47-48) The trial court considered further argument and after due consideration, ordered that the lawsuit be dismissed. (RR Vol. 3, p. 55-56) (CR 65) The trial court heard testimony with regard to attorney’s fees. Based on the evidence presented, the trial court awarded Appellee $3375 in attorney’s fees. The court’s decision was reduced to writing and an order was filed on July 22, 2015. (CR 65-66) It is from this final order that Appellant has appealed.

vi

STATEMENT REGARDING ORAL ARGUMENT

Appellee does not request oral argument as it is of the opinion that oral argument will not materially aid the Court in making its decision. No novel issues or arguments are presented in this case.

vii

ISSUES PRESENTED

Appellant has asserted four “Points of Error” in his Brief. The first three points are subsumed under the following point:

Issue No. 1: Did the trial court err in granting the motion to dismiss

based on the conclusion that the statute of limitations barred the

relief sought? Appellee agrees with the formulation of the fourth point of error.

Appellee will address the points out of order because the fourth point of error is outcome determinative. Sustaining the trial court’s decision that the pleading does not state a claim obviates the need to decide whether limitations bars the claims.

viii

CAUSE NO. 03-15-00513-CV

=================================================== In The Court Of Appeals Third Court Of Appeals District Austin, Texas

=================================================== ELWYN D. SHUMWAY, APPELLANT

VS.

WHISPERING HILLS OF COMAL COUNTY, TEXAS PROPERTY OWNERS ASSOCIATION, INC., APPELLEE

===================================================

APPEAL FROM CASE NO. C2015-0215A; 22ND JUDICIAL DISTRICT COMAL COUNTY, TEXAS HON. DIBRELL WALDRIP, PRESIDING

=================================================== TO THE HONORABLE COURT OF APPEALS:

Appellee, Whispering Hills of Comal County, Texas Property Owners Association, Inc., files this Brief for Appellee and respectfully states:

STATEMENT OF FACTS

Appellee is a Texas nonprofit corporation organized to manage the affairs and enforce the declaration of covenants, conditions, and restrictions at the subdivision known as Whispering Hills located in Comal County, Texas. On March 22, 1975, Appellant purchased lots 2 and 5 in the Whispering Hills subdivision. (CR 37) Appellant obtained a contract for deed for the properties and received a deed for the properties on or about October 15, 1984. (CR 35-40) The contract for deed contained and described restrictions on the use of the properties. (CR 37-40) Included among the restrictions was a clause limiting use of the property to residential purposes unless designated as a business lot. (CR 40) When Appellant received his deed, the restrictions had changed in form but not substance. (CR 35, Appendix to Appellant’s Brief at p. 36)

Appellant concedes that he has known for some time of the failure of the developer to designate his lots for business purposes. He further conceded in his pleadings that the lots were not designated for business purposes. (CR 25) Attached as an exhibit to Appellant’s three petitions was a letter from Steven Bepko dated July 7, 2010. (CR 48) In that letter, Mr. Bepko states that the owners of certain properties, including the ones owned by Appellant’s, had a dispute with the Association regarding the use of their properties. (CR 48) He states in his *3 opinion that the properties should be used for business purposes and were sold as business lots. (CR 48)

On June 17 and July 14, 2015, the trial court heard Appellee’s Motion to Dismiss. (RR Vol. 1, 2 and 3) The trial court granted the Motion to Dismiss. (RR Vol. 3 p. 55-56) On or about July 22, 2015, the trial court signed the order dismissing the lawsuit. (CR 65) Appellant filed his Notice of Appeal on or about August 14, 2015. (CR 67-68)

SUMMARY OF THE ARGUMENT

This appeal involves the granting of a motion to dismiss pursuant to Tex. R. Civ. P. 91a. The trial court properly granted Appellee’s Motion to Dismiss. Taking the allegations stated in the petition as true, no basis in law exists that would entitle Appellant to the relief sought. The trial court acted properly because the allegations establish that the Appellant has no right to use his lots for business purposes. Furthermore, the trial court acted properly because the pleadings and attachments conclusively establish that Appellant knew that he could not use his property for business purposes more than four years before he filed suit.

ARGUMENT

I. STANDARD OF REVIEW

Rule 91a of the Texas Rules of Civil Procedure permits a trial court to dismiss a cause of action that has no basis in law or fact. City of Austin v. Liberty Mut. Ins., 431 S.W.3d 817, 821-22 (Tex. App. – Austin 2014, no pet); TEX. R. CIV. P. 91a (West 2015). In reviewing a trial court’s ruling on a 91a motion, the Court should review the trial court decision de novo, based on the allegations of the live petition and any attachments thereto. Weizhong Zheng v. Vacation Network, Inc., 468 S.W.3d 180, 183-84 (Tex.App. -- Houston [14th Dist.] 2015, pet. denied). In conducting the review, the Court should accept as true the factual allegations in the pleadings to determine if the cause of action has a basis in law or fact. Id.; see Roark v. Allen, 633 S.W.2d 804, 810 (Tex.1982).

II. TAKING ALL FACTS AS TRUE, APPELLANT CANNOT OBTAIN THE RELIEF SOUGHT AS A MATTER OF LAW

Rule 91a allows a trial court to dismiss a cause of action if the facts as set forth do not allow recovery as a matter of law. TEX. R. CIV. P. 91a. Appellant acknowledges that the recorded documents do not permit use of his property for a non-residential purpose. Because the recorded deed has never permitted the use of the property for business purposes, the trial court did not have the power to rewrite *6 the unambiguous deed regardless of what rights Appellant may have thought he obtained more than forty years earlier.

In the absence of ambiguity, the interpretation of a contract is a legal question for a court. Tawes v. Barnes, 340 S.W.3d 419, 425 (Tex. 2011). In this case, Appellant has attached both his contract for deed and his deed. (CR 35, 40) The contract for deed states, “The property herein described shall be used solely for new residential purposes.” (CR 40) Appellant’s deed states, “All tracts shall be used solely for residential purposes, except tracts designated for business purposes….” (CR 35) Appellant admits that his tract was not designated for business purposes. Appellant’s Brief at 8. The Original Petition, First Amended Original Petition and the Second Amended Original Petition all attached the deed and contract for deed as exhibits. In all three pleadings, Appellant states that the recorded plat does not designate his tracts for business purposes. (CR 25) Given that no document states that the property may be used for business purposes, Appellant cannot receive the relief that he sought – a declaration that he has the right to use the property for business purposes. (CR 30) Thus, the trial court did not err when granting the Motion to Dismiss.

III. THE TRIAL COURT DID NOT ERR WHEN IT GRANTED APPELLEE’S MOTION TO DISMISS BASED ON LIMITATIONS

Even if the Court determines that the trial court should not have granted the motion to dismiss based on plaintiff’s attachments and admissions, the trial court properly ruled that limitations barred Appellant’s claim. 2 A. The trial court assumed all facts to be true.

Rule 91a requires the trial court to assume all allegations to be true together with all reasonable inferences to be drawn from the allegations when deciding if a cause of action has a basis in law. TEX R. CIV.P. 91a. The trial court stated on numerous occasions during the hearings that he assumed all of the Appellant’s facts to be true. (RR Vol. 2, p. 29, 32, 36, 40, 44, 47; Vol. 3 p. 54) Appellant has provided no basis to conclude that the trial court acted inappropriately.

B. The trial court properly ruled that the cause of action arose more than four years before the suit was filed. Appellant states he did not suffer a legal injury until he inquired about the

use of his property for business purposes. A “legal injury” occurs when facts come into existence that authorize a party to seek a judicial remedy. Provident Life &

2 Federal courts have permitted dismissal of suits pursuant to FED. R. CIV. P. 12(b)(6) based on the statute of limitations. Mann v. Adams Realty Co., 556 F.2d 288, 293 (5th Cir.1977). Because TEX. R. CIV. P. 91a is analogous to FED. R. CIV. P. 12(b)(6), Texas courts may look to case law interpreting 12(b)(6). See GoDaddy.com, LLC v. Toups, 429 S.W.3d 752, 754 (Tex. App. – Beaumont 2014, pet. denied).

Accident Ins. Co. v. Knott, 128 S.W.3d 211, 221 (Tex. 2003); Prestige Ford Garland Ltd. P’ship v. Morales, 336 S.W.3d 833 (Tex.App.--Dallas 2011, no pet.)

Appellant’s claim arises from the transaction he entered into in 1975. Appellant asserts that he received certain promises regarding the use of his property. Appellant further admits that the promises made by the developer are contrary to the rights set forth in his deed. Appellant states that he does not know the exact date he learned that his property could not be used for business purposes; however, he admits that the knowledge was obtained more than four years prior to filing suit. Appellant’s Brief at 16. Appellant’s contract for deed unambiguously states that the property shall be used for residential purposes only. (CR 40) He received his deed in 1984. (CR 35)

Even if the contract for deed did not create a legal injury, receipt of a deed that did not permit use as a business certainly did. See Prestige Ford, 336 S.W.3d at 838-39. At that time, Appellant received his property subject to the restriction that it be used for residential purposes unless otherwise designated. Upon receipt of the deed, the applicant suffered injury because he received something less than what he had been promised. Because a legal injury was suffered more than four years prior to filing suit, the trial court did not err.

Finally, Appellant attached a letter that written on July 7, 2010. (CR 48) Appellant wants to disavow those portions of the letter that do not benefit him. However, the letter further supports the statements of Appellant that he thought he was buying a property that could be used for business purposes and that he knew that the property had not been designated for business purposes more than four years before filing suit. Certainly by July 2010, Plaintiff knew that the Appellee was not going to permit business use. At that point, Appellant suffered his injury because he had been told he could use the property for residential or business purposes.3

CONCLUSION

The trial court properly granted the Motion to Dismiss. Assuming all facts as stated in the First and Second Amended Petitions to be true and reviewing the record de novo, no basis in law exists to declare that Appellant was entitled to use his property for business purposes. Therefore, the trial court did not commit error and the judgment of the trial court should be affirmed.

3 Appellee asserts that the injuries were suffered when Appellant received the contract for deed in which it states that the property shall be used only for residential purposes.

PRAYER

Appellee respectfully requests that the Court of Appeals affirm the judgment of the trial court. Appellee further requests that all costs of the appeal be taxed against Appellant. Appellee requests such further relief to which it may be entitled.

Respectfully submitted,

THURMAN & PHILLIPS, P.C.

/S/ ZACHARY B. AOKI ZACHARY B. AOKI State Bar No. 01275870 zaoki@thurman-phillips.com MICHAEL B. THURMAN State Bar No. 2006500 8000 IH-10 West, Suite 1000 San Antonio, Texas 78230 (210) 341-2020 – Telephone (210) 344-6460 – Facsimile ATTORNEYS FOR APPELLEE

CERTIFICATE OF COMPLIANCE

I certify that Appellee’s Brief does not exceed the word count limit as set forth in Rule 9.4(i)(3) of the Texas Rules of Appellate Procedure. The exact word count based on the information provided by Word 2013 is 1701.

/s/ Zachary B. Aoki Zachary B. Aoki

CERTIFICATE OF SERVICE

The undersigned counsel certifies that a true and correct copy of the above document was served on the Appellant by electronic mail on the 25th day of November, 2015.

/s/ Zachary B. Aoki Zachary B. Aoki

APPENDIX

A. FED. R. CIV. P. 12(b)(6) B. Contract for Deed (CR 37-40) C. Bepko Letter (CR 48) A Rule 12. Defenses and Objections: When and How Presented;..., FRCP Rule 12

United States Code Annotated Federal Rules of Civil Procedure for the United States District Courts (Refs & Annos) Title III. Pleadings and Motions

Federal Rules of Civil Procedure Rule 12

Rule 12. Defenses and Objections: When and How Presented; Motion for Judgment on the Pleadings; Consolidating Motions; Waiving Defenses; Pretrial Hearing

Currentness

<Notes of Decisions for 28 USCA Federal Rules of Civil Procedure Rule 12 are displayed in two separate documents. Notes of Decisions for subdivisions I to VII are contained in this document. For Notes of Decisions for subdivisions VIII to end, see second document for 28 USCA Federal Rules of Civil Procedure Rule 12.>

(a) Time to Serve a Responsive Pleading.

(1) In General. Unless another time is specified by this rule or a federal statute, the time for serving a responsive pleading is as follows:

(A) A defendant must serve an answer:

(i) within 21 days after being served with the summons and complaint; or

(ii) if it has timely waived service under Rule 4(d), within 60 days after the request for a waiver was sent, or within 90 days after it was sent to the defendant outside any judicial district of the United States.

(B) A party must serve an answer to a counterclaim or crossclaim within 21 days after being served with the pleading that states the counterclaim or crossclaim.

(C) A party must serve a reply to an answer within 21 days after being served with an order to reply, unless the order specifies a different time.

(2) United States and Its Agencies, Officers, or Employees Sued in an Official Capacity. The United States, a United States agency, or a United States officer or employee sued only in an official capacity must serve an answer to a complaint, counterclaim, or crossclaim within 60 days after service on the United States attorney.

(3) United States Officers or Employees Sued in an Individual Capacity. A United States officer or employee sued in an individual capacity for an act or omission occurring in connection with duties performed on the United States' behalf must serve an answer to a complaint, counterclaim, or crossclaim within 60 days after service on the officer or employee or service on the United States attorney, whichever is later.

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 Rule 12. Defenses and Objections: When and How Presented;..., FRCP Rule 12 (4) Effect of a Motion. Unless the court sets a different time, serving a motion under this rule alters these periods as follows:

(A) if the court denies the motion or postpones its disposition until trial, the responsive pleading must be served within 14 days after notice of the court's action; or

(B) if the court grants a motion for a more definite statement, the responsive pleading must be served within 14 days after the more definite statement is served.

(b) How to Present Defenses. Every defense to a claim for relief in any pleading must be asserted in the responsive pleading if one is required. But a party may assert the following defenses by motion:

(1) lack of subject-matter jurisdiction; (2) lack of personal jurisdiction; (3) improper venue; (4) insufficient process; (5) insufficient service of process; (6) failure to state a claim upon which relief can be granted; and (7) failure to join a party under Rule 19.

A motion asserting any of these defenses must be made before pleading if a responsive pleading is allowed. If a pleading sets out a claim for relief that does not require a responsive pleading, an opposing party may assert at trial any defense to that claim. No defense or objection is waived by joining it with one or more other defenses or objections in a responsive pleading or in a motion.

(c) Motion for Judgment on the Pleadings. After the pleadings are closed--but early enough not to delay trial--a party may move for judgment on the pleadings.

(d) Result of Presenting Matters Outside the Pleadings. If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.

(e) Motion for a More Definite Statement. A party may move for a more definite statement of a pleading to which a responsive pleading is allowed but which is so vague or ambiguous that the party cannot reasonably prepare a response. The motion must

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 B 37 38 39 40 C 48