BOD suing a homeowner

Several homeowners stole items from the HOA clubhouse. When we, the BOD, reviewed the video tapes, we called the police. We had a fudiciary duty to do so. Long story made short, one of the homeowners sued the BOD and the President as an individual. He lost every alligation and the suit was thrown out of court. Our HOA attorney and the D&O attorney now want the BOD to sue the homeowner. We want only to recover the legal fees and the cost of the property that was stolen. The suit will be in the name of the BOD and the President as an individual. This is a hands down case as we have the homeowners deposition and the tapes which clearly show the actions.
The President feels that he should personally get some money for him being named individualy, if we win the suit. The other members of the BOD feel that he should get no money. That any settlement is the HOA's because our D&O insurance covered the law suits. The President had no more participation in the suit than any other BOD. Has anyone ever dealt with this type of a situation?

I agree with Roger. There should have been a countersuit filed. It's much cheaper and would have served the individuals better. It's almost too late now to follow that route. It's NEVER a good idea for a HOA to sue a homeowner. Suing your HOA is suing yourself and your neighbors. It's just a legal mess that keeps revolving.

The HOA CAN place a lien on the member's property for the damages. This is allowable. However, the HOA must pay to replace the items so they can use the receipts as proof of damages to them. You can't lien for punishment. The HOA has to have suffered real damages. A lien will prevent the owner from selling the property until the lien is settled. A lawsuit is just a "judgement" and the owner can sell without paying for years.

What your dealing with is more on the Criminal level. It's best that the situation had been handled by the police and criminal court. Stealing is an offense punishable by jail time and possible fine. This should have been the route that was taken not in small claims court. (Probate).

I wouldn't sue this person on the behalf of the BOD. If the president has a problem, he/she should sue the person on a PRIVATE level. Making ALL the residents pay is unfair and not the right route to take.

What expenses and what damages has the president suffered personally? If nothing then he should get nothing. It is expected as the president of your association you are going to be named in any lawsuit, as long as he didn't have to personally pay for his defense or his name was slandered and his reputation destroyed he should not get any money.

As for your countersuit, the questions I would be asking right now as a BOD is, if we win this case are we likely to see the judgement? IF you have racked up 10k in legal fees already, continuing to pursue this case will make that bill rise. Factor in that this person had to pay legal fees already and will continue to do so if countersued. It comes to a point where does the HOA count its loses and move on or does it feel confident it will get paid. I don't think it is a wise choice to proceed if you don't feel the homeowner can pay the judgement.

I agree with Brad and others here...

If the DOL insurance carrier desires to sue the homeowner that is their right, and has nothing to do with the HOA (unless there is a clause that the HOA must participate - and at what levels - in the policy).

If the HOA wants to sue the homeowner for the cost of your deductible to the above DOL insurance carrier (if applicable) that would be appropriate.

If the President felt that his name was slandered (etc), then he would need to seek remedies under his name, and not as President of the HOA.

All in all... hate to sound negative.. but if the bums (owners) would steal from the HOA (with cameras present), then turn around and sue the HOA for doing the right thing... do you REALLY think that the bums (owners) are going to ante up and pay anything if the HOA prevails (or that they are smart)? Or for that matter, have the $$ to pay up if it goes that length...?

Be reasonable and get what the HOA paid out (legal expenses, deductible) - which SHOULD have been part of (as any good attorney would pursue) the verdict from the Court. I understand that it was tossed, but there are often conditions (dismissed, with/without predujice, etc). This can be levied against the assessments of the owner, for future (possible, if you follow the correct procedures) liens - so that the property cannot be sold, etc. Make sure that you follow your gov doc's to the letter, and be fair/balance, and act without malice.

Side question: if I got pulled into a suit like this a the President and had to spend any significant amount of time on the case, I personally would be out some money due to lost wages (I'm a contract software engineer paid on an hourly basis). Would I be able to counter-sue for those lost wages even though the HOA had covered the original suit?

Nancy, it sounds like the attorney representing the HOA is almost as incompetent as the attorney for the plaintiff. Suggest you carefully review the abliities of your HOA's insurance carrier and your HOA's attorney

I have a problem with how much money this cost the association when it should have been covered by D&O insurance. Leaving an association with a $10K legal bill is not exactly great coverage! Why did your association attorney have to be involved at all in taking dispositions? I thought the insurance company was supposed to handle the entire situation.

In any case, from what you've said, the president just seems to be being greedy to want some money out of it -- perhaps vindictive. Perhaps this has something to do with the high legal fees?

I am confused also about the timing of getting the legal fees but have never seen how it was handled. I would have expected it would have been handled as the judge was dismissing the case. I was involved once in a criminal case where when the case was dismissed the attorney then went on a rush to file for "mischievous use of the criminal justice system". You had a very short time to file that -- like before the judge left the building. In a civil suit for ARC fines that we won, the judge awarded the attorney fees right on the spot. If we hadn't accepted what he was saying there would have been further dealings and the case would have remained open, otherwise the guy had to make arrangements to pay us right then and there. As our attorney didn't even ask us what we were going to do, I am not sure what would have gone on afterwards. Maybe they asked for attorney fees and the judge said $10K was ridiculous?

Here is the million dollar question, how much are the locks, is it worth pursuing? Since the police didn't arrest the guy is it a slam dunk case to prove he did it? Or is it just more money wasted.

OK. From the beginning! Many years ago the BOD decided that they could have bingo in the clubhouse. The laws in the state of FL dictate that this is ok as long as all proceeds are distributed as prizes. The only monies that can be used from the proceeds are the cost to buy materials (bingo cards, dabbers, etc.). There is no entrance fee. The BOD was getting complaints from homeowners about the Bingo game and the payouts.

I was elected Treasurer in Oct. 2006. No Treasurer, for the past 9 years had asked to see the books. This is not a requirement. When we started having complaints in Dec. 2006, I sent the homeowner who ran bingo, a certified letter asking for the books. I gave him 7 business days to turn the books into the office. I had the right as the HOA Treasurer and the bingo game was run under the HOA auspices, a NFP organization.

The homeowner basically told me and the BOD, forget it. You are not getting the books. When the 7 days was up and we did not have the books, I changed the locks on the closet door that kept the bingo supplies. I sent another certified letter that day(both letters signed for by the homeowner) telling him he did not have access to the bingo closet any more and the BOD was not going to allow him to run the game.

He played poker with other homeowners a few nights later. At 11:00 he went to the closet. He did not have a key since the lock had been changed. From the stationary video camera, that has been in place for 5 years, he was seen doing something with the lock. We cannot tell if he used a pick or something else because of the angle of the camera. But he opened the door.

When I and others went into the closet the next night to run the bingo game we discovered there were no supplies. When the lock was changed the closet was full. I called the other BOD members and we reviewed the tapes. We knew the 5 homeowners were the ones who were playing poker. One of the BOD members called the weakest link. He told him we had them on tape (irony: this person was the one who was instrumental in getting the video put in the clubhouse)for 24 minutes cleaning out the closet. They threw some of the supplies away in the trash and they bagged up the rest and took them out of the building. Everyone knew at that point who the person was. His attorney had told everyone.

We allowed him to stay so as not to make any more of a scene. Then the attorney started talking about the case. We had not even brought it up. We ended the meeting before we finished.

We then called another BOD meeting to finish our businesses the following week. The culprits attorney asked if he could speak at this meeting. We said no, and he was not allowed at the meeting. He even went so far as to call our HOA attorney and a past President and ask them if he could speak at the meeting. Yes, this is an attorney with a license in the state of Florida.

We asked our attorney to be at this meeting. We knew that the other attorney was going to show and we wanted our attorney to reason with him. It happened just this way. He showed and started to make a scene. He interruped the meeting so much that the Secretary got up and called the police. The police showed and escorted the attorney out of the building.

He admitted that the one who ran bingo had told all of them that he no longer wanted to run bingo. He did not mention the BOD's request for the books or the letter that he was not allowed to run bingo any longer. He asked if they would help him take the supplies out of the closet. He also told them that the supplies were his bought with his money. They believed him not knowing the actual circumstances. We got the same story from the next person we called.

We then called the bingo homeowner and he cursed us up and down. He said that we were not going to get the supplies or the books back because they were his. He knew the law and the status of the game being run under the HOA. He signed a release each year saying that he understood the bingo laws in FL.

I then decided to call the police. We had many homeowners in the clubhouse that night. There were committee meetings and about 40 people were there to play bingo. I announced that there would be no bingo that night. I did not say who broke in but did say that the supplies were stolen and the HOA would replace them by next week.

Of course with the police showing up everyone hung around. The BOD were in the office with the police showing the tape and telling them the whole story. The police then wanted the addresses of the 5 homeowners. They wanted to arrest them. As a BOD, we decided that this would be detrimental to the community. We asked the police to hold off until we had time to speak to our attorney.

The next morning we called our attorney. He did not want any police action taken against these homeowners as long as they made restitution. That started our 2 month talks. Two of the homeowners got their lawyers involved. This became a circus. The lawyers wanted a copy of the video. We had them view it in our offices. Our HOA attorney was involved every step of the way. When the homeowners would not come up with the $250. we asked from each of them and we received the lawsuit claiming "defamation of character", our lawyer said to quit the talks. The $250. was to take care of the missing supplies. The legal fees we at a minimum then but they were dragging for 2 months.

A week after the break in the main culprit sent his wife in with the bingo books and a handful of supplies. This she said was not an admittance of guilt and wanted the PM to sign a paper to this. He would not.I reviewed the books and found so may unexplained expenses (approx. $3700. in one year). We gave this info to the police. The end result, which we just found out last week, was that the police are not going to prosecute. Another story.

We had a regularly scheduled BOD meeting a few days after the break in. The main culprit came to the meeting with his lawyer and video cameras. We were not planning on answering any questions about this subject. Our attorney had advised us not to mention names or what happened. If we were asked we were to say that it was a legal matter and the attorney was handling it.. When the President saw the attorney he asked him quietly and discreetly to leave. He stated that the BOD meetings are for members only. He refused to leave and announced to the audience that he was there to protect his client's innocence.

I know, you can't believe this. It is true. It is not from a soap opera but could be.

Then the lawsuit from the culprit. Our D&O insurance attorneys took over. Our HOA attorney was involved with the case because he had lived it with us. He gave a lot of background info and helped the D&O with the questions for the depositions of the homeowners who broke into the closet.

The culprit broke down at one of our depo's and told us everything. His daughter, who works for the culprits attorney came to the depo with her father. She had to be escorted out of our D&O attorneys office and this was only after our D&O's called the judge. She made such a scene that other attorneys who are in this practice came out to see what was going on with all the screaming and yelling.

Now the case comes to court. The culprits attorney was santioned by the judge within the first 5 minutes for speaking out when he was told not to. Then the judge heard the case, reviewed the videos and threw it out as a friviuos lawsuit.Then he told the culprits attorney that he could not represent the culprit in any future case we might bring. He also heard our attorneys complaints about the culprits lawyer and reported him to the bar.

So here we stand. Our countersuit has been filed. We are to go before the same judge who heard the original suit. The culprit has not answered the suit, he has no lawyer, he has until the 18th of August. The hearing is scheduled for the 21st of August.

Do you think we will win?

I know this is crazy but these are the facts. We have had some strange events happen but this one beats them all. This note was quite long but I am hoping that it gives you some background.