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?
—CondoMadness
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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