Can new board sue old board members?

Hi All,

Can a new board sue old board members for Breach of Fiduciary duties? This would be to get back all lost money from a Lawsuit [Illegally brought, State Law] they brought and lost then settled, not repairing common areas, and not going after Contractor for damages caused to common area from improper installation of siding and one breaking a water line which flooded the unit which the board contacted Association Insurance instead of Contractor Insurance? This caused Association Insurance to go up almost 33 percent. New President is working with Association insurance company and going after Contractor insurance company. The Contractor insurance says they will take care of all the damages and get back Associations deductible. The old board never sought any damages from Contractor that I can find in all the files, not even an email! The old board left us in a world of hurt and basically no funds. Luckily dues were coming to pay Association insurance bill which put us back to almost nothing due to the increase in the bill.

I hope the Contractors Insurance company does what they said they would do. The one unit with the flooding damage was paid from Association Insurance company which they will subrogate with contractors insurance company but the other one is the one from 2016 installs which leaked from the beginning. The Contractors Insurance company said they would pay but I have a feeling we may need to sue to get all damages.

Also, the owner of the unit that flooded had mold and couldn't live in the unit for almost 7 months. He was trying to get paid by Association insurance but they told him to go to his own insurance. So his insurance is going after Association insurance till the New President put all the Insurance companies together. So both the unit owners and the Associations Insurance are going after Contractors Insurance company. Also, in talking to Association insurance company when they receive all the monies from the flooded unit they covered they will then lower Association premium.

I agree. Guy is using his position for pay back.

Hi John

No, I'm not doing that! I'm asking should the board bring an action against ex-board members for the losses from wrongdoing? I can't be part of it being I'm already bringing an action. Or should members come together and bring the action on their own?

Just asking on what is the best way to get the money back in Association accounts.

The Association does have D&O insurance.

I guess I was also looking at the old board members are covered by the D&O insurance and would they pay out?

I just feel that these members should replace monies they cost all the members to replace.

Thanks,
Guy

Guy,

You sound like you need to punish someone ...

In so doing, are going to end up punished everyone - and, the HOA itself?

Would it better to simply get to work, fix what can be fixed ...??

Guy,

From what you posted, it sounds like that board made judgement calls based on their experience (which may have been limited), legal advice and facts known at the time the decisions were made (which might not have been all the facts, just the facts available at the time the decisions had to be made).

My personal opinion is you will waste a lot of resources (personal and association) to win nothing as I doubt you will pierce the corporate shield to go after the individuals (vs. the corporation - which is the HOA). Insurance likely won't cover the cost of the battle. Past board members are indemnified by the Association, just as you are, for decisions they made while on the Board - so the membership will have to pay for everything.

My best advice, adopt policies so the same mistakes are not made in the future and move forward.

Did you ask why? Perhaps nobody else would volunteer to be treasurer so he took the job on.
I understand the need to comply with the governing documents. I also understand the reality when nobody is willing to step-up and serve.

At one time, I made plans to name everyone in my family as board members and officers simply because nobody was volunteering. That would have satisfied the Bylaws but in reality, I would have been doing all the work.

Hence the question. Did you ask why?


Realistically, how much do you want to spend to go after $500?
Many contractors require partial payment up front.
Everyone is subject to a scam.
It sounds like the individual checked into the options and (I expect with board approval) chose to take this as an expensive lesson.


Often, the advice provided by others on this site say to report the incident to your insurance company so the work will get done quickly. Then let the two insurance companies deal with each other. It saves time and energy.

If your in an auto accident that is someone else's fault, do you report it to your insurance or deal with the other persons? To me, that is going to depend on the situation, who the other insurance carrier is, etc.


Is he the only person on the Board? Decisions are made by the board either by majority vote or simply allowing someone to do things without making a fuss. I think you lay too much at one persons feet when it should be laid at all. Additionally, don't forget about the members who voted these people in and then failed to do their job of checking in on what is happening. You took the time to check on things, but others did not.


That's a concern. Do you have proof?
If you are on the Board, why don't you contact your agent and give them that info from your records now?


I understand. I would be ticked as well. It appears to be an expensive lesson to all that they need to do their job and check to see how things are being ran from time to time.


I understand that.
If desired, consult with an attorney to see what the cost would be for such legal action.
Ask what are the chances of piercing the corporate shield to go after each director (not just one as it was a group decision) for the money.

I think it's unlikely you can pierce the corporate shield. If you can't, then it's not worth the time, energy or money as you will only cost the membership more money (regardless if you bring the suit yourself or as a member of the board).

Understood.

Keep in mind that the other two, regardless of gender (as that doesn't enter into it), allowed it to happen.
On a three person board, the other two had the votes to stop him. They had the votes to remove him as President and as Treasurer. They chose (for reasons of their own) not to. They share the blame.