Federal judge denies dismissal of Southern Walk lawsuit against OpenBand
By Erika Jacobson Moore
A U.S. District Court judge has denied a motion that would stop the Southern Walk at Broadlands HOA federal lawsuit against the community’s cable provider OpenBand.
After having its initial suit dismissed without prejudice in late July, Southern Walk’s HOA filed an amended complaint against the Dulles-based telecommunication company last month. OpenBand responded by filing a motion opposing the homeowners association’s ability to file an amended suit. Today, a federal judge denied the motion, and allowed the case to move forward.
Comment has been requested from OpenBand’s representatives on today’s hearing.
For the residents’ part, Southern Walk HOA President Erika Hodell Cotti said the judge’s ruling was a positive step.
“The HOA is pleased with the court’s decision and we look forward to proceeding forward with our amended complaint and to our day in court,” she said.
OpenBand serves 4,200 residents in four communities: Lansdowne on the Potomac, Southern Walk, Lansdowne Village Green and Leisure World. All of the contracts are made through the homeowner’s association. Leisure World, in which each building is an individual HOA, is the only community in which the resident-controlled HOA awarded a contract to OpenBand following a competitive bidding process.
Southern Walk has been battling with OpenBand for years, citing concerns about poor customer service, inadequate cable technology, and a multi-decade exclusive contract that was entered into with OpenBand by the then-developer controlled HOA board. While the agreement states it allows other providers to serve Southern Walk, exclusive easements granted to the telecommunications company when the community was under construction at the beginning of the decade make that virtually impossible for other providers like Verizon or Comcast to offer services, residents say.
In the amended complaint, Southern Walk states, “The Telecommunications Services Agreement and the other contracts and conveyances come together in a carefully orchestrated, inter-related self-dealing scheme that guarantees exclusive access for Open Band to the Southern Walk Real Estate Development and an income stream for Open Band for up to 65 years.”
The amended complaint notes that while there is a blanket non-exclusive easement in the Declaration of Broadlands, Southern Walk’s convenants allow for the declarant, developer Van Metre, “to grant to a third party a transferable exclusive right to operate Utilities on the Property [and that such] easement rights set forth in this Subsection shall survive in perpetuity…”
The complaint also notes that the easements in Southern Walk refer to the “exclusive right” to provide services to homeowners, and that OpenBand’s own operating agreement refers to the easements as exclusive, and that OpenBand representatives have acknowledged publicly, that the easements are exclusive for wire services.
The Southern Walk HOA originally filed its suit on the basis that the contract that was created between OpenBand and its developer Van Metre violated the 2007 Federal Communications Commission order that disallowed exclusive telecommunications agreements. In late July a judge dismissed that suit, without prejudice, giving residents the opportunity to re-file.
OpenBand’s Aug. 22 motion challenged that ability, on the grounds that it would be “futile.”
“The Amended Complaint fails to cure the deficiencies identified by the Court when it dismissed Plaintiff’s original Complaint,” OpenBand’s motion reads. “Although Plaintiff claims that it ‘seeks leave to allege in detail the specific exclusivity provisions’ contained in the agreement at issue in its original Complaint-the Telecommunications Services Agreement-all Plaintiff has done is add factual allegations based upon extraneous documents. However, the proposed amendment is futile, as this Court has already held that the TSA is a valid and lawful bulk billing agreement under the applicable Federal Communications Commission…”
The motion also notes that the court already ruled that the easements in the community are not part of the HOA agreement.
“Although Plaintiff states that the FCC has ordered that exclusive access is illegal, that is an incorrect characterization of the scope of the 2007 Exclusive Access Order, which only prohibits building exclusivity clauses in contracts between cable operators and developers or homeowners associations,” the motion argues. “To the extent that exclusivity arises out of something other than an agreement between the parties, such as an easement over private property, that circumstance would be beyond the scope of the FCC’s authority…”
The motion also notes that each homeowner signed onto the agreement when they purchased their homes and no one was forced to sign.
“No homeowner was forced to close on the purchase of his/her home if any of the HOA’s restrictions or requirements were unacceptable to that homeowner. Unless the HOA’s covenants and conditions violate some protected right, then they are enforceable once accepted by the homeowner,” the motion argues.
This is an ongoing story and more will be reported as it becomes available.