Nearby homeowners lacked standing to sue for diminution of value due to Utility District’s violation of restrictive covenants

Country Community Timberlake Village, L.P., et al v. HMW Special Utility District of Harris and Montgomery Counties, 01-12-00825-CV (Tex. App. – Houston [14th Dist.], April 15, 2014)

This is a diminution of value case arising from the condemnation of a small track for utility use. The Houston Court of Appeals, 14th District, held the property owners did not have standing since none of them had ownership in the actual tract being condemned, even though the track was allegedly created for their benefit.

Country Community created the subdivision dividing a 143.5-acre tract of land and attached several restrictive covenants. Country Community also owned a 3.9332-acre tract which is not part of the subdivision but had its own covenants. HMW purchased 0.2105 acres of the Small Tract and constructed a small water plant on the site.  Such use is contrary to the covenants of the small tract so HMV sued to condemn that restriction. Certain homeowners and the developer countersued for diminution in value of their adjoining residential subdivision. A jury awarded a diminution value of $1,000 per tract and both sides appealed.

The 14th District Court of Appeals first held that when a grantor subdivides land with covenants each grantee may enforce those covenants if they were part of a general plan or scheme of development for the entire parcel that was part of the inducement to obtain land within the restricted area. On the other hand, it is well settled that a restriction on a piece of property may not be enforced by one who owns land not subject to the restriction, absent privity of contract or a general plan or scheme of development applicable to the land that the plaintiff does own. After analyzing the specific language of the covenants on each tract (including recital language tying the two together), the court held the home owners/developer did not establish a general plan or scheme of development indicating the smaller tract’s covenants were created for the benefit of the larger subdivision. As a result, the home owners/developer lacked standing to sue for diminution of value.

If you would like to read this opinion click here. Panel: Chief Justice Radack, Justices Bland and Huddle. Opinion by Justice Huddle. The attorney listed for the District is Patrick F. Timmons Junior.  The attorney listed for the Plaintiffs is William S. Chesney III.

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