Ineligible Board Member

Started by JamesM36 • 24 replies • 1543 views

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JamesM36 (Pennsylvania)
Posts: 7

Posted:

Hello, I have a question about the Board I serve on here in PA.

Our By-Laws state:

"The qualifications for becoming and remaining a Director of this Corporation are as follows:
1. Directors must be residents of the Commonwealth of Pennsylvania."

When the Developer began the process of turning over the Association, only five members were nominated, so they were installed as the original Board. One of those five members owns his home as a vacation property and eventual home for retirement. He currently lives, works (votes & pays taxes) in Ohio.

We asked our property management company to find out from their attorney what we should do. The attorney recommended (1) he be asked to resign or (2) the Board vote him off (requires 2/3 vote which would end up 4/5 members).

He has (1) refused to resign and (2) one Board member will not vote against him (very good friends).

I have many questions, but the biggest one is:

Does this affect our liability policies? PA requires Directors act 'in good faith'. Is it 'good faith' to knowingly be in violation of the By-Laws?

Thanks for any help!

GwenG (Florida)
Posts: 669

Posted:

The Board has a fiduciary obligation to its members: these are the duties of care, loyalty and obedience.

IMO, the Board has no choice insofar as its liability. D & O insurance does not cover a board director unless they are acting as fiduciaries and exercising good business judgement. This board is violating its fiduciary responsibility of obedience (to the law). And it is not exercising good business judgement by exposing the Association to an board member who is not eligible to serve. It must remove the director.

MarkM31 (Washington)
Posts: 494

Posted:

Quote:

Posted By JamesM36 on 06/09/2017 8:02 AM
Hello, I have a question about the Board I serve on here in PA.

Does this affect our liability policies? PA requires Directors act 'in good faith'. Is it 'good faith' to knowingly be in violation of the By-Laws?

Liability for what? How many parcels are in your association? Your general liabilty would be unaffected, and your D&O would not be affected under every situation.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Define resident? They do own a residence in P.A. do they not? Do they have to have a driver's license in that state or live there for a certain amount of time? Make sure they are not considered a resident first.

Former HOA President

JamesM36 (Pennsylvania)
Posts: 7

Posted:

We have 101 homes in our association.

The concern would be, of course, the D&O policy.

There are other issues that I didn't want to jump into. The general conduct of this Director and his buddy has put us in a position of concern. I'm not as concerned about getting sued just because he's in violation of the By-Laws, but rather because his conduct has violated our By-Laws AND he's ineligible to serve.

PitA
Posts: 1,416

Posted:

Yet, the Directors are, in fact, permitting him to serve.

Perhaps they have lost their testicles to some hideous disease ?

JamesM36 (Pennsylvania)
Posts: 7

Posted:

Based on the legal opinion received from our property manager, a legal resident of PA, lives (typically >50%) in PA, votes in PA, and pays resident income tax in the Commonwealth. His driver's license is OH, he lives in OH >75% of the year, and his job in Ohio (government contractor) actually has an OH residency requirement with it (if I understand what's been explained to me correctly). He owns property in PA.

JamesM36 (Pennsylvania)
Posts: 7

Posted:

Unfortunately, a 3-2 vote does not meet the 67% required to remove a Director.

What course of action would you suggest?

SheliaH (Indiana)
Posts: 6,964

Posted:

You’d have to ask your insurance carrier how they’d look at this board member’s living out of state, but usually “acting in good faith” refers to the decisions the Board makes on behalf of the community. If this director attends meetings regularly, shows up prepared, applies careful thought to the issues before voting, it may be the insurance company will be more interested in that as opposed to where he lives – since he owns a home in the community, he IS an association member.

You didn’t say if you’ve had other elections since the developer turned over the community to the homeowners – if so and this guy has been reelected a few times, I’m not sure your Board can just vote him off . You may want to keep looking through your Bylaws to see what it says about removing board members – usually, the homeowners have to vote to do that through a recall or wait until the next election at the annual meeting.

It seems to me the bigger issue is the man’s conduct and that’s what I’d focus on. That may also include his buddy and these two are not acting in the best interests of the association (I assume you have verifiable proof of this), the rest of the Board needs to call an executive session and have a come to Jesus meeting with them. They may change their tune if they’re told in no uncertain terms to knock off the bad behavior or the Board can vote to censure them (3 vs. 2 should take care of that).

Of course, that doesn’t get them off the board – for this, you’ll need to go to the homeowners. You’d probably need a special homeowners meeting to discuss their conduct, let the homeowners ask questions and then they can vote on what they want to do. se two regarding their behavior. You could vote to censure them (3 vs. 2 would take care if it), but that doesn’t get them off the board. the rest of you (it would be 3 vs. 2) need to band together and tell these two to knock it off or face censure.

Of course, that won’t get them off the board – you’ll probably need to call a special homeowners meeting to discuss all that and then the homeowners would have to vote. If you want to push the residency issue, I suppose you can turn this over to the HOA attorney who could take action to force him off, but that can get really nasty and expensive, so I’d consider the executive session first and then a special homeowner’s meeting so these two could have a chance to defend themselves before the homeowners determine their fate.

Looking at this issue from a wider perspective, there are lots of people who own homes in HOA communities but live out of state, so I don’t know if that portion of the bylaws is realistic because the off-site percentage may rise to where you have trouble finding people to serve on the board because no one lives in the state. That said, I do understand why it was probably written that way – in my own community, we have a large percentage of off-site owners, and nearly all of them are investor-owners who only seem to care about keeping anyone (and I do mean anyone) in the unit so they can keep collecting rent. That may be something to keep in mind the next time the community considers amending the Bylaws as needed.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

GwenG (Florida)
Posts: 669

Posted:

I would bet that there is likely a corporate statute or homeowner statute that provides for removal of directors in situations of fraud and lesser "crimes".

As far as residency, maybe the best would be the statutory definition of residency found in your homestead statute if a definition is silent in the Bylaws. Generally, residency means you declare a place your home, your mail goes there, your vehicles are registered, your driver license is there, you are registered to vote there, your personal income is taxed there. Owning property is not residency.

Did this board director lie on his application for candidacy for board? Was the non-residency disclosed to the board?

It really doesn't matter if the director works 24/7 for the Association and walks on water--he or she is knowingly in violation of your association governing documents and should be asked to resign. The board is not doing its fiduciary duty to the Association by knowing this and willfully allowing the violation to continue.

This is not something an insurance company will weigh into "theoretically" and they will tell you to read the policy and consult your lawyer for advice.

I don't think the Members should have the authority to "vote" on this directorship for "cause". It is a corporate task for the board and perhaps, the HOA attorney.

The fact that the director won't resign, has a protective friend on the board and is being scrutinized for other misdeeds is further evidence that board members need to get sound legal advice and act.

Virtually all D & O policies require directors to act within their fiduciary positions and indemnify them against bad judgement errors resulting in damages. This goes beyond forgiveness for bad judgement. The attorney should be able to answer this question very quickly.

If your laws give the board the authority to remove other directors "for cause", I would'nt wait any longer. What PITA said.

Or amend your bylaws. (Changing the law to accommodate the misdeed is the current trend in Florida legislature).

Also, unless your property manager is an attorney, they have no business giving a legal opinion and directors should not rely on such "legal advice".

JamesM36 (Pennsylvania)
Posts: 7

Posted:

Quote:

Posted By SheliaH on 06/09/2017 11:27 AM
You’d have to ask your insurance carrier how they’d look at this board member’s living out of state, but usually “acting in good faith” refers to the decisions the Board makes on behalf of the community. If this director attends meetings regularly, shows up prepared, applies careful thought to the issues before voting, it may be the insurance company will be more interested in that as opposed to where he lives – since he owns a home in the community, he IS an association member.

You didn’t say if you’ve had other elections since the developer turned over the community to the homeowners – if so and this guy has been reelected a few times, I’m not sure your Board can just vote him off . You may want to keep looking through your Bylaws to see what it says about removing board members – usually, the homeowners have to vote to do that through a recall or wait until the next election at the annual meeting.

It seems to me the bigger issue is the man’s conduct and that’s what I’d focus on. That may also include his buddy and these two are not acting in the best interests of the association (I assume you have verifiable proof of this), the rest of the Board needs to call an executive session and have a come to Jesus meeting with them. They may change their tune if they’re told in no uncertain terms to knock off the bad behavior or the Board can vote to censure them (3 vs. 2 should take care of that).

Of course, that doesn’t get them off the board – for this, you’ll need to go to the homeowners. You’d probably need a special homeowners meeting to discuss their conduct, let the homeowners ask questions and then they can vote on what they want to do. se two regarding their behavior. You could vote to censure them (3 vs. 2 would take care if it), but that doesn’t get them off the board. the rest of you (it would be 3 vs. 2) need to band together and tell these two to knock it off or face censure.

Of course, that won’t get them off the board – you’ll probably need to call a special homeowners meeting to discuss all that and then the homeowners would have to vote. If you want to push the residency issue, I suppose you can turn this over to the HOA attorney who could take action to force him off, but that can get really nasty and expensive, so I’d consider the executive session first and then a special homeowner’s meeting so these two could have a chance to defend themselves before the homeowners determine their fate.

Looking at this issue from a wider perspective, there are lots of people who own homes in HOA communities but live out of state, so I don’t know if that portion of the bylaws is realistic because the off-site percentage may rise to where you have trouble finding people to serve on the board because no one lives in the state. That said, I do understand why it was probably written that way – in my own community, we have a large percentage of off-site owners, and nearly all of them are investor-owners who only seem to care about keeping anyone (and I do mean anyone) in the unit so they can keep collecting rent. That may be something to keep in mind the next time the community considers amending the Bylaws as needed.

Thank you so much for taking the time to respond.

I think what you are talking about is part of the larger issue... He doesn't show up for meetings (unless we agree to meet on his terms, weekends only - he has told us by email that he will not make time during the week, even for a phone call), he doesn't reply to emails (unless the topic is initiated from his friend or the property manager specifically asks him to respond), and his opinions are only provided through his buddy (he's very non-committal, even in person).

We have not had a full election yet. Our By-Laws do not outline steps for removal of a Board Member (we've actually had to go all the way back to the PA Uniform Planned Community Act to find a way) and we have no method for censure. We've brought up adopting a Code of Conduct policy, but the 2 dissenters feel that will 'stifle creativity' on the Board and they've been refusing to come to meetings unless they are both in attendance. We've been hesitant to push a lot through on the 3-0 or 3-2 vote as these two go immediately to the community to tell them how the rest of the Board is 'abusing' their power.

We have tried to have a 'Come to Jesus' meetings with them and even included the property manager. One did not show up (he tried to call in from 5 minutes away, but had poor cell service, so he got disconnected and did not call back) and the member from Ohio didn't even try to call in. We believe this is what has led our property management firm to choose not to renew our contract when the time comes (received that notification the other day). I do have everything documented and have all the emails that have been sent.

What is the best way to discuss their conduct with the community?

There is actually an 'illegitimate' meeting of the Association scheduled for tomorrow (organized by a single neighbor, not the Board, and not to the standards of the By-Laws - no 30-day notice to the community, no stated agenda, etc.). The Board has been told by the Property Manager (and their legal resources) that the Board should not go to this meeting. I'm almost positive these two are going (they argued for a week with the Property Manager). Any thoughts?

'Rules' and 'Liability' seem to be about the only way to motivate these two, but they really think they can do whatever they want. That's why we've tried to frame our discussions in that fashion. We've tried just about everything else...

JamesM36 (Pennsylvania)
Posts: 7

Posted:

Quote:

Posted By GwenG on 06/09/2017 11:58 AM
I would bet that there is likely a corporate statute or homeowner statute that provides for removal of directors in situations of fraud and lesser "crimes".

As far as residency, maybe the best would be the statutory definition of residency found in your homestead statute if a definition is silent in the Bylaws. Generally, residency means you declare a place your home, your mail goes there, your vehicles are registered, your driver license is there, you are registered to vote there, your personal income is taxed there. Owning property is not residency.

Did this board director lie on his application for candidacy for board? Was the non-residency disclosed to the board?

It really doesn't matter if the director works 24/7 for the Association and walks on water--he or she is knowingly in violation of your association governing documents and should be asked to resign. The board is not doing its fiduciary duty to the Association by knowing this and willfully allowing the violation to continue.

This is not something an insurance company will weigh into "theoretically" and they will tell you to read the policy and consult your lawyer for advice.

I don't think the Members should have the authority to "vote" on this directorship for "cause". It is a corporate task for the board and perhaps, the HOA attorney.

The fact that the director won't resign, has a protective friend on the board and is being scrutinized for other misdeeds is further evidence that board members need to get sound legal advice and act.

Virtually all D & O policies require directors to act within their fiduciary positions and indemnify them against bad judgement errors resulting in damages. This goes beyond forgiveness for bad judgement. The attorney should be able to answer this question very quickly.

If your laws give the board the authority to remove other directors "for cause", I would'nt wait any longer. What PITA said.

Or amend your bylaws. (Changing the law to accommodate the misdeed is the current trend in Florida legislature).

Also, unless your property manager is an attorney, they have no business giving a legal opinion and directors should not rely on such "legal advice".

Thank you as well for your response. This has been very much in line with my own thoughts.

We had no formal application for candidacy and it was not disclosed without 'prying'. His response when asked directly (the first time) was that he is a member of a professional engineering society in PA.

We are in the process of contacting outside legal counsel for an opinion. The legal counsel of our property manager did recommend that he be requested to resign and, in the event that he would not resign, that the Board take action to remove him. Right now, we're left in a position where he won't resign and we can't (successfully) vote to remove which means we couldn't do anything for at least 30 days when we could call a meeting of the Association and gather enough proxies to vote him off (requires 2/3 vote).

Of the 101 homes in our community, only 2 owners do not live in their homes as a primary residence. 1 property is a rental and the Director mentioned is the other. Had he 'asked' from the beginning to amend the By-Laws, it may have been cleaner, but now it would be self-serving for him (at least in my opinion).

GwenG (Florida)
Posts: 669

Posted:

The fact that he sidestepped a direct question about his residency citing an association with an in-state professional society indicates that the director had awareness of wrongdoing. Director knew where the question was coming from and leading to.

This director and his buddy sound like potential trouble. Why is Director giving a stupid excuse answer to a direct question and refusing to step aside when caught? Director doesn't participate in meetings, doesn't communicate unless his buddy asks or cornered by the PM, creates unreasonable barriers for fellow directors to meet and his crony-buddy does all the talking for him.

Has Association put the request to resign in writing? Is this director an officer? Any check-writing authority?

I would also be staring hard at the buddy and his role in supporting and speaking for this person.

This does'nt make sense. Since you apparently have a small, cohesive, live-in community, it sounds like you have a reasonable shot at voting him out rather than taking on a legal dispute. I would be knocking on doors night and day collecting proxies. Good luck.

PitA
Posts: 1,416

Posted:

By the time the Tauric Ka-Ka matures into fertilizer you will have held the upcoming meeting.

Good luck.

ps. Gwen; do you prefer I use the term toric ?

SheliaH (Indiana)
Posts: 6,964

Posted:

I just realized I didn’t completely edit my response – sorry for repeating myself several times.

Well, this is a fine mess. First of all, there rarely is one meeting time that will work 100% for everyone, so I don’t know why this guy thinks HE can dictate when you should meet. The email stuff is a mixed bag – look around on this website and you will see a number of conversations and questions about the right and wrong way to use them. Hint – board members should never make decisions via email unless it’s an emergency and in many cases those emails are considered part of Association documents, meaning any homeowner could request to review them and they could become discoverable if there’s a lawsuit related to whatever was discussed in the emails.

You say you haven’t had a full election yet – does that mean you’ve had annual meetings where the quorum wasn’t met? If so, the board members usually stay on until they quit or are voted out, so we may be back to booting him off because he’s not a full-time resident of your state. To get rid of him may very well require an attorney because this guy will not go quietly.

The two board members who say a code of conduct will stifle creativity –WTH???? If you can’t be creative while promising to avoid conflict of interests (actual and perceived), show up to meetings on time and having read the agenda and other materials so you can participate fully and make thoughtful decisions, make decisions in the best interests of everyone, not just a select group of people – you know, the type of stuff that appears in codes of conduct? If you can’t do that, get the hell off the board because you are not ready and will only cause more chaos and disorder.

Oh yeah, I suspect these guys are also cowards because they don’t want to confront the other two. Or they’re afraid that people will look at THEM, get fed up and toss everyone out. But that may be necessary because I’m beginning to think nearly everyone on this board is full of caca and need to step down so grownups can take over.

If everything you say is correct and you really are the only adult in the room, you will need to decide how far you want to go with this because this can easily turn into 4 against 1 and the others will find a way to toss YOU out. Speaking truth to power isn’t easy, but this is your home and community, so you may have no other choice.

So you might start by trying one more time and send a strongly worded letter to all of your colleagues warning them their conduct (throw in some examples) will be detrimental to the entire community unless they grow the hell up and demand an executive session (maybe the next time the other guy is in town) to discuss all this.

While you’re waiting for them to respond, start talking to the homeowners – they need to know what’s going on. In fact, it may be worth your while to send everyone a copy of what you sent your colleagues. That may be a great way to get more people to come to meetings and see for themselves what’s going on. Your hook could be the property manager’s decision to drop your association as a client – this happened because there are board members who are not acting ethically and if it continues, other contractors may join the property manager because no wants to step into a pile of…. well, you know.

You can also continue to drive home the point about rules and liability – if you don’t have a competent functional board, association resources get mismanaged, vital decisions might not be made and if someone messes up, the entire community may be on the hook for several thousand dollars or more thanks to waste, possible (or actual) fraud, underfunded reserves, etc. This won’t happen overnight - don’t be surprised if more than a few people don’t listen or care what you say. Unfortunately, apathy is a thing in HOAs and it’s the single biggest reason stuff doesn’t get done.

Finally, do you know why the neighbor called this meeting? I understand your reluctance to attend, but it may be helpful to talk to the neighbor directly and find out what’s going on. Perhaps he or she has noticed the dysfunction and is starting the process to rally together the neighbors. That could be an ally down the road or the beginning of a recall against YOU. Once you know what’s going on, you can decide what you want to do.
I wish you well and hang on to your Depends (!) – this is going to be an interesting ride.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

JamesM36 (Pennsylvania)
Posts: 7

Posted:

Quote:

Posted By SheliaH on 06/09/2017 10:17 PM
I just realized I didn’t completely edit my response – sorry for repeating myself several times.

Well, this is a fine mess. First of all, there rarely is one meeting time that will work 100% for everyone, so I don’t know why this guy thinks HE can dictate when you should meet. The email stuff is a mixed bag – look around on this website and you will see a number of conversations and questions about the right and wrong way to use them. Hint – board members should never make decisions via email unless it’s an emergency and in many cases those emails are considered part of Association documents, meaning any homeowner could request to review them and they could become discoverable if there’s a lawsuit related to whatever was discussed in the emails.

You say you haven’t had a full election yet – does that mean you’ve had annual meetings where the quorum wasn’t met? If so, the board members usually stay on until they quit or are voted out, so we may be back to booting him off because he’s not a full-time resident of your state. To get rid of him may very well require an attorney because this guy will not go quietly.

The two board members who say a code of conduct will stifle creativity –WTH???? If you can’t be creative while promising to avoid conflict of interests (actual and perceived), show up to meetings on time and having read the agenda and other materials so you can participate fully and make thoughtful decisions, make decisions in the best interests of everyone, not just a select group of people – you know, the type of stuff that appears in codes of conduct? If you can’t do that, get the hell off the board because you are not ready and will only cause more chaos and disorder.

Oh yeah, I suspect these guys are also cowards because they don’t want to confront the other two. Or they’re afraid that people will look at THEM, get fed up and toss everyone out. But that may be necessary because I’m beginning to think nearly everyone on this board is full of caca and need to step down so grownups can take over.

If everything you say is correct and you really are the only adult in the room, you will need to decide how far you want to go with this because this can easily turn into 4 against 1 and the others will find a way to toss YOU out. Speaking truth to power isn’t easy, but this is your home and community, so you may have no other choice.

So you might start by trying one more time and send a strongly worded letter to all of your colleagues warning them their conduct (throw in some examples) will be detrimental to the entire community unless they grow the hell up and demand an executive session (maybe the next time the other guy is in town) to discuss all this.

While you’re waiting for them to respond, start talking to the homeowners – they need to know what’s going on. In fact, it may be worth your while to send everyone a copy of what you sent your colleagues. That may be a great way to get more people to come to meetings and see for themselves what’s going on. Your hook could be the property manager’s decision to drop your association as a client – this happened because there are board members who are not acting ethically and if it continues, other contractors may join the property manager because no wants to step into a pile of…. well, you know.

You can also continue to drive home the point about rules and liability – if you don’t have a competent functional board, association resources get mismanaged, vital decisions might not be made and if someone messes up, the entire community may be on the hook for several thousand dollars or more thanks to waste, possible (or actual) fraud, underfunded reserves, etc. This won’t happen overnight - don’t be surprised if more than a few people don’t listen or care what you say. Unfortunately, apathy is a thing in HOAs and it’s the single biggest reason stuff doesn’t get done.

Finally, do you know why the neighbor called this meeting? I understand your reluctance to attend, but it may be helpful to talk to the neighbor directly and find out what’s going on. Perhaps he or she has noticed the dysfunction and is starting the process to rally together the neighbors. That could be an ally down the road or the beginning of a recall against YOU. Once you know what’s going on, you can decide what you want to do.
I wish you well and hang on to your Depends (!) – this is going to be an interesting ride.

Again, I appreciate your notes.

I know it certainly seems far fetched, but this is the honest truth of our situation. I received another email from one of the dissenters last night telling me that I'm slandering board members because we sent our minutes out to the community and noted him and the member in Ohio as absent at meetings (they refuse to come).

I tried just what you said. I sent a strongly worded email pointing out the facts of the situation, the rules in question, and exactly what our role is as fiduciaries. I don't mean to make it sound as though I am the only one working at this point, our Board is solidly divided 3-2. Unfortunately, the minority 2 are willing to incite the neighborhood to make it sound as though they are the majority and we are holding them back...

That's why the meeting was called... The neighbor who called it is the neighbor who the dissenting two gave the landscaping contract to this year (they used more than a little misrepresentation of the contract, etc. - another fun, unbelievably true story). He has called the meeting to tell the community that we need to give him the snow removal contract, too, as it will save us a ton of money and not require our dues to go up (we still pay the initial fees the developer set 11 years ago). He did stop by to talk one evening. He got upset when I told him that we needed him to act professionally as our lawn care service and that I did not think we would be installing a neighborhood pool (while keeping annual fees below $150/year)...

It really is a ridiculous situation. I'm trying every avenue to make sure we are fulfilling our obligations to the community and are operating within the laws of the Association and State. I want to get the facts in front of the membership, but part of me does feel bad because it reflects so poorly on 2 neighbors and community members. I was always taught to be part of the solution, and I want to do it the best way for everyone.

RogerB (Colorado)
Posts: 5,067

Posted:

James,
Doesn't your Bylaws have a section titled "Resignation/Removal of Directors"?

An exampler from another association's Bylaws is:
"A Director may resign at any time by giving written notice to the Secretary of the Association, stating the effective date of such resignation. Acceptance of such resignation shall not be necessary to make the resignation effective. The Members by a two-thirds vote of all persons present and entitled to vote at any meeting of the Association at which a quorum is present, may remove any Director with or without cause."

This would resolved the problem illustrated by you. If your Bylaws do not specify a reasonable means to removed an inactive Board member then you may need to amend the Bylaws if this Board member refuses to resign and does not attend Board meetings.

GwenG (Florida)
Posts: 669

Posted:

James: I am reading "between the lines" here so forgive any presumption of my further comments.

As Dr Phil often exclaims to his wayward guests "What the HELL were you thinkin' ?!". Your situation sounds more ominous each time you provide further details of information! Now, there is a second conflict of interest brewing in the community at large for a snow removal contract. You have permitted this board member and buddy to call the shots and run the show. You have permitted this guy to not participate as a member of the board team and not communicate or participate. You know the board member is in violation of your governing documents. You know there is a conflict of interest contract. Do you need any more reasons to ACT as a fiduciary, cowboy up and get an attorney involved? You have active and reckless forces opposing your position among the owners and a minority of directors "on your side".

It appears to me that you are straddling the fence and trying to not upset anyone. That strategy is not going to work in this situation. When you have ugly factors such as greed and self-serving interests that are known to you, you can be sure there are others that you do not know about As Dr. Phil says, "If you see one rat you can be sure there are 50 you cannot see".

I would suggest you take definitive action against these board members immediately to protect yourself and the other members of your community. Hire a lawyer. That is your promise to the community--you did not promise to do your job only if it feels comfortable or is convenient. Or duck out with a letter of resignation and place the cause on record if you believe you need some kind of consensus to act. Governance of a corporation is not about democracy. (I characterize boards as either a group exercising "benign, beneficial tyranny" or "malignant tyranny".)

The storm clouds are gathering. YOU have the power! You can choose to not use it or use it in a beneficial way.

I would also suggest that you do a mini forensic audit of the books and at least sniff out anything unusual in the financials.

GwenG (Florida)
Posts: 669

Posted:

@PITA. I'm bullish on "Tauric".

JohnC46 (South Carolina)
Posts: 14,265

Posted:

James

Gwen had a good reply.

I might add, grow a pair and go after him.

GwenG (Florida)
Posts: 669

Posted:

A note further to Roger's post. While all laws and states laws may differ, underlying doctrines of laws will usually be reasoned with consistency.

That being said, Florida adjudicated a similar scenario against an Association that attempted to oust directors for the reason of "missing three consecutive board meetings". This was stated in their Bylaws, but the statute provided ONLY for the ouster if Board members were behind in assessments. Therefore, the "missed meetings" recall action was vacated and the members restored to their chairs. The operation and legal reasoning would like be the foundation of the findings should James's board members challenge the ouster. The reasoning was "strict construction" of the statute.

Here is the link to the decision: http://www.myfloridalicense.com/dbpr/lsc/arbitration/allorders/2008004566.pdf

RogerB (Colorado)
Posts: 5,067

Posted:

GwenG,
Based on the link you provided I believe it states the Board chose to remove Directors, not the Association.

The Association's members elect Directors, not the Board members. Thus the Association members would need to vote to remove a Board member, not just the Board members.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By RogerB on 06/10/2017 11:51 AM
GwenG,
Based on the link you provided I believe it states the Board chose to remove Directors, not the Association.

The Association's members elect Directors, not the Board members. Thus the Association members would need to vote to remove a Board member, not just the Board members.

Typically a BOD Member can be removed by those that put him there. If the BOD appointed him, the BOD can remove him. If he was elected by the owners, then only the owners can remove/recall him.

GwenG (Florida)
Posts: 669

Posted:

Roger posted: Based on the link you provided I believe it states the Board chose to remove Directors, not the Association.

The Association's members elect Directors, not the Board members. Thus the Association members would need to vote to remove a Board member, not just the Board members.

Roger; Yes, indeed, the Board removed the Directors per their internal documents. The purpose of the case link is to illustrate the necessity of reading a governing document in conjunction with a statute. In this case, the Bylaw gave the board permission to remove directors was challenged by those recalled directors and they were successful at getting their seats back because the statute conflicted with the bylaw.

In the example, the board directors were elected by members and the other directors sought to remove them due to missed meetings, which was authorized by Bylaw.

So the caution is-- just because your bylaws allow something, one must also be sure that there is no conflict with state statutes.

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By JohnC46 on 06/10/2017 12:00 PM

Typically a BOD Member can be removed by those that put him there. If the BOD appointed him, the BOD can remove him. If he was elected by the owners, then only the owners can remove/recall him.

In Florida only the owners can vote to recall a director regardless of how they got their seat.

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