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BY TOM BOWER • Special to The Daily Tribune

MARBLE FALLS - A bitter legal dispute over the city’s first Starbucks Coffee Co. shop has been settled with the project’s developer agreeing to install more landscaping for the benefit of neighboring residents.

However, little else is known about the details of the settlement, and some neighbors of the coffee shop are concerned a precedent has been set that will allow other fast-food operations to open up in the subdivision.

“Right now, the covenants are broken. They have been violated,” said Lenwood Nelson, former president of the Gateway Park Property Owners Association, which initiated the lawsuit.

According to legal documents on file in the 33rd state District Court, an out-of-court settlement was reached on Aug. 27, but a motion to withdraw the counter suit - ending the litigation - was not filed until Oct. 1.

In the dispute, the Gateway Park POA sued an investment company owned by Marble Falls insurance agent Shane Stewart, seeking to halt the construction of a new one-story office building the association claimed was in violation of the neighborhood’s restrictive covenants.

The office building, located at 301 Gateway North, was designed and constructed to house Stewart’s State Farm insurance office, along with a Starbucks coffee shop featuring a drive-up takeout window. The property owners association never succeeded in halting the construction, and the development ultimately was completed, allowing the coffee shop to open May 19.

Specifically, the association’s restrictive covenants prohibit “drive-in service restaurants.” The lawsuit hinged on whether the Starbucks coffee shop should be considered a drive-in restaurant, like a Sonic Drive In, or whether it is merely a coffee shop with a drive-through takeout window, which is not specifically prohibited by the covenants.

Not everyone is happy

In a telephone interview Monday, Nelson said all he knows about the settlement is what he read in a newsletter to POA members that he received within the last several weeks. Any settlement, he said, should be narrowly tailored to the lot where the Stewart office building and coffee shop are located, in order that no other similar fast-food establishment can lawfully be developed on any other Gateway Park properties.

Nelson lives just uphill from the coffee shop. Bright lights from the drive-through service menu can be seen by neighbors and neighbors can easily hear music from cars in line at the window, as well as the extra traffic generated by the business.

Nelson said the settlement should also address the variances to the subdivision covenants regarding sign restrictions, which he said were never approved because the restrictions do not address signs and communications systems needed to support drive-through service windows.

“The way it is now, any property owner can put the same type of development on their lot,” Nelson said. “Our covenants, for all practical purposes, are worthless because of that.”

The project was financed and developed by Stewart Investments LLC, which is a company owned by Stewart and his wife Kara.

In a newsletter mailed to property owners three weeks ago, members of the Gateway Park POA board stated the lawsuit was settled out of court and that Stewart Investments had agreed to work with the association’s Architecture Control Committee to add additional landscaping elements to further screen the coffee shop from nearby residential properties in the subdivision.

Stewart Monday did not respond to an invitation from The Daily Tribune seeking comment.

Archie Smith, president of the Gateway Park POA board, told The Daily Tribune in an e-mail, “The Stewarts and Gateway Park are preparing a joint statement to the news media now. It is not ready for publication and distribution but as soon as it is, we will contact you so that you will have the information.”

Litigation proves costly

The newsletter informed POA members the cost of the litigation to date totals $41,000, of which $20,000 had been paid to the association’s attorneys.

The lawsuit, filed by the association Feb. 26, became a lightning rod of controversy in and around the mixed-use, 97-acre subdivision, which runs parallel to U.S. 281, and stretches from the Marble Falls city limits at Max Starcke Dam Road all the way north to the shores of Lake Marble Falls.

The subdivision has a blend of business, commercial and residential lots, where single-family homes are valued from $300,000 to $500,000 and are located just blocks away from light-industrial commercial businesses, such as a lawn tractor supply company. The subdivision also features an apartment complex, a county government annex and medical offices.

About half of the property owners are absentee, and the other half reside in the subdivision’s 44 homes.

The dispute was ignited last fall when the POA’s Architecture Control Committee at first approved the plans for the Stewart office building, but then rescinded that approval when Stewart Investments did not follow through with promises to provide a comprehensive site plan that addressed the subdivision’s sign restrictions.

Meanwhile, construction got under way Nov. 4 amid threats from Stewart Investments promising extensive litigation. Around Dec. 20, members of the POA board learned the plans for the coffee shop included the drive-through service window, and they began voicing concerns the office building violated the covenant against “drive-in service restaurants.”

Smith’s wife Jo Ann, who served as chairman of the Architecture Control Committee when the plans were submitted, said in July that her panel had decided the coffee shop’s drive-up takeout window did not make it a “drive-in service restaurant.”

However POA board members, led by then-president Nelson and vice president John Russo, had a different opinion and sought legal counsel, leading to the filing of the lawsuit. The Stewarts filed a counter suit, and POA board members were advised not to discuss the case, even with the rest of the association members.

Association members who were uninformed about the litigation and the counter legal threats from Stewart Investments became frustrated with the POA board, and at the July 14 annual membership meeting, they ousted the president, who was up for re-election, and three remaining board members resigned.

The new board, led by Archie Smith and Dr. David Greenwell, then instructed the POA’s attorneys to negotiate a settlement, which led to a final take-nothing judgment signed by 424th state District Judge Dan Mills on Aug. 27.

The Stewarts then filed a motion to drop their counter suit Oct. 1.

Gateway Park and Starbucks developer
settle lawsuit