Douglas B. Moseley v. Sherrie Arnold

Citation: Not availableDocket: 06-15-00031-CV

Court: Court of Appeals of Texas; November 3, 2015; Texas; State Appellate Court

Original Court Document: View Document

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Sherrie Arnold (Appellee) files her brief in response to Douglas B. Moseley (Appellant) regarding the appeal from the 71st District Court of Harrison County, Texas. Appellee seeks oral argument contingent upon Appellant's request for it being granted. The brief outlines critical issues, including the trial court's correct entry of final judgments favoring Appellee based on prior summary judgment orders, Appellee's standing to enforce a restrictive covenant benefiting her, and the assertion that the doctrine of Changed Circumstances does not apply as Appellant failed to present evidence supporting it. The document also includes a detailed index of authorities, a summary of the argument, and a prayer for relief, emphasizing the Appellee's right to uphold the restrictive covenant and the failure of Appellant’s breach of contract claims.

On July 31, 1985, Appellant entered a Contract of Sale with Robert T. Gorman to sell five acres of land and an operational truck stop in Harrison County, Texas. Subsequently, Appellant conveyed this five-acre tract to the Gormans on September 16, 1985. A key term of the contract included a Restrictive Covenant on a separate 6.379-acre tract across the highway, prohibiting Appellant and his successors from using the 6.3 Acres as a truck or fuel stop. This restriction was intended to protect the value of the five acres sold to the Gormans and was designed to run with the land without a specified duration.

Despite initially agreeing to this covenant and receiving $971,500 for the sale, Appellant now claims the covenant is invalid, motivated by a new opportunity for significant compensation for the 6.3 Acres. There is a consensus that Appellee owns the fee title to the five acres, thereby holding the right to enforce the Restrictive Covenant under Texas law.

Appellee's ability to enforce this restriction is supported by the absence of changed circumstances that would negate its benefits. Appellant's arguments regarding waiver, abandonment, and alleged breach of contract are deemed irrelevant, as no breach of contract claims are properly before the court. Additionally, any breach of the right of first refusal is barred by the Statute of Limitations, since it was a personal and unrecorded covenant, rendering it void concerning Appellee.

The appellate court must uphold the December Summary Judgment based on any grounds asserted by the Appellee that are supported by evidence and pleadings, especially when the trial court does not specify the grounds for its decision. The Appellant is required to challenge all grounds presented in the summary judgment motion as erroneous. The Restrictive Covenant in question serves to prohibit the development of a fuel or truck stop on a 6.3-acre tract, benefiting a neighboring 5-acre tract owned by the Gormans and their successors, including the Appellee. The Appellant argues that the covenant terminated due to its lack of assignment and asserts that it should not apply post-sale of the 5 acres. However, it is established that the covenant runs with the land, intended to protect the value and desirability of the benefitted property. The language of the covenant explicitly binds all parties with interest in the 6.3-acre tract. The Appellee, having been recognized as a successor in interest, is entitled to enforce the covenant. The Appellee reserves the right to further brief the issue of the covenant's applicability if necessary.

In Scaling v. Sutton and various other cases, Texas law establishes that a restrictive covenant is intended to protect the value and desirability of a specified property—in this instance, the "5 Acres." The owner of the 5 Acres, as well as their successors, are beneficiaries entitled to enforce the restrictive covenant, which prohibits the use of adjacent "6.3 Acres" for a truck stop and fuel station. The covenant was a negotiated and recorded agreement, with consideration provided, indicating that the restriction was placed on the 6.3 Acres in favor of the 5 Acres. The Appellee, having succeeded the Gormans' interest in the 5 Acres, is recognized as an interested property owner and is thus entitled to enforce the covenant. The Appellant acknowledged that the covenant is clear and unambiguous regarding its beneficiaries, which include successors to the Gormans' interest. The Appellant's argument that "successor" only refers to a party that holds the restrictive covenant itself is dismissed, as the covenant explicitly indicates that it was established as part of the sale of the 5 Acres. The terms of the Warranty Deed, which include all rights and appurtenances related to the 5 Acres, further support the Appellee's right to enforce the restrictive covenant. The intent of the parties was to restrict the 6.3 Acres for the benefit of the 5 Acres, and this intent is reflected in the clear language of the Restrictive Covenant and the associated Warranty Deed.

The Restrictive Covenant in question effectively prohibits the Appellant and his successors from constructing a truck stop on the designated 6.3 Acres. When the Appellant attempted to sell this property for that purpose, the title company identified the Restrictive Covenant, necessitating its release for the sale to proceed. The Appellant's claim that the Deed Restriction must be conveyed is incorrect and could disrupt the established framework of restrictive covenants in Texas, which do not require amendments or transfers with each new property owner. Such covenants are intended to limit land use for the benefit of other properties or subdivisions and run with both the restricted and benefitted lands.

Additionally, the doctrine of Changed Circumstances, which allows for the release of restrictive covenants when significant changes render them ineffective, does not apply here. The Appellant argues that such changes must be drastic enough to invalidate the original purpose of the restriction, but it is acknowledged that the 6.3 Acres has not been used in violation of the Restrictive Covenant. The Appellant seeks to sell the land for a use that violates the restriction, while evidence shows that no truck stop has operated on the property since its sale to Gorman. The Appellant's assertion that an unrelated incident involving a truck stop affects the Appellee's benefits from the Restrictive Covenant is irrelevant.

Appellant argues in the Motion for Partial Summary Judgment that certain events constitute changed circumstances making a restriction on the property unenforceable. These events include: foreclosure of the property, failure to assign the Restrictive Covenant to subsequent purchasers, a fire at the truck stop, the non-rebuilding of the truck stop, and the demolition of remaining structures. However, these circumstances do not meet legal criteria, which require that changes in the area must significantly hinder the benefits intended for the property owner. The law states that unless changes are so radical that they negate the benefit of the restriction, it remains enforceable. 

The court finds that the appellant’s claims do not inhibit the potential for the 5 Acres to be used as a truck stop, as the property is vacant and there are no restrictions preventing its use for that purpose. Appellee benefits from the restriction, as it ensures no competition directly across the street, and the value of property rights is evident from past sales and offers. The appellant acknowledges that the Restrictive Covenant has provided advantages to the appellee for over 20 years. Therefore, under the established legal standards regarding changed circumstances, the appellant’s argument fails, and the restriction remains enforceable.

Appellant failed to provide evidence of Changed Circumstances necessary to create a material fact issue, as all facts alleged do not demonstrate that the restrictive covenant is of no substantial benefit to Appellee. Consequently, the Court's previous judgment regarding Changed Circumstances should be upheld. Appellee also argues that claims of Waiver and Abandonment, raised by Appellant, do not apply as a matter of law since Appellant has not shown any violations of the restrictive covenant. The Affidavit of Sherrie Arnold confirms that no truck stop or fuel station has been built on the relevant property, negating the possibility of acquiescence to such violations.

Additionally, Appellant's claim regarding a breach of the Contract of Sale is inadequately presented, as it was not explicitly included in the issues raised. Nonetheless, Appellee contends that the Right of First Refusal cited by Appellant was not incorporated into the Warranty Deed related to the property transfer, making it unenforceable against subsequent purchasers who were unaware of it. Texas law specifies that unrecorded property interests are not binding on buyers lacking notice, and the foreclosure and sale of the property did not activate the Right of First Refusal.

Involuntary transfers resulting from a foreclosure sale do not activate a right of first refusal, as established in *Draper v. Gochman*, where the Texas Supreme Court ruled that such rights are not triggered by involuntary sales, like foreclosure. The right of first refusal in question only applies if Gorman, the seller, decides to sell the property. Since Gorman did not make that decision and the foreclosure sale was involuntary, the right was not triggered. Additionally, Appellant had constructive notice of the sale from the recorded deed in 1989, making any claims of harm due to breach invalid after the statute of limitations expired in 1993. The right was a personal covenant between Appellant and Gorman and did not bind successors, meaning any breach must be claimed against Gorman within four years, which has also expired. The right of first refusal was not noted in the Warranty Deed, providing no notification to subsequent purchasers like Appellee. As such, the trial court's judgment favoring Appellee was upheld, confirming Appellee's standing to enforce the restrictive covenant and dismissing Appellant's claims. The document concludes with a request for the affirmation of the trial court's final judgment and related legal fees.