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LeeS1
(New Mexico)
Posts:19
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| 09/06/2008 4:24 PM |
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This is unbelievable, and I am passing on the letter written by a woman in New Mexico. It makes you wonder whether anyone is safe. She stated that their D&O insurance company has had the claim since Aug 2007, and doesn't know what to do. The judge apparently ignored the HOA's bylaws as well as state law, and made a declaratory judgment. He further allowed the builder, who still has 125 houses to build, to exercise his 125 votes, in violation of the bylaws that specify he cannot vote.
To the lawyers out there, does anyone know whether a declaratory judgment can be appealed and overruled? Can a judge just totally ignore an association's bylaws and state statutes? The writer of the letter told me that the old board members who were thrown out have received certified notices in the past week of liens on their property to the tune of $17,000+. The new president of the splinter group has asked the membership (with no response to date, as she has not done it properly) whether the Association should pay the liens or make the past board members pay out of their pockets, even though the HOA has more than enough money to cover them. The section in the NM state statutes is clear on indemnification. Further, the splinter group's election was in violation of their bylaws. The case is #D-619-CV-200700432 in NM. The writer also stated that she heard some of the previous board members had checked with their own umbrella policies and were told they are not covered there, either. (Makes you wonder.)
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A RECENT decision [Aug 22] handed down by the state District Court [Deming, NM] really gives me great concern as a local citizen who freely volunteers my retirement time to serve on nonprofit boards in Deming.
This past year, there was a power struggle between two factions in the Country Club Estates Homeowners Association. A group of the association's members challenged the current board and their continued right to serve. The board members did the prudent thing by contacting legal counsel who recommended filing for a declaratory judgment to rule on the contentious issues.
District Judge J.C. Robinson handed down his ruling along with awarding damages resulting from the costs of the proceedings against the board members from their own personal assets, thus rendering null and void (state law regarding nonprofits and indemnification of directors).
I was not aware judges had this authority over state statutes and now realize — as should all citizens of Deming and for that matter the state — the need to be very cautious when serving on nonprofit boards. A precedent appears to have been legally rendered in a court of law that eliminates the “so-called immunity” board members were formerly provided by the state statutes.
If your current non-profit organization has directors and officers liability coverage, do not assume as a board member you automatically have protection while volunteering. Your personal homeowner and umbrella policies may not provide fall-back coverage, thus leaving your personal assets at risk just as this Country Club Estates Homeowners Association board of directors discovered.
This is truly a sad situation and certainly gives me great concern, as it should all members who volunteer their time to sit on the many non-profit boards.
LINDA L. DRILLING
Deming, NM
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SusanW1
(Michigan)
Posts:1533
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| 09/06/2008 5:03 PM |
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Of course we don't know all the particulars, but
Quote:
"The board members did the prudent thing by contacting legal counsel who recommended filing for a declaratory judgment to rule on the contentious issues."
I wonder: Didn't that attorney advise the board members about ALL the possible outcomes of the suit?
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BrianB
(California)
Posts:1591
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| 09/06/2008 5:21 PM |
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Ah yes, judges. a power unto themselves. THey need no legislature or executive branch, they can make and enforce laws on their own.
Having been in a courtroom when a judge, in dead seriousness, said "I don't care WHAT the law says, in this court, I decide what to do", i am surprised at nothing a judge does or says. In effect, there are no laws that a judge must follow at any time, they are free to follow them or not in their court.
and this one, chose not.
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GeorgerwilliamsW
(Indiana)
Posts:366
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| 09/06/2008 11:57 PM |
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Now let's go off the deep end, folks, as we are wont to do here without more information, particularly the facts, about this case.
From what I have been able to ascertain at this point, there may be an issue about the "legality of the board."
Please keep in mind that directors and officers liability insurance does not cover deliberate malfeasance or illegal activities, even if you are a "volunteer." If you break the law (as determined by a judge--whether you like the judge or not) then insurance will not cover you.
We simply don't have the facts here. If you can get more facts, please post them (and cite your source, please).
Here is a summary of the judgment:"DEFENDANT SHALL RECOVER FROM PLAINTIFF AND INDIVIDUAL MEMBERS OF PLAINTIFF'S BOARD, namely [names removed], THE SUM OF $8,812.80 FOR ATTORNEY FEES AND COSTS OF HOFACKET LAW FIRM, AND $8,488.32 FOR ATTORNEY FEES AND COSTS PAID OUT OF ASSOCIATION FUNDS TO MARTIN E THREET TOGETHER WITH INTEREST AT RATE OF 8.75%" http://www.nmcourts.gov |
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