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Subject:  PEOPLE`S COURT judge catches condo "Director-Manager" STIFFING AUDITOR
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BobD4
(up north)

Posts:957


11/21/2021 6:53 AM  
Can anyone helpfully suggest more credible defences that might have been helpful to the Florida condo Board caught stiffing a contracted auditor in front of millions of Americans ( and Canadians ) ?

People`s Court episode 8596 ( Nov 16 2021. These ain`t actors but real litigants who agree to divert into ADR binding alternative dispute resolution. )

Savvy Latina judge Marilyn Milian hears a C.P.A.`s claim for payment after conducting a contracted condominium association audit.

The defendant Florida condo Director here self-describes as the Condo Board`s ``Managing Agent``, and notably raises zero defence about the quality of the audit. Nor of the plaintiff`s professional timeliness except that it allegedly `jumped the gun`` / she claims allegedly should have been submitted to the Board for brand new approval after changes of Board majority.

UNPAID AUDIT BILL

It is undisputed that the plaintiff professional auditor ( a C.P.A. ) had been contracted in writing to do – and had actually completed professionally and on time - a $ 2700 ( 2019 ) audit authorized in 2020 by Motion of the condo Board`s majority as approved at a quorumed Board Meeting.

Such was a Meeting which the defendant admits having attended as a Director.

Also undisputed is that despite the condo by-laws in front of Judge Milian – by-laws which require an ANNUAL AUDIT - the defendant Director-Manager had not only attended the contract issuance Board Meeting. But had had also voted unsuccessfully against the Motion to comply with the audit by-law.

Further supporting the auditor`s iron-clad claim to be paid for her work, are the signed contract, the by-laws requiring an annual audit, and the ZOOM live testimony of the past President. With authority of the majority Motion, he had executed the contract binding the condo corporation. Four months later he sold his unit, resigned as President and moved out. ( Wonder why ? )

Presumably next taking the new majority was the defendant who self-describes as Director / Manager.

VOODOO DEFENCES

Judge Milian hears a gob-smacking range of voodoo defences raised politely & delivered dead-pan by the Director-Managing Agent.

Then the judge delivers a surgical dissection before ordering payment of the auditor`s bill.

Judge Milan giggles about South Florida condo disputes - obviously has been to that rodeo before - but even she is surprised by a range of gob-smacking voodoo defences from the Director-Manager.

Delivered dead-pan and low-key, those defences could act as a form of cautionary warning not only to service-providing professionals, but to potential buyers & lenders doing due diligence.

Amongst those :`

- "the audit `jumped the gun`` / should have been submitted to the Board for brand new approval after changes of Board majority, a ( voodoo ) by-law over-ride which Boards ( allegedly ) have been getting away with for years. We had only one prior external audit in 20 years !

- anyway, we had a 2017 audit; why do one for 2019 ?``

- ``I cannot remember that the Board voted to approve ``

- `by-laws are mere guidelines that can be ignored

- ``our own by-laws are inappropriate boiler-plates, because we have only 20 units & are short of funds

- ``the previous (approving ) Board ignored some other by-laws. So why did they comply with the audit by-law ?

Amongst Judge Milan`s challenges :

``Where on earth do you get the nerve - the authority – to claim to override the audit by-law ? !

If you want a change ( to amend any lawfully amendable by-law ), what makes you think you can merrily chit-chat past it ? Lawfully amending a by-law doesn`t have to be a Suicide Pact ! ! ``
"You have a duty to carry out what people contractually buy into ! " ( and LEND into ) "What gives you the right to ignore that ? "

Postscripts :

- The plaintiff auditor is asked if she will ever do work for the defendant`s Board again – NO ( politely ).

- The defendant "Director-Manager" still stays low key, deflecting without daring to address the opticals of stiffing an auditor contracted to examine the integrity of the financial statements. Wider, given that condo owners are expected to pay, comply etc, what is the implication of their Board casually stiffing professional service-providers ? She appears ``not to get it``. ( If this is her view of by-laws, wonder what else is going on ? )

Maybe there were sounder defences she could have raised . . .
SheliaH
(Indiana)

Posts:4284


11/21/2021 7:17 AM  
If the bylaws require an annual audit, that's what the board is suppose to do. Not having enough money isn't really an excuse -you budget for that, just like everything else.

Some of the excuses you cite are typical of boards who would rather skip important work or ignore bad news and an audit isn't the only thing that gets caught up in this nonsen. There IS no excuse for what this hard allowed to happen and now that it's gone on national television, this board risks not finding good contractors to do anything for the community.

The real question is why this board let the one director or managing agent (or whatever she was) dictate all of this. The rest of the homeowners should sack the entire lot.

PS - what with "savvy Latina judge?" That has nothing to do with the facts of the case. I don't know what you were trying to imply, or maybe you thought you were being cute - and you weren't, so stop it.
AugustinD


Posts:1905


11/21/2021 7:20 AM  
Posted By BobD4 on 11/21/2021 6:53 AM
Delivered dead-pan and low-key, those defences could act as a form of cautionary warning not only to service-providing professionals, but to potential buyers & lenders doing due diligence.

Amongst those :`

- "the audit `jumped the gun`` / should have been submitted to the Board for brand new approval after changes of Board majority, a ( voodoo ) by-law over-ride which Boards ( allegedly ) have been getting away with for years. We had only one prior external audit in 20 years !

- anyway, we had a 2017 audit; why do one for 2019 ?``

- ``I cannot remember that the Board voted to approve ``

- `by-laws are mere guidelines that can be ignored

- ``our own by-laws are inappropriate boiler-plates, because we have only 20 units & are short of funds

- ``the previous (approving ) Board ignored some other by-laws. So why did they comply with the audit by-law ?
This condo board and its nominal leader are frightening.

Amongst Judge Milan`s challenges :

``Where on earth do you get the nerve - the authority – to claim to override the audit by-law ? !

If you want a change ( to amend any lawfully amendable by-law ), what makes you think you can merrily chit-chat past it ? Lawfully amending a by-law doesn`t have to be a Suicide Pact ! ! ``
"You have a duty to carry out what people contractually buy into ! " ( and LEND into ) "What gives you the right to ignore that ? "
Brava. Perfection in a court (or by an arbitrator, technically?).
AugustinD


Posts:1905


11/21/2021 7:23 AM  
Sorry, but I dig savvy Latina judges putting condo boards in place.
CathyA3
(Ohio)

Posts:2588


11/21/2021 9:30 AM  
Wow. I got nothing - I think those voodoo excuses were the best they had.

Any possibility that maybe they had something better up their sleeves is negated by the fact that they put this rubbish on display. Did they think that this would encourage home sales? Or help the manager gain more clients (or keep the ones they currently have)? Or support the board's claim of "business judgement" or use of D&O insurance if somebody sues them?
MaxB4
(California)

Posts:1594


11/21/2021 10:01 AM  
While having my morning coffee, I watched the full episode of the People's Court for this matter and I thought it was a joke.

Here are a couple of issues that came up.

----If audits were to be done annually, why didn't the association do them before on an annual basis.

----The manager was a director at the time, but is no longer a director, just a managing agent.

----Bylaws cannot be amended, IF, state laws say they are required.

----Bylaws don't require 75% approval.

----Where are the minutes, the proof?
MaxB4
(California)

Posts:1594


11/21/2021 10:23 AM  
Per Florida Statute 718.111(13):

----An association that operates fewer than 50 units, regardless of the association’s annual revenues, shall prepare a report of Cash Receipts and Expenditures.
----An association with total annual revenues of less than $150,000 shall prepare a report of Cash Receipts and Expenditures.
----An association with total annual revenues of $150,000 or more, but less than $300,000, shall prepare Compiled Financial Statements (“Compilation”).
----An association with total annual revenues of at least $300,000, but less than $500,000, shall prepare Reviewed Financial Statements (“Review”).
----An association with total annual revenues of $500,000 or more shall prepare Audited Financial Statements (“Audit”).

I doubt this HOA would fall under >$500K as their monthly assessments would be $1900 or more.

So while their Bylaws may say Annual Audits, I believe a case could be made to follow this Florida statue.
AugustinD


Posts:1905


11/21/2021 10:33 AM  
Posted By BobD4 on 11/21/2021 6:53 AM
It is undisputed that the plaintiff professional auditor ( a C.P.A. ) had been contracted in writing to do – and had actually completed professionally and on time - a $ 2700 ( 2019 ) audit authorized in 2020 by Motion of the condo Board`s majority as approved at a quorumed Board Meeting.
A deal's a deal.
MaxB4
(California)

Posts:1594


11/21/2021 10:50 AM  
So, where were the minutes of the meeting authorizing the contract?
LetA
(Nevada)

Posts:1462


11/21/2021 11:58 AM  
I would never consider "The Peope's Court" a credible citation for prescience of law. Both parties are paid for their appearance and the conclusion is akin to binding arbitration.
Cite a more reliable source for case law, one that actually comes from a court of law.
BobD4
(up north)

Posts:957


11/21/2021 12:27 PM  
Posted By SheliaH . . . The real question is why this board let the one director or managing agent (or whatever she was) dictate all of this. The rest of the homeowners should sack the entire lot.

PS - what with "savvy Latina judge?" That has nothing to do with the facts of the case. I don't know what you were trying to imply, or maybe you thought you were being cute - and you weren't, so stop it.




1 - All the comments from everyone above are excellent & appreciated.

As to "savvy Latina ( judge ) . ." .` I unreservedly apologize for any cultural biases within the 2 adjectives. Such was unintended ; appreciate & will amend my thinking. About "Latina" . . .

2 - Judge Milian loudly & justifiably celebrates her heritage, such as onscreen sayings like "Jugando al quien es mas macho". ( the dispute really took off after both sides got stubborn - "Playing the game, Who is more macho ? ").

As a former prosecutor & state civil judge, she could be seen here as gently pulling her punches until hearing some gobsmacking but unfortunately not uncommon stuff.

Bright person good at graphic illustrations for the viewers eg explains refusing to enforce ILLEGAL CONTRACTS / ”unclean hands” : “ well It’s like this Judge. The cocaine was no good. Let me show you good cocaine. Then compare it to this bad cocaine here. Just try a little yourself, so you will know the product difference . . . “

Her hubby ex-Federal judge is no slouch onscreen either, eg : recounting instructions he once issued to one jury : " Would you dare trust that alibi testimony even if his tongue was notarized ? "

3 - whether the MINUTES

Attorney commenter Harvey Levin noted afterwards that the claim could free-standing attract some sorta payment just by its commensuracy & the un-contradicted performance. And also by ZOOM testimony from the signator ex-President here. Attorney Levin didn't cite what's usually called "quantum meruit".

4 - If the Director-Manager ( ! ) thought the auditor would prefer to just quietly forget her entitlement - rather than be seen by millions internationally chasing a client - then that was an error.

5 whether OTHER DEFENCES ?

`` We`re self-managed & just prefer to be as informal as we can get away with. Nobody has directly accused us of stealing nor cheating from fellow condo owners, nor of failing to get value for money.

AND who needs any audit at all ? Swear it`s unheard of to even steal from fellow church members, charities nor children`s sports leagues where folks know & live near each other. Never happens. Just trust me . . . ``

`` I have been too honest & should have had some legal advice beforehand. But with only 20 units we`re too poor to have a cellphone to arrange it. Nor to take Board Minutes, nor to conduct by-law amendments. So poor we might even have to accept ``payment in kind`` - chickens, hay, potatoes etc . . . . ``

Thanks for comments.
BobD4
(up north)

Posts:957


11/21/2021 12:41 PM  
Posted By LetA on 11/21/2021 11:58 AM
I would never consider "The People's Court" a credible citation for prescience of law. Both parties are paid for their appearance and the conclusion is akin to binding arbitration.

Cite a more reliable source for case law, one that actually comes from a court of law.




Good comment. Maybe some of the Florida commenters might supply such as to Florida ch 718 & contract repudiations. This centrally could be about repudiating any contract and about a disturbing way of thinking audits. And quantum meruit alone is a principle applied widely.
JohnC46
(South Carolina)

Posts:11659


11/21/2021 12:41 PM  
An aside story. We were having issues with our retention pond overflow pipe leaking. One of the companies I called to take a look at it met me at the pond as planned but the first question he asked is this an HOA and are they the one paying? I replied yes. He said thank you but I want to pass on the job. I asked him why? He replied he would not do business with HOA's as they are always looking to do things on the cheap. Often the person responsible for over seeing the job will change and you have to go back to square one with a new person. A BOD of Directors is like having three bosses telling you different things. They are generally slow payers. He said thanks and bye. I admit, I admired him.
AugustinD


Posts:1905


11/21/2021 12:55 PM  
Posted By LetA on 11/21/2021 11:58 AM
I would never consider "The Peope's Court" a credible citation for prescience of law. Both parties are paid for their appearance and the conclusion is akin to binding arbitration.
Cite a more reliable source for case law, one that actually comes from a court of law.
Wikipedia says both parties are paid to appear (something less than $300 each, apparently). The show also pays for any damages that a party wins. If this is fact, then was it a wise choice for the condo board to appear on the show as a defendant? In the short term, yes. The board was guaranteed to save a few thousand dollars by doing so.

In the long term, is there a cost to the COA's reputation?

I figure whatever the People's Court judge decides has at least as much value as what a contemporarly trial court judge decides.
MaxB4
(California)

Posts:1594


11/21/2021 1:08 PM  
The condo board wasn't present, only the managing agent, apparently representing the Board. She wasn't on the Board as of the date for the People's Court. The CPA had the former Board president who signed the contract. It was stated that the condo wasn't performing annual audits, but then, as I posted, with only 20 units, it looks like they weren't required to.
AugustinD


Posts:1905


11/21/2021 1:24 PM  
-- I do not care who was representing whom. All I care about is whether the judge's decision made sense. It does to me.

-- FS 718.111 (13) has much more to it than you posted. For one, FS 718.111 (13) c) states the following:

An association may prepare, without a meeting of or approval by the unit owners:
1. Compiled, reviewed, or audited financial statements, if the association is required to prepare a report of cash receipts and expenditures;
2. Reviewed or audited financial statements, if the association is required to prepare compiled financial statements; or
3. Audited financial statements if the association is required to prepare reviewed financial statements.
BenA2
(Texas)

Posts:1104


11/21/2021 1:38 PM  
To put this in other (more concise) words: Board approved contract, CPA completed work. Ruling by any judge with a brain, HOA must pay bill.
BenA2
(Texas)

Posts:1104


11/21/2021 1:45 PM  
On a separate issue, is the board doing their fiduciary duty allowing this case to go on reality TV? Maybe they saved the association money but it seems nuts to me. When you are playing with other people's money you should stick to real courts.
JohnC46
(South Carolina)

Posts:11659


11/21/2021 2:56 PM  
Posted By BenA2 on 11/21/2021 1:45 PM
On a separate issue, is the board doing their fiduciary duty allowing this case to go on reality TV? Maybe they saved the association money but it seems nuts to me. When you are playing with other people's money you should stick to real courts.



I agree.
MaxB4
(California)

Posts:1594


11/21/2021 3:21 PM  
Posted By AugustinD on 11/21/2021 1:24 PM
-- I do not care who was representing whom. All I care about is whether the judge's decision made sense. It does to me.

-- FS 718.111 (13) has much more to it than you posted. For one, FS 718.111 (13) c) states the following:

An association may prepare, without a meeting of or approval by the unit owners:
1. Compiled, reviewed, or audited financial statements, if the association is required to prepare a report of cash receipts and expenditures;
2. Reviewed or audited financial statements, if the association is required to prepare compiled financial statements; or
3. Audited financial statements if the association is required to prepare reviewed financial statements.



Last I checked, owners are not called upon to contract out for Annual Reviews or Audit, so I don't why you felt it was relevavant.
AugustinD


Posts:1905


11/21/2021 3:36 PM  
Posted By MaxB4 on 11/21/2021 3:21 PM
Posted By AugustinD on 11/21/2021 1:24 PM
-- I do not care who was representing whom. All I care about is whether the judge's decision made sense. It does to me.

-- FS 718.111 (13) has much more to it than you posted. For one, FS 718.111 (13) c) states the following:

An association may prepare, without a meeting of or approval by the unit owners:
1. Compiled, reviewed, or audited financial statements, if the association is required to prepare a report of cash receipts and expenditures;
2. Reviewed or audited financial statements, if the association is required to prepare compiled financial statements; or
3. Audited financial statements if the association is required to prepare reviewed financial statements.



Last I checked, owners are not called upon to contract out for Annual Reviews or Audit, so I don't why you felt it was relevavant.
I can see why you in particular would decide that "association" here does not translate to "the Board."
MaxB4
(California)

Posts:1594


11/21/2021 3:55 PM  
Posted By AugustinD on 11/21/2021 3:36 PM
Posted By MaxB4 on 11/21/2021 3:21 PM
Posted By AugustinD on 11/21/2021 1:24 PM
-- I do not care who was representing whom. All I care about is whether the judge's decision made sense. It does to me.

-- FS 718.111 (13) has much more to it than you posted. For one, FS 718.111 (13) c) states the following:

An association may prepare, without a meeting of or approval by the unit owners:
1. Compiled, reviewed, or audited financial statements, if the association is required to prepare a report of cash receipts and expenditures;
2. Reviewed or audited financial statements, if the association is required to prepare compiled financial statements; or
3. Audited financial statements if the association is required to prepare reviewed financial statements.



Last I checked, owners are not called upon to contract out for Annual Reviews or Audit, so I don't why you felt it was relevavant.
I can see why you in particular would decide that "association" here does not translate to "the Board."



OK, The Board may prepare, without a meeting of or approval by the unit owners. Again, why was that relevavnt?

The show was a circus. Neither the judge, plaintiff or the defendant knew what they were doing. The plaintiff apparently had a signed agreement. The defendant could have countered with the minutes, if there were any. Maybe, it was as the defendant, that no decsion was reached, but the president, who no longer lives there, signed the agreement anyway. The defendant could have countered, the reason I voted down the proposal was it was overkill, based on our income, a lower price product was more appropriate.
AugustinD


Posts:1905


11/21/2021 4:00 PM  
Posted By MaxB4 on 11/21/2021 3:55 PM
OK, The Board may prepare, without a meeting of or approval by the unit owners. Again, why was that relevavnt?
Asked. Answered.
BobD4
(up north)

Posts:957


11/22/2021 9:01 AM  
Thank you for the comments & viewings.

Just to clarify :

1 - I respectfully can see NO indicator of mis-application or mis-performance by either Judge Milian nor the plaintiff auditor.

2 - The Zoom / remote inputting by the parties here - ( and at some ODL Online Dispute Resolution tribunal scenarios - ) now allows a viewer or adjudicator to better see FACIAL INDICATORS. And to better form conclusions about credibility, motives etc, although that can be risky.

3 - Whether the sole backstory was - or was not - really the prior Board majority being ( ? overly ? ) suspicious - arranging audits in 2017 & 2019 - but now being overthrown, good folks can be sincere but seriously misguided.

If even a gross mis-statement gets repeated often enough without enough challenge, lots of folks can start believing it's correct. And may insist vigorously it's true based on flimsy or no grounds.

Some bad stuff can ensue.

For example my fellow owners still cling to a sincere but voodoo mis-statement by our Declarant years ago, that hunting is per se technically prohibited within our cross-covenanted subdivision of 2 to 5 acre lots. Unfortunately this is legally false nor supported by covenants nor planning law in our jurisdiction. That's although unsafe hunting anywhere violates the relevant laws of general application.

It is arguable that this false belief discourages new purchasers ( from city areas ) being warned to wear high optic clothes during hunting season when hiking the trails or near the boundaries.

Repeated long enough the erroneous belief got believed and now obstructs prudent alerts.

Anyway thanks for the comments.
JanineR
(Tennessee)

Posts:219


11/22/2021 9:54 AM  
Posted By BenA2 on 11/21/2021 1:45 PM
On a separate issue, is the board doing their fiduciary duty allowing this case to go on reality TV? Maybe they saved the association money but it seems nuts to me. When you are playing with other people's money you should stick to real courts.




I agree too.

Although I did search for the episode and listened to it and enjoyed it. So glad it was shared.

Our previous board "voted" not to do annual audits, to save money. Despite both our Master Deed and Bylaws requiring an annual audit.

As a member, I questioned that it was not the Board's decision to make.

Now, on the Board, I still argue that is not the Board's decision to make.
We are obligated to do an annual audit per our governing documents, unless the members vote to change the docs, not the board.

In our case, there were minutes of that decision many years ago. But those minutes just enforced that the board voted to go against the bylaws.
In our case, there were also two accountants from the management company in that meeting, and it doesn't seem that either of them had the knowledge to let the board know they don't have the authority to change the master deed or bylaws to not do an audit.

JanineR
(Tennessee)

Posts:219


11/22/2021 10:17 AM  
Posted By BenA2 on 11/21/2021 1:38 PM
To put this in other (more concise) words: Board approved contract, CPA completed work. Ruling by any judge with a brain, HOA must pay bill.





I agree.
And add most Board can't change Bylaws without member approval.

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