Lawsuit update

I wanted to take the time to update some of you on the lawsuit a group of us plaintiffs filed in 2018 here in CO, and would really like input from the legal guys out there because this is very leagalize:

We won every single motion concerning the (second)amendment, we agreed to a $25K settlement directly from the insurance provider for one claim 3 days before trial, and all parties agreed to dismiss the third claim in the case. We won the motion regarding the amendment in 2021, however only this year settled all the other portions of the claim and finally ended the case with a formal decree from the judge declaring the amendment which required unanimous consent to change was therefore invalid by law. We are now in the process of motioning for attorney's fees, which apparently the HOA is on the hook for even though the board has been telling homeowners (even in writing) that the insurance is paying for everything and they didn't expect any financial impact on the homeowners. We will see what happens, how much we will be awarded, and what the board will say to the community since they have been silent on the issue. To be clear, I'm not proud to make my friends and neighbors pay for this, but it may also be the only way to get them to pay attention and get involved... because there is an active second lawsuit, and possibly one to come based on the info below that most residents are completely unaware of.

To summarize, our declaration specifies that amendments to use restrictions, allocated interests, unit boundaries and declarant rights require unanimous consent. This unanimous consent has been upheld in CO courts in a couple cases now (though ours is the first on use restrictions) because CCIOA, our HOA state law carves out protections for unanimous consent for these particular amendments. All other amendments to the Declaration not part of these carve outs require a maximum of 67% by law. The association has been saying they were planning to appeal and have also been telling the community that the insurance has agreed to pay for the appeal..... well that's not what we understand while the attorneys were discussing settlement. Sounds like the association would be paying for the appeal- so it seems they are trying to find a work around rather than losing that appeal and having to pay for both their and our attorney fees for the appeal. This workaround proposal is dangerous.

These board members are now proposing to try to amend the unanimous consent language in the Declaration! The problem here is there is an appellate court case from 2016 addressing the two step process to amend a unanimous consent clause for allocated interests (remember this and use restrictions are both carved out in CCIOA). The courts saw through the two step process and declared the amendment invalid, because you can't change a unanimous consent clause without first obtaining unanimous consent. (DA Mountain rentals v The Lodge at Lionshead). Our HOA board is aware of this, and are actually stating this is an authority for them to proceed with a vote to amend the unanimous consent language. They are hung up on the term "permananent character" in the case as though ours is somehow different. The issue is unanimous consent means permanent character.

Myself and at least one other who is an attorney, is asking the board for the written legal opinion from Altitude Law- a well known HOA firm here in CO. So far there has been no production of an attorney opinion, and the attorney opinion leading up to our lawsuit was one that was no more than attorney opinion with no quoted authority or case law in her entire letter (same firm). I think it is willfull and wonton of the board to move forward with a vote, positioning themselves for personal liability, especially without the production of a documented legal opinion. The HOA defense attorney of record in the 2016 case has also been contacted and has some very very strong input.

I have trolls which monitor what I say here within our community so I won't say more but under all these circumstances I am curious what some of you think.... and mind you, the board is also suing me personally for an improvement on my property and the judge seems very displeased over the case. Nevertheless the board is facing an assessment for our attorney fees for the loss of this lawsuit, while also actively pursing a lawsuit against us where they are showing the attorney fees on the financial ledgers as accounts receivable because they are billing the attorney fees under our owner account rather than showing the actual HOA expense. It is a creative way to hide the costs but I am not so certain it is legal when you are dealing with a corporation. And should they lose... then what? Irresponsible fiduciaries? Personal liability?

Melissa- yes an attorney opinion can absolutely be bought... however an attorney opinion in a hotly contested scenario where current case law has been brought forward would be extremely prudent for the board, otherwise they are acting outside of legal support. And I want to see an attorney put their name to this opinion rationalizing how this precedent setting case is somehow not valid for their position. In my eyes, the board becomes liable by moving forward without at least a documented attorney position to hide behind.

The question- at what point does this board stop fighting this issue at all costs? They lose one lawsuit so they are instigating another.

Hello-

-- who pays the HOA's attorney fees for the case that ended in a settlement. The case had 3 claims, and only one of the three claims ended with settlement. There are no claimed attorney fees per the stipulation as a result of accepting the settlement. This is a non issue. The other claim ended with us as the Plaintiffs being the prevailing party in the action per the judgement and are entitled to attorney fees per CCIOA.

-- whether the HOA has to pay for your group's attorney fees, for the case that ended in a settlment. It is CO state law under CCIOA that the prevailing party in an action to defend or enforce the Declaration or CCIOA is entitled to reasonable attorney fees. That is statute- we have already provided a post judgement motion requesting attorney fees. So I don't have questions on this

-- whether a court would find an amendment, to change the unanimous consent language, to be lawful. The courts already found such an amendment to be unlawful in the 2016 appellate court case I quoted. That is the authority I mention.

-- whether the board has to listen to you and this other owner as the two of you ask the board to get an opinion from a law firm that you and this other owner chose. No- we are asking for a legal opinion from their own HOA attorney to support them moving forward with a vote (the community isn't asking for this- it is board driven rather than filing for appeal to the lawsuit)

-- whether the board has to share the opinion of any attorney the board retains with the owners. This I am unsure about, however the board has provided the attorney opinion letters in the past to justify their contested actions before. I do not believe the HOA attorney of record wants to put his name on such a letter to be frank due to the appellate case I mentioned above. There is no other caselaw I am aware of concerning this in CO for him to use as authority which is another reason why I think such an opinion is important.

Please either fine tune the above or clarify what your questions are. Really I am looking to see who feels the board is entering the realm of personal liability related to willful and wonton behavior by essentially ignoring the outcome of the lawsuit and trying to find an indirect method instead, without documented legal support from their counsel. After all.... who honestly after going to court on this issue and losing would try another way? I think no one normal.

Please share the language from your covenants on the subject of attorney fees. N/A as I know these answers

Please share all the language from your covenants on the subject of amending.

11.1 In General. Except in cases of amendments that may be executed by
Declarant in the exercise of its Development Rights or by the Association under Article X
of this Declaration and C.R.S., §38-33.3-107, or by certain Unit Owners under C.R.S.,
§38-33.3-218, and except as limited by Section 11.4 and Article XIV of this Declaration,
this Declaration, including the Plat, may be amended only by vote or agreement of Unit
Owners of Units to which at least 67 percent of the votes in the Association are allocated.
The procedure for amendment must follow the procedures of C.R.S., §38-33.3-217.

g.
11.4 Unanimous Consent. Subject to the Special Declarant Rights reserved
herein, and except to the extent expressly permitted or required by other provisions of the
Act, an amendment may not create or increase Special Declarant Rights, increase the
number of Units, change the boundaries of a Unit after it is initially created as
contemplated herein, the Allocated Interests of a Unit or the uses to which a Unit is
restricted, except by unanimous consent of the Unit Owners.

No financial impact to the community??? You do realize your D&O insurance premiums and general liability premiums are going to increase drastically to cover the cost of
this litigation.
As for the questions, what are the questions?

One statement you said the judge struck down one amendment and the board wants to redraft it. I'm a bit confused
Quite honestly the board should just let sleeping dogs lay.

It's not OK for a member to sue the board but it is perfectly acceptable for the board to sue a member?
Actually, it is lawyers who make case law because the lawyer who made his case won, and the court adopted his argument. The courts don't make a case for you; you have to work for it.
If suing a board member individually was not sometimes necessary, there wouldn't be insurance. Some people think directors are saints just because they are "volunteers." Directors must be held to account. And when the members are stupid enough to keep electing the same directors after they repeatedly harm the association, they have to accept the results.
My rant for the morning.

-- Looking back at the old thread, the main dispute in this lawsuit was the HOA's amendment of the governing documents. The amendment restricted the animals on lots to equine (horses, donkeys, mules) only. Suing over this makes sense, first because it appears the covenants and statute require 100% consent, and 100% consent was not obtained. Second because this amendment is unreasonable IMO. Nationwide case law typically says that amendments have to be reasonable; no tyranny of the majority allowed; et cetera.

-- I think the OP (JenniferB14) did the right thing in suing to fix this particular item. This amendment was outrageious.

-- I do not know what the other claims in the lawsuit were.

-- The OP indicates her group of owners wants the board to read another law firm's opinion. This other law firm's opinion presumably cites case law that speaks to 100% consent being required for certain amendments. JenniferB14, the proper way to make this happen is your group's attorney writes the HOA attorney with the case law, first politely asking the HOA board to comply with this case law. If the board refuses, then your attorney escalates this until the board has an ultimatum: Either comply with the case law, or face a lawsuit from JenniferB14's group.

I expect this will turn out to be true. Jennifer, you might note the many reports of astronomical increases in HOA insurance, especially in Florida, Texas and California, in the last year or so. Tripling premiums is happening a lot. You read this right: Where say a condo association's premiums were $100,000 per year, they are now $300,000 per year in some parts of the country.

On the other hand, for the main dispute of the lawsuit, I think the group of owners was of necessity in "fight or flight" mode. The amendment that the court tossed out was extreme oppression, with regard to land use.

In the other thread, the OP spoke of having "legal insurance" for her family, with 'no cap.' She says her family's insurer is paying for an attorney to defend their family in a lawsuit brought by the HOA for alleged architectural violations. First I would review the insurance policy carefully to see if there is a "hammer clause." Google to see what the latter means. Second I would review the insurance policy to see what it says about the insurers' rights to settle. Do expect an enormous increase in your family's insurance premiums.

Melissa- again you just aren’t understanding this. There is no rule, there is no covenant which can be changed by the board or the members . We won the lawsuit proving that. End of story. The board is trying to find another way - seems like if you got sued you would deal with the outcome not keep prodding and provoking the same Bear.

-- Clients are not required to take the advice of their attorney.

-- So-called shopping around for a lawyer that agrees with one's position is completely lawful.

-- Lawyers largely exist to invent the seemingly impossible theory. They just have to have decent evidence that their theory might be correct.

-- Notably, what the case law says today could be overturned by a state Supreme Court or the Federal Supreme Court tomorrow.

Because you did not read the OP's posts.

They would not be spending the money if not forced to buy responding to the lawsuit.

True, but I think it calls into question the sophistication of the "volunteer" when they are going against the advice of their lawyer. Who does this? Like I said if there was profit to be made, I would not be shocked.

No question about that. Going against the advice of counsel is a red flag that the board is likely rogue.

Since some six years have passed since this dispute began, I expect this board is dug in and has zero interest in playing "fair" with the OP and her group. Worse, given that a supermajority supported the amendment ('equine use only'), the OP's group is likely loathed. This means the board is going to happily and enthusiastically resist anything the OP's group wants. This is a full-fledged HOA war. The board and its attorney will use the reality of our legal system to harass the OP and her group to the greatest extent possible. And they will largely get away with it. If you are talking about attorneys doing whatever the board tells them to do, because this will pay the attorney's heating bills for his spa in Aspen, then I too would not be shocked.