ACCEPTED 03-17-00849-CV 21317390 THIRD COURT OF APPEALS AUSTIN, TEXAS 12/15/2017 10:54 AM JEFFREY D. KYLE CLERK No. 03-17-00849-CV FILED IN 3rd COURT OF APPEALS In The Court of Appeals for the Third AUSTIN, TEXAS District of Texas at Austin 12/15/2017 10:54:45 AM JEFFREY D. KYLE Clerk

In re Richard W. Jackson and Lisa C. Jackson, Relators.

From the County Court at Law No. 1, Travis County, Texas Trial Court Cause No. C-1-CV-17-001833

Amended Petition for Writ of Mandamus

J. Patrick Sutton SBOT 24058143 1706 W. 10th Street Austin Texas 78703 Tel. (512) 417-5903 Fax. (512) 355-4155 jpatricksutton@ jpatricksuttonlaw.com Counsel for Relators

Oral Argument Not Requested IDENTITY OF PARTIES AND COUNSEL Relators: Richard W. Jackson and Lisa C. Jackson Respondent: The Honorable Todd Wong, 1000 Guadalupe Street, Room 206, Austin, Texas 78701. Ph. (512) 854- 9241.

Real Parties Janice Cox and Helen Ramsey In interest: Counsel for Relator in the appeals court: J. Patrick Sutton SBOT 24058143 1706 W. 10th Street Austin Texas 78703 Tel. (512) 417-5903 / Fax (512) 355-4155 jpatricksutton@ jpatricksuttonlaw.com Counsel for Relator in the trial court: J. Patrick Sutton David M. Gottfried SBOT 24058143 State Bar of Texas No. 08231200 1706 W. 10th Street 1505 West Sixth Street Austin Texas 78703 Austin, Texas 78703 Tel. (512) 417-5903 Tel. (512) 494-1481 Fax (512) 355-4155 Fax (512) 472-4013 jpatricksutton@ [email protected] jpatricksuttonlaw.com Counsel for Real Party in Interest: Michael L. Navarre Beatty Bangle Strama P.C.

400 West 15th Street, Suite 1450 Austin, Texas 78701 Phone: 512.879.5050 / Fax: 512.879.5040 [email protected]

i TABLE OF CONTENTS INDEX OF AUTHORITIES ..................................................................... iii STATEMENT OF THE CASE .................................................................... 1 STATEMENT OF JURISDICTION ........................................................... 1 ISSUE PRESENTED .................................................................................. 1 STATEMENT OF FACTS .......................................................................... 2 ARGUMENT ............................................................................................... 4 I. Standard of Review .......................................................................... 4 II. The Trial Court Abused Its Discretion .............................................. 5 III. The Jacksons Lack an Adequate Remedy by Appeal ...................... 6 IV. Remedies Appropriate by Mandamus .............................................. 7 PRAYER FOR RELIEF .............................................................................. 8 RULE 52.7(a)(2) STATEMENT AS TO EVIDENCE ................................ 8 RULE 52.3(j) CERTIFICATION ................................................................ 8 CERTIFICATE OF SERVICE .................................................................... 9 CERTIFICATE OF COMPLIANCE ........................................................... 9 APPENDIX TO PETITION FOR WRIT OF MANDAMUS .................... 10

ii INDEX OF AUTHORITIES CASES In re Olshan Found. Repair Co., 328 S.W.3d 883 (Tex. 2010) .......... 4 In re Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex. 2004) .......... 5 In re Reece, 341 S.W.3d 360 (Tex. 2011) (orig. proceeding) ............... 4 In re Team Rocket, L.P., 256 S.W.3d 257 (Tex. 2008) ......................... 4 In re United Scaffolding, Inc., 301 S.W.3d 661 (Tex. 2010) .............. 4 Murphy v. McDaniel, 20 S.W.3d 873 (Tex. App. – Dallas 2000, no pet.) .......................................................................................................... 5 State v. Walker, 679 S.W.2d 484 (Tex. 1984) (orig. proceeding) ... 6, 7 STATUTES Tex. Civ. Prac. & Rem. Code § 51.014 ................................................... 6

iii STATEMENT OF THE CASE Nature of the case: In a suit to construe the meaning of restrictive covenants, the relators obtained a temporary injunction barring the real parties in interest from recording an amendment to the restrictive covenants. Months after the time for an interlocutory appeal of the injunction expired, the real parties in interest sought an order dissolving the temporary injunction.

Respondent: The Honorable Todd Wong, County Court at Law No. 1, Travis County, Texas.

Ruling Assailed: On December 8, 2017, the trial court granted the motion to dissolve the injunction despite the movants’ failure to offer any evidence of a change in circumstances after the injunction was issued.

STATEMENT OF JURISDICTION Texas Government Code § 22.221(b)(1) provides jurisdiction.

ISSUE PRESENTED If a party seeking to dissolve a validly-obtained temporary injunction did not timely appeal the temporary injunction yet offers no evidence of a change of circumstances after the injunction was issued, is it a clear abuse of discretion for the trial court to dissolve the injunction?

REASON FOR AMENDMENT This Amended filing adds facts concerning the recordation of a written instrument by the real parties in interest along with a complete copy of said instrument, with signature pages, at Appendix Tab D.

STATEMENT OF FACTS The Jacksons sued to stop Ramsey and Cox from recording any amendments to subdivision restrictive covenants1 unless Ramsey and Cox (1) sent prior notice of the proposed amendment to all owners and (2) obtained a recommendation from the subdivision’s architectural committee. Following an evidentiary hearing, the trial court granted the Jacksons’ motion for a temporary injunction on March 3, 2017. 2 Ramsey and Cox did not appeal the order granting the temporary injunction.

Ramsey and Cox have counterclaimed for wrongful injunction based on the trial court’s grant of the relators’ motion for same. 3 On December 4, 2017, four days before the pretrial conference ahead of the December 11 trial, Ramsey and Cox filed a motion to dissolve the injunction. 4 The sole basis for their motion was that App. E (Plaintiffs’ Exhibit 1 thereto).

2 App. A.

3 App. F.

4 App. B.

the trial court reversed its interpretation of the restrictive covenants in an interlocutory summary judgment order. At the hearing on the motion to dissolve the injunction on December 8, Ramsey and Cox offered no evidence in support of their motion.

The trial court granted the motion. 5 The trial setting was then passed by the parties owing to the unlikelihood of the case being reached.

On December 11, 2017, Ramsey and Cox recorded in the Official Records of Travis County an amendment to the restrictive covenants. 6 They had not notified all owners of the voting on the amendment in early 2017 and never obtained any recommendation from the subdivision’s architectural committee.7 The deed restriction they relied upon in filing their amendment requires recordation of their amendment by March 7, 2017 (a ten-year anniversary date for recording amendments voted upon by a majority of owners). 8 Nevertheless, in addition to being filed on December 11, 2017, some of the signature pages show purported owner ratification as late as November and December,

5 App. C.

6 Tab D.

7 Tab C (containing findings of fact); Tab E (transcript of injunction hearing).

8 Tab E (Plaintiffs’ Exhibit 1, § 1.4).

2017. 9 On December 13, 2017, the Jacksons noticed an interlocutory accelerated appeal of the order dissolving the temporary injunction. No. 03-17-00846-CV.

ARGUMENT I. Standard of Review Mandamus relief is appropriate when a trial court clearly abuses its discretion and there is no adequate remedy at law. . A trial court clearly abuses its discretion when it reaches a decision that is arbitrary and unreasonable such that it amounts to a clear and prejudicial error of law or when it fails to correctly analyze or apply the law. In re Olshan Found. Repair Co., 328 S.W.3d 883, 888 (Tex. 2010) (orig. proceeding). An erroneous legal conclusion, even in an unsettled area of law, is an abuse of discretion. In re United Scaffolding, Inc., 301 S.W.3d 661, 663 (Tex. 2010) (orig. proceeding).

Whether there is an adequate appellate remedy is determined by balancing the benefits of mandamus review against the detriments. In re Team Rocket, L.P., 256 S.W.3d 257, 262 (Tex. Tab D (signature pages).

2008) (orig. proceeding). In that balancing, the court considers whether mandamus will “preserve important substantive and procedural rights from impairment or loss, allow the appellate courts to give needed and helpful direction to the law that would otherwise prove elusive in appeals from final judgments, and spare private parties and the public the time and money utterly wasted enduring eventual reversal of improperly conducted proceedings.”

In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 136 (Tex. 2004) (orig. proceeding).

II. The Trial Court Abused Its Discretion As the authority relied upon by Ramsey and Cox in their motion to dissolve the temporary injunction holds, the movant must prove that a change in circumstances arose after the injunction was entered. See Murphy v. McDaniel, 20 S.W.3d 873, 877 (Tex. App. – Dallas 2000, no pet.). However, an interlocutory ruling on the merits of a case is not, in and of itself, a “change in circumstances” authorizing dissolution of an otherwise properly obtained temporary injunction. Id. at 878. This legal framework prevents a party who failed to appeal an order granting a

temporary injunction from doing so belatedly, and from getting an advance ruling from the court of appeals on the merits of a claim prior to final judgment. Id. at 877-879.

The sole basis for Ramsey and Cox’s motion to dissolve the temporary injunction was their obtaining of an interlocutory summary judgment order favorable to them on the merits. They presented no evidence at all of any change in circumstances.

Accordingly, the trial court clearly abused its discretion in granting the motion to dissolve the temporary injunction.

III. The Jacksons Lack an Adequate Remedy by Appeal Where a party has already established the validity of a temporary injunction, it is improper to force that party to re- establish the injunction’s validity prior to final judgment in the case. State v. Walker, 679 S.W.2d 484, 485 (Tex. 1984) (orig. proceeding).

Ramsey and Cox could have appealed the temporary injunction order but did not. See Tex. Civ. Prac. & Rem. Code § 51.014(a)(4). Instead, they waited many months and, on the eve of trial, sought to force the Jacksons’ to relitigate the early 2017

evidentiary injunction hearing. The Jacksons cannot seek an appeal of the validity of the original injunction, so mandamus is the appropriate remedy.

In addition, the Jacksons engage in leasing that Ramsey and Cox’s recorded amendment would ban, and they have leases in force. The amendment is a direct threat to their property rights and contracts. It provides a basis for Ramsey and Cox to seek legal and equitable relief in the trial court that they should not have been entitled to seek at all had the injunction not been wrongfully procured. Expensive, wasteful new proceedings directly stemming from a clear abuse of discretion by the trial judge will be the result.

IV. Remedies Appropriate by Mandamus The order dissolving the injunction must be vacated and the injunction reinstated. See State v. Walker, 679 S.W.2d at 486. The Jacksons are simultaneously seeking emergency relief to stay the trial court’s order in both their interlocutory accelerated appeal and in this original proceeding.

PRAYER FOR RELIEF This Court should grant Relators the Jacksons’ petition for a writ of mandamus and direct the trial court to vacate its December 8, 2017 order dissolving the temporary injunction and to reinstate the injunction. The Court should remand the case consistent with the above and grant any other relief to which the relator may be justly and in fairness entitled.

Respectfully submitted, /s/ J. Patrick Sutton J. Patrick Sutton Texas Bar No. 24058143 1706 W. 10th Street Austin Texas 78703 Tel. (512) 417-5903 Fax. (512) 355-4155 jpatricksutton@ jpatricksuttonlaw.com Attorney for Relator RULE 52.7(a)(2) STATEMENT AS TO EVIDENCE In the trial court, the real party in interest put it no evidence in support of its motion to dissolve the temporary injunction. A record was made of the arguments of counsel at the hearing.

RULE 52.3(j) CERTIFICATION I have reviewed the petition and concluded that every factual statement in the petition is supported by competent evidence included in the appendix or record. /s/ J. Patrick Sutton J. Patrick Sutton

CERTIFICATE OF SERVICE I certify that on December 15, a true and correct copy of this AMENDED petition was served by efiling on: Michael L. Navarre Beatty Bangle Strama P.C.

400 West 15th Street, Suite 1450 Austin, Texas 78701 Phone: 512.879.5050 / Fax: 512.879.5040 [email protected] /s/ J. Patrick Sutton Attorney for Relator CERTIFICATE OF COMPLIANCE This document complies with the typeface requirements of Tex. R. App. P. 9.4(e) because it has been prepared in Century Schoolbook 14-point for text and 12-point for footnotes. Spacing is expanded by .6 point for clarity. This document also complies with the word- count limitations of Tex. R. App. P. 9.4(i), if applicable, because it contains 1089 words, excluding any parts exempted by Tex. R. App. P. 9.4(i)(1).

/s/ J. Patrick Sutton Attorney for Relator

No. 03-17-________-CV

In The Court of Appeals for the Third District of Texas at Austin

In re Richard W. Jackson and Lisa C. Jackson, Relators.

From the County Court at Law No. 1, Travis County, Texas Trial Court Cause No. C-1-CV-17-001833

APPENDIX TO PETITION FOR WRIT OF MANDAMUS

Order granting Defendants’ motion to dissolve TI Tab A Defendants’ Motion to Dissolve TI Tab B Order granting temporary injunction Tab C Recorded Amendment (without signature pages) Tab D Transcript of March 9, 2017 injunction hearing Tab E

Tab A Tab B Filed: 12/4/2017 10:48 PM Dana DeBeauvoir Travis County Clerk CAUSE NO. C-1-CV-17-001833 C-1-CV-17-001833 Kylie Uhlaender RICHARD W. JACKSON, § IN THE COUNTY COURT LISA C. JACKSON, and § KATHLEEN WOODALL, § Plaintiffs, § AT LAW NUMBER TWO OF vs. § § JANICE COX and HELEN RAMSEY, § Defendants. § TRAVIS COUNTY, TEXAS DEFENDANTS’ MOTION TO DISSOLVE THE TEMPORARY INJUNCTION Defendants and Counter-Plaintiffs file their Motion To Dissolve The Temporary Injunction, and would respectfully show the court the following: I. EXECUTIVE SUMMARY Background: On February 24, 2017, Plaintiffs sued Ms. Cox and Ms. Ramsey to prevent them from following Section 4 of Article I of the 1972 Deed Restrictions to prohibit rentals for less than ninety (90) days. Plaintiffs’ claims were for (1) a declaratory judgment that a notice and ACC approval requirement in Article IX of the 1972 Deed Restrictions could be copied/pasted into Section 4 of Article I of the 1972 Deed Restrictions and (2) breach of contract based on this same rewriting of the 1972 Deed Restrictions. Plaintiffs moved for a temporary restraining order and a subsequent temporary injunction, which the Court granted.

Problem: On November 17, the Court ruled against Plaintiffs on their sole basis for the temporary injunction. The Court rejected Plaintiffs’ interpretation of the 1972 Deed Restrictions and granted Defendants’ Motion for Partial Summary Judgment As To Claims And Counterclaims Concerning Section 4 Of Article I Of The Restrictive Covenants. Furthermore, Plaintiffs previously dropped their breach of contract claim that was based on their same faulty contract interpretation.

Relief: Defendants respectfully request that the Court grant this Motion, dissolve the temporary injunction, award Defendants the bond, and grant further relief.

II. ARGUMENT AND AUTHORITIES A. The Sole Basis For Plaintiffs’ Temporary Injunction Was Their Faulty Contract Interpretation.

On February 24, 2017, Plaintiffs sued Ms. Cox and Ms. Ramsey. Their sole claim for declaratory judgment was the following: 1 “Plaintiffs seek a declaration that 30 days’ notice to all owners of proposed amendments and the prior recommendation of the ACC are required before any amendment may be adopted and recorded.”

As set forth in Plaintiffs’ lawsuit, these requirements are in Article IX of the 1972 Deed Restrictions. 2 These requirements are not in Section 4 of Article I of the 1972 Deed Restrictions.

Plaintiffs’ breach of contract claim was based on Plaintiffs’ same faulty interpretation of the 1972 Deed Restrictions. 3 Although Plaintiffs amended their claim twice before the temporary injunction hearing, these claims remained the same and Plaintiffs did not add any new claims. 4 In his opening argument, Plaintiffs’ counsel made it clear that the sole basis for Plaintiffs’ request for a temporary injunction was their faulty interpretation of the 1972 Deed Restrictions: 5 “We will show and will also argue that there are certain deeds restrictions in a subdivision from 1972 and that those deed restrictions do not allow any amendment to those restrictions without two specific things occurring.

One, written notice to all owners 30 days in advance of the adoption of the amendment. Two, a quote “recommendation” by an entity called the architectural control authority.”

Subsequently, the parties filed competing motions for partial summary judgment concerning the proper interpretation of the 1972 Restrictions. The Court recently ruled in favor of Defendants and granted partial summary judgment against Plaintiffs’ claims.

Plaintiffs’ Original Petition at ¶ 25.

Id. at ¶ 13.

Id. at ¶ 26-29.

Plaintiffs’ First Amended Petition at ¶ 25; 26-29; Plaintiffs’ Second Amended Petition at ¶ 25; 26-29.

Transcript of March 9, 2017 Temporary Injunction Hearing at 6-7.

B. The Court Rejected The Sole Basis For Plaintiffs’ Temporary Injunction And Granted Defendants’ Motion For Partial Summary Judgment Against Plaintiffs’ Claims.

On October 12, 2017, Defendants filed their Motion For Partial Summary Judgment As To Claims And Counterclaims Concerning Section 4 Of Article I Of The Restrictive Covenants (“Defendants’ MPSJ”). As set forth in the Motion, Defendants sought a partial summary judgment as to the claims that were the basis for Plaintiffs’ temporary injunction: 6 This Motion for Partial Summary Judgment covers Plaintiffs’ claims for (1) declaratory judgment that “30 days’ notice to all owners of proposed amendments and the prior recommendation of the ACC are required before any amendment may be adopted and recorded” and (2) breach or attempted breach of the Restrictive Covenants. Defendants also move for summary judgment on their declaratory judgment claim that the requirements of notice and prior recommendation of the Architectural Control Authority in Article IX are not copied/pasted into Section 4 of Article I of the Restrictive Covenants.

On the other hand, Plaintiffs filed their Renewed Cross-Motion for Partial Summary Judgment Concerning Procedure for Amending Restrictive Covenants (“Plaintiffs’ Cross-MPSJ”).

Plaintiffs’ Cross-MPSJ was a mirror-image of Defendants’ MPSJ and sought the opposite interpretation of the 1972 Deed Restrictions.

On November 17, 2017, the Court issued its rulings. Importantly, the Court granted Defendants’ MPSJ as to this contract interpretation issue: 7 “ORDERED, ADJUDGED, AND DECREED that Defendants’ Motion for Partial Summary Judgment as to Claims and Counterclaims Concerning Section 4 of Article I of the Restrictive Covenants is GRANTED.”

The Court similarly denied Plaintiffs’ Cross-MPSJ. By its orders, the Court disposed of Plaintiffs’ claims in favor of Defendants.

Defendants’ MPSJ at 3 (emphasis added).

Order on Defendants’ Motions for Summary Judgment at 2 (emphasis in original).

C. The Court Should Dissolve The Injunction And Grant Relief To Defendants.

By its Orders, the Court also eliminated the sole basis of Plaintiffs’ temporary injunction.

There is no basis for Plaintiffs’ temporary injunction. Therefore, pursuant to Texas law, the Court should dissolve the temporary injunction. Murphy v. McDaniel, 20 S.W.3d 873, 878 (Tex. App.— Dallas 2000, no pet.) (explaining the circumstance that result in the dissolution of a temporary injunction). Furthermore, the Court should award the $10,000 bond to Defendants. Energy Transfer Fuel, L.P. v. Bryan, 322 S.W.3d 409, 413-14 (Tex. App.—Tyler 2010, no pet.) (citing DeSantis v. Wackenhut Corp. 793 S.W.2d 670, 685 (Tex. 1990)). Finally, if the Court deems it necessary, Defendants request equitable or other relief in the form of time to file the change to the 1972 Restrictions or some other form to cure any harm caused to Defendants.

III. CONCLUSION WHEREFORE, PREMISES CONSIDERED, Defendants respectfully request that the Court grant this Motion, dissolve the temporary injunction, award Defendants the bond, and if the Court deems it necessary, Defendants request equitable or other relief in the form of time to file the change to the 1972 Restrictions or some other form to cure any harm caused to Defendants grant further relief. Defendants also request such other relief as the Court deems proper.

Respectfully submitted, /s/ Michael L. Navarre Michael L. Navarre State Bar No. 00792711 BEATTY BANGLE STRAMA, PC West 15th Street, Suite 1450 Austin, Texas 78701 (512) 879-5050 Telephone (512) 879-5040 Facsimile [email protected] ATTORNEYS FOR DEFENDANTS CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing instrument was electronically served on counsel of record by electronic transmission on this 4th day of December, 2017: James Patrick Sutton – via [email protected] The Law Office of J. Patrick Sutton 1706 W. 10th St. Austin, Texas 78701

Mr. David M. Gottfried – via [email protected] The Gottfried Firm West Sixth Place 1505 West Sixth Street Austin, Texas 78703

/s/ Michael L. Navarre Michael L. Navarre

Tab C Tab D Tab E

1 REPORTER'S RECORD 2 VOLUME 1 OF 1 VOLUMES 3 TRIAL COURT CAUSE NO. C-1-CV-17-001833 RICHARD W. JACKSON, ) IN THE COUNTY COURT LISA C. JACKSON, AND ) KATHLEEN A. KOLB ) WOODALL ) 6 ) ) VS. ) AT LAW NO. 1 ) 8 ) JANICE COX, HELEN ) RAMSEY, POINT VENTURE ) NEIGHBORS FOR STR ) 10 REFORM ) TRAVIS COUNTY, TEXAS

12 ******************************************************** 13 TEMPORARY INJUNCTION ********************************************************

16 On the 9th day of March, 2017, the following proceedings came on to be heard in the above-entitled and numbered cause before the Honorable Todd T. Wong, Judge presiding, held in Austin, Travis County, Texas: 20 Proceedings reported by machine shorthand.

1 A P P E A R A N C E S

3 ATTORNEYS FOR THE PLAINTIFFS: 4 Mr. James Patrick Sutton SBOT NO. 24058143 5 THE LAW OFFICE OF J. PATRICK SUTTON 1706 West 10th Street 6 Austin, Texas 78703 Phone: 512-417-5903 7 - AND - Mr. David M. Gottfried 8 THE GOTTFRIED FIRM SBOT NO. 08231200 9 West Sixth Place 1505 West Sixth Street 10 Austin, Texas 78703 Phone: 512-494-1481

13 ATTORNEY FOR THE DEFENDANTS: 14 Mr. William E. 'Bill' Sterling SBOT NO. 19175200 15 WILSON, STERLING & RUSSELL 9951 Anderson Mill Road, Suite 200 16 Austin, Texas 78750 Phone: 512-258-2244

1 INDEX 2 VOLUME 1 3 Temporary Injunction March 9, 2017 5 PAGE VOL.

6 Announcements . . . . . . . . . . . . . . . . .5 1 Opening Statement by Mr. Sutton . . . . . . . .6 1 Opening Statement by Mr. Sterling . . . . . . .7 1 Plaintiff's Witnesses Direct Cross Voir Dire Vol.

Janice Cox 11 By Mr. Gottfried 16 1 By Mr. Sterling 23 1 12 By Mr. Gottfried 29 1 By Mr. Sterling 29 1 Helen Ramsey 14 By Mr. Gottfried 30 1 By Mr. Sterling 33 1 Kathleen Woodall 16 By Mr. Gottfried 34 1 By Mr. Sterling 38 1 17 By Mr. Gottfried 41 1

19 Closing Argument by Mr. Sutton . . . . . . . . 44 1 Closing Argument by Mr. Sterling . . . . . . . 52 1 Closing Argument by Mr. Sutton . . . . . . . . 59 1 Closing Argument by Mr. Sterling . . . . . . . 61 1 Court's Ruling . . . . . . . . . . . . . . . . 67 1 Adjournment . . . . . . . . . . . . . . . . . .69 1 Court Reporter's Certificate . . . . . . . . . 70 1

1 ALPHABETICAL INDEX OF WITNESSES 2 Direct Cross Voir Dire Vol.

3 COX, JANICE By Mr. Gottfried 16 1 4 By Mr. Sterling 23 1 By Mr. Gottfried 29 1 5 By Mr. Sterling 29 1 6 INDEX - VOLUME 1 CONT.

7 ALPHABETICAL INDEX OF WITNESSES 8 Direct Cross Voir Dire Vol.

9 RAMSEY, HELEN By Mr. Gottfried 30 1 10 By Mr. Sterling 33 1 WOODALL, KATHLEEN By Mr. Gottfried 34 1 12 By Mr. Sterling 38 1 By Mr. Gottfried 41 1

15 EXHIBITS OFFERED BY THE PLAINTIFF EXHIBIT DESCRIPTION OFFER ADMIT VOL.

17 1 Point Venture Section Three-1 13 14 1 Plat Record 2 General Provisions 14 14 1 3 Amendment to Restrictions 15 15 1 4 Notes 21 21 1 22 EXHIBITS OFFERED BY THE PLAINTIFF EXHIBIT DESCRIPTION OFFER ADMIT VOL.

24 1 VRBO web listing 27 28 1

1 P R O C E E D I N G S 2 March 9, 2017 3 THE COURT: C-1-CV-17-001833, Richard Jackson and Lisa Jackson versus Janice Cox, Helen Ramsey, Point Venture Neighbors.

6 Counsel, if you would go ahead and make your appearances for record.

8 MR. SUTTON: Judge, Patrick Sutton and David M. Gottfried for all plaintiffs.

10 THE COURT: All right. Thank you.

11 MR. STERLING: William Sterling, Jr. for defendants, Janice Cox and Helen Ramsey. In reality, there is no incorporated or association.

14 THE COURT: Okay. Very good. All right.

15 Thank you very much.

16 All right. I read the original -- well, I guess the third amended petition that was filed. I read the TRO. Pulled some cases.

19 You-all have anything you want me to look at?

21 MR. STERLING: Your Honor, I did file an answer, and I sent a copy to Court 2's staff attorney and I don't know whether that's...

24 MR. GOTTFRIED: If I may approach, Your Honor?

1 THE COURT: Sure. All right.

2 So we're here just on the temporary injunction. This is not a permanent injunction. It's no final hearing on anything. So just to remind counsel, you keep that in mind as you proceed today.

6 All right. Well, plaintiffs, may proceed.

7 MR. SUTTON: Judge, what I'd like to do is just preview for you what the evidence will show.

9 THE COURT: That would be great. If you could do that, then I'll let the defendant do the same.

11 OPENING BY PLAINTIFF 12 MR. SUTTON: Thank you, Judge.

13 First, we will show and will also argue that there are certain deeds restrictions in a subdivision from 1972 and that those deed restrictions do not allow any amendment to those restrictions without two specific things occurring.

18 One, written notice to all owners 30 days in advance of the adoption of the amendment. Two, a, quote, "recommendation" by an entity called the architectural control authority.

22 We will then show, one, that the defendants failed to meet those two requirements, that there is an architectural control authority, and that the defendants have circulated an amendment which would

1 restrict the rights of property owners, actually bar property owner's right to rent for short terms.

3 We will have seven witnesses who will talk about the lack of notice, the existence of an architectural control authority, and then, finally, Judge, we'll show that all that deed restrictions provide that all that is required for a temporary injunction in this case is a showing of a breach or attempted breach, and that the deed restrictions specifically remove the requirement of irreparable injury or that money damages are not an adequate remedy.

12 Thank you, Judge.

13 THE COURT: Thank you.

14 Counsel.

15 OPENING BY DEFENDANT 16 MR. STERLING: Your Honor, we -- they're going to be introducing a certified copy of 1972 restrictions, and we don't have any quarrel with that particular document as it's going to be presented.

20 We do disagree with counsel as to whether or not there is a requirement for 30 days notice or a requirement for having ACA approval when it comes to an attempted change of the restrictive covenants under a particular portion of the restrictive covenants themselves.

1 And we'll call Your Honor's attention to Section -- I believe it's Section 1.

3 THE COURT: It's 1.4, isn't it?

4 MR. STERLING: 1.4, yes.

5 And that particular section allows for a majority of the lot owners to change the 1972 restrictions by getting a document signed by them, proper manner of recording it in the deed records, and then so recording. And that's the only real requirements that are there.

11 We're going to be arguing that, in essence, the provision that the other side has been referred to is not applicable to that particular provision. It may be under a section having to do with label amendments. But right on that same page is going to be a section -- I think it's Section 11 of the document that basically says that -- it's on Section 11 -- talk about captions. And captions basically say forget the captions. They don't mean anything. You can look at it as if they were never there in terms of doing that.

22 THE COURT: But you just told me -- you referred to me 9 which says Amendments, but in the body of that provision, it talks about any covenants that may be annulled, amended, or modified. So it's not just

1 amendments either, right?

2 MR. STERLING: Well, it's -- I think it's referring only to the particular form by which they go about doing it using this particular provision. If you want to change any time during the year, at any time you have to go through the ACA and give your 30 days notice.

7 But if you're going through this other provision, the provision that allows you to change it but it doesn't become effective until the next period of duration, if you do it that way, it's a totally different system.

11 In other words, the changes where you're using the ACA, you're going to be having -- having to have notice who's going to go voting and all that kind of stuff. There's no voting when it comes to the actual use of this majority getting a changing instrument and signing it and recording it. You're voting by signing on the instrument or not signing the instrument.

18 THE COURT: I see your argument.

19 MR. STERLING: So basically that's what I'm saying, it's a whole different thing.

21 And so what I wanted to state is that that's the crux of what the problem is between my client -- my clients and theirs is the interpretation of those two particular provisions. They want to basically say that their provision overrides and makes mine

1 meaningless, essentially.

2 THE COURT: They're not saying they can coalesce together.

4 MR. STERLING: Well, they may be trying to say that, but I don't see how they can really coalesce together. How do you do a 30 days in advance of when you're picking up individual signatures, you know, as you go, and it may take you the whole 10-year period to get them all signed up?

10 It's just not the same thing. You're not doing a vote-type situation.

12 But in any case, what I was getting at is that that's the crux of it. And what they're trying to do is add a temporary injunction to kill our current effort to try to change the restrictive covenants to disallow, you, know, these short-term rentals. And they're trying to, basically, use that -- use this temporary injunction in order to try to prevent us from getting there. Essentially getting there during this period.

21 THE COURT: Let me stop you there. From my reading, they're enjoining you from going through the process from not engaging in the process that's set up under the restriction, under this document. And I understand what you're saying is that they're preventing

1 you from doing the -- using provision or paragraph 4.

2 You're trying to go through paragraph 4.

3 MR. STERLING: Right.

4 THE COURT: And they're saying, no, you've got to go through 9.

6 MR. STERLING: Right.

7 THE COURT: Is that about it?

8 MR. STERLING: That's about it.

9 THE COURT: Okay. All right.

10 MR. STERLING: But the one thing I wanted to get across is that if we don't make -- essentially the way this -- our method works is that the successive periods essentially provides for duration of these original restrictive covenants starting out with a 35-year period then it goes succeeding 10-year period, et cetera. We're at the end of a 10-year period.

17 THE COURT: You're at the end of the second 10-year period.

19 MR. STERLING: Right. And if we are not successful in getting signed up a majority and recorded all those done by March 15th, we will be prevented from this taking effect until the next period beyond that.

23 Not, you know -- 24 THE COURT: It's not March 27th? It's March 15th?

1 MR. STERLING: Well, March 27th. That's a good question because March 15th is when it was signed, the original.

4 THE COURT: Oh, I see.

5 MR. STERLING: But it wasn't recorded until 19 or till March 27th. Whichever date, the point is if we don't get it done certainly within one of those two days, we could end up in a situation where it would not take effect during the next 10-year period but the one after that is what would happen. So, in effect, we'll be stopping this thing from being effective for a full 10 years using this method.

13 THE COURT: All right.

14 MR. STERLING: And that will cause it to happen by just doing a temporary injunction.

16 THE COURT: I see. You could read it that way. You might read it another way too.

18 MR. STERLING: Well, I think if you can figure out a way for us to get it effective otherwise, I would be happy to do that.

21 THE COURT: I'm not going to engage in that with you, but I think there may be a creative way to do something there but, all right. Very good.

24 MR. STERLING: All right. I think that basically --

1 THE COURT: Is that it?

2 MR. STERLING: -- gives us an idea what our situation and our position is.

4 THE COURT: Fair enough. All right.

5 Thank you both.

6 Counsel for plaintiff, you-all may proceed.

8 MR. GOTTFRIED: Good morning, Your Honor.

9 Being mindful of the fact this is a temporary injunction hearing not a permanent injunction hearing, I think we may be able to cut through some of the formalities by stipulating as to a couple of documents.

14 THE COURT: Fantastic.

15 MR. GOTTFRIED: I visited with Mr. Sterling and he's graciously agreed that we can mark this plat as Plaintiff's Exhibit 1.

18 MR. STERLING: I have no objection.

19 THE COURT: So he has no objection you admitting it into evidence.

21 MR. Gottfried: May I approach?

22 THE COURT: Yes, of course. Thank you.

23 MR. GOTTFRIED: Your Honor, we would move for the admission of Plaintiff's Exhibit Number 1.

25 (Plaintiff's Exhibit No. 1 offered.)

1 THE COURT: All right. Thank you.

2 Plaintiff's Exhibit 1 admitted.

3 (Plaintiff's Exhibit No. 1 admitted.)

4 MR. GOTTFRIED: Your Honor, that's just to give you some perspective of where this subdivision is.

6 It's on Lake Travis. And the folks that are in the courtroom today are the waterfront section of Lake Travis.

9 THE COURT: Okay.

10 MR. GOTTFRIED: May I approach, Your Honor?

12 THE COURT: Yes. Thank you.

13 MR. GOTTFRIED: Mr. Sterling and I have also stipulated to the deed restrictions, which I've just provided the Court as Plaintiff's Exhibit Number 2 and move for the admission of Plaintiff's 2.

17 (Plaintiff's Exhibit No. 2 offered.)

18 THE COURT: All right. Thank you.

19 MR. STERLING: I have no objection, Your Honor.

21 THE COURT: All right. Thank you.

22 Plaintiff's Exhibit 2 is admitted.

23 You-all don't need to ask permission to come up and show me stuff. It's fine.

25 (Plaintiff's Exhibit No. 2 admitted.)

1 MR. GOTTFRIED: Your Honor, I have handed the Court Plaintiff's Exhibit Number 3, which is the proposed amendment. And we move for the admission of Plaintiff's Exhibit 3.

5 (Plaintiff's Exhibit No. 3 offered.)

6 MR. STERLING: May I see it?

7 MR. GOTTFRIED: Yes.

8 MR. STERLING: I just want to make sure.

9 I have no objection, Your Honor.

10 THE COURT: All right. Thank you.

11 Plaintiff's Exhibit 3 is admitted.

12 (Plaintiff's Exhibit No. 3 admitted.)

13 MR. GOTTFRIED: And, Your Honor, I'm also hoping that we can stipulate that notice to all of the residents of the proposed amendment was not given. It's actually a judicial admission in paragraph 12 of defendant's answer and counter-claim where they state, defendants admit that the facts set forth in paragraph 20 of the plaintiff's petition are true and correct, same and except all lot owners but six were given at least 30 days notice in writing of the proposed amendment and the web sites were up for at least 30 days in writing showing the proposed amendment.

24 And they say, on information and belief, those six received 30 days notice in writing by reading

1 from the web sites, which is not the provision of written notice as required under the deed restriction.

3 MR. STERLING: Your Honor, I'll stand by what he read.

5 THE COURT: Okay. Well, then, the Court will note and make part of the record that provision 12 in defendant's original answer is admitted to by the defendant's counsel.

9 MR. STERLING: With those exceptions.

10 THE COURT: With the exceptions that are noted.

12 MR. Gottfried: Your Honor, we would call Janice Cox.

14 THE COURT: Ms. Cox.

15 JANICE COX, having been first duly sworn, testified as follows: 17 DIRECT EXAMINATION BY MR. GOTTFRIED: 19 Q. Good morning, Ms. Cox.

20 A. Good morning.

21 Q. Could you please state your full name for the record?

23 A. Janice K. Cox.

24 Q. And what is your home address? 25 A. 18940 Peckham Drive.

1 Q. And are you a resident of Point Venture Section Three-1?

3 A. Yes, sir.

4 Q. And you oppose short-term rentals in your subdivision; is that correct?

6 A. Yes.

7 Q. And you've authored a web site that you put up entitled Point Venture Neighbors; is that correct?

9 A. No. 10 Q. Have you put together a web site as part of your effort to ban short-term rentals in the subdivision?

13 A. Yes.

14 Q. What is the name of that web site?

15 A. There's two web sites. SaveSection3-1.org.

16 There's -- it's sort of a joint web site, pvstrreform.com.

18 Q. And are you the owner of both of those web sites?

20 A. Yes.

21 Q. Who were the other neighbors that are part of that organization that is trying to ban short-term rentals in the subdivision?

24 A. I can't go through the entire list. I don't have it in front of me. Pepper would be one.

1 Q. I'm sorry?

2 A. Helen Ramsey would be one.

3 Q. Who is Helen Ramsey?

4 A. She lives with me. 5 Q. Are there more than three people that are part of the, quote, neighbors -- 7 A. No. 8 Q. No?

9 A. No. 10 Q. So you can only name yourself and Ms. Ramsey?

11 A. Correct. Yes.

12 Q. And I'd like to refer you to Plaintiff's Exhibit Number 3, which I believe -- is that the amendment to the deed restrictions that you've been circulating within the subdivision?

16 A. The back page is blank but, yes. Page 1 and 2, yes.

18 Q. What do you mean by "the back page is blank"?

19 A. If it was for a specific lot, the lot would be filled in and the name would be filled in.

21 Q. Oh, okay. What I'm really asking, is this the form of the amendment that you're asking your neighbors to sign?

24 A. Yes.

25 Q. Okay. And under this proposed amendment,

1 short-term rentals of less than 90 days would be forbidden in the subdivision; is that correct?

3 A. Yes.

4 Q. Who is the developer of the subdivision currently? Is there one?

6 A. I would believe the -- I guess it was the Mitchell Group originally, and then that passes down to the ACC or POA. Don't know.

9 Q. To your knowledge, do any -- does any developer still own any lots within the subdivision?

11 A. I can't answer that yes or no. 12 Q. You simply don't know?

13 A. I don't know.

14 Q. Did you provide 30 days written notice to all of the members of the subdivision of your proposed amendment to the deed restrictions, which are Plaintiff's Exhibit Number 3?

18 A. All but -- all but seven.

19 Q. And how did you pick the seven that you were not going to provide notice to?

21 A. They own short-term rentals.

22 Q. So is it fair to say that that was a concerted effort by you to exclude them from the dialogue regarding the amendment that you were proposing for the subdivision?

1 A. One, we didn't think they would sign it. Two, we had some elderly people in the subdivision, and we were afraid they -- we were afraid of harassment.

4 Q. And so based on those reasons, you specifically excluded, what was it, six or seven of the residents?

6 A. Seven.

7 MR. GOTTFRIED: May I approach the witness?

9 THE COURT: Yes. Thank you.

10 Q. (BY MR. GOTTFRIED) Ms. Cox, I've handed you what's been marked as Plaintiff's Exhibit Number 4 and ask you if you can identify it?

13 A. What do you want?

14 Q. Can you identify Plaintiff's Exhibit Number 4?

15 A. Yes.

16 Q. What is Plaintiff's Exhibit Number 4?

17 A. The number of mailouts when they were done.

18 Q. Is Exhibit Number 4 a document that you created?

20 A. I believe, yes. I didn't, but I believe Helen Ramsey did.

22 Q. And you were subpoenaed to be here today as a witness, correct?

24 A. Yes.

25 Q. And you produced certain documents pursuant to

1 that subpoena; is that correct?

2 A. This was not one of them. This document, I don't believe was on the subpoena.

4 Q. Would you agree with me that that was a document that was produced to me today by your lawyer?

6 A. Yes.

7 MR. GOTTFRIED: Your Honor, we move for the admission of Plaintiff's Exhibit Number 4.

9 (Plaintiff's Exhibit No. 4 offered.)

10 MR. STERLING: I don't really have an objection to it, Your Honor. I would say my client produced certain documents in relationship to the subpoena that was given, and there has been some confusion with her about what that entailed. But I think that qualifies as one of the documents -- as a document that they requested.

17 THE COURT: All right. So no objection.

18 So Plaintiff's Exhibit 4 is admitted.

19 (Plaintiff's Exhibit No. 4 admitted.)

20 Q. (BY MR. GOTTFRIED) And Ms. Cox, there are two Post-it notes on Plaintiff's Exhibit Number 4. Do you see them?

23 A. Uh-huh.

24 Q. Are those your handwriting?

25 A. No, sir.

1 Q. Do you recognize the handwriting?

2 A. Yes.

3 Q. Whose handwriting is it?

4 A. Helen Ramsey's.

5 Q. Are you aware -- do you have any personal knowledge of the existence of an architectural control authority within your subdivision?

8 A. Yes. I believe it's a committee.

9 Q. And who are the members of that committee?

10 A. Two that I know of are Stan Retriman (ph) and Cindy Clemmons.

12 Q. What about Eugene Glass, would he be a member?

13 A. I don't know if he is currently, but he has been in the past.

15 Q. Marvin Ruthridge? Are you familiar with -- 16 A. I know the name. Don't know if he certainly sits on the ACC.

18 Q. And Greg McConnel?

19 A. Don't recognize the name.

20 Q. But you do have personal knowledge that an architectural control authority does exist and is operating or committee is operating within your subdivision?

24 A. Yes.

25 Q. Did you submit your proposed amendment to that

1 architectural control authority before you started circulating it for signatures?

3 A. No. 4 Q. So you would agree with me that since you never submitted it, there was never a recommendation by the architectural control authority that the amendment be adopted by the members; is that correct?

8 A. Yes.

9 MR. Gottfried: We'll pass the witness, Your Honor.

11 THE COURT: All right. Thank you.

12 Counsel.

13 CROSS-EXAMINATION BY MR. STERLING: 15 Q. Ms. Cox, in connection with your living at the -- on the lot, are you the owner of the lot?

17 A. Yes.

18 Q. Is Ms. Ramsey also an owner?

19 A. Yes.

20 Q. So you own it jointly together; is that correct?

22 A. Yes.

23 Q. And in the course of -- how long have you owned it or how long have you actually lived on the lot?

25 A. I believe it's three years.

1 Q. And during that period of time -- well, scratch that.

3 Do the Jacksons, the plaintiffs, own any lots nearby?

5 A. Yes.

6 Q. They own one near you?

7 A. Yes.

8 Q. Is it a next door neighbor-type situation?

9 A. Yes.

10 Q. And have you or -- to your personal knowledge, do you know whether they're renting out or leasing the improvements on their lot?

13 A. Yes.

14 Q. Have you seen the renters on the lot?

15 A. Yes.

16 Q. Have the Jacksons used, at least in the past, a manager for the lot or for that lot?

18 A. Yes and no. They use the BRBO at current times.

20 Q. Okay. But did they use this individual in the past?

22 A. Can you clarify "for"?

23 Q. Well, was there -- did they have someone other than Mr. and Mrs. Jackson themselves act as their manager of the rental?

1 A. I believe very early on they did. They used the company in Lago.

3 Q. Do they have any on-site managers now?

4 A. They did. I think the neighbor was actually part of the caretaker -- 6 Q. Arrangement?

7 A. -- arrangement.

8 Q. And did you ever have any problems with the renters or the managers?

10 A. Yes.

11 MR. GOTTFRIED: Objection, Your Honor.

12 I'm going to object to the relevance. We're here about notice.

14 MR. STERLING: Your Honor, we're not just here about notice. I have an affirmative defense that goes to the invitation of clean hands doctrine which replies to this temporary injunction, and I filed an answer that actually has that in writing. I'm entitled to go into that.

20 THE COURT: I'm going to allow a little bit of leeway here, not a whole lot, just enough to handle this injunction. So you may proceed.

23 Q. (MR. STERLING) Have you had any problems with the use or -- problem with the renters or the managers in connection with the short-term rental being used on

1 the lot?

2 A. Yes.

3 Q. Could you describe for us what kind of problems you've had?

5 A. We've had disorderly conduct. We've had lewd profanity. We've had people dancing on the roofs.

7 We've had people trespassing. We've had vandalism.

8 We've had continuing loss of sleep. We've had bongo drums. We've had karaoke music. We've had -- I mean, it's endless.

11 We have people parking in our driveway.

12 We have people turning around in our driveway. We have people trespassing. Just Christmas I was out of town, we have people standing there and drinking beer in our driveway. Their kids are in our -- we can see from our cameras we're being notified. They come over in 10s or 15s at a time asking questions. It's been a basic nightmare.

19 Q. Have you had to call the police?

20 A. Yes, sir.

21 Q. And have there been -- have your other neighbors complained about the same activities?

23 A. Yes, sir.

24 Q. Would it be fair to say that the existence of the short-term rental business on the lot has become an

1 annoyance or a nuisance in the neighborhood?

2 A. Yes, sir.

3 Q. I'm going to show you what's been marked as Defendant's Exhibit 1.

5 THE COURT: Why don't you go ahead and show it to opposing counsel first. Thank you.

7 Q. (BY MR. STERLING) Let me show you what's been marked as Defendant's Exhibit 1 and ask you is that a printout from a web site service that allows for advertising short-term vacation rentals?

11 A. Yes, sir.

12 Q. And is that -- if you looked at it completely and fairly, is that describing pictures and all the Jackson's property?

15 A. Yes, sir.

16 Q. And does it have a picture of the two of them as the owners?

18 A. Yes, sir.

19 MR. STERLING: We offer Defendant's Exhibit 1.

21 (Defendant's Exhibit No. 1 offered.)

22 MR. GOTTFRIED: Your Honor, we object on the grounds of relevancy. Leasing, even short-term leasing, is permitted under the current restrictions.

25 It's not really an issue in this case what they're using

1 their property for.

2 MR. STERLING: Actually, Your Honor, it's not. One of the things that I brought up in my pleading is that there is a section of the restrictive covenants, which is Article or Roman Numeral 4, Section -- or Paragraph 5, which basically prohibits the renting of any improvements on a lot without the prior consent of the architectural control authority.

9 MR. GOTTFRIED: Your Honor, I don't think that that's what it says. I think it says without the authority of the developer and there currently is no developer. And if the defendants are taking the position that the deed restrictions prevent all leasing of any kind for any duration in this subdivision, that's something I'd love to get on the record.

16 THE COURT: Okay. I'm going to allow Defendant's Exhibit 1. It's admitted.

18 (Defendant's Exhibit No. 1 admitted.)

19 THE COURT: I'm going to remind you, gentlemen, that we are here simply on a temporary injunction. I'm not going into the leads of your final hearing on this.

23 I understand you-all wanting to go ahead and get it out. If you-all want free discovery and you want to have a reporter type everything out now, that's

1 absolutely fine with me and I'm sure for her. But I'm going to allow Defendant's Exhibit 1. But I'm going to remind you why we're here. All right. Please proceed.

4 MR. STERLING: I'll pass the witness.

5 THE COURT: All right. Thank you.

6 Anything else?

7 REDIRECT EXAMINATION 8 Q. (BY MR. GOTTFRIED) Ms. Cox, is it your position that all leasing of any kind within the subdivision is prohibited by the deed restrictions?

11 A. Yes.

12 MR. GOTTFRIED: We'll pass the witness.

13 RECROSS-EXAMINATION 14 Q. (BY MR. STERLING) Ms. Cox, would it also be your understanding that prohibiting of the renting within the subdivision is subject to the exception by approval of the architectural control authority?

18 A. Yes.

19 MR. GOTTFRIED: Your Honor, I'm going to object to the leading and, actually, it's not what the document says.

22 THE COURT: That's sustained.

23 Q. (BY MR. STERLIING) Ms. Cox, the individual restrictive covenants provides for the developer to basically sign away his rights to an architectural

1 control authority; is that correct?

2 MR. GOTTFRIED: Objection; leading.

3 THE COURT: Sustained.

4 MR. STERLING: Pass the witness.

5 MR. GOTTFRIED: Nothing further.

6 THE COURT: All right. You may step down.

7 MR. GOTTFRIED: Your Honor, we would call Helen Ramsey.

9 THE COURT: Ms. Ramsey.

10 HELEN RAMSEY, having been first duly sworn, testified as follows: 12 DIRECT EXAMINATION BY MR. GOTTFRIED: 14 Q. Good morning, Ms. Ramsey.

15 A. Good morning.

16 Q. Could you please state your full name for the record?

18 A. Helen Ramsey, Jr. 19 Q. And where do you reside? 20 A. 18940 Peckham.

21 Q. And do you live there with Janice Cox?

22 A. I do.

23 Q. And so you are a resident of Point Venture Section Three-1; is that correct?

25 A. Three-1 is correct.

1 Q. Okay. And you oppose short-term rentals in your subdivision?

3 A. In Section Three-1, correct.

4 Q. Okay. And did you, together with Ms. Cox, put together the web site entitled neighbors -- the Point Venture Neighbors -- what's the name of the web site you and Ms. Cox started?

8 A. Ms. Cox started the web site. I did not. It's pvstrreform.com and savesection3-1.

10 Q. Other than two of you, has anyone else joined in that group of neighbors as you define it in your -- in the web site?

13 A. No, sir.

14 Q. So it's just the two of you?

15 A. It's just the two of us.

16 Q. Do you have Plaintiff's Exhibit Number 4 in front of you?

18 A. I do.

19 Q. And the two Post-its on Plaintiff's Exhibit Number 4, are those your handwriting?

21 A. Yes, sir.

22 Q. Could you please read them both loud for the Court?

24 A. I can. Kathy is a member at the Point Venture Renters Association and so are -- as are other STR

1 owners in Section Three-1. They obviously were aware of the amendment by 2-3-17. That's the first one.

3 Second one says, didn't send mailout to STR and friends because of history of harassment we have endured and didn't want to waste a stamp.

6 Q. So you were present in the courtroom for Ms. Cox's testimony, correct?

8 A. Correct.

9 Q. And you agree that neither you nor Ms. Cox sent notice to all the members of the subdivision that you were seeking the amendment that is Plaintiff's Exhibit Number 3?

13 A. Correct. Seven were excluded.

14 Q. And those seven that were excluded, that wasn't just inadvertence. They were purposely left off the list of who got the notice, correct?

17 A. That's true. We decided that we did not want to endure -- we wanted to hold off the harassment that -- we didn't want to it escalate.

20 Q. Is it your position that all leasing within the subdivision of any duration is prohibited under the deed restrictions?

23 A. I don't know how to interpret that really. I think the Court needs to interpret that. I don't know.

25 Q. I'm asking for your position.

1 A. I don't have a position on it. I don't have a position on it. I'm not sure I can interpret that in the reading of the deed restrictions. I'll leave that to the lawyers and the...

5 Q. Do you oppose leasing of any duration in the subdivision?

7 A. No, sir.

8 MR. GOTTFRIED: Pass the witness, Your Honor.

10 THE COURT: Thank you.

11 CROSS-EXAMINATION BY MR. STERLING: 13 Q. Ms. Ramsey, did you check the controller's office as to whether or not hotel tax is being paid by the Jacksons?

16 MR. GOTTFRIED: Objection, Your Honor.

17 Calls for hearsay. And objection on the grounds of relevance.

19 THE COURT: That's sustained.

20 Q. (BY MR. STERLING) Do you agree with Ms. Cox's characterization of the problems that the short-term rental caused in the neighborhood?

23 A. Yes, sir.

24 Q. Is there any doubt in your mind that this would all end the Jacksons are running a short-term rental

1 business on their lot?

2 MR. GOTTFRIED: Your Honor, I object to the relevancy.

4 THE COURT: Overruled.

5 THE WITNESS: No, there's -- no, sir.

6 MR. STERLING: Pass the witness.

7 MR. GOTTFRIED: Nothing further, Your Honor.

9 THE COURT: Thank you, ma'am. You may step down.

11 MR. GOTTFRIED: Your Honor, we would call Kathleen Woodall.

13 THE COURT: Ms. Woodall, come around and let me swear you in.

15 KATHLEEN WOODALL, having been first duly sworn, testified as follows: 17 DIRECT EXAMINATION BY MR. GOTTFRIED: 19 Q. Good morning, Ms. Woodall.

20 A. Hello.

21 Q. Can you please state your full name for the Court?

23 A. Kathleen Kolb Woodall.

24 Q. And what is your address? 25 A. 18920 Peckham Drive.

1 Q. And is that a property within Point Venture Section Three-1?

3 A. Yes.

4 Q. And how long have you owned that property?

5 A. Since late October, I think, 2004.

6 Q. And are you a full-time or part-time resident there?

8 A. I split my time, but it's my primary residence.

9 Q. When you are not residing there, do you rent out that property?

11 A. Yes.

12 Q. And for what periods of time do you typically rent it out?

14 A. Between two and 21 days.

15 Q. And how many years have you been renting it out?

17 A. I began renting it last year -- mid-year of 2016.

19 Q. Were you provided with written notice of the proposed amendment that is Plaintiff's Exhibit Number 3?

21 A. No. 22 Q. How did you learn about the proposed amount?

23 A. I received an e-mail from another resident notifying me saying -- with a link to the web site.

25 Q. And did you know at that time who was proposing

1 the amendment?

2 A. No. 3 Q. Was -- have you ever been given an opportunity to speak at a meeting regarding the proposed amendment?

5 A. No. 6 Q. Are you aware of the existence of an architectural control authority within the subdivision?

8 A. Yes.

9 Q. And explain for the Court what your familiarity is with that architectural control committee, what do they do, and if you know any of the members.

12 A. I know that Stan Retriman is a member, and I know that it is a committee created by way of the owners' association, and that they have some broad duties that include the review of development of plans and building plans and administration of that.

17 Q. Are you aware of any architectural control authority recommendation one way or the other related to the proposed amendment that's Plaintiff's Exhibit Number 3?

21 A. There was none.

22 Q. Do you oppose the proposed amendment that is Plaintiff's Exhibit Number 3?

24 A. I would not sign it.

25 Q. Are you familiar with the history -- with the

1 developer history out there in Point Venture?

2 A. Yes.

3 Q. Explain for the Court what your understanding is of the developer history out there.

5 A. My understanding is that there were several developers over time from the inception of the community that experienced financial difficulties and some bankruptcies with the final group of lots being vested with the Point Venture POA which they disposed of to private owners over time and they do not own anymore.

11 Q. So your understanding is that there are no -- that there is currently no developer as that term is defined within the deed restrictions currently?

14 A. Correct.

15 Q. How would the proposed amendment, Plaintiff's Exhibit Number 3, affect your property rights?

17 A. Well, I would be restricted from not only short-term rentals, but it would restrict me from the potential of renting on a longer term because I would not be able to maintain a tenant in a holdover status on a lease for month to month. And my property is currently for sale which would impact the value because it sets my title separate and different from others in the neighborhood impacting the way it would be viewed by the open market.

1 MR. GOTTFRIED: I'll pass the witness.

2 CROSS-EXAMINATION BY MR. STERLING: 4 Q. Ms. Woodall, do you pay hotel tax?

5 A. Yes.

6 Q. In relationship to your short-term rental?

7 A. Yes.

8 Q. And have you been, in the past, an advocate for regulation of short-term rentals?

10 A. I have advocated for the Village of Point Venture to enforce ordnances for everyone and to potentially permit STRs in the neighborhood through the Village of Point Venture.

14 Q. And isn't it true that you said in a Point Venture meeting, October 7, 2015, that you felt that VRBOs are causing property values to decrease?

17 A. I don't recall if that was the total of my statement. It may have been a part of a statement I made which was lengthy.

20 Q. Okay. Would it surprise you that it's part of a Point Venture minutes of that meeting?

22 A. The minutes of the meeting do not include my full statement, which was submitted to the board and asked to be appended to the minutes.

25 Q. But that is substantially something you said

1 during that meeting; is that correct?

2 A. They were the minutes approved by the board.

3 It's was not my full statement.

4 Q. Okay. Did you say that VRBOs would -- what does VRBO mean?

6 A. Vacation rental by owner.

7 Q. Okay.

8 -- was causing property values to decrease?

10 MR. GOTTFRIED: Objection, Your Honor, asked and answered.

12 THE COURT: Sustained.

13 Q. (BY MR. STERLING) Were you aware of a provision in the 1972 restrictions, Article -- Roman Numeral 4 of 5 where it says, the renting or leasing of any improvement thereon or a portion thereof without the prior consent of the developer is prohibited?

18 A. I was provided with a copy of the deed restrictions when I bought my first house in Point Venture in 2002 and my second in 2004. I had not read them until after the amendment was submitted. I had not read them in sometime.

23 Q. And when you read them at the time that you were called upon to think about what it actually says, because of the existence of amendment being floated

1 around for signature, did you read that in the restrictive covenants?

3 A. That paragraph was not the object of my focus.

4 Q. Okay. Were you aware that no lot of the subdivision shall be used for commercial, business or professional purpose nor for church purpose?

7 A. I have been aware -- 8 MR. GOTTFRIED: Objection, Your Honor, relevancy.

10 THE COURT: Overruled.

11 Q. (BY MR. STERLING) Were you aware that all lots in the subdivision were to be used for single-family residences purposes only?

14 A. Yes.

15 Q. Were you aware that no noxious or offensive activity of any sort shall be permitted, nor shall anything be done on any lot which may be or become an annoyance or nuisance to the neighborhood?

19 A. Yes.

20 Q. Did you have a conversation with Janice Cox on or about April 30, 2016, in which you indicated you were going to join the other side, you were going to become a joint short-term renter -- short-term business?

24 A. I don't consider it us or them.

25 MR. GOTTFRIED: Your Honor, I'm going

1 object to relevancy.

2 THE COURT: Overruled.

3 Q. (BY MR. STERLING) You can answer.

4 A. I do not consider it joining the other side. I recall a conversation where I informed Janice that I was going to begin using my house as a short-term rental.

7 Q. Was that the day of the -- of a man who was dancing on a roof?

9 A. No. I really don't know.

10 MR. STERLING: Pass the witness.

11 THE COURT: Thank you.

12 REDIRECT EXAMINATION 13 Q. (BY MR. GOTTFRIED) Ms. Woodall, could I direct your attention to Plaintiff's Exhibit Number 1?

15 MR. GOTTFRIED: Which is the plat, Your Honor.

17 Q. (BY MR. GOTTFRIED) Can you point out to the Court the section of that plat which is Point Venture, Section Three-1?

20 A. Sure.

21 MR. STERLING: Could we approach, Your Honor?

23 THE COURT: Yes, of course. Thank you.

24 THE WITNESS: It roughly is -- this is not a complete plat because there are homes down here, but

1 it goes roughly down lake front and then it comes around and comes back up here. And along this side all the way up here through Kelly and along Venture Drive and back down here. And my home is here. This is the defendant, the Jacksons.

6 Q. (BY MR. GOTTFRIED) And where is the lake?

7 A. The lake is here. These are waterfront homes, and the lake is here. This is very -- it's vertical.

9 MR. STERLING: Could I ask just one question for clarity?

11 This is the whole of Section Three-1, isn't it? Doesn't show anything else?

13 THE WITNESS: I believe that's correct. I don't know where the Three-1 stops here on lake front, you know, right along this road so I assume this to be correct.

17 MR. GOTTFRIED: We'll pass the witness, Your Honor.

19 MR. STERLING: I pass the witness.

20 THE COURT: All right. Thank you.

21 MR. GOTTFRIED: Your Honor, we have six other witnesses, but I think we're going to rest.

23 THE COURT: All right. Let me let her get off.

25 You may step down.

1 MR. GOTTFRIED: In light of the testimony so far, I think we can dispense with the other witnesses.

4 THE COURT: Yeah, but they paid for parking down here and tried to find a spot.

6 MR. GOTTFRIED: If they really want to get their time on the stand, I could do it.

8 THE COURT: It's entirely up to you.

9 MR. GOTTFRIED: We'll rest, Your Honor.

10 THE COURT: All right. Thank you.

11 Counsel.

12 MR. STERLING: Your Honor, I don't know that we have anything further to put on because he called our witnesses. I got what I wanted out of them.

15 THE COURT: Okay. Very good.

16 If you-all want to give me a closing argument for this particular phase of this matter, I can take it if you-all want to give it.

19 MR. SUTTON: Judge, I'd like to make a brief closing. I need about five minutes.

21 THE COURT: All right. You're going to need five minutes to do it or you need a five-minute break?

24 MR. SUTTON: If you'd like to take a break, I'm fine.

1 THE COURT: No, I'm good.

2 CLOSING ARGUMENT BY PLAINTIFF 3 MR. SUTTON: Okay. Judge, I'd like to direction your attention to Plaintiff's Exhibit 2, which is the deed restrictions.

6 What I'd like to do is orient you to the two or three key provisions, and then I'm going to offer you some cases that will guide you in your interpretation this morning.

10 On page 2, number page 2 of the deed restrictions is one of the clauses implicated today.

12 It's called the Duration clause. And I agree the title of these provisions are not controlling.

14 And I will summarize that what the Duration clause says is, first, for a 35-year period and then on 10-year anniversaries thereafter, a majority of owners -- not two-thirds, but just over 50 percent -- are empowered to change the provisions hereof in whole or part.

20 So we know that there are circumstances under which the percentage required is, I'm going to say, 51 percent instead of 67 percent.

23 Now, I'm going to skip over a clause that's on the next page and come back to it because I want to stick to the subject matter of amendment.

1 If you go to the second to the last page there is Article 9, IX, called Amendments. This is a stand-alone clause which says that any or all of the amendments may be annulled, amended, or modified at any time at the recommendation of the architectural control authority by a vote of two-thirds.

7 That is one sentence. Irrespective of the 35- and 10-year anniversaries, there is a separate procedure involving architectural control authority where a two-thirds vote suffices.

11 Now, we get into the difficulty which is the next two sentences, which are stand-alone sentences.

13 All such lot owners shall be given 30 days notice in writing of any proposed amendment before it is adopted.

16 Then, finally, there shall be no annulment, amendment, or modification of these covenants without the prior recommendation of the architectural control authority.

20 So we have two clauses which have -- I will call complimentary provisions, but there is a conflict as to the percentage required if you want to call it a conflict.

24 This presents a problem for the Court because you've got two clauses that deal with some of

1 the same subject matter. One of which imposes some additional requirements. It is very easy, Judge, to harmonize these provisions without resorting to any tiebreaker rule. The harmonization is that there are circumstances under which a lower voting threshold is possible, and that's on these anniversary dates.

7 However, nothing in that first clause says, and you can do that without notice or you can do that without the recommendation of the architectural control authority.

10 To harmonize the two, you simply add those procedural due process requirements to the first clause and, thereby, you have given effect to every word in this document.

14 I will cite to the Court the broad principles announced in two cases as to how you interpret deed restrictions. One is a case from -- 17 And if I may, I'll give the Court copies of these.

19 One is a case relating to deed restrictions, particularly from 2015. It's called Zgabay, Z-G-A-B-A-Y. And the other case called Forbau, F-O-R-B-A-U.

23 And I will give opposing counsel copies of these.

25 Summarized briefly, these two cases hold

1 as follows: Forbau, the older case, is a general contract interpretation case. And it says that the court needs to give effect to every provision in a contract and specific clauses control over general. The Zagbay case, a 2015 case, relates specifically to deed restrictions. And this is an important case for the third appellant district.

8 It says as follows: If the court finds there is any ambiguity between two deed restrictions or any ambiguity in deed restrictions, there is a tiebreaker rule. The deed restricts are interpreted to favor the free and unrestricted use of property.

13 Judge, you, therefore, have two ways to answer the -- to interpret this conflict or this harmonization in our favor. One, without resort to a tiebreaker rule that you can harmonize the two provisions. Second, that under the rule in Zgabay if you have any doubt what to do, what you have to do is favor the free and unrestricted use of property.

20 There is one narrow sense in which whether leasing is allowed in this subdivision is relevant. And the only sense in which it's relevant is as follows: Does the amendment that has been put into evidence seek to restrict property rights?

25 The reason that it does, Judge, is because

1 it expressly bans, without exception, rentals by duration. A minimum duration of 90 days is required for rentals.

4 And what I'll do is point to the Court to another page of the deed restrictions, page 6, at the bottom of the page.

7 Paragraph 5, the renting or leasing of any improvements without the prior written consent of developer is prohibited.

10 Well, let's state that another way.

11 Renting is allowed with the prior consent of the developer. We don't have to address today whether renting is, in fact, allowed. All the Court has to address is whether the proposed amendment would restrict renting to the extent it is allowed. And the answer is plainly yes. The whole point of the amendment to the deed restrictions is to restrict property rights.

18 Judge, if you have any doubt at all what these two different provisions mean, if you find there's an ambiguity or any doubt, you're going to interpret the deed restrictions in favor of my clients, the rent for short terms and who oppose the amendment.

23 Finally, Judge, I'd like to address a procedural issue of what we have to show today for this injunction.

1 This is on page 3, the Enforcement clause.

2 I believe that this is the broadest enforcement clause I've ever encountered in 10 years of HOA litigation. Probably explained by this being a fairly old deed restrictions.

6 It says as follows, and I'll summarize: Any attempted -- any violation or attempted violation is subject to legal or equitable action. And it doesn't say by an owner, but the implication is that someone with standing can bring a case for damages or an injunction.

12 And then it says, you can see either a mandatory or prohibitory injunction for any violation or attempted violation, and it is not a prerequisite to the granting of an injunction to show inadequacy of the legal remedy or irreparable harm.

17 The only thing my clients have to show today to get an injunction is that the defendants have violated or attempted to violate the restrictive covenants by going out and getting an amendment -- seeking an amendment without written notice or architectural control recommendation. Both of those facts were established in the testimony.

24 The common law of Texas already provides that irreparable injury need not be shown in any deed

1 restriction case in any event.

2 And I'll give the Court the authority for that. What I've done is provided the Court with a newer case, Reed versus Reed, which summarizes the state of law as of 2016 on that.

6 The defendants are going to argue that the rest -- the other requirement -- or the other allowance of the deed restriction is that you can seek an injunction without a showing of an inadequacy of legal remedy. They're going to argue that that contract clause is not enforceable. So to address that, I have a case for the Court -- 13 Excuse me just one minute, Judge.

14 I should say the defendants cite a case from 1870 which has nothing to do with that issue. I have two cases for the Court, more modern cases. One is called Doyle and the other is called Inwood.

18 Judge, the Doyle and Inwood cases do as follows: The Doyle case says that parties can agree by contract to any remedy and if it doesn't violate public policy, the courts will enforce it.

22 The Inwood case is really a watershed case relating to just how much power homeowners associations have under deed restrictions. And I will offer the Court by analogy the following: The Texas Constitution

1 forbids foreclosures of homesteads. There are eight enumerated exceptions.

3 There is no exception allowing a homeowners association to foreclose a homestead and yet the Texas Constitution is overridden by deed restrictions because, as the Inwood case says, if a deed restriction says that a homeowners association can take your house away, the deed restrictions remedy controls.

9 I can't think of a stronger statement as to how much power there is in recorded deed restrictions as having your house taken away for not paying your monthly assessment.

13 Defendants are going to argue that we don't get the benefit of this enforcement clause, that it's not enforceable because it somehow conflicts with state law. That's simply not the case. This enforcement clause should be enforced as written. The only thing we have to prove today is that there is a breach -- attempted breach of the deed restrictions.

20 Finally, Judge, the defendants have made too much of the potential harm that they would suffer.

22 The injunction asks that any deed restriction -- that any amendment that they may get a 51 percent vote for not be recorded until final judgment. They may well get their 51 percent vote, Judge. All we're saying is it

1 can't be recorded until this lawsuit has been decided so that there won't be limitations on my client's rights, clouds on their title, and most importantly, they won't be subject to lawsuits by 20 or 30 or 40 or 50 owners while they're renting to short terms.

6 Thank you, Judge.

7 THE COURT: Thank you.

8 Counsel.

9 CLOSING ARGUMENT BY DEFENDANT 10 MR. STERLING: Your Honor, I'm going to kind of go -- work backwards of what counsel talked about.

13 Last thing he said was about how structuring the temporary injunction and that it's not going to be that inconvenient, they can go on and get their majority but that somehow just being prevented from going ahead and filing it, recording it, is not going to cause or cause any damage to my client. Well, it will cause damage because it won't be effective.

20 It's going to change the effective date of it without even getting an actual hearing on the merits.

22 It was going to be a situation -- if they're ordered not to record it that they will end up in a situation where they just want -- if they get it -- get the final amount of signatures they need, they'll

1 end up recording it in the next 10-year period and that means it would be effective until the 10-year period after that. And it seems to me that's a wrong way about going about doing any kind of -- keeping and maintaining the status quo. It's not doing that at all. At the very least, it should have allowed us to go ahead with it. You record it if you want to. You can even have an injunction prohibiting people from enforcing it after it's been recorded just so we could go ahead and get it done.

11 They have a legal remedy, which is the Declaratory Judgment Act, they can invoke. They do have a legal remedy. And I think they ought to be compelled to use that legal remedy itself. They can clearly get a declaration that is void if that's what they want to do.

16 Now, there's been a lot of talk about not having a chance to read everything counsel has given me. But the way he structured his argument makes me think that there is still not a direct case that says, gee whiz, you can get rid of or you do not have to have a -- that fourth point of proof in a temporary injunction situation involving restrictive covenants. That is, showing of an inadequacy of your legal remedy. I think that you do.

25 One of the things that I think that is --

1 I know I cited a case that's fairly old, but I like the language in it and the language in it is basically that your state is not really a party to the contract. The case I cited was Moore versus Letchford. It's 19- or 1871.

6 But it basically is saying that while it's required to give adequate process for the enforcement of rights, you can't tie the state's hands on how they're going to go about proving it.

10 And that's the point I'm trying to basically say. They're basically changing the evidentiary rules of the court, and I don't think they get away with doing that by putting it in their contract in the restrictive covenants.

15 Now, let's go, I think, to the situation that I tried to raise, and I think there's evidence of it in what you've heard. And that is, essentially, you've got to come into the court with clean hands. And they haven't come into court with clean hands. They have shown and they have admitted that they're violating certain restrictive covenants themselves. And it's pretty clear that if they're saying, you know, gee whiz, the only exception can be a developer and that developer's rights aren't moving on to the HOA, then they can't change it at all and renting at all.

1 And there are other things that they're violating in terms of running a business on the lot.

3 They're running what amounts to annoyance or nuisance activity on the lots. All of that is happening, and they're violating all those things.

6 And the reason I brought them up in this temporary injunction hearing is because these are all centered around the issue about short-term rentals. And in the situation where you're talking about the same subject matter -- that's what we're talking about -- the ultimate goal on both sides is fighting over the existence or nonexistence and the continued existence of short-term rental rights. And I think that you cannot permit them to get a temporary injunction when their hands are as dirty as they are in this situation.

16 So let's go, I think, now to actually talking about the restrictive covenants.

18 Now, one of the things that counsel referred to was a case. And one of the cases it cited was Coker versus Coker, which is a Supreme Court case.

21 And it's cited by one of his references.

22 And that particular case is talking about how you use contract interpretation rules on any contract, not just a restrictive covenants contract.

25 And it's clear that the usual principles of contract

1 principles are supposed to be done by or applied by the court to any contract which includes restrictive covenants, which is just another form of a contract.

4 But one of the things it says, basically, is that in harmonizing contract provisions, terms stated earlier in an agreement must be favored over subsequent terms. And our term is way in front of this contract.

8 The term they're pushing is way in the back of the contract. It's possible to harmonize that without any real problem at all, and harmonizing it is the developer providing two separate methods of initiating and providing for amendments or changes to the restrictive covenants.

14 One is a grassroots method that's done without voting where you have a majority of people running around collecting signatures. Usually that's going to be somebody like my clients pushing to get an amendment of some sort. Essentially petitioning to get their actual amendment. And there are -- if you read the rules of the statutes about restrictive covenants, there are provisions in there for doing exactly that.

22 Similar to what is being done -- provided for in the 1972 restrictions themselves.

24 And the 1972 restrictions were done before those statutes probably even went into effect. So it's

1 showing that there's one way of doing it and then there's going to be another way of doing it. And the other way of doing it is doing it using the HOA or the architectural control authority, essentially, which is a committee, apparently, of the current HOA.

6 But you see the difference. One, it's got -- one has bare majority. The other one has two-thirds.

8 One require as vote. The other one just requires signatures. One requires notice. The other one doesn't require notice. One requires -- and it would be superfluous to have notice when you're running around going to each person door to door trying to get them to sign on to the actual instrument that you want to sign or want to record.

15 And it doesn't require the architectural control authority to give us permission or a recommendation.

18 So it's just two separate things that work separately, and you can harmonize it as being that.

20 Now, the thing that I'm concerned with is one of the things that counsel said was because of the type of amendment that we requested, which would supposedly restrict the -- what is currently in the restrictive covenants, which may not be exactly true.

25 It may actually be opening up if you ban all leasing and

1 we now have another thing that allows leasing or only bans a portion of leasing. It seems to me that that is opening up. But in any case, they're characterizing as being restrictive.

5 But you're not supposed to be looking at the amendment. You're supposed to be looking at -- because what they're fighting about is the amendment processes. And it seems to me the one, if you're going to look at it past trying to harmonize it, you're trying to sit there and say which is the most restrictive.

11 Their's is the most restrictive. Their's the one who ends up having everything go at two-thirds majority, requiring the actual architectural control authority to do a recommendation prior to getting on a ballot of some sort. That's essentially much more restrictive than what's allowed in the one allowing from a majority of people and lot owners rising up as a group and going ahead and signing off on an instrument that changes and is recorded.

20 So either way you want to look at it, and I think the proper way is to say that it's not really ambiguous. I think it's pretty straightforward on service. And if you use the normal contract principles, look at the entire four corners of the document, and apply the tiebreaker that I'm talking about, it's pretty

1 obvious that the one at the head of the line should be given more favor. And we're not doing anything against the other process. All it's doing is being allowed both processes to work together.

5 So we urge the Court to deny the injunction -- the temporary injunction for all the reasons I've stated.

8 THE COURT: Thank you.

9 MR. SUTTON: May I have a brief minute rebuttal, Judge?

11 THE COURT: Sure.

12 FURTHER ARGUMENT BY PLAINTIFF 13 MR. SUTTON: Regarding the defense of unclean hands, here is why that argument is erroneous.

15 There is a confusion in the short-term rental cases by people who oppose them, between an owner's right to rent for any duration versus an owner's breaches of restrictive covenants. And often you have owners who have a right to rent for short terms who have breached the restrictive covenants because they have either caused nuisances or they have had over occupancy violations. Any number of other actionable wrongs for which there are damages and injunction as a remedy.

24 So the fact that an owner may have violated a restrictive covenant would not mean that the

1 owner does haven't a property right. And so the error in the analysis here by the defendants is to say that unclean hands would prevent owners from having procedural due process when it comes to amending the deed restrictions.

6 I can't think of anything that would take that right away from a homeowner unless they -- unless that homeowner had actually themselves sabotaged the amendment process. That's where the unclean hands argument come in.

11 Second, the evidence was that the defendants actually blocked us from having a voice in this vote, and it's quite apparent why. If you believe that deed restrictions are local, local government, that they are constitutions for subdivisions, then the spirit of this document is that everyone has a voice.

17 There is a process for them to be involved when deed restrictions are being proposed. I suspect that the architectural control authority will have some words to say if a group of owners, without the architectural control authority's recommendation, have gone and recorded something. I guess we'll see if the injunction is denied.

24 Finally, the Zgabay opinion relates not to -- not merely to enforcement of a deed restriction in

1 favor of an owner, but specifically the free and unrestricted use of property. And that's what has to be born in mine.

4 Another aspect of Zgabay that applies here is that my client's property right is partly bound up with the procedural due process rights they have. They have spent money on land, Judge. That land came with a bundle of rights that are important to these people.

9 They are making rents on their property. The defendants want to take that away without procedural due process.

11 I would ask the Court to keep that in mind for a group of homeowners.

13 Thank you, Judge.

14 THE COURT: All right. Thank you.

15 FURTHER ARGUMENT BY DEFENDANT 16 MR. STERLING: Only thing I would add is it's one thing to talk about procedural due process in a situation about taking away, let's say, a home -- or a HOA has accused you of violating something and you're entitled to a hearing and that kind of stuff. But it's another thing to be talking about procedural due process in the sense of changing the amendments. That's not a matter of due process in a judicial or semi-judicial method.

25 It's basically, we're talking about two

1 different methods of changing a particular process.

2 They were aware of it when they bought their property.

3 They should have been aware of it. They are plain to see to read both those two provisions. And the first conclusion any reasonable personal would come to is both those apply. One way -- I can do it this way, or I can do it that way.

8 THE COURT: All right. Thank you.

9 All right. I always hate it when judges kind of went off on a tangent when I was practicing law, so I'm going to do that anyway.

12 I want to ask both attorneys this: Let's say, hypothetically, provision comes up. Petition or a request of the architectural control authority -- I know you guys aren't saying ACA because you don't want to be called the Affordable Care Act -- but anyway, the architectural control committee looks at something, has a proposal, has something but then it has to go through two-thirds to be approved. That's about right.

20 But before they do that, they've got to give a 30-day notice to those -- to everyone. Is that about right?

23 Okay. So let's say they do that. And that's approved. What next -- who files the instrument with the property records? Is it signed under the ACA

1 or is it signed by -- how does that work procedurally?

2 MR. SUTTON: Judge, I believe I can address that.

4 THE COURT: Okay.

5 MR. SUTTON: In this particular set of deed restrictions, we don't have a mandatory HOA in here. But there is this ACC. And the only thing that it says about the ACC in that amendment process is that it makes a recommendation. And that could be recommendation for or against.

11 The recordation would be a list of signatures attached to an amendment. And that signature would be either 51 percent or two-thirds. And they would be on the back of the recorded instrument.

15 THE COURT: All right. So is it your argument, then, that after it's approved -- let's say two-thirds agree and they bless the architectural committee's or whatever, ACA, then those two-thirds have to sign the document to get it filed, or does it revert back to Provision 1-4 -- Section 1-4 where you then have to go ahead and just get one-half of everyone to sign off on it?

23 MR. SUTTON: Our position is that at the stated tenure intervals of the first provision that a relaxed majority requirement is required, and you would

1 only need 51 percent on that instrument. But outside of those unusual periods, then it's two-thirds and attached -- their signatures attached.

4 THE COURT: Okay. So that's you-all's position.

6 What is your view on that?

7 MR. STERLING: My view is that I really think that when it says recommendation, it means favorable recommendation. Because I think most people when they talk about you're recommending something, it's favorable. If you're not recommending something, it's unfair.

13 THE COURT: Okay.

14 MR. STERLING: So I disagree with him on that.

16 And I think that, practically speaking, that if you had a HOA run a vote on this thing and -- or I should say the architectural control authority, I would think the right thing to do would be to then to file a document that had the amendment on it; cite that it got, you know, 30 days notice; that they had the vote; it was over two-thirds; and they certify to it that the architectural control authority, and only the architectural control authority, have to sign it and record it. A lot simpler.

1 THE COURT: Do you think that under Section 1, Paragraph 4 that you have to give notice to all of the property owners?

4 MR. STERLING: No, I don't think so. I think the reason why is that the whole process works differently. You're taking your petition in your hand, or whatever you're calling it, and you're going out and essentially lobbying to get a signature lot by lot. And once you reach your majority, you stop. You don't need to go any further. So I don't think there's a question about having any kind of a need for notice. You're having to lobby each single time you do it.

13 THE COURT: Okay.

14 MR. STERLING: That's how you do regular petitions.

16 THE COURT: All right. Thank you.

17 All right. I'm going take a 10-minute break, and I'll be back at 10:45 and let you know.

19 Thank you.

20 MR. SUTTON: Judge, should I give you our proposed order now?

22 THE COURT: Yeah, let me see.

23 Do you have one too?

24 MR. STERLING: I haven't seen it, and our order would be denied.

1 THE COURT: Okay. That's fine. Thank you.

3 (Court in recess.)

4 THE COURT: By the way, when do you guys want to have this case set for trial? You have to do it in 60 days.

7 MR. SUTTON: 60 days. I was thinking the end of June. Does that fit with the window?

9 MR. STERLING: Yeah, probably can be done.

10 I would think somewhere end of June.

11 MR. SUTTON: I have vacation beginning July 13th.

13 THE COURT: Okay.

14 MR. SUTTON: That third week in June, if that's the square on the calendar.

16 THE COURT: That's a jury week.

17 MR. SUTTON: I have not pled for a jury.

18 MR. STERLING: No, I don't see any point in a jury.

20 MR. SUTTON: We'll do bench.

21 THE COURT: So the third week of June is actually a jury week.

23 MR. SUTTON: Forth week in June, then.

24 THE COURT: June 26th through the 30th.

25 MR. SUTTON: Agree.

1 MR. STERLING: I'm sorry, what was it?

2 THE COURT: June 26th through the 30th is there -- you guys probably don't have your calendars with you.

5 MR. STERLING: I don't have it with me. 6 COURT'S RULING 7 THE COURT: All right.

8 All right. I thought you-all did a fine job. I always appreciate good lawyering. So let me tell all of you that you did fantastic. The clientsshould be pleased no matter what the judge does.

12 I am concerned in the taking of property rights without due process and without following procedures that are set forth in governing documents for a neighborhood or community. I spent quite a bit of time on this yesterday reading the cases, reading what have been submitted -- or, actually, I looked at yours and then I just saw yours today. But to harmonize the provisions, I think at this point the document -- the deed restrictions, as they're written, provide a process. And I don't think that's been followed.

22 And so, therefore, I'm granting the temporary injunction as proposed by the plaintiff.

24 We're going to maintain the status quo.

25 MR. STERLING: Your Honor --

1 THE COURT: Hold on.

2 A $10,000 bond that's been previously filed will remain in effect. This will, essentially, require -- will enjoin the defendants from going against what I believe is required, giving 30 days notice, going through the architectural control authority.

7 We're going to set the case for trial during the week of June 26th through the 30th, 2017, on agreement of counsel.

10 So, yes, this is prohibiting any further -- well, it actually kind of speaks for itself as to what can and can't be done. I've signed this. You-all can get it filed.

14 And now, I'm sorry.

15 MR. SUTTON: Judge, Mr. Sterling has raised an issue that I may not have written clearly that the prior bond cash remain in effect. I wonder if you would like to interline them.

19 MR. STERLING: Before you do, Your Honor, I wanted an opportunity to at least say that I think that a separate bond should be placed for this particular temporary injunction. I think it ought to be at least $10,000.

24 THE COURT: You want a separate bond, a different bond? Any particular reason why?

1 MR. STERLING: I think that the stakes are pretty high in this particular situation. And, effectively, what the Court is doing is going to prevent my client from ever getting this particular amendment in effect for at least 10 years.

6 MR. SUTTON: Judge, I believe he should have elicited testimony as to the dollar issues relating to the bond and that was not done.

9 THE COURT: All right. I'm just going to go ahead and interline this prior cash bond.

11 And if you-all will get together as to a date in that week of June 26th through 30th, I can actually sign a separate order if you-all want that.

14 Okay.

15 MR. SUTTON: Thank you, Judge.

16 THE COURT: All right. Thank you very much.

18 (The proceedings were concluded.)

1 STATE OF TEXAS ) COUNTY OF TRAVIS ) 3 I, Cathy Mata, Official Court Reporter in and for the County Court at Law No. 1 of Travis County, State of Texas, do hereby certify that the foregoing contains a true and correct transcription of all portions of evidence and other proceedings requested in writing by counsel for the parties to be included in this volume of the Reporter's Record, in the above-styled and numbered cause, all of which occurred in open court or in chambers and were reported by me. 12 I further certify that this Reporter's Record of the proceedings truly and correctly reflects the exhibits, if any, admitted, tendered in an offer of proof or offered into evidence.

16 I further certify that the total cost for the preparation of this Reporter's Record is $651.20 and was paid/will be paid by Mr. James Patrick Sutton.

19 WITNESS MY OFFICIAL HAND this the 3rd day of May, 2017.

22 /s/ Cathy Mata Cathy Mata, Texas CSR No. 6126 23 Expiration Date: 12/31/17 Official Court Reporter, County Court at Law No. 1 24 Travis County, Texas P.O. Box 1748, Austin, Texas 78767 25 Telephone (512) 854-9252 Tab F CAUSE NO. C-1-CV-17-001833 RICHARD W. JACKSON, § IN THE COUNTY COURT LISA C. JACKSON, and § KATHLEEN WOODALL, § Plaintiffs, § vs. § AT LAW NUMBER TWO OF § JANICE COX and HELEN RAMSEY, § Defendants. § TRAVIS COUNTY, TEXAS DEFENDANTS JANICE COX AND HELEN RAMSEY’S FIRST AMENDED ANSWER AND SECOND AMENDED COUNTERCLAIM Defendants Janice Cox and Helen Ramsey (hereinafter “Defendants”) file their First Amended Answer and Second Amended Counterclaim, and respectfully show the Court as follows: GENERAL DENIAL Pursuant to Rule 92 of the Texas Rules of Civil Procedure, Defendants generally deny each and every allegation in Plaintiffs’ Petition (the “Petition”) and demand strict proof of all matters set forth therein. Defendants specifically reserve the right to file amended pleadings in this case in accordance with the Texas Rules of Civil Procedures and applicable orders of the Court.

DEFENSES 1. Plaintiffs’ claims are barred, in whole or in part, by the doctrine of unclean hands.

2. Plaintiffs’ claims are barred, in whole or in part, by the doctrine of estoppel, including the doctrine of equitable estoppel.

Wherefore, Defendants respectfully request that (1) Plaintiffs take nothing by way of their claims, (2) Defendants receive their costs of court, expenses, and attorneys’ fees expended in this action; and (3) Defendants receive any further relief, at law or in equity, to which they may be justly entitled.

COUNTERCLAIMS I. FACTUAL BACKGROUND 1. Ms. Cox and Ms. Ramsey live in a residential neighborhood of Point Venture Section 3-1, Texas (“Point Venture”). The properties in Point Venture are governed by the 1972 Restrictions that are recorded at Volume 4291 Page 1452, et seq. in the Official Records of Travis County (“1972 Restrictions”). Ms. Cox and Ms. Ramsey moved to Point Venture for the quiet and family oriented lifestyle the community offered. However, as transient rentals have become more common in Point Venture, the quiet has been replaced with constant interference with and disrespect for their rights as property owners and their enjoyment of their home.

2. The Jacksons own a house adjacent to Ms. Cox and Ms. Ramsey. The Jacksons continually rent out their house as a party house for transient housing. The Jackson’s transient renters have committed the following acts: • Transient renters urinating and vomiting in front of their family; • Being chased by transient renters on foot, late at night; • Observing weekend parties with over thirty (30) guests playing music, singing karaoke and dancing on the roof of the Jacksons’ house in the late night and early morning hours; • Transient renters throwing trash and beer cans onto their property; • Transient renters trespassing onto their property; • Persons entering onto their property from the Jacksons’ property and damaging it; and • Intoxicated transient renters harassing both Ms. Cox and Ms. Ramsey on their own property on multiple occasions.

Ms. Cox and Ms. Ramsey attempted to resolve the matter amicably by speaking with the Plaintiffs and other Point Venture neighbors directly. Ms. Cox and Ms. Ramsey were met with hostility, retaliation, and threats. The nuisance created by the Jacksons continued even after Ms. Cox and Ms. Ramsey attempted to resolve the issue.

3. Previously, Kathleen Woodall opposed the operation of transient rentals in Point Venture. At a Village Council meeting on October 7, 2015, Ms. Woodall expressed concern regarding rental properties. Specifically, she suggested that the Village Council register rentals, limit occupancy and cars, and implement cleaning requirements and a code of conduct. She also expressed “VRBO’s are causing Property Values to decrease.” Ms. Woodall distributed a handout outlining her concerns and suggestions. At a Village Council meeting on March 10, 2016, Ms. Cox and Ms. Ramsey were present when Ms. Woodall told the Mayor she felt “there should be an ordinance regulating the short-term rentals.” Ms. Woodall also sent out two e-mails in late 2015 and early 2016 discussing her on-going suggestions to regulate transient rentals through written ordinances. Subsequently, Ms. Woodall began making her property available as a transient rental and, conveniently her position on transient rentals changed.

II. COUNTERCLAIM: DECLARATORY JUDGMENT 4. The allegations in the preceding paragraphs are incorporated herein by reference.

5. There is a real and substantial justiciable controversy between the parties.

Defendants contend that Article I, ¶ 4 provides for the owners of a majority of lots in the subdivision to have the power and authority to change the provisions of the 1972 Restrictions, in whole or in part, by the execution and recordation of an instrument so changing the 1972 Restrictions. Plaintiffs incorrectly contend that Article I, ¶ 4 requires 30 days’ written notice in

writing to all lot owners and the prior recommendation from the Architectural Control Authority before execution and recordation of the changing instrument.

6. Defendants seek a declaration that the 1972 Restrictions do not require that an Article I, ¶ 4 changing instrument have 30 days’ written notice or an Architectural Control Authority recommendation before its execution and recordation.

III. COUNTERCLAIM: BREACH OF CONTRACT 7. The allegations in the preceding paragraphs are incorporated herein by reference.

8. The 1972 Restrictions prohibit Plaintiffs from: (1) renting any of the improvements on their lot without the prior written consent of the Developer; (2) using a lot for any commercial, business, professional or church purpose; (3) using a lot for anything other than a single-family, private residential purpose; (4) using a lot for anything other than single family residential purposes; and (5) allowing noxious or offensive activity of any sort on their lot or allowing anything to be done on their lot which may be or become an annoyance or nuisance to the neighborhood.

9. Plaintiffs have breached the 1972 Restrictions. As a result of Plaintiffs’ breaches of contract, Defendants have been damaged in an amount within the jurisdiction of this Court.

10. All conditions precedent have been satisfied.

IV. COUNTERCLAIM: INVASION OF INTEREST IN PRIVATE ENJOYMENT OF PROPRTY/NUISANCE (Jacksons only) 11. The allegations in the preceding paragraphs are incorporated herein by reference.

12. Ms. Cox and Ms. Ramsey have a right to use and enjoy their home. Plaintiffs have substantially interfered with their interest and right to use and enjoy their home. Plaintiffs’ actions constitute a nuisance.

13. Plaintiffs’ actions are negligent or intentional. As a result, Defendants have been damaged in an amount within the jurisdiction of this Court.

V. COUNTERCLAIM: WRONGFUL INJUNCTION 14. The allegations in the preceding paragraphs are incorporated herein by reference.

15. Pursuant to Article I, Section 4 of the 1972 Restrictions, Defendants were attempting to change the 1972 Restrictions to prohibit rentals for less than ninety days. This change would have put Plaintiffs out of the business of transient rentals.

16. Although one of the Plaintiffs testified at the temporary injunction hearing, Plaintiffs failed to inform the Court that one of the Plaintiffs had sent a letter and a flyer opposing the change to everyone in Point Venture Section 3-1. Everyone, except for the probable and notable exceptions of Ms. Cox and Ms. Ramsey received the letter and flyer. Plaintiffs’ mailing included the change to the 1972 Restrictions. The letter and flyer opposing the change was sent out on February 2, 2017.

17. Plaintiffs’ opposition did not work - It was clear that the will of the people was to stop the nuisances created by the transient rental business. Plaintiffs realized that the money from their $900-plus nightly rental incomes was about to end. That is when Plaintiffs filed this lawsuit - three weeks after sending out the letter and flyer to try and stop people from signing the change to the 1972 Restrictions.

18. Previously, Plaintiffs obtained a temporary restraining order and temporary injunction to prevent the change and protect their business. In both instances, Plaintiffs’ sole complaint was that Defendants failed to meet the (1) notice and (2) ACC approval requirements in Article IX of the 1972 Restrictions. Because Defendants were following the procedure in Article I, Section 4 of the 1972 Restrictions – which does not include these requirements and has different

requirement – Plaintiffs argued that the requirements in Article IX of the 1972 Restrictions should be copied and pasted into Article I, Section 4 of the 1972 Restrictions. Plaintiffs made this complaint while admitting (1) Article IX is a “standalone” amendment provision while (2) Article I, Section 4 is a “separate” provision that allows a “majority of owners to amend the deed restrictions upon the 35th anniversary of their adoption and every ten years thereafter.”

19. On November 17, 2017, the Court denied Plaintiffs’ motion for partial summary judgment concerning this issue and granted Defendants’ motion for partial summary judgment on this same issue.

20. The temporary restraining order and temporary injunction were issued or perpetuated when they should not have been. On information and belief, the temporary injunction will be dissolved.

21. As a result of Plaintiffs’ obtaining the temporary injunction, Defendants have been injured and seek recovery for such injury. Furthermore, Defendants ask that the Court award Defendants additional damages in the amount of the temporary restraining and temporary injunction bond or otherwise rule that the bond be recovered by Defendants. Finally, if the Court deems it necessary, Defendants request equitable or other relief in the form of time to file the change to the 1972 Restrictions or some other form to cure any harm caused to Defendants.

VI. REQUEST FOR PERMANENT INJUNCTION 22. The allegations in the preceding paragraphs are incorporated herein by reference.

23. Defendants seek a permanent injunction against the Jackson's continued operation of their property for their transient rental business.

VII. REQUEST FOR ATTORNEYS’ FEES, INTEREST, AND COSTS 24. Pursuant to Texas law, Chapter 38 of the Texas Civil Practice and Remedies Code and Section 5.006 of the Texas Property Code, Defendants seek to recover their reasonable attorneys’ fees and costs, including reasonable fees for the cost of successfully making or responding to an appeal to the court of appeals and the Texas Supreme Court. All conditions precedent for the recovery of attorneys' fees have been met.

25. Defendants are also entitled to his costs incurred in this action pursuant to Rule 131 of the Texas Rules of Civil Procedure.

26. Furthermore, Defendants request that they be awarded prejudgment and post- judgment interest to which they are entitled under the law.

VIII. CLAIMS FOR RELIEF 27. Pursuant to Rule 47 of the Texas Rules of Civil Procedure, Defendants are seeking monetary relief over $100,000 but not more than $200,000 and non-monetary relief.

IX. JURY DEMAND 28. Defendants have requested a trial by jury and paid the requested fee.

X. PRAYER FOR RELIEF WHEREFORE, PREMISES CONSIDERED, Defendants respectfully request the following relief: (1) that this matter be set down for trial by jury; (2) that the Court grant a declaration that the 1972 Restrictions do not require that an Article I, ¶ 4 changing instrument have 30 days’ written notice or an Architectural Control Authority recommendation before its execution and recordation;

(3) that the Court grant Defendants' application for a permanent injunction prohibiting Plaintiffs from using their lot for a transient rental business; (4) that the Court award Defendants all damages they have sustained as a result of Plaintiffs’ conduct; (5) that the Court award Defendants additional damages in the amount of the temporary restraining and temporary injunction bond or otherwise rule that the bond be recovered by Defendants; (6) that the Court award Defendants additional damages in the amount of the temporary restraining and temporary injunction bond or otherwise rule that the bond be recovered by Defendants; (7) that, if the Court deems it necessary, the Court award Defendants equitable or other relief in the form of additional time to file the change to the 1972 Restrictions or some other form to cure any harm caused to Defendants. (8) that the Court award prejudgment and post-judgment interest; (9) that the Court award Defendants their reasonable attorneys’ fees as permitted by law, including reasonable fees for the cost of successfully making or responding to an appeal to the court of appeals and the Texas Supreme Court; (10) that the Court award Defendants their costs, including costs of court; and (11) for all such other relief, at equity or otherwise, to which Defendants may show themselves entitled.

Respectfully submitted,

/s/ Michael L. Navarre Michael L. Navarre State Bar No. 00792711 BEATTY BANGLE STRAMA, PC West 15th Street, Suite 1450 Austin, Texas 78701 (512) 879-5050 Telephone (512) 879-5040 Facsimile [email protected] ATTORNEYS FOR DEFENDANTS

CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing instrument was electronically served on counsel of record by email on this 1st day of December, 2017: James Patrick Sutton – via [email protected] The Law Office of J. Patrick Sutton 1706 W. 10th St. Austin, Texas 78701

Mr. David M. Gottfried – via [email protected] The Gottfried Firm West Sixth Place 1505 West Sixth Street Austin, Texas 78703

/s/ Michael L. Navarre Michael L. Navarre