363 S.W.3d 632
Tex. App.2012Background
- La Ventana Ranch is governed by CCRs that vest control of the Architectural Committee (AC) in Driftwood Development, LP, with Driftwood retaining appointment rights over most AC members.
- AC may grant variances from CCRs when in its sole discretion the variance will not impair high-quality development and is justified by unusual, aesthetic, topographic, septic, or unusual circumstances; variances must be in writing and signed by a majority of voting AC members.
- In 2006, residents sought variances for private water wells and buried propane tanks due to water problems and gas-price concerns; the AC granted 24 water-well variances and 23 propane-tank variances, with votes by two AC members, while other AC members were unaware.
- ROA filed suit seeking declaratory judgment that variances were invalid; Interim-LV joined as Driftwood’s successor after foreclosure and sought to defend the CCRs and water system control.
- A jury found variances valid under the CCRs; it also found Crider and Davis acted arbitrarily in propane variance decisions and breached fiduciary duties; the trial court declared all propane variances invalid and water-well variances (except for Davis and Crider) valid, and awarded attorney’s fees to plaintiffs.
- Interim-LV appealed the fee award and the core validity decisions; the court of appeals affirmed in part, reversed in part, and remanded for recalculation of fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of water-well variances | ROA claims variances are waivers outside AC power. | Variance language authorizes waivers limited to property and instance under 5.7(d). | Variances are within CCRs; valid |
| Majority voting authority of AC | Davis and Crider represented majority voting AC at signing. | Kidd was non-voting or liaison; meetings show majority by voting members. | Sufficient evidence supports Davis and Crider signing under CCRs |
| Breach of fiduciary duty by Crider and Davis | Informal fiduciary duty existed; homeowners trusted AC members to act in their best interests. | No fiduciary relationship; AC acts under CCRs; election alone insufficient. | No fiduciary relationship; breach claim overruled |
| Propane-tank variances | Variances valid under CCRs; arbitrary findings irrelevant. | Arbitrary and capricious finding should render variances invalid. | Propane variances valid; ARBITRARY-CAPRICIOUS findings do not control under sole-discretion CCRs |
| Attorney's fees allocation | Fees reasonable and necessary; Interim-LV should bear portion. | Fees excessive or improperly allocated; challenge to multipliers and scope. | Appellate remand on fee amount to determine equitable and just award |
Key Cases Cited
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (standard for reviewing legal sufficiency and jury findings)
- Valence Operating Co. v. Dorsett, 164 S.W.3d 656 (Tex. 2005) (de novo review of summary judgments)
- Crim Truck & Tractor Co. v. Navistar Int'l Transp. Corp., 823 S.W.2d 591 (Tex.1992) (fiduciary duty framework; informal fiduciary duty concepts)
- Meyer v. Cathey, 167 S.W.3d 327 (Tex.2005) (formal and informal fiduciary duties; scope of fiduciary relationship)
- Uptegraph v. Sandalwood Civic Club, 312 S.W.3d 918 (Tex.App.-Houston [1st Dist.] 2010) (contract interpretation and covenant language considerations)