HOA losses in court couple questions

Hi, All just a few questions about the procedure.

1-When should the Board notify the Association of the loss?
2-Should the Board call a meeting to talk to Association?
a-monies
b-assessments
3-Should the board tell the Association why they lost?
a-Show rulings.
b-Wrongdoings by a few board members.
4-Should the members be able to vote out wrongdoers at the meeting?

Should Association members start a class action suit against the wrongdoing board members personally for Breach of Contract?

If you have enough for a class action suit, then you have enough to make changes IN your HOA without going to court. That is enough to vote your current board out. That is enough to change the rules. Suing your HOA is suing yourself and your neighbors. It's a consequence. Would it not be better to avoid court if you all have the power without a court?

The HOA is to disclose the lawsuit. Maybe not all the details. The ruling and amount the HOA has to pay in damages/legal fees is something needs to be disclosed. Also the HOA insurance may be covering this. As for suing the individual board members? I wouldn't do that. Just vote them out.

Hi Melissa
To start off please re-read the last line it says sue the two members Personally which isn't suing yourself or other members but the two wrongdoers. The two board members should foot the bill for breaking State Law on a board must have a unanimous board vote to bring a suit or a member vote. HOA Insurance doesn't cover taking a member to court for a bylaw violation only if a suit is brought against the HOA or Board. Why should members pay thousands of dollars each for those two breaking the law and is a Breach of Contract? The two board members did this on their own and were found to be guilty of the violation by the judge in her ruling.

Wow, all sorts of lack of transparency here. GuyM1, try not to put too many details about your situation, if you can, summarize. To get us on the same page just because these two Board members didn't tell the other board members, doesn't mean the other board members are off the hook. You must sue the HOA first, then the insurance kicks in. Then as the case proceeds, you can sue them individually. Most volunteers that join the HOA have umbrella insurance that is an additional to your home coverage, so that will kick in.

I'll try to answer a few questions:

1-When should the Board notify the Association of the loss?
answer, right away, and even if they don't, the lawsuit is always disclosed as new home-buyers come in, that is Law

2-Should the Board call a meeting to talk to Association?
answer, I highly doubt if they will call a meeting plus it would be in Executive anyway, if they haven't been transparent until this point, they definitely will not call a meeting, remember they are still in control

3-Should the board tell the Association why they lost?
answer,county records will show the amount of the judgement rewarded, remember the HOA doesn't have to pay anything, its just a judgement, warrant in debt, they don't have to pay it. Talk to your attorney in filing a judgement lien against the HOA, that will get their attention
a-Show rulings.
b-Wrongdoings by a few board members.
answer, no, people probably don't want to see that many details, the details will come out naturally

4-Should the members be able to vote out wrongdoers at the meeting?
most states its 2/3 membership vote to vote them out, very difficult to achieve this, sometimes suing is the only way...because if you vote them out...nothing will stop them from becoming board members again if no one else volunteer's for the position...voting them out is a temporary solution...lawsuits are on the record and permanent.

I don't think a class action requires a certain percentage of membership, I believe it becomes class action as soon as you have more than one person on the attorney's retainer. So it will say Group of Individuals vs. HOA.

Overall you must talk to your attorney on the next steps, I wouldn't put anything on this forum. Don't worry about the membership and informing them right now, if you have support enough to get others on the retainer, then run it by the attorney. Worry about your money and getting it back.

Mail them a government book from high school. They must understand how voting, transparency and check & balance works.

Plaintiffs Attorney put in his brief that they would exceed $18,600 plus court costs and Defendant Attorney fees around $15.000 plus, court costs and Damages. Thinking around $40,000 and there is only 9 units in the HOA.

Do not forget to review the Indemnification clause, if you have one (most places do) in the governing documents. Those are often obscure but they can be real eye-openers.

Guy,

A lawsuit by shareholders/HOA members against their own HOA is what is called a "derivative action." "Class action" does not apply.

Your HOA's Declaration, Bylaws and so on also subject you to contractual terms. Are you running for the Board? Why did you not run earlier? Have you read your governing documents to see how to remove a director? You posted elsewhere that your HOA has only nine units. Campaigning would be a cinch.

If I were the judge and saw you had filed a lawsuit (maybe with a few other HOA members), then I would be asking why you had not exhausted all your remedies under the Declaration and Bylaws before wasting precious court time and taxpayer resources on a lawsuit. This is one reason why typically, lawsuits such as the one you propose generally go nowhere and rightly incur the wrath of judges. The directors you want to sue as individuals are volunteers. The courts do not like deterring volunteers from stepping up via penalizing these volunteers with heavy court costs and damanges.

Hi Paul
Special Meeting was called for next weekend and will be at Law firms office. A discussion of relevant circumstances will take place and the Board will seek input from the owners on how to proceed legally. Options to be considered will include attempted settlement. additional enforcement action, or appeal of the trial courts decision. Members only but the Law firm Attorney will be there but a homeowner can execute a proxy to have someone there for them. Isn't that a double negative? Hey did you write a book?

Thanks

Hi CjC
I don't know that but will check it out. We always have let proxies be Family or friends. So I don't know if that works here or not, any thoughts?

Thanks

Hi Ben
I don't think they do and will look again. Could this be a State law or a Bussiness rule? Well, they have allowed family members to act as long as they have Power of Attorney could this change things?

thanks

I highly doubt they will decide to pay you back your money especially not in a meeting, nothing would be binding. At this meeting I wouldn't offer any information you have on them, let them volunteer and if possible record and write it down. This meeting may be risky and the opposition maybe trying to fish out information from you.

If nothing happens at this meeting, what you need to do is an attorney demand for records around the time where they said they voted on the suit. Once they refuse the records, which they will. Then you sue the HOA. The complaint will include details of the two board members that messed up and how they tried to cover their tracts. The remaining board member is still liable. So the Derivative suit notice will be for 2 or 3 board members, your attorney would know better.

About your proxy vote, it should be another member, not family or friends even with power of attorney. The court or even the attorney is not going to like that you tried to sway the vote by getting these types of proxies. Let each homeowner do the proxy or come to the meeting to vote. If they are so relaxed on proxy rules, then that needs to be fixed as it will work against you in other situations. Do it by the book, no shortcuts.

I'm not sure we're on the same page. The board member will get his/her single membership vote doesn't matter if they give it to their spouse, they will get one vote for that household. All your other details about bad governing will be in the suit. Your main goal right now is to make it to this meeting and see what happens. I don't see any issue with audio recording especially since it appears to be an open meeting of residents and its not executive session, they will object but try anyway otherwise you better take good notes. Perhaps you can change the venue so the attorney can't hide behind the no recording excuse.

Heres what I found

Proxy is stated in the Quorum definition which states if a proxy can be used that the meeting can only be about business to be considered. A proxy holder couldn't vote only members can.

Completely depends on Statutes and governing documents.

In VA, we can name anyone we desire to be our proxy representative.

Guy,

Thanks for the update.

Sorry you are going through this.

You may want to talk to the individual who is the trustee about serving on the Board with you.

Tim

Hi Tim
The Trust Lawyer has a firm in Ohio and Florida and he spends most of his time in Florida. We have the old board member that help me in the case because she was on the board at the time of Litigation. So she is going to be on the board and the new owner next to me that bought his unit after litigation had started which he has a good case against the old owner. So it will be those two for sure and either one other unit owner or myself.I believe the soon old board is figuring out if I get on the board I can find all the Insurance companies denial letter, meeting with minutes and emails between board members that will then be available to me. The board set the Special meeting date and a few days later they sent out an email stating that one member couldn't make that date but the next weekend would be good. So they sent out a new email asking to change the date. Which I wrote back and told them I was leaving on the day after meeting and couldn't make that next date. I think one of the board members can't make it and they want all of them there to keep me off the board. We have nine units and three positions to fill. So the three board members are going that leaves six, the person in the trusted house can't and that leaves five, one older gentleman said he did his time years ago and doesn't want on the board so that leaves four. The other gentleman travels a lot for work and is the one that would be against me if they talk him into it. So here is how it ended HOA Attorneys ended up lowering their fee to $11,500 and my Attorney settled for $4000 plus I pay no assessment from the suit. So after I found out that the Association paid $10,000 already and only $1500 plus the $4000 equals $5500 for assessment which I believe the whole amount should be assessed to put money back into the reserve fund. But in Ohio, you don't have to do that. Why my Attorney only received $4000 is most of his work was on my countersuit which we dropped to bring a much bigger and Personal lawsuit now that this is done. I even wonder if the board will show up at the meeting after being served with the new suit.

Incorrect. Typically any person can be named the proxy holder be they an insider or an outsider.

I made a new thread on this if you would like to respond to your thoughts.

Hi All
Well after losing the Truck parking suit the Board all are resigning. So the Board set up a Special Meeting to resign and to vote on a new Board. So this date was set and sent to all members. A few days later the President sends out a an email stating that 1 member can't make it that weekend and would it be ok to change the date to the following weekend? Well, so I replied that I couldn't make that next weekend due to me flying out the day after the first scheduled date for the meeting.In the next email to me, they said they wanted everyone there and did I check my calendar. In that email, it seemed that they were confused if I was saying which date would be good. So I emailed them back and said the first scheduled date is the one I could make and not the second. So I received another email that stated that they changed the date to the second requested date by one member. Which I replied, how can you give another member precedence over another? Their reply was that they took the majority over me not being able to make the next date. I replied you took a vote without giving me notice of a meeting to vote? They replied no vote just to the majority and thought I could call into the meeting? I replied Why can't the other member call in and leave the first scheduled meeting intact? They asked was I going to Volunteer to be on the Board? I didn't reply to that it just told me my suspicions where right that they want to keep me off the Board.The point is that it mattered that that other person had to be there but didn't matter if I was there. My belief is the Board doesn't want me to be able to go through documents that they would never give me that would show the wrongs done by this Board. They are Manipulating the meeting to have me not be able to get on the Board. I think it may be one of the board members that can't make it which will leave them short votes to keep me out. Also in the last reply from the board, it turned into two people can't make the scheduled meeting which I think it's husband and wife which still only have one vote they're just using it's two people. Funny thing is I ask why can't the other person call in just like your asking me to?

Insurance might not cover the BOD members if there was any violation of fudiciary duty. BOD members cannot blatantly themselves violate the governing documents and then expect the insurance to cover their transgressions.

Hmmm ... NOT if the COURT already found them in violation. Per the OP above as noted and also potentially noted on other threads::

The two Board members broke the State Law by bringing the suit without a unanimous vote by the board or vote of the members.

If a prior court already has found the BOD violated the CCR’s and State Laws ... Potentially they are not covered if any was for Fudiciary Duty. That is one item which many insurance companies will not cover or provide for if the BOD members violate. The BOD members have already been found guilty of bringing a suit in violation of the documents. Documents which are written and filed and which they are aware of and have or should have read.