Opinion

Opinion issued December 17, 2015.

In The

Court of Appeals

For The

First District of Texas

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NO. 01-14-00216-CV

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VICTOR S. ELGOHARY, REPRESENTATIVELY ON BEHALF OF

NOMINAL DEFENDANT LAKES ON ELDRIDGE NORTH COMMUNITY

ASSOCIATION, INC., Appellant

V.

LAKES ON ELDRIDGE NORTH COMMUNITY ASSOCIATION, INC.;

REALMANAGE, LLC; DARLA KITCHEN; DON BYRNES; MICHAEL

ECKLUND; LAURA VASALLO LEE; JOHN KANE; JULIE ANN

BENNETT; RICK HAWTHORNE; CARA DAVIS; CHRISTI KELLER;

JIM FLANARY; JILL RICHARDSON, Appellees

****

LAKES ON ELDRIDGE NORTH COMMUNITY ASSOCIATION, INC.;

REALMANAGE, LLC; DARLA KITCHEN; DON BYRNES; MICHAEL

ECKLUND; LAURA VASALLO LEE; JOHN KANE; JULIE ANN

BENNETT; RICK HAWTHORNE; CARA DAVIS; CHRISTI KELLER;

JIM FLANARY; JILL RICHARDSON, Appellants

V.

VICTOR S. ELGOHARY, REPRESENTATIVELY ON BEHALF OF

NOMINAL DEFENDANT LAKES ON ELDRIDGE NORTH

COMMUNITY ASSOCIATION, INC., Appellee

On Appeal from the 234th District Court

Harris County, Texas

Trial Court Case No. 2013-17221

MEMORANDUM OPINION

In this dispute between a homeowner and his neighborhood homeowners

association, we consider whether the trial court erred in (1) granting a no-evidence

summary judgment for the homeowners association, (2) granting a traditional

summary judgment for the homeowners association; (3) granting the homeowners

association’s request for declaratory relief; (4) limiting discovery; and (5)

awarding attorney’s fees to the homeowners association. In the homeowners

association’s appeal, we consider whether the trial court erred by reducing the

amount of attorney’s fees awarded to the homeowners association.

BACKGROUND

On March 22, 2013, after the Lakes on Eldridge North Community

Association, Inc. [“the Association”] voted to change the usage requirements at the

rear restricted access gate of the subdivision, Victor Elgohary, a resident of the

subdivision, sued 10 directors and former directors of the Association [“the

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Directors”], RealManage, LLC, the Association’s managing agent, and Christi

Keller, the Association’s managing agent and an employee of RealManage.

Specifically, Elgohary alleged that the Association’s “board of directors has

fundamentally changed the operation and use of the restricted access gate . . . [and]

has not only enacted new limited times of operation and reduced the vehicle size

restriction, but it has made resident access into or out of the northern access point

of the subdivision impossible unless utilizing a motor vehicle.”

Elgohary brought both individual and derivative claims, including breach of

contract, breach of fiduciary duty, negligence, conversion, and theft, asserting that

the Directors and RealManage had misappropriated funds and made expenditures

that were inconsistent with the Association’s non-profit status and its charter.

Elgohary also brought individual claims of trespass and breach of contract against

the Association and the Directors, and sought injunctive relief to prohibit the

closing of the neighborhood’s entrance and the placement of certain signs in the

subdivision. Elgohary later amended his petition to include a request for sanctions

from the Association’s counsel, Neil McLaurin and Walter Spears.

The Association counterclaimed, seeking a declaratory judgment that the

Association’s Deed Restrictions (1) permitted the Association to regulate the

access gate to the neighborhood, and (2) did not prohibit the Association from

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placing signs on subdivision property. The Association also sought attorney’s fees

from Elgohary.

On August 5, 2013, Elgohary served each defendant 590 discovery requests

related to many different issues. On August 21, 2013, all defendants filed a hybrid

no-evidence and traditional motion for summary judgment. Defendants also filed

objections and a motion for protection from Elgohary’s discovery requests; they

also asked that the trial court stay their discovery responses until it had ruled on

their summary judgment motions. Both the motions for summary judgment and

the motions for protection from discovery were set for September 16, 2013.

Elgohary filed responses to both motions before the September 16 hearing date.

However, at the hearing on September 16, 2013, Elgohary complained that

he had not received proper notice of the summary judgment motions. Specifically,

he complained that although he had received the motion by email, he did not

receive service as required by TEX. R. CIV. P. 166a(c). After verifying that

Elgohary had received actual notice of the motion, the trial court asked both parties

if resetting the summary judgment motion for 21-days from the original hearing

date would be sufficient. He also indicated that he would reset the hearing on the

motion for protection after the summary judgment’s rescheduled hearing date.

Neither side objected to the trial court’s rescheduled hearings. Similarly, Elgohary

did not file a Motion for Continuance.

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On September 30, 2013, Elgohary filed an Amended Response to

Defendants Traditional and No Evidence Motion for Summary Judgment,

supported by his own affidavit.

On October 12, 2013, more than 21 days after the originally scheduled

summary judgment hearing, the trial court granted the defendants’ motion for

summary judgment. The order did not specify whether the no-evidence motion or

the traditional motion was granted. The trial court did not rule on the defendants’

motion for protection at that time. However, on October 14, the trial court held a

hearing on the defendants’ motion for protection, at which time the trial court

stated that the motion was now moot because the trial court had granted the

summary judgment.

The Association’s declaratory judgment claims were tried to the bench on

March 13, 2014. After trial, the trial court signed a final judgment declaring that

(1) “the Association is permitted to regulate the use of the West Little York

entry/exit[;]” (2) “the Association is not prohibited from placing signs on

Association property, so long as said signs do not relate to the construction,

improvement, alteration, or addition to Lots within the Subdivision; and that (3)

the Association “shall have and recover from Counter-Defendant Victor S.

Elgohary $20,000 in reasonable and necessary attorney’s fees through the trial of

this case[;]”, plus attorney’s fees through appeal, costs, and interest.

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PROPRIETY OF SUMMARY JUDGMENT

In issue one, Elgohary contends the trial court erred in granting defendants’

no evidence motion for summary judgment. In issue two, Elgohary contends the

trial court erred in granting the defendants’ traditional motion for summary

judgment.

Standard of Review

We review summary judgments de novo. Valence Operating Co. v. Dorsett,

164 S.W.3d 656, 661 (Tex. 2005). When a summary judgment does not specify the

grounds on which it was granted, we will affirm the judgment if any one of the

theories advanced in the motion is meritorious. Joe v. Two Thirty Nine Joint

Venture, 145 S.W.3d 150, 157 (Tex. 2004).

After adequate time for discovery, a party may move for summary judgment

on the ground that there is no evidence of one or more essential elements of a

claim. TEX. R. CIV. P. 166a(i); Hahn v. Love, 321 S.W.3d 517, 523–24 (Tex.

App.—Houston [1st Dist.] 2009, pet. denied). Once the movant specifies the

elements on which there is no evidence, the burden shifts to the nonmovant to raise

a fact issue on the challenged elements. Id.

In a traditional summary judgment motion, the movant has the burden to

show that no genuine issue of material fact exists and that the trial court should

grant judgment as a matter of law. TEX. R. CIV. P. 166a(c); KPMG Peat Marwick v.

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Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). In reviewing a

traditional summary judgment, we must indulge every reasonable inference in

favor of the nonmovant, take all evidence favorable to the nonmovant as true, and

resolve any doubts in favor of the nonmovant. Valence, 164 S.W.3d at 661. A

defendant who moves for traditional summary judgment on the plaintiff’s claim

must conclusively disprove at least one element of the plaintiff's cause of action.

Little v. Tex. Dep’t of Crim. Justice, 148 S.W.3d 374, 381 (Tex. 2004).

No-Evidence Summary Judgment

Elgohary brings three procedural challenges to the trial court’s grant of no-

evidence summary judgment. First, he argues that the defendant’s waived the no-

evidence portion of their summary judgment motion. Second, he contends that

there was not adequate time for discovery because at the time it was granted, the

defendants had not responded to his discovery requests, and that he had five more

months to complete discovery under the discovery order entered by the trial court.

Third, Elgohary contends that the trial court erred in granting summary judgment

because he did not have 21-days’ notice of the summary judgment hearing.

Elgohary does not argue that he raised a fact issue as to each of the elements

challenged in the no-evidence motion. We will address each argument

respectively.

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Waiver of No-Evidence Motion

In its reply to Elgohary’s Amended Response to Defendant’s Traditional and

No Evidence Motion For Summary Judgment, the Defendant’s stated:

Defendants seek only a traditional motion for summary judgment on

their arguments and authorities concerning Association governing

documents and statutes which provide immunity to them.

On appeal, Elgohary argues that this statement in the Defendant’s reply is a

judicial admission that they were waiving their no-evidence motion. We disagree.

The elements of a judicial admission are: (1) a statement made during the

course of a judicial proceeding; (2) that is contrary to an essential fact or defense

asserted by the person making the admission; (3) that is deliberate, clear, and

unequivocal; (4) that, if given conclusive effect, would be consistent with public

policy; and (5) that is not destructive of the opposing party’s theory of recovery.

Bliss & Glennon, Inc. v. Ashley, 420 S.W.3d 379, 393 (Tex. App.—Houston [1st

Dist.] 2014, no pet.). The statement referenced above is not a deliberate, clear, and

unequivocal waiver of the Defendant’s no-evidence motion for summary

judgment. To the contrary, it points out only that the portion of Defendants’

motion that relies on the Association’s governing documents and immunity statutes

are traditional summary judgment grounds, not no-evidence grounds. The

Defendants’ attempt to clarify that in its reply cannot be a deliberate, clear and

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unequivocal waiver of its no-evidence grounds. Indeed, it does not mention its no-

evidence motion at all.

Thus, we reject Elgohary’s first ground for defeating the no-evidence motion

for summary judgment.

No Adequate Time For Discovery

When a party argues it has not had an adequate opportunity for discovery

before a no-evidence summary-judgment hearing, that party must file an affidavit

explaining the need for further discovery or a verified motion for continuance.

TEX. R. CIV. P. 166a(g); See Joe, 145 S.W.3d at 161. The affidavit must explain

why the continuance is necessary; conclusory allegations are insufficient. Carter

v. MacFadyen, 93 S.W.3d 307, 310 (Tex. App.—Houston [14th Dist.] 2002, pet.

denied). We generally consider the following nonexclusive factors in determining

whether the trial court abused its discretion: (1) the nature of the cause of action;

(2) the nature of the evidence necessary to controvert the no-evidence motion; (3)

the length of time the case has been active in the trial court; (4) the amount of time

the no-evidence motion has been on file; (5) whether the movant has requested

stricter time deadlines for discovery; (6) the amount of discovery that has already

taken place; and (7) whether the discovery deadlines that are in place are specific

or vague. Madison v. Willimson, 241 S.W.3d 145, 155 (Tex. App.—Houston [1st

Dist.] 2007, pet. denied); see also Joe, 145 S.W.3d at 161. When reviewing a trial

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court’s order denying a motion for continuance, we consider whether the trial court

committed a clear abuse of discretion on a case-by-case basis. BMC Software

Belg., N.V. v. Marchand, 83 S.W.3d 789, 800–01 (Tex. 2002). A trial court abuses

its discretion when it reaches a decision so arbitrary and unreasonable as to amount

to a clear and prejudicial error of law. Id.

Here, Elgohary did not file a sworn motion for continuance. He did,

however, argue in his unsworn Amended Response to Defendant’s Traditional and

No Evidence Motion For Summary Judgment that he did not have adequate time

for discovery that that “[d]epositions are also necessary in this case in order for

Plaintiffs to controvert Defendants’ good faith assertions and presumptions of

acting in a reasonable way with regards to the restrictive covenants,” and that

“[s]ince the evidence needed to controvert the motion for summary judgment and

defend the counterclaims has not been fully developed, summary judgment would

be premature and should be continued or denied.” These unsworn allegations are

insufficient to carry Elgohary’s burden to show an inadequate time for discovery.

See Joe, 145 S.W.3d at 161 (requiring party arguing inadequate time for discovery

to file affidavit or verified motion for continuance). Elgohary did, however, attach

an affidavit to his response that is sworn, thus we look to the evidence presented in

the affidavit to determine whether Elgohary carried his burden.

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In Doe v. Roman Catholic Archdiocese of Galveston–Houston, 362 S.W.3d

803, 811 (Tex. App.—Houston [14th Dist.] 2012, no pet.), the plaintiff alleging

lack of adequate time for discovery filed two affidavits in support of his motion for

continuance. The first affidavit alleged that the case had been on file for less than

four months, that “additional time is needed to conduct full discovery[,]” and that

“the information and items produced in discovery will assist Plaintiff in

establishing Plaintiff’s claims which defer, toll, or otherwise eliminate the statute

of limitations defense, or at a minimum, will create a fact issue on this affirmative

defense for a jury to decide[.]” Id. at 811. The second affidavit contained similar

allegations, plus further specified “the particular documents and depositions [the

plaintiff] wanted,” claiming that the discovery would help him “establish or

support [his] claims, and particularly, claims . . . which defeat Defendant’s

Motions or limitations defense.” Id. The court noted that the plaintiff’s affidavits

“did not explain how [the evidence sought through discovery] would enable him to

defeat the defendants’ asserted affirmative defense of limitations.” In so holding,

the court stated:

Indeed, in neither motion does Doe identify or explain what relevant

facts he expected to discover that would enable him to defeat or raise

a fact issue on the affirmative defense of limitations. . . . Although

Doe generally asserts that the discovery he sought would support

doctrines which would ‘defer, toll, or eliminate’ the statute of

limitations . . . he did not discuss the elements of these doctrines or

explain how they would apply on these facts. Because Doe failed to

explain how the additional discovery he sought was in any way

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material, the trial court did not abuse its discretion in denying the

motions for continuance.

Id. at 812; see also Madison v. Williamson, 241 S.W.3d 145, 155–56 (Tex. App.—

Houston [1st Dist.] 2007, pet. denied) (no abuse of discretion when nonmovant

“made no effort to specify the additional evidence she needed to respond to the

motion”); Carter v. MacFadyen, 93 S.W.3d 307, 311 (Tex. App.—Houston [14th

Dist.] 2002, pet. denied) (same when response did not indicate “what specific

discovery needed to be completed”); Rest. Teams Int’l, Inc. v. MG Secs. Corp., 95

S.W.3d 336, 341 (Tex. App.—Dallas 2002, no pet.) (finding trial court did not

abuse its discretion by granting no-evidence motion for summary judgment when

case had been on file for seven months, but before discovery period ended;

appellants’ motion for continuance did not explain their failure to present evidence

opposing summary judgment motion or explain how they attempted to participate

in discovery while case was pending).

Elgohary’s affidavit provides even less information than that provided by the

plaintiff in Doe. In his affidavit, Elgohary alleges that he “personally served

discovery of interrogatories and production of documents on Defendants by hand

delivery on August 5, 2013 at the offices of Hays, McConn, Rice & Pickering.”

He then avers that Defendants objected to his discovery requests as “all

overbroad,” and that, despite his offers to “deal with and discuss objections as they

applied to each individual request for production and discovery,” Defendants

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instead filed a motion for protection from discovery. Elgohary’s affidavit does not,

however, state which of his 590 discovery requests were necessary to rebut the no-

evidence motion for summary judgment or how the information sought would raise

fact issues precluding summary judgment.

Regarding Elgohary’s argument that the discovery period did not expire

until January 24, 2014, some three months after the summary judgment was

granted, we note that “Rule 166a(i) begins with the phrase, ‘[a]fter adequate time

for discovery’ not ‘after a pretrial scheduling discovery period has concluded,’ and

therefore, it does not support appellant’s argument that a trial court abused its

discretion in granting no-evidence summary judgment during the discovery

period.” Lucio v. John G. & Marial Stella Kenedy Mem 7 Found., 298 S.W.3d

663, 670 (Tex. App.—Corpus Christi 2009, pet. denied).

Based on the lack of information provided in Elgohary’s affidavit, we cannot

conclude that the trial court abused its discretion in ruling on the no-evidence

motion for summary judgment. “The mere fact that a trial court decided an issue

in a manner differently than an appellate court would under similar circumstances

does not establish an abuse of discretion.” Zeifman v. Michels, 212 S.W.3d 582,

587 (Tex. App.—Austin 2006, no pet.).

Thus, we reject Elgohary’s second ground for defeating the no-evidence

motion for summary judgment.

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Notice of Summary Judgment Hearing

In issue two regarding the traditional summary judgment, Elgohary argues

that he did not have 21 days’ notice before the summary judgment hearing.

Because this argument applies equally to the no-evidence motion for summary

judgment, we address it here.

Elgohary contends that the trial court erred in granting the motions for

summary judgment “because the Defendants did not comply with filing and service

rules under TEX. R. CIV. P. 21, TEX. R. CIV. P. 21a, and TEX. R. CIV. P. 166a.” We

disagree.

Proof of actual notice will establish compliance with Rule 21a. See Goforth

v. Bradshaw, 296 S.W.3d 849, 854 (Tex. App.—Texarkana 2009, no pet.) (stating

that purpose of rule 21a “is to achieve actual notice and to set up presumptions to

use in disputes about whether notice was achieved”; determining that even though

report was served on party by regular mail, which is not authorized by rule 21a,

there was “acknowledged” and “actual delivery” of report); Netherland v. Wittner,

662 S.W.2d 786, 787 (Tex. App.—Houston [14th Dist.] 1983, writ ref’d n.r.e.)

(holding that when appellant acknowledged timely receipt of notice by regular

mail, appellant appeared and fully participated at trial, and appellant did not claim

harm arising from notice, appellee had fulfilled primary purposes of service under

rule 21a).

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Here, any error in giving less than 21-days’ notice of the summary judgment

submission was cured when the trial court reset the submission date for 21 days

beyond the original submission date, thereby giving Elgohary actual notice of the

summary judgments’ submission and additional time to respond.

Elgohary also challenges the summary judgment on the basis that not all of

the individual defendants were included in the motion for summary judgment and

the defendants did not move for summary judgment on his claims for sanctions

under TEX. CIV. PRAC. & REM. CODE § 10 and TEX. R. CIV. P. 13. Specifically,

Elgohary contends that the trial court erred in dismissing his claims “against

counsel for the Association Walter Spears and Neil McLaurin without a properly

noticed summary judgment hearing or motion for summary judgment,” and erred

in dismissing his “sanctions claims against the Association, Defendant Directors,

RealManage, and Keller without a timely noticed submission for summary

judgment.”

First, we note that Spears and McLaurin were never served, thus there was

no need for them to file a motion for summary judgment. Their absence from the

final judgment does not mean that it did not dispose of all parties and all claims

because they were never made parties to the suit. Second, the record shows that

Elgohary’s sanctions requests were disposed of by separate order entered after the

summary judgment was granted. This was not error. Requests for sanctions are

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not independent causes of action. See Mantri v. Bergman, 153 S.W.3d 715, 717–

18 (Tex. App.—Dallas 2005, pet. denied) (“[T]here is no precedent in Texas for

treating motions for sanctions as independent causes of action.”).

Thus, we reject Elgohary’s third ground for defeating the no-evidence

motion for summary judgment.

Having disposed of both of Elgohary’s challenges to the no-evidence

summary judgment, we conclude that the trial court did not err in granting the

defendants’ no-evidence summary judgment.

Accordingly, we overrule issue one.

Traditional Summary Judgment

In light of our disposition of the no-evidence summary judgment, we need

not address Elgohary’s second issue regarding the propriety of the traditional

summary judgment, and decline to do so.

DECLARATORY JUDGMENT

In issue three, Elgohary contends the trial court erred in rendering judgment

on the Association’s declaratory judgment claims because (1) “the lower court

erred in not abating the Association’s claims by requiring the joinder of all

homeowners and other necessary parties in the declaratory action[;]” (2) “the

Covenant Conditions and Restrictions prohibit signs in the Subdivision[;] and (3)

“the Association’s request for a declaration that the Association is permitted to

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regulate the use of the West Little York Entry/Exit is not a justiciable controversy

as presented[.]” We address each argument respectively.

Abatement

Elgohary filed a motion to abate the Association’s counterclaim for

declaratory relief, arguing that it was necessary to join all homeowners in Lakes on

Eldridge North [“LOEN”] before proceeding to judgment on the Association’s

counterclaim. The trial court denied the motion. Elgohary contends this was

reversible error.

This Court considered a similar, but slightly different issue in Indian Beach

Prop. Owners’ Ass’n v. Linden, 222 S.W.3d 682, 697-98 (Tex. App.—Houston

[1st Dist.] 2007, no pet.). In Indian Beach, the homeowners’ association brought

suit against a homeowner, seeking an injunction that his fence violated deed

restrictions. Id. at 690. The homeowner counterclaimed, seeking a declaratory

judgment that its fence was in compliance with the deed restrictions. Id. On

appeal, the homeowners’ association claimed that the trial court lacked jurisdiction

to render a declaratory judgment because all other homeowners were not joined as

necessary parties. This Court held that the failure to join all property owners

affected by a restrictive covenant in a declaratory judgment action did not deprive

the trial court of jurisdiction to enter the declaratory judgment because nothing

prevented the trial court from rendering complete relief between the parties, and

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because the declaratory judgment did not prejudice the rights of any person not a

party to the proceeding. Id. at 698 (citing Brooks v. Northglen Ass’n, 141 S.W.3d

158, 162 (Tex. 2004) and Wilchester West Concerned Homeowners LDEF, Inc. v.

Wilchester West Fund, Inc., 177 S.W.3d 552, 559 (Tex. App.—Houston [1st Dist.]

2005, pet. denied)). This Court also noted that, had the homeowners’ association

been concerned about the possibility of inconsistent judgments, it could have asked

the trial court to abate to join the absent homeowners. Id.

The issue in this case is not jurisdiction, but whether the trial court

committed reversible error by refusing Elgohary’s request to abate so that the

absent homeowners could be joined. Indeed, courts have held that all homeowners

should be joined when a declaratory judgment would affect the property interests

of all real property owners in the community. See Dahl v. Hartman, 14 S.W.3d

434, 437 (Tex. App.—Houston [14th Dist.] 2000, pet. denied); April Sound Mgmt.

Corp. v. Concerned Prop. Owners for April Sound, Inc., 153 S.W.3d 519, 521

(Tex. App.—Amarillo 2004, no pet.).

Elgohary and the Association dispute whether the declaratory judgment

would affect the property interest of all real property owners in the community.

However, we need not decide the issue because, under the facts presented here,

error, if any, in denying Elgohary’s requested abatement, is harmless. See TEX. R.

APP. P. 44.1(a). The purpose of TEX. CIV. PRAC. & REM. CODE ANN. §37.006(a)

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(West 2008), which requires joinder in a declaratory judgment proceeding of “all

persons who have or claim any interest that would be affected by the declaration,”

is to avoid a multiplicity of suits. Dahl, 14 S.W.3d at 436. Elgohary, however,

cannot be harmed by the possibility of multiple suits, only the Association can. As

noted by this Court in Indian Beach, “nothing prevented the trial court from

rendering complete relief between the parties to the suit.” 222 S.W.3d at 698. As

such, we conclude that Elgohary has failed to show that the trial court’s error in

denying his requested abatement “probably caused the rendition of an improper

judgment” as to him. See TEX. R. APP. P. 44.1(a).

Construction of Association’s Governing Documents

Article V of the Association’s Declaration of Covenants, Conditions &

Restrictions, entitled Protective Covenants and Restrictions, as follows:

Section 1. Covenants Applicable. The following provisions shall be

applicable to any and all construction, improvement, alteration, or

addition to the Lots.

b. No sign, including political signs, advertisement, billboard or

advertising structure of any kind shall be displayed, maintained

or placed in the public view on or from any part of the Property

or on any Lot, except signs temporarily used by Declarant or

any Owner on a Lot, of not more than six (6) square feet,

advertising the Lot for sale or rent, or signs of architects and

builders during the period of construction and sale of

improvements on any Lot.

After trial on the merits, the trial court entered a declaratory judgment

stating:

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It is therefore, . . . ORDERED, ADJUDGED and DECREED that,

pursuant to the Uniform Declaratory Judgments Act, the Association

is not prohibited from placing signs on Association property, so long

as said sign to not relate to the construction, improvement, alteration,

or addition to Lots within the Subdivision.

Elgohary contends the trial court erred in rendering this declaratory

judgment, arguing that “the Covenants Conditions and Restrictions prohibit signs

in the subdivision.” Specifically, Elgohary contends that the only signs allowed in

the neighborhood were “for sale signs” and/or architects and builders signs during

construction. Elgohary’s position was that the Association’s signs explaining the

hours and use of the restricted access gate were prohibited, and, indeed, that all

other signs, were prohibited. We construe Elgohary’s issue to be a challenge to the

trial court’s interpretation of the restrictive covenant as a matter of law.

Standard of Review and Applicable Law

The Association’s Declaration of Covenants, Conditions & Restrictions

contains restrictive covenants concerning real property. See TEX. PROP. CODE ANN.

§ 202.001(4) (Vernon 2014) (defining restrictive covenant). Restrictive covenants

are subject to the general rules of contract construction. Pilarcik v. Emmons, 966

S.W.2d 474, 478 (Tex. 1998); Bank United v. Greenway Improvement Ass’n, 6

S.W.3d 705, 707 (Tex. App.—Houston [1st Dist.] 1999, pet. denied). As when

interpreting any contract, the court’s primary duty in construing a restrictive

covenant is to ascertain the drafter’s intent from the instrument's language. Bank

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United, 6 S.W.3d at 708. In ascertaining the drafter’s intent, we must examine the

covenant as a whole in light of the circumstances present when the covenant was

made. Pilarcik, 966 S.W.2d at 478. We must give a restrictive covenant’s words

and phrases their commonly accepted meaning. Truong v. City of Houston, 99

S.W.3d 204, 214 (Tex. App.—Houston [1st Dist.] 2002, no pet.). We review a trial

court’s interpretation of a restrictive covenant de novo. Air Park–Dallas Zoning

Committee v. Crow–Billingsley Airpark, Ltd., 109 S.W.3d 900, 909 (Tex.App.—

Dallas 2003, no pet.).

Whether restrictive covenants are ambiguous is a matter of law for the court

to decide. Pilarcik, 966 S.W.2d at 478; Samms v. Autumn Run Cmty. Improvement

Ass’n, Inc., 23 S.W.3d 398, 402 (Tex. App.—Houston [1st Dist.] 2000, pet.

denied). A covenant is unambiguous if, after appropriate rules of construction have

been applied, the covenant can be given a definite or certain legal meaning.

Pilarcik, 966 S.W.2d at 478; Pitman v. Lightfoot, 937 S.W.2d 496, 517 (Tex.

App.—San Antonio 1996, writ denied) (holding same concerning contracts

generally). In contrast, if, after appropriate rules of construction have been applied,

a covenant is susceptible of more than one reasonable interpretation, the covenant

is ambiguous. Pilarcik, 966 S.W.2d at 478; Universal C.I.T. Credit Corp. v.

Daniel, 243 S.W.2d 154, 157 (1951).

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Analysis

In construing a restrictive covenant, a court’s primary task is to determine

the drafter’s intent and to liberally construe the language of the restrictions to give

effect to their purposes and intent and to harmonize all of the provisions so that

none are rendered meaningless. Rakowski v. Committee to Protect Clear Creek

Village Homeowners’ Rights 252 S.W.3d 673 (Tex. App.—Houston [14th Dist.]

1997, pet. denied).

Here, if we were to accept Elgohary’s assertion that, as a matter of law, the

restrictive covenant prohibited all signs other than those specifically permitted, it

would render the phrase applying the covenants to “any and all construction,

improvement, alteration, or addition to the Lots” meaningless by effectively

eliminating that verbiage. Further, adopting Elgohary’s interpretation of the

restrictive covenant would lead to an absurd result, i.e., the prohibition of all signs

by any party, including the Association, in the neighborhood’s common areas.

Under Elgohary’s interpretation, the Association could make rules about use of

common areas, but could not disseminate those rules through the use of any signs.

We cannot interpret a contract so as to produce an absurd result. See Lane v.

Travelers Indem. Co., 391 S.W.2d 399, 402 (Tex. 1965) (refusing to construe

contract in manner that would lead to absurd results); Avasthi & Assocs., Inc. v.

Banik, 343 S .W.3d 260, 264 (Tex. App.—Houston [14th Dist.] 2011, pet. denied)

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(declining to accept construction of contract that would produce absurd results

because there was construction that would not produce absurd result).

Thus, we cannot say that the trial court erred as a matter of law when it

rendered judgment declaring that the Association could place signs in the

neighborhood as long as the signs did “not relate to the construction, improvement,

alteration, or addition to Lots within the Subdivision.”

Justiciable Controversy

Article 1, section 1.d. of the Association’s Declaration of Covenants,

Conditions & Restrictions defines “Common Areas” of the subdivision, and Article

VIII, section 3(a) provides for “[t]he right of the Association to prescribe rules and

regulating for the use, enjoyment, and maintenance of the Common Areas.” Based

on these provisions, the Association sought by way of its counterclaim “a

declaration from the Court that the Association is permitted to regulate the use of

the [West Little York] entry/exit.”

Elgohary’s position was that that the Association was not permitted to

regulate access to the subdivision from West Little York via Enclave Vista Lane

because there was an express easement on Enclave Vista Lane. The Association’s

position was that its regulation of access to Enclave Vista Lane from West Little

York did not interfere with the express easement on Enclave Vista Lane because

that street remained fully accessible to homeowners via another street, Sonora

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Canyon Lane, and that regulating access to one end of the street was permissible

under section 3(a) of the Declaration of Covenants, Conditions & Restrictions as a

regulation regarding the use of a common area.

After trial on the merits, the trial court entered the following declaratory

judgment:

It is therefore, . . . ORDERED, ADJUDGED and DECREED that,

pursuant to the Uniform Declaratory Judgments Act, the Association

is permitted to regulate the use of the West Little York entry/exit.

On appeal, Elgohary contends that the trial court erred in rendering this

declaratory judgment because there was no justiciable controversy between the

parties regarding this issue. Specifically, Elgohary states that “he has never

disputed that the Association may regulate the gate for purposes of keeping it

operation or to limit its use solely to those with remote controls registered in the

Association’s computer systems.”

A declaratory judgment is appropriate only if a justiciable controversy exists

concerning the rights and status of the parties and the controversy will be resolved

by the declaration sought. Bonham State Bank v. Beadle, 907 S.W.2d 465, 467

(Tex. 1995); see also TEX. CIV. PRAC. & REM.CODE § 37.002(b) (reflecting that the

purpose of the Uniform Declaratory Judgments Act is “to settle and to afford relief

from uncertainty and insecurity with respect to rights, status, and other legal

relations”). For a justiciable controversy to exist, there must be a real and

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substantial controversy involving a genuine conflict of tangible interest and not

merely a theoretical dispute. Bonham State Bank, 907 S.W.2d at 467. “A

declaratory judgment action does not vest a court with the power to pass upon

hypothetical or contingent situations, or to determine questions not then essential

to the decision of an actual controversy, although such questions may in the future

require adjudication.” Tex. Health Care Info. Council v. Seton Health Plan, Inc.,

94 S.W.3d 841, 846 (Tex. App.—Austin 2002, pet. denied).

Here, the declaration that the Association sought—whether it could regulate

the West Little York entry/access gate—was essential to resolution of the dispute

between the Association and Elgohary, and, as it alleged in its counterclaim, “the

relief the Association sought is greater in scope and concerns the underlying

disagreement between the parties as to the interpretation of the Association’s

dedicatory instruments.” Indeed, if the Association had no authority to regulate the

West Little York entry/access gate at all, none of the actions it took, including

those Elgohary now contends are permitted such as “keeping it operational” and

“limit[ing] its use solely to those with remote controls, would be permissible. As

such, the trial court did not err by concluding that the Association’s request for

declaratory relief presented a justiciable controversy.

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Conclusion

Having decided that (1) there was no reversible error in the trial court’s

denial of Elgohary’s motion to abate; (2) the Declaration of Covenants, Conditions

& Restrictions did not prohibit the Association from placing signs in the

neighborhood about the rules regarding access from West Little York; and (3) the

Association’s request for declaratory judgment presented a justiciable controversy,

we overrule Elgohary’s third issue.

LITMITATION OF DISCOVERY

In issue four, Elgohary contends the trial court erred in granting the

Defendant’s protective order from discovery.

Background

In August 2013, Elgohary served 590 discovery requests on each of the

Defendants. The Defendants filed a motion for protective order, which was set for

a hearing on October 14, 2014. At the October 14 hearing for the protective order,

the trial court indicated that the motion for protective order was moot because it

had already granted the Defendants’ Motion for Summary Judgment. This ruling

is not the basis for Elgohary’s issue on appeal.

After summary judgment was granted, discovery continued on the

Association’s remaining declaratory judgment claims. Elgohary served written

discovery and deposition notices to the Association and certain directors, and also

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subpoenaed a former director, Michael Dach, who was not a party to the suit. The

Defendants and Dach filed motions for protection from further discovery and

seeking to quash all noticed depositions.

At a hearing on January 27, 2014, the trial court asked Elgohary why he

needed the discovery, and he responded that it was necessary to determine whether

the Association’s and Directors’ actions had been reasonable and taken in good

faith. Defendants responded that no further discovery was needed because

summary judgment had been granted on all of Elgohary’s claims, which were

based on reasonableness and good faith, and that the only claims remaining were

their declaratory judgment claims, which required the interpretation of the

Declaration of Covenants, Conditions & Restrictions, a question of law. The

remaining issue, the Defendants argued, was not whether the Association’s

regulations were reasonable and done in good faith, but whether the Declaration of

Covenants, Conditions & Restrictions permitted them to regulate the entry/exit at

West Little York at all, a “more global declaratory judgment not specific to

[Elgohary’s] facts.” The trial court agreed with the defendants and granted their

motions for protection. It is this ruling that Elgohary challenges in his fourth issue

on appeal.

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Law and Analysis

Elgohary argues that the trial court erred in limiting his discovery because

the Defendants did not carry their burden to show that his requests were unduly

burdensome. However, as made clear from the record of the hearing, the trial court

did not limit discovery because it was burdensome, but because it was irrelevant to

the remaining issues in the case.

Texas Rule of Civil Procedure 192.3 is entitled “Scope of Discovery” and

provides, “In general, a party may obtain discovery regarding any matter that is not

privileged and is relevant to the subject matter of the pending action . . . [and

which] appears reasonably calculated to lead to the discovery of admissible

evidence.” TEX. R. CIV. P. 192.3(a); Crown Central Petroleum Corp. v. Garcia,

904 S.W.2d 125, 127 (Tex. 1995) (orig. proceeding). In discovery situations, the

trial court is granted latitude in limiting or tailoring discovery. TEX. R. CIV. P.

192.4. Generally, a trial court should limit discovery methods to those which are

more convenient, less burdensome, and less expensive, or when the burden or

expense of the proposed discovery outweighs its likely benefit. In re Alford

Chevrolet–Geo, 997 S.W.2d 173 (Tex. 1999) (orig. proceeding); TEX. R. CIV. P.

192.4. Discovery requests themselves must be reasonably tailored to matters

relevant to the case at issue. In re Xeller, 6 S.W.3d 618, 626 (Tex. App.—Houston

[14th Dist.] 1999, orig. proceeding). Consequently, the trial court has broad

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discretion to limit discovery requests by time, place, and subject matter. See

Texaco, Inc. v. Sanderson, 898 S.W.2d 813, 815 (Tex.1995) (orig. proceeding).

Here, the issues for which Elgohary sought discovery—reasonableness and

good faith of the Association’s and Directors’ actions—had already been resolved

against him by way of summary judgment. The only remaining issue involved the

interpretation of the Association’s Declaration of Covenants, Conditions &

Restrictions. Since this issue was to be resolved as a matter of law based upon the

language of the declarations, the trial court did not abuse its discretion by

preventing Elgohary from conducting further discovery on issues that had no

relevance to the upcoming trial.

We overrule issue four.

ATTORNEY’S FEES

In the final judgment, the trial court ordered that the Association “shall have

and recover from Counter-Defendant Victor S. Elogohary $20,000 in reasonable

and necessary attorney’s fees through the trial of this case[.]” In his fifth issue on

appeal, Elgohary contends the trial court erred in awarding attorney’s fees because

(1) “the Association sought no damages or specific relief[,]” and (2) he did not

receive timely notice of the billing statements that the Association entered into

evidence at trial in support of its attorney fee claim. In its appeal, the Association

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contends the trial court erred in reducing its reasonable and necessary fees from

$42,000 to $20,000. We address each issue respectively.

Attorney’s Fees in the Absence of Damages or Specific Relief

Elgohary contends that the attorney’s fees cannot stand because “the

Association sought no damages or specific relief from Elgohary,” thus the fees,

“even though supported by [the Association’s attorney’s testimony] cannot support

such a high award since it is clearly out of proportion with the result [the

Associations’ attorneys] obtained on behalf of the Association.”

Here, the Association sought and obtained relief pursuant to the Declaratory

Judgment Act, which provides that “[i]n any proceeding under this chapter, the

court may award costs and reasonable and necessary attorney’s fees as are

equitable and just.” TEX. CIV. PRAC. & REM. CODE ANN. § 37.009 (West 2015).

There was no need for the Association to seek damages or injunctive relief in order

to obtain attorney’s fees pursuant to the statute.

Timely Notice of Billing Statements

At trial, when the Association’s attorney offered his billing records into

evidence, the following exchange took place:

[Trial Court]: Any objection?

[Elgohary]: I do have one objection. And that was, again, this was

one of the things I asked for in discovery that was quashed.

[Association’s counsel]: Your Honor—

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[Trial court]: Was it produced?

[Association’s counsel]: Your Honor, we produced copies of our

invoices to Mr. Elgohary along with all of [the] trial exhibits pursuant

to the Court’s trial preparation order. We also e-mailed copies of the

invoices after the hearing, in which I told your Honor and Mr.

Elgohary that we would give him the invoices. That was one of the

conditions to Your Honor’s ruling on discovery.

[Trial Court]: Overruled. You may proceed.

[Elgohary]: I would just add to the record that that was less than 30

days prior to trial.

[Trial court]: Okay.

[Elgohary]: That’s what we objected to.

[Trial court]: Proceed.

....

[Trial court]: Hang on. Mr. Elgohary, let me just state that the basis

for my ruling is that I don’t—I don’t—based upon the types of records

that are involved here and the types of cases and the claims that have

been made, there’s no unfair prejudice or surprise.

Rule 193.6 of the Texas Rules of Civil Procedure provides:

(a) Exclusion of Evidence and Exceptions. A party who fails to make,

amend, or supplement a discovery response in a timely manner

may not introduce in evidence the material or information that was

not timely disclosed, or offer the testimony of a witness (other than

a named party, who was not timely identified, unless the court

finds that:

(1) there was good cause for the failure to timely make, amend

or supplement the discovery response; or

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(2) the failure to timely make, amend or supplement the

discovery response will not unfairly surprise or unfairly

prejudice the other parties.

(b) Burden of Establishing Exception. The burden of establishing

good cause or the lack of unfair surprise or unfair prejudice is on

the party seeking to introduce the evidence or call the witness. A

finding of good case or the lack of unfair prejudice must be

supported by the record.

(c) Continuance. Even if the party seeking to introduce the evidence

or call the witness fails to carry the burden under paragraph (b), the

court may grant a continuance or temporarily postpone the trial to

allow a response to be made amended, or supplemented, and to

allow opposing parties to conduct discovery regarding any new

information presented by that response.

TEX. R. CIV. P. 193.6. Rule 193.6’s exclusion provision is automatic unless one of

the exceptions applies. See Fort Brown Villas III Condo. Ass’n v. Gillenwater, 285

S.W.3d 879, 881 (Tex. 2009).

Here, the trial court found that the second exception applied, i.e., that

Elgohary was not unfairly prejudiced or surprised by the exhibit containing the fee

statements. Indeed, Elgohary does not argue how he was prejudiced, other than a

conclusory statement in his brief that it prevented him “from making any

reasonable cross examination of McLaurin’s testimony regarding the

reasonableness of his fees.” And, the record supports the trial court’s conclusion

that Elgohary was not prejudiced. Contrary to his assertion that “this was one of

the things I asked for in discovery that was quashed,” the record shows that the

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trial court ordered the Association to “produce in response for Elgohary’s Resquest

for Production No. 6 copies of invoices for attorney’s fees incurred in this

lawsuit[.]” The Association’s counsel stated on the record that he gave Elgohary

the fee statements “along with all of [the] trial exhibits pursuant to the Court’s trial

preparation order.” Elgohary does not make any argument about how the time he

had to review the invoices was insufficient or how he would have prepared

differently if he had more time. As such, he has not shown how the trial court’s

ruling was an abuse of discretion.

Reduction of Attorney’s Fees Awarded

At the conclusion of the bench trial when the judgment of the court was

announced, the trial court stated:

Now, I’m going to arbitrarily reduce the award for attorney’s fees in

this case to $20,000. If you’re unhappy with that reduction, you can

certainly take that up on appeal. If there’s appeal of this matter, you

can certainly take up my completely arbitrary reduction from your

$42,000 request, which is probably and, in fact, I do find is

completely reasonable and necessary attorney’s fees, but I’m going to

arbitrarily strike it down to $20,000.

In its sole issue on appeal, the Association contends the trial court abused its

discretion in reducing the attorney’s fees below that which was reasonable and

necessary because it admitted that the reduction was made “arbitrarily.”

In a declaratory judgment action a trial court may award reasonable and

necessary attorney’s fees that are equitable and just. Ridge Oil Co., Inc. v. Guinn

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Invs., Inc., 148 S.W.3d 143, 161 (Tex. 2004). The reasonable and necessary

requirements are questions of fact to be determined by the factfinder, but the

equitable and just requirements are questions of law for the trial court to decide.

Id. (citing Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998)). Unreasonable fees

can never be awarded, even if the trial court believes them to be just, but the court

may conclude that it is not equitable or just to award even reasonable and

necessary fees. Id. at 161–62. “Section 37.009’s ‘as are equitable and just’

language cannot reasonably be construed to mean anything other than the extent to

which such fees are equitable and just and, thus, authorizes an award of attorney’s

fees less than the amount found by [the factfinder] to be reasonable and

necessary.” Id. at 162. The amount of reasonable and necessary attorney’s fees

does not dictate their availability under the declaratory judgment act; the trial court

must decide whether it would be just and equitable to award them. Id. at 163. We

review a decision to reduce an attorney’s fee award below what is reasonable and

just for an abuse of discretion. Id. If the judge’s decision is not arbitrary or

unreasonable, it does not abuse its discretion. Id.

Here, nothing other than the trial court’s off-the-cuff statement that the

reduction was done “arbitrarily,” indicates that the trial court abused its discretion

in determining whether the fees were “equitable and just.” Contrary to its oral

statement, the trial court in its order recited that the fees it awarded were

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“reasonable and necessary.” Whether it is “equitable and just” to award attorney’s

fees depends not on direct proof, but on the concept of fairness, in light of all the

circumstances of the case. Approach Res. I, L.P. v. Clayton, 360 S.W.3d 632, 639

(Tex. App.—El Paso 2012, no pet.) (citing Ridge Oil, 148 S.W.3d at 162.) If the

trial court acts according to principles of fairness, it does not act arbitrarily.

Chambers v. First United Bank & Trust Co., No. 02-11-00047-CV, 2012 WL

1556091, at *11 (Tex. App.—Fort Worth May 3, 2012, no pet.) (mem. op.) (citing

Ridge Oil, 148 S.W.3d at 162)). The trial court heard testimony, exhibits, and the

cross-examination contesting an award of attorney’s fees. The trial court was also

very aware of the nature of the case, and that the issue regarding the declaratory

judgment involved a fairly straight-forward interpretation of the Association’s

governing documents. Because it is clear that the trial court reduced the attorney’s

fees based on principles of fairness, it did not act arbitrarily, despite its statement

to the contrary.

We overrule both Elgohary’s fifth issue on appeal and the Association’s first

issue on appeal.

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CONCLUSION

We affirm the trial court’s judgment.

Sherry Radack

Chief Justice

Panel consists of Chief Justice Radack and Justices Bland and Huddle.

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