Supreme Court of Texas Holds That a Defendant Condominium Association May Recover Attorney’s Fees Under the Texas Property Code

Recently, the Supreme Court of Texas issued an opinion in Sunchase IV Homeowners Association, Inc. and Board v. Atkinson. The issue presented was whether Section 82.161(b) of the Texas Property Code allowed a condominium association to recover its attorney’s fees after successfully defending a lawsuit brought by a unit owner. Chapter 82 of the Texas Property Code is known as the “Uniform Condominium Act,” and Section 82.161(b) allows the “prevailing party” in a lawsuit to enforce the condominium’s declaration, bylaws, or rules to recover its attorney’s fees and costs from the nonprevailing party.

In Sunchase IV, David Atkinson sued his condo association for various tort and contract claims. At trial, a jury found in favor of the condominium association and awarded it over $100,000 in attorney’s fees.

Atkinson appealed, and the court reversed the award of attorney’s fees because the association was not adversely affected by a violation of Chapter 82 or the condominium’s declaration or bylaws, and it had not requested any affirmative relief.

The Supreme Court of Texas reversed the court of appeals and reinstated the award of attorney’s fees. In doing so the Supreme Court acknowledged Texas’s long-standing general rule that litigants are responsible for their own attorney’s fees. But the court also recognized that Section 82.161 was a fee-shifting provision similar to other contexts in which a defendant could recover attorney’s fees as a prevailing party.

The Court held that the association was a prevailing party because it successfully defended against the lawsuit to enforce the condominium declarations and bylaws, resulting in a take-nothing judgment against Atkinson. In doing so, the Court aligned the meaning of a “prevailing party” under the Uniform Condominium Act with other statutes and caselaw.