By Deborah Goonan, Independent American Communities
A Nevada HOA cannot reverse negligent misrepresentation verdict, and a federal court upholds First Amendment rights of the public on private streets.
Supreme Court rules in favor of homeowner, affirms 2017 jury verdict of ‘negligent misrepresentation’ against HOA
In 2003, Jonathan Friedrich purchased a home in the Rancho Bel Air neighborhood of Las Vegas. At the closing, the homeowner was presented with a copy of Covenants, Conditions, & Restrictions (CC&Rs) for Rancho Bel Air, Unit 2 Property Owners Association (the HOA).
Being a responsible property owner, Friedrich paid HOA fees to Rancho Bel Air until 2012, when, to his surprise, he received a letter from the POA informing him that his home was, in fact, not part of Unit 2 POA.
Friedrich learned that his home is located in Unit 1 of Rancho Bel Air, and Unit 1 is not governed by Rancho Bel Air POA or any other owners association.
The POA took the stance that, even though Unit 1 was not part of the association, homeowners were still obligated to pay POA fees. However, the POA also asked owners to sign legal papers annexing their properties to the Unit 2 owners’ association.
Feeling duped by Rancho Bel Air for nearly a decade, Friedrich refused to sign the papers, and stopped paying fees to the POA in 2012.
In 2014, Rancho Bel Air POA attempted to foreclose on Friedrich’s property for failure to pay assessments and fees. Friedrich sued the association to stop the foreclosure, on the grounds that his home is not part of the POA. The homeowner also asked the court to order Rancho Bel Air to repay 10 years’ worth of HOA fees that it never had the right to collect.
The case dragged on for three years.
Finally, in 2017, a jury found that Rancho Bel Air POA made a “negligent misrepresentation” to Friedrich, by claiming that his home was included as a property in a homeowners association for Unit 2, when, in fact, Friedrich’s house is situated in Unit 1, where there is no owner’s association.
The jury awarded Friedrich 70% of fees previously paid to the POA, plus $20K in punitive damages.
But that wasn’t the end of the legal fight.
Jury rules in favor of homeowner in case of non-existent HOA
Rancho Bel Air appeal fails
The state of Nevada has a three year statute of limitations for bringing claims of negligent misrepresentation.
Rancho Bel Air POA argued that Friedrich knew, or should have known, that his home was not part of Rancho Bel Air, Unit 2 POA from the time of purchase in 2003. That fact was noted in fine print on the copy of the CC&Rs handed to Friedrich at the close of sale.
So, the POA reasoned that the court should reverse its 2017 jury ruling in favor of Friedrich. Citing the 3-year statute of limitations, Rancho Bel Air argued that the homeowner waited 11 years to file his lawsuit in 2014.
Friedrich maintained, once again, that Rancho Bel Air misrepresented the truth, by continuously billing him for POA fees from the time of his home purchase. The association didn’t inform homeowners in Unit 1, including Friedrich, that their properties were not part of any mandatory membership homeowner’s association until 2012.
Therefore, Friedrich did not discover the negligent misrepresentation until 2012, and his 2014 lawsuit fell within the 3-year statute of limitations.
The 8th District Court agreed with Friedrich, but the POA appealed to the Nevada Supreme Court.
In November, the Supreme Court of Nevada upheld the District Court’s decision, once again ruling in favor or Friedrich.
Read the decision:
IN THE SUPREME COURT OF THE STATE OF NEVADA
RANCHO BEL AIR PROPERTY OWNERS ASSOCIATION, UNIT 2, INC.,
JONATHAN FRIEDRICH, INDIVIDUALLY AND AS TRUSTEE OF THE JONATHAN FRIEDRICH REVOCABLE TRUST,
No. 74816 FILED November 22, 2019
According to Jonathan Friedrich, he’ll be going back to court to seek reimbursement for his legal fees.
To date I have spent over $ 273,000.00 in legal fees and costs. If you want to go up against an HOA you need a FAT checkbook!
Now we have to go back to the Trial Judge for my legal fees. Judges do NOT have to grant all me fees only “reasonable fees”. The defense can go back to the Supreme Court and APPEAL what ever the Trial judge gives me. NO END to this.
First Amendment rights extend to privately-owned streets in HOA-governed communities
The U.S. Court of Appeals for the Sixth Circuit (federal court) issued an encouraging opinion on free speech rights in July 2019.
The case concerned whether or not First Amendment rights can be limited or curtailed on privately-built and owned roads.
The dispute arose when 5325 Summer Avenue Property Owners Association, Inc. owner of a mixed use planned community named Virginia Run Cove, called Memphis Police to remove a private citizen from the street in front of a Planned Parenthood Clinic.
John Brindley, who was not a resident of Virginia Run Cove, was standing in the street near the clinic and sharing his pro-life views with anyone passing by.
The HOA has long declared the street in its Virginia Run Cove subdivision to be private. Someone with the HOA apparently didn’t agree with Brindley’s views, and chose to call the local police.
Memphis Police responded to the HOA’s complaint by ordering John Brindley, under threat of arrest, to leave the premises, as it is “private” property.
Homeowner sues the City and its police officers
Following the incident, Brindley sued the City of Memphis and two of its police officers, citing his Constitutional rights to free speech in a “traditional public forum.” (Note: The HOA was not part of the lawsuit.)
The District Court refused to consider Brindley’s claims. It agreed with the City’s view that the two-lane street in Virginia Run Cove is private, therefore the HOA has the right to restrict speech on its property.
Dissatisfied with that opinion, Brindley chose to appeal to the Sixth Circuit.
The Appeals court reversed the District Court’s decision, based upon previous case law with regard to private streets serving the public.
The Sixth Circuit Court ruled that, even though the street running through Virginia Run Cove is privately owned, it functions as a traditional public forum, based upon a two-part legal test:
(1) is the privately-owned street physically indistinguishable from a public street and (2) does the street function like a public street. If both of these criteria are met, it is a “traditional public forum.”
In other words, an HOA cannot restrict First Amendment rights on its streets with public right of way. This is great news for millions of Americans, whether or not they reside in an HOA-governed community. ♦♦
Appeals Court Deems Association Street a First Amendment Public Forum
OCT 31,2019 / BY JOHN COLBY COWHERD
Brindley v. City of Memphis, 934 F.3d 461 (6th Cir. 2019).Brindley v. City of Memphis, 2:17-cv-02849, 2018 U.S. Dist. Lexis 117481 (W. D. Tenn, Jul. 13, 2018).