Case Alert: EIS Development II, LLC v. Buena Vista Area Association (Texas Supreme Court 2025)

By Michael P. Granata June 19, 2025 Posted in Press Releases Tagged in Divorce

Case Alert: EIS Development II, LLC v. Buena Vista Area Association (2025 WL 1668344)
 
Introduction
 
In EIS Development II, LLC v. Buena Vista Area Association, decided by the Supreme Court of Texas on June 13, 2025, the court addressed a dispute over a deed restriction limiting residential density on a 100-acre property in Ellis County, Texas. The case involved petitioner EIS Development II, LLC, which planned to develop a subdivision called Sunset Meadows with 73 single-family residential lots, each under two acres, and respondents, the Buena Vista Area Association and several adjoining landowners, who sought to enforce a restriction stating, “[n]o more than two residences may be built on any five acre tract.” The court’s decision clarified the interpretation of this restriction, reversed the lower courts’ rulings granting declaratory and injunctive relief to the respondents, and remanded for a new trial on EIS’s changed-conditions counterclaim.
 
Background
 
The property originated from land acquired by the State of Texas between 1988 and 1993 for the Superconducting Super Collider project. After the project was defunded, the Texas General Land Office sold a 90-acre parcel and an adjoining 10-acre parcel to David Lemon in 1988, attaching Level 5 Restrictions to the deeds. These restrictions included the key provision limiting residential density to “no more than two residences” on any five-acre tract, alongside requirements for minimum dwelling size (2,200 square feet) and single-family use. The restrictions were set to run with the land for 20 years, renewable for successive 10-year periods unless modified by 80% of adjoining landowners.
In 2019, Lemon sold the parcels to Salvador Family Holdings without referencing the restrictions, and the parcels were later transferred to EIS Development II, LLC. EIS planned Sunset Meadows, a subdivision with 73 lots, each between one and two acres, for single-family homes. The City of Waxahachie’s Planning & Zoning Commission approved the final plat in September 2020, and the Ellis County Commissioners’ Court allowed approval by operation of law in November 2020. No adjoining landowners objected during these approvals, though one non-adjoining landowner raised the restrictions.
In December 2020, the Buena Vista Area Association, formed by three adjoining landowners, sued EIS for declaratory and injunctive relief, arguing that the development violated the restriction by exceeding a maximum of 40 residences (two per five acres) across the 100 acres. EIS countered, challenging the Association’s standing and raising defenses of waiver, abandonment, estoppel, and changed conditions, while also seeking a declaratory judgment that the restrictions were unenforceable.
Trial and Appellate Proceedings
The trial court granted partial summary judgment for the Association, declaring that the restrictions unambiguously limited development to two main residences per five-acre tract, dismissing most of EIS’s defenses except changed conditions, and issuing a temporary injunction. At trial, the jury was instructed to consider only changes occurring after Salvador Family Holdings acquired the property for EIS’s changed-conditions counterclaim, and it found no changed conditions. The final judgment declared the restrictions valid, limited development to 40 residences, and permanently enjoined EIS from building more. The court of appeals affirmed, upholding the restriction’s density limitation and the jury instruction.
Supreme Court Analysis
The Supreme Court of Texas addressed five issues raised by EIS, focusing primarily on the restriction’s meaning, the changed-conditions counterclaim, and joinder of parties.
  1. Interpretation of the Restriction
The court held that the restriction, “[n]o more than two residences may be built on any five acre tract,” does not prohibit building one residence on each sub-five-acre lot. Applying property law principles and the omitted-case canon of textual interpretation, the court emphasized that restrictive covenants must clearly prohibit the challenged land use to bind subsequent purchasers. The restriction limits residential density, not tract size, and only explicitly addresses tracts of five acres or more, implying that no more than two residences can be built on such tracts.
The court rejected several interpretations:
  • EIS’s argument that the restriction applies only to tracts exactly five acres or five acres and larger was unreasonable, as it ignored implications for smaller or larger tracts.
  • The Association’s claim that the restriction sets a minimum five-acre tract size for any residential building was unsupported, as the restriction does not address tract size.
  • The dissent’s view, which limited the 100 acres to 40 residences by dividing it into 20 hypothetical five-acre tracts, was deemed unreasonable for rewriting the restriction to apply “per five acres” and ignoring the actual platted tracts.
The court concluded that the restriction reasonably implies that one residence may be built on any tract, including sub-five-acre lots, as it assumes one residence is permissible on a five-acre tract and does not prohibit construction on smaller tracts. This interpretation avoids adding unstated provisions and aligns with the need for clear notice in property law. Consequently, the court reversed the declaratory and injunctive relief halting EIS’s development.
  1. Waiver or Abandonment Counterclaim
EIS argued that the Association waived or abandoned enforcement rights by not objecting to the plat approval and tolerating violations in nearby subdivisions. The court rejected both claims:
  • Failing to object to the plat was not waiver, as neither the city nor county could enforce deed restrictions during plat approval, rendering objections futile.
  • Alleged violations in non-adjoining subdivisions did not support waiver, as the Association lacked standing to enforce restrictions on those properties.
  1. Changed-Conditions Counterclaim
The court found error in the trial court’s instruction limiting the jury to post-purchase changes for EIS’s changed-conditions counterclaim. The changed-conditions doctrine focuses on whether changes since the restriction’s creation render its benefits unobtainable, not on the owner’s notice or purchase timing. The court disapproved contrary appellate decisions and remanded for a new trial, allowing consideration of all changes since 1988.
  1. Joinder
EIS argued that nonparty adjoining landowners and the State were necessary parties. The court disagreed, holding that Texas Rule of Civil Procedure 39 requires joinder only of those actively claiming an interest. Neither the nonparty landowners nor the State had asserted claims, despite potential interests via deeds or statute, so joinder was not required.
Dissent
The dissenting opinion, joined by two justices, argued that the majority misconstrued the issue by focusing on sub-five-acre lots rather than the 100 acres. The dissent viewed the restriction as a clear density limit of 40 residences across the 100 acres, enforceable regardless of subdivision, and criticized the majority for nullifying the restriction by allowing unlimited residences through subdivision. The dissent emphasized the original parties’ intent to maintain a rural lifestyle and warned that the ruling undermines density restrictions statewide.
Conclusion
The Supreme Court reversed the judgment granting the Association relief, rendered judgment that the Association take nothing, and remanded for a new trial on EIS’s changed-conditions counterclaim. The decision underscores the importance of clear language in restrictive covenants and limits judicial expansion of unstated restrictions, while ensuring equitable consideration of changed conditions.