Does the Texas Citizens Participation Act (TCPA) often referred to as the Texas Anti-Slapp law, apply to a Home Owner’s Association or HOA suing a home owner to enforce restrictive covenants? That’s the question that the Beaumont court of appeals had to decide in Salamah v. Spring Trails Community Association, Inc., 09-18-00051-CV, (Tex. App. – Beaumont December 6, 2018) (mem. op).

The Salamahs were operating a daycare business in their home. They were sued by the HOA to enforce a restrictive covenant against the daycare business. In their motion to dismiss, the Salamahs acknowledged that their deed contains some restrictions including one that restricts what business can be run out of their house.

According to the Salamahs’ motion, the Association could not enforce the restriction because they had been running a daycare business in their home for years, the Association’s Board knew what they were doing, and the manner they were conducting the daycare business did not violate the restrictions in their deed. In the trial court, the Salamahs argued that the Association sued them for three reasons: (1) to retaliate against Abdallah for having criticized the Board about how it was being managed, (2) to punish Abdallah for having participated in a recall petition of the Board, and (3) to punish Abdallah for having announced that he was seeking a position on the Board. According to the Salamahs, the circumstances surrounding the Board’s decision authorizing the Association’s suit shows that the Board had retaliated against them by filing suit to punish them for exercising their First Amendment rights. Additionally, the Salamahs assert that the Association’s claims should have been dismissed because they proved the Association’s claims were barred by affirmative defenses. In response, the Association argued that its motivation in filing suit was not retaliatory, but that it filed suit so that it could pursue its own legal rights to enforce the restrictions in the Salamahs’ deed.

The trial court denied the Salamahs motion to dismiss and they filed an interlocutory appeal.

The Texas Anti-SLAPP law or TCPA has a three step process. In step one, the movant bears the burden of establishing by a preponderance of the evidence that the nonmovant’s claim is a legal action in response to the movant’s exercise of his right of association, his exercise of his right of free speech or his exercise of his right to petition. §27.003 (a).

The court of appeals assumed, without deciding, that the HOA’s suit was a legal action covered under the Texas Anti-SLAPP law.

Once the movant has shown that the nonmovant’s legal action is covered by the act, the burden shifts to the nonmovant to demonstrate a prima facie case for each essential element of a cause of action by “clear and specific evidence.” §27.005 (c).

The court first noted that the Salamahs did not dispute that their deed contained restrictions on the use of their home for business.

One of the provisions in the declarations addresses how the Board is to determine whether a homeowner’s operation of a home-based business violates the restrictions in the deeds to the homes in Spring Trails. According to the declarations, whether a homeowner’s business violates a restriction is “determined in the sole discretion of the Board.” The declarations also allow the Association to maintain lawsuits to enforce restrictions like the one at issue in this appeal. Although the Salamahs allege the Association failed to promptly sue them to enforce the deed and thereby waived its right to enforce the restriction, the declarations provide that the “failure of the Association to enforce such provisions shall in no event be deemed a waiver of the right to do so thereafter.”

Under the Texas Property Code, a homeowners’ association may exercise “discretionary authority” to enforce a restrictive covenant, and if it does so, the Association’s conduct is presumably “reasonable[, ] unless the court determines by a preponderance of the evidence that the exercise of discretionary authority was arbitrary, capricious, or discriminatory.” The evidence the Association presented in response to the Salamahs’ motion shows that the Association filed a facially valid claim seeking to have a factfinder determine whether the Salamahs were operating a daycare business in a manner that violated the restrictions in their deed. For example, the evidence the Association filed when it responded to the Salamahs’ motion reveals that the Association conducted an investigation into the manner the Salamahs were operating their business. Included in the Association’s evidence is an affidavit signed by a homeowner in Spring Trails. The homeowner’s affidavit reflects that the homeowner personally observed the Salamahs’ daycare operation: the individual who signed the affidavit states that the business constitutes “a nuisance that affects my ability to enjoy my property.”

The court concluded that the HOA had met its burden of showing a prima facie case to establish  the elements needed to prove its case.

If the nonmovant meets his burden of establishing a prima facie case for each essential element of a cause of action by “clear and specific evidence”, the court must still grant the motion to dismiss if the movant establishes a valid defense by a “preponderance of evidence”. §27.005 (d).

In issue three, the Salamahs argue that even if the Association established a prima facie case, they established they have affirmative defenses that bar the Association from having a factfinder determine whether the Association’s claims have merit. The evidence in the record, however, shows that the violations the Association complains about in the suit are continuous. For that reason, the Association’s claims are not barred by the affirmative defenses the Salamahs raised below (waiver). Finally, the declarations that burden the Salamahs’ deed provide that the Association’s failure to enforce a restriction “shall in no event be deemed a waiver of the right to do so thereafter.” Because the Salamahs failed to meet their burden to show that the Association’s claims are barred by their affirmative defenses, we overrule issue three.

In the end, the court of appeals held that an HOA’s suit to enforce restrictive covenants is a discretionary act and as long as the record shows that the HOA followed the process set out in the restrictive covenant, the HOA met step two of the Texas Anti-SLAPP law (TCPA) even if the homeowner proved that the suit was a legal action relating to the homeowner’s exercise of his rights of speech, association or petition.

The court also held that when the deed shows that the HOA does not waive its rights when it doesn’t take action when a violation first appears, it does not waive its rights by waiting to take action. Step three will require more than waiver based on failing to act initially.