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Subject: Board misconduct--legal remedies
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KathleenF
(Illinois)

Posts:19


01/08/2006 2:36 PM  
When the subject of board misconduct comes up, people always advise diplomatic and political solutions. Talk to them. Negotiate. Remove them from office.

But in small associations, it is very easy for a few individuals to get a lock on political power--relying on personal loyalties, favor exchanges, apathy, timidity and a measure of intimidation.

Where political solutions are impossible--because the board controls too many votes--and negotiation is futile--because the board stonewalls or retaliates--litigation may be the only recourse to address rampant board misconduct.

Litigation is an awful thing. No one wants to be involved with it. Yet--sometimes it is unavoidable. After four years of attempting to build coalitions and "Clean Up Dodge--including getting myself elected to the board (before the Powers That Be realized I wouldn't "play ball")--I am about to sue for multiple breaches of fiduciary duty and violations of the Fair Housing Act.

I would appreciate hearing from anyone who has already gone done this road--particularly if you were able to get meaningful injunctive relief (like, for example, banning corrupt directors from board service) or substantial money damages from corrupt or incompetent individual directors. Was the process worthwhile for you--all things considered?

Moving is extremely difficult for me (due to illness and disabilities), so "just leave" is not an option.

I'm in Illinois, living in a housing cooperative which is governed by the Business Corporations Act (not the Illinois Condominium Property Act). But I am interested in hearing from condo, as well as coop, owners.



SamuelB
(North Carolina)

Posts:83


01/09/2006 4:20 AM  
I am President of a 344 unit condo complex in North Carolina and we had a similar situation, so your concerns are not limited to small numbers of units. We were able to handle our situation through a political solution, but it did take an attorney, which we, as a few dedicated condo owners, hired to assure due process was adhered to. The previous Board did try to stonewall us, but our attorney stepped up and faced down their attorney and they were all voted out of office.

So, for us, it was worth it, but just barely. It has taken an enormous toll on me personally as well as professionally (my business, which is not related in any way with the condo's, has suffered). I think the bottom line to your question “it is worth it”, has to be answered personally. A legal solution is possible, but never forget the old adage “He who holds the gun, holds the power”. Be prepared for them to use Roberts Rules against you, so you need to have a very good understanding of RROR (http://www.robertsrules.com/).

To me personally, I feel it was worth it because there are many owners in our condo complex on fixed income and I saw a strong potential for our dues to become astronomical or be faced with exorbitant special assessments, which I knew they would not be able to afford.

I would strongly recommend getting some neighbors who side with you together and form your own group to help fight those in power. Do not try to do this on your own. Develop your own slate so the owners will know where you’re coming from and what you have to offer that the existing Board does not have. If none of this works, the only recourse might be full legal action, which can be very expensive and you probably will not want to go there.

As for holding the existing board members accountable financially, your Association should have insurance coverage on each of the Board members to protect them against such lawsuits; I would never be a board member without it. You might be able to go to the insurance company that holds this policy and express your concerns. They may be able to exert some pressure on the board members if the insurance company thinks you might bring suit against them.

These are just some thoughts and are in no way meant to be legal suggestions. I hope they have been helpful.

Samuel

I fly because it releases my mind from the tyranny of petty things . . . - Antoine de St-Exupéry
KathleenF
(Illinois)

Posts:19


01/15/2006 3:35 PM  
Thanks, Samuel, for your thoughtful reply. Unfortunately, I do "stand alone" here and a political solution is impossible. However, your comments about having a platform are of pracical help. I think I'll do this for the upcoming annual meeting--purely for educational purposes. I've done this kind of thing in the past, but we have naive new members who are easy marks for the board's propoganda.

For me, the most astonishing thing about this entire experience is how little most owners
know or care about democracy in these tiny towns.

Kathleen
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