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EdR
(Texas)
Posts:170
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| 04/22/2006 8:48 AM |
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If a director of a board is sued for misconduct or malfeasance of duties on the board, not enforcing deed restrictions, civil conspiracy, etc. and the lawsuit is against the board and then individually against a particular director, can that individual director, on or off, the board have statutory immunity? Exactly what is statutory immunity? Since HOAs are non-profit corporations, they still are corporations and the directors are elected---doesn't statutory immunity apply if you are a volunteer (like the good samaritan act sort of thing)? How can he/she ride on the coat-tails of the board's insurance individually if sued both ways?
EdR |
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RogerB
(Colorado)
Posts:3726
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| 04/22/2006 5:05 PM |
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You are getting into quite a technical legal question here Ed. I'm certainly not qualified to give a good answer. Perhaps Tom or Loura with HindmanSanchez will see your question an give some insights.
FWIW I think statutory immunity provides protection from prosecution by statute. HOA that are incorporated may provide via a corporate shield when properly worded. HOAs also provide indemnification in the bylaws with language similar to the following. Note the statement "No indemnification shall be provided for acts constituting gross negligence, or for fraud, or for more reprehensible conduct."
The Association shall indemnify every director, officer, agent and employee, and any former director, officer, agent and employee, against all loss, costs and expenses, including attorney's fees, reasonably incurred in connection with any action, suit, or proceeding to which such person may be made a party by reason of being or having been such a director, officer, agent or employee of the Association, except for matters in which such person shall be finally adjudged to be liable for gross negligence or fraud. Any such indemnity shall be limited to and may only be paid out of the insurance proceeds provided by an insurer furnishing officers and directors errors and omissions insurance coverage and any other insurance protecting the Association from liability because of the negligent acts of its servants, including insurance covering motor vehicles or public liability, property damage, medical and other similar coverage, it being the intent and purpose of this provision to limit all payments or settlements in indemnification to the actual proceeds of insurance policies. No indemnification shall be provided for acts constituting gross negligence, or for fraud, or for more reprehensible conduct. In the event of a settlement, the settlement shall be approved by the insurance carrier and paid for by the insurance carrier out of the insurance proceeds. The foregoing rights shall not be exclusive of other rights to which such director, officer, agent or employee may be entitled. |
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Roger Borcherding
Official HOATalk.com Sponsor
DARCO Property Management (Colorado)
(303) 925-0150 
*See legal notice below (end of page) or go to www.hoatalk.com/legal |
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RogerB
(Colorado)
Posts:3726
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| 04/22/2006 5:22 PM |
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I left out key words in the last post.
HOAs, THEIR BOARDS, AND THEIR MEMBERS DO NOT HAVE STATUTORY IMMUNITY. THOSE that are incorporated may provide SOME PROTECTION via a corporate shield when properly worded. HOAs also provide indemnification in the bylaws with language similar to the following. |
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Roger Borcherding
Official HOATalk.com Sponsor
DARCO Property Management (Colorado)
(303) 925-0150
*See legal notice below (end of page) or go to www.hoatalk.com/legal |
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KathleenF
(Illinois)
Posts:19
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| 04/28/2006 11:41 AM |
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I just want to remind us that "statutory immunity" is a question of state law. We must look to the specific language of the relevant statute in our own state. In fact, we must look to two different state law issues: indemnification and immunity.
For example, the state law Roger quotes is very different from the laws here in Illinois.
There are a number of ways to get free access to our state's Public Acts--on any topics. The state government website is a good place to start. We can Google: "(state name) Public Acts." |
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RogerB
(Colorado)
Posts:3726
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| 04/28/2006 12:37 PM |
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| Kathleen, I agree except I did not quote a state statute, just an HOA By-law which provides indemnification except for fraud, willful wrongdoing, etc. Immunity is not the same as indemnification; HOAs can provide indemnification but not immunity. |
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Roger Borcherding
Official HOATalk.com Sponsor
DARCO Property Management (Colorado)
(303) 925-0150
*See legal notice below (end of page) or go to www.hoatalk.com/legal |
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KathleenF
(Illinois)
Posts:19
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| 06/12/2006 1:53 PM |
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Sorry, Roger, I did miss the fact that you were quoting someone's Bylaws, not a state law.
Like you, I was trying to point out that there is a difference between indemnification and immunity. In order to hold any board member personally financially responsible, the complaining shareholder has to hurdle the obstacles imposed by both indemnification laws (and/or Bylaws) and immunity laws (also called "limited liability" laws).
Ed: I agree with Roger that this issue gets quite technical, and that you will need individual legal advice. You should be able to get a free consultation from a HOA attorney, since this is potentially a fee-generating case--IF you can find one that represents individual homeowners (rather than just boards). Not so easy . . .
If not, perhaps a nearby law school has a housing law clinic. There is a growing academic interest in the civil rights aspects of HOA issues and, with that, some free and low-cost help for individual homeowners popping up here and there. The John Marshall Law Clinic in Chicago has such a program and might be able to help you launch a search for local help. Good luck!
Some states are considering state-financed enforcement mechanisms (e.g., through the state Attorney General's office) for protecting the civil rights and contract rights of individual HOA residents. It's a long, long shot, but is there any chance your state already has done this?
Then, of course, there's the question of the scope and limitations of the board's errors and omissions insurance (including the deductible) . . .
Kathleen
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