CASE LAW UPDATE 2

By: Marc D. Markel and Brady E. Ortego
Roberts Markel Weinberg P.C.
Houston • Dallas • Austin • San Antonio • Sugar Land

A few recent judicial decisions relating to community associations have both solidified longstanding principles of covenant interpretation and changed the landscape of community associations.  The principles that are affirmed provide great case law for use in courts that may be reluctant to rule in favor of a community association.  With the rulings that have created change, community associations may be left with more questions than answers. 

Following is the second in a series CMA will post of Texas HOA case law summaries.  In rendering opinions to community associations, covenants and case law must be read together to formulate the best strategy for action.  With counsel, management, and directors working closely in this regard, challenges may be avoided and the resources of the community association are better protected.  Please consult your HOA’s attorney for legal matters pertaining specifically to your association.

Hollis v. Gallagher
2012 WL 3793288, Tex.App.-Austin, August 28, 2012

Hollis involved a subdivision of 45 lots with two streets with one side facing Lake Travis.  The covenants of the association required consent of the two initial developers to construct two story homes.  Both initial developers were deceased.  Hollis sued the Gallaghers for construction of a two story home absent approval.  Judge Gisela Triana-Doyal, of the 353rd District Court in Travis County, ruled in favor of the Gallaghers based on impossibility of performance due to the death of the developers.
 
In a memorandum opinion, the appellate court upheld Judge Triana-Doyal’s ruling.  Hollis argued that after the death of the initial developers, the covenants prohibited two story homes in perpetuity.  The intent of the covenant was to protect views and values on the non-lakeside lots; two story homes were inconsistent with this intent.  The Gallaghers argued to the appellate court that to enforce the covenant would amount to a complete ban on two story homes.  Additionally, the Gallaghers pointed out to the court that the covenants made no mention of view and/or protection of same.
 
The appellate court narrowed the issue to whether the Gallaghers conclusively established the affirmative defense of impossibility of performance as to the covenant related to developer approval of two story homes.

Depending on the circumstances that a particular community association is facing, impossibility of performance of a particular covenant could be either a positive or a negative for a community association.  By way of example, if the ratification of an amendment was dependent on an action that was impossible to perform, Hollis may be relied upon to effectuate said amendment. 

Marc D. Markel

Brady E. Ortego

For over thirty years Roberts Markel Weinberg PC has represented developers, builders, community associations, and non-profit corporations throughout the State of Texas. We have an established reputation as an industry leader in the field of community association law.

Our firm enjoys the distinction of being AV rated and being listed in the roster of Preeminent Law Firms by Martindale-Hubbell.