Georgia Court Says HOA Claims For Violations of Covenants Were Barred by Statute of Limitations

Georgia Appellate Court decision (July 15, 2015).

This case involves ongoing disputes between homeowners’ association members (“Owners”) and their homeowners’ association (“Association”) pertaining to efforts by the Association to prevent alleged continuing violations of applicable restrictive covenants and to recover past due Association assessments and attorney fees.

Owners purchased their property in 1996 with knowledge of the fact that the property was subject to various restrictive covenants that were contained in Association’s governing documents. The problems started in 2002, when Owners enclosed a portion of their yard by erecting a fence without the required Association approval. The Association first engaged in efforts to get Owners to take down the unauthorized fence in 2003. When the Association’s board refused to approve the fence as constructed, Owners quit paying their dues to the Association. Separate and apart from the unresolved issues pertaining to the fence, in early 2006, Owners installed a new garage door – again without prior approval from the Association. The Association then notified Owners that the garage door was in violation of the architectural standards that required the color of the garage door to match the color of the trim on their house. Notwithstanding same, Owners refused to repaint the garage door to the required color. As a result of the continuing violations, the Association began assessing fines in the amount of $25.00 per day.

The first lawsuit between the Association and Owners, which was filed by the Association in 2009, sought to recover the unpaid past assessments. While that suit was pending, in March of 2009, the Association sent Owners notification of numerous violations of the Association’s restrictive covenants, including the installation of the fence back in 2002, and the replacement of the garage door in 2006. The notice demanded correction of the alleged violations and threatened the imposition of fines of $25.00 per day per violation. When the issues over the alleged violations did not get resolved, in May of 2010, the Association was granted permission to amend the complaint that it had filed back in 2009, and have the case transferred to the appropriate superior court. Following the transfer of the case to the superior court, the Association filed an amended complaint that alleged claims for both the unpaid assessments and for injunctive relief along with damages for the alleged uncorrected covenant violations. Owners defended the Association’s lawsuit and also filed a counterclaim which alleged that the Association’s action against Owners was arbitrary and capricious. After participating in mediation, in February 2011, the Association’s action was dismissed without prejudice. In May 2011, Owners settled their claims against the Association that arose before May 2011.

In August 2011, the Association filed a new action against Owners that alleged claims that had been included in the 2010 action that had been dismissed, with the exception of claims pertaining to the fence on Owners’ property. Owners defended this second lawsuit and also filed a counterclaim which alleged that the Association’s action against Owners was arbitrary and capricious, and Owners sought the recovery of attorney fees and litigation expenses. This action resulted in a jury verdict in favor of the Association for $31,325 in damages for unpaid fines resulting from the covenant violations, an additional $5,123.75 for past due assessments, and an additional $41,117.58 in attorney fees. The trial court also granted the Association injunctive relief and ordered that the Owners remedy all but one of the covenant breaches. The Owners then filed an appeal.

One of the Owners’ claims on appeal was that the granting of injunctive relief and the imposition of fines for the covenant violations was in error because the Association’s claims were time-barred. Under Georgia statutes, actions for the breach of a restrictive covenant that does not involve the failure to pay assessments or fees must be commenced within two years after the right of action accrues, which is immediately upon violation of the covenant. In an effort to get around the statute of limitations issues, the Association contended: (i) that the date that the 2009 action was filed should be the controlling date because the subsequent complaints that were filed in 2010 and 2011 were renewals of the claims alleged in the 2009 action; and (ii) the covenant violations were “continuing violations” that give rise to new causes of action as they continue, thus extending the period of the statute of limitations. The appellate court rejected the Association’s arguments because: (i) the only claim alleged in the 2009 action was for past due assessments that were not related to alleged covenant violations which were first alleged in the subsequent actions filed in 2010 and 2011; and (ii) the continuing violation rule does not apply in cases that involve fixtures (window screens and garage door) or where there are not separate repetitive acts constituting the violations.

Because the Owners had first replaced the garage door in November of 2005, and the Association gave notice of the alleged violation in January of 2006, the action filed by the Association in May of 2010 that made claims relative to those alleged violations was not timely filed— using either a two or a four year period of limitations. The same conclusion was reached with regard to the claims pertaining to the window screens which were based on alleged violations that dated back to 1996 (when Owners moved into the house that was missing screens), or 2005, when Owners removed a screen from a window. In ruling that the Association’s claims were time-barred, the appellate court pointed out that under the applicable statute, the right of action accrues “immediately upon the violation of the covenant.”

Because the trial court had awarded the Association injunctive relief on time-barred claims and may have ordered Owners to remedy violations that no longer existed, the appellate court vacated: (i) the trial court jury’s verdict that awarded the Association fines and attorney fees based on the alleged covenant violations; and (ii) the trial court’s order granting injunctive relief based on the jury’s verdict. As a result, the appellate court remanded the case back to the trial court for a retrial.

See case decision: Marks_v._Flowers_Crossing_Cm