Removal of an elected director for cause

KurtC
Posts: 5

Posted:

I live in Indiana and need to know if there is a definition for "cause." Our HOA bylaws allow a director elected by the membership to be removed the remaining majority of the BoD for "cause." It appears that can make up whatever they want. The BoD must appoint a replacement. A director has been removed it appears for not part of the good-ole-boy network and asking too many questions and been replaced by an former board member. There is something rotten going on! Any guidance is appreciated!

KathleenF (Illinois)
Posts: 19

Posted:

Hi, Kurt--

The best answer to your question will come from a review of the Indiana HOA statute and any case law interpreting "just cause."
But--it's a foregone conclusion that political differences don't consitute JC.

The tougher question is: What political or legal remedies are available to the wrongfully ejected director?

Political Remedy: Your governing docs and/or state law probably give shareholders some rights to recall board members. So, if you've got enough political muscle, you can just flex it and dump the dumpers. Or elect a better board next time.

Legal Remedies: If the bad guys have the clout, legal approaches may be your best or only options. You can get a copy of your governing statute online or through your state representative. Through FindLaw and Lexis/Nexis.One, you may even be able to get a free look at Indiana case law.

For example, a wrongfully dumped director may have a viable suit for defamation, or breach of contract or . . . S/he or any other shareholder injured by this maneuver may have a suit for breach of fiduciary duty. These are Q's for a lawyer who knows Indiana law, including HOA law. The toughest part may be proving enough actual damages to justify attorney fees and court courts.

Other Ideas: You may want to read Douglas's post on HOA Boards, which has many suggestions about dealing with bad boards. Hopefully, one of them will work for you.

Law Reform? Unfortunately, as I spell out in my post on "Rogue Boards and Guerilla Shareholders," none of my suggestions or anyone else's may be any darn use at all . . .I personally think it's high time we start admitting that this mass social experiment has major problems which, in many states, still need fixing at the legislative level.