Sep 17, 2018

Comments Regarding a HOA and Real Estate Developer’s Misconduct Falls within the TCPA

By: Nisha Byers

Once again, the Texas Citizens Participation Act (TCPA) has been found to have a broad reach.  A recent Texas Supreme Court case overturned a decision of the Dallas Court of Appeals in applying the TCPA.  In Adams v. Starside Custom Builders, LLC, 547 S.W.3d 890 (Tex. 2018), a homeowner, John Adams (Adams), was sued by his subdivision’s real estate developer, Starside Custom Builders, LLC (Starside).  The claim at issue was defamation, based on blog comments and an email sent to the developer’s owner and CEO, Phillip Pourchot (Pourchot), the homeowner association’s (HOA) president, and others.  Adams was angry about Starside’s development of the neighborhood common areas, and specifically Starside’s cutting down of trees in those areas.  The blog’s homepage showed a handcuffed man, with tabs for “undisclosed felony conviction,” “unpaid creditors,” “commingled funds,” and “contract fraud/felony investigation.”  It also included the name of the predecessor entity to Starside, Bentley Premier Builders, LLC (Bentley), and its prior owners, including Pourchot, implying that Pourchot was a felon. Under the logo of Bentley, the webpage stated that “a west Plano Developer” “made life miserable for” home builders, subcontractors, and families “eager to build new homes.”  The email in question asserted that the HOA, of which Pourchot was a member of the board, “’clear cut’ land and did not follow city ordinances.”  It also alleged “that Pourchot was in complete control of the HOA.”  Adams claimed that he had an agreement in principle with Starside that it would sell part of the common area to Adams. 

Adams filed a motion to dismiss Starside’s defamation claim, arguing that the TCPA applied, and that Starside could not establish a prima facie case to survive dismissal. It was denied by operation of law when the trial court failed to rule, and that dismissal was appealed. 

The TCPA allows a party to quickly move to dismiss a cause of action that is “based on, relates to, or is in response to a party’s exercise of the right of free speech.” Tex. Civ. Prac. & Rem. Code § 27.003(a).  If a party meets that threshold, the non-moving party, in order to avoid dismissal, must establish by “clear and specific evidence a prima facie case for each essential element of the claim.” Id. § 27.005(c).  However, the movant can still prevail if they can establish by a preponderance of the evidence all of the essential elements of a valid defense.  Id. § 27.005(d).  At issue in Adams was whether the defamation claim involved the “exercise of the right of free speech.”

The TCPA defines the “exercise of the right of free speech” as “a communication made in connection with a matter of public concern.” Id. § 27.001(3).  Communication is defined very broadly, and a “matter of public concern” includes “’an issue related to  . . . environmental, economic, or community well-being; …the government; …or …a good, product, or service in the marketplace.’”  Adams, 547 S.W.3d at 892, citing Tex. Civ. Prac. & Rem. Code § 27.001(7).  The Dallas Court of Appeals held that the blog and email did not relate to Starside’s services in the marketplace, as the statements did not mention Starside. The Texas Supreme Court disagreed. 

First, it explained that the blog did raise issues regarding services in the marketplace as the complaints were about Bentley’s development and management of the subdivision. Id. at 895.  The Court concluded that the email also related to Starside’s service to residents in maintaining the disputed common areas, which Adams claimed was being performed illegally and in violation of his own property rights in the common area. Id. The Court also concluded that although the statements at issue did not actually mention Starside, they mentioned Starside’s corporate predecessor and its CEO and owner.  Further, Starside’s own pleadings and arguments acknowledged Bentley and Starside were essentially the same company.  Id.  Starside’s arguments, that its name, business reputation and standing as a luxury developer and builder were injured, were admissions that the statements were related to Starside’s services in the marketplace.

The Court also concluded that the email, which alleged violations of the city code in cutting down trees on land open to the public, involved a matter of public concern as it related to community well-being, the government, and general “public concern.”  Id. at 896.  Also, the Court held that tree cover concerns are related to “environmental” well-being.  Id.  Finally, the Court held that, in the context of the small subdivision, the allegations of “malfeasance and criminality by the developer and the HOA likely concerns the well-being of the community as a whole.” Id.

Given that the blog and email communications related to “Starside’s services in the marketplace, and to the community and environmental well-being of the . . . subdivision,” the Court held that Adams was exercising his right of free speech within the meaning of the TCPA.  Id. at 897.  Thus, he had the right to file a motion to dismiss challenging the sufficiency of the defamation allegations.  Id. The case was remanded to the trial court for a determination of whether Starside had established a prima facie case for each essential element of defamation, or whether Adams had established a valid defense as set forth in the TCPA.

The TCPA continues to be a powerful and wide-ranging tool in attempting to obtain an early dismissal of any number of actions.  This decision further illustrates how comprehensive the definition of a “matter of public concern” can be.