paying plantiffs attorney fees

Started by HappyJ • 9 replies • 1552 views

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HappyJ (Tennessee)
Posts: 21

Posted:

We had a recall election. The Secretary and President were recalled and then sued the new directors stating the Assocation did not follow proper procedures to recall them. Both parties. settled out of court to allow the old board to be replaced back to their positions until another special election could be held by a third party court master.. Once again the membership did not vote for the Secretary and President to remain on the board.. Now the plantiffs (secretary and President) want their attorney fees paid by the assocation because they stated that the voted to pay it when they were in office.. How could that be legal? They also sued the treasurer when they sued the newly elected officals/

MelissaP1 (Alabama)
Posts: 13,836

Posted:

When you sue your HOA you sue yourself and your neighbors. You being a member of the HOA and the HOA ONLY funded by it's members, it means that your HOA funds are also used to defend itself in a lawsuit you or another member may bring to the HOA. So yes, they could possibly get reimbursed IF the court has deemed it so. Should have been part of the settlement.

I like to quote one of the Marx brothers. He sued a club he wanted to be a member of and won. After he won he refused to join the club. When asked why he stated "I wouldn't be a member of a club that would have ME as a member"...That's a HOA in a nutshell...

Former HOA President

TimB4 (Tennessee)
Posts: 21,062

Posted:

Happy,

Typically, when the Individuals were in office and defending themselves, the Association or D&O insurance would cover the costs of defending Directors and Officers. Once the Director/Officer was removed, costs incurred after the removal would be born by the individual.

Since there were issues in the recall procedures I suspect that your issue isn't typical and you may need to consult an attorney.

LarryB13 (Arizona)
Posts: 4,099

Posted:

The proper place for the recalled board members to request their attorneys' fees was in court. By agreeing to dismiss their original lawsuit without an agreement that the association would pay their fees, I would think that the recalled board members waived any claims they had.

The association did not file the lawsuit; it was brought by two individual board members seeking to keep their seats. Since they were not ultimately successful in their bid to remain on the board, they would not be entitled to an award of fees in court. Paying fees incurred by indvidual board members under such circumstances would seem to be a breach of fiduciary duty to the association. If anything, the two board members should have been on the hook for the association's costs although the association also waived that claim in the settlement.

The two recalled board members are essentially now trying to rewrite the settlement agreement that they reached previously.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

Both parties. settled out of court

The case has been settled. If they wanted legal fees, they should have brought it up at the settlement. Its over. Done. Finished.

HappyJ (Tennessee)
Posts: 21

Posted:

I'm sorry, I should have said both parties agreed out of court to have another special election. The judge signed the agreed order and the case has yet to be dismissed.The agreed order never indicated who would pay any fees relating to the lawsuit. The election was three weeks ago and our attorney was going to ask for a dismissal since all issues were resolved.. The plantiffs attorney now wants to file a motion requesting the assocation pay his fees..

LarryB13 (Arizona)
Posts: 4,099

Posted:

Since the case is still pending, it is a matter for the court to decide who pays the legal fees and in what amounts. The recalled board members may argue that they won their case because they forced a new election but the results of the that election just repeated the results of the election they challenged. Their challenge did not change the results and did nothing except delay their removal from the board.

If I understand correctly, there was a time after the first election and before the second election when the two now-recalled board members resumed their positions and used that opportunity to obligate the association to pay their personal legal fees. This was highly improper for at least three reasons: first, it is the use of association funds to pay personal expenses; second, the issue of legal fees is a matter for the court to decide; and third, the two members had an obvious conflict of interest in voting to pay for their personal legal expenses from association funds.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By HappyJ on 04/17/2012 10:34 AM
I'm sorry, I should have said both parties agreed out of court to have another special election. The judge signed the agreed order and the case has yet to be dismissed.The agreed order never indicated who would pay any fees relating to the lawsuit. The election was three weeks ago and our attorney was going to ask for a dismissal since all issues were resolved.. The plantiffs attorney now wants to file a motion requesting the assocation pay his fees..

Happy,

Do not take this personally but I just hate when people write about legal matters because they always get it wrong.

In this case, the parties did not agree to anything out-of-court. They reached an interim agreement that the court approved. There is nothing out-of-court about that and, as you noted, the case is still pending awaiting a final resolution.

Since your association is represented by an attorney I am not certain as to why you brought your original question ("How could that be legal?") here instead of asking it of your attorney. He is far more competent to answer your legal questions than anyone here.

HappyJ (Tennessee)
Posts: 21

Posted:

Larry,
I don't take these forums personally.. I learned a log time ago to not become easily offended.The attorney working the case is tied up in federal court and I posted wondering if anyone had similar stories to share or thoughts on the issue

MelissaP1 (Alabama)
Posts: 13,836

Posted:

This is a typical request and up to the court to decide. Your HOA couls counter with the same request. However, the judge must rule who pays what in the end. Most likely both parties may be responsible for their own costs even if requested or not. Just make sure your attorney requests everyone pays their own costs or puts in the other party pays for your cost too. Again this is something very typical and happens in most cases if someone is thinking forward enough.

Former HOA President

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