Craig Zgabay and Tammy Zgabay v. NBRC Property Owners Association

ACCEPTED

03-14-00660-CV

4513311

THIRD COURT OF APPEALS

AUSTIN, TEXAS

3/16/2015 2:30:04 PM

JEFFREY D. KYLE

CLERK

Cause No. 03-14-00660-CV

__________________________________________________________________

RECEIVED IN

IN THE COURT OF APPEALS FOR THE THIRD JUDICIAL 3rd COURT

REGIONOF APPEALS

OF

AUSTIN, TEXAS

TEXAS 3/16/2015 2:30:04 PM

JEFFREY D. KYLE

__________________________________________________________________

Clerk

Craig Zgabay and Tammy Zgabay

v.

NBRC Property Owners Association

__________________________________________________________________

AMICUS BRIEF OF THE TEXAS CHAPTERS OF COMMUNITY

ASSOCIATIONS INSTITUTE

__________________________________________________________________

Darryl W. Pruett

Texas State Bar No. 00784795

darryl@weichertlaw.com

George V. Basham, III

Texas State Bar No. 01868000

george@weichertlaw.com

Glenn K. Weichert

State Bar No. 21076500

glenn@weichertlaw.com

The Weichert Law Firm

3821 Juniper Trace, Suite 106

Austin, Texas 78738

(512) 263-2666

(512) 263-2698 - Facsimile

ATTORNEYS FOR AMICI CURIAE

Table of Contents

Table of Contents ...................................................................................................... ii

Index of Authorities ................................................................................................. iii

Identity and Interest of Amicus Curiae ...................................................................... v

Issues Presented ...................................................................................................... vii

Summary of the Argument......................................................................................... 1

Argument.................................................................................................................... 5

I. Short-Term Rentals Are Not A Residential Use ............................................ 5

A. The Proper Interpretation of Restrictive Covenants ................................... 5

B. Transient Rentals Are A Commercial Enterprise....................................... 7

C. The Hotel Occupancy Tax Questionnaire ................................................ 18

II. The Deleterious Effects Of Transient Rentals ............................................... 19

III. Conclusion and Prayer ................................................................................... 21

ii

Index of Authorities

Cases

Allstate Ins. Co. v. Sylvester, No. 07-00360, 2008 U.S.Dist. LEXIS 42386, at **16-

20 (Dist. Hawaii May 21, 2008)……………………………………………… 17

Benard v. Humble,

990 S.W.2d 929, 931 (Tex.App.—Beaumont 1999, pet. denied). ......... 2, 7, 8, 13

Cowling v. Colligan,

312 S.W.2d 943 (Tex. 1958) .................................................................................7

Environmental Processing Sys., L.C. v. FPL Farming Ltd.,

No. 12-0905, 2015 Tex. LEXIS 113, at *9 (Tex. Feb. 6, 2015)..........................10

Four Seahorses, LLC v. Spanish Grant Civic Ass'n, Sections 1 & 2, Inc.,

Nos. 14-04-00638-CV, 14-04-00982-CV, 2005 Tex. App. LEXIS 9081 (Tex.

App.—Houston [14th Dist.] Nov. 3, 2005, pet. denied). .......................................8

Friendswood Dev. Co. v. Smith-Sw. Indus., Inc.,

576 S.W.2d 21, 29 (Tex. 1978). ..........................................................................10

Grain Dealers Mut. Ins. Co. v. McKee,

943 S.W.2d 455 (Tex. 1997) .................................................................................5

Hagemann v. Worth,

782 P.2d 1072 (Wash. Ct. App. 1989)...................................................................7

Hyatt v. Court,

No. 2008-CA-01474-MR, 2009 Ky. App. Unpub. LEXIS 738, at *10-*11 (Ky.

Ct. App. Aug. 28, 2009)........................................................................................17

Mills v. Bartlett,

377 S.W.2d 636 (Tex. 1964) ...........................................................................8, 13

Munson v. Milton,

948 S.W.2d 813 (Tex. App.—San Antonio 1997, pet. denied).............................6

Owens v. Ousey,

241 S.W.3d 124, 129 (Tex. App.—Austin 2007, pet. denied) ..............................5

Pilarcik v. Emmons,

966 S.W.2d 474 (Tex. 1998) .................................................................................5

Quinn v. Harris,

No. 03-98-00117-CV, 1999 Tex.App. LEXIS 1576, at fn. 3 (Tex. App.—Austin

March 11, 1999, pet. denied) (not designated for publication) ..............................6

iii

Reagan National Advertising of Austin, Inc. v. Capital Outdoors, Inc.,

96 S.W.3d 490, 493 fn. 2 (Tex. App.—Austin 2002, vacated w/o ref. to merits

and remanded for settlement) .................................................................................6

Southampton Civic Club v. Couch,

322 S.W.2d 516 (Tex. 1959) ...................................................................... 8, 9, 12

Southampton Civic Club v. Foxworth,

550 S.W.2d 152 (Tex.Civ.App.—Houston [14th Dist.] 1977, writ denied n.r.e.) .9

Southland Royalty Co. v. Humble Oil & Ref. Co.,

249 S.W.2d 914, 916 (Tex. 1952) .......................................................................10

Vonderhaar v. Lakeside Place Homeowners Assoc., Inc.,

No. 2012-CA-002193-MR, 2014 Ky. App. Unpub. LEXIS 637, at *11 (Ky. Ct.

App. Aug. 8, 2014) ...............................................................................................13

Wasson Interests, Ltd. v. City of Jacksonville,

No. 12-13-00262-CV, 2014 Tex. App. LEXIS 7377 (Tex. App.—Tyler July 9,

2014, pet. filed) (mem. op.) ..................................................................................18

Wein v. Jenkins,

No. 03-04-00568-CV, 2005 Tex.App. LEXIS 7477 (Tex. App.—Austin Sept. 9,

2005, no pet.) (mem. op.)............................................... 1, 7, 10, 11, 12, 14, 15, 16

Statutes

TEX. PROP. CODE § 202.002. ..................................................................................1, 5

TEX. PROP. CODE § 202.004 .......................................................................................6

TEX. TAX CODE § 156.001 ...................................................................................3, 15

TEX. TAX CODE § 156.101 ...................................................................................3, 15

Other Authorities

ATTORNEY GENERAL OPINION NO. WW-182 (1960)…..……………………3, 16, 17

MERRIAM-WEBSTER ONLINE DICTIONARY .................................................................8

iv

IDENTITY AND INTEREST OF AMICUS CURIAE

This brief is filed on behalf of the Texas chapters of the Community

Associations Institute (“CAI”), which is an international organization. CAI has

four chapters in Texas—Austin, Dallas/Fort Worth, Greater Houston and San

Antonio. The cost for preparation of this brief is being borne solely by these

chapters. There are more than 5 million people living in the 25,000-30,000

community associations in the State of Texas.1 CAI serves its members by

providing information and education, connecting communities with service

providers, and advocating on behalf of those neighborhoods. CAI helps

communities to protect their property values, preserve the character of the

communities, and meet the expectations of their residents. CAI submits this brief

to address the following central issue: Whether an owner’s transient rental of his or

her residence violates the community’s single-family residential use restrictions.

One of the most important benefits offered to residents by their community

association is the preservation of the characteristics and qualities of the

community. And the most important attribute for the vast majority of communities

is their residential character. Like zoning laws, the restrictive covenants for many

communities contain provisions which attempt to restrict the use of property for

purposes that are believed to be incompatible with the character of the community.

1

http://www.txcaa.org/facts-about-poas

v

Having an owner utilize his or her property for commercial purposes can be

extremely detrimental to the community. Commercial uses can attract customers

and clients to the community, increase traffic and parking on the community’s

roads, and create other nuisance issues such as noise and odors. All these issues

can detract from the residential nature of a community.

Transient rentals can present their own set of additional issues for the

community. Non-resident owners sometimes fail to exercise the same level of care

and concern for their properties as that of resident owners. Transient renters have

little incentive to care for the property or behave neighborly toward homeowners

and resident families. An inattentive owner may lease the property without

discretion, attracting criminals and other unsavory characters to the community,

and potentially endangering the health, safety and welfare of residents.

Without the ability to regulate commercial activity within a community,

community associations are wholly unable to protect the residential character of

the community, which is deleterious to property values. The outcome of this case

critically impacts the interests of the above-described CAI constituents.

vi

ISSUES PRESENTED

I. Transient Rentals Are Not A Residential Use

A. The Proper Interpretation Of Restrictive Covenants

B. Transient Rentals Are A Commercial Enterprise

C. The Hotel Occupancy Tax Questionnaire

II. The Deleterious Effects On Neighborhoods Of Short-Term Rentals

III. Conclusion and Prayer

vii

SUMMARY OF THE ARGUMENT

Restrictive covenants are unambiguous if they can be given a definite or

certain legal meaning. They are only ambiguous if they are susceptible to more

than one reasonable interpretation. The primary concern for a court in interpreting

restrictive covenants is to ascertain and then give effect to the intention of the

parties as expressed in the instrument. By statute, a restrictive covenant must be

liberally construed to give effect to its purposes and intent. TEX. PROP. CODE §

202.002. Given that neither party here contends that the Restrictions are

ambiguous, the Court need not strictly construe the Restrictions.

Transient rentals are a non-residential use of property. Property that is

restricted to single-family residential purposes cannot be used for transient rentals

because: (a) such rentals are a commercial use of the property; and (b) the

transients do not have any intent to remain, and thus their use of the property is not

residential. Business is the antonym or opposite of residential. Engaging in

transient rentals and otherwise operating restricted property as a business in the

nature of a hotel is a prohibited business or commercial use. Wein v. Jenkins, No.

03-04-00568-CV, 2005 Tex. App. LEXIS 7477 (Tex. App.—Austin Sept. 9, 2005,

no pet.) (mem. op.) Using restricted property for weekend rentals is “more aptly

described as temporary, or for retreat purposes, or transient housing, rather than for

1

residential purposes.” Benard v. Humble, 990 S.W.2d 929, 931 (Tex. App.—

Beaumont 1999, pet. denied).

The single-family residential-purposes restriction here restricts the use of the

house, not merely the consanguinity of the renters. The argument that any use of

the house by a single family is per se residential is groundless, as that would mean

any rental of a hotel room for any length of time, even by the hour, would also be

residential.

Appellants’ proposed interpretation should be rejected for numerous reasons.

This Court has never adopted such a strained reading of a single-family residential

restriction. This Court has actually held one individual in contempt for violating a

permanent injunction prohibiting him from operating his transient rental business

when he rented the entire house for a family reunion weekend (and therefore

presumably to a single family). Appellants’ interpretation would allow rentals

with no durational constraints, in direct contradiction to Texas law interpreting a

“residential” use to require physical presence and an intent to remain, which a

transient tenant does not have. Appellants do not offer any principled reason why

their presence or absence from the house while it is rented for transient purposes

makes any difference. The consanguinity of the renters and whether the owner is

present may affect whether the rental violates the “single family” restriction, but

they have no relevance to determining whether the rental is a residential use. The

2

relevant nature of a hotel is not that it might limit rentals to unrelated individuals or

that the owner or manager is off-site. The relevant nature of a hotel is that it is a

place for transient stays.

As a matter of state law, a transient rental of a house means that such house

is a “hotel” for purposes of collecting the hotel occupancy tax. See TEX. TAX

CODE § 156.001 (“In this chapter, ‘hotel’ means a building in which members of

the public obtain sleeping accommodations for consideration. The term includes a

hotel, motel, tourist home, tourist house, tourist court, lodging house, inn, rooming

house, or bed and breakfast . . .”). The hotel occupancy tax is imposed on transient

renters, and is not imposed on renters who rent for at least a 30 day term. See TEX.

TAX CODE § 156.101 (tax is not imposed on “a person who has the right to use or

possess a room in a hotel for at least 30 consecutive days . . .”). These Tax Code

provisions evidence Texas public policy regarding transient rentals—such rentals

are “in the nature of a hotel,” regardless of the consanguinity of the renters.

Moreover, the Texas Attorney General has recognized that transient rental of

property “is an enterprise that is commercial in nature.” Tex. Att’y Gen. Op. No.

WW-821 (1960), at fn. 1. Therefore, when the Restrictions were adopted, the

declarant could not have intended “single family residential purposes” to include

transient rentals of residential property because transient rentals of less than 30

3

days (the rentals subject to the hotel occupancy tax) were considered to be “an

enterprise that is commercial in nature.”

The Hotel Occupancy Tax Questionnaire makes clear that transient rentals

are a business in the nature of a hotel.

Transient rentals have a deleterious effect on neighborhoods. The problems

relate to the transient nature of the occupancy, not to the lack of consanguinity of

the renters. One way of keeping these commercial businesses from infiltrating

single-family residential zones is simply to enforce the restrictive covenants as

written, and find—consistent with Texas law—that transient rentals are a

commercial, or at least non-residential, use.

Many municipal governments have chosen to regulate these transient-rental

businesses. The City of Austin, for example, limits the density of non-owner

occupied transient rentals so as to preserve the residential character of its

neighborhoods.

Transient rentals operate in a defined marketplace for their commercial

services and many times operate outside the rules. Moreover, they undermine

neighborhoods.

4

ARGUMENT

I. Short-Term Rentals Are Not A Residential Use

A. The Proper Interpretation Of Restrictive Covenants

The Declaration of Covenants, Conditions and Restrictions River Chase Unit

Three (“Restrictions”), in the Section entitled “Use Restrictions,” restricts the

Zgabays’ use of their property to “single family residential purposes.” Clerk’s

Record (“CR”) 70. Restrictive covenants are interpreted in accordance with

general rules of contract construction. Pilarcik v. Emmons, 966 S.W.2d 474, 478

(Tex. 1998). Like a contract, covenants are “unambiguous as a matter of law if

[they] can be given a definite or certain legal meaning.” Id. (citing Grain Dealers

Mut. Ins. Co. v. McKee, 943 S.W.2d 455, 458 (Tex. 1997)). Covenants are

ambiguous only if they are susceptible to more than one reasonable interpretation.

Id. The primary concern “is to ascertain and give effect to the true intention of the

parties as expressed in the instrument.” Owens v. Ousey, 241 S.W.3d 124, 129

(Tex. App.—Austin 2007, pet. denied). By statute, a restrictive covenant must be

liberally construed to give effect to its purposes and intent. TEX. PROP. CODE §

202.002. Moreover, an exercise of discretionary authority by a property owners’

association concerning a restrictive covenant is presumed reasonable unless the

court determines by a preponderance of the evidence that the exercise of

5

discretionary authority was arbitrary, capricious, or discriminatory. TEX. PROP.

CODE § 202.004.

Restrictive covenants should therefore be liberally construed to determine

the framers’ intent, and only if there is any ambiguity as to that intent should the

covenant be strictly construed. See Munson v. Milton, 948 S.W.2d 813, 816 (Tex.

App.—San Antonio 1997, pet. denied). This is the standard used by this Court in

interpreting restrictive covenants. Quinn v. Harris, No. 03-98-00117-CV, 1999

Tex. App. LEXIS 1576, at fn. 3 (Tex. App.—Austin March 11, 1999, pet. denied)

(not designated for publication) (“The Fourth Court of Appeals [in Munson] has

employed both [section 202.003(a)’s liberal and the common law’s strict]

standards to review a restrictive covenant, finding that the covenant should be

liberally construed to determine the framers’ intent, and if there is any ambiguity

as to that intent, the covenant should then be strictly construed in favor of the free

and unrestricted use of the premises. We believe the Fourth Court of Appeals has

found the proper balance between the two standards that does not conflict with

precedent or the Texas Property Code.”).2

2

While this Court subsequently held that the statute “does not conflict with the longstanding common-

law rule that if there is ambiguity or doubt as to the drafter’s intent, a covenant is to be strictly construed

against the party seeking to enforce it and in favor of the free and unrestricted use of land”, See Reagan

National Advertising of Austin, Inc. v. Capital Outdoors, Inc., 96 S.W.3d 490, 493 fn. 2 (Tex. App.—

Austin 2002, vacated w/o ref. to merits and remanded for settlement), it cited Munson for that proposition.

Therefore, the currently applicable rule appears to be the same as that articulated by the Munson court and

by the Third Court of Appeals in the Quinn case. That is, restrictive covenants are to be strictly construed

if there is any ambiguity, but in determining whether there is any ambiguity in the first instance the

restrictive covenants are to be liberally construed to give effect to their purposes and intent.

6

Significantly, neither party here contends that the Restrictions are

ambiguous. This Court should affirm the granting of the injunction against the

Zgabays because their short-term rentals are not a single family residential

purpose.

B. Transient Rentals Are A Commercial Enterprise

A residential-use restriction prohibits business or commercial use on the

restricted property. Cowling v. Colligan, 312 S.W.2d 943 (Tex. 1958) (rendering

judgment that covenant restricting use to residence purposes prohibited use of the

tract for business and commercial purposes). “The term business is the antonym of

residential and to provide residence to paying customers is not synonymous with a

residential purpose.” Hagemann v. Worth, 782 P.2d 1072, 1075

(Wash. Ct. App. 1989) (affirming injunction against use of residentially restricted

property as an elder care home). This Court has similarly recognized that engaging

in transient rentals and otherwise operating restricted property as a business in the

nature of a hotel is a prohibited business or commercial use. Wein v. Jenkins, No.

03-04-00568-CV, 2005 Tex.App. LEXIS 7477 (Tex. App.—Austin Sept. 9, 2005,

no pet.) (mem. op.). Moreover, weekend rentals are “more aptly described as

temporary, or for retreat purposes, or transient housing, rather than for residential

purposes.” Benard, 990 S.W.2d at 931-32. Transients never establish a residence

7

because they do not have any intent to remain. Id. at 932 (quoting from and citing

Mills v. Bartlett, 377 S.W.2d 636, 637 (Tex. 1964)).3

“Commercial” means “of or relating to commerce.” MERRIAM-WEBSTER

ONLINE DICTIONARY, http://www.merriam-webster.com/dictionary/commercial

(last visited March 13, 2015). “Commerce” means simply “activities that relate to

the buying and selling of goods and services.” MERRIAM-WEBSTER ONLINE

DICTIONARY, http://www.merriam-webster.com/dictionary/commerce (last visited

March 13, 2015).

In accord with this understanding of the prohibition on commercial uses, the

Texas Supreme Court held more than fifty years ago that residentially-restricted

property could not be used primarily for financial gain. In Southampton Civic

Club v. Couch, 322 S.W.2d 516 (Tex. 1959), the Texas Supreme Court held that if

an owner of residentially restricted property is: (a) operating a rooming or boarding

house on his premises as a business; or (b) is using an establishment on his

premises, separate and apart from his dwelling house, for renting as a source of

financial gain; or (c) is renting space to others in his dwelling house as a separate

housekeeping unit; or (d) is using his dwelling house primarily as a source of

financial gain rather than as a residence for himself and his family and domestic

3

In a subsequent case, the County Court at Law No. 3. Galveston County, Texas, enjoined transient

rentals because the property was restricted to single family residential purposes. Four Seahorses, LLC v.

Spanish Grant Civic Ass'n, Sections 1 & 2, Inc., Nos. 14-04-00638-CV, 14-04-00982-CV, 2005 Tex.

App. LEXIS 9081 (Tex. App.—Houston [14th Dist.] Nov. 3, 2005, pet. denied).

8

servants, that activity should be enjoined. Couch, 322 S.W.2d at 520.4

Significantly, the Texas Supreme Court did not declare that any of these uses were

more violative of the restriction than any other. They were simply equivalent

commercial uses of the property that were prohibited by a single-family residential

use restriction.

The “financial gain” referenced by the Texas Supreme Court need not be

through any formal business entity, nor need it be significant to qualify such use as

a prohibited commercial use. In Southampton Civic Club v. Foxworth, 550 S.W.2d

152 (Tex.Civ.App.—Houston [14th Dist.] 1977, writ denied n.r.e.), the court

enjoined the rental of residentially-restricted property. It rebuffed the defendants’

argument that they were not making any profit on the rentals, holding that “[t]he

fact that the Foxworths used each month’s rental for residential maintenance does

not alter the fact that this income was a source of financial gain.” Foxworth, 550

S.W.2d at 153. The Zgabays do not reside at the property and are using the

property primarily for financial gain. This is and has been a prohibited non-

residential or commercial use under Texas law for more than half a century.

It is important to apply these decisions to the transient rentals at issue.

According to the Texas Supreme Court, it “adhere[s] to prior decisions that have

established rules relating to property rights unless, or until, the Legislature

4

The Court did find that uses that were merely incidental to the owner’s use of the property as a residence

for the owner and his family were allowed. Couch, 322 S.W.2d at 520.

9

modifies those rules.” Environmental Processing Sys., L.C. v. FPL Farming Ltd.,

No. 12-0905, 2015 Tex. LEXIS 113, at *9 (Tex. Feb. 6, 2015). This is because the

“doctrine of stare decisis has been and should be strictly followed by [the Texas

Supreme Court] in cases involving established rules of property rights.”

Friendswood Dev. Co. v. Smith-Sw. Indus., Inc., 576 S.W.2d 21, 29 (Tex. 1978).

This is so, “even though good reasons might be given for a different holding.”

Southland Royalty Co. v. Humble Oil & Ref. Co., 249 S.W.2d 914, 916 (Tex. 1952)

(citations omitted). Thus, the fact that someone has created a new income stream

from selling a particular service (whole-house rentals for transient stays) does not

mean that the single-family residential purposes restriction does not apply to that

new operation.

Moreover, the restriction is clear and unambiguous. In Wein, this Court

affirmed a Travis County district court’s entry of a permanent injunction

prohibiting operation of a bed and breakfast on a lot that was restricted to “single-

family, private residential purposes.” Wein, 2005 Tex.App. LEXIS 7477, at *1-*2.

The court affirmed the trial court’s determination that use of the property for a

“bed & breakfast,” for a “commercial business in the nature of a hotel,” or for a

“venue for parties, business meetings, or retreats” was a business use, and therefore

violated the provision restricting use of the property to “single-family, private

residential purposes.” Wein, 2005 Tex.App. LEXIS 7477, at *7-*8. The court

10

stated that the trial court’s determination was “consistent with both the plain

language and the underlying purpose of the Lot Use Restriction as it existed at the

time the injunction was issued.” Wein, 2005 Tex.App. LEXIS 7477, at *7-*8. In

other words, the term “single-family, private residential purposes” was

unambiguous and prohibited using the property for a “bed & breakfast,” for a

“commercial business in the nature of a hotel,” or for a “venue for parties, business

meetings, or retreats.”

There is no significant difference between the restrictive language in the

Wein case and the present one (“single-family, private residential purposes” versus

“single family residential purposes”). Here, the restriction to “single family

residential purposes” prohibits commercial or business uses, including, but not

limited to, using the property as a “bed & breakfast,” as “a commercial business in

the nature of a hotel,” or as a “venue for parties, business meetings, or retreats.”

The Zgabays contend that the “single family residential purposes” restriction

only prohibits multiple families staying in the same building. The Court should

reject the Zgabays’ interpretation for the following reasons.

First, the Zgabays’ interpretation does not give effect to the term

“residential.” The restriction at issue is not simply and solely a restriction that only

a single family at a time can occupy the house. The use of the house must be

residential, rather than non-residential. The Zgabays’ interpretation is that any use

11

of the house by a single family is per se residential. The Zgabays argue that using

the house for activities such as brushing one’s teeth and sleeping makes the use

residential. If that were the case, any rental of a hotel room for any length of time,

even by the hour, would also be residential. The Zgabays’ interpretation is simply

untenable.

Second, this Court has never adopted such a strained reading of a single-

family residential use restriction. This Court, in an ancillary order in Wein, found

the homeowner to be in contempt of the injunction prohibiting him from operating

his transient rental business when he rented the entire house for a family reunion

weekend. See Contempt Order, attached hereto in the Appendix. According to this

Court’s rationale, renting an entire house for a family reunion (and therefore

presumably solely to members of a single family) constitutes using the property for

a business or commercial, not residential, purpose. This rationale is consistent

with the Texas Supreme Court’s holding in Southampton Civic Club v. Couch, 322

S.W.2d 516 (Tex. 1959). Nothing in this Court’s opinion in Wein nor in its

contempt order suggests that the injunction against Mr. Wein impliedly authorized

transient rentals so long as the rental was to a single family.

Third, the Zgabays’ interpretation would allow rentals with no durational

constraints, in direct contradiction to Texas law interpreting a “residential” use to

require physical presence and an intent to remain—which a transient tenant does

12

not have. Benard, 990 S.W.2d at 932 (quoting from and citing Mills v. Bartlett,

377 S.W.2d 636, 637 (Tex. 1964)). Again, the Zgabays argue that doing things

such as brushing one’s teeth and sleeping, for whatever amount of time,

necessarily means that you are using that location (whether it be a house, a hotel,

or other lodging) for residential purposes. The Zgabays’ argument is simply

wrong. While there may be many things that people can do in a house they rent

only for a weekend getaway, “it is not what the individuals do to occupy their time

while on the property that is forbidden; it is the fact that the property is being held

out for remuneration in much the same manner as a hotel or motel.” Vonderhaar v.

Lakeside Place Homeowners Assoc., Inc., No. 2012-CA-002193-MR, 2014 Ky.

App. Unpub. LEXIS 637, at *11 (Ky. Ct. App. Aug. 8, 2014).5

Fourth, the Zgabays offer no principled reason why their presence or

absence from the house while it is rented for transient purposes makes any

difference. The Zgabays’ position is that the “single family residential purposes”

restriction only applies if the Zgabays are present in the house along with their

renters. The Zgabays concede that the restriction prohibits them from renting

Bedroom A in the house to a student and Bedroom B in the house to another,

unrelated, person. The Zgabays contend, however, that the far more commercially

5

Unpublished opinions of Kentucky appellate courts may be cited, per Kentucky Rule of Civil Procedure

76.28(4)(c), “for consideration by the court if there is no published opinion that would adequately address

the issue before the court.” Ky. R. Civ. P. 76.28(4)(c). A copy of the opinion is attached in the appendix.

.

13

intensive act of moving completely out of the house, not using it as their residence,

and renting the entire house for transient stays for financial gain are somehow not a

commercial use of the property. Whether the use is residential or commercial does

not turn on whether the Zgabays are present during the rental. Their presence or

absence during the rental simply has nothing to do with determining whether the

Zgabays’ transient rentals are single-family residential purposes. Again, nothing in

this Court’s opinion in Wein nor in this Court’s contempt order suggests that the

result in the case depended upon whether Mr. Wein was renting to more than a

single family or whether he was also present at the house along with the renters.

Fifth, the consanguinity of the renters and whether the owner is present may

affect whether the rental violates the “single family” restriction, but they have no

relevance to determining whether the rental is a residential use. The single-family

residential purposes restriction does not allow non-residential or transient rentals,

regardless of whether the tenants are a single family or a group of college buddies,

and regardless of whether the owner stays in the house or is absent. This court has

made clear that operating restricted property as a business in the nature of a hotel

is a prohibited business or commercial use. Wein, 2005 Tex. App. LEXIS 7477.

The relevant nature of a hotel is not that it might limit rentals to unrelated

individuals. There are often times that entire hotels or lodging establishments are

fully rented by a single family (for reunions, weddings, etc.). The relevant nature

14

of a hotel is not that the owner or manager is off-site (there are numerous examples

of hotel owners or managers who also live at the establishment). The relevant

nature of a hotel is that it is a place for transient stays. The fact that a single family

is staying at the hotel does not change the relevant nature of the hotel, because the

consanguinity of the renters does not affect the basic nature of what a hotel is.

In any event, this Court made clear in Wein that a single-family residential

use restriction prohibits not only using the restricted property as an actual hotel,

but operating it as a business “in the nature of a hotel.” Wein, 2005 Tex. App.

LEXIS 7477 (emphasis added). This Court should hold that the Zgabays’ transient

rentals are, at the very least, “in the nature of a hotel” and therefore prohibited by

the restriction limiting use of the property to “single family residential purposes.”

As a matter of state law, a transient rental of a house means that such house

is a “hotel” for purposes of collecting the hotel occupancy tax. See TEX. TAX

CODE § 156.001 (“In this chapter, ‘hotel’ means a building in which members of

the public obtain sleeping accommodations for consideration. The term includes a

hotel, motel, tourist home, tourist house, tourist court, lodging house, inn, rooming

house, or bed and breakfast . . . .”). The hotel occupancy tax is imposed on

transient renters, and is not imposed on renters who rent for at least a 30 day term.

See TEX. TAX CODE § 156.101 (tax is not imposed on “a person who has the right

to use or possess a room in a hotel for at least 30 consecutive days . . . .”). These

15

Tax Code provisions evidence Texas public policy regarding transient rentals—

such rentals are “in the nature of a hotel,” regardless of the consanguinity of the

renters.

Moreover, immediately after passage of the first hotel occupancy tax, the

Texas Attorney General recognized that transient rental of property “is an

enterprise that is commercial in nature.” Tex. Att’y Gen. Op. No. WW-821

(1960), at fn. 1 (courtesy copy attached hereto in the Appendix). That opinion

dealt specifically with the hotel occupancy tax, and was in response to a question

whether the State Parks Board was a “person” required to collect the tax for its

transient cabin rentals. In order to determine whether the State was a “person”

required to collect the tax, Attorney General Will Wilson had to determine the

exact nature of the activity in question (transient rentals). Specifically, Attorney

General Wilson had to determine whether “the sovereign entity involved is acting

not in its sovereign capacity but rather is engaging in commercial and business

transactions such as other persons, natural or artificial, are accustomed to conduct .

. . .” Id. He noted in regard to the transient rentals: “Though the renting of cabins

in this case may, perhaps, be a non-profit activity, or designed to foster the

esthetic, it nevertheless is an enterprise that is commercial in nature.” Id. He

concluded that the State was a “person” and was required to collect the Hotel

Occupancy Tax assessed on its transient renters specifically and precisely because

16

the State was engaging in an enterprise (transient rentals) that was commercial in

nature. Id.; See also Hyatt v. Court, No. 2008-CA-01474-MR, 2009 Ky. App.

Unpub. LEXIS 738, at *10-*11 (Ky. Ct. App. Aug. 28, 2009) (being required to

pay the same taxes as is required of motels and hotels “only emphasizes the

business-related nature” of transient rentals).6

Therefore, when the Restrictions were adopted in 1999, the declarant could

not have intended “single family residential purposes” to include transient rentals

of residential property because transient rentals subject to the hotel occupancy tax

were considered to be “an enterprise that is commercial in nature.”7 See also

Wasson Interests, Ltd. v. City of Jacksonville, No. 12-13-00262-CV, 2014 Tex.

App. LEXIS 7377 (Tex. App.—Tyler July 9, 2014, pet. filed) (mem. op.) (lease

limited use of the property to residential use only; City terminated lease when

lessee engaged in transient rentals).8

6

See fn. 5, supra. A copy of the opinion is attached in the Appendix.

7

One of the largest players in the transient rental industry (what they term the “vacation rental industry”)

concedes that transient rentals are commercial activity. HomeAway, Inc., states in its latest annual report

(10-K, Part I, Item I) that HomeAway, Inc. and its subsidiaries operate “the world’s largest online

marketplace for the vacation rental industry.”

https://www.sec.gov/Archives/edgar/data/1366684/000119312515062554/d846217d10k.htm. Needless

to say, a marketplace presumes commerce. The Zgabays’ transient rentals are a part of that market and

are a commercial, or at least non-residential, use of the property.

8

Transient renting is also typically excluded from coverage under a homeowners policy through the

exclusion of “business pursuits.” Allstate Ins. Co. v. Sylvester, No. 07-00360, 2008 U.S.Dist. LEXIS

42386, at **16-20 (Dist. Hawaii May 21, 2008)(granting summary judgment to insurer that “business

use” exclusion applied when the property was rented by owners to transient renters as part of a vacation

rental business).

17

C. The Hotel Occupancy Tax Questionnaire

The Hotel Occupancy Tax Questionnaire makes clear that transient rentals

are a business in the nature of a hotel. A person seeking to engage in transient

rentals must represent to the State:

a. the person’s “principal type of business”;

b. the person’s “business location name and address”;

c. whether the person’s “business” is located within city limits;

d. the nature of the person’s “business activities for [the] location”; and

e. the “date of the first business operation in the above location that is

subject to hotel occupancy tax.”

Form AP-102, Texas Questionnaire for Hotel Occupancy Tax (attached hereto in

the Appendix). There is simply nowhere on the form for the person engaging in

transient rentals to dispute the State’s characterization of those transactions as

constituting a “business.” And, again, the statute defines such transient rental

house as a “hotel.” The transient-rental business is at least “in the nature of” a

hotel.

The State also requires each person seeking to engage in transient rentals to

classify that transient-rental business activity by stating the North American

Industry Classification System (“NAICS”) number applicable to their transient-

rental business. See Form AP-102, Item 12. The North American Industry

Classification System “is the standard used by Federal statistical agencies in

classifying business establishments for the purpose of collecting, analyzing, and

publishing statistical data related to the U.S. business economy.” UNITED STATES

18

CENSUS BUREAU, http://www.census.gov/eos/www/naics/ (last visited March 13,

2015). Given that the Questionnaire relates solely to transient-rental activities, it

becomes clear that the State of Texas recognizes transient rentals of single-family

residences to be commercial activity that may be classified using the NAICS. The

NAICS number for transient rentals of single-family dwellings is 721199 (“All

Other Traveler Accommodation”). SICCODE.COM,

http://siccode.com/en/naicscodes/721199/all-other-traveler-accommodation (Last

visited March 13, 2015). In contrast, the NAICS number for residential rentals is

531110. SICCODE.COM, http://siccode.com/en/naicscodes/531110/lessors-of-

residential-buildings-and-dwelling#tab-pane-group_naicscode_product-element

(Last visited March 13, 2015).

II. The Deleterious Effects Of Transient Rentals

Transient rentals have a deleterious effect on neighborhoods. Some of the

most egregious examples are homes that are purchased by investors, never lived in

by the investor, and simply rented out to a steady stream of different weekend

transient renters. When Asheville, North Carolina, was looking at regulating

transient rentals, they discovered numerous deleterious effects of such transient

rentals, such as transients’ intensity of activities such as car trips, late-night noise

and light, and trash generation; the fact that transient rentals tend to attract large

numbers of people, either requiring paved yards or creating parking shortages in

19

the area; and potentially leading to escalation in area home prices, which may

encourage speculative investors to purchase properties while creating conditions

that are inhospitable to permanent residents.9 These problems relate to the

transient nature of the occupancy, not to the lack of consanguinity of the renters.

Many municipal governments have chosen to regulate these transient rental

businesses. One example is the City of Austin, Texas. In order to preserve the

residential character of their neighborhoods, the City of Austin limits non-owner

occupied transient rentals such as the Zgabays to no more than 3% of the single-

family, detached residential units within the census tract of the property. CITY OF

AUSTIN CODE § 25-2-791(C)(3).10

One way of keeping these commercial businesses from infiltrating single-

family residential zones is simply to enforce the restrictive covenants as written,

and find, consistent with Texas law, that transient rentals are a commercial, or at

least non-residential, use.

9

http://www.ashevillenc.gov/Portals/0/city-

documents/cityclerk/mayor_and_citycouncil/boards_and_commissions/planning_and_zoning/PAS%20Re

search%20Response.pdf (last visited March 13, 2015).

10

Found at

https://www.municode.com/library/tx/austin/codes/code_of_ordinances?nodeId=TIT25LADE_CH25-

2ZO_SUBCHAPTER_CUSDERE_ART4ADRECEUS_SPCRESHRMREUS_S25-2-791LIRE (last

visited March 16, 2015). Many times, however, government regulation of these commercial businesses

are simply ignored. A simple Google search for “Austin short-term rental ordinance” (without the quotes)

shows the fourth result is “5 Ways to Beat Austin’s Short Term Rental Licensing Ordinance.” That web

page, http://republicofaustin.com/2013/02/19/5-ways-to-beat-austins-short-term-rental-licensing-

ordinance-during-sxsw/ (last visited March 9, 2015), advises transient rental owners to “hide your home”

and not allow the street view of your unlicensed transient rental listing so as to make it harder for the City

of Austin to uncover that illegal activity.

20

III. Conclusion and Prayer

Transient rentals operate in a defined marketplace for their commercial

services and many times operate outside the rules. Moreover, they undermine

neighborhoods. A single family residential purposes use restriction prohibits

transient rentals because such rentals are either commercial activity, which is the

opposite of residential, or because the transient nature of the rentals are more aptly

described as temporary, or for retreat purposes, or transient housing, rather than for

residential purposes. In any event, what the Zgabays are doing is using their

residentially-restricted property primarily for financial gain, which the Texas

Supreme Court has determined violates a residential use restriction. This Court

should confirm the common sense understanding of single family residential

purposes—it prohibits transient rentals. Because transient rentals are not a single

family residential purpose, but are a commercial use in the nature of a hotel, the

trial court’s judgment should be affirmed.

21

Respectfully submitted,

The Weichert Law Firm

3821 Juniper Trace, Suite 106

Austin, Texas 78738

(512) 263-2666

(512) 263-2698 - Facsimile

By: /s/ Darryl W. Pruett

Darryl W. Pruett

Texas State Bar No. 00784795

darryl@weichertlaw.com

George V. Basham, III

Texas State Bar No. 01868000

george@weichertlaw.com

Glenn K. Weichert

State Bar No. 21076500

glenn@weichertlaw.com

ATTORNEYS FOR AMICI CURIAE

CERTIFICATE OF COMPLIANCE WITH WORD LIMIT

I, Darryl W. Pruett, hereby certify that this brief (exclusive of the portions

excepted by rule) contains, according to the computer program used to prepare the

document, 5,109 words.

/s/ Darryl W. Pruett

Darryl W. Pruett

22

CERTIFICATE OF SERVICE

This is to certify that a true and correct copy of Brief of Amici Curiae has

been electronically served on the following counsel for Appellants and Appellee on

this 16th day of March, 2015:

J. Patrick Sutton

1706 W. 10th Street

Austin, Texas 78703

Telephone: (512) 417-5903

Telecopier: (512) 355-4155

ATTORNEY FOR APPELLANTS

Wade C. Crosnoe

Brian D. Hensley

Thompson, Coe, Cousins & Irons, LLP

701 Brazos, Suite 1500

Austin, Texas 78701

Telephone: (512) 708-8200

Telecopier: (512) 708-8777

Tom L. Newton, Jr.

Allen, Stein & Durbin, P.C.

6243 IH-10 West, 7th Floor

P.O. Box 101507

San Antonio, Texas 78201

Telephone: (210) 734-7488

Telecopier: (210) 738-8036

ATTORNEYS FOR APPELLEES

/s/ Darryl W. Pruett

Darryl W. Pruett

23

APPENDIX

TABLE OF CONTENTS FOR APPENDIX

1. Contempt Order in Wein v. Jenkins

2. Vonderhaar v. Lakeside Place Homeowners Assoc., Inc., No. 2012-CA-

002193-MR, 2014 Ky. App. Unpub. LEXIS 637, at *11 (Ky. Ct. App. Aug.

8, 2014)

3. Tex. Att’y Gen. Op. No. WW-821 (1960)

4. Hyatt v. Court, No. 2008-CA-01474-MR, 2009 Ky. App. Unpub. LEXIS

738, at *10-*11 (Ky. Ct. App. Aug. 28, 2009)

5. Form AP-102, Texas Questionnaire for Hotel Occupancy Tax

CONTEMPT ORDER

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-04-00568-CV

Marc Wein, Appellant

v.

Maureen Jenkins and William E. Sherman, Appellees

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 200TH JUDICIAL DISTRICT

NO. GN103548, HONORABLE PATRICK O. KEEL, JUDGE PRESIDING

ORDER

PER CURIAM

Appellees Maureen Jenkins and William E. Sherman sued their neighbor, appellant

Marc Wein, alleging that Wein had trespassed and encroached on their property, building stairs and

a boat dock partially on their land, and was operating out of his home a commercial bed and

breakfast, violating the neighborhood’s restrictions and covenants. In late May 2004, a jury found

largely in favor of appellees. On July 28, 2004, the trial court signed a final judgment awarding

appellees monetary damages and attorney’s fees, ordering Wein to remove the offending structures

from appellees’ property, and permanently enjoining Wein from operating the bed and breakfast,

effective immediately. The trial court’s judgment was clear and unambiguous in its order that Wein

cease operating his commercial business from his home.

On September 2, Wein filed his notice of appeal; appellees received notice of his

appeal on September 7. Also on September 2, appellees filed a motion for contempt in the trial

court, asserting that Wein was violating the injunction and continuing to use his home as a bed and

breakfast. On September 20, the trial court held a hearing on appellees’ motion. At that hearing,

Wein raised the issue of the trial court’s jurisdiction, asserting that the trial court lost jurisdiction

when he filed his notice of appeal. The court conducted an evidentiary hearing, but declined to enter

an order or assess sanctions, leaving that to this Court.

On October 4, appellees filed in this Court a “motion for judgment on plaintiffs’

motion for contempt,” asking that Wein be jailed until he “purged himself” of his contempt. Wein

asserts that (1) the evidence put forth in the trial court’s hearing should be disregarded because the

trial court lacked jurisdiction, (2) he should not be jailed because there was no evidence that he is

currently violating the order, and (3) appellees should not be awarded attorney’s fees because they

did not act with due diligence in filing their motion for contempt and proceeding with the hearing

before the trial court. We held a show-cause hearing on October 27 to address this issue.

The supreme court has stated, “For appealable orders in the nature of an injunction,

in which the validity of the order alleged to have been violated is itself in issue in the appeal, the

appellate court alone is vested with jurisdiction to enforce the injunctive provisions by contempt.”

Schultz v. Fifth Judicial Dist. Court of Appeals at Dallas, 810 S.W.2d 738, 740 (Tex. 1991). In such

a case, this Court “may exercise that jurisdiction by referring to the trial court the fact finding burden

of hearing testimony and taking evidence, but the appellate court where the appeal is pending must

exercise jurisdiction to actually issue the contempt judgment.” Id. at 740-41; see In re Goldblatt,

38 S.W.3d 802, 804 (Tex. App.—Fort Worth 2001, orig. proceeding); Roosth v. Daggett, 869

S.W.2d 634, 636-37 (Tex. App.—Houston [14th Dist.] 1994, orig. proceeding); see also In re

2

Taylor, 39 S.W.3d 406, 410-11 (Tex. App.—Waco 2001, orig. proceeding) (in family law case,

portion of order allegedly violated was not mentioned in direct appeal and therefore trial court

retained jurisdiction to enforce that portion of order by contempt). Unless the injunction is void, its

propriety is not an issue—the only issue is whether the injunction was violated. See Fort Worth

Driving Club v. Fort Worth Fair Ass’n, 121 S.W. 213, 216 (Tex. Civ. App.), rev’d on other grounds,

122 S.W. 254 (Tex. 1909).

Wein urges that this Court must disregard evidence heard by the trial court because

the court lacked jurisdiction over the issue of contempt once Wein filed his notice of appeal.1 Wein

argues that instead we should remand the cause to the trial court to hold a second hearing on the

issue, essentially granting the trial court jurisdiction to hold a specific hearing. We disagree. Wein

acknowledges that we have the authority to refer the cause to the trial court for fact finding, see

1

Wein points to Morrison v. State, 132 S.W.3d 37 (Tex. App.—Houston [14th Dist.] 2004,

pet. ref’d), and Hagens v. State, 979 S.W.2d 788 (Tex. App.—Houston [14th Dist.] 1998, pet. ref’d),

both criminal cases concerning hearings on motions for new trial conducted after the trial courts lost

jurisdiction of the cases. In Hagens, the court stated:

While we may have the authority to reverse a judgment and remand the cause for

ineffective assistance of counsel manifestly appearing in the record at the hearing

on a defendant’s motion for new trial, we have no authority to extend the

deadlines for filing a motion for new trial. Because we have no authority to order

the trial court to conduct a hearing on an out-of-time motion for new trial, we

have no authority to consider the record prepared at such a hearing.

979 S.W.2d at 792 (citation omitted). In Morrison, the court refused to consider evidence brought

forth at a hearing held after the trial court denied the timely filed motion by written order and after

the motion for new trial would have been overruled as a matter of law. 132 S.W.3d at 48. Morrison

does not answer the question raised by Hagens of whether the court could extend the deadline for

the hearing in spite of the order overruling the motion and the running of the time in which the

motion would otherwise have been overruled as a matter of law.

3

Schultz, 810 S.W.2d at 740, and we have the authority to conduct our own evidentiary hearing on

a motion for contempt, although referring a cause to the trial court for fact finding generally is

preferred. In re Werblud, 536 S.W.2d 542, 544-45 (Tex. 1976); In re Reed, 901 S.W.2d 604, 610-11

(Tex. App.—San Antonio 1995, orig. proceeding). Although the trial court held an evidentiary

hearing, it did not take any “action” that would be void for lack of jurisdiction aside from verbally

finding that Wein was in contempt.2 Because we may perform a fact finding on the issue of

contempt, see Werblud, 536 S.W.2d at 544-45, we will make our own finding of contempt based on

this record. Accordingly, we disregard the trial court’s verbal finding of contempt and will consider

the evidence brought forth at the hearing before the trial court. To refer the cause to the trial court

for a second hearing on the same issues, as urged by Wein, would accomplish nothing but a waste

of time and judicial resources.

At the hearing, appellees presented evidence that Wein had continued to operate his

business after the trial court permanently enjoined him from doing so. Appellees presented

information taken from Wein’s website on September 20, 2004, still advertising his bed and

breakfast as a “unique luxury retreat.” The evidence shows that the bed and breakfast had at least

six rooms and provided breakfasts and other amenities and services. Appellees brought forth

evidence that Wein rented the entire house for a family reunion the weekend of August 6 through

August 8, billing the family about $7,000. The man who rented the house for the reunion testified

that Wein told him that the residence “was busy,” and that “some sort of wedding party . . . was

2

The jurisdictional issue appears to have been first raised in Wein’s response to appellees’

motion for contempt, filed on September 20, 2004. The trial court was faced at the time with a

motion for contempt filed before appellees learned that Wein had appealed.

4

coming in after us.” Appellees also introduced portions of Wein’s May deposition, during which

he testified about a wedding that was planned for August 11. The record does not reflect whether

that wedding was actually held at Wein’s bed and breakfast. Disregarding the trial court’s legal

conclusion that Wein had committed contempt, we find and conclude, based on the uncontroverted

evidence,3 that Wein continued to operate his bed and breakfast well after the trial court signed its

order and thus was in contempt of court.

The government code provides a limit of $500 in fines per instance of contempt. Tex.

Gov’t Code Ann. § 21.002(b) (West 2004); In re Long, 984 S.W.2d 623, 625 (Tex. 1999). In

assessing a penalty, we may not divide a single act of contempt into separate acts and assess

punishment for each allegedly separate act. Long, 984 S.W.2d at 625. Nor may we assess attorney’s

fees as sanctions for contempt. Wallace v. Briggs, 348 S.W.2d 523, 525-26 (Tex. 1961); In re

Wieses, 1 S.W.3d 246, 251 (Tex. App.—Corpus Christi 1999, orig. proceeding); Ex parte Dolenz,

893 S.W.2d 677, 680 (Tex. App.—Dallas 1995, orig. proceeding). A person in contempt may be

confined to jail “to vindicate the court’s authority,” Dolenz, 893 S.W.2d at 677, but the term of

imprisonment must be for the lesser of 18 months or end upon compliance with the court order. Tex.

Gov’t Code Ann. § 21.002(h)(2).

3

We note that, at the show-cause hearing before this Court, Wein and his attorney admitted

that Wein had rented the house for the family reunion and stated that the website had been taken

down. At the time of the show-cause hearing before this Court, Wein’s website was still operational,

and on November 8, appellees’ counsel informed the Court that as of November 5, the website was

still operating and soliciting reservations. The website has since been changed to show only a

message that states, “Site Temporarily Unavailable.” These facts alone, admitted by Wein before

this Court, are grounds for holding Wein in contempt.

5

There is no evidence that Wein is still operating his bed and breakfast and therefore

there is no evidence that he is currently in contempt of which he must be “purged.” Thus, we will

not commit Wein to jail, as requested by appellees. See id. Nor may we award attorney’s fees

incurred by appellees in pursuing these contempt proceedings. See Wallace, 348 S.W.2d at 525-26.

We may assess a fine, capped at $500 per instance of contempt. See Long, 984 S.W.2d at 625.

During August, Wein continued to operate his bed and breakfast and rented out the entire house for

at least one full weekend. Leading up to the weekend, Wein corresponded with the would-be guests,

emailing them and telling them how to get directions to the house and providing a gate code to gain

entry to the neighborhood and information about use of the boat dock. Wein continued to solicit

business through his website well into the fall of 2004. In our view, Wein’s actions amount to four

instances of contempt in total—one for each day during which Wein allowed his house to be used

in August as a bed and breakfast in violation of the trial court’s order, and one for his continuing to

solicit bed and breakfast reservations through his website after the court signed its order.

Accordingly, the Court hereby ORDERS, ADJUDGES, and DECREES that Marc

Wein is in contempt of court for violating the trial court’s order of July 28, 2004, by having let out

his home as a commercial bed and breakfast on August 6, 2004.

For this violation, the Court orders that Marc Wein shall be fined $500.00.

The Court further ORDERS, ADJUDGES, and DECREES that Marc Wein is in

contempt of court for violating the trial court’s order of July 28, 2004, by having let out his home

as a commercial bed and breakfast on August 7, 2004.

For this violation, the Court orders that Marc Wein shall be fined $500.00.

6

The Court further ORDERS, ADJUDGES, and DECREES that Marc Wein is in

contempt of court for violating the trial court’s order of July 28, 2004, by having let out his home

as a commercial bed and breakfast on August 8, 2004.

For this violation, the Court orders that Marc Wein shall be fined $500.00.

The Court finally ORDERS, ADJUDGES, and DECREES that Marc Wein is in

contempt of court for violating the trial court’s order of July 28, 2004, by continuing to operate his

website and solicit business for several months after the issuance of the trial court’s order.

For this violation, the Court orders that Marc Wein shall be fined $500.00.

We thus order Wein to pay a fine of two thousand dollars ($2,000) to the Clerk of the

Third Court of Appeals no later than 5:00 p.m. on March 17, 2005. If Wein fails to pay the fine

timely, it shall be collectible in the manner provided by law.

It is further ordered that all costs be adjudged against Marc Wein.

It is ordered on February 15, 2005.

Before Chief Justice Law, Justices B. A. Smith and Pemberton

7

Vonderhaar v. Lakeside Place Homeowners Assoc.,

Inc.

No Shepard’s Signal™

As of: March 12, 2015 8:53 PM EDT

Vonderhaar v. Lakeside Place Homeowners Ass'n

Court of Appeals of Kentucky

August 8, 2014, Rendered

NO. 2012-CA-002193-MR

Reporter

2014 Ky. App. Unpub. LEXIS 637; 2014 WL 3887913

PATRICK VONDERHAAR; CAROLEE VONDERHAAR; Opinion

RONALD ADAMS; AND LISA ADAMS, APPELLANTS v.

LAKESIDE PLACE HOMEOWNERS ASSOCIATION, INC., AFFIRMING

APPELLEE

CAPERTON, JUDGE: The Appellants, Patrick and Carolee

Notice: THIS OPINION IS DESIGNATED "NOT TO BE Vonderhaar and Ronald and Lisa Adams, appeal from the

PUBLISHED." PURSUANT TO THE RULES OF CIVIL October 5, 2012, findings of fact, conclusions of law, and

PROCEDURE PROMULGATED BY THE SUPREME summary judgment/injunction issued by the Russell Circuit

COURT, CR 76.28(4)(C), THIS OPINION IS NOT TO BE Court in favor of Appellee, Lakeside Place Homeowners

PUBLISHED AND SHALL NOT BE CITED OR USED AS Association, Inc. (hereinafter "Lakeside"), based upon the

BINDING PRECEDENT IN ANY OTHER CASE IN ANY finding that Appellants had violated the Declaration of

COURT OF THIS STATE; HOWEVER, UNPUBLISHED Covenants and Restrictions of Lakeside Place in light of the

KENTUCKY APPELLATE DECISIONS, RENDERED fact that they utilized their property for commercial

AFTER JANUARY 1, 2003, MAY BE CITED FOR purposes. Upon review of the record, the arguments of the

CONSIDERATION BY THE COURT IF THERE IS NO parties, and the applicable law, we affirm.

PUBLISHED OPINION THAT WOULD ADEQUATELY

ADDRESS THE ISSUE BEFORE THE COURT. The Appellants, the Adamses and Vonderhaars, are co-

OPINIONS CITED FOR CONSIDERATION BY THE owners in fee of a single family home located in the

COURT SHALL BE SET OUT AS AN UNPUBLISHED Lakeside subdivision, in Russell County, Kentucky.

DECISION IN THE FILED DOCUMENT AND A COPY OF Lakeside Place Homeowners Association is a homeowners

THE ENTIRE DECISION SHALL BE TENDERED ALONG association designated to preserve and protect the interest

WITH THE DOCUMENT TO THE COURT AND ALL of the real property owned by its

PARTIES TO THE ACTION. members [*2] in Lakeside Place subdivision located in

Russell County, Kentucky.

Prior History: [*1] APPEAL FROM RUSSELL CIRCUIT

COURT. HONORABLE VERNON MINIARD, JR., JUDGE. The Declaration of Covenants and Restrictions of Lakeside

ACTION NO. 09-CI-00537. Place was executed on July 20, 1988, by developers

Donald H. Byrom and Larry Kinnett. These restrictions were

Counsel: BRIEF FOR APPELLANTS: Harlan E. Judd, recorded in the Russell County Clerk's Office on January

Bowling Green, Kentucky. 20, 2002. Lakeside instigated litigation to seek injunctive

relief against Appellants, based upon the assertion that they

BRIEF FOR APPELLEE: M. Gail Wilson, Jamestown, were in violation of the Declaration of Covenants and

Kentucky. Restrictions because the Declaration restricted the use of

the land in the subdivision to single family residential

Judges: BEFORE: CAPERTON, COMBS, AND DIXON, purposes only, and there were to be no business,

JUDGES. ALL CONCUR. commercial, trade, or professional uses permitted.

Article VII of the Declaration, entitled Building and Use

Opinion by: CAPERTON

Restrictions, stated as follows:

Page 2 of 5

2014 Ky. App. Unpub. LEXIS 637, *3

disturbance, played loud music, and left trash in the

Section 1. Single Family Residential Use. Each lot roadway, in addition to leaving cars parked in the

(including land and improvements) shall be used roadways, which created problems for traffic movement on

and occupied for single family residential purposes the subdivision roads.

only. No owner or other occupant shall use or

occupy his lot, or permit the same or any part As noted, on October 5, 2012, the Russell Circuit Court

thereof to be used or occupied, for any purpose entered a judgment restricting the Appellants from any

other than as a private single family residence for rental or lease activity on their property. It is from that

the Owner or his tenant and their families. As used judgment that Appellants now appeal to this Court.

specifically, but

As their first basis for appeal, Appellants argue that the

without limitation, the [*3] use of Lots for duplex

trial court erred in determining [*5] that the Declaration

apartments, garage apartments, or other

prevents rentals because it specifies a "tenant" as a

apartment use. No lot shall be used or occupied for

any business, commercial, trade, or other permissible party and provides no specific detail as to

length of time that the property can be rented. Appellants

professional purpose either apart from or in

assert that Article VII of the Declaration plainly states that

connection with the use thereof as a private

residence, whether for profit or not. the use of the property by "tenant" for single family

purposes is acceptable, and notes that in order to preclude

The Appellants originally purchased their first lot in the Appellants' rental activities, the Declaration would have

Lakeside Place, Lot 22, in the early 1990s. At that time, the had to use the term "tenant" to clearly and specifically

Adamses sought an opinion letter from the developer, Don prohibit any "rental or leasing" of the properties subject to

Byrom, granting them the ability to rent their property in the the Declaration. Appellants assert that restrictive covenants

neighborhood on a short-term basis. That letter was written should be strictly construed against those seeking to

by Byrom. After a home was constructed on this lot, the enforce them, and that in this instance the covenant was

Appellants engaged in renting the home on Lot 22 for not specific enough to restrict rental activity of the

several years prior to the purchase of the second lot, Lot properties at issue. Appellants also assert that Kentucky

13. Appellants subsequently purchased Lot 13. should move toward accepting a more modern approach

which favors an unfettered use of land, and urge this Court

Other homeowners in Lakeside became concerned when to find accordingly.

the Appellants built a house on Lot 13 in Lakeside that they

immediately began to use as a short-term rental facility, In conjunction with their argument that the trial court erred

rather than as a single family residence. The Appellants in determining that the Declaration prevents rentals,

advertised the property for rent on various websites, Appellants argue that the trial court erred because it

including for periods of time as short as three nights. "refused to see" that Article VII was subject to

more than one [*6] interpretation and is therefore

In his deposition, Ronald Adams confirmed that the tax ambiguous. Appellants assert that though the court

returns for the [*4] years 2007 and 2008 indicated that the attempted to distinguish a "lease" from a "rental," the

rental property was listed as a "motel." The Appellants' Declaration itself makes no such distinction and is at best

income tax returns were submitted into evidence below and ambiguous on this point. Appellants assert that if ambiguity

indicated the rents received as income as well as on this issue exists, the facts make clear that the drafters of

expenses, including cleaning, maintenance, repairs, the Declaration clearly intended to allow rental

supplies, utilities, insurance, legal and professional fees, arrangements and that no specification was made as to

and depreciation of the property. Additionally, Appellants how long the property could be rented or leased.

paid the required Russell County Tourist and Convention

Commission Transient Room Tax and the Kentucky Sales Further, Appellants argue that the trial court erred in

Use and Transient Room Tax, as is required of motels, determining that Appellants' rental was a "business use," or

that, alternatively, this creates a second ambiguity in the

hotels, and persons renting their property for a short period

of time. Declaration. While the court found that the short-term

rentals of Appellants' property were a "business use,"

Lakeside asserted that Appellants made short-term rentals Appellants argue that merely receiving money for the

to large groups of people who created a noise rented property did not mean that the property was being

utilized for "non-residential," or

Page 3 of 5

2014 Ky. App. Unpub. LEXIS 637, *6

"business use" purposes. Alternatively, Appellants argue we focus solely on interpretation of the Declaration as a

that the Declaration was at best ambivalent on this point. matter of law.1 In so doing, we turn first to applicable

precedent. It is clearly established that when attempting to

In response to the first four arguments made by Appellants, construe ambiguous restrictive covenants the party's

Lakeside argues that the trial court properly determined that intention governs. See Glenmore Distilleries v. Fiorella, 273

the rental of the house located on Lot Ky. 549, 554, 117 S.W.2d 173, 176 (1938). If known, the

13 of Lakeside was [*7] in violation of Article VII of the surrounding circumstances of the development are likewise

Declaration. Lakeside asserts that by virtue of an important consideration when ambiguous language

advertisements on the internet, tax returns indicating that creates a doubt as to what the creators intended to be

the business use for the property was a "motel," and by prohibited. Brandon v. Price, 314 S.W.2d 521, 523 (Ky.

payment of the hotel and motel tax of Russell County, the 1958). Thus, the construction may not be used to defeat the

Appellants could present no proof that they were not obvious intention of the parties though that intention may

engaged in a commercial enterprise in the rental of their not be precisely expressed. Connor v. Clemons, 308 Ky. 9,

home. 213 S.W.2d

438 (1948) [*8] .

In addressing this issue, we note that interpretation of a

restrictive covenant is a matter of law appropriate for de Furthermore, we note that Kentucky has approached

novo review by this Court. Colliver v. Stonewall Equestrian restrictive covenants from the viewpoint that [*10] they are

Estates Ass'n, Inc., 139 S.W.3d 521, 522-23 (Ky. App. to be regarded more as a protection to the property owner

2003). Upon review, we note that there are no factual and the public rather than as a restriction on the use of

disputes between the parties and, accordingly, property, and that the old-time doctrine of strict construction

no longer applies. Highbaugh Enterprises

1 In addressing this issue, we also direct the parties to our previous unpublished opinion in Hyatt v. Court, 2009 Ky. App. Unpub. LEXIS

738, 2009 WL 2633659 (Ky. App. 2009), which we cite pursuant to Kentucky Rules of Civil Procedure 76.28(4), and which we believe

to be directly on point in this matter. In Hyatt, as was the case with the Appellants sub judice, the Hyatts advertised their home on the

internet, and charged a cleaning fee, security deposit, and a charge for Kentucky sales tax.

This Court ultimately found that the Hyatts were using their property as a business, stating:

Merriam-Webster's 2009 Online Dictionary defines commercial as of or relating to commerce, which is defined as the

exchange or buying or selling of commodities on a large scale involving transportation from place to place, and is

synonymous with business. There can be no doubt that the Hyatts define their rental enterprise as a business. The Hyatts

cannot label the rental of their vacation home one thing to the Internal Revenue Service and characterize it to the contrary

to this Court.

The Hyatts urge us to note that the people who rent their property engage in the very same recreational activities as do the

owners or their guests who reside in the dwellings within the Sherwood Shores subdivision. While this

may indeed be the [*9] case, it is not what the tenants do to occupy their time while on the property that is

forbidden, it is the fact that the property is being held out for remuneration in much the same manner as a

hotel or motel that is restricted.

The creators of the subdivision plainly intended to restrain deed-holders from engaging in anything more than recreation

while using their property. Such is the privilege of the creators. That the other property owners seek to enforce the

protections of the restrictive covenants is their right.

What is equally clear is that the Hyatts have gone to a great deal of trouble to treat their vacation property as a business.

The rental agreement, copyrighted web-site, check-in and check-out times, and the supply of various sundries to tenants,

underscore the appropriateness of this commercial classification. Further, the fact that the Hyatts are required to pay the

same taxes as is required of motels and hotels only emphasizes the business-related nature of their endeavor. It is

unmistakable that the Hyatts have violated the restrictive covenant as the trial court found.

Hyatt, 2009 Ky. App. Unpub. LEXIS 738, [WL] at *4.

Page 4 of 5

2014 Ky. App. Unpub. LEXIS 637, *10

Inc. v. Deatrick and James Construction Co., 554 S.W.2d other property owners seek to enforce the protections of the

878, 879 (Ky. App. 1977). restrictive covenants is their right. We are in agreement with

the court below that Appellants have violated the restrictive

Indeed, in 1952, our Supreme Court noted: covenant and, accordingly, we

believe the trial court appropriately granted summary [*12]

[W]e are among the jurisdictions which adhere to judgment.

the concept that such restrictions constitute mutual,

reciprocal, equitable easements of the nature of Having so found, we now turn to the Appellants' fifth basis

servitudes in favor of owners of other lots of a plot for appeal, namely that the trial court erred in ordering the

of which all were once a part; that they constitute Appellants to produce their income tax returns which they

property rights which run with the land so as to assert are confidential, privileged materials. Appellants

entitle beneficiaries or the owners to enforce the assert that they stipulated the fact that they were renting the

restrictions, and if it be inequitable to have property for profit as a single-family rental and that,

injunctive relief, to recover damages. Crutcher v. accordingly, their tax returns were not relevant to any

Moffett, 205 Ky. 444, 266 S.W. 6; Starck v. Foley, material issue in this matter, particularly because there is

209 Ky. 332, 272 S.W. 890, 41 A.L.R. 756; Doll v. no claim for punitive damages.

Moise, 214 Ky. 123, 282 S.W. 763; Bennett v.

Consolidated Realty Co., 226 Ky. 747, 11 S.W.2d In response, Lakeside argues that the trial court properly

910, 61 A.L.R. 453. ordered Appellants to provide their tax returns. Lakeside

asserts that as part of discovery, it had requested income

Ashland-Boyd County City-County Health Dept. v. Riggs, tax returns from Appellants which, when provided, indicated

252 S.W.2d 922, 924-25 (Ky. 1952). that the "business purpose" for the house rental was

designated as "motel" on the Schedule C for tax year 2007,

Having thus expressed the state of the law in the that expenses were deducted, and that the property was

Commonwealth concerning restrictive covenants, we now depreciated. Accordingly, Lakeside argues that the tax

turn to the factual scenario before us. Sub judice, the returns were clearly relevant as to the use of the property.

Appellants have labeled their home as a "motel," for tax We agree.

purposes, have treated it as a business, have advertised it

on various websites, have a rental agreement along with Pursuant to Kentucky Rules of Evidence 401, "relevant

check-in and check-out times, and pay taxes required of evidence" is that which has a tendency to make the

hotels and motels. Upon review of the record, it is clear that existence of any fact that is of consequence to the

the Appellants define determination of the action more [*13] probable or less

their rental enterprise as a [*11] business, and have indeed probable than it would be without the evidence. Sub judice,

stated as much to the Internal Revenue Service. They we are in agreement with Lakeside and the court below that

cannot now characterize it to the contrary to this Court. the designation of the property for tax purposes was

relevant and, accordingly, we decline to reverse on this

While the Appellants argue that the individuals who rent basis.

their property engage in the very same recreational

activities as do the owners or their guests who reside in the As their sixth and final basis for appeal, Appellants argue

dwellings permanently, or as is the case for long-term that the trial court erred in depriving them of a jury trial on

rentals, we do not find the activities of the occupants to be their "waiver" argument. Appellants assert that they had

determinative. Indeed, it is not what the individuals do to rented or leased their two properties in the subdivision for

occupy their time while on the property that is forbidden; it is years without contest from the homeowner's association.

the fact that the property is being held out for remuneration They assert that they asked Attorney Byrom if the property

in much the same manner as a hotel or motel. in the subdivision could be rented and he agreed.

Moreover, Appellants note that Byrom sent them a letter,

Upon review of the record and the testimony of the parties, which has since been misplaced, indicating that the

we believe that the creators of the subdivision did not intend property could be rented. Appellants assert that their

for properties in the subdivision to be testimony as to the contents

utilized as motels or hotels in the manner in which

Appellants are currently utilizing their property. That the

Page 5 of 5

2014 Ky. App. Unpub. LEXIS 637, *13

of this letter was uncontroverted. Accordingly, they argue of substantial value to those entitled to benefit by

that this permission, in conjunction with the length of time its provisions, they are still entitled to enforce it

they had rented the properties without objection, amounted insofar as they were not affected by the principles

to waiver of any right that might otherwise have existed. of estoppel and waiver.

In response to Appellants' argument concerning waiver,

We agree with Lakeside and the court below that there is a

Lakeside argues that the trial court properly held that

significant difference between a long-term rental of a

there [*14] was no waiver of the Declaration. Lakeside

property by one family in contrast to short-term rentals by

asserts that while other homeowners may have rented their

different individuals or families every weekend. While the

property to other parties for long-term periods of time, this

restriction may not have been rigidly enforced with respect

was different than the short-term rentals sub judice and in

to long-term rentals, Lakeside retained the right

no way constituted a waiver of the covenants and to do so with respect to the short-term rentals because [*15]

restrictions contained in the Declaration. Again, we agree.

the continued enjoyment of the subdivision by all

homeowners was an ongoing interest of substantial value.

As our Kentucky Supreme Court previously held in

Accordingly, we affirm.

Hardesty v. Silver, 302 S.W.2d 578, 582 (Ky. 1956):

Wherefore, for the foregoing reasons, we hereby affirm the

Where the restrictive covenant has not been rigidly October 5, 2012, findings of fact, conclusions of law, and

enforced, and where certain structures and uses summary judgment/injunction issued by the Russell Circuit

have been tacitly permitted which are violative of Court granting summary judgment in favor of Appellees, the

the strict terms, but where, in spite of such Honorable Vernon Miniard, Jr., presiding.

relaxation, there still remains something

ALL CONCUR.

Attorney General Opinion WW-821

March 25, 1960

Mr. E. B. Camiade Opinion No. Wk-821

State Parks Board

Austin, Texas Re: Under House Bill 11, Acts

of the 56th Legislature,

Third Called Session, 1959,

is the Texas State Parks

Board required to collect the

Hotel Occupancy Tax on rooms,

cabins and camping shelters

owned and operated by the

Dear Mr. Csmiade: Parks Board.

By your letter dated January 11, 1960, you request an

opinion on four questions relating to the application

of the Hotel Occupancy Tax to rooms, cabins and camping

shelters owned and operated by the State Parks Board.

In describing the subject accomtmdations,you state:

"The revenue derived from the charges

made for the use of said rooms, cabins and

camping shelters is deposited by the employee

of the Texas State Parks Board handling said

rentals In a local bank fund, called a Con-

cession Account. Out of said Concession

Account, the employee pays for all expenses

incurred in operating and maintaining said

rooms, cabins and camping shelters. The

Parks Board authorizes the employee to re-

tain 204%of the money left in the Concession

Account after paying all expenses of opera-

tion and maintenance, as compensation for

his work in handling said rentals. This

compensation Is handled as wages, and is

reported accordingly for social security

and withholding tax purposes by the Texas

State Parks Board. The other 80% of the

money left in the Concession Account IS

deposited in the State Treasury In the State

Parks Fund, and used for operation, maintenance

and repairs to the State Parks of Texas."

Your first question is whether the State Parks Board is

required~to collect the Hotel Occupancy Tax.

Mr. E. B. Camlade, Page 2 Opinion NO. ww-821

The tax in question is imposed upon the occupant (except

"permanent residents") of any building or buildings in

which the public may, for a consideration, obtain sleeping

accomodations where the cost of occupancy of the space

furnished is at the rate of two dollars ($2.00) or more per

See Art. 23.01 (a) Art. 23.02 (a) and Attorney General's

g&ion No. ~-706 (Sept&ber 21 1959). Only hospitals,

sanitaPiums and nursing homes &e excepted from the definition

of "hotels ' Every "person" owning, operating, managing or

controlling a "hotel" is required to collectthe tax and make

remittance to the State. Arts. 23.03 and 23.04. 'Person"

is defined to mean any Individual, company, corporation, or

association owning, operating, managing or controlling any

hotel.

The term "person" as extended to Include "corporation"

may include the State (thereby, obviously, including all State

components or "functioning arms") where such an Intention is

manifest. The fact that a State is, In the generic sense, a

corporation is a proposition having roots In judicial antiquity.

Witness the following statement from Chlsholm, Executor, v.

Geor ia 1 U.S. (Curtis) 17, 36, 2 U.S. (Dali.) 419, 447

Tide

"The word 'corporation', in Its largest

sense, has a more extensive meaning than

people generally are aware of. Any body politic,

sole or aggregate, whether its powers be re-

stricted or transcendent, is In this sense 'a

corporatlon8. The king, accordingly, in England,

is called a corporation, 10 Ce. 29, b. So also,

by a very respectable author (Sheppard, in his

abridgement, (Vol. 431) is the parliament itself.

In this extensive sense, not only each State

singly, but even the United Statesmay without

lmproprletv be ~tezmed 'corporations'. I have,

therefore, in contradistlnctien ko this large

and indefjnite term, used the term 'subordinate

corporations'; meaning to refer to such only (as

alone capable of the slightest application, for

the purpose of the objection) whose creation and

whose powers are limited by law."

The United

_ States Supreme Court haa not departed from the

foregoing Interpretation. See Cotten v';~United States, 11 How.

229, 231-232, 52 U.S. 229 (1850); Ohio v. Helverin 2

360 (1934); Georgia v. Evans, 316 U,S. 159 (1942);%eeg%~oS.

United States v. Cooper Corporation, et al., 312 U.S. 600

(1941); Stanley v. Schwalby, 147 U S 508 (189 ); Helverlng

v. Stockholms Enskilda Bank, 293 U:S: 84 ($9343 ; Far East

MP. E. B. Camiade, Page 3 Opinion NO, ww-821

Conference v, United States, 342 U.S. 570 (1952); Res ublica

v. Sweeps9 1 U.S. Dali. 41 (1779) and Relverl;g v.*

American Tobacco Company, Ltd., 69 F.2d 528 ( .C.A. 2nd

Cir. 1934) ff'd, 293 U S 9 95 In Georgiav. Evans, supra,

the wordinaaof the deflnition'of nerson was. lnsof‘aras pertinent.

identical go the definition in Issue. There the question was -.

whether the State of Georgia was a "person" within the meaning

of the Sherman Anti-Trust Act (26 State. 209, 210) for the

purpose of instituting a civil action for treble damages.

Section 8 of the act defined "person" as "corporations and asso-

ciations existing under or authorized by the laws of any of

the territories, the laws of any State, or the laws of any

foreign country." The Court, speaking through Justice Frankfurter,

pointed out that whether 'person" includes a State or the

United States depends upon its legislative environment, and

that the following may be considered in construing the term:

1 the structure of the Act; (2) its legislative history;

t3 1 the practice under It; (4) past judicial expressions.

Applying these principles, the Court held that the State of

Georgia was a "person" within the foregoing definition.

Other authorities less imcressive t&n the Supreme Court

have held that the State Is a corporation. See Burke v.

Railroad Retirement Board, 165 F.2d 24 (C.C.A., D,C. 1947)

{in which it was held that the Allegheny County, PennsylvanIa,

drphans Court was a person within the meaning of the Rail-

road Retirement Act (50 Stat. 309) because the context and

purpose of thz Act required the terms as extended to Include

'corporation, to incltie a governmen+.albody); Isner v.

Thterstate Commerce Commission, 90 F.Supp. 361 (U.S.D.C S.D.

kich. 1950) in which the Court, relying on T. & P. Ry.'&o.

v. I.C.C., 1 2 U.S. 197; RRD. Labor Board, 258 U.S. 158, and

tah State Building Comamissionv. Great American Indemnity Co.,

-_ , held that the I.C.C. Is a "corporation"):

140 P .2d 763

Indiana State Toll-Bridge Commission v. NSnor, 132 N.E:2d 282

95b) (in which it was held that the Toll-Bridge Commission,

a body politic and corporate, was a corporation); and Indiana

v. worsm, 40 Am.Dec. 378 (holding the State to be a'corporatlon"

and a "person" within the%&eaning of the statute providing‘that

all notes in writing and signed by any "person" are negotiable).

The case of United States v. Coumentaros, 165 F.Supp. 695

(U.S.D.C., Md. 1958) contains an exhaustive review of authorities

on this subject.--It is even pointed out9 in a quote from

Helvering v. Stockholms Enskllda Bank, supra, that Blackstone,

the eminent authority on all matters pertaining ,to law, had

this to say (1 Bl. 123):

"Persons are divided by the~~~law

Into

either natural persons9 or artLflcia1.

MP. E. B. Csmiade, Page 4 Opinion NO. ww-821

Natural persons are such as the God of

nature formed US; artificial aressuch as

are created and devised by human-laws-for

the purposes of society and government,

which are called corporations or bodies

politic." (Emphasis added.)

Based on its lengthy discussion, the Court concluded that the

United States Is a 'person" and "body corporate" within a

Maryland statute providing that every person and body corporate

that has the right to become a plaintiff In any action or

proceeding shall have,,,the

right to become a plaintiff in an

attachment against a non-resident. In so holding, the Court

makes the following statement which Is particularly appropos

to the instant situation:

"By analyzing those decisions holding that

the sovereign 1s a person or body corporate,

it may be found that one or more of the follow-

ing factors are present and It may be con-

cluded that their presence determines the

reasonableness of such a construction of the

statute in question and the manifestation of

legislative intent to include the sovereign.

Generally the sovereign entity involved is'

acting not In Its sovereign capacity but

rather is engaging in commercial and business

transactions such as other persons, natural

or artificial, are accustomed to conduct,

usually in addition, when a statute is construed

~80 as to include the sovereign within Its terms,

no impairment of sovereign powers results

thereby and rights and remedies are given

rather than taken away-"

Analysis of the Hotel Occupancy Tax Act In light of the

foregoing principles makes it clear that the State Is a "person"

required to collect the tax, In line with the reasoning in the

Coumantaros case, the State Parks Board is, In effect, given

a right or remedy (I.e., collection of the tax from the

occupant) In reference to an activity "such as other persons,

natural or artificial, are accustomed to conduct."1 This

position is also fortified by reference to another extrinsic

aid to statutory Interpretation, i.e., "past judicial expression."

(See discussion of Georgia v.,~

Evans, supra.)

1

Though the renting of cabins in this case may, perhaps, be a

non-profit activity, or designed to foster the esthetic, It

nevertheless Is an enterprise that is commercial In nature.

Mr. E. B. Camlade, Page 5 Opinion No. ww-821

It Is specifically noted that by the statute in question

the tax is not imposed on the State itself, rather Instead

the State merely collects the tax from those occupying the

sleeping accomodatlons. Your first question Is answered in

the affirmative.

Conditioned upon an affirmative answer to the first

question, you ask:

"Does the tax apply to a room or cabin

where the cost of occupancy for one person

is less than two dollars ($2.00) per day,

but for two or more persons is more than two

dollars ($2.00) per day?"

The tax is imposed upon the total cost of occupancy of

a rental unit, or space", regardless of the number of people

who pay for or take advantage of the privilege of occupancy.

Consequently, where more than two dollars ($2.00).per day is

charged for the same rental unit, the tax is due.

You next ask whether the tax applies "where group camp

facilities (consisting of dormitory buildings, service buildings

and showers, clothes washing equipment and sanitary facilities,

combination dining hall and kitchen, recreation hall and ad-

ministrative staff cottage) are rented to a group (that is not

exempt under paragraph (c) of Art. 23.02 of said H.B. 11) at

a charge of $35.00 a day for 50 persons,"

Under the facts presented, it must be considered that the

entire "group camp facility" is the rental unit furnished, since

there is no indication that the rental price is divided according

to the number of 'rooms' or "spaces"; nor does there appear to

be any separation of the charge for the buildings used for

sleeping accomodations from charges made for service'buildings"

or "dining" or "recreation" halls. Therefore, It appears that

the tax Is due upon the entire cost of occupancy. (On this

point, attention is directed to Opinion No. w-706, cited

supra, and In particular to Questions and Answers Nos. 1, 2 and

5 therein).

The last question Is whether the tax is to be collected

on screened-in camping shelters where nothing is furnished, "not

even a bed."

As pointed out above, a "hotel" is a building in which the

public may for a consideration, obtain "sleeping accomodations".

The term "sleeping accomodations' infers something more than

a mere overhead covering; it appears that some sort of bed,

cot, bunk, hammock, mattress, or at least a pallet, Is required.

’

m. E. B. Camiade, Page 6 Opinion No. WW-821

A person who receives none of these articles (or a sub-specie

thereof) Is not very well "accomodated" for sleeping. There -

fore, this question is answered in th? negative.

SUMMARY

The Hotel Occupancy Tax is due on the

cost of occupancy of rooms, cabinsf,camping

shelters, and "group camping units owned

by the Texas State Parks Board where the

price charged for such occupancy exceeds

two dollars ($2.00) per day per individual

rental unit. However, the tax is not due

on screened-in camping shelters where

nothing is furnished, "not even a bed."

Yours very truly,

WILL WILSON

Attorney General of Texas

JNP:cm

APPROVED:

~.OPINION COMMITTEE:

W. V. Geppert, Chairman

Richard Wells

Robert A. Rowland

'Ray Loftln

Charles Cabaniss

REVIEWEBFOR THEATTORNEYGENERAL

By: Leonard Passmore

Hyatt v. Court

Positive

As of: March 12, 2015 8:56 PM EDT

Hyatt v. Court

Court of Appeals of Kentucky

August 28, 2009, Rendered

NO. 2008-CA-001474-MR

Reporter

2009 Ky. App. Unpub. LEXIS 738; 2009 WL 2633659

SCOTT HYATT; SUSAN HYATT, APPELLANTS v. IVA Opinion

COURT, APPELLEE

AFFIRMING

Notice: THIS OPINION IS DESIGNATED "NOT TO BE

PUBLISHED." PURSUANT TO THE RULES OF CIVIL KELLER, JUDGE: This is an appeal from an order of the

PROCEDURE PROMULGATED BY THE SUPREME Marshall Circuit Court which enjoined the appellants, Scott

COURT, CR 76.28(4)(C), THIS OPINION IS NOT TO BE and Susan Hyatt, (hereinafter the Hyatts), from renting their

PUBLISHED AND SHALL NOT BE CITED OR USED AS vacation home, located on Kentucky Lake. The court found

BINDING PRECEDENT IN ANY OTHER CASE IN ANY that the Hyatts were in violation of a restrictive covenant

COURT OF THIS STATE; HOWEVER, UNPUBLISHED contained in the deed prohibiting commercial or

KENTUCKY APPELLATE DECISIONS, RENDERED manufacturing activity. In the appeal, the Hyatts argue they

AFTER JANUARY 1, 2003, MAY BE CITED FOR have not violated the restrictive covenant as the rental of

CONSIDERATION BY THE COURT IF THERE IS NO their vacation home does not rise to the level of a

PUBLISHED OPINION THAT WOULD ADEQUATELY commercial purpose. Alternatively, the Hyatts assert that

ADDRESS THE ISSUE BEFORE THE COURT. even if their behavior violates the deed, the character of the

OPINIONS CITED FOR CONSIDERATION BY THE subdivision has so changed that to do equity, the restriction

COURT SHALL BE SET OUT AS AN UNPUBLISHED should be nullified. We disagree with the Hyatt's

DECISION IN THE FILED DOCUMENT AND A COPY OF contentions, and therefore affirm the Marshall Circuit

THE ENTIRE DECISION SHALL BE TENDERED ALONG Court's judgment due to the reasons set forth below.

WITH THE DOCUMENT TO THE COURT AND ALL

PARTIES TO THE ACTION. FACTS

Prior History: [*1] APPEAL FROM MARSHALL CIRCUIT A bench trial was held in June of 2008. As the parties do

COURT. HONORABLE DENNIS R. FOUST, JUDGE. not dispute [*2] the facts found by the court, we will reiterate

ACTION NO. 07-CI-00002. those facts which are pertinent below. In the trial court, the

appellant, Iva Court, and ten others 1 (hereinafter the

Counsel: BRIEF FOR APPELLANTS: Dennis L. Null, Jr., owners), owned homes located in the Sherwood Shores

Mayfield, Kentucky. Subdivision. Citing various complaints against renters of the

Hyatt's home, including blocking access to driveways,

BRIEF FOR APPELLEE: G. Eric Long, Benton, Kentucky. trash, and vulgar language, the owners sought to enforce a

restrictive covenant found in their collective deeds. The

Judges: BEFORE: KELLER, STUMBO, AND relevant portions of the restrictions are set out as follows:

VANMETER, JUDGES. ALL CONCUR.

1. No building shall be erected or maintained on

any lot in Sherwood Shores other than a

Opinion by: KELLER

1 Due to the appellee's failure to name the additional parties in the notice of appeal, the additional persons associated with the case in the trial court are

not per se parties to this appeal, however, we shall refer to them in the plural so as to avoid confusion.

Page 2 of 4

2009 Ky. App. Unpub. LEXIS 738, *3

private residence and a private garage for the sole Lastly, the court found that the subdivision's character had

use of the owner or occupant, except those lots not changed sufficiently to warrant waiver of the restrictive

designated as commercial on the plat. covenant pursuant to Kentucky law. Therefore, the court

enjoined the Hyatts from continuing to rent their property in

2. No part of said premises shall be used for

violation of the restrictions.

commercial or manufacturing purposes, except

those lots designated as commercial on the plat As stated [*5] above, the Hyatts argue to this Court that

map. their behavior in renting their property does not constitute

commercial activity, but that even if it did, the restriction

The court found that the Hyatts had created a

should not be enforced as there has been a change in the

copyrighted [*3] website at www.bestkylakevacation.com

character of the neighborhood such that it is no longer

advertising the rental of their fully-furnished home for up to

possible to accomplish the purpose intended by the

three (3) couples or two (2) families. The rental included the

covenant.

use of their home and private dock for periods of two (2)

nights up to one (1) week. The Hyatt's charged a security STANDARD OF REVIEW

deposit, a cleaning fee, an additional amount for pets, and

included a charge of 10% Kentucky sales tax. Tenants We agree with both parties that interpretation of the

entered into a written rental agreement, which included a restrictive covenant is a question of law appropriate for de

specific check-in and check-out time, a $ 300.00 damage novo review by this Court. Colliver v. Stonewall Equestrian

deposit, and a $ 10.00 per person charge for each Estates Ass'n, Inc., 139 S.W.3d 521, 522-23 (Ky. App.

additional person over the age of ten (10). The Hyatts 2004). Furthermore, as the parties agree that there are no

provided linens, paper products, and other amenities for factual disputes, we will concentrate our evaluation as to

which there were other fees. The form specifically whether the Hyatts were entitled to a judgment in their favor

designated that the "rental is for vacation purposes only." as a matter of law.

In addition to producing a witness who testified that he also ANALYSIS

advertised his Sherwood Shores property for rent, the

Hyatts testified that there were five (5) to six (6) other The Hyatts urge us to look to other jurisdictions for our

properties, possibly in Sherwood Shores, that they believed analysis of this matter, as they believe that there is not a

likewise rented on substantially the same basis as their Kentucky case that resolves the specific question of

own. The court found that the Hyatt's tax returns for 2006 whether short-term rental of property is a "commercial

and 2007 listed the rents paid as purpose." While we believe the cases from Oregon and

income, and deducted as expenses the [*4] cleaning, Virginia cited by the Hyatts are noteworthy, we do not agree

maintenance, repairs, supplies, utilities, insurance, legal that they reflect the state of the law in our

and professional fees, as well as depreciation of the Commonwealth. Therefore, [*6] we look to our precedent,

property. Additionally, the Hyatts paid the required Marshall where the essential rule when attempting to construe

County tourist and convention commission monthly ambiguous restrictive covenants is that the party's intention

transient room tax, and the Kentucky sales use and governs. See Glenmore Distilleries v. Fiorella, 273 Ky. 549,

transient room tax, as is required of motels, hotels, and 554, 117 S.W.2d 173, 176 (1938). If known, the

persons renting their property. surrounding circumstances of the development are likewise

an important consideration when ambiguous language

When analyzing the restrictive covenant, the court found creates a doubt as to what the creators intended to be

that the phrase "commercial or manufacturing purposes" prohibited. Brandon v. Price, 314 S.W.2d 521, 523 (Ky.

was not ambiguous and therefore there was no need to 1958). Thus, the construction may not be used to defeat the

scrutinize it further. The court stated, "[r]enting or leasing a obvious intention of the parties though that intention be not

home on a daily or weekly basis, paying business taxes, precisely expressed. Connor v. Clemons, 308 Ky. 9, 213

and depreciating the asset for income tax purposes are all S.W.2d 438 (1948).

characteristics of a 'commercial purpose.' The court further

found that the fact that other Kentucky has approached restrictive covenants

residents may be renting their property in the same way from the viewpoint that they are to be regarded

that the Hyatts were, did not make the phrase ambiguous.

Page 3 of 4

2009 Ky. App. Unpub. LEXIS 738, *6

more as a protection to the property owner and the when read together raised an ambiguity, the Supreme

public rather than as a restriction on the use of Court reasoned:

property, and that the old-time doctrine of strict

construction no longer applies. Highbaugh When the grantor specifically prohibits the use of

Enterprises Inc. v. Deatrick and James property for a particular purpose, the more

Construction Co., 554 S.W.2d 878, 879 (Ky. App. reasonable construction would be that no other

1977). uses are prohibited. At least an intention to further

extend the limitations is very doubtful. It is at this

Colliver v. Stonewall Equestrian Estates Ass'n, Inc., 139 point that we must apply the rule of strict

S.W.3d 521, 523 (Ky. App. 2003). construction against a restraint on the free use of

land.

Indeed, in 1952, our Supreme Court noted:

Id., 308 Ky. at 12, 213 S.W.2d at 440.

[W]e are among the jurisdictions [*7] which adhere

to the concept that such restrictions constitute Only then, when faced with an ambiguity, did the Supreme

mutual, reciprocal, equitable easements of the Court opine that a church was not a business, and that its

nature of servitudes in favor of owners of other lots erection did not violate the restriction. Such is what we must

of a plot of which all were once a part; that they do in the instant matter; that is, decide if the restriction

constitute property rights which run with the land so and/or its language are ambiguous, define what is

as to entitle beneficiaries or the owners to enforce prohibited, and then decide if the actions

the restrictions, and if it be inequitable to have [*9] of the Hyatts rise to the level of behavior sought to be

injunctive relief, to recover damages. Crutcher v. prohibited.

Moffett, 205 Ky. 444, 266 S.W. 6; Starck v. Foley,

209 Ky. 332, 272 S.W. 890, 41 A.L.R. 756; Doll v. The trial court found that the restriction is unambiguous and

Moise, 214 Ky. 123, 282 S.W. 763; Bennett v. that it clearly sought to prevent any commercial or

Consolidated Realty Co., 226 Ky. 747, 11 S.W.2d manufacturing activity within the subdivision, except where

910, 61 A.L.R. 453. originally authorized. While we agree with the trial court on

this issue, we nevertheless undertake to further define the

Ashland-Boyd County City-County Health Dep't v. Riggs, term commercial as it is ordinarily used in legal documents.

252 S.W.2d 922, 924-25 (Ky. 1952). Black's Law Dictionary, 7th edition, 1999, does not define

commercial, but does use the term within its definition of

In Ashland-Boyd the question presented was whether or business:

not a governmental health clinic for indigents violated a

restriction against the erection of a "'business house of any Business. A commercial enterprise carried on for

kind.'" The Supreme Court sought first to define business profit; a particular occupation or employment

prior to holding that a health clinic is not a business: habitually engaged in for livelihood or gain.

The term 'business' has a broad meaning and BLACK'S LAW DICTIONARY, 7th edition, 1999.

significance and may be used with many different

connotations. It refers generally to a trade or Merriam-Webster's 2009 Online Dictionary defines

occupation or to commercial, industrial commercial as of or relating to commerce, which is defined

and professional [*8] engagements. as the exchange or buying or selling of commodities on a

large scale involving transportation from place to place, and

Id. at 925-26. is synonymous with business. There can be no doubt that

the Hyatts define their rental enterprise as a business. The

In Connor v. Clemons, 308 Ky. 9, 213 S.W.2d 438 (1948), Hyatts cannot label the rental of their vacation home one

the construction of a church was proposed on land where thing to the Internal

the deeds prohibited a "building or structure to be used for Revenue Service and characterize it to the [*10] contrary to

business purposes" and provided that "[n]ot more than one this Court.

structure to be used for residential

purposes shall be erected on any one lot." Id., 308 Ky. at The Hyatts urge us to note that the people who rent their

10, 213 S.W.2d at 439. Holding that the two restrictions property engage in the very same recreational activities

Page 4 of 4

2009 Ky. App. Unpub. LEXIS 738, *10

as do the owners or their guests who reside in the dwellings must be so drastic as to render the original purpose or

within the Sherwood Shores subdivision. While this may intent impossible:

indeed be the case, it is not what the tenants do to occupy

their time while on the property that is forbidden, it is the The fact and circumstances must be examined to

fact that the property is being held out for remuneration in determine whether the change of the character of

much the same manner as a hotel or motel that is the neighborhood is sufficient to vitiate the

restricted. The creators of the subdivision plainly intended restrictions; or, to state the question in other terms,

to restrain deed-holders from engaging in anything more whether the 'scheme of development'

than recreation while using their property. Such is the contemplated by the restrictions has been

privilege of the creators. That the other property owners abandoned sufficiently to operate ipso facto as a

seek to enforce the protections of the restrictive covenants vitiation of the restrictions.

is their right.

Logan v. Logan, 409 S.W.2d 531, 534 (Ky. 1966); see also

What is equally clear is that the Hyatts have gone to a great Goodwin Bros. v. Combs Lumber Co., 275 Ky. 114, 120

deal of trouble to treat their vacation property as a S.W.2d 1024 (1938).

business. The rental agreement, copyrighted web-site, 2

check-in and check-out times, and the supply of various Despite [*12] the other witnesses for the Hyatts, who

sundries to tenants, underscore the appropriateness of this testified that they are also engaged in renting property in

commercial classification. Further, the fact that the Hyatts Sherwood Shores, the trial court did not find evidence of

are required to pay the such an abandonment of purpose as to render the

same taxes as is required of motels [*11] and hotels only restrictions obsolete. We discern no abuse of discretion in

emphasizes the business-related nature of their endeavor. this finding. The neighborhood has not abandoned the

It is unmistakable that the Hyatts have violated the original intention of a purely residential area, which is

restrictive covenant as the trial court found. evident by simply counting the parties involved on either

side of this lawsuit.

Our analysis cannot stop here however; as the Hyatts have

alleged that the neighborhood's character has so changed For the foregoing reasons, we affirm the Marshall Circuit

that to enforce the covenants as written would violate Court's judgment enjoining the appellant's from any further

equity. Kentucky case law simply does not support their commercial activity, including the rental of their home.

argument. Before enforcement is prevented in equity,

ALL CONCUR.

change in the character of a neighborhood intended to be

created by restrictions

2 Presumably the Hyatts are attempting to prevent competition from other businesses by the use of copyright laws.

AP-102

Texas Questionnaire for Hotel Occupancy Tax

GLENN HEGAR TEXAS COMPTROLLER OF PUBLIC ACCOUNTS

GENERAL INSTRUCTIONS

WHO MUST SUBMIT THIS QUESTIONNAIRE – You must submit this questionnaire if you are an individual,

partnership, corporation or organization operating a hotel in Texas.

DEFINITIONS –

• HOTEL: A hotel is a building in which members of the public obtain sleeping accommodations for consideration.

Examples include hotels, motels, bed and breakfasts, rooming houses, skid mounted bunkhouses, tourist

houses, tourist courts, manufactured homes, residency inns, condominiums, cabins and cottages.

• BUSINESS LOCATION: Any location where you provide sleeping accommodations for consideration.

NOTE: If you have been in operation and have not submitted a questionnaire, you will need to file reports and pay

tax, plus applicable penalty and interest for the period of time you have been in business.

FOR ASSISTANCE – If you have any questions about this questionnaire, contact your nearest Texas State Comp-

troller's field office or call 1-800-252-1385.

AMERICANS WITH DISABILITIES ACT – In compliance with the Americans with Disabilities Act, this document

may be requested in alternative formats by calling 1-800-252-5555. Hearing impaired taxpayers may call via

1-800-RELAY-TX.

FEDERAL PRIVACY ACT - Disclosure of your social security number is required and authorized under law,

for the purpose of tax administration and identification of any individual affected by applicable law. 42 U.S.C.

§405(c)(2)(C)(i); Tex. Govt. Code §§403.011 and 403.078. Release of information on this form in response to a

public information request will be governed by the Public Information Act, Chapter 552, Government Code, and

applicable federal law.

If you are hiring one or more employees, please contact the Texas Workforce Commission (TWC) at 512-463-

2699 or your local TWC tax office to determine if you are liable for payroll taxes under the Texas Unemployment

Compensation Act.

Complete this application and mail it to COMPTROLLER OF PUBLIC ACCOUNTS

111 E. 17th Street

Austin, TX 78774-0100

Under Ch. 559, Government Code, you are entitled to review, request and correct information we have on file about

you, with limited exceptions in accordance with Ch. 552, Government Code. To request information for review or

to request error correction, contact us at the address or number listed on this form.

AP-102-1 (Rev.1-15/20)

AP-102-2

(Rev.1-15/20)

Below is a listing of taxes and fees collected by the Comptroller of Public Accounts. If you are responsible for reporting or paying one of the listed

taxes or fees, and you DO NOT HAVE A PERMIT OR AN ACCOUNT WITH US FOR THIS PURPOSE, please obtain the proper application by calling

1-800-252-5555 or by visiting your local Comptroller Enforcement field office.

9-1-1 Emergency Service Fee/Equalization Surcharge - If you are Off-Road, Heavy Duty Diesel Powered Equipment Surcharge - If

a telecommunications utility, a mobile service provider or a business you sell, lease or rent off-road, heavy duty diesel powered equip-

service user that provides local exchange access, equivalent local exchange ment, you must complete Form AP-201. This is in addition to the

access, wireless telecommunications connections or intrastate long-distance sales tax permit. You are required to charge both the sales tax and

service, and you are responsible for collecting emergency communications the surcharge.

charges and/or surcharges, you must complete Form AP-201.

Automotive Oil Sales Fee - If you manufacture and sell automotive oil Hotel Occupancy Tax - If you provide sleeping accommodations to

in Texas; or you import or cause automotive oil to be imported into Texas the public for a cost of $15 or more per day, you must complete Form

for sale, use or consumption; or you sell more than 25,000 gallons of AP-102.

automotive oil annually and you own a warehouse or distribution center

located in Texas, you must complete Form AP-161. International Fuel Tax Agreement (IFTA) - If you operate qualified

Battery Sales Fee - If you sell or offer to sell new or used lead acid bat- motor vehicles that require you to be licensed under the International

teries, you must complete Form AP-160. Fuel Tax Agreement, you must complete Form AP-178.

Cement Production Tax - If you manufacture or produce cement in

Manufactured Housing Sales Tax - If you are a manufacturer of

Texas, or you import cement into Texas and you distribute or sell cement

manufactured homes or industrialized housing engaged in business

in intrastate commerce or use the cement in Texas, you must complete

in Texas, you must complete Form AP-118.

Form AP-171.

Cigarette, Cigar and/or Tobacco Products Tax - If you wholesale, Maquiladora Export Permit - If you are a maquiladora enterprise

distribute, store or make retail sales of cigarettes, cigars and/or tobacco and wish to make tax-free purchases in Texas for export to Mexico,

products, you must complete Form AP-175 or Form AP-193. you must complete Form AP-153, to receive the permit.

Coastal Protection Fee - If you transfer crude oil and condensate from

TAX TYPE(S)

or to vessels at a marine terminal located in Texas, you must complete Motor Vehicle Seller-Financed Sales Tax - If you finance sales of

Form AP-159. motor vehicles and collect Motor Vehicle Sales Tax in periodic pay-

ments, you must complete Form AP-169.

Coin-Operated Machine Tax - If you engage in any business dealing

with coin-operated amusement machines OR engage in business to own

or operate coin-operated amusement machines exclusively on premises Motor Vehicle Gross Rental Tax - If you rent motor vehicles in Texas,

occupied by and in connection with the business, you must complete you must complete Form AP-143.

Form AP-146 or Form AP-147.

Crude Oil and Natural Gas Production Taxes - If you produce and/ Petroleum Products Delivery Fee - If you are required to be licensed

or purchase crude oil and/or natural gas, you must complete Form under Texas Water Code, sec. 26.3574, you must complete Form

AP-134. AP-154.

Direct Payment Permit - If you annually purchase at least $800,000 worth

of taxable items for your own use and not for resale, you must complete Sales and Use Tax - If you engage in business in Texas; AND you

Form AP-101 to qualify for the permit. sell or lease tangible personal property or provide taxable services

in Texas to customers in Texas; and/or you acquire tangible personal

Fireworks Tax - If you collect tax on the retail sale of fireworks, you must property or taxable services from out-of-state suppliers that do not

complete Form AP-201. This is in addition to the sales tax permit. You hold a Texas Sales or Use Tax permit, you must complete Form

are required to charge both the sales tax and the fireworks tax. AP-201.

Franchise Tax - If you are a general partnership or non-Texas entity

without a certificate of authority or certificate of registration, you must Sulphur Production Tax - If you own, control, manage, lease or oper-

complete Form AP-114. ate a sulphur mine, well or shaft, or produce sulphur by any method,

system or manner, you must complete Form AP-171.

Fuels Tax - If you are required to be licensed under Texas Fuels Tax Law for

the type and class permit required, you must complete Form AP-133.

Texas Customs Broker License - If you have been licensed by the

Gross Receipts Tax - If you provide certain services on oil and gas wells United States Customs Service AND want to issue export certifica-

OR are a utility company located in an incorporated city or town having a tions, you must complete Form AP-168.

population of more than 1,000 according to the most recent federal census

and intend to do business in Texas, you must complete Form AP-110.

AP-102-3

(Rev.1-15/20)

Texas Questionnaire for

Hotel Occupancy Tax

• TYPE OR PRINT • Do NOT write in shaded areas. Page 1

SOLE OWNER IDENTIFICATION

1. Name of sole owner (First, middle initial and last name)

2. Social Security Number (SSN) Check here if you DO NOT 3. Taxpayer number for reporting any Texas tax OR Texas identification number if

have a SSN. you now have or have ever had one.

NON-SOLE OWNER IDENTIFICATION --- ALL SOLE OWNERS SKIP TO ITEM 9. ---

4. Business Organization Type

Profit Corporation (CT, CF) General Partnership (PB, PI) Business Trust (TF)

Please submit a copy of the trust

Nonprofit Corporation (CN, CM) Professional Association (AP, AF) Trust (TR) agreement with this application.

Limited Liability Company (CL, CI) Business Association (AB, AC) Real Estate Investment Trust (TH, TI)

Limited Partnership (PL, PF) Joint Venture (PV, PW) Joint Stock Company (ST, SF)

Professional Corporation (CP, CU) Holding Company (HF) Estate (ES)

Other (explain)

5. Legal name of corporation, partnership, limited liability company, association or other legal entity

6. Taxpayer number for reporting any Texas tax OR Texas identification number if you now have or have ever had one. .....

1

7. Federal Employer Identification Number (FEIN) assigned by the Internal Revenue Service .......................................

3

8. Check here if you do not have an FEIN. .....................................................................................................................

9. Mailing address

Street number, P.O. Box, or rural route and box number

BUSINESS INFORMATION

City State/province ZIP code County (or country, if outside the U.S.)

10. Name of person to contact regarding day to day business operations Daytime phone

11. Principal type of business

Agriculture Transportation Retail Trade Real Estate Mining Communications

Finance Services Construction Utilities Insurance Public Administration

Manufacturing Wholesale Trade Other (explain)

12. Primary business activities and type of products or services to be sold NAICS

If you are a SOLE OWNER, skip to Item 18.

File number Month Day Year

13. If the business is a Texas profit corporation, nonprofit corporation, professional corporation or

limited liability company, enter the file number issued by the Texas Secretary of State and date....

14. If the business is a non-Texas profit corporation, nonprofit corporation, professional corporation or limited liability company, enter the state or country

of incorporation, charter number and date, and if the corporation has a Texas Certificate of Authority, enter the file number and date.

State/country of inc. Charter number Month Day Year Texas Certificate of Authority number Month Day Year

15. If the business is a corporation, has the business been involved in a merger within the last seven years? ..... YES NO If "YES," attach a

detailed explanation.

State Number

TAXPAYER INFORMATION

16. If the business is a limited partnership or registered limited liability

partnership, enter the home state and registered identification number. ............................................................

17. List general partners, principal members/officers, managing directors or managers (Attach additional sheets, if necessary.)

Name Title Phone (Area code and number)

Home address City State ZIP code

SSN or FEIN County (or country, if outside the U.S.)

Percent of

ownership _______ %

Position held Partner Officer Director Corporate Stockholder Record keeper

Name Title Phone (Area code and number)

Home address City State ZIP code

SSN or FEIN County (or country, if outside the U.S.)

Percent of

ownership _______ %

Position held Partner Officer Director Corporate Stockholder Record keeper

AP-102-4

(Rev.1-15/20)

Texas Questionnaire for

Hotel Occupancy Tax

• TYPE OR PRINT • Do NOT write in shaded areas. Page 2

18. Legal name of entity (Same as Item 1 OR Item 5)

19. Business location name and address (Attach additional sheets for each additional location.)

Business location name

Street and number (Do not use P.O. Box or rural route.) City State ZIP code County

Physical location (If business location address is a rural route and box number, provide directions – e.g., “2 miles west of Austin on FM 2222.”) Business location phone

BUSINESS LOCATION

20. Is your business located inside the city limits? ............................................................... YES NO

21. Brief description of your business activities for this location.

22. Enter the date of the first business operation in the above location that is subject to hotel occupancy tax,

or the date you plan to start such business operation (Date cannot be more than 90 days in the future.) ......................

23. Enter the number of rentable rooms .........................................................................................................................................................

24. Do you own or rent/lease property at this location? ........................................................................................ OWN RENT/LEASE

If you rent or lease the real property, enter the property owner's name and address.

Property owner's name

Property owner's address

If you purchased an existing business or business assets, complete Items 25-28.

Previous owner’s taxpayer

PREVIOUS OWNER INFORMATION

25. Previous owner’s trade name. number, if available

26. Previous owner’s legal name, address, and phone number, if available.

Name Phone (Area code and number)

Address (Street and number) City State ZIP code

27. Check each of the following items you purchased.

Inventory Corporate stock Equipment Real estate Other assets

28. Purchase price of this business or assets and the date of purchase.

Month Day Year

Purchase price $ Date of purchase

29. The sole owner, all general partners, corporation or organization president, vice-president, secretary or treasurer, Date of signature(s)

Month Day Year

managing director, or an authorized representative must sign. A representative must submit a written power of attorney.

(Attach additional sheets if necessary.)

I (We) declare that the information in this document and any attachments is true and correct to the best of my (our) knowledge and belief.

SIGNATURES

Type or print name and title of sole owner, partner, or officer Driver license number/state Sole owner, partner, or officer

Type or print name and title of partner or officer Driver license number/state Partner or officer

Type or print name and title of partner or officer Driver license number/state Partner or officer

FOR COMPTROLLER USE ONLY USERID Date