June 2018
In This Issue:
Recent Cases in Community Association Law
Commercial Units in Mixed-Use Condominium Not Responsible for Residential Unit Costs
Purchaser Bears Risk by Not Asking for Resale Certificate
Court Refused to Remove Verbally Abusive Director from Office
Club Bylaws Take Precedence Over Statutory Default Provisions
Despite Occupying Common Area for Years, Owners Could Not Acquire Title
Association Not Liable for Defending Against Owner’s Allegations of Illegal Activity
Association Could Not Drop Flood Insurance
Quick Links:
Contact Law Reporter
Visit Our Home Page
View Archives
View Credits
CAI College of Community Association Lawyers
printer friendly
 

Recent Cases in Community Association Law

Law Reporter provides a brief review of key court decisions throughout the U.S. each month. These reviews give the reader an idea of the types of legal issues community associations face and how the courts rule on them. Case reviews are illustrations only and should not be applied to other situations. For further information, full court rulings can usually be found online by copying the case citation into your web browser. In addition, the College of Community Association Lawyers prepares a case law update annually. Summaries of these cases along with their references, case numbers, dates, and other data are available online.


Commercial Units in Mixed-Use Condominium Not Responsible for Residential Unit Costs

Harrison v. Casa de Emdeko, Incorporated, No. SCWC-15-0000744 (Haw. Apr. 26, 2018)

Assessments: The Supreme Court of Hawaii held that, under the Hawaii Condominium Property Act, expenses for building components that served only particular units in a mixed-use project had to be allocated as limited common expenses to the units served, even though the declaration did not assign the components as limited common elements.

[ return to top ]

Purchaser Bears Risk by Not Asking for Resale Certificate

Bridge Investments, LLC v. Lowry Ridge Townhomes Association, LLP, No. A17-1221 (Minn. Ct. App. Apr. 23, 2018)

Assessments: The Court of Appeals of Minnesota held that a unit purchaser became responsible for the unit’s preexisting delinquency because the declaration put the purchaser on notice of the association’s lien rights, and the purchaser failed to ask the seller for a resale certificate.

[ return to top ]

Court Refused to Remove Verbally Abusive Director from Office

A Pocono Country Place Property Owners Association, Inc. v. Kowalski, No. 904 C.D. 2017 (Pa. Commw. Ct. May 7, 2018)

Association Operations: The Commonwealth Court of Pennsylvania declined to remove from office an association director who constantly demeaned and insulted other directors because offensive conduct alone was insufficient to warrant judicial interference with corporate governance.

[ return to top ]

Club Bylaws Take Precedence Over Statutory Default Provisions

Desert Mt. Club Inc. v. Graham, No. 1 CA-CV 17-0100 (Ariz. Ct. App. Apr. 12, 2018)

Documents: The Arizona Court of Appeals held that the nonprofit corporation act’s default provisions that allow a membership to be resigned at any time did not apply where a nonprofit club’s bylaws contained explicit provisions governing membership termination.

[ return to top ]

Despite Occupying Common Area for Years, Owners Could Not Acquire Title

Cole v. Bonaparte’s Retreat Property Owners’ Association, Inc., No. COA17-492 (N.C. Ct. App. Apr. 17, 2018)

Risks and Liabilities: The North Carolina Court of Appeals held that owners could not prove adverse possession of association open space because they had not used or claimed the property for 20 years.

[ return to top ]

Association Not Liable for Defending Against Owner’s Allegations of Illegal Activity

Kulick v. Leisure Village Association, Inc., No. B281922 (Cal. Ct. App. Apr. 24, 2018)

Risks and Liabilities: The Court of Appeal of California held that California’s anti-SLAPP statute barred an owner’s claim that the association defamed him by disseminating a letter to the community that answered allegations he made in his independent newsletter that the association acted illegally.


Leisure Village Association, Inc. (association) governed the Leisure Village senior development in Camarillo, Cal. Robert Kulick, a unit owner, anonymously published a newsletter entitled “Leisure Village News,” which he distributed to all community residents.

 

The newsletter was very critical of the association and its board of directors. Some issues insulted individual directors and accused them of illegal activities and “hate mongering.” The association’s rules prohibited anonymously distributing or posting any document containing threats of physical violence, threatening language, or slanderous or defamatory remarks. In November 2013, the association sued Kulick for violating the rules, intentionally interfering with the association’s contractual relationship with its insurers, and creating a nuisance.

 

While the lawsuit was pending, Kulick published another newsletter under a pseudonym, accusing the board, among other things, of obstructing justice and racketeering in connection with the lawsuit. The newsletter accused the association’s manager of perjury, the association’s attorney of extortion and “hate-mongering,” and a director of lying and cheating. It also said the association elections were rigged, and the association might be forced into bankruptcy.

 

The association’s attorney prepared a letter answering the specific allegations, which the association distributed to all residents. The letter denied the newsletter’s allegations, characterizing them as reckless, unfounded, inaccurate, and spiteful. The letter discussed aspects of the lawsuit, explained the association’s position, and invited owners to view the courthouse filings. A jury found in the association’s favor, and the association was awarded $129,643 for compensatory and punitive damages.

 

Kulick then sued the association, individual directors, and the association’s manager and attorney, alleging the association’s letter defamed him. The association moved for the lawsuit to be dismissed as a SLAPP (strategic lawsuit against public participation) suit. The trial court granted the motion, dismissed the case, and granted attorneys’ fees to the association. Kulick appealed.

 

Kulick argued that California’s anti-SLAPP statute did not apply because the letter was not communicated in a public forum in connection with a matter of public interest. The statute provides that a claim arising from a defendant’s act furthering a constitutionally-protected right of free speech or petition regarding an issue of public interest may be dismissed unless the plaintiff establishes a probability that he will prevail on his claim.

 

The appeals court found the letter was sufficiently in a public forum. A statement by the governing body of a planned community can constitute a public forum for the statute’s purposes. The letter was distributed by the association to approximately 2,100 residents furthering the association’s government.

 

The appeals court also determined that the letter’s content was an issue of public interest. The statute broadly defines “public interest” as including private conduct that impacts a broad segment of society or that affects a community in a manner similar to a governmental entity. The appeals court held that the letter’s context warranted protection by a statute that embodies a public policy that encourages participation in matters of public significance. The letter involved the legal controversy which Kulick himself started. It discussed the association’s success in the lawsuit to that point and the mandatory settlement conference.

 

In addition, the letter’s characterization of the newsletter as reckless and an unwanted intrusion and Kulick’s accusations as spiteful were expressions of opinion. Opinions do not include or imply false factual assertions and are not actionable defamation.

 

Further, the remaining challenged statements were protected by the statute’s litigation privilege. The litigation privilege extends to any communication made by litigants or other authorized participants in judicial or quasi-judicial proceedings to achieve the litigation’s objective and that have some logical relation to the action.

 

The litigation privilege extends to communications made before, during, or after trial. The letter was distributed while the lawsuit was pending, and it discussed the lawsuit and invited the residents to review the courthouse filings. As such, Kulick could not establish that he would probably prevail on his defamation claim.

 

Accordingly, the trial court’s order dismissing the case was affirmed.

 

©2018 Community Associations Institute. All rights reserved. Reproduction and redistribution in any form is strictly prohibited.

[ return to top ]

Association Could Not Drop Flood Insurance

Porter v. Beaverdam Run Condominium Association, No. COA17-793 (N.C. Ct. App. May 1, 2018)

Risks and Liabilities: The Court of Appeals of North Carolina held that a condominium association was obligated to carry flood insurance on buildings in a flood zone unless the coverage was unavailable or unreasonably expensive.

 

 

6402 Arlington Blvd. | Suite 500 | Falls Church, VA  22042 | (888) 224-4321
This e-mail was sent to inform you of CAI products, services or events.
For more information, please visit www.caionline.org.
Change your e-mail address