496 P.3d 22
Or. Ct. App.2021Background
- Plaintiffs Tokarski and Kelly are lot owners and members of Creekside Homeowners Association (HOA); HOA sued plaintiffs' entities in 2016 to keep the golf course open.
- Plaintiffs sued the HOA and six board members, alleging the board used HOA reserve funds to pay litigation costs in violation of the HOA CC&Rs (Article XI, §3).
- Defendants moved to strike under ORS 31.150 (Oregon’s anti‑SLAPP statute), arguing the claims targeted protected petitioning activity and that plaintiffs could not make a prima facie case.
- The trial court denied the special motions to strike and entered a limited judgment denying the motions.
- On appeal the court held the spending of reserve funds to fund litigation qualified as petitioning activity under ORS 31.150(2)(d), but plaintiffs nevertheless presented substantial evidence making a prima facie case that the CC&Rs unambiguously prohibited using reserve funds for litigation.
- The court also rejected defendants’ standing argument because the CC&Rs expressly grant lot owners the right to sue to enforce them.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the claims arise from protected activity under ORS 31.150 | Tokarski: claims are contract/fiduciary enforcement, not petitioning | Defs: use of reserve funds to pay litigation is petitioning (filing/pursuing suit) | Court: conduct (funding litigation) is petitioning under ORS 31.150(2)(d) |
| Whether plaintiffs presented a prima facie case that the CC&Rs bar using reserve funds for litigation | Tokarski: Article XI §3 unambiguously limits reserves to repair/replacement; defendants admitted using reserves for litigation | Defs: §3 allows board discretion or other legal defenses excuse use | Court: §3 plainly forbids non‑repair uses absent 2/3 vote; plaintiffs made a prima facie case |
| Whether defendants’ asserted defenses compelled dismissal on a special motion to strike | Tokarski: defenses are disputed factual/legal issues for trial | Defs: asserted defenses (interpretation, authority to spend, derivative remedies) defeat prima facie case | Court: defenses did not compel judgment as a matter of law; factfinder could find for plaintiffs |
| Whether plaintiffs have standing to enforce the CC&Rs (derivative vs direct) | Tokarski: CC&Rs expressly grant lot owners right to sue in law or equity | Defs: enforcement normally must be derivative on behalf of association | Court: CC&Rs unambiguously grant owners enforcement rights; plaintiffs have standing |
Key Cases Cited
- Plotkin v. SAIF, 280 Or App 812 (2016) (standard of review and procedural framework for ORS 31.150 motions)
- Staten v. Steel, 222 Or App 17 (2009) (purpose of ORS 31.150 as anti‑SLAPP to deter meritless suits chilling public participation)
- Clackamas County Oregon v. Clackamas River Water, 280 Or App 366 (2016) (filing litigation is petitioning activity)
- WSB Investments, LLC v. Pronghorn Devel. Co., LLC, 269 Or App 342 (2015) (directors may breach fiduciary duties by violating unambiguous governing documents)