Community Associations and the First Amendment

My opinion, this is likely the most important case affecting community associations and their future operations since the decision could materially change the balance between unit owner rights and the association's power to enforce restrictions.

A brief primer on constitutional law may be of some assistance. The First Amendment to the Constitution prohibited the federal government from abridging the right of free speech. The Fourteenth Amendment to the Constitution carried this prohibition further to the states and local governments. Thus, it is clear that a municipality does not have the right to prohibit the expression by free speech of citizens in most instances. In 1948, the United States Supreme Court was faced with the issue of extending constitutional protections to private agreements. Shelley v. Kraemer related to the issue of a restrictive covenant which prohibited black families from moving into a neighborhood. As an interesting side note, Justice Thurgood Marshall was one of the attorneys representing the families that were excluded from moving into the neighborhood because of the restrictive covenant. The Supreme Court held that once a state court was requested to enforce the restriction, state action arose. The Court, finding state action, went on to hold that the restriction was unconstitutional and therefore refused to enforce it.

From 1948 to the present the Supreme Court of the United States has not extended its holding in Shelley v. Kraemer beyond racial restrictions. However, several state courts have extended the decision to other types of restrictions. For example, state courts have held that private restrictions prohibiting children could not be enforced by the court under the holding in Shelley v. Kraemer. In addition, a Florida court, following the war in Iran, refused to enforce a restriction against the flying of the American flag based upon Shelley. For the most part, it appears that courts which have applied Shelley have done so with relationship to restrictions which exclude persons from the community such as in the cases dealing with restrictions against children. The decision relating to the American flag was an emotionally charged decision whereby a court seemed incensed by the idea that anyone could restrict the flying of "Old Glory". It would be interesting to know how the court would have ruled if the flag had been an Iranian flag, since free speech is not limited to free speech which the court likes but is intended to allow the free expression of speech whether popular or not.

The facts in Midlake are rather simple. Midlake is a condominium community located in the Pocanos resort area in Pennsylvania. Mr. Cappuccio, an attorney from New Jersey, and his wife purchased the unit in 1989. From 1989 to 1993, the Cappuccio's displayed two 81/2 x 11 "for sale" signs in the windows of their unit. The restrictive covenants of the condominium association in essence stated that, except for the declarant, no owner could display "for sale" signs in the common elements or limited common elements or in the unit if it were visible from the common elements except with the prior consent of the governing board of the condominium association. Mr. and Mrs. Cappuccio never received such consent. It should also be noted that the restriction on its face was not an outright prohibition against "for sale" signs but rather required the prior written consent of the condominium association. In fact, the record in the case indicates that on weekends two portable "for sale" and "open house" signs were placed at the entrance to the complex.

The Cappuccios argued that, since a condominium association is a government of sorts, its actions constituted a state action and therefore the Constitution applied. In addition, they argued that Midlake was similar to a company town in that, effectively, if they wanted to live in the Pocanos, they would have to live either at Midlake or two other condominium associations in the area. Finally, the Cappuccios argued that Shelley v. Kraemer prohibited enforcement of the restriction since the restriction violated their First Amendment rights. While rejecting the first two arguments, the Court held that Shelley v. Kraemer did apply and that therefore enforcement of the restriction would constitute state action. The Court further held that the prohibition of "for sale" signs violated the Cappuccio's First Amendment rights and therefore was invalid and unenforceable. The Court cited a 1977 United States Supreme Court decision which held that a total prohibition of "for sale" signs in a municipality with the purpose of attempting to curtail "white flight" was unconstitutional.

What is not clear in this case is whether the restriction of the condominium association was a total prohibition against "for sale" signs or whether it was simply a restriction which stated that prior consent was needed. There are a long line of cases stating that there can be reasonable restrictions against free speech in terms of time, place and manner. For example, one court has held that restricting "for sale" signs to 1 p.m. to 5 p.m. on weekends is inappropriate limitation on time, place and manner of speech. The threshold question for the Superior Court will be whether judicial enforcement of a private restriction which is racially neutral constitutes state action and if it is, whether a restriction short of a total prohibition is in violation of the First Amendment.

Obviously, the decision in this matter will go beyond "for sale" signs. For example, political signs would obviously be an expression of free speech as would the displaying of flags and perhaps even other more volatile signage.

The courts' balancing of the rights of unit owners versus the rights of the condominium association, including the rights of others who purchase into the community with certain expectations to be free from certain visual clutter, should be fascinating. As the case evolves I will report the results. Stay tuned.