Tanglewood Association Verdict May Be Houston Area's Largest

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Following a late November jury trial spanning two weeks, a Harris County jury awarded damages and attorneys' fees totaling almost $500,000.00 against a Houston area Tanglewood Homes Association for its violations of deed restrictions. The jury found that over a two year period the community association for this Galleria-area neighborhood acted in an arbitrary and capricious manner towards the complaining homeowners.

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Group Campaigns to Rein In Out of Control Homeowners Associations

According to Robin Klar Lent, President of Texas Homeowners for HOA Reform, an advocacy group for Texas homeowners http://www.texashoareform.org/ , seeking to hold homeowner associations accountable for over-stepping their authority, "Tanglewood Homes Association is typical of a way out of control homeowners association. Weekend bureaucrats think they can make up the rules as they go along, ignoring that what controls the Association's actions are the actual deed restrictions. The fact that this is the second time the Tanglewood property owners association lost a case involving the same paragraphs of the protective covenants evidences the poor leadership today seen in many Texas homeowners associations."

According to property owners advocate Robin Lent, “Community associations must be held accountable. The property owners association just like a homeowner is accountable for deed restriction breaches.    Association’s advisors sometimes mislead community association management into thinking that the association is beyond the law’s reach and not liable for misdeeds. This is flat out wrong. The officers and directors and Board members must be held accountable for their deed restriction violations like everyone else. The property owners association must be held accountable to the same standard as homeowners. In my eyes the Feldmans are heroic in standing up to a property owners association gone wild. This case confirms that in Texas all parties are held to the same standard for breaches of restrictive covenants.”

Mrs. Lent continued, “Eventually homeowners in Tanglewood will understand the irreparable damage caused. The hidden expenses start with the escalating costs of Director and Officer Insurance. In many instances after needless litigation such as this, premiums on D&O insurance double, before being canceled.”

Calls to Pogo Davis Kutzschbach, the president of Tanglewood Homes Association, Inc. went unanswered. Ms. Kutzschbach did not testify at the trial. Similar inquiries to Rick Butler of Butler & Hailey, the Association's attorneys, and Board members, Brett Hamilton and Karl Willmann, also were not returned.

In 2008, three Tanglewood homeowners brought suit against the Association in Cause No. 2008-65420, Feldman v. Tanglewood Homes Association, Inc., in the 80th Judicial District Court of Harris County, Texas on account of the Association's failure to enforce the more than fifty year old protective covenants. According to Mike Kelly, who serves as trustee for one of the homeowners, "Tanglewood Homes Association's management just decided that it wasn't going to enforce part of the restrictions. The Association wanted to make up its own rules."

In the November trial, the community association was found liable for additional damages, which are being calculated in the second part of the case. The second part of the trial to be held next year addresses still additional damages arising out of the incident.

Prior to the case being presented to the jury, the Judge of the 80th Judicial District Court for Harris County, Texas also found that Tanglewood Homes Association had violated the deed restrictions as to an adjoining home and lot owned for the benefit of the plaintiffs, who owned the house that was the subject of the jury trial. The homeowners association was unsuccessful in its attempts to have the adjoining home demolished and not rebuilt.

According to Stewart Feldman, one of the plaintiffs: "Since 2008, the Tanglewood property owners association's management exhibited poor judgment in blocking our family's home addition and refusing enforcement of the deed restrictions in favor of making the rules up as the Association went along. Given that this is the second time this homeowners association was sued and lost on the issue of lot combinations, once in the mid 1990s and again in November 2010, we hope that the Association finally has gotten the message that in the Houston area, homeowners associations, just as homeowners, are required to abide by deed restrictions for the benefit of all residents. Using the monies entrusted to the Association to then pay damages for the Association's intentional breaches of the restrictions by a wayward Board is irresponsible." The earlier case was Berlioz Investments, Ltd. v. Tanglewood Homes Association, Inc., Appeal No. 96-20363; In the United States Court of Appeals for the Fifth Circuit (1996).

Commented John Craddock, counsel for the plaintiffs: "Throughout this case, the Association seems to have suffered from poor decision making compounded by poor advice. Even when the Association knew that it was wrong and had the opportunity to limit its losses, the Association decided to do everything possible to increase the litigation costs on the Feldmans, which the Association now has to pay." Mitchell Katine, co-counsel for the plaintiffs, added: "The Association decided not to play by the rules at the outset. And the homeowners association appears to have kept the Tanglewood residents in the dark. I hope that the other homeowners will now exercise some control over this run away board."

One resident speculated that the total damages in this case due to the plaintiffs, beyond the hundreds of thousands of dollars in attorneys' fees already paid by the Association, will lead to a $1,500.00 assessment against each of the Association's homeowners. An inquiry to Brett Hamilton, a Locke Lord attorney, who is chair of the Association's legal committee, to try to confirm the possible homeowners assessment and other facts, resulted in "no comment"; no response was received from Karl Willmann of Betz Realty, the former chair of the Association's deed restriction committee. According to plaintiffs, Hamilton and Willmann oversaw and directed the litigation on behalf of the Association.

Recent press reports in the Houston area have addressed abuses by other property owners associations. On November 11, 2010, Fox 26 Television http://www.myfoxhouston.com/dpp/news/investigates/101111-hoa-meeting-melee-caught-on-tape?CMP=201011_%20emailshare in Houston featured a story of a battle that broke out among homeowners leading to the ouster of that association's president.
Commented Feldman, "Tanglewood Association's leadership seems intent on steering the Tanglewood homeowners down a dangerous road which has already resulted in a several hundreds thousands of dollars of losses to the Association's members. The Association is now defying court orders and rulings."

The other party in the case, Mike Kelly, commented: "Tanglewood Homes Association knows who messed up. I only hope that the Association seeks reimbursement from those among its leadership and its advisors who put 1,221 property owners in harms way, likely leading to a sizable judgment. Their actions were neither prudent nor responsible."

For Information:
Robin Klar Lent
Texas Homeowners for HOA Reform, Inc.
PO Box 20086
Houston, Texas 77225


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