One board member suing another for libel

Started by FrankB5 • 6 replies • 5251 views

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FrankB5 (Texas)
Posts: 1

Posted:

All, I am very new the association management arena so I'm seeking advice from some of you seasoned veterns. We have a three member board of a condo association of which I am the only elected member. The other two board members resigned because I unseated their friend and co-conspiritor. As a result of their resignations, I appointed one board member and she and I together appointed the third. Six weeks into the arrangement everything went south. The last straw was a homeowner fell through the stairs of their unit. It was always understood that exterior elements were the responsibility of the HOA, but the insurance company denied the claim based on the declarations stating that individual homeowners are responsible for the maintenance of their limited common elements.

The other two board members voted to not inform the community of the safety issue or the threatened lawsuit on October 1. I complied against my better judgement because I didn't want to have a lot of questions we couldn't answer yet. We awaited an opinion from our attorney and they voted to continue to not inform the community on several different occassions through October 24, at which time I was given the option to send a vague e-mail about stair safety. I finally sent an e-mail to the community on November 11 detailing the safety issue as well as the liability issue and was immediately attacked by the other two board members. I told them, copying the management company, that they had conspired to keep information from the community. By the way, they did the same thing when we changed the foreclosure procedure.

I have now been threatened by one of the other board members that if I do not retract my statement that they will sue me for libel. I know they would not be sucessful, but I don't want to have to pay the legal cost for her case to be thrown out of court. Does anyone have any experience with this issue? Would D&O insurance pay for a dispute between board members? We are located in Texas.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

First off, people can sue for anything anytime. Just wait for the paperwork and don't knee jerk react. If you don't get threatened to be sued as a board member atleast once a month, your not doing your job. Plus you need to recognize the difference between personal and HOA liability. Libel is personal and wouldn't need the HOA's involvement. The HOA's insurance isn't for such cases. It's for protecting a board member's personal assets from a lawsuit if they did act in a careless manner that resulted in damages as a BOARD. Best piece of advice I can give you on this is my tride and true response: Suing your HOA is suing yourself and your neighbors. Plus for a HOA it is cheaper to counter sue than to sue. Just ignore the threat until the threat actually comes to your door in a form of a summons.

As for your other issue...The HOA's insurance probably did deny this claim. Rightfully so. The owner's insurance should have picked up the claim NOT the HOA's. Did the owner go to their homeowner's insurance first or just went to the HOA's? That is my first question here. That doesn't mean that homeowner's insurance won't sue the HOA's insurance. They most likely will. That then becomes an insurance CLAIM situation between the two insurances. The HOA involvement should be kept between the insurance companies.

However, I strongly suspect the owner who fell through the stairs has brought a personal suit. This is the lawsuit you may be referring to coming up. If so, then this person may bear the brunt of proof the HOA is responsible. The denial from the HOA's insurance should bolster the HOA's case. Which by the way you may consider the HOA filing a counter suit or make sure the lawyer request any legal fees the HOA's had to pay be reimbursed or paid by the other party. The court will have to decide that and it's NOT a guarantee they will grant the other party paying the HOA's legal fees/costs. Discuss this with your lawyer as it sounds like your HOA has hired one and not using the HOA's insurance one. Which your HOA may want to contact about the policy and it's payout information. There is a cap on what insurance pays out in lawsuit awards. So best to find out what amount that is in case this person is suing for more than the damages incurred. In the end most of this would be an insurance claim technically.

I believe this person may have a case for paying off their insurance deductible and possibly some of their legal bills as worst case. Pain and suffering is a punitive thing and up to the judge in awarding. So I can't factor in that in this worst case scenerio. The repair portion of the suit is the meat of the situation and what the HOA should concentrate on defending.

As for letting the HOA members know about the suit. They have every right to know about it. It is their money being spent on the issue. The board represents the general membership in daily routine and operations. That doesn't exclude members from knowing what the board is facing on their behalf. Plus it is a good time to make sure people understand their CC&R's and their responsibility for outside maintenance. That way it may not happen again or they will know NOT to sue.

Former HOA President

LarryB13 (Arizona)
Posts: 4,099

Posted:

I am not sure that it has been tested in court yet, but members of a condo board would seem to fall under the heading of "public official."

A State cannot under the First and Fourteenth Amendments award damages to a public official for defamatory falsehood relating to his official conduct unless he proves "actual malice" - that the statement was made with knowledge of its falsity or with reckless disregard of whether it was true or false. New York Times Co. V. Sullivan, 376 U.S. 254 (1964)

Threatening to sue is easy. Doing it is something else entirely. The reality is that few attorneys would agree to take on such a case and the plaintiff will have to pony up anywhere from $5,000 to $20,000 just to begin the case. The bar is set so high that few of these cases ever see the light of day.

There is little that you can do to prevent a person from filing a lawsuit against you. Unless the other board member can prove that you made your statement with actual malice, knowing it was false, the case will not end in the other board member's favor.

The D&O insurance may cover your defense. It will not provide the other board member with funds to sue you.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By LarryB13 on 11/13/2012 11:37 AM
The D&O insurance may cover your defense. It will not provide the other board member with funds to sue you.

Our D&O insurance specifically excludes covering any actions between the board members.

You will need to read the policy for your insurance to be sure.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By FrankB5 on 11/13/2012 11:04 AM

I have now been threatened by one of the other board members that if I do not retract my statement that they will sue me for libel.

The truth is an absolute defense to defamation.

JonD1
Posts: 2,350

Posted:

The simple truth is some people are not cut out for serving on the property's Boards. The OP hand picked his fellow Board members and then when the MAJORITY of the three person Board decided to handle an issue contrary to what the OP felt should be done well he then took it upon himself to notify the property owners as to HIS point of view.

Now, not surpisingly one of his fellow Board members did not appreciate being bad mouthed to the community and has threatened legal action. Libel.

The OP knows for sure this claim would fail,(how I don't know) and now wants the HOA insurance to cover his defense. Wonderful!

As a single member of any Board you should not take action which the majority does not condone. And IF and when you do you should expect pushback when you suggest those same Baord members are not performing their duties as you beleive they should in YOUR opinion.

IF you stack the deck in bringing in YOUR own people to serve and after a short time that plan crumbles just might be time to look in the mirrir and decide what role you played.

I would not want the property's insurance being used to defend the OP's actions.

JM10 (California)
Posts: 503

Posted:

Quote:

Posted By LarryB13 on 11/13/2012 11:37 AM
I am not sure that it has been tested in court yet, but members of a condo board would seem to fall under the heading of "public official."

A State cannot under the First and Fourteenth Amendments award damages to a public official for defamatory falsehood relating to his official conduct unless he proves "actual malice" - that the statement was made with knowledge of its falsity or with reckless disregard of whether it was true or false. New York Times Co. V. Sullivan, 376 U.S. 254 (1964)

Threatening to sue is easy. Doing it is something else entirely. The reality is that few attorneys would agree to take on such a case and the plaintiff will have to pony up anywhere from $5,000 to $20,000 just to begin the case. The bar is set so high that few of these cases ever see the light of day.

There is little that you can do to prevent a person from filing a lawsuit against you. Unless the other board member can prove that you made your statement with actual malice, knowing it was false, the case will not end in the other board member's favor.

The D&O insurance may cover your defense. It will not provide the other board member with funds to sue you.

In California a board member is a public official. As such the requirements for libel are higher. The statement must be false, it must not be opinion and the person must prove actual malice. Just as Larry stated.

Also, it depends on how and where the statement was made. For instance, if the statement was made in court or during a debate, it could be considered protected/privileged speech.

I would speak with your management company and ask for someone to educate the board about how to deal with safety issues. I'm for transparency in HOA boards having been at the receiving end of discrimination. In the case of a safety issues, the sooner you make the notification the better. If information is withheld and another person is injured, the injured parties attorney might attempt to find negligence on the part of the board.

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