Religion in the Community

Below is an article written by Julie E. Blend that was recently published in the Dallas/ Ft. Worth Community Associations Institute Chapter magazine, Community Contact, Spring 2015.

Religious Revival

“ . . . turn your fact to the Great West and there build your home and fortune.”

Horace Greeley, 1841

When pioneers turned out in droves in search of new lands and better lives in the “Old West” they brought their religion with them. Houses of worship were built and traveling preachers known as circuit riders moved from town to town on horseback. From its earliest beginnings our nation was founded upon religious freedom. The pioneers took their religion seriously as an essential part of the fabric of life on the frontier. Similarly, today’s American society is interwoven with the practice of various religions.

Religion has been a topic of recent litigation and proposed legislation involving community associations. Chapter 202 of the Texas Property Code already regulates the display of religious items.   An association may only prohibit religious displays on the entrance to a dwelling under certain circumstances, such as when the item is greater than 25 square inches (Texas Property Code Section 202.018). Each new session of the Texas legislature brings the possibility of new laws affecting homeowners’ associations. A recently filed bill for the upcoming legislative session proposes to regulate religion in community associations on a much larger scale.

Representative Matt Krause from Tarrant County has filed a House Joint Resolution, HJR No. 125. The bill proposes a constitutional amendment relating to a person’s free exercise of religion. It specifically states: “A homeowners’ association may not burden in any way a person’s free exercise of religion unless the burden is: (1) necessary to further a compelling quasi-governmental interest of the homeowners’ association; and (2) the least restrictive means of furthering that interest.” If both houses of the legislature pass it, then Texas voters will see it on the ballot at the polls next November. It should be noted that Representative Jason Villalba from Dallas had filed a similar bill earlier but has publicly stated he will not pursue his bill due to unintended consequences not apparent at the time the bill was filed. This proposed language tracts the Texas Religious Freedom Restoration Act (“TRFRA”)(Chapter 110 of the Texas Civil Practice and Remedies Code), which prohibits the government from “substantially burden[ing] a person’s free exercise of religion” unless the burden “is in furtherance of a compelling governmental interest” and “is the least restrictive means of furthering that interest.” Whether this proposed legislation will pass, and if so, how it would be interpreted, remains to be seen. Connecting “quasi-governmental” with “homeowners’ association” expressly in the Texas Constitution is likely to have far-reaching constitutional ramifications for associations well beyond the issue of religious freedom.   This is a bill to definitely keep your eye on.

It is well known that the Fair Housing Act applies to community associations and provides protection against certain forms of discrimination, including religious discrimination. Do other statutes apply in the context of religion and community associations? At least one Texas trial judge has answered yes. A Collin County judge recently cited the TRFRA and a federal statute in ruling against an association in a lawsuit involving religious gatherings in a home. An owner filed the lawsuit seeking an injunction and statutory damages against the Congregation Toras Chaim, Inc., a congregation of Orthodox Jews in far North Dallas, and the owners of the home where the Congregation gathered. The Association for the Highlands of McKamy IV and V neighborhoods intervened in the lawsuit making claims only against the owners. Both sides asked the court to dispose of all or most of the case through motions for summary judgment. The Judge ruled in favor of the defendants, citing both the TRFRA and the federal Religious Land Use and Institutionalized Persons Act (“RLUIPA”).

The plaintiff and the Association argued that its governing documents restricted the use of homes to a single – family residence.   In response the defendants asserted that the primary use of the home is as a residence. Families also admittedly gathered at the home because Orthodox Jews are prohibited from driving on their Sabbath and must live within walking distance of a synagogue. The defendants asserted that an interpretation of the Association’s restrictive covenants to prevent the Congregation’s religious activities would violate both the TRFA and the RLUIPA. They argued that the statutes applied to the Association because: (i) the plaintiff and the Association sought to enforce state statutes that are subject to the TRFRA and RLUIPA, (ii) judicial enforcement of restrictive covenants is itself state action subject to the statutes, and (iii) homeowners’ associations are quasi-governmental entities that are themselves subject to the statutes.

The Association argued that it was not a governmental entity to which the TRFA and RLUIPA applied. It further pointed out that defendants’ request to apply TRFA and RLUIPA to a homeowners association was an attempt to seek an extension of the law, not an application of existing law, as no court has made such a finding. The Judge’s ruling did not specifically state which of the defendants’ three grounds served as the basis for her holding that the TRFRA and the RLUIPA applied, so there was no actual finding that an association is a quasi-governmental entity.

The Judge took under advisement whether the additional grounds raised in the defendants’ motion should be granted as well. Some of the additional grounds included claims that the Association’s decision to intervene was arbitrary, capricious or discriminatory in violation of the Texas Property Code, that the right to enforce the residential use restriction had allegedly been waived because other non-residential uses of homes had been allowed, and that the Association’s delay in challenging the Congregation’s activities for almost three years should prevent an injunction. Further, defendants asserted that the plaintiff’s claims for damages were deficient. Any further clarification the Judge may provide on these matters could be instructive in dealing with the issue of religious gatherings.

Of course an appeal may be filed and a higher court would have the opportunity to affirm or overturn the Judge’s ruling.   Keep in mind as well that the express language of restrictive covenants is fact specific and should always be reviewed in considering a unique course of action should a similar matter arise. If carried to the appellate court level, the recent Collin County lawsuit has the potential to affect the law regarding religious matters in community associations in a significant way. HJR No. 125 has the same potential. As with all pending bills before the legislature, it is important to pay attention and embrace any opportunity to voice your opinion.

Advertisements

Minnesota HOA Agrees to Pay Over $100,000 to Settle Fair Housing Case

The December 2013 blog entry reported the Condominiums of Greenbrier Village case that was filed in Minnesota alleging discrimination against families with children based upon rules regulating the use of common areas. The parties entered a consent order this month that includes an injunction, the Association’s agreement to implement a written nondiscrimination policy, and mandatory fair housing discrimination training for the board and the manager. The Association agreed to pay $ 100,000 to six affected families and $ 10,000 to the Department of Justice as a civil penalty. Below is a link to the Consent Order:

http://www.justice.gov/usao/mn/downloads/Greenbrier%20Consent%20Order.pdf

Avoiding Litigation

Below is an article that was recently published in the Dallas/ Ft. Worth Community Associations Institute Chapter magazine, Community Contact, Fall 2014, which discusses how to avoid litigation:

Stay on Track: 10 Hurdles to Overcome and Survive Litigation

By Julie E. Blend, Esq.

In today’s litigious society the threat of a lawsuit is a harsh reality for owners’ associations. Many times litigation can be avoided by taking a proactive approach to governance. Here are 10 hurdles to overcome to survive, or better yet, avoid, being sued:

  1. Board members should set up a separate e-mail account used exclusively for association business. The rules of discovery in litigation are broad and it would be unfortunate if your work or personal e-mail account became subject to discovery because association communications were made using those e-mail accounts.
  1. Have proper insurance in place and understand your coverage. Consult a community association insurance specialist to determine what coverage is available and makes the most sense for your association. Be sure to assess your insurance protection on a calendar basis to address changes in your insurance needs.
  1. Treat owners consistently the same without selective enforcement of covenants. Selective enforcement is a legal defense and nothing looks worse to a judge or jury than a board that shows favoritism to one or more owners. Owners are more likely to sue an association when they are incensed over unequal treatment of owners.
  1. Follow proper procedures in holding meetings, elections and votes. Improper procedure is subject to challenge. An excellent property management company and attorney can help your association follow legal requirements.
  1. Read, understand and follow your governing documents. Conduct an annual audit of your governing documents to determine whether amendments or new policies are necessary. Be sure all governing documents are filed in the county real property records or they are not effective.
  1. Keep accurate records and document matters with a paper trail when necessary. If a difficult conversation takes place, send a follow-up e-mail to confirm what was said. If a conflict is brewing, take notes to help you remember the answers to who, what, when, where and how.
  1. Do not make harsh decisions out of anger. A good rule of thumb is the 72 hour rule: if you want to send a nasty e-mail or letter to let them know what you really think, write it out on paper and hold it for 72 hours. Read it again and ask yourself how a jury would perceive the e-mail or letter if you actually sent it.
  1. Communicate with the members openly and often about what is going on in the community. For example, if a special assessment is needed, have open communication about it first before springing it on the owners as a surprise. An owner who feels “kept in the dark” is more likely to twist a suspicion into a fiduciary duty claim.
  1. Stay current on areas of potential liability through CAI publications, programs or industry presentations. The law evolves and changes constantly. For example, don’t wait to learn about fair housing laws by reading the petition filed against the association alleging familial status discrimination.
  1. Have a community association attorney on Favorites on your smart phone.  Many legal bloopers are preventable by taking the time to call your attorney before you send the letter, pass the rule, etc. A phone call can save you from thousands of dollars in defense costs and headaches, and preserve your association’s goodwill.

 

 

 

 

Will Houston Award of Nuisance Damages Stymie Urban Development?

A Houston trial court allowed a jury award to stand in favor of 20 homeowners who filed suit in opposition to a proposed urban residential 21- story high – rise development. Neighboring homeowners had opposed the Ashby High-Rise development for six years before suit was filed in 2013. The jury found that a private nuisance existed as to 20 of the 30 plaintiffs and awarded approximately 1.2 million dollars in damages for diminution in their property values and approximately $ 400,000 for loss of use and enjoyment of their property. The court allowed the decrease in value damages but disallowed the loss of use damages because they were speculative until the project is constructed. An appeal is anticipated.

In a lengthy order, the trial court concluded that there was sufficient evidence to support a jury finding of private nuisance because the proposed development would be “abnormal and out of place in its surroundings,” and that it “substantially interferes with Plaintiffs’ use and enjoyment of their land.”   Plaintiffs argued several factors contributed to a nuisance: increased traffic; loss of privacy; foundation damage to adjacent landowners due to settlement; increased light to adjacent landowners; construction annoyances; and shadow cast by the Project with resulting vegetation damage. Despite the jury finding of damages, the plaintiffs asked the court to grant a permanent injunction preventing the project from being built at all instead.

The court denied injunctive relief and discussed some of the reasons why. First, the nuisance was “very localized” in that plaintiffs north of the Project lost, and a nuisance was only found as to plaintiffs within approximately 200 feet of the Project. Next, it would be very difficult to enforce an injunction as such an order would not end the controversy. The developer could come back and apply to the city for a modified project to be followed by another lawsuit. Then the court balanced the equities and concluded that an injunction would harm both the defendant and the City of Houston. The court noted the amount of time and expense the developer had devoted to the Project. As for the City of Houston, the court acknowledged Houston’s unique absence of zoning and stated: “there is no question but that it will have a chilling effect on other development in Houston. For better or worse, the City of Houston has repeatedly opted against zoning . . . If an injunction was issued, then a judge can become a one man zoning board with little criteria . . . perhaps Houston should reconsider whether zoning is appropriate for this City.“

The court concluded that the Project “will provide benefits to the city as a whole” with tax revenues, housing and the reduction in urban sprawl and freeway congestion. The court also noted that the City of Houston approved the Project and extracted concessions from the defendant in doing so, that other mid-rise residential projects were developed in the neighborhood, and that the privacy concerns of the plaintiffs predated the Project because the prior structure had two story apartments. Last, the court pointed out, although of lesser importance, that some plaintiffs bought their properties after the development of the Project, and that the plaintiffs had aggressively fought the project with threats of picketing and boycotts. The court quoted the threat from evidence presented at trial: “we will appear at the homes of the owners, investors, and chef of your restaurant tenant and demonstrate our opposition to their presence in our neighborhood.” Plaintiffs, therefore, violated the rule that a party who seeks equity (injunctive relief) must do equity (behave nicely).

Here is a link to the May 1, 2014 order:

http://www.justex.net/JustexDocuments/12/Ashby opinion.pdf

Houston Court of Appeals Reverses Large Judgment Against HOA

The Houston Court of Appeals, 14th District recently ruled in Tanglewood Homes Association, Inc. v. Feldman, overturning a trial court judgment for over $ 500,000 that had been awarded in favor of owners after a lengthy bifurcated jury trial.   The Feldmans planned to expand their home by purchasing their neighboring lot, adding on to their existing home on part of the neighboring lot, then re-platting the lots, building a fence between them and selling the remainder of the neighboring lot. The HOA initially denied the plans and the Feldmans sued. The owner of the neighboring lot intervened as a plaintiff in the lawsuit. During the lawsuit, the HOA approved the expansion plans but stated that if the remainder of the neighboring lot were sold, the construction of a new residence on the re-platted neighboring lot would violate the deed restrictions.

At trial, the liability questions submitted to the jury contained the phrase “and/or,” such that the jury was asked whether the HOA’s denial of plans was arbitrary and capricious as to the Feldmans “and/or” the neighboring owner, and whether the HOA had made a negligent misrepresentation upon which the Feldmans “and/or” the neighboring owner had justifiably relied. The jury answered yes to the liability questions, awarded $ 90,000 in damages, and over $ 492,000 in attorneys’ fees to the plaintiffs. The HOA argued that the jury findings were fatally ambiguous due to the inclusion of “and/or” and the court of appeals agreed. The court held that without an express finding of liability in favor of each of the plaintiffs, the trial court’s judgment for damages could not stand. The court also overturned the award of attorneys’ fees.

The court did affirm the trial court’s declaratory judgment that detailed the re-plat and construction, that the improvements on the plaintiffs’ lots did not violate the deed restrictions and that the HOA had waived any position to the contrary. The court entered an abatement order and referred the parties to mediation. The opinion can be found at the following link:

http://caselaw.findlaw.com/tx-court-of-appeals/1665341.html

 

 

Austin Court of Appeals Affirms Jury Verdict for Condo Owner

The Austin Court of Appeals recently upheld a jury verdict in favor of a condominium owner in a lawsuit brought by the association, in Canyon Vista Property Owners Association, Inc. v. Laubach, 2014 WL 411646 (Tex. App.—Austin).  The association brought suit against Laubach for failure to pay assessments.  The owner counterclaimed for breach of the Declaration.  Laubach paid his outstanding assessments and the case went to trial on his counterclaim.   Laubach presented evidence that the association had failed to maintain the common elements, specifically, the subflooring of Laubach’s unit, which caused the wood floor to flex unnaturally and create excessive noise.  The court ordered the association to repair Laubach’s floor, and to the extent the association paid a licensed contractor less than $ 19,413.63 (the amount the jury found as the cost of repairs), to pay Laubach the difference.

 

On appeal the association first argued that the owner did not have standing to sue and recover damages for injury to the common elements.  The court of appeals held that as a co-tenant of the common elements, Laubach had standing to sue, noting that the association failed to raise this argument at the trial court level.  The association then argued that there was insufficient evidence to support the jury award of damages for loss of use of the unit.  The court upheld the jury award of damages of $ 2,100 for Laubach’s expenses to be incurred in moving out of the unit for the one – month period for the repairs.  The court did agree with the association that the jury’s award of $ 6,000 for loss of use was unsupported by the evidence.  Although Laubach’s attorney had suggested the jury consider a calculation of damages based upon the number of days Laubach had to live in his unit with the floor in disrepair, the court of appeals pointed out there was no evidence presented of any diminution in value caused by the defective floor, no expert witness assigned a proportionate value to the use of proper floors, and the attorney’s statements by themselves were not evidence.

 

Finally, the association argued that the trial court erred by allowing evidence of the association’s insurance coverage.  The court of appeals held that the association had “opened the door” by raising the issue of insurance in its case in chief.  The association’s board member had testified that assessment payments included an annual assessment “for the insurance.”

 

Although filing the lawsuit got Laubach to pay his assessments, the association wound up having to pay over $ 21,000 to or on behalf of the owner.

New Rules of Procedure Effective March 1st, 2013

The January blog post was about the new Texas Rules of Civil Procedure for dismissal of baseless lawsuits and expedited cases.  These rules became effective March 1, 2013.  After the period for public comment, slight modifications were made to the rules.

For dismissal of baseless lawsuits, Rule 91a Dismissal of Baseless Causes of Action, is now in effect.  Rule 91a governs all community association litigation, as only Family Code matters and statutory inmate claims are excluded from the rule’s application.   Modifications to Rule 91a include Rule 91a.5 Effect of Nonsuit or Amendment; Withdrawal of Motion.  Rule 91a.5 as modified allows a party until three days before a Rule 91a hearing to nonsuit a challenged cause of action and, therefore, prevent the court from ruling on a motion to dismiss.  Further, Rule 91a.5 as modified allows a party until three days before the hearing to amend a challenged cause of action.  Rule 91a.7 Award of Costs and Attorney Fees Required, was modified to clarify that the court must consider evidence of costs and fees in determining the award to the prevailing party on the motion to dismiss a baseless cause of action.

For expedited actions, New Rule 169 expressly does not apply to Property Code claims.  As mentioned in the January blog post, association versus owner (and owner versus association) claims under the Texas Property Code are excluded, as are Texas Property Code Section 82.103 officer and director claims for fiduciary liability under the Texas Uniform Condominium Act.  Non-Property Code matters involving $100,000 in damages or less are governed by new Rule 169, including vendor or other third party disputes.  Additionally, new Rule 169 governs officer and director claims against subdivision association board members, and pre-January 1, 1994 condominium board members, alleging $100,000 in damages or less, as there is no Property Code provision addressing such claims.  Any lawsuits for more than $100,000 do not fall within the parameters of Rule 169.

Modifications to Rule 169 include the alternative dispute resolution requirement.  As modified, unless the parties have agreed to not participate in mediation, a court may refer a case to mediation one time for a half-day, for a cost not to exceed twice the amount of the lawsuit filing fees.  Any mediation must be completed no later than 60 days before the initial trial setting.  The modified Rule allows the court to continue the trial date only twice, and not to exceed a total of 60 days.  Finally, modified Rule 169 allows each party eight hours for trial, with an option to file a motion asking the court for an extension up to twelve hours per side.

View the rules in their entirety here: http://www.supreme.courts.state.tx.us/MiscDocket/13/13902200.pdf