Summary
The Ninth District Court of Appeals of Texas affirmed the dismissal under Texas Rule of Civil Procedure 91a of Lawrence and Karen Traw’s claims against Walden Town House Association, Inc. The court held that the asserted ultra vires, nonprofit-association, property, estates, trusts, and jurisdictional theories had no basis in law, and it upheld the award of attorney fees to the association.
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Questions Presented
- Whether the Traws' claims had a basis in law under Texas Rule of Civil Procedure 91a.
- Whether the Traws could assert an ultra vires claim under Texas Business Organizations Code section 20.002.
- Whether Texas Business Organizations Code chapter 252, Texas Property Code section 209.0041(h), Estates Code section 22.018, and Property Code sections 111.004 and 115.001 or 115.011 provided a legal basis for the Traws' claims.
- Whether Texas Government Code section 27.033 provided a jurisdictional basis for the suit in district court.
- Whether the trial court properly awarded WTHA attorney fees under Texas Rule of Civil Procedure 91a.7.
Holdings
- The trial court properly dismissed the Traws' claims because, taking their allegations as true and liberally construing their pleadings, the claims had no basis in law.
- The Traws could not maintain their ultra vires claim because they did not fall within any category authorized to assert such a claim and challenged completed transactions rather than seeking to enjoin a prospective act.
- Chapter 252 did not provide a legal basis for the Traws' claims because WTHA is an incorporated nonprofit entity, not an unincorporated nonprofit association governed by chapter 252.
- Section 209.0041(h)'s 67-percent approval requirement did not apply because the challenged transactions were neither declarations nor amendments to declarations.
- Those provisions did not provide a legal basis for the Traws' claims because the pleadings did not allege that the transactions involved an estate or trust, and the statutes do not create general rights for property owners to challenge property-association decisions.
- Section 27.033 did not support the Traws' suit because it governs a justice of the peace's jurisdiction, whereas the case was filed in district court, and the Traws independently failed to establish a legal basis for their claims.
- The trial court acted within its discretion in awarding WTHA costs and reasonable and necessary attorney fees because WTHA prevailed on its Rule 91a motion; Rule 91a.7 does not require bad faith.
Key quotations
“A cause of action has no basis in law if the allegations, taken as true, together with inferences reasonably drawn from them, do not entitle the claimant to the relief sought.” (3)
“We review the merits of a Rule 91a motion de novo because the availability of a remedy under the facts alleged is a question of law and the rule’s factual-plausibility standard is akin to a legal-sufficiency review.” (3)
“Rule 91a.7 does not require bad faith; rather, it states that “the court may award the prevailing party on the motion all costs and reasonable and necessary attorney fees incurred with respect to the challenged cause of action in the trial court.”” (8)
Factual background
The Traws reside in the Walden Town House complex. WTHA executed a contract to sell several association-owned lots to a third-party developer and entered into a use agreement allowing a neighboring community to access a road for trash and other essential services. The Traws alleged that these transactions required member approval and violated several provisions of the Texas Business Organizations Code, Property Code, and Estates Code.
Procedural history
The Traws sued Walden Town House Association, Inc. over the association's sale of lots and an access-use agreement, asserting ultra vires and statutory claims. The 457th District Court of Montgomery County granted WTHA's Rule 91a motion to dismiss and later awarded WTHA attorney fees under Rule 91a.7. The Traws appealed, and the Ninth District Court of Appeals affirmed both orders.