Texas Court Says HOA Lacked Authority to Compel Owners to Use a Trash Service Provider Chosen by the Board of Directors

Texas Appellate Court decision (July 26, 2017).

The case involved a dispute over whether a homeowners association (“Association”) had the authority to compel owners and residents within the common interest community to use and pay for a particular waste and recycling collection provider selected by Association’s Board of Directors. Based on a provision in Association’s CC&Rs, since its inception in 1998, Association has required the individual owners and residents of the community to acquire and pay for their own garbage collection and disposal services. The provision contained in Association’s CC&Rs stated: “All refuse garbage and trash shall be collected or disposed of by Owner, at his expense.”

In 2014, Association’s Board of Directors accepted for consideration, a proposal that it consider requiring all residents to use a single trash collection company. The basis for the proposal was to reduce the number of days that the trucks from all the different garbage collection companies that were servicing the residents of the community were in the community collecting trash and recycling materials from the homes. After considering various companies, Association’s Directors decided on one company and entered into a contract with that company which designated the company the sole and exclusive provider of waste collection services to the community. The contract also provided that the individual residents were to pay for waste collection services directly to the vendor. No further action was taken by Association to amend the provision in its CC&Rs that stated the owners and residents of the community would acquire and pay for their own garbage collection and disposal services.

After entering into the agreement with the new service provider, Association notified all of the owners and residents of the new contract and engaged in efforts to eliminate all other trash collection companies in the community. Plaintiff in this case was a trash collection company that had been eliminated by the Association’s actions. The company sued Association alleging various claims relating to interference with their contracts and prospective business relations. The trial court ruled that Association had the authority to compel owners or residents to use the services of a particular service provider that has been selected by Association’s Board of Directors and the plaintiff (the former service provider that could no longer continue providing services in the community) appealed.

Association defense was that it had the authority to compel owners and residents of the community to use one trash collection provider based on its general duty to “operate, maintain, and manage the common areas” of the community, which includes the streets.

Applying general contract law, the appellate court found that under the applicable law pertaining to the interpretation of contracts, more specific provisions prevail over general mandates. Thus, because there was a specific provision in the CC&Rs that said “All refuse garbage and trash shall be collected or disposed of by Owner, at his expense,” the court determined that Association did not have the right to compel owners and residents to contract with the single trash collector that had been chosen by Association’s Board of Directors.

See case decision: C.A.U.S.E., Corp. v. Vill. Green Homeowners Ass’n, Inc.>