Cost of a simple lawsuit

Matthew

Unless the HOA cost was covered by their insurance, the costs should show up in the financials, whether in their operating costs or in some cases out of reserves.

But since I am not a member of the association they are not required to show me squat. My first guess would be that the insurance company picked up a large part of the HOA's tab but the association still would have paid the deductible.

Then there is the hidden cost. By losing the case in both the trial court and again on appeal, the insurance carrier shelled out a ton of money. There might be a cancellation notice the next time the policy comes up for renewal.

What kind of insurance is this?

Seeking justice through the courts is expensive, time-consuming, and uncertain. Even if your view of justice ultimately prevails.

Kevin there is a reason for the expression: One lawyer in a town will starve, but two lawyers will get rich?

We didn't back down. My friend sued the HOA first and won. Their threat only pissed us off even more and made us dig even deeper and gather more information (what some may call a fishing expedition but this expedition got some pretty good catches). We ignored their threats and the HOA did nothing to us because they couldn't. In the end they lost everything.

I think EVERY lawsuit has the potential to become such a costly and damaging thing - just depends on the players involved. In my situation the HOA had a scumbag attorney and the board was blinded by groupthink.

Yet another reason why I'm a big advocate of alternative dispute resolution - preferably a program where both sides agree in advance to split the cost of a third party mediator, with the losing side having to reimburse the winner. If both sides can come up with a reasonable compromise, the costs will remain their own.

The underlying problem is that no one is willing to talk and really listen to the other side anymore - we become so convinced that we are "right" that we will fight and fight, to the point that the squabbling becomes less about resolving the dispute but more about stomping the other side into the dirt. As a practical matter, I prefer not to go to court unless the odds are tilted in my favor to win. As you say, lawsuits aren't cheap and there's always a chance you could lose, so the more information and evidence you have to back up my side of the dispute the better.

There are times when a lawsuit will be necessary to settle things, but I think homeowner association residents and Board members need to be willing to think things through - often there's a solution no one's considered. Starting with a critical look at the community rules - some may truly be unnecessary and/or unreasonable and need to be tweaked or tossed altogether. HOAs need to have a clear rule enforcement process including appeal rights to the homeowner and those processes need to be followed to the letter. You will have a few who think rules apply to everyone but them, of course, but if you do what you need to do, you're increase the odds of winning your lawsuit

This is also where education comes in - homeowners need to be reminded that the rules exist in part to maintain the overall function, design and look of the community and you agree to comply by those rules when you buy your home. As others have said on various posts elsewhere on this site, it's the homeowner's responsibility to read the rules and decide if he/she/they want to live by them BEFORE buying the home. If they aren't recorded somewhere in a city, county or state agency, insist that the seller provide a complete and updated version. If they can't or refuse to, you may need to consider if you really want to live there, less you come across a rule you can't stand (once you sign the dotted line to buy the house, you can't back out then).

If it was stated, I missed it. Did the plaintiff property owners get assessed a portion of the legal costs the HOA was ordered to pay (any part that was not covered by insurance)? I would think some kind of special assessment was levied by the HOA to defray legal expenses.

The second paragraph of my original post begins with:
"The plaintiffs (property owners) sought to put up a For Sale sign, just like state law says they may. The HOA claimed an exemption from the law and removed the sign. The owners sued for an injunction against the HOA."

Whatever action was taken to pay the association's costs is not part of the court record and is not known to me because I am not a member of that association. A few years ago a proposal died in a legislative committee that would have required directors to pay those losses from their own pockets.

As Melissa likes to say, suing your HOA is suing yourself, so it is likely that the plaintiff homeowners picked up a part of the tab incurred by the association's failed legal defense. Ironic, huh?

My HOA tried the same dirty tricks. The tried to get the plaintiff's attorney recused, provided incomplete discovery, and filed countless counter motions.

Matthew et al:

We have a condominium in Maryland where the board let the attorney run up $200,000 in legal fees to stop a homeowner from collecting $250 that was awarded to him. The attorney's argument was that the association can pass all legal costs on to the homeowner.

Since the community was denied access to any condo records for years, this only came out much too late but once the community found out they dumped the board president and two of his henchmen at the next board election. But the association still has the debt.

Jeanne

Kevin,

C'mon now, you know deep down it was the homeowner's fault. LOL!

Jeanne,

When you wrote, "the attorney run up $200,000 in legal fees to stop a homeowner from collecting $250 that was awarded to him," were these fees incurred in filing appeals from the original judgment or was there some other chicanery involved?

The reason I ask is that if the fees were the result of filing appeals from the original judgment then costs could easily reach this mark, especially if the association was ordered to pay the homeowner's fees. This was a bad decision on the part of the board to keep this case alive.

One of the problems with the-loser-pays-the-winners-fees system is that it encourages both sides to keep fighting until they run out of appellate courts. By that point at least party will be nearly bankrupt. I do not have a solution to this problem but I do wonder how things would change if the losing party was not required to pay his own attorney? That is, the attorney who loses does not get paid at all.

An association should try to avoid lawsuits of any type! We are going through a costly lawsuit right now. Interested in the CLINCHER? The association filed a lawsuit again me (wife of a board member) but the ASSOCIATION'S insurance is paying for all of my defense costs (and then cancelled the policy). Homeowners are paying for every fee involved in this lawsuit - plaintiff, defendant, cost of new insurance because we are now considered high risk. The whole situation is disappointing, sad and will probably bankrupt the association.

That's correct. They went from 60K/year with a 10K deductible to 160K/year with a 60K deductible!

Melissa

Who are your comments directed at, the homeowner or the Board?