EIS Dev. II v. Buena Vista Area Ass'n

690 S.W.3d 369

EIS DEVELOPMENT II, LLC, Appellant,

v.BUENA VISTA AREA ASSOCIATION, Lance W. Hall and Heather R. Hall, Jason Paul Smithey, David W. Molengraaf and Kimberley K. Molengraaf, Alexander E.W.J. Schindler and Angela R. Schindler, as individuals Appellees.

No. 08-22-00006-CV

Court of Appeals of Texas, El Paso.

April 12, 2023

Appeal from the 40th District Court of Ellis County, Texas (TC# 104809), Bob Carroll, Judge

ATTORNEY FOR APPELLANT: James P. Moon, Law Offices of James P. Moon, P.C., 101 Vintage Drive, Suite 100, Red Oak, TX 75154, Anthony A. Petrocchi, Anthony A. Petrocchi, P.C., 5127 Spyglass Drive, Dallas, TX 75287, Lance E. Caughfield, Baker, Moran, Doggett, Ma & Dobbs, LLP, 1400 Preston Rd., Ste. 350, Plano, TX 75093.

ATTORNEY FOR APPELLEE: David Lance Currie, Brent M. Rubin, Carrington Coleman Sloman & Blumenthal LLP, 901 Main St., Suite 5500, Dallas, TX 75202.

Before Rodriguez, C.J., Soto, J., and Marion, C.J. (Ret.), Marion, C.J. (Ret.) (Sitting by Assignment)

CORRECTED OPINION

YVONNE T. RODRIGUEZ, Chief Justice

The opinion issued on March 24, 2023, is withdrawn, and the following is the corrected opinion of this Court.

Appellant, EIS Development II, LLC (EIS), appeals from the trial court’s permanent injunction against building more than two main residences per five-acre tract on property it sought to develop.¹ EIS complains of the trial court’s denial of abatement to join additional parties before issuing a declaratory judgment interpreting deed restrictions, the declaratory judgment itself, the jury verdict denying EIS’s "changed conditions" defense, and the trial court’s permanent injunction against development based on the jury verdict. We affirm.

Factual Background

EIS acquired 100 acres in Ellis County (the Property) and sought to begin development of a subdivision in late 2020. During the early stages of EIS’s obtaining approval for the subdivision from Ellis County, certain adjacent and nearby landowners became concerned. They later formed the Buena Vista Area Association (the Association), which filed suit to stop development. Appellees are the Association and several members of the Association whom EIS added as third-party defendants.²

The Property was originally part of the land surrounding the City of Waxahachie which the State of Texas had acquired for construction of the Superconducting Super Collider (the SSC). After the SSC was defunded in 1993, the State began selling more than 10,000 tracts of land it had accumulated for the project. The properties were largely empty because existing structures had been bulldozed for the SSC project. The Property was initially transferred from the State to a third party in 1988, and later to Salvador Family Holdings, Ltd. (SFH) on December 17, 2019. SFH transferred the Property to EIS in November 2020.³

The State attached deed restrictions to each parcel of the SSC properties sold, and these restrictions included at least six various levels of deed restrictions for the various SSC properties. There were no deed restrictions on the Property prior to that time. Each time the Property was sold, it was made subject to the deed restrictions.

The deed restrictions relevant to this case state:

This conveyance is made and accepted subject to any and all covenants, conditions, and restrictions (CCR’s), if any, relating to the property, but only to the extent they are still in effect, shown of record in Ellis County, Texas, and to all zoning laws, regulations and ordinances of municipal and/or other governmental authorities. This conveyance is also made and accepted subject to the following CCR’s:

1. No residential dwelling shall contain less than 2,200 square feet of floor space with a minimum of 1,100 square feet on the ground floor. "Square footage of floor space" excludes porches and open or closed carports or garages. A two-car garage as a minimum is required. Such square footage is that amount of area contained in the dwelling space only. The residence shall be conventional construction with 80% masonry exterior and used as a single family dwelling. No more than two residences may be built on any five acre tract. A guest house or servants’ quarters may be built behind a main residence location, but must be less than 900 square feet and of like construction as the main residence. Barns and outbuildings shall not be used for residential purposes. (emphasis added).

2. The property is designated as residential, and shall be used for that purpose.

….

11. The term of these CCR’s are to run with the land and shall be binding on all persons in title to the tract, in whole or part for a period of twenty (20) years from the effective date of this deed, after which time they shall be renewed automatically for successive periods of ten years unless changed by agreement of 80% of adjoining property owners.

The CCR’s set forth herein may be enforced by any adjoining landowners by action in the appropriate Court of Ellis County, but only after 30 days written notice of an alleged violation of these CCR’s to the landowner.

EIS proceeded with developing the Property, planning to construct a subdivision known as Sunset Meadows. The subdivision was platted with seventy-three homes on 100 acres, with all but one lot being smaller than two acres. In going through the process of having the Planning & Zoning Commission of the City of Waxahachie approve the plat, the City required EIS to give notice to all contiguous landowners. Property owners near the planned subdivision learned of the development and formed the Association for the purpose of enforcing the deed restrictions.⁴

Procedural Background

In late 2020, the Association filed suit seeking declaratory judgment on the meaning of the deed restrictions and related temporary and permanent injunctions.⁵ The Association argued that the restriction of "no more than two residences per five acre tract" limited development to residential lots with a five-acre minimum size, since those two residences would include a main residence and a guest house or servant’s quarters.

In January 2021, EIS’s predecessors in the suit filed a plea in abatement, original answer, counterclaim, and third-party petition, challenging the Association’s standing; seeking abatement for the purpose of adding the State and all adjoining landowners as necessary parties; asserting the affirmative defenses of abandonment/waiver, changed conditions, and estoppel; and seeking declaratory judgment against the Association and third-party individual landowners that the deed restrictions were no longer enforceable.⁶ A temporary injunction hearing was scheduled for January 27, but during the hearing, the parties agreed to a continuance. They later entered into an extensive Rule 11 agreement, filed on February 5, 2021, alleviating the need to complete the hearing on the temporary injunction.

By Rule 11 agreement, the parties agreed to allow substitution of EIS for the original defendants through the filing of a second amended petition, and the original defendants agreed to dismiss their claims. The parties also agreed to a temporary restraining order stopping construction on the Property but permitting completion of the grading and excavation work. The second amended petition sought the same relief as the first, and EIS filed its own plea in abatement, answer, counterclaims, and third-party claims identical to those previously asserted. EIS also asserted affirmative defenses identical to those raised by its predecessors.

As part of the Rule 11 agreement, the parties agreed to submit the interpretation of the deed restrictions and EIS’s affirmative defenses, counterclaims, and third-party claims to the trial court through the Association’s motion for partial summary judgment, which it filed on March 10, 2021. The parties also agreed to enter into joint stipulations to narrow the contested issues before the trial court. They submitted eighteen pages of stipulations, filed on the same day as the Association’s motion for partial summary judgment. The parties agreed to request an expedited, preferential trial setting; to abate discovery until the summary judgment was resolved, with an exception for discovery from the State regarding the intent and interpretation of the deed restrictions; and to keep the agreed temporary injunction in effect until the summary judgment was resolved.

The Association sought traditional summary judgment on the interpretation of the deed restrictions and determination of EIS’s plea in abatement. The Association sought both traditional and no-evidence summary judgment on EIS’s affirmative defenses, counterclaims, and third-party claims. '

EIS responded there had been inadequate time for discovery. EIS argued the deed restrictions were ambiguous and more time was needed for discovery to determine their meaning, purpose, and intent. EIS argued the Association had not established its right to summary judgment on EIS’s affirmative defenses.

The trial court granted partial summary judgment on the meaning of the deed restrictions, concluding that the restrictions "unambiguously limit development on the Property … to no more than two main residences per five-acre tract" (emphasis in original). The trial court dismissed with prejudice all EIS’s affirmative defenses and counterclaims, and third-party claims with the exception of its affirmative defense on changed conditions. As to changed conditions, the trial court determined only those changed conditions that had occurred after SFH acquired the Property should be considered. Based on its partial summary judgment, the trial court entered a temporary injunction, enjoining EIS from constructing more than forty "main residences" on the Property, with no more than two main residences per five-acre tract. The court set the changed conditions issue for jury trial.

At trial, the only issue before the jury was whether EIS had met its burden of proving the affirmative defense of changed conditions...