Candlelight Hills Civic Association, Inc v. Goodwin

The Candlelight Hills Civic Association (the association) (defendant), a nonprofit subdivision homeowners association, sought to tap a maintenance fund to purchase a recreational facility for the subdivision’s use by increasing the annual assessment for maintenance fees—if enough lot owners and residents approved the acquisition. Gerald Goodwin (plaintiff), a subdivision homeowner, objected to the purchase and filed a declaratory-judgment action against the association to stop the purchase and to challenge the association’s authority under restrictive covenants and state law to use maintenance funds to purchase real property. The association’s restrictive covenants listed specific purposes for which maintenance assessments could be used as well as a general authorization for “doing any other thing necessary or desirable in the opinion of the Trustees of the Association, . . . which they consider of general benefit to the owners or occupants of the Subdivision.” Texas law and the association’s articles of incorporation and bylaws provided additional authority to the association regarding the maintenance fund and its authority to own property in its own name. One purpose stated in the articles of incorporation and bylaws was the association’s responsibility to maintain the subdivision’s residential character. The trial court ruled that the restrictive covenants were unambiguous and that they did not allow the association to use maintenance-fund assessments to acquire real property. The association appealed.