Power to Prosecute

The way I read what you posted is that the BOD may not institute an action which is expected to cost more than $2,500.00. There doesn't appear to be a cap on the amount the BOD can spend to defend against a lawsuit instituted by another party. Even if the BOD instituted it you would need to prove that they had a reasonable expectation that the matter would exceed the cap. It could be they expected it to settle or the H/O to comply but instead he escalated the matter over the cap.

Write a factual letter and mail it to everyone in the association and see if you can gain interest in replacing the board of directors and/or the officers. No association should spend $88k in legal fees against 1 person even if they are right. You, the homeowner paid for this. The current people in charge have lost touch with reality and will prove they are right at any cost, get rid of them. I've seen this scenario happen time and time again. The key word is "settlement" People need to learn to come to an agreement before too much money is wasted on legal fees.

Jon

The Association brought suit against an owner. The question is not whether they had the authority to prosecute or defend, the CCR's clearly state they do. The problem is (according to the governing docs) that they couldn't institute any leagl procedure costing more than $2500 without written assent of a majority of the membership. The real question is who is ultimately responsible?, the attorney or the PM who should have know that the governing docs forbid the Board from taking this action without membership approval.

Did the HOA actually pay this bill or did their insurance company? From my own unfortunate experience the insurance companies will spend whatever cost no matter how wrong the HOA is in order to try and "spend the homeowner" under the table. The board goes along because they believe it does not cost them anything, until of course they lose.

Richard:

Some of the details you have provided don't make sense. Was there one suit or two? Did the BOM bring an action ( file suit) or was the suit filed against the property? And as Trish has suggested, what role if any does your property's insurance coverage play?

You would need to have details and a copy of the insurance policy to determine if the property was covered. It might take the carrier some time to make this determination. It is possible the property could recoup some or all of the cost under insurance depending on the spcifics of the matter.

I would guess it is difficult for the Board to make detailed explanations as to the details for this matter due to the fact while informing the property owners they will also be informing the party they are in litigation with. Not a real good legal move.

Again, as we have not been provided any real details as to who brought the suit and what matters are in litigation it would be difficult at best, impossible at worst to make an educated guess as to how the Board responsed or acted in this matter.

$88,000 in one quarter???? I would love to hear the details and review the invoices of this matter.

I would suggest you do some basic research through your local courts to determine who brought suit and what the details of the suit are. Many courts have on-line records available over the internet. Perhaps that might give you some insight into the matter.

CAI Lawyers, Vendors and Management are there to drain associations out of every dollar they can. The firm who who represents your HOA deals with around 3500 associations from what I hear. 3500 times 1000 a month on the HOA payroll equals 35000000 per month plus law suits. WOW Thats alot of dollar bills. The lawyers do what they want, you dont like it, get on the board and stop it. Richard? Whats your next management company in mind? Another CAI management company thats associated with another Law Firm in CAI who will try and do the same thing to you when your on the Board. Drain the Association of it funds trying to convince you to hand over the cash....

Whats your next step?

Richard, you need to visit the LA County Court site and spend the $5.00 to research the suit. Your CC&R's say expect to cost more than; it could be a simple suit that got blown out of proportion by the other party or they could be defending in which case the insurance may come into play. Do you know for a fact that all of the money was spent on this particular case?

Jon

What all due respect, details of the suit have no bearing on this issue. The Board has a responsibility to uphold and enforce the governing docs. That goes for the PM and Attorney. Trying to compare your electoral failure with this issue is comparing apples to oranges, there is no comparison. I am not questioning whether the individual who they went after (who is a sleaze bag) was wrong, only the matter in which they did it and the rules that weren't followed.

Maybe the language was put into the CCFR's so the Association after it was turned over couldn't institute any legal action against the developer without a majority of the owners approving the expenditure. If so, smart on their part.

If a Board doesn't like the Rules and Regulations adopted by a previous Board, do they 1) ignore the rules, 2) enforce the rules, 3) change the rules?

Our documents give the majority of the owners the right to vote to move forward and prosecute if they so choose. It's our money.

If the Board doesn't like the rule, then go and have it amended by 67% of the owners. I didn't like the Bylaws so I got them changed.

Glen

I am sure a couple of dollars were paid to the attorney to write three letters to me.

At the beginning of 2009, our Association had over $300K in surplus funds. Today, we are short funding our reserve account to pay for our water bill. Tomorrow, what we raise owners assessments to pay for a Board being stupid. $100K was paid to the Association's legal firm, 20% of our budget in just 4 months.

I am assuming you could justify a Board instituting action at say $1500 to start and then allowing them to escalate to whatever amount they wanted, without communicating to the Members where the money was going and oh, why we have to raise your dues.

An PM or an Attorney, from experience, would have a ball park figure on what amount to expect to pay taking the action they took, whether or not the other party put up a fight. As I said, I am not questioning whether they should have, but how they took action. If the Board doesn't have to abide by the CCR's, why should the owners?

I wouldn't go after the Board, as they are my neighbors, but we can take steps to deal with the PM and the Attorney. A very bad business decision was made, potentially affecting the financial stability of our community.

Mary,

You said the magic words, "fire them". I've been to the Board Meeting and I know who runs the show. Yes, the PM and Attorney, is supposed to take direction from the Board, but as we all know, this isn't always the case.

Case in point, two and a half years ago, the Board under the advice from the PM (old management company) levied a special assessment on replacing street lights which we had funds in our reserve account to fix/replace. The Board then received a settlement from the building more than the actual assessment, but the monies were never returned to the homeowner. Bottomline, the lights should have been fixed from monies in the reserve, but the Board's response when questioned was "the Management company said it was alright. They take no responsibility for their action. This is a business, as others have stated, but run like a government that has no accountability.

Richard:

With all due respect I think you are a bit confused. You seem to hold ill will towards the PM and attorney but your neighbors on the Board are above all this.
Don't they have sopme responsibility now?

The PM and attorney work for the Board are hired by the Board. How was it the PM who ran the property was then replaced with a new PM if the Board wasn't in charge?

Back to your original topic. IMO you cannot make any rational judgment as to the behavior of the Board without first knowing the facts. Although you seemed hell bent on proving the Board violated the By-Laws. If what you say is close to reality you have much bigger problems than that. And as to your suggestion that the PM or attorney should be able to give a guess as to what amount of money would be expended in a legal matter well that's crazy talk. The court decided how long this matter might go on, the court, the judge none of which is known beforehand. And as most Boards don't have crystal balls once you jump in you might be dragged all the way. $2,500 might get you 10 hours in many areas not much chance of getting ANY case resolved in that time in the real world.

Richard you jump from issue to issue with bad moments from years ago questioning the Boards decisions when you have yet to give us details of fact. Did the Board in fact bring suit? You don't know until you read the filing with the plaintiff's name and defendant's name written in plain English.

And IF they violated the by-laws as you would like to suggest did they do so willfully, knowingly and intentionally? Abd they did this because _____________.
They wanted to run your property and theirs into the ground the throw it into finacial ruin.

IMO IF they violated this section of your by-laws and any of what you say is in fact accurate the least of your problems would be that violation.

Good luck and let us know if and when the dust settles what exactly took place.

Hard for some, impossible for me to operate or form opinions with assumptions and partial information. And IMO details DO affect this matter.