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Subject: lawsuit against POA
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Author Messages
WillR
(Michigan)

Posts:68


04/16/2011 7:54 AM  
I just filed a lawsuit against the POA for several violation and against several individuals as individuals that are in violation of the deed restrictions. My question is now that the Association has been served does the Board have to inform the membership that the POA is being sued? Also any others, such as the insurance company and real estate companies?
Thanks
MelissaP1
(Alabama)

Posts:4772


04/16/2011 3:20 PM  
You just dropped a HUGE can of worms...Not much of it very good. Think you may want to READ some other posts on here and educate yourself on HOW a HOA/POA really works...Glad you want to take action against violators and such but your going about in the WRONG way...

Suing your HOA is suing yourself and your neighbors. If you want to know if they are going to tell the other members, see if they tell you too. Your a member are you not? POA = Property Owner's Association. Your a property owner and thus part of the association...The very same association your suing..

A HOA/POA is ONLY funded by it's members FOR it's members. It's also it's own governing entity. Which means if you had ready your CC&R's, By-laws or ACC documentation(if you have them) the options of dealing with rule violations is IN there...

What is the end result do you expect to satisfy you? Are you still under the Developer's control? I see nothing but an endless loop of lawyers/court/angry members in your future...All of which could have been avoided or remedied in a different fashion if you had just taken the time to realize what a POA is and how it operates...

Former HOA President
JonD1
(New York)

Posts:1621


04/16/2011 3:31 PM  
Will:

With the details you have provided tough to give you any response worth something.

Who did you sue? The builder or an elected Board?
And the individuals you sued who are they?
And those with violations who are they and what violations are they guilty of in your mind?
Are you or were you a member of the Board?

What court was the suit filed? Small claims? Superior court?
Was the suit preapred and filed by and attorney?
Are you seeking damages? Monetary? If so in what amount?

And just what would you hope would be the ideal ending for this matter?
What have you done to resolve this before resorting to legal action?

If you have filed your action why now does it concern you as to how the sued party responds? What role does their informing the property owners or insurance carrier concern you as the party who has brought the action?

Any other calrifications to the situation might allow people to offer advice that might prove useful.

WillR
(Michigan)

Posts:68


04/17/2011 6:03 AM  
Melissa, Yes I do understand that by suing the Association I'm in fact suing myself and neighbors. Believe me it was not my first choice. As I have posted in the past, We have two board members from one lot. Our restriction state each lot shall constitute as a single member. Yet they refuse to correct the issue and their cohorts on the board are backing them. We now have two more board member doing the same. So a total of four board member from two lots. The last one added was placed as President after the board illegally removed me. They wanted her over me since I required that we follow are by-laws and since I caught the treasurer and secretary finding funds. To discredit me they have gone about spreading lies and false accusation. I do not think it is asking to much that the board see the bills and accounts and that the is a judge for the election , a nominating committee, the returned ballots go to the judge instead of the treasurer and secretary. That as Ex Officio the President be allowed to attend all committee meetings, and have access to the Office to conduct business. That the board follow what the members have adopted at the annual meeting and conduct the association affairs as the majority of the members have requested by vote. It pains me to no end to have to go to such extreme measures, but when you have a group of cohorts whose one interest out weigh that of the association what other choice is there. I'm by no means perfect but I try to do my best. But to throw out the rules and do what ever is wrong. I'm not alone there is a large group supporting this action. Now you might say, Well why not just vote out the others, and I would refer back to who handles the ballots. Members have requested the number of vote per the number of lots they own, only to be told "that's not how we are doing it". So long story short, when all else has failed court is the only option left.
WillR
(Michigan)

Posts:68


04/17/2011 6:52 AM  
Jon,

My concerns about informing the members and such comes from the fact that they should be made aware. For the forty some years that our association has been established, the members have all respected the one lot, one member, one vote restriction. Since this new group has taking control over the past few years our restrictions and by-laws have been thrown out the window. I tried to get the board prior to my taking office to follow the by-laws. They where not have a proper election. When someone who resign they would just appoint there pal in and that was that. At the next annual meeting that person would just stay on. It wasn't until we went to mediation and the board contacted the attorney that they realized that the by-laws needed to be enforced. But that only lasted for a little while. Since more people want to be involved the group had to now find some way to insure that the vote would go their way. I what organization dose the candidate handle the return ballot? As for what my hopes are for the out come, that's easy, since this group has taken control the members have refused to get involved. I hope that the association is put back to where it was a pleasure to come to meeting and care about the place. I work hard with others to get more of the social events back up and get our clubhouse out of moth balls. I'm not in this for the money, I have even requested that the court order the treasurer and secretary to pay retribution back to the association.

Person sued; POA, four individuals who are also on the board

Court of action: Circuit court

Amount; $25,000 and a special damages in the amount of $9000.00 and $1750.00, the 25 is broken down between the five and the 9000 is divided by the three that hind funds ( in Michigan you can claim three times the amount) and the 1750 is on the treasurer alone for the pay she received and failing to do the job.

Action I tried; Talk first, mediation, an attorney that specializes in POA/HOA ( at my expense) speaking to the board, and then sending them a letter, court.

I prepared the suit and filed. I spend hours and hours on research and cases, supporting facts and evidence.

My concerns on if the members are informed is because I have tried to take great care in insuring that the effect on the whole is and little as possible. I'm do not want someone to lose a sale of the place because of a lawsuit nor the insurance premiums go up. All because a group of cohorts are acting in their own interest.

Since I was illegally removed by the board and not by vote of the members. The members have only been told lies as to why they did what they did. The minutes do not even state a reason. How can they? I caught them hiding funds. What are they going to say, "We got caught so we got rid of the person the found out so we can continue to hide more"!

Not only did they remove me but they held a Kangaroo court to have all my privileges removed so that I would not have contact we other members to inform of my finds.

There is only so much we as members can take from a out of control group. Check the post on this site of the number of boards that have gotten so arrogant with power they have forgotten who they are working for. I at a last resort that the court has to get involved then rest assured its reached that point that if suing yourself is what it takes then do it! It may hurt for awhile but it better then letting the cancer grow!
GlenL
(Ohio)

Posts:5088


04/17/2011 8:06 AM  
Will if you want to inform the other members, simply write them a letter informing them of what you have done, refer them the the county court site where they can read the filings for themselves. Yes it will cost you a bit of copying and postage but this way you can be sure the people will have the opportunity to see your side.

P.S. Be sure you have someone proof your letter before you copy and mail it. I know there is no edit function here but if your letter looks like your posts IMHO you will not get a positive response.

"Common sense is like deodorant--the people who need it most never use it."
JonD1
(New York)

Posts:1621


04/17/2011 9:25 AM  
Posted By WillR on 04/17/2011 6:52 AM
Jon,

My concerns about informing the members and such comes from the fact that they should be made aware. For the forty some years that our association has been established, the members have all respected the one lot, one member, one vote restriction. Since this new group has taking control over the past few years our restrictions and by-laws have been thrown out the window. I tried to get the board prior to my taking office to follow the by-laws. They where not have a proper election. When someone who resign they would just appoint there pal in and that was that. At the next annual meeting that person would just stay on. It wasn't until we went to mediation and the board contacted the attorney that they realized that the by-laws needed to be enforced. But that only lasted for a little while. Since more people want to be involved the group had to now find some way to insure that the vote would go their way. I what organization dose the candidate handle the return ballot? As for what my hopes are for the out come, that's easy, since this group has taken control the members have refused to get involved. I hope that the association is put back to where it was a pleasure to come to meeting and care about the place. I work hard with others to get more of the social events back up and get our clubhouse out of moth balls. I'm not in this for the money, I have even requested that the court order the treasurer and secretary to pay retribution back to the association.

Person sued; POA, four individuals who are also on the board

Court of action: Circuit court

Amount; $25,000 and a special damages in the amount of $9000.00 and $1750.00, the 25 is broken down between the five and the 9000 is divided by the three that hind funds ( in Michigan you can claim three times the amount) and the 1750 is on the treasurer alone for the pay she received and failing to do the job.

Action I tried; Talk first, mediation, an attorney that specializes in POA/HOA ( at my expense) speaking to the board, and then sending them a letter, court.

I prepared the suit and filed. I spend hours and hours on research and cases, supporting facts and evidence.

My concerns on if the members are informed is because I have tried to take great care in insuring that the effect on the whole is and little as possible. I'm do not want someone to lose a sale of the place because of a lawsuit nor the insurance premiums go up. All because a group of cohorts are acting in their own interest.

Since I was illegally removed by the board and not by vote of the members. The members have only been told lies as to why they did what they did. The minutes do not even state a reason. How can they? I caught them hiding funds. What are they going to say, "We got caught so we got rid of the person the found out so we can continue to hide more"!

Not only did they remove me but they held a Kangaroo court to have all my privileges removed so that I would not have contact we other members to inform of my finds.

There is only so much we as members can take from a out of control group. Check the post on this site of the number of boards that have gotten so arrogant with power they have forgotten who they are working for. I at a last resort that the court has to get involved then rest assured its reached that point that if suing yourself is what it takes then do it! It may hurt for awhile but it better then letting the cancer grow!




Will:

Let me start with the fact some of what you have posted is hard to follow. Some of the details YOU understand well are difficult for at least me to understand from your posts.

Let me make a few points. With the filing of your suit it is possible this might hinder or prevent some of your neighbors ability to find buyers who might apply for a mortgage. With the restrictions and guidelines in place today many lenders may not want to give out mortgage money with a suit filed. Some use it as an excuse.

And IF the Board were to file now a claim with the insurance carrier for your property it MAY result in the costs of your master policy increasing. Again, this would depend on if your policy carries D&O coverge and IF they make a claim.
In that case the carrier would need to determine whether they would cover the legal costs of answering such a suit.

The one lot, one vote rule would seem to me to be applying to the vote of members on an issue affecting the entire property. As in an annual election.
Your concern as to two parties serving on the Board as owners of the same lot well that might be a different thing entirely. Is that addressed in any way in your documents? How about state law? Is that a good situation probably not is it violating the documents or law if you have studied up on this you should know the answer.

As to appointing Board members under many documents this is allowed and the person is then able to serve out the full term of the person they replaced. Again, is this in direct violation of your documents? State law?

As to your concern about the other property owners being informed. My suggestion would be the same as the one already provided you. Do the informing yourself. Whatever information the Board might provide will have their spin on it and you should be able to give the facts, CLEARLY and in a simple manner. As suggested I would ask someone to review your notice because as I suggest when we send out information you have to write down to the levle of your audience. Most people don't have the knowledge of details or degree of concern you have. The problem being will they ever? Today many people have little interest in getting imvolved.

Some questions:
Were you voted onto the Board by the property owners?
How were you removed? Did the owners have anything to say about this?
How have your "privileges" been removed? What are we talking about that prevennts you from contacting other owners or informing them?

In Michigan you can sue individuals serving on a HOA or POA Board personally?
In NY you cannot. As many Boards full under the business judgment rule and are not liable as individuals.

When you state I believe that Board members are "hiding" funds could you explain that? You state you are asking the court to order restitution that would suggest something has been mishandled in the way of property funds. Is that your claim?

So hiding funds accomplishes what for the members of this Board? Do you know?
Why would they go to the effort required to "hide" funds for what purpose.

How many units do you have?
How many people actually support YOUR efforts?

Will in the end if the other property owners fail to take an interest in their own homes and investments what will really change. IF this becomes a one person crusade not only will the suit do damage to your property but what will occur after the suit is settled one way or the other? Anything really positive going to happen if you win? How about if you don't?





WillR
(Michigan)

Posts:68


04/17/2011 1:11 PM  
Jon, Sorry about the clarification, I try to do better.

I was re-elected at the annual meeting last year by the membership, the person running against me was one of the groups pal's a co-owner of the lot with the treasurer. At the next board meeting, the secretary had made up the agenda, the board refused mine, on her's was removal of the President. After objections by some (not the group)the board proceeded to press the matter and with the secretary leading the pack , I was given a few minutes to state may case and then they voted (4-3), two votes from the one lot people, (the secretary and her husband: who I had removed as a chairmen of a committee last year but she had her cohorts overturn with out and meeting nor minutes). He was removed for turning the pool heat up to 93 degrees with out notice to the member of the temp nor informing me the he had, and he then instructed the pool attendant to falsify the report showing the temp as 83. Her husband also wanted to purchase a safety pool cover which the DNRE would rather us not have and it cost over $3000.00.
In May 2009, oddly enough the exact amount was sequestered from all the treasurers reports (her and the secretary are the only ones on the budget and finance committee and refuse to allow anyone else), in March 2010 it was proven that the cover was not needed and surprise that same amount now became a "deposit adjustment" yet for the whole time all the bank statements reflected the money. I was able to get the statements from the bank and when I requested them I learned that the treasurer had a second account in the association name with only her on it. So it may have been hidden for any reason. After some discussion with other members and a director, I chose to have the police look into the matter. In Michigan you can hide funds.
So the board of cohorts removed me. Changed the locks to the clubhouse and put their pal in office.
The majority of our members are part timers coming up mainly in the summer months. We have tried to get a members list but the board refuses.
As for the removal of privileges, that was done in an executive session which I did not nor will not attend since all action of this board are illegal(per the attorney I had who is a specialist in association POA / HOA's) and since they where going to do whatever anyway, according to the secretary.
What is accomplished by all of this, well its not a one man crusade there are a lot of members that are aware of the boards action and are 100% behind me. It hurts me that someone sale or purchase maybe effected but that goes both ways. We do have D/O insurance and the attorney I had told the board not to count on it for the cost since they are knowingly violating the restrictions and by-laws plus the state law.
Bottom line is, as much as it hurts to have to turn to the courts, when compromise and honesty fail, justice must prevail. As for if I lose, by not following through and staying with the status quo we would have lost too!



JonD1
(New York)

Posts:1621


04/17/2011 3:56 PM  
Posted By WillR on 04/17/2011 1:11 PM
Jon, Sorry about the clarification, I try to do better.

I was re-elected at the annual meeting last year by the membership, the person running against me was one of the groups pal's a co-owner of the lot with the treasurer. At the next board meeting, the secretary had made up the agenda, the board refused mine, on her's was removal of the President. After objections by some (not the group)the board proceeded to press the matter and with the secretary leading the pack , I was given a few minutes to state may case and then they voted (4-3), two votes from the one lot people, (the secretary and her husband: who I had removed as a chairmen of a committee last year but she had her cohorts overturn with out and meeting nor minutes). He was removed for turning the pool heat up to 93 degrees with out notice to the member of the temp nor informing me the he had, and he then instructed the pool attendant to falsify the report showing the temp as 83. Her husband also wanted to purchase a safety pool cover which the DNRE would rather us not have and it cost over $3000.00.
In May 2009, oddly enough the exact amount was sequestered from all the treasurers reports (her and the secretary are the only ones on the budget and finance committee and refuse to allow anyone else), in March 2010 it was proven that the cover was not needed and surprise that same amount now became a "deposit adjustment" yet for the whole time all the bank statements reflected the money. I was able to get the statements from the bank and when I requested them I learned that the treasurer had a second account in the association name with only her on it. So it may have been hidden for any reason. After some discussion with other members and a director, I chose to have the police look into the matter. In Michigan you can hide funds.
So the board of cohorts removed me. Changed the locks to the clubhouse and put their pal in office.
The majority of our members are part timers coming up mainly in the summer months. We have tried to get a members list but the board refuses.
As for the removal of privileges, that was done in an executive session which I did not nor will not attend since all action of this board are illegal(per the attorney I had who is a specialist in association POA / HOA's) and since they where going to do whatever anyway, according to the secretary.
What is accomplished by all of this, well its not a one man crusade there are a lot of members that are aware of the boards action and are 100% behind me. It hurts me that someone sale or purchase maybe effected but that goes both ways. We do have D/O insurance and the attorney I had told the board not to count on it for the cost since they are knowingly violating the restrictions and by-laws plus the state law.
Bottom line is, as much as it hurts to have to turn to the courts, when compromise and honesty fail, justice must prevail. As for if I lose, by not following through and staying with the status quo we would have lost too!


Will:

Sounds like you have quite the can of worms up there. I still have no idea how the Board members removed you. In many cases they can remove you from an officer's position but not from the Board as a member. Depends on your documents. And if you are willing to see them enforced.

As to a members list you could try to access the owners through the county property records with in many cases are available online. In NY I have access through the county clerk's office with parcel mapping and owner information to all properties in the county.

What "privileges" have been taken from you? And what authority have they to do so?

Once presented to the insurance company as a claim the insurance company will have to determine whether this suit is covered. That should be an interesting call.

Will:

My questions about whether this will truly accomplish something comes from personal history. I joined my Board out of curiosity 25 years ago. After a short time I found it to be a closed off boys club that served their own agenda and allowed the contrators and service providers to milk the property as long as they were getting theirs. Combined they had the mental power of a ant. But they held all the cards then and did as they wanted without a challenge. Now I was outnumbered 8-1 and certainly not welcomed with open arms. And support from the other owners well they were deaf, dumb, blind and lazy. This would have contniued up till today if not for my decision to change things. As I worked a full time job then and had limited time it took some time to get things moving. I had to find people who would support me and get them to serve on the Board. I had to learn the details of the property and the legal aspects of what I needed to do. I had to build some support for my agenda and get some people who always voted to support the existing Board to listen and change their views. I needed a plan and time. Well Will it took me 14 YEARS to first remove the President and VP and Treasurer in an election. After the President and VP had served in their capacity for over 20 years. We then had a majority and fired the MC to clean house completly. Now I serve as President with a small group that serves the property's best interest.

So change can be accomplished no matter what the situation IF you are willing to work rather that flap your gums about what should be and could be if only the world was the way you saw things. I know because I did it. No need for laws to be changed. No need to change the By-Laws. Bottom line if there is a problem work to fix it or change it, if not don't bother to whine and complain because you lack the motivation, knowledge or determination to get done what needs to happen. IMO to many people want someone else to do the work they have decided needs to be done.

My concern Will as has happened in my case after all the dust has cleared where will you be and where will the property find itself. As a matter of habit I look at issues from the ending back. IF you are successful do you plan to carry the agenda of this Board going forward? Do you have people willing, ready and able to serve on the Board? It appears to me even if successful the current Board members may be left in their current positions. What do you plan to do then?

And if you are successful do you think these folks will just pack up or ride off into the sunst quietly? I have my doubts.

And IF your suit fails what then. IF they have an attorney representing them it might be a different battle between what is right and wrong rather what is legal and permissable under the current documents and law. Quite a difference many people fail to consider.

IMO this might be a long drawn out battle. The lawsuit is just the first battle of what I would guess might be many. I know because I have been there.

Do yourself a favor and consider the cost along with time and effort in your life and then if you are willing to carry that well then good luck.

I have found while many appreciate what it is YOU are willing to do few will be willing to join you in the sacrifice and consequences. And in the end in most cases when you stop the effort stops and the old bad habits that were allowed to develope while the owners sat by and did nothing will begin again.

That's my two cents for what it's worth...........
MelissaP1
(Alabama)

Posts:4772


04/17/2011 5:58 PM  
If the people are truly behind you on this, then the ONLY way you MIGHT be successful in suing your HOA, is IF it is a CLASS ACTION case. This mean you need to get MORE members involved in your lawsuit in the HOA. The more PAYING members in your lawsuit the better. You ALL can share in the legal costs. Otherwise, don't believe everyone at face value with agreeing with you 100% if they aren't willing to put up with legal costs too.

I've been in your shoes before. Had an illegal unnecessary special assessment. The new board did do the whole lie and decieve thing to get it to pass. I did have to hire a lawyer and had a special meeting with those supporters. I had 1 person donate money to the cause. I lost before we even got to court because they did gather the votes no matter how deceiptful they were about it. We are talking some AMAZING laughable made up stuff...

A few months AFTER the whole mess happened and the work completed, the members saw what had happened to them. It was really sad as I had spent years protecting them from these "people". I soon received numerous phone calls of apologies. It didn't compare to the irate meetings those board members had to sit through for months...

Sometimes, you just have to step back and let them hang themselves. It will happen if they are doing wrong. It happened with my former HOA...They got exactly what they asked for and I appreciated every last minute of it...

Former HOA President
JanetB2
(Colorado)

Posts:1962


04/17/2011 11:01 PM  
Hi Will:

As you apparently understand that in essence suing your HOA is utilizing money that you and all your neighbors pay for assessments I will not go into that issue.

You stated you have issues with two board members from one lot. You need to be aware in many states there are numerous other associations who also have more than one board member from each lot. While your CCR’s state each lot shall constitute as a single member, you need to potentially realize that is with regards to the HOA membership, voting at the annual HOA member meetings, and HOA state statutes. Unless your corporation documents such as the “By-Laws” do not allow more than one individual from the same lot/unit to serve on the “board of directors” …

With regards to your question “Does the Board have to inform the membership that the POA is being sued?”: In essence yes they should inform, as the members will be the individuals paying for any said legal fees for your lawsuit.

Are you Condo or single family home HOA?

WillR
(Michigan)

Posts:68


04/18/2011 10:22 AM  

Thank you all for your input, I will try to answer each point.
1. How they removed me is still perplexing; They voted me out in July 2011, at the regular board meeting. In August I had an attorney attend the meeting and he explained that the board is an illegal board and that they did not have the power under Michigan laws to remove an officer, only the membership can. the board then contacted the associations attorney and he explained that to them in a letter in October, He stated that they could only suspend, but the "bell had been rung", they change the lock to the clubhouse, posted a request to find a replacement ( just for show since they already had the person they wanted), removed me from all contact list and the bank account. Sound like a removal. I was told I was removed. So In January 2011, They put in their pal, and stated that since I had not attended any meeting for three month I was now really removed. So removed?, suspend?,or removed. Legally none of the above!

2. As far as the two members from one lot. Each lot gets one membership which is one member. The state laws covers joint tenants and tenant in common and is the same one lot one vote as agreed upon. To be on the board each position requires the person to be a member and in good standing. We are a POA and non-profit and fall under PA 162 of 1982. True some places have more than one but they fall under what is know as "freeholder" and in those cases each person on the title or deed has the right to be a member.

3. The members that are in support are good people and feed up with the association and this board. The ones who do not know of all of this, hopefully soon will and join the crusade. The secretary and her pals refuse to put anything into the minutes, so its not the member fault for not knowing. But they soon will know.

4. The hidden funds issue, the treasurer claims it was just a "deposit error", for ten months starting in May 2009, $3000.00 failed to be reported on her treasurer report. She according to the by-laws is to balance the books and account every three months (each quarter). In March of 2010, the word got out that a pool cover (costing that very amount) was not needed and at the March meeting the treasurer and secretary stated that we had extra funds in the amount of $3000.00 and we should think about maybe a money market or CD. Some board members wanted to find out more of which would give the best rates so the matter was tabled . At the Aprils meeting she reluctantly informed the board about a $3000.00 so call Deposit error). We assume it was for the pool cover but who really knows her intent, and since we later learned of a second account with only her as a signer. Well you can do the math. But I was always told if it has a bill and webbed feet its a duck!

5. True, the battle is a costly one in every aspect. TIME, MONEY AND SANITY, but when all the nice nice talk fails and you have bent over backwards to compromise and work for the whole not the one, then as a last resort you go the next step. I pry that this will do several things. get the POA back on track and return to what we use to have and open honest and caring board that but in the time and effort for the good for all. And may be serve as a wake up call to those who think that they will just pay their dues and let someone else carry the load. More people have wanted to and have tried to be on the board but were belittled or degraded by the current group. If those involved are removed "yes" there are replacements standing by to do the job. Just an example, at the last election a very nice lady wanted to run for treasurer, she has the experience and well to do for the job. Yet the current treasurer and secretary harassed her so bad that she said it was just not worth the effort. Why put yourself in front of the firing line. And then there are some that as long as this group is in office they do not want to have their name tarnished by association.

In conclusion, I had hoped it would not of had to come to this drastic measure, but if it is to continue the association just be be in a worse case seniro and even have to dissolve.
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