A recent opinion issued by the First District Court of Appeals has shone a light on the importance of 209 hearings in the POA process as it relates to the recovery of attorney’s fees. This article examines the Court’s decision in Dao v. Mission Bend Homeowners Association and explains why associations and their management teams need to be cautious moving forward in their approach to the 209 violation process.
Background
On the surface, Dao v. Mission Bend Homeowners Association appears to be a simple deed restriction violation matter. Dao, the homeowner, made an improvement on his lot, a water fountain in the front yard to honor his recently deceased mother-in-law and did not receive ACC approval. The Association sent a certified 209 letter in September of 2018 that described the violation and requested the removal of the fountain. In response and within 30 days of receiving the Association’s demand, Dao sent a letter to the Association requesting a hearing that the Association received but did not respond to. As the enforcement process continued without the removal of the fountain, in March 2019, the Association filed suit against Dao in trial court.
The crux of the Association’s argument was that Dao violated two provisions in the Association’s CCR’s:
- Article III, Section 1 (Land Use and Building Type)
- All Lots shall be known and described as Lots for residential purposes only (hereinafter sometimes referred to as “residential lots”), and no structure shall be erected, altered, placed or permitted to remain on any residential Lot other than one single-family dwelling not to exceed two (2) stories in height and a detached or an attached garage for not less than two or more than four cars. . .
- Article III, Section 14 (Lot Maintenance)
- (1) to mow the grass thereon, (2) to remove any debris therefrom, (3) to remove, trim or prune any tree, hedge, or planting that, in the opinion of the [Association], by reason of its location or height, or the manner in which it has been permitted to grow, or disease, decay or other condition is detrimental to the enjoyment of the adjoining property, is unattractive in appearance or obstructs the view of traffic, (4) to repair or paint any fence thereon that is out of repair or not in harmony, with respect to color, with fencing on adjacent property in the Subdivision, and (5) to do any and all things necessary or desirable in the opinion of the [Association] to place such property in a neat and attractive condition consistent with the intention of this Declaration.
Dao’s argument was that neither provision applied to the fountain as it was not a building or structure, the Association acted in an arbitrary, capricious and discriminatory manner in their enforcement actions, and the Association denied him due process by refusing to conduct a hearing.
In its ruling, the court concluded Article III, Section 14 applied and was violated, and the court issued a judgment in favor of the Association ordering Dao to remove the fountain and pay the Association’s attorney’s fees.
The Appeal
In his appeal, Dao’s primary argument concerns the application of Texas Property Code Section 209.008 in the award of attorney’s fees to the Association.
Section 209.008 (a) and (b) state:
(a) A property owners’ association may collect reimbursement of reasonable attorney’s fees and other reasonable costs incurred by the association relating to collecting amounts, including damages, due the association for enforcing restrictions or the bylaws or rules of the association only if the owner is provided a written notice that attorney’s fees and costs will be charged to the owner if the delinquency or violation continues after a date certain.
(b) An owner is not liable for attorney’s fees incurred by the association relating to a matter described by the notice under Section 209.006 if the attorney’s fees are incurred before the conclusion of the hearing under Section 209.007 or, if the owner does not request a hearing under that section, before the date by which the owner must request a hearing. The owner’s presence is not required to hold a hearing under Section 209.007.
In the initial notice issued by the Association in September 2018, the Association gave Dao the opportunity to request a hearing under Section 209.007 of the Texas Property Code on or before the 30th day after the notice was mailed. The appeals court determined that Dao requested a hearing within the 30-day time period.
During the appeal process, the Association told the court it, “did not dispute its receipt of Dao’s timely request for a hearing nor that it sought reimbursement of the attorney’s fees it incurred related to the violation described in the September 12, 2018 notice. But the Association did not hold or conduct/conclude a hearing.”
In its decision, the court stated, “Under these circumstances, the plain language of subsection (b) limits Dao’s liability for the Association’s attorney’s fees to those incurred after the conclusion of the requested hearing. See id. § 209.008(b) (“An owner is not liable for attorney’s fees incurred by the association relating to a matter described by the notice under Section 209.006 if the attorney’s fees are incurred before the conclusion of the hearing under Section 209.007 . . .”). Because the Association did not conduct a hearing on Dao’s fountain, all the attorney’s fees for which it sought reimbursement were incurred “before the conclusion” of a Section 209.007 hearing, meaning none are recoverable.” The appeals court concluded that attorney’s fees to the Association from the trial court judgment should be eliminated.
Exception
It is important to note that in some cases there is an exception to Section 209.007’s hearing requirements. 209.007(d) provides the exception for suits seeking a temporary restraining order, temporary injunction or a foreclosure. While this did not apply in Dao v. Mission Bend Homeowners Association, the appellate court notes in its opinion that it does not always follow that if an association does not conduct a hearing required by statute it cannot seek relief from a trial court. The court states, “Here, the statute’s plain language making a hearing mandatory only in some cases weighs against a jurisdictional interpretation.”
Ramifications Going Forward
Dao v. Mission Bend Homeowners Association is a perfect example of the need to follow the requirements of Chapter 209 closely. Section 209.008(b) clearly outlines that an owner is not liable for attorney’s fees incurred before the conclusion of a hearing relating to the matter in the notice to the owner, if the owner requests the hearing in accordance with Section 209.007. In this case, if the Association would have held a hearing for the matter, the Association would not be liable for thousands of dollars in attorney’s fees. Going forward, Dao v. Mission Bend Homeowners Association should serve as a caution to all POA boards and their management teams to do their due diligence in processing and enforcing deed restriction violations.
