A recent California appellate decision offers important lessons for HOA boards and managers about the limits of using litigation to respond to vocal or disruptive homeowners, particularly when anti-SLAPP protections come into play. “SLAPP” stands for Strategic Lawsuit Against Public Participation, and anti-SLAPP legal protections are intended to prevent lawsuits from being used to silence people from speaking on matters of public interest.

Cocoa AJ Holdings, LLC (Cocoa) was the developer of GS Heritage Place, a mixed condominium development in San Francisco's Ghirardelli Square that included both whole residential units and fractional (timeshare) units. Stephen Schneider owned a timeshare interest in one of the fractional units. In 2021, Cocoa decided to sell its 19 remaining unsold units as whole units rather than fractional units, a change that required amending the community's CC&Rs. Schneider objected and launched what Cocoa described as a "multiyear campaign" to block the amendments. His efforts included contacting other fractional owners, demanding negotiations with the board, making statements Cocoa considered false or misleading, organizing an unofficial owners' group, soliciting litigation funding, and filing multiple lawsuits.

The parties had previously settled a 2018 class action lawsuit, and that settlement included a general release of claims and a nondisparagement clause in which Schneider agreed not to make false or disparaging statements about Cocoa and to cooperate constructively in future dealings. In 2022, Cocoa filed a cross-complaint against Schneider alleging intentional interference with prospective economic advantage, breach of the settlement agreement, unjust enrichment, and defamation. Schneider responded with a special motion to strike under California's anti-SLAPP statute.

The appellate court affirmed the trial court's order granting Schneider's anti-SLAPP motion and striking all four of Cocoa's claims. The court's reasoning came down to two key findings. First, Schneider's conduct arose from protected activity. His campaigning against the amendments to the CC&Rs, which included statements to over 150 other fractional owners about the board's actions, was a matter of public interest because it affected the financial interests of the entire community. His lawsuits and communications in anticipation of the litigation were also protected petitioning activity.

Second, Cocoa failed to show a probability of prevailing on any of its claims. On the interference claim, Cocoa could not demonstrate it had an actual economic relationship with specific buyers at the time of Schneider's conduct or that his actions were independently wrongful. On the defamation claim, the two communications Cocoa pointed to were either not provably false or were protected by the litigation privilege. On the breach-of-contract claim, the court found that the settlement agreement's nondisparagement clause was limited to matters connected to the original class action, not to future disputes over amendments to the CC&Rs. And on the unjust enrichment claim, Cocoa could not show Schneider unjustly retained any benefit, as it failed to demonstrate a probability of success on its other claims.

This case is a reminder that homeowner speech and advocacy—even when aggressive or disruptive—often carries significant legal protection, and HOA boards and managers should keep several practical lessons in mind.

First, boards should understand anti-SLAPP risks before filing suit. When an owner's conduct involves speaking out about community governance, organizing other owners, or filing lawsuits, those activities are likely protected under anti-SLAPP law. As such, a cross-complaint or lawsuit targeting that conduct risks being struck, and if that happens, the board may be ordered to pay the owner's attorneys' fees.

Second, nondisparagement clauses have limits. Settlement agreements are interpreted to cover the matters the parties intended to resolve at the time, and a nondisparagement clause from an earlier dispute may not extend to entirely new controversies that arise later. Boards should not assume a prior settlement gives them broad authority to silence an owner on future issues.

Third, owner criticism of board actions can be a matter of public interest. When a board decision affects the finances or living conditions of the broader ownership community, owners who speak out (even loudly) are engaging in protected activity. This is true even if the owner acts in an unofficial capacity or organizes an informal group.

Fourth, to prevail on claims like intentional interference, the wrongful conduct must go beyond the speech or petitioning itself. Boards should work with counsel to identify whether an owner's behavior crosses a line defined by statute, regulation, or other legal standard before pursuing legal action. And finally, before responding to a vocal owner with litigation or legal threats, boards should consult counsel early and assess whether the conduct at issue is likely protected and whether the association can realistically meet its burden of proof.

Disputes between developers, boards, and outspoken owners are common. This decision underscores the importance of responding thoughtfully and strategically rather than reactively. If you have questions about this case or any other issues, please contact your community association counsel.