In re Austin Hous. Fin. Corp.

1

In re Austin Housing Finance Corporation and The City of Austin

No. 03-22-00091-CV

Court of Appeals of Texas, Third District, Austin

July 27, 2022

ORIGINAL PROCEEDING FROM TRAVIS COUNTY

Before Justices Goodwin, Baker, and Kelly

MEMORANDUM OPINION

Chari L. Kelly, Justice

Relators Austin Housing Finance Corporation (AHFC) and the City of Austin (collectively, Relators) have petitioned for writ of mandamus seeking relief from a January 24, 2022 abatement order. That order abated the underlying lawsuit until AHFC joined all other lot owners, mortgage service providers, and the homeowners' association for the subdivision where the subject property is located. For the reasons explained below we conditionally grant mandamus relief.

BACKGROUND

This mandamus proceeding arises out of an underlying declaratory judgment action filed by real parties in interest Marcela Patricia Buenrostro Del Real (one of the lot owners in the subdivision) and Friends of Brykerwoods LLC (collectively the Plaintiffs), seeking to prevent the City of Austin and AHFC from constructing affordable single-family housing in the Brykerwoods Annex subdivision. AHFC purchased Lot 1 of Brykerwoods Annex located at 3000 Funston Street, Austin Texas, (the Property), from the City of Austin.

After AHFC began construction on the Property, Plaintiffs sued to stop the construction. As pleaded in their Second Amended Petition, Plaintiffs sought, among other things, a declaratory judgment that a provision in the subdivision's 1947 plat applies to the Property, and therefore prohibits the erecting of any building on the Property because the Property is smaller than the minimum lot size requirements.^[1] Relators filed an answer asserting special exceptions and defenses, including waiver and estoppel, but did not assert any counterclaims.

The trial court signed a temporary injunction on March 18, 2020, preventing AHFC from continuing construction on the Property during the pending suit. The trial date was continued many times until a setting of January 18, 2022. In the weeks before the setting, Plaintiffs filed an amended plea in abatement and motion for continuance, arguing that the proceedings should be abated because AHFC was asserting waiver and estoppel, which required AHFC to join the other lot owners in the subdivision (as well as any affected mortgage service providers and the homeowners' association) as necessary parties under the Uniform Declaratory Judgments Act. Plaintiffs submitted only the subdivision plat as evidence in support of its amended plea in abatement. After a hearing, the trial court issued a written order granting the abatement, finding that the other lot owners and mortgage service providers have a "vested interest" in the minimum lot size provision contained in the 1947 plat and suspending the lawsuit until AHFC adds the following additional parties. The order stated:

IT IS, THEREFORE, ORDERED that this cause is suspended until the Homeowners Association of the Brykerwoods Annex and all lot owners in the Brykerwoods Annex subdivision are joined as parties by the Defendant Austin Housing Finance Corporation.

IT IS, THEREFORE, ORDERED that Defendant Austin Housing Finance Corporation shall also join all mortgage service providers who hold a security interest in any property and/or deed of trust for any lot in the Brykerwoods Annex identified in the attached Exhibit 1.

Relators now seek mandamus relief, contending that the trial court abused its discretion by requiring them to join those additional parties.

STANDARD OF REVIEW

Mandamus is an extraordinary remedy that requires Relators to show that the trial court clearly abused its discretion and that no adequate remedy by appeal exists. See In re K & L Auto Crushers, LLC, 627 S.W.3d 239, 247 (Tex. 2021) (orig. proceeding); In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36, 138 (Tex. 2004) (orig. proceeding). A trial court abuses its discretion when it acts "arbitrarily, capriciously, and without reference to guiding principles." In re Boyaki, 587 S.W.3d 479, 483 (Tex. App.-El Paso 2019, orig. proceeding). A trial court has no discretion in determining what the law is or applying the law to the facts, and therefore the trial court abuses its discretion if it clearly fails to correctly analyze or apply the law. Id.

Whether a necessary party exists is an evidentiary issue, and therefore to establish entitlement to mandamus relief, Relators must show that the evidence before the trial court dictated only one possible outcome as a matter of law. See In re Occidental W. Tex. Overthrust, Inc., 626 S.W.3d 395, 400 (Tex. App.-El Paso 2021, orig. proceeding). They were therefore required to show through "record evidence" that each of the alleged necessary parties had an actual, claimed interest-not just a potential interest-in the subject matter of the action. See Crawford v. XTO Energy, Inc., 509 S.W.3d 906, 913 (Tex. 2017) ("Rule 39 does not require joinder of persons who potentially could claim an interest in the subject of the action; it requires joinder, in certain circumstances, of persons who actually claim such an interest."). Similarly, a plea in abatement based on nonjoinder "should show definitely and specifically the nature and extent of the interest of such person who is claimed to be a necessary party," and must "give the court definite allegations as to the parties and the interests claimed by them." In re Occidental, 626 S.W.3d at 401 (quoting Stanolind Oil & Gas Co. v. State, 133 S.W.2d 767, 771 (Tex. 1939)).

Relators lack an adequate remedy by appeal. Generally, mandamus relief is available for the improper joinder of parties. See In re Boyaki, 587 S.W.3d at 484 (granting mandamus relief for improper joinder under Rule 39); In re Corcoran, 401 S.W.3d 136, 139-40 (Tex. App.-Houston [14th Dist.] 2011, orig. proceeding) (granting mandamus relief for improper joinder under Uniform Declaratory Judgments Act). Mandamus relief is also appropriate here because the order suspends the underlying lawsuit until additional parties are joined, leaving Relators without any other method for challenging the court's action or presenting their defenses. See In re Shulman, 544 S.W.3d 861, 867 (Tex. App.-Houston [14th Dist.] 2017, orig. proceeding); see also In re Prudential, 148 S.W.3d at 136.

ABUSE OF DISCRETION

Relators contend that the trial court abused its discretion by abating the underlying proceeding until Relators joined three categories of parties: (1) other recorded lot owners in the subdivision, (2) any mortgage servicer with a security interest and/or deed of trust for each such lot owner, and (3) the homeowners' association.

"When declaratory relief is sought, all persons who have or claim any interest that would be affected by the declaration must be made parties." Tex. Civ. Prac. & Rem. Code § 37.006(a). Trial courts generally have broad discretion in joinder of parties, see Royal Petro. Corp. v Dennis, 332 S.W.2d 313, 317 (Tex. 1960), but whether parties must be joined under subsection 37.006(a) should be determined using the analysis under Rule 39 of the Texas Rules of Civil Procedure, see Twin Creeks Golf Grp. v. Sunset Ridge Owners Ass'n, 537 S.W.3d 535, 547 (Tex. App.-Austin 2017, no pet.). Rule 39(a) provides for joinder of indispensable parties in mandatory terms, but "there is no arbitrary standard or precise formula for determining whether a particular person falls within its provision." In re Boyaki, 587 S.W.3d at 483 (quoting Longoria v. Exxon Mobil Corp., 255 S.W.3d 174, 180 (Tex. App.-San Antonio 2008, pet. denied)). Plaintiffs sought abatement before the trial court, and therefore had the burden to show that the parties they deemed to be necessary are, in fact, necessary under Rule 39. In re Occidental, 626 S.W.3d at 400.

The record before us does not show that any of the categories of parties identified in the abatement order qualify as necessary parties to the underlying litigation. The only evidence presented in support of the amended plea in abatement was a copy of the 1947 plat containing the disputed minimum lot size provision for the subdivision.^[2] Plaintiffs contend that the document alone demonstrates other lot owners have "claimed certain contractual rights under their recorded deeds and dually [sic] recorded restrictive covenants." At most, such evidence suggests that the other lot owners may potentially claim an interest in the subject of this action. See Crawford, 509 S.W.3d at 913. Nothing in the record establishes that those other lot owners have demanded recognition or otherwise asserted or established any right or privilege that would rise to the level of an actual claimed interest in the subject matter of the underlying action. See In re Corcoran, 401 S.W.3d at 139 ("An action for declaratory judgment that is a suit against a homeowner to enforce compliance with a deed restriction does not implicate the rights of other homeowners.").

Citing our decision in Sides v. Saliga, No. 03-17-00732-CV 2019 WL 2529551 (Tex. App.-Austin June 20, 2019, pet. denied) (mem. op.), Plaintiffs argue that Relators' waiver defense requires the joinder of the other lot owners because Relators must...