President’s extreme behavior created liability for Association
Law Reporter
September 2016

In this next situation, an owner went to appeals court to "win" the right to sue the Association and its President for defamination.

You have to ask yourself; how much did he spend in legal fees so far just to get the right to go to court once again?

Boswell v. The Retreat Community Association, No. E064171 (Cal. Ct. App. July 11, 2016)

The California Court of Appeal found that an association president was exercising free speech on a public issue when he openly maligned a resident, but he and the association could still be sued for intentionally inflicting emotion distress.

The Retreat Community Association (association) governed the Retreat subdivision in Corona, California. Carl Schmidt was the association’s president and head of the architectural committee.

In 2011, David and Melina Boswell purchased a home in the Retreat through an installment contract. There was friction between Schmidt and the Boswells almost from the beginning. Schmidt claimed numerous architectural and covenant violations by the Boswells; the board imposed fines and conducted hearings.

Schmidt produced fraudulent evidence

Both Schmidt and the Boswells made and distributed emails, verbal comments, and flyers to other association members which each disparaged the other. Schmidt sat outside of the Boswells’ house with a camera or video camera, and the Boswells consequently installed surveillance cameras on the outside of their home. Schmidt ordered a Boswell guest’s car to be towed. The car owner sued the association, and Schmidt produced fraudulent evidence that the guest had not been issued a parking pass.

Boswell created a Facebook page entitled, “What’s Happening in the Retreat?” and posted comments that Schmidt found objectionable. Schmidt blocked the Boswells’ contractor from the Retreat midway through work on the Boswells’ home, which effectively left Boswell’s vehicle stuck in his garage for a while.

Unrelated to the Retreat issues, a class action lawsuit was filed against the Boswells’ company, New Wealth Advisors Club (NWAC). In January 2015, the association received a subpoena from the class action plaintiffs’ attorney, requesting information from the association’s gated entry system. This sparked more communications from Schmidt to the community.

A week later, the association filed suit against the Boswells, NWAC and others, seeking a declaration that the association was not liable for the Boswells’ allegedly fraudulent real estate scheme. It also sought an injunction against the Boswells using their property for illegal purposes and to prevent them from using the Retreat’s trademark on Facebook.

The Boswells countersued the association and Schmidt

The Boswells countersued the association and Schmidt, alleging 19 claims of intentionally inflicting emotional distress and other claims. The association and Schmidt (collectively, the association) responded by filing an anti-SLAPP (strategic lawsuit against public participation) motion against the Boswells. The association also dismissed its original complaint against the Boswells.

California’s SLAPP statute prohibits a lawsuit against a person arising from the constitutional right of free speech in connection with a public issue, unless the court determines that the plaintiff has shown a probability of prevailing. A probability of prevailing does not mean that the plaintiff will probably prevail. Rather, it means that the complaint is legally sufficient and supported by enough facts that it could prevail.

The trial court denied the association’s anti-SLAPP motion because it determined the Boswells’ claims did not arise out of protected activity. The association appealed.

The appeals court organized the Boswells’ claims into categories for analysis.

The first category of claims
The first category consisted of what the appeals court called “garden-variety” homeowners association disputes. These included the Boswells’ claims that the association’s rule enforcement efforts against them were groundless and done maliciously or harassingly. The appeals court found that these did not involve any constitutionally-protected activity by the association.

The second category of claims
The second category of claims involved Schmidt’s alleged surveillance or “stalking,” including the towing incident, assembling a dossier on the Boswells, and photographing and filming the Boswells. While photography can be a form of free speech, the appeals court found that Schmidt’s surveillance activity did not appear to relate to any public issue.

The third category of claims
The third category of claims involved Schmidt’s communications among Retreat residents, letters to local real estate agents and Facebook postings. The overall themes of the communications were that the Boswells did not have the Retreat’s interests at heart because they were renters; the Boswells were harming the Retreat by spreading lies on Facebook, operating a fraudulent business and damaging property values; and the Boswells behaved unethically and in an un-Christian manner.

As a result, some of the Boswells’ neighbors came to believe that the Boswells were a danger to the neighborhood and to children. The appeals court found that these communications did relate to an underlying issue of public interest, particularly since the association had been subpoenaed in litigation involving the Boswells.

Since the Boswells’ allegations arose partly out of protected activity and partly out of unprotected activity, the claims had to be dismissed as a SLAPP suit unless the Boswells showed a probability of prevailing.

Schmidt’s behavior sufficiently extreme and outrageous to constitute intentional infliction of emotional distress

The appeals court found Schmidt’s behavior sufficiently extreme and outrageous to constitute intentional infliction of emotional distress. The Boswells had also sufficiently alleged emotional distress damages, including suffering fear and ill health effects requiring medication. They were unable to enjoy their home and their neighborhood for a significant amount of time. Therefore, the Boswells did have a probability of prevailing.

Accordingly, trial court’s judgment was affirmed in part but reversed in part as to other issues.

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