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Subject: Sue homeowner for causing Special Assessment?
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KenM15
(California)

Posts:5


06/10/2019 3:07 PM  
The title says it all - a couple disgruntled residents caused an uproar, and abused our bylaws to force a recall vote of the HOA board. It was clearly very personal, and they lost by an overwhelming majority, but the whole ruckus cost the HOA $100K in both attorney's fees and then a special election. I know the HOA board wants to just put this behind them, but I don't! Could we get the board to call for a special assessment, so that we can turn around and sue to recover the money from the individuals who caused this mess?

And a follow-on question. Has anyone been able to push to convert many of these CCR clauses to arbitration to avoid legal battles?
JohnT38
(South Carolina)

Posts:107


06/10/2019 3:29 PM  
How did they abuse the bylaws and why do you feel you have a case to sue? No disrespect intended but your original post is all emotions and no facts.
NpS
(Pennsylvania)

Posts:3658


06/10/2019 3:34 PM  
Posted By KenM15 on 06/10/2019 3:07 PM
Could we get the board to call for a special assessment, so that we can turn around and sue to recover the money from the individuals who caused this mess?



Recovering from those who caused the mess should have been part of the settlement agreement, or if it went to court, part of the judge's ruling. IMO, the opportunity is past.
Anyway, do you think your owners have an appetite to spend more money they might not recover after paying $100k?

Sikubali jukumu. Read all posts at your own risk.
MarkM19
(Texas)

Posts:403


06/10/2019 3:37 PM  
The only winners will be the Lawyers. If you are not one then just take your lumps.

I am struggling to remember the correct term so you can research these 2 to see if it fits your specific case.

SLAPP or Anti SLAPP lawsuits
SheilaJ1
(South Carolina)

Posts:110


06/10/2019 3:50 PM  
With NPS on this.

You missed the chance. Even if you did do it at the right time, you have almost no chance of recovering the fee's.

Pay the assessment and vote better board members next time.

KenM15
(California)

Posts:5


06/10/2019 4:11 PM  
OK, so more detail. A small but very vocal group hired an attorney to send a letter accusing the board of spending too much to update the clubhouse without a member vote, and not following the procedure strictly. Really petty stuff. The board spent $50K to have the attorney defend their position with letters of their own to show that a vote wasn't required. Nothing actually went to trial - almost certainly because they had no chance to win. Then the group gathered enough names on a petition to force a recall vote, which cost another $50K to mail, count, etc. That was unsuccessful also - the BOD supporters won by a landslide. So now I'm wondering: 1) do I have any recourse? I have prepaid legal assistance through my work place. Can I personally sue these knuckleheads?; and 2) how can we avoid this abuse by the minority? Forced arbitration?
NpS
(Pennsylvania)

Posts:3658


06/10/2019 4:11 PM  
Posted By MarkM19 on 06/10/2019 3:37 PM
The only winners will be the Lawyers. If you are not one then just take your lumps.

I am struggling to remember the correct term so you can research these 2 to see if it fits your specific case.

SLAPP or Anti SLAPP lawsuits





See http://www.dmlp.org/legal-guide/anti-slapp-law-california

Sikubali jukumu. Read all posts at your own risk.
RichardP13


Posts:0


06/10/2019 4:24 PM  
Posted By KenM15 on 06/10/2019 4:11 PM
OK, so more detail. A small but very vocal group hired an attorney to send a letter accusing the board of spending too much to update the clubhouse without a member vote, and not following the procedure strictly. Really petty stuff. The board spent $50K to have the attorney defend their position with letters of their own to show that a vote wasn't required. Nothing actually went to trial - almost certainly because they had no chance to win. Then the group gathered enough names on a petition to force a recall vote, which cost another $50K to mail, count, etc. That was unsuccessful also - the BOD supporters won by a landslide. So now I'm wondering: 1) do I have any recourse? I have prepaid legal assistance through my work place. Can I personally sue these knuckleheads?; and 2) how can we avoid this abuse by the minority? Forced arbitration?



Are you saying that members should not be able to question whether a Board is operating correctly, or maybe, in this case, legally?
NpS
(Pennsylvania)

Posts:3658


06/10/2019 4:29 PM  
Posted By KenM15 on 06/10/2019 4:11 PM
OK, so more detail. A small but very vocal group hired an attorney to send a letter accusing the board of spending too much to update the clubhouse without a member vote, and not following the procedure strictly. Really petty stuff. The board spent $50K to have the attorney defend their position with letters of their own to show that a vote wasn't required. Nothing actually went to trial - almost certainly because they had no chance to win. Then the group gathered enough names on a petition to force a recall vote, which cost another $50K to mail, count, etc. That was unsuccessful also - the BOD supporters won by a landslide. So now I'm wondering: 1) do I have any recourse? I have prepaid legal assistance through my work place. Can I personally sue these knuckleheads?; and 2) how can we avoid this abuse by the minority? Forced arbitration?



Sorry Ken. I'm having trouble counting all the knuckleheads. $50k to mail, count, etc. on a recall vote. Give me a break.
Rather than ask here, why not contact your prepaid assistance provider and find out if they cover you for HOA retaliation lawsuits?
There is such a thing as mandatory arbitration, but only if it's agreed by the parties in advance, typically by contract. Do you have a contract that requires it?
Have you explored what D&O insurance there was and whether it was pursued? Why should the HOA pay if insurance covered it? Maybe because the knuckhead minority didn't plan very well and cost everyone a lot of money.

In summary, don't be a knucklehead yourself. If you don't understand enough, admit it and accept it. You could spend a lot more and have nothing to show for your efforts.

Sikubali jukumu. Read all posts at your own risk.
MarkM19
(Texas)

Posts:403


06/10/2019 4:29 PM  
Ken,
So how old is your association? What are your reserves levels? Was this money spent out of reserves? When you say update is can be misleading. Was the structure repaired or completely modified? It makes a difference as to weather Reserve funds should have been used or not. What is your annual budget? In Ca. I believe the Law is the board can not spend more than 5% of the annual budget on a capitol improvement without a vote of the homeowners.

If I am wrong I am sure someone here will state the exact numbers.
RichardP13


Posts:0


06/10/2019 4:33 PM  
10 years ago my former association got involved in a neighbor to neighbor dispute that ended up costing the association $250K in legal fees. The Board and management company tried to disguise the costs as liens and foreclosures. Most of the community never read the annual reports and would never question the expenditure. A couple did, myself included. It did cost money to fix the problem or on the Board's side to fight the changes. That's part of business when lawyers are called in.
KenM15
(California)

Posts:5


06/10/2019 4:38 PM  
Question it - absolutely! And that all happened - many meetings, lots of questions, which the BOD and other members dutifully gave answers to. LOTS of public discussion on NextDoor, Facebook, etc. which was again very supportive of the clubhouse remodel. And lots of legal opinion that the BOD acted very normally and reasonably. The problem is that instead of ending there, it became very personal and nasty, and kept escalating. There has to be a balance - no vote is ever unanimous! How do you prevent the 'losers' in every election from destroying your association just to spite the winners?
RichardP13


Posts:0


06/10/2019 4:43 PM  
If what you say is true and I have no reason to doubt it, the Board and association threw away $50K in election costs.
KenM15
(California)

Posts:5


06/10/2019 4:59 PM  
Yes the remodel was expensive, but not over the 5% limit. The clubhouse is about 50 years old, so entirely justified. I'm not saying the BOD was perfect (no relation - just a supporter of our volunteers) but darnit this was an awful mess. Surely there is a better way!
RichardP13


Posts:0


06/10/2019 5:03 PM  
The association's attorney butchered this thing. But, remember, they are in it for the money!
KenM15
(California)

Posts:5


06/10/2019 5:08 PM  
NPS - fair enough. I see your point that suing them will add more fuel to the fire. So lets focus on the long game here - how do we change our bylaws to avoid this mess in the future? Does anyone have experience with adding arbitration as a step before more action can take place? Can we add a rule that if you keep going after arbitration that the HOA can recover legal fees if they are successful?
RichardP13


Posts:0


06/10/2019 5:27 PM  
How many homes in your complex?
NpS
(Pennsylvania)

Posts:3658


06/10/2019 5:30 PM  
Posted By KenM15 on 06/10/2019 5:08 PM
NPS - fair enough. I see your point that suing them will add more fuel to the fire. So lets focus on the long game here - how do we change our bylaws to avoid this mess in the future? Does anyone have experience with adding arbitration as a step before more action can take place? Can we add a rule that if you keep going after arbitration that the HOA can recover legal fees if they are successful?



Best resource in CA
- https://www.davis-stirling.com/HOME/ADR-Menu

Sikubali jukumu. Read all posts at your own risk.
NpS
(Pennsylvania)

Posts:3658


06/10/2019 5:32 PM  
Posted By NpS on 06/10/2019 5:30 PM
Posted By KenM15 on 06/10/2019 5:08 PM
NPS - fair enough. I see your point that suing them will add more fuel to the fire. So lets focus on the long game here - how do we change our bylaws to avoid this mess in the future? Does anyone have experience with adding arbitration as a step before more action can take place? Can we add a rule that if you keep going after arbitration that the HOA can recover legal fees if they are successful?



Best resource in CA
- https://www.davis-stirling.com/HOME/ADR-Menu



See also
- https://www.echo-ca.org/educational-topics/alternative-dispute-resolution

Sikubali jukumu. Read all posts at your own risk.
DouglasK1
(Florida)

Posts:1439


06/10/2019 5:52 PM  
Posted By KenM15 on 06/10/2019 4:11 PM
I have prepaid legal assistance through my work place. Can I personally sue these knuckleheads?


You can pretty much sue anybody for anything. Your chances of prevailing is what you really want to know. Since you have a legal professional available, I would suggest talking to them. They can examine the facts in more detail than we can here, and give an opinion that is more informed by local laws and case law.

Escaped former treasurer and director of a self managed association.
PaulJ6
(New York)

Posts:273


06/10/2019 5:53 PM  
Posted By KenM15 on 06/10/2019 3:07 PM
The title says it all - a couple disgruntled residents caused an uproar, and abused our bylaws to force a recall vote of the HOA board. It was clearly very personal, and they lost by an overwhelming majority, but the whole ruckus cost the HOA $100K in both attorney's fees and then a special election. I know the HOA board wants to just put this behind them, but I don't! Could we get the board to call for a special assessment, so that we can turn around and sue to recover the money from the individuals who caused this mess?

And a follow-on question. Has anyone been able to push to convert many of these CCR clauses to arbitration to avoid legal battles?




So you'd have a special assessment. As long as it's validly adopted, what basis would you have to sue someone? Causing the board to validly adopt a special assessment means....that you have a special assessment that you have to pay. Not grounds for a lawsuit.

$100,000 was spent for attorneys' fees...but unless the board had decided to "lawyer-up", zero would have been spent.

I say let it go.
SamE2
(New Jersey)

Posts:145


06/10/2019 5:59 PM  
If I was on the Board I would have sent an message that we disagreed and informed the insurance company. Don't know the size or budget but spending $50k to dispute an owners complaint sounds very excessive to me. Obviously the $50k spent to justify the spending didn't satisfy anyone. Like it or not they have a right to recall so that is what it is.
AugustinD


Posts:1905


06/10/2019 6:07 PM  
Posted By KenM15 on 06/10/2019 4:11 PM
OK, so more detail. A small but very vocal group hired an attorney to send a letter accusing the board of spending too much to update the clubhouse without a member vote, and not following the procedure strictly. Really petty stuff. The board spent $50K to have the attorney defend their position with letters of their own to show that a vote wasn't required. Nothing actually went to trial - almost certainly because they had no chance to win. Then the group gathered enough names on a petition to force a recall vote, which cost another $50K to mail, count, etc. That was unsuccessful also - the BOD supporters won by a landslide. So now I'm wondering: 1) do I have any recourse? I have prepaid legal assistance through my work place. Can I personally sue these knuckleheads?; and 2) how can we avoid this abuse by the minority? Forced arbitration?


First, California's Davis-Stirling Act has relatively exacting procedures for keeping disputes out of court. If you skim through the links here https://www.davis-stirling.com/HOME/ADR-Menu, you will see that California law requires that the HOA attempt internal dispute resolution (IDR) and if still needed, Alternative Dispute Resolution (ADR). The ADR takes the form of either mediation or arbitration.

Second, If the HOA attorney billed the HOA for $50k to write letter after letter to these folks, I'd say the problem may be the HOA attorney coupled with inadequate intelligence on the part of the HOA attorney's client (the HOA, as represented by the board).

Third, if the board spent $50k to conduct a recall vote, I'd like to see a breakdown of the costs. This seems exorbitant.

Fourth, I do not believe the California anti-SLAPP statute applies to HOAs or condos. Anti-SLAPP statutes try to protect people who are speaking out about public issues. "Public issues" has an exact meaning here. HOA issues are generally considered private, corporate issues.

Fifth, I do not think you have grounds to sue these folks. I mean, what issue would you raise in the demand letter that is always required (if one's attorney is the least bit competent)? All I can see the demand letter saying is something like: "Dear neighbor Frank Frivolous and Tom Troublesome, You forced my HOA's attorney to respond repeatedly to frivolous concerns you have. You forced my HOA to run an expensive recall election. On the one hand, I grant that you have a right to ask that the Board follow the correct procedure for spending HOA funds. You also have the right to petition for a recall election. On the other hand, this was *&^%$# expensive! I want my share of what the HOA spent back, and from you! Please send a check in the amount of $1000 to me at my address. If you do not pay me by August 1, I will have to take you to court. Yours, Kindly Ken"
RichardP13


Posts:0


06/10/2019 6:13 PM  
Posted By SamE2 on 06/10/2019 5:59 PM
If I was on the Board I would have sent an message that we disagreed and informed the insurance company. Don't know the size or budget but spending $50k to dispute an owners complaint sounds very excessive to me. Obviously the $50k spent to justify the spending didn't satisfy anyone. Like it or not they have a right to recall so that is what it is.



To obtain $50K in election costs, their association has to be 4000-5000 homes. It is possible.
MelissaP1
(Alabama)

Posts:8503


06/10/2019 7:25 PM  
This ship has sailed. Time to pick up the pieces and just move on. The whole situation was just handled badly all around. Hopefully use this as a "learning experience". Otherwise you all doomed to repeat this.

I am actually tired of posting this... Suing your HOA is suing yourself and your neighbors. In this case there was never a real lawsuit. Just a bunch of letter writing campaigns using legal resources. All this "macho mas macho" stance just bites everyone in the end.

If the HOA knew a bit more what it was doing, there could have been better options. If this had gone to court, the court would decide who pays the legal expenses. It has to be asked for during the court process. Each party could have paid their own or paid the others. Again did not go to court so that option is gone.

The HOA basically caused it's own special assessment by incurring it's legal expenses. In certain cases, this could be considered "damages" but it has to be the most frivolous lawsuit on the planet brought against the HOA. This doesn't sound like it fits that bill. There was a procedural process as the basis dictated by the rules.

Overall, let this go. Everyone has to pay for their mistakes. It just effects everyone. Next time vet out the whole legal process/need your HOA is doing. It doesn't sound like it's a sound practice.

Former HOA President
RichardP13


Posts:0


06/10/2019 7:56 PM  
Posted By MelissaP1 on 06/10/2019 7:25 PM
This ship has sailed. Time to pick up the pieces and just move on. The whole situation was just handled badly all around. Hopefully use this as a "learning experience". Otherwise you all doomed to repeat this.

I am actually tired of posting this... Suing your HOA is suing yourself and your neighbors. In this case there was never a real lawsuit. Just a bunch of letter writing campaigns using legal resources. All this "macho mas macho" stance just bites everyone in the end.

If the HOA knew a bit more what it was doing, there could have been better options. If this had gone to court, the court would decide who pays the legal expenses. It has to be asked for during the court process. Each party could have paid their own or paid the others. Again did not go to court so that option is gone.

The HOA basically caused it's own special assessment by incurring it's legal expenses. In certain cases, this could be considered "damages" but it has to be the most frivolous lawsuit on the planet brought against the HOA. This doesn't sound like it fits that bill. There was a procedural process as the basis dictated by the rules.

Overall, let this go. Everyone has to pay for their mistakes. It just effects everyone. Next time vet out the whole legal process/need your HOA is doing. It doesn't sound like it's a sound practice.



Did you not read this? There was NO lawsuit, none, nada.
MelissaP1
(Alabama)

Posts:8503


06/10/2019 8:17 PM  
Did you read my response? I said since there was NO lawsuit... It was acknowledged there wasn't a lawsuit. It was probably better that there was... However, the HOA decided to spend money on legal actions. So since they did not go to court, there was never going to be any money coming back. It was just money spent out of pocket. So sad, too bad...

Former HOA President
GenoS
(Florida)

Posts:3177


06/10/2019 10:16 PM  
Posted By RichardP13 on 06/10/2019 4:24 PM
Are you saying that members should not be able to question whether a Board is operating correctly, or maybe, in this case, legally?

I question that, too. Maybe it was a petty dispute but maybe they had a good case. Homeowners should be able to question those decisions.

Also, $50,000 to run a recall election? That's where I'd be focused. Are there 100,000 homes in the association each requiring a 50-cent stamp? Without knowing any details, that smells really fishy.
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