Anti-SLAPP in Depth

Last October, the Fitzmaurice Anti-SLAPP opinion was published from the 14th District Court of Appeals in Houston (see October 2013 blog entry).  Below is an article discussing further Anti-SLAPP applications in the community association context that was recently published in the Dallas/ Ft. Worth Community Associations Institute Chapter magazine, Community Contact, Winter, 2013:

Out of the Frying Pan:  How Anti-SLAPP Protects You From Spicy Lawsuits

By Julie E. Blend, Esq.

Dealey Zimmermann Clark Malouf & Blend, PC

 

Anti-SLAPP Defined

The adoption of anti-SLAPP statutes has become increasingly prevalent and now over half of the fifty states have them.  SLAPP stands for “Strategic Lawsuits Against Public Participation.”  Texas adopted its anti-SLAPP statute, the Texas Citizens’ Participation Act (“TCPA”), in 2011.  In general, the purpose of Anti-SLAPP statutes is to prevent costly litigation that is initiated solely for the purpose of silencing free speech.    The TCPA is designed to: “safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government  . . .” Tex. Civ. Prac. & Rem. Code § 27.002.

The TCPA allows a defendant in a defamation-type lawsuit to file a motion to dismiss a meritless lawsuit if it relates to the defendant’s constitutional rights.  Exercising the right of free speech is defined as “a communication made in connection with a matter of public concern.”  If the plaintiff in the lawsuit can present clear evidence of its claim, then the court may not dismiss the lawsuit.  The court may award attorneys’ fees to the prevailing party on the motion to dismiss.    The court may also impose sanctions against the plaintiff for bringing the SLAPP lawsuit.  The 2013 83rd legislative session added an amendment to Chapter 51 of the Civil Practice and Remedies Code providing a quick appeal process (an interlocutory appeal) from the denial of such a motion to dismiss.  This new law provides further protection to a SLAPP defendant in the event that a trial court denies a motion to dismiss brought under the TCPA.

The financial penalty for a SLAPP suit can be substantial.  Last year a Dallas County judge awarded $ 15,000 in sanctions and over $ 15,000 in attorneys’ fees against a mortgage lender for bringing a defamation suit based upon negative comments posted online.  The plaintiff filing the SLAPP lawsuit is not the only party that can be penalized.  If the defendant files a frivolous motion to dismiss pursuant to the TCPA, then the plaintiff can be awarded attorneys’ fees.  A lawsuit or counterclaim to an existing lawsuit, and any motion to dismiss brought under the TCPA, must be carefully considered by your attorney for anti-SLAPP application to avoid incurring costs for sanctions and attorneys’ fees awards.

How Anti-SLAPP Applies to Community Associations

What does the TCPA have to do with community associations?  Generally, complaints vocalized against a community association can be constitutionally protected.  This means a defamation-type lawsuit brought by an association could be subject to dismissal under the TCPA.  On the flip side, defamation suits by owners or others complaining of statements made by an association or its board members can be dismissed under the TCPA as well.  A recent Texas Court of Appeals opinion applied the TCPA to require dismissal of a defamation lawsuit and an award of attorneys’ fees against the owner’s representative who sued Remington Forest Subdivision Homeowners Association and its former board members.  The plaintiff had assisted with a petition drive to recall board members.  She sued the Association based upon the declaratory judgment lawsuit it had filed in connection with the new board, and for negative comments posted on Facebook by former board members.  The court held that communications made in the Association’s   lawsuit were privileged, and that the plaintiff’s mere reference to “lies” spread on Facebook did not meet her burden of clear evidence.

If a homeowners’ association is involved, does the TCPA always apply?  No.  It will depend upon whether the circumstances relate to the rights of free speech, to petition, or of association.  Texas courts, however, broadly construe the application of the TCPA.  The TCPA is more likely to apply in Texas than in states that have a strict construction of their anti-SLAPP statute.  As Texas’ anti-SLAPP statute is only two years old, other states with broadly construed anti-SLAPP statutes, such as California, provide guidance on how the TCPA might be applied to owners’ associations in Texas. Many California SLAPP lawsuits involving common interest communities have made their way to the appellate courts and although not controlling law in Texas, could be used by analogy in a Texas lawsuit.

The TCPA defines the right to petition to include communications regarding  “a public meeting dealing with a public purpose.” Under the California anti-SLAPP statute, similar language describing protected activity includes statements in a public forum that concern a matter of public interest.  A California case held that statements made at an association meeting and in a newsletter published by a group of owners qualified as a public forum that concerned matters of public interest.  The court found that public interest included “private conduct that impacts a broad segment of society.”  The court accordingly dismissed a former manager’s defamation lawsuit against board members, owners and the private homeowners’ association journalism club affiliated with an association of over 3,000 members.

A board member filing a defamation lawsuit may be subject to a higher burden to present evidence for each element of their claim as required by the TCPA.  In this situation, the board member is considered a “limited-purpose public figure.”  In Vice v. Kasprzak, a Houston Court of Appeals held that a board president, as a limited-purpose public figure, had to prove the defendants committed defamation with actual malice.  The court defined limited-purpose public figure as a person who “thrust themselves to the forefront of particular public controversies . . .” The court based its finding on the fact that owners in an association with over 2,000 homes had an ongoing dispute with the association that had been reported in local newspapers, the plaintiff had a substantial role in the controversy because he acted as board president at the same time as acting as the developer’s attorney, and the defamatory statements (alleging conflict of interest), related to the plaintiff’s dual role as president of the board and counsel to the developer.

Anti-SLAPP and Association/Owner Private Communications  

What if the facts underlying the lawsuit do not relate to a meeting, publication, or petition process?  A clue that the TCPA may apply under those circumstances is the cause of action asserted in the lawsuit.  Claims for defamation, libel and slander are most likely to trigger application of the statute. A California court found that the public interest requirement was not met in a breach of fiduciary duty lawsuit, because the alleged protected statements were only made in mundane correspondence between the association’s attorney and the plaintiff owner.  Because the association defendant filed a motion to dismiss under the anti-SLAPP statute when grounds did not exist, the court awarded attorneys’ fees to the plaintiff.

What about covenant enforcement litigation?   One California case held that an owner’s suit against the association for breach of contract and fiduciary duty related to architectural guideline disputes did not trigger anti-SLAPP.  The same California court, however, in another architectural control committee issue suit, Ruiz v. Harbor View Community Association, did apply the statute.  The difference was that the cause of action in Ruiz included libel, and the public interest requirement was met because multiple plaintiff owners alleged the association had engaged in selective covenant enforcement.  The court noted the lawsuit was based upon letters that called the acts of the board “arbitrary and capricious,” and alleged harassing behavior that took place at board meetings.  This was enough for the anti-SLAPP statute to apply even though the basis for the suit was interaction between the association and just a few owners.

What about a pure collection lawsuit?  A California court declined application of the anti-SLAPP statute in an association suit for delinquent assessments.   The delinquent owner sought dismissal, arguing that the suit was filed in retaliation to the owner’s criticism of the board.  The court held that the motion should be denied because the purpose of the lawsuit was to collect assessments, and not to chill the constitutional rights of the defendant.  Under the TCPA, the court may find that the suit was brought to deter the exercise of constitutional rights.  Texas courts, therefore, may look to the purpose of the underlying lawsuit in ruling on a TCPA motion to dismiss.

Even if a defamation-type claim is not alleged, the TCPA can still apply.  A California association filed suit for declaratory relief and attorneys’ fees against an owner seeking the court’s interpretation of its governing documents.  No claims for defamation were brought at all.  The court held that the suit related to the defendant’s right of free speech in criticizing the board’s decisions regarding maintenance responsibility for balconies and siding.  The court relied upon the fact that the association’s attorney had threatened to sue the owner if she continued to request financial information and refused to sign a confidentiality agreement.  Associations should be careful in responding to owner criticism not to trigger the potential application of the anti-SLAPP statute in the event that the association decides to file a lawsuit.