      TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN


                                      NO. 03-14-00660-CV



                        Craig Zgabay and Tammy Zgabay, Appellants

                                                 v.

                        NBRC Property Owners Association, Appellee


     FROM THE DISTRICT COURT OF COMAL COUNTY, 433RD JUDICIAL DISTRICT
          NO. C2014-0501C, HONORABLE DIB WALDRIP, JUDGE PRESIDING



                            MEMORANDUM OPINION


               Appellants Craig and Tammy Zgabay appeal from the trial court’s order granting

summary judgment in favor of appellee NBRC Property Owners Association, the homeowners

association in the River Chase subdivision, and denying their motion for summary judgment.

Because the restrictive covenants on which the Association relies allow for the leasing of a home but

do not impose any term of duration, we reverse the trial court’s order in favor of the Association,

render judgment in favor of the Zgabays, and remand the cause for consideration of attorney’s fees.


                              Factual and Procedural Background

               Properties in the subdivision are subject to a Declaration of Covenants, Conditions,

and Restrictions (the “restrictive covenants”), which provide that properties in the subdivision are

only to be used “for single family residential purposes.” The Zgabays bought land in the subdivision

in 2000, built a house on it, and lived there for a number of years. In 2014, they began to rent the
house when they were not in occupancy, for terms of fewer than thirty days. They later moved to

a different home, retaining their house in the subdivision as a rental property. At the time of trial,

the house was rented under a one-year lease, and the Zgabays intend to continue advertising and

renting the house for varying lengths of time, paying hotel and lodging taxes when the house is

rented for fewer than thirty days. In 2014, the Association demanded that the Zgabays cease short-

term and vacation rentals and online advertising of their property, asserting that such use was in

violation of the restrictive covenants.

               The Zgabays responded by filing suit seeking declaratory relief that the restrictive

covenants do not prohibit short-term rentals or restrict rentals based on duration and that renting the

house to an individual or single family for residential use is considered a “single family residential

purpose” that is allowed under the restrictive covenants . The Association counterclaimed, seeking

injunctive relief and statutory damages under the property code.1 Both the Zgabays and the

Association moved for traditional summary judgment, and the trial court granted summary judgment

in favor of the Association, denying the Zgabays’ motion.


                                          Standard of Review

               We review a trial court’s ruling on a motion for summary judgment de novo. Joe v.

Two Thirty Nine Joint Venture, 145 S.W.3d 150, 156 (Tex. 2004). Summary judgment is proper

only if the movant establishes that there is no genuine issue as to any material fact and that it is

entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Joe, 145 S.W.3d at 156. When, as


       1
        A trial court “may assess civil damages for the violation of a restrictive covenant in an
amount not to exceed $200 for each day of the violation.” Tex. Prop. Code § 202.004(c).

                                                  2
here, both parties seek summary judgment and the court grants one and denies the other, we render

the judgment that the trial court should have rendered. City of Garland v. Dallas Morning News,

22 S.W.3d 351, 356 (Tex. 2000).

               When interpreting restrictive covenants, we apply the general rules of contract

construction. Pilarcik v. Emmons, 966 S.W.2d 474, 478 (Tex. 1998). We construe the covenants

“as a whole in light of the circumstances at the time the parties entered into the agreement, giving

effect to every sentence, clause, and word of a covenant, and avoiding constructions that would

render parts of the covenant superfluous or inoperative.” Sharp v. deVarga, No. 03-05-00550-CV,

2010 WL 45871, at *3 (Tex. App.—Austin Jan. 8, 2010, pet. denied) (mem. op.) (citing Pilarcik,

966 S.W.2d at 478; Owens v. Ousey, 241 S.W.3d 124, 129 (Tex. App.—Austin 2007, pet. denied)).

In construing restrictive covenants, we seek to give effect to the parties’ true intention, Owens,

241 S.W.3d at 129, and our focus is on “their objective intent, as it is reflected in the written

contract,” Sharp, 2010 WL 45871, at *3 (citing Tien Tao Ass’n v. Kingsbridge Park Cmty. Ass’n,

953 S.W.2d 525, 528 (Tex. App.—Houston [1st Dist.] 1997, no pet.); Travis Heights Improvement

Ass’n v. Small, 662 S.W.2d 406, 410 (Tex. App.—Austin 1983, no writ)).

               If a restrictive covenant can be given definite legal meaning, it is unambiguous and

should be construed liberally to effectuate its intent.2 See Tex. Prop. Code § 202.003; Jennings v.

Bindseil, 258 S.W.3d 190, 195 (Tex. App.—Austin 2008, no pet.). However, when a restrictive




       2
          Although neither the Association nor the Zgabays assert that the covenants are ambiguous,
we are not bound by those conclusions. “Whether a contract is ambiguous is a question of law for
the court to decide by looking at the contract as a whole in light of the circumstances present when
the contract was entered.” Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983).

                                                 3
covenant may reasonably be interpreted in more than one way, it is ambiguous, and we will resolve

all doubts in favor of the free and unrestricted use of the property, strictly construing any ambiguity

against the party seeking to enforce the restriction. Wilmoth v. Wilcox, 734 S.W.2d 656, 657 (Tex.

1987); Hicks v. Falcon Wood Prop. Owners Ass’n, No. 03-09-00238-CV, 2010 WL 3271723, at *7

(Tex. App.—Austin Aug. 19, 2010, no pet.) (mem. op.); Sharp, 2010 WL 45871, at *3; Jennings,

258 S.W.3d at 195; Dyegard Land P’ship v. Hoover, 39 S.W.3d 300, 308-09 (Tex. App.—Fort Worth

2001, no pet.); Pebble Beach Prop. Owners’ Ass’n v. Sherer, 2 S.W.3d 283, 288 (Tex. App.—San

Antonio 1999, pet. denied). The party seeking to enforce a restrictive covenant has the burden of

showing that the restriction is valid and enforceable. Sharp, 2010 WL 45871, at *3; Gillebaard v.

Bayview Acres Ass’n, 263 S.W.3d 342, 347 (Tex. App.—Houston [1st Dist.] 2007, pet. denied).


                                             Discussion

               Under the restrictive covenants, the Zgabays’ house may be used “for single family

residential purposes.” The Association asserts that short-term rental of a property is not single

family residential use; the Zgabays assert that rental of the property by an individual or a family,

regardless of the term of the lease, is a single family residential purpose.3




       3
           The trial court, in considering the parties’ motions for summary judgment, determined that
in using the term “residential,” the restrictive covenants meant “to occupy a place over a substantial
period” without explaining exactly what a “substantial period” would be, thus injecting ambiguity
into its ruling.

                                                  4
                The restrictive covenants do not define “single family residential purposes.”4 They

do, however, permit signs advertising a property for sale or rent, subject to specific limitations. This

informs the meaning of “single family residential use” in that we know that leasing of homes was

contemplated by the drafters and is permissible under the covenants. As for whether the covenants

state a minimum permissible duration for the leasing of homes, the covenants do not provide any

minimum term for which a property may be leased but do address the use of a temporary structure

such as a mobile home, a barn, or a garage as a residence, stating that such a structure may never be

used as a residence except for up to six months while the permanent house is under construction.

Therefore, it is clear that the drafters of the covenants considered and knew how to impose a duration

on particular uses or types of structures.

                Looking at the restrictive covenants as a whole, we conclude: (1) that the leasing or

renting of residences in the subdivision is permissible, (2) that the covenants themselves do not place

any limit on the duration of the leasing of a residence, and (3) that the drafters were familiar with the

concept of time limits with regard to uses that may be made of structures in the subdivision and did


        4
          Reference to common usage does not lead to a definitive answer of what was intended
by the phrase “single family residential purposes.” For example, Merriam-Webster defines
“residential” as “used as a residence,” “restricted to or occupied by residences”; “residence” is
defined as “a building used as a home.” Merriam-Webster’s Collegiate Dictionary (11th ed.)
(http://www.merriam-webster.com/dictionary/residential). Webster’s defines “residential” as “used,
serving, or designed as a residence” or “restricted to or occupied by residences,” and defines
“residence” as “the act or fact of abiding or dwelling in a place for some time” or “the place where
one actually lives or has his home as distinguished from his technical domicile.” Webster’s Third
New Int’l Dictionary 1931 (2002) (synonyms include “dwell,” “sojourn,” “lodge,” “stay,” and “put
up”). Black’s defines “residence” as “living in a given place for some time” or as a “house or other
fixed abode; a dwelling,” and notes that it usually “just means bodily presence as an inhabitant,”
whereas “domicile” usually “requires bodily presence plus an intention to make the place one’s
home.” Black’s Law Dictionary 1423 (9th ed. 2009).

                                                   5
not impose any duration limits with regard to the leasing of homes. Under these circumstances, the

absence of a specific minimum duration for leasing at best renders the restrictive covenants

ambiguous. Therefore, the requirement of section 202.003 that we liberally construe a restrictive

covenant to effectuate its intent does not apply, see Tex. Prop. Code § 202.003, and instead, we

must resolve the ambiguity against the Association and in favor of the Zgabays’ free and unrestricted

use of their property. See Wilmoth, 734 S.W.2d at 657; Hicks, 2010 WL 3271723, at *7; Sharp,

2010 WL 45871, at *3; Jennings, 258 S.W.3d at 195; Hoover, 39 S.W.3d at 308-09.

               The drafters of the restrictive covenants recognized and permitted the leasing of

homes. They recognized and disallowed most temporary residencies in the context of temporary

structures. They did not define “single family residential purposes” to exclude temporary or transitory

use of permanent homes as dwellings.5 Thus, the restrictive covenants are ambiguous and should


       5
          In Munson v. Milton, the restrictions specifically barred the use of properties for business
purposes, stating that tracts in the subdivision could be used for “residential, camping or picnicing
purposes and shall never be used for business purposes. Motel, tourist courts, and trailer parks shall
be deemed to be a business use.” 948 S.W.2d 813, 815 (Tex. App.—San Antonio 1997, pet. denied).
As observed by Justice Burgess in his dissent in Benard v. Humble, by specifying that use of a
property as a motel or the like was a business use, the subdivision showed some intent to bar the
short-term renting of properties. 990 S.W.2d 929, 932 (Tex. App.—Beaumont 1999, pet. denied)
(Burgess, J., dissenting) (further observing that although covenants in Benard barred use of property
for anything other than “single-family residential purposes,” they contained no additional covenants
to discern whether drafters intended to bar short-term rentals). The restrictions in this case do not
include such an absolute bar. They merely prohibit structures other than dwellings “to be used for
single family residential purposes” and go on to state that:

       No Activity, whether for profit or not, shall be conducted on any Tract which is not
       related to single family residential purposes, unless said activity meets the following
       criteria: (1) no additional exterior sign of activity is present, (b) it is the type of action
       that usually happens in a home, (c) no additional traffic, that would not be there
       normally, is created, and (d) nothing dangerous is present that should not be there.

That provision can be read as stating that a for-profit activity related to single family residential
purposes may be conducted.

                                                     6
be interpreted in favor of the Zgabays. See Hicks, 2010 WL 3271723, at *7; Sharp, 2010 WL 45871,

at *3; Jennings, 258 S.W.3d at 195; Hoover, 39 S.W.3d at 308-09; Sherer, 2 S.W.3d at 288. The

trial court erred in granting summary judgment in favor of the Association.


                                            Conclusion

                The restrictive covenants the Association sought to enforce against the Zgabays lack

any unambiguous minimum duration for rentals. We therefore reverse the trial court’s order granting

summary judgment in favor of the Association, render judgment in favor of the Zgabays, dissolve

the injunction imposed by the trial court, and remand the cause to the trial court for consideration

of the issue of attorney’s fees.



                                              __________________________________________

                                              David Puryear, Justice

Before Justices Puryear, Pemberton, and Bourland

Reversed and Rendered in Part; Remanded in Part

Filed: August 28, 2015




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