Get 1 year of free community web site hosting from Community123.com!
Friday, December 03, 2021











HOATalk is a free service of Community123.com:

Easy to use website tools to help your board
Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.
Subject: Virginia POAA 55.1-1828 Lawsuit Writ Denied
Prev Next
Please login to post a reply (click Member Login on the menu).
Author Messages
BernieJ


Posts:0


11/02/2021 4:57 PM  
Recently a case was brought to the Virginia Supreme Court seeking writ for a lawsuit that was dismissed by a county judge earlier this year. The case was prepared by a competent attorney and submitted all documents to the local court as follows:
This complaint is filed by (Property Owner Name) and on behalf of all aggrieved lot owners in the subdivision of (Name of Subdivision).
The lawsuit charged their was an illegal declaration added to the covenants which lead to an illegal assessment imposed on the membership. The suit was filed against all Board Members named individually.
The lower court dismissed the case and never gave a reason. The property owners who pitched in their own money to sue the Board were devastated that the judge gave no consideration to the complexity of the case. They raised more money and submitted a writ for an appeal to be granted.
At the appeal hearing in October, one minute into the presentation by the attorney, one justice asked one question that threw our attorney off kilter. The question was, are you filing this as a class action or as an individual? I am not sure your case meets the requirements of 55.1-1828. Needless to say, this gobbled up all of the full 10 minutes that our attorney had to defend our case claiming violations under code 55.1-1825 (improperly imposing an assessment that was not intended for association property)
One week later the Justices emailed a letter to our attorney that the case did not meet the criteria for appeal.
The Justices could have denied our case for some other reason, but the only question that was asked and discussed was the fact that an individual property owner was filing the lawsuit on her own behalf and all aggrieved lot owners. Should this have been filed as a full blown class action lawsuit or did the attorney correctly file it as an individual on behalf of the others? Here is the code that was questioned:


§ 55.1-1828. Compliance with declaration.
A. Every lot owner, and all those entitled to occupy a lot, shall comply with all lawful provisions of this chapter and all provisions of the declaration. Any lack of such compliance shall be grounds for an action to recover sums due, for damages or injunctive relief, or for any other remedy available at law or in equity, maintainable by the association or by its board of directors or any managing agent on behalf of such association or, in any proper case, by one or more aggrieved lot owners on their own behalf or as a class action. Except as provided in subsection B, the prevailing party shall be entitled to recover reasonable attorney fees, costs expended in the matter, and interest on the judgment as provided in § 8.01-382. This section shall not preclude an action against the association and authorizes the recovery by the prevailing party in any such action of reasonable attorney fees, costs expended in the matter, and interest on the judgment as provided in § 8.01-382 in such actions.
MaxB4
(California)

Posts:1594


11/02/2021 5:04 PM  
And as one poster states over and over, the courts enforce the covenant, BS
BernieJ


Posts:0


11/02/2021 5:12 PM  
Thank you Max, do you mean BS as in B*** S*** or they ignore the code of Virginia and only enforce the covenants?

My question really relates to whether the attorney filed the court papers properly by combining all aggrieved lot owners with the individual property owner?
MaxB4
(California)

Posts:1594


11/02/2021 5:30 PM  
Posted By BernieJ on 11/02/2021 4:57 PM
in any proper case, by one or more aggrieved lot owners on their own behalf or as a class action.


This tell me it could have been filed individually, OR as a class action.
BernieJ


Posts:0


11/02/2021 6:26 PM  
could have or should have?
I can't believe that after 13 months working with this attorney our case would have been tossed out at the Supreme Court level over could have or should have been filed only one way or the other. The root of the case was so serious and there was an enormous amount of evidence that supported the violation of 55.1-1825. I also spoke to several attorneys who believed the case was well founded, even the developer stated at the special meeting, he himself talked to six attorneys until he found one who would write the ballot.
BernieJ


Posts:0


11/02/2021 6:48 PM  
I am sorry Max, I didn't meant to rant. Since our attorney filed it as an individual property owner, on behalf of the aggrieved lot owners, it should have been accepted as being filed properly as an individual property owner. Right? So we could assume that that the justices denied the writ for some other reason?
MaxB4
(California)

Posts:1594


11/02/2021 6:52 PM  
I have read enough HOA lawsuits to realize that judges will act out of pure stupidity and disregard for the actual truth. It is possible they pre-judged before you even showed up.
AugustinD


Posts:1905


11/02/2021 6:52 PM  
Posted By BernieJ on 11/02/2021 6:26 PM
could have or should have?
I can't believe that after 13 months working with this attorney our case would have been tossed out at the Supreme Court level over could have or should have been filed only one way or the other.
Assuming this was the reason the case was tossed, why can't you believe it? Dismissal of a lawsuit for failing to follow procedural rules (which are Thee Law along with much else) happens all the time.

Respectfully, I doubt you have all the facts here. Do keep in mind that, if a layperson could parse everything a court did without going to law school, there would be no need for law school.

In the lower court, did the HOA motion for dismissal? If so, and the judge was silent (by all appearances), then the reason for the dismissal is most likely contained in the motion.

Can you get a copy of the letter" the appeals court mailed your group's attorney and provide it here, or at least quote the main reasons given?

Maybe I will search the case law for discussion of 55.1-1828.



AugustinD


Posts:1905


11/02/2021 6:56 PM  
Posted By BernieJ on 11/02/2021 6:48 PM
Since our attorney filed it as an individual property owner, on behalf of the aggrieved lot owners
One person may not represent a group of people in a lawsuit without meeting certain requirements. In other words, for a lawsuit there is more to legally achieving "class" status than simply writing on the initial court filing that Jane Doe is filing on behalf of __, ___, and ___.
BenA2
(Texas)

Posts:1104


11/02/2021 6:59 PM  
I love to argue the law but when a state supreme court rules, that IS the law, unless a federal court overrules them. I'm not saying your attorney did anything wrong based on the knowledge he or she had before the ruling but it is moot now.

Based on the limited information we have, it sounds like the court felt that the case was improperly filed which means they could not consider any material facts. I would think that the attorney has the full decision and knows exactly what was done wrong (at least in the court's opinion).
AugustinD


Posts:1905


11/02/2021 7:11 PM  
BernieJ, according to several web sites, Virginia prohibits class actions lawsuits in its state courts. Virginia is unusual in this way. This past year the Virginia legislature even tried to change this. It appears the legislature was not successful, or any law they passed on this has not taken effect.

Virginia has a "Multi Claimant Litigation" Statute, that might be relevant. But from what you have posted, your group did not meets its requirements.

Your group is asking the Board to follow its own rules, right? I think it's fair that the courts require plaintiffs to follow the rules as well (when it comes to court procedure).
BernieJ


Posts:0


11/02/2021 8:49 PM  
I recall the Association's attorney stating the case should be dismissed, for other reasons, not because the case was filed improperly.
BernieJ


Posts:0


11/02/2021 8:54 PM  
The point you make is correct, class action lawsuits are not allowed in the state of Virginia, except for Property Associations. As the POA Act I mentioned, 55.1-1825 does permit class action lawsuits when it involves a property association that is subject to the Act.
AugustinD


Posts:1905


11/03/2021 6:04 AM  
Posted By BernieJ on 11/02/2021 8:54 PM
The point you make is correct, class action lawsuits are not allowed in the state of Virginia, except for Property Associations. As the POA Act I mentioned, 55.1-1825 does permit class action lawsuits when it involves a property association that is subject to the Act.
I am not ready to bet on this. I have not studied this extensively, but so far, I think the problem may be that Virginia court rules (part of the law) apparently lack requirements for meeting class action status. On the other hand, an attorney who passed the bar in Virginia would surely know what he/she was doing when it comes to such a matter. You certainly may be right, and something else caused the suit to be dismissed without a hearing on the merits.

I also wondered whether any mention of "class action" in Virginia statutes meant that one could file as a class in federal court (assuming the lawsuit meets the criteria for adjudication in the federal courts)?

I look forward to further information you care to share.
CathyA3
(Ohio)

Posts:2588


11/03/2021 6:08 AM  
As Augustin said, things get tossed for procedural issues all the time.

That's not to say that the judges didn't have a particular axe to grind in this case - although the ones I've heard of tend to be judges who view HOAs as nasty bullies that should be shot down as often as possible.

If I were a homeowner in this particular case, I'd be pretty ticked that I'd paid a lot of money to a lawyer who made an avoidable mistake and would be looking around for a another one (assuming I had the money to keep fighting this). This may end up being another of those cases where the cost of being proven right far exceeds the monetary value of whatever injustice the plaintiff went to court over.
AugustinD


Posts:1905


11/03/2021 7:57 AM  
The media in Virginia has provided some coverage of this case. To respect BernieJ's privacy, I am going to be somewhat circumspect.

The developer of this HOA still holds at least one seat on this HOA's board. Other signs indicate the developer is still selling lots/homes in this HOA. The developer may still be in control. When BernieJ's "group" took the HOA on, the signs are that BernieJ's group was taking on a well-fortified developer. The assessment to which BernieJ's group objects involves supporting what appears to be a non-HOA non-amentity but one that does help property values. I can see why BernieJ's group is roiled. But from what I can tell, and as is common, the OP has presented a one-sided view of things.

The lawsuit appears to have alleged as its main claims that the Board lied about the issues on a ballot when the Board held an owners' vote for a special assessment some months before, and that the Board breached its fiduciary duties as these duties pertained to the vote and related matters. (I am reading between the lines and trying to protect BernieJ's privacy. Do not bank on my report as the full truth.) The media reports that, in early 2021, the HOA motioned to dismiss the main claim (of an improper assessment) on grounds that another owners' vote had occurred within the last month or so; this vote was proper; and this new vote apparently (from what I can tell) properly approved the special assessment. The HOA's (developer's?) attorney said the main issues were moot. The circuit court judge agreed. Per the Circuit Court log, the judge granted the HOA's "demurrer."

Demurrer = defense asserting that even if all the factual allegations in a complaint are true, the facts would be insufficient to establish a valid cause of action.

The circuit court judge went on to rule that BernieJ's group had a few weeks to file an amended complaint that did not include the above issues (lying and breach of fiduciary duties). Or BernieJ's group could appeal the circuit court judge's dismissal of the main issues. BernieJ's group apparently chose to appeal the dismissal of the claims of lying and breach of fiduciary duties. For some reason this appears to have gone straight to the Virginia Supreme Court and not the Virginia appeals courts. Per court records, the Virginia Supreme Court "refused" the petition in late October.

The signs are that the lawsuit was filed by owner ___ ____, "individually and on behalf of all owners of the HOA." In my layperson's experience, and with apologies to BernieJ, and knowing BernieJ's attorney would like me shot, I think filing thusly is just weird. One person cannot just claim to represent "all owners." Especially when it appears a vote went down within the last year indicating many owners disagree with the plaintiff owner here. As a matter of law, it appears to me there is one plaintiff; not several plaintiffs; and not a "class." Never mind the question of whether Virginia state courts hear class actions. It is not cool to claim one represents all owners when one clearly does not. I really want to hear the plaintiff's attorney's explanation of why he filed as he did. Surely I am missing something. Else claiming one plaintiff represents all owners sounds pretty damn much like a serious lie to the court to me.

Could this be why, according to the OP, the Virginia Supreme Court appeared to have a bug up its arse at the hearing this past October on this point? Maybe.

I wonder whether a derivative suit might have been appropriate. BernieJ, "derivative suit" is a complicated topic for laypeople just hearing the phrase for the first time. In many states, including Virginia, it is a suit where the plaintiff claims to bring a suit on behalf of the corporation, because the corporation's board is hurting the corporation, and the corporation has no one else to help it. Certain requirements must be met. It seems clear that no such attempt was made in this initial foray into the court system on this matter.

I checked out the law firm representing the plaintiff (not plaintiffs). It seems reputable but I would not call it a specialist in HOA law at all. Nor is the attorney a specialist in HOA law at all. Or even real estate law, for that matter. The attorney is a graduate of a leading law school.
AugustinD


Posts:1905


11/03/2021 8:40 AM  
BernieJ, one other thing:

From what I can tell so far, this vote to amend the covenants sounds like a classic case of tyranny of the majority. That is, a super majority agreed to add, and so fund, a major amenity to the covenants. Boom, wow! For now, I am aware that the courts in fact do not always approve such a vote. For example in some states, and while covenants do not always have to be "reasonable and fair," the courts are not so generous with amendments to covenants. If a super majority votes to do something really wild, as arguably a super majority has done here, the courts might not okay it unless all owners agree to the change.

Virginia case law may have much to say on this point.

Your group's lawsuit does not seem to have addressed this point.

My advice: Speak with your group. See if it is willing to pony up the money to consult another attorney. I think this second attorney being a HOA / real estate specialist would be best by far.
BernieJ


Posts:0


11/03/2021 9:38 AM  
Super majority is an understatement here.
The entire plan to add the "privately owned business" to the services that the association is responsible for was crafted by investors of the business, and Board members who are members and investors of the business. The developer held a whopping 104 proxy's to pass the measure. There are 325 lot owners who held proxy's, but only 170 in total voted. 87 voted it down, 83 voted in favor, then add on the 104 developer held proxy's in favor.
There were numerous blunders with the way the matter was forced upon the membership, including, the developer didn't have the right to appoint the Board members who voted to impose the assessment. He forgot that for 2 1/2 years he had over sold his inventory which dropped him below the number of lots required for him to be able to appoint Board members. When they were threatened with a lawsuit, the community manager was replaced, then the Board quickly tried to fix all these blunders by calling an emergency meeting to vote in the appointed Board. To make everything legal, they had to call another special meeting, rewrite the ballot correctly so that it could be recorded legally, give proper notice then run to the courthouse and record it before we went to court when the judge dismissed it. Essentially, most of what we were suing them over in an effort to have the declaration removed from the covenants was corrected prior to court. Except for the fact that the declaration itself violates the POAA, 55.1-1825. That is why we sought an appeal.
55.1-1825 permits the assessments to be imposed by the Board if they are "provided as a service the association is responsible as permitted in the covenants", "as long as the funds are used primarily for assets owned by the association or in the best interest of the association". The code does not permit association money to be used to finance or fund a private business or amenities not owned by them, so the Board decided to circumvent the code by adding the business to the covenants. By adding the business to the covenants, the association will be burdened forever to support the business via assessments at the will of the Board.
This kind of thing can happen to anybody who lives in an HOA community that has a business established inside the development plan or near by. What is the purpose of having a Property Owners Association Act if the courts won't uphold it?
Should we have hired a contract lawyer who is well versed in corporate law?
AugustinD


Posts:1905


11/03/2021 9:50 AM  
What is the purpose of having a Property Owners Association Act if the courts won't uphold it?
BernieJ, speaking as a former client of an attorney to you (a present client of an attorney):

One could just as easily ask what is the purpose of court rules and case law if the courts will not uphold it?

The signs are that the courts so far did not feel the arguments your attorney made had sufficient legal merit. I realize you feel differently. Yet here you are today, having spent a lot of money with your friends and getting bupkis in exchange. Worse, the media reports the developer may be countersuing you all for its attorney fees.

You have to dissect why you lost. It's not helpful to keep insisting you should have won.

Should we have hired a contract lawyer who is well versed in corporate law?
I continue to feel you need a HOA specialized attorney or possibly a real estate attorney. You must meet with him or her but respectfully, go in without the bias you show here. Just present the facts without emotion. Ask questions. Do not make assertions of law (as you are doing here). Why? Because obviously, your arguments (or your attorney's arguments) failed and miserably so.

Again, I do not like what happened and from my reading of a lot of case law, I think you may have a case. It's pretty darn serious to change the covenants as radically as this board/developer did. What they did may be lawful. But it may also be not lawful. I admit I do not have all the facts and have a lot of questions. I feel the problem is you are answering these questions with thorough bias, failing to realize that (1) the readers here are not the enemy; (2) for readers here to help you, they need the facts to be presented without bias or editorial statements presented as fact; and (3) to save money on an attorney, injecting your own interpretation of the law only will cost you more.
AugustinD


Posts:1905


11/03/2021 9:52 AM  
Posted By AugustinD on 11/03/2021 9:50 AM
It's pretty darn serious to change the covenants as radically as this board/developer did.
Correction: as a supermajority of voters apparently did.
MaxB4
(California)

Posts:1594


11/03/2021 10:02 AM  
Bernie

I found the case you referenced and have read a couple of articles about it.

1. Did the business exist when you bought your property and was business made to be a benefit to any prospective buyer?

2. How long has the developer been on the board?
JohnC46
(South Carolina)

Posts:11659


11/03/2021 10:33 AM  
Bernie

You got your ass legally kicked. Time to stop lamenting about it and get better legal advice.
MaxB4
(California)

Posts:1594


11/03/2021 10:52 AM  
Posted By JohnC46 on 11/03/2021 10:33 AM
Bernie

You got your ass legally kicked. Time to stop lamenting about it and get better legal advice.



Dobyou have any idea what the case actually involved?
BobD4
(up north)

Posts:957


11/03/2021 2:54 PM  
Posted By BernieJ on 11/03/2021 9:38 AM
Super majority is an understatement here. . . . Should we have hired a contract lawyer who is well versed in corporate law?




1 - Media articles about this exact dispute are online, but may take some perseverance to find.

2 - whether CORPORATE-type "OPPRESSION" ? An attorney with contract litigation experience might - might ? - have been able to try to get somewhere with an Oppression remedy.

I happen o live in a jurisdiction which imbedded such a remedy in its condominium statute two decades ago. It took a number of judicial outings before becoming of any use at all to minority stakeholders, a limited remedy. It was arguably too handy to strip mis-behavers of their unit ownership.

3 - If the OP provides more detail without identifying her community, maybe some of the Virginia commenters here can suggest attempts to get fair play out of Virginia Boards under whatever influence of Declarants.

The OP should consider quoting verbatim the full wording of the Supreme Court. I am surprised it arrived by "letter" ( ? ).
BernieJ


Posts:0


11/03/2021 5:37 PM  
Thank you all for the different perspectives of this dilemma we are in. The way it rests now, the declaration is in the covenants and will stay that way as long as the business is open and the developer is on the Board.
For now I would like to close this discussion and will update everyone if there is worthwhile development to share.
MaxB4
(California)

Posts:1594


11/03/2021 6:31 PM  
I read a couple of the articles and think I have a small idea of what happened.

You have a golf course that was a separate entity from the homes and the homeowners association and their was no requirement to become a member of the course. It was supposed to be self-sufficient. Two things happened, golf in the country is declining, and a world-wide pandemic hit. The developer to date has not turned over control of the community to the owners and probably control the board and a majority of the votes, through proxies. The board member in question either owns the golf course or is a partner in the venture. Because of the two factors above, they have come onto hard times, so is using his control over the association to force owners to subsidize the golf course. He has a 2 or 3 to one advantage in the votes in the community.

Close?
AugustinD


Posts:1905


11/07/2021 5:28 AM  
For the archives, an discussion of the law in a state (Florida) that prohibits unreasonable amendments, from http://condocrazeandhoas.com/master-association-v-sub-association-who-wins/:

“In determining the enforceability of an amendment to restrictive covenants, the test is one of reasonableness.”Holiday Pines Prop. Owners Ass’n v. Wetherington, 596 So. 2d 84, 87 (Fla. 4th DCA 1992). This court defined “reasonable” as “not arbitrary, capricious, or in bad faith.” Hollywood Towers Condo. Ass’n v. Hampton, 40 So. 3d 784, 787 (Fla. 4th DCA 2010). In other words, as we stated in Holiday Pines, the modification of restrictions cannot “destroy the general plan of development.” Holiday Pines, 596 So. 2d at 87 (citing Nelle v. Loch Haven Homeowners Ass’n, 413 So. 2d 28 (Fla. 1982)). Amendments which cause “the relationship of lot owners to each other and the right of individual control over one’s own property”to be altered are unenforceable. Id. at 88. Such an alteration is considered a “radical change of plans.” Id. Klinow v. Island Court at Boca W. Prop. Owners’ Ass’n, 64 So.3d 177, 180 (Fla. 4th DCA 2011) (footnote omitted). Klinow further defined “radical change” as “a change which would create an inconsistent scheme, or a deviation in benefit from that of the grantee to that of the grantor.” Id. (citing FlamingoRanch Estates, Inc. v. Sunshine Ranches Homeowners, Inc.,303 So. 2d 665, 666 (Fla. 4th DCA 1974)).


The next questions I would have for BernieJ's HOA is:

-- Does Virginia case law say similar?

-- Does the addition of this amenity (via amendment to the CCRs?) destroy the general plan of development?



(TimB4, thank you for pointing out that I posted this to the wrong thread earlier.)
BobD4
(up north)

Posts:957


11/08/2021 9:00 AM  
Posted by OP on 11/02/2021 5:12 PM
. . . My question really relates to whether the attorney filed the court papers properly by combining all aggrieved lot owners with the individual property owner ? . . .




The questioner's posting count - she has now resigned from the Forum - makes it look moot that what she refused or ignored answering, will become available. That's for trying to directly answer her specific question.

1 - Maybe she can hire & listen to a class action or multi-plaintiff civil litigator.

Or maybe she can see how far she can get appealing to the VA state bar with a complaint about her attorney's performance . . whatever

2 - Several positive suggestions were presented above as to the actionable merits about a proxy-dominated Board decision etc to do what she appears to consider "inserting a Declaration into covenants". ( ? )

Whatever that means, 2 levels of courts next summarily refused to proceed about proxy-dominated decisions to transform ( "voluntary" ? ) recreation into some sorta imbedded contractual burden. One thinks oppression if its available.

Or whatever the judicial rationale from the decisions uncovered by Augustin above. It's the judicial rationales that can have legs. Wonder if the OP will bother listening ?
MaxB4
(California)

Posts:1594


11/08/2021 9:03 AM  
Posted By BobD4 on 11/08/2021 9:00 AM
Posted by OP on 11/02/2021 5:12 PM
. . . My question really relates to whether the attorney filed the court papers properly by combining all aggrieved lot owners with the individual property owner ? . . .

Wonder if the OP will bother listening ?


WHY?
AugustinD


Posts:1905


11/08/2021 11:06 AM  
The loss of anonymity may have played a role in the OP's resignation.
Please login to post a reply (click Member Login on the menu).
Forums > Homeowner Association > HOA Discussions > Virginia POAA 55.1-1828 Lawsuit Writ Denied



Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.







General Legal Notice:  The content of forum messages are from the posting member and have not been reviewed nor endorsed by HOATalk.com.  Messages posted by HOATalk or other members are for informational purposes only, are not legal or professional advice and do not constitute an attorney-client relationship.  Readers should not act upon this information without seeking professional counsel.  HOATalk is not a licensed attorney, CPA, tax advisor, financial advisor or any other licensed professional.  HOATalk accepts ads from sponsors but does not verify sponsor qualifications nor endorse/guarantee any sponsor's product or service.
Legal Notice For Messages Posted by Sponsoring Attorneys: This message has been prepared by the sponsoring attorney for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Readers of HOATalk.com should not act on this information without seeking professional counsel. Please do not send any sponsoring attorney confidential information unless you speak with the sponsoring attorney or an attorney from the sponsoring attorney’s firm and get authorization to send that information to them. If you wish to initiate possible representation, please contact an attorney in the firm of the sponsoring attorney. Sponsoring attorneys that post messages here are licensed to practice law in a specific state or states as indicated in their message signature or sponsor’s profile page. (NOTE: A ‘sponsoring attorney’ is an attorney that is a HOATalk.com official sponsor and is identified as such in the posted message or on our sponsor page.)

Copyright HOA Talk.com, A Service of Community123 LLC ( Homeowners Association Discussions )   Terms Of Use  Privacy Statement