In a pair of decisions arising from contractual disputes, the Fort Worth and Dallas Courts of Appeals have affirmed trial court orders denying motions to dismiss under the Texas Citizens Participation Act.

The first case, Carl and Patricia Johnson v. Windsong Ranch Community, Association, Inc. (02-23-00385-CV; February 22, 2024) involved a dispute between a homeowners’ association and residents of Windsong Ranch development in Denton County. Plaintiffs sued the HOA, alleging negligence, conspiracy, breach of fiduciary duty, money had and received, and other theories in response to the HOA’s enforcement of the Master Covenant and Facilities Use agreement that governed Plaintiffs’ access to common areas. Plaintiffs alleged that the HOA issued fraudulent fines and selectively enforced HOA rules against them in retaliation for a prior suit filed against the HOA’s management company. The HOA counterclaimed for breach of contract and for indemnification of attorney’s fees and costs under the terms of the Facilities Use Agreement and moved for summary judgment, which the trial court granted. That left the HOA’s counterclaim. First, Plaintiffs filed a Rule 91a motion to dismiss, which the trial court denied. Trying again, Plaintiffs filed a TCPA motion to dismiss. Once again, the trial court denied the motion. Plaintiffs appealed.

The Fort Worth Court of Appeals affirmed. While Plaintiffs established that the counterclaim was brought against them based on or in response to their exercise of the right to petition, thus triggering application of the TCPA, the HOA presented clear and specific evidence supporting each element of its breach-of-contract claim. Furthermore, the very existence of Plaintiffs’ lawsuit constituted a breach of the contract because the Facilities Use Agreement provides that the HOA cannot be held responsible for anything with respect to the common areas. The HOA thus satisfied its burden in establishing a prima facie case. The burden then shifted back to Plaintiffs to establish an affirmative defense. The court held that Plaintiffs’s claims that the Facilities Use Agreement lacked consideration and that its indemnification provision did not comply with fair notice requirements failed. Consequently, the court upheld the trial court’s denial of Plaintiffs’ TCPA motion.

The second case, Access Floor Specialists, Inc. d/b/a Allied Interiors v. RemREHoldings, LLC (05-23-00605-CV; February 21, 2024) arose from a dispute between a subcontractor and property owner over a mechanic’s lien. Access, the subcontractor, contracted to perform flooring work for the owner’s general contractor, who failed to pay the subcontractor’s bill. The subcontractor subsequently filed a mechanic’s lien and then sued the owner to foreclose the lien. The property owner responded by filing a motion to remove and invalid or unenforceable lien, alleging that the subcontractor failed to file the requisite notice of claim before filing affidavits of lien and failing to timely file the affidavits. The owner further asserted a counterclaim for fraudulent lien, alleging that the subcontractor knew that it filed an untimely lien. The subcontractor moved to dismiss the owner’s counterclaim under the TCPA. The trial court did not rule on the motion, which was denied by operation of law. The subcontractor appealed.

The Dallas Court of Appeals affirmed. The subcontractor argued that the trial court erred because the owner’s counterclaim was based on the subcontractor’s exercise of its right to petition, and that the owner did not provide clear and specific evidence to make a prima facie case for its counterclaim. The owner countered that the counterclaim falls within the TCPA’s commercial-speech exemption. The court agreed, holding that the owner’s fraudulent lien claim satisfied the first and second elements of the exemption because the subcontractor provided labor to the owner and sought to receive the money it was owed. It also satisfied the third and fourth elements because the intended audience of the lien was the owner, a customer to whom the subcontractor provided their service. The exemption thus applied.

This article was researched and substantially written by Dilara Muslu, TCJL’s research intern.

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