CASE LAW UPDATE

By: Marc D. Markel and Brady E. Ortego

A few recent judicial decisions relating to community associations have both solidified longstanding principles of covenant interpretation and changed the landscape of community associations. The principles that are affirmed provide great case law for use in courts that may be reluctant to rule in favor of a community association. With the rulings that have created change, community associations may be left with more questions than answers.

Following is the first in a series CMA will post of Texas HOA case law summaries. In rendering opinions to community associations, covenants and case law must be read together to formulate the best strategy for action. With counsel, management, and directors working closely in this regard, challenges may be avoided and the resources of the community association are better protected. Please consult your HOA's attorney for legal matters pertaining specifically to your association.

Candlewood Creek v. Gashaye

2012 WL 3135721, Tex.App.--Dallas, August 02, 2012
The association's covenants provided that the assessment obligation was secured by a lien. Additionally, the covenants secured attorneys fees, late fees and interest. The owner fell into arrears with the association and it filed a motion for summary judgment seeking $1,545 in assessments and late fees and $2,500 in attorneys' fees and expenses. The owner failed to file an adequate response. Judge Craig Smith, presiding over the 192nd District Court in Dallas County, declined to provide an order for foreclosure and awarded a mere $50.00 despite the owner's failure to file an adequate response. The association appealed the summary judgment as to the denial of the foreclosure remedy and award of attorney's fees.

The appellate court, in a memorandum opinion, noted that the covenants provided for payment of a monthly assessment, a foreclosure of the lien if the assessment was not paid, and recovery of attorney's fees for such action. The appellate court stated that "the trial court's award of $50 under these circumstances was so contrary to the overwhelming weight of the evidence that the award is clearly wrong and unjust." Further, the appellate court reaffirmed the notion that an association covenant is a contract between the parties, and Texas law permits the recovery of attorney fees on a breach of contract action.

Marc D. Markel

Brady E. Ortego

For over thirty years Roberts Markel Weinberg PC has represented developers, builders, community associations, and non-profit corporations throughout the State of Texas. We have an established reputation as an industry leader in the field of community association law.

Our firm enjoys the distinction of being AV rated and being listed in the roster of Preeminent Law Firms by Martindale-Hubbell.