What Happened When a Texas Homeowner Association Opted to Sign with a Single Hauler

Ever think that your homeowners or condo association is plowing ahead with an ill-considered project? Ignoring its own rules? Now and then, here and there, many people feel this way, but at the same time they are daunted by the time and effort to take on the governing board. To cheer one’s hopes, here’s a tale from Texas where an uprising of owners and residents got them results.

Village Green is a subdivision in Bexar County northwest of San Antonio. Formed in 1998, the Village Green Homeowners Association (VGHA) is managed by a board of directors. From the outset, VGHA has required each owner in the development to arrange and pay for garbage service. Indeed, Paragraph 3.20 of the VGHA's Declaration of Covenants, Conditions, and Restrictions (Declaration) reads, in part as follows:

This policy led to a situation where trucks from many companies enter the subdivision on various days throughout the week to collect trash and recycling.

In early 2014, a Village Green resident came to the board with a suggestion: require all residents to use a single hauler. The directors liked the idea enough to invite a homeowner volunteer to research several waste collection services. Vaquero Waste & Recycling was eventually determined to be the least expensive provider.

The proposal to switch to a single collection company was openly discussed at several board meetings between March and September 2014. At its November 2014 meeting, the board voted to designate an exclusive hauler and to accept Vaquero's proposal. Thereafter, VGHA and the company signed a waste collection contract effective March 10, 2015. Under the agreement, Vaquero became the sole provider within the community and it directly billed residents for its services.

Before signing the contract, the board informed residents that they needed to make arrangements with Vaquero by April 1, 2015—a deadline later extended to April 30, 2015. VGHA also provided residents with information on how to switch from their current hauler. Although the Declaration can be amended by vote of the subdivision residents, Paragraph 3.20 remained unchanged.

After the resolution was passed, some board members reportedly acted to prevent other waste disposal companies from fulfilling their contracts with residents. In particular, VGHA changed the gate codes in order to block other waste and recycling companies from entering the subdivision. For homeowners who had not yet made the transition, getting service from their existing provider became difficult and irregular, if not impossible. Some owners decided it was time to strike back.

C.A.U.S.E. (an entity created by Village Green property owners specifically to enforce the applicable restrictive covenants within the subdivision) sued VGHA with a number of claims, among them interference with existing contract, interference with prospective business relations, breach of restrictive covenants, plus a request for attorney’s fees. In addition, C.A.U.S.E. sought an outright judicial declaration that “Plaintiff's freedom to choose their own waste disposal service, and pay for same, is not in violation of any applicable restrictive covenants.” VGHA filed an answer denying the allegations and seeking reimbursement for its own expenses and attorney's fees.

At the direction of the trial judge, the parties addressed certain "threshold" issues of law, particularly whether VGHA has the authority to compel owners or residents within the subdivision to use a service provider chosen by the board of directors. VGHA argued that under the Declaration, its board had the authority to implement rules and regulations to manage and maintain the subdivision’s common areas, including roads and streets. It noted that among the board's motivations to change the waste collection policy were: reducing trash truck traffic and improving safety on roads; limiting the appearance of trash bins on streets to once a week; and easing street maintenance costs for the community. In addition, it argued that the board had the right to delegate its powers and to sign contracts with third parties. With respect to Declaration Paragraph 3.20, VGHA claimed that it does not permit homeowners to select and contract with the waste and recycling company of their choice. It merely states that homeowners are obliged to take charge of and pay for waste collection and disposal.

After hearing from both sides, the trial court ruled that VGHA has the authority to compel

owners or residents to use the services of a waste hauler chosen by the board. It granted VGHA's motion for judgment in its favor and denied all claims filed by C.A.U.S.E. However, a three-

judge panel of the state court of appeals unanimously reversed the lower court ruling, finding that VGHA lacks the authority to take the action it did.

“When we consider the plain language of Paragraph 3.20, the meaning is clear and unambiguous,” said Justice Rebeca C. Martinez, writing for the panel. “Even if it could be argued that Paragraph 3.20 contains an ambiguity or doubt as to the intent of the Declaration's framers, restrictive covenants are to be construed in favor of the free and unrestricted use of the premises. * * * In light of the clear language in this case, we conclude that individual homeowners are the ones who are to arrange for and pay for trash collection.”

The court brushed aside VGHA’s contention that its authority to compel the residents to use one trash provider stems from the Declaration, which gives the board the duty to operate, maintain, and manage the common areas, including the neighborhood streets, to promote the health, safety, and welfare of the subdivision, and to make contracts to provide services for security and maintenance of the neighborhood. “We disagree that these general provisions render Paragraph 3.20—the only covenant pertaining to trash collection—superfluous,” her opinion continued. “Reading the Declaration in its entirety, we see no clearly worded intent expressly allowing the Board to choose one trash collector for the entire neighborhood to the exclusion of all others.”

C.A.U.S.E. (a Texas Unincorporated Nonprofit Association) v. Village Green Homeowners Association, Inc., No. 04-16-00329-CV, Tex. Ct. App., 4^th Dist., July 26, 2017

Barry Shanoff is a Bethesda, Md., attorney and general counsel of the Solid Waste Association of North America.