Sueing a board member

Started by JimK10 • 8 replies • 1541 views

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JimK10 (Florida)
Posts: 8

Posted:

I reside in Zephyrhills Florida(snow bird) and have been recently been elected to the board(not a officer)in our mobile home park. Our HOA is a INC. We are approx. 195 mobile homes and do not own our property, rent only. The question I have can any one individual on the board be sued or would the HOA be sued as a whole, lets say that there was a neglect accusation and a injury occurred at a fund raiser(this is only an example not)I have read our bylaws and there is no mention of liability. Can someone help me with this. I would like to obtain documentation that would clear this matter up. Thanks Jimk10

LarryB13 (Arizona)
Posts: 4,099

Posted:

Jim,

Your association should have liability insurance with a rider that also covers Directors and Officers, usually referred to as D&O. This insurance is intended to cover liabilities arising from your service on the board.

Some time back there was a thread on this forum from a board member of a condo association in California who was being sued by at least one fellow board member. The defendant board member was covered by his association's D&O policy while the plaintiff board member had to pay his own way.

Check with your association's insurer to find out what coverage you may have under your policy.

JimK10 (Florida)
Posts: 8

Posted:

Thanks LarryB13 I will defiantly follow up on this. Thanks for the info

JimK10 (Florida)
Posts: 8

Posted:

Thanks LarryB13 I will defiantly follow up on this. Thanks for the info

JoK2 (California)
Posts: 198

Posted:

Evidently in our wonderful country, someone can be sued over anything, even when the supposed "issue" is spelled out in black and white that it is legal to do etc. Call your insurance company and have them explain the D & O rider on the policy to you directly so that you have a clear understanding of what it means. As an example, most policies of this nature will not cover any illegal activity or crime committed by a board member.

Welcome to this forum, it is tremendously helpful!

The only hard part is accepting the advice given when it doesn't agree with your own opinion!

JimK10 (Florida)
Posts: 8

Posted:

Thanks Jo, yes it seems that suing is a profitable business here in the states, not quite the same up in Canada. I will definitely review our insurance policy and ask some pointed questions if I am not 100%clear on the content within the policy.

MissyP (Alabama)
Posts: 63

Posted:

I always post "Suing your HOA is suing yourself and your neighbors". Board members suing each other may not happen if there is D&0 insurance. It's to protect the board member from lawsuits effecting them personally. Instead the claim would go to the insurance company to pay out. Considering that the insurance policy is paid for by ALL the owners, then the HOA would indeed be paying for that lawsuit with their own money. It's a vicious cycle one should avoid. Instead ready your documents. It will provide you ways to correct the issues internally instead of going outside.

JM10 (California)
Posts: 503

Posted:

I can give you two actual cases.

1. When my husband and I sued my HOA (for not allowing us to attending meetings and refusal to hand over documents), we were required by small claims court to give a name. It should be been the agent of process as listed by the business registration required by the Secretary of State (website search will give that to you) in California. However, one of the things we were suing for was to get them to turn in the two state required documents and they wouldn't tell us who the officers were. In that case, we were required to add the names of the Board of Directors. In small claims court, one usually can't find director liability. That would in most cases require a higher court judgment.

2. In the case of willful misconduct (check your insurance policy) a board director can be sued and held liable. It is not, however, easy to prove that and a legal authority such as a court would be required to find a person has acted in such a manner. My example would be a legal case in Hawaii where a couple was given a substantial award. You can read about it here (http://themolokainews.com/2012/03/27/ke-nani-kai-residents-receive-3-87-million-jury-award-against-condo-association/) or simply do a search for molokai condo lawsuit.

So the answer is yes, however, the behavior has to be extreme. In the case of willful misconduct which usually entails breaking civil/criminal law, your insurance may have some type of clause which would cancel coverage. Most insurance cases have clauses that say something to the effect that if you break the law (ignorance is not an defense to this), the insurance is immediately invalidated. That's true for car, homeowners and other insurance policies.

JimK10 (Florida)
Posts: 8

Posted:

Thanks JM10. I will be reviewing our insurance policy to ensure there is clauses or a rider that speaks to liability of the directors and or board members. Thanks again

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