Double Diamond-Delaware, Inc., Double Diamond, Inc., White Bluff Club Corporation, National Resort Management Company, R. Michael Ward, Fred Curran, and White Bluff Property Owners Association, Inc. v. Jeanette Alfonso, Eugenio Corpus, Fe Huevos, Elezar Nuique, Editha and Reynaldo Pepito, Simonette and Julito Pepito, Cherry Somosot, and Nelia Vicente
13-14-00324-CV
| Tex. App. | Jul 31, 2015Background
- WBPOA administers White Bluff; plaintiffs include Double Diamond entities and others; defendants are WBPOA and related parties; dispute centers on golf course maintenance fees and food/beverage assessments
- Governing documents grant broad authority to the WBPOA to promote common benefit, health, safety, and welfare and to spend funds as reasonably necessary to perform the association’s functions
- Plaintiffs sought to invalidate fees and sought disgorgement and declaratory relief; trial court granted summary judgment against appellants and denied transfer of venue
- Appellees argue expenditures were improper under Article II Section 9 and that “Common Properties” limits expenditures to certain property
- Venue dispute centers on Hidalgo County vs. Dallas County; appellants contend Hidalgo County is improper and Dallas County proper
- Court reverses summary judgment and transfer denial, holds governing documents authorize fees; disgorgement not proper; Hidalgo County not proper venue, case should be in Dallas County
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are WBPOA fees/assessments authorized by governing documents? | Appellees contend expenditures exceed authority | Appellants rely on broad grant of authority to promote common benefit | Yes; governing documents authorize fees and expenditures |
| Are WBPOA expenditures improper under Article II Section 9? | Disallow improper inurement/unauthorized payments | Expenditures for common benefit may be reasonable compensation; no evidence of improper inurement | No; expenditures properly authorized and not inurement |
| Does the definition of “Common Properties” limit WBPOA spending? | Expenditures limited to defined common properties | Definition does not constrain spending to common properties; broad powers exist | No; governance and purposes authorize broader spending consistent with the declarations |
| Is disgorgement an available remedy in this declaratory judgment context? | Disgorgement should purge ill-gotten gains | Disgorgement not proper where no fiduciary breach established | No; disgorgement not available in this declaratory judgment action |
| Is Hidalgo County proper venue for this action? | Venue based on purchasers’ location and alleged contacts in Hidalgo County | Venue lacks prima facie proof; substantial contacts in Hill County; Dallas County proper | No; Hidalgo County is not proper; case should be in Dallas County |
Key Cases Cited
- Wilchester West Concerned Homeowners LDEF, Inc. v. Wilchester West Fund, Inc., 177 S.W.3d 552 (Tex. App.—Houston [1st Dist.] 2005) (upheld assessments/promoted common benefit under broad deed restrictions)
- Candlelight Hills Civic Ass’n, Inc. v. Goodwin, 763 S.W.2d 474 (Tex. App.—Houston [14th Dist.] 1988) (expenses for common benefit authorized; purchase of recreation facility permissible)
- American Golf Corp. d/b/a Walden on Lake Houston Golf and Country Club v. Colburn, 65 S.W.3d 277 (Tex. App.—Houston [14th Dist.] 2001) (deed restrictions cannot impose non-dues charges; confirms authority of governing documents to require dues and related assessments)
- Swinnea v. ERI Consulting Eng’rs, Inc., 236 S.W.3d 825 (Tex. App.—Tyler 2007) (disgorgement of profits discussed; part of fiduciary-duty context; not controlling here)
- In re Socorro Ind. Sch. Dist., 2010 WL 1138451 (Tex. App.—Corpus Christi-Edinburg) (mem. op.; considered for venue practice guidance, not official reporter)
- Hsin-Chi-Su v. Vantage Drilling Co., No. 14-14-00461-CV, 2015 WL 4249265 (Tex. App.—Houston [14th Dist.]) (disgorgement described in fiduciary duty context; not controlling here)
- Head v. U.S. Inspect DFW, Inc., 159 S.W.3d 731 (Tex. App.—Fort Worth 2005) (failure-to-disclose elements; discussed in venue context)
- Yalamanchili v. Mousa, 316 S.W.3d 33 (Tex. App.—Houston 2010) (venue and related rule considerations in appellate context)