Board member too ill to perform duties

If you are that concerned, make a motion to remove him as Treasurer and appoint someone, perhaps you, in their place. The individual would still be a Director and be entitled to vote on all matters before the Board. However, the duties of Treasurer would be removed from him.

If you approach the issue properly, the individual may be relieved at having those duties given to someone else so they can concentrate on fighting the disease.

The treasurer should have given some sort of notice to the board when he found that he was unable to keep up with the demands of his position. He was not obligated to tell you he suffers from cancer and I am not sure that he was required to give any reason at all. His admitted inability to file documents would be cause to suspect that other parts of his job were not being done.


The course of action should be to appoint a new treasurer. Let the new treasurer examine the records and make a recommendation as to how to proceed. Your association should have been having some form of annual audit and there is no reason at this point to go into panic mode.

BTW, those of us who are professionals in the business world never use the term "professional" when speaking about HOA boards, which bear far more likeness to Boy Scout Troop 98 than to any business enterprise.


The only thing you know for sure is that papers are not being filed in an orderly manner. The I-don't-remember answer is pretty normal in a deposition and may have no bearing on anything. You do not need a witness to recall meetings when you have minutes. You do not need a witness to recall emails when you have the emails. Phone calls and personal conversations are a different story, but a deposition is often a fishing expedition and witnesses are often advised by their attorneys to forget a lot.

If the board was aware of the treasurer's inability to function in that role then they should have removed him. Unless there was more obvious evidence than a stack of unfiled papers in his home, I would have a hard time calling the board's lack of action Malfeasance. By the same token, I see no significant liability to the association or the members without more evidence, which is what a new Treasurer should be looking into.

I agree that he should have declined the nomination. I can only speculate that he may have thought his medical problems were only temporary or that even with his medical disability that he was still the best choice for the job.

Fred

While his replies might have been a cop out, a do not blame me reply, even a lie, etc. the bottom line is he opened the door to being unable to perform his duties.

Tough love here, but the BOD should remove him for the Treasurer's position even if a lie.

I think - especially if the response in the deposition was a lie. The treasurer is a position that, in my opinion, requires the utmost trust.
If there is even a hint of impropriety it invites a high degree of scrutiny.

no pleasure

no pain

just routine common sense day to day business judgment

the treasurer can no longer perform his duty

the treasurer is replaced

end of case

(1) A director can not simply 'take over' an officer's position w/o a meeting and vote of the BOD

however, if you could 'soft soap' the resignation in advance of (2) that would be a kind pleasantry

but

corporations should NOT be run with pleasantries, they should be run with common business acumen

I would, however, reword (2):

"John, according to his deposition, because of health issues, is no longer capable of completing the full duties of the treasurer. I make a motion to replace John as treasurer."

Corporations can be run with civility.

a DIRECTOR should have a private 'chat' requesting their resignation

if no prompt resignation:

civil and polite replacement as per corporate by-laws

YOU ARE a $1,000,000.00 corporation and must operate like one

ps. if, repeat if, you are 'flush' with discretionary funds, you (the BOD) may consider a bookkeeper to take the load off the treasurer (both present and future)

however, you should NOT have discretionary funds in the first place

there you go again - corporations must be operated like corporations

I have a different take on this than many of the other posters.

1. The stress of the deposition and of defending a lawsuit could be affecting the responses. The setting may have been strange to him and he may have never been deposed before. He may have been confused by the setting. I wouldn't necessarily consider his answers meaningful in determining his general mental state. if he consulted an attorney, he may have been advised that "I don't recall" is a viable answer to a deposition question. His cancer excuse only indicates that he has been distracted, not that he has been incapacitated. In other words, I think you're making too big a deal about the significance of the deposition.

2. If he has had a mental or functional capacity issue since November, I seriously question why this would be coming to light now. My big concern is that the BOD was unaware of the problem until the deposition. Don't the other BOD members interact with him? Wouldn't they have had some indication that something wasn't quite right?

3. I am also troubled that your Treasurer apparently operates independently on some island. IMO, Treasurer is only a title - but the responsibility of knowing what's going on financially belongs to all BOD members.

4. And I am troubled that the only mention of independent CPA review or audit is discussed in retrospect. Where is the process that demonstrates that finances at your HOA has any level of independent scrutiny? IMO, from what you have described, your HOA is wide open to fraudulent acts regardless of the health of this one individual.

Sorry. I was replying to Larry and didn't hit the quote button. Yikes!

NpS you wrote:

I have a different take on this than many of the other posters.

1. The stress of the deposition and of defending a lawsuit could be affecting the responses. The setting may have been strange to him and he may have never been deposed before. He may have been confused by the setting. I wouldn't necessarily consider his answers meaningful in determining his general mental state. if he consulted an attorney, he may have been advised that "I don't recall" is a viable answer to a deposition question. His cancer excuse only indicates that he has been distracted, not that he has been incapacitated. In other words, I think you're making too big a deal about the significance of the deposition.

2. If he has had a mental or functional capacity issue since November, I seriously question why this would be coming to light now. My big concern is that the BOD was unaware of the problem until the deposition. Don't the other BOD members interact with him? Wouldn't they have had some indication that something wasn't quite right?

3. I am also troubled that your Treasurer apparently operates independently on some island. IMO, Treasurer is only a title - but the responsibility of knowing what's going on financially belongs to all BOD members.

4. And I am troubled that the only mention of independent CPA review or audit is discussed in retrospect. Where is the process that demonstrates that finances at your HOA has any level of independent scrutiny? IMO, from what you have described, your HOA is wide open to fraudulent acts regardless of the health of this one individual.
**************************************

NpS - while I only posted one comment by the Treasurer in my OP, I can answer or address you "take" a little better.

In his deposition he was asked if he was ever deposed before. His answer was yes, about ten times all over ten years ago before he retired from his job. He certainly was not confused in the setting and he had the HOA retained Defense attorney at his side during the deposition.
I agree, counsel would advise, during their prep meeting prior, that "I do not recall" is an acceptable response as often as he need to use it...

As far as the cancer being an excuse for distraction versus incapacitated - well, I feel that this is a judgement call. But his response also indicated that he may not be "keeping" papers as he used to before the illness. This is what causes the concern. Those were his own words and opens us up to member questions.

For your point #2 - I, as well as many other residents have noted behavior changes (read out bursts of temper and impatience) during monthly board meetings. This has been gradual since last year at this time and was change enough that people noticed but passed it off as possibly caused by any number of reasons (their beloved dog died last fall- which we all knew about) and anyone can have a bad day. However, taken in retrospect with this revelation of the illness, you can now see the obvious conclusion that his behavior has changed due to the recurrence of his cancer.

For your point #3 - I definitely could not agree MORE! However, because this guy spent his whole working career in finance, I feel the the rest of the BoD (and prior ones) just deferred to his expertise and lulled themselves into some sort of a sense of security. As people have started looking into the annual financial reports and published budgets since last month - there are questions being asked and records are being requested by members. There are some discrepancies that have been brought up.

Your point #4 - Again I totally agree with you. Some members have been asking for an outside audit for five or more years and they have been vilified because the rest of the BoD thinks so highly of this guy. We do have an outside bookkeeper who writes out checks as directed by the treasurer but audits have been outrightly refused and no action taken by the BoD.

The lawsuit that caused all this was due to Election Fraud. All the sources that people have checked including a law firms that specializes in Defending Board members, indicates that election fraud is the tip of the ice berg and usually leads to finding out that there was (or is) financial mis-management. It will be interesting to see where that leads. The logic there is that to commit election fraud one must be hiding something much worse.

Obviously there is a lot more going on within my HOA than I can possibly share in this thread. I have tried to keep the focus on the issue of the Board Member/Treasurer's own comments in his sworn testimony. I see two possibilities here:
1.) Either he is seriously ill and his ability to perform the roles of BoD member & Treasurer is seriously compromised/degraded to the point he should step down from both roles (my opinion) or;
2.) He tried to avoid painting himself into one corner with these responses and statement. And, in doing so, he has painted himself into another corner by his statements. Which to me, if he lied, he should not be on the BoD and should definitely not be in a position of managing our funds if he has lied.

Please bare in mind that I like the guy and served with him on another committee in the past. But the concerned Homeowner and member of the HOA in me makes me ask these questions from a character and integrity standpoint.

Again, thanks to everyone for your response, comments and advice. It ha been very helpful.

Fred

Your response demonstrates that you understand your situation well. Perhaps these events will provide you with the impetus to rally the troops and get some important attitude changes made. Best of luck.

BTW, as far as insurance coverage goes, you have made some very compelling arguments to support protection under D&O. Based on what you have said, I would not be concerned personally if I were you.