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Subject: Suing Board members, Not the HOA Board
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Author Messages
WalterM3
(Georgia)

Posts:371


05/19/2015 10:29 AM  
"Simply if you sue someone, they can sue you back. If you sue individuals of a HOA or any board, they are protected PERSONLLY by the HOA/Corporation insurance policy."

There is a fly in the buttermilk for your interpretation.


"Indemnification. The Association shall indemnify every officer and director against any and all expenses, including counsel fees, imposed upon or reasonably incurred by any officer or director in connection with any action, suit, or other proceeding (including settlement of any suit or proceeding, if approved by the then Board of Directors) to which he or she may be a party by reason of being or having been an officer or director. The officers and directors shall not be liable for any mistake of judgment, negligent or otherwise, except for their own individual willful misfeasance, malfeasance, misconduct, or bad faith. The officers and directors shall not have personal liability with respect to any contract or other commitment made by them, in good faith, on behalf of the Association (except to the extent that such officers or directors may also be members of the Association), and the Association shall indemnify and forever hold each such officer and director free and harmless against any and all liability to others on account of any such contact or commitment."

That is from our Covenants.

"Action Without A Meeting. Any action by the Board of Directors or by any committee appointed by the Board of Directors required or permitted to be taken at any meeting may be taken without a meeting if, prior to such action, one or more written consents describing the action taken are signed by no less than a majority of the members of the Board of Directors or of such committee, as the case may be."

That is from the Bylaws.

They don't have that. No Action Without Meeting was captured at any time during 2013 and 2014.

Not following the clear procedure in the Bylaws is malfeasance.

Secondly, the suit was for defamation. The money was not approved and no Director was acting in a way:L "to which he or she may be a party by reason of being or having been an officer or director."

So you are just completely wrong and you remind me of some of the people who I am suing.



Walt

BanksS


Posts:0


05/19/2015 11:48 AM  
Posted By WalterM3 on 05/19/2015 10:19 AM
Posted By BanksS on 05/19/2015 8:22 AM
Posted By MelissaP1 on 05/19/2015 7:56 AM

O.C.G.A. 14-3-1604 (2010)
14-3-1604. Court-ordered inspection


(a) If a corporation does not allow a member who complies with subsection (b) of Code Section 14-3-1602 to inspect and copy any records required by that subsection to be available for inspection, the superior court may summarily order inspection and copying of the records demanded at the corporation's expense upon application of the member.

(b) If a corporation does not within a reasonable time allow a member to inspect and copy any other record, the member who complies with subsections (b) and (c) of Code Section 14-3-1602 may apply to the superior court for an order to permit inspection and copying of the records demanded. The court shall dispose of an application under this subsection on an expedited basis.

(c) If the court orders inspection and copying of the records demanded, it shall also order the corporation to pay the member's costs (including reasonable attorneys' fees) incurred to obtain the order unless the corporation proves that it refused inspection in good faith because it had a reasonable basis for doubt about the right of the member to inspect the records demanded.

So we'll see.

Walt




I fight the battle of obtaining records all the time. Iowa law does allow for reimbursement of attorney fees if the HOA does not comply with a records request within 10 days of the request. At one point, I did consult my attorney about the issue and I paid for it. I could have pursued it but didn't. It came to a point of not wanting to spend my life focusing on HOA issues.
MelissaP1
(Alabama)

Posts:10576


05/19/2015 12:24 PM  
By-laws are INTERNAL documents of the HOA. They are typically NOT required to be filed anywhere but with the HOA. They can be changed by a simple vote of the board. Even meeting notes can count as a change according to my lawyer. So the HOA board members NOT signing some kind of agreement your fighting over is NOT violating any real laws. Just INTERNAL ones.

Covenants and Restrictions (CC&R's) hold the most power in your HOA in regards to enforcing rules. They are filed at the county level and must the laws you spout. Still do NOT see a violation or anything done wrong here. It's NOT worth pursuing. Just get over it already and stop wasting everyone's money and time.

Former HOA President
TimB4
(Tennessee)

Posts:17830


05/19/2015 6:57 PM  
Walt,

Let me see if I can summarize the order of events. Please correct anything I make a mistake with.


1) In 2014 you were serving as a Director (based on your first thread referenced earlier in this thread)

2) Prior to the annual membership meeting, the Board chose to decrease the number of Directors (which you believe to be a violation of your governing documents)

3) Prior to the annual meeting you had e-mail the Association attorney asking questions about the Board's actions, but never received a response.

4) Due to the decrease (although it's not clear if you even were a candidate) you were not reelected to the Board.

5) The President, being required to attend a deposition, contacted the Association attorney to accompany him even though the Association was not directly involved (but may have been indirectly involved) in the legal action the deposition was about.

6) In September 2014, the Board paid the attorneys bill associated with services provided for the deposition.

7) On an unknown date, you brought legal action against specific Directors for utilizing, and paying, the Association attorney for non-association business.

8) In January 2015, the Board discussed adopting a resolution to require board approval prior to contacting the Associations attorney (as no such resolution existed earlier).

9) Recently, date unknown, the Board adopted such a resolution as noted in the minutes of a Board meeting.


Is this order of events correct?

If the order is correct, I do not think you will win your legal action (keep in mind, I am not an attorney and do not work in the legal profession). The reasons why I don't think you will win your legal action are:

a) Regardless if proper procedure was followed, the Board (as a whole) sanctioned the action of the President by paying the legal expenses incurred. This may have been a bad decision, but it was still a decision of the Board.

b) The Board saw that lack of a procedure opened the Association up to incurring expenses and took steps to correct that by adopting the procedure now in place.

c) Even if proper procedures were not followed and even if the court considers the Boards decision to pay the bill improper, the Board is likely covered under the Business Judgement Rule Even if you disagree that the decision was in the best interest of the Association, keep in mind that the attorney was responding to a request made by the President of the Association, hence they had good faith expectations that this was a Board decision to contact the attorney.

d) You are coming to court with unclean hands, as you also incurred legal expenses for the Association by e-mailing questions to the Associations attorney about an issue without prior Board approval or unanimous agreement as an action without meeting. It doesn't matter that your contact with the attorney directly involved the Association or not. You are arguing procedures and, based on what has been provided, you violated those same procedures.




At least, that's my perspective based on what you have shared with us.
GenoS
(Florida)

Posts:4276


05/19/2015 7:14 PM  
Posted By MelissaP1 on 05/19/2015 12:24 PM
By-laws are INTERNAL documents of the HOA. They are typically NOT required to be filed anywhere but with the HOA. They can be changed by a simple vote of the board.

Not always true. Our bylaws require 2/3 approval of all voting interests to amend.
BonnieG1
(Nebraska)

Posts:1186


05/19/2015 7:21 PM  
Posted By GenoS on 05/19/2015 7:14 PM
Posted By MelissaP1 on 05/19/2015 12:24 PM
By-laws are INTERNAL documents of the HOA. They are typically NOT required to be filed anywhere but with the HOA. They can be changed by a simple vote of the board.

Not always true. Our bylaws require 2/3 approval of all voting interests to amend.




Our By-Laws have to be filed at the courthouse with our Master Deed. Most of our By-Laws require a 2/3 approval to amend. One section at this time requires 100% approval. We are working with our lawyer to lower the requirement of 100% approval to amend.

Now resolutions passed by the Board do not need to be filed at the court house and can be amended or rescinded with a simple Board vote.
JonD1


Posts:0


05/19/2015 7:23 PM  
Or to offer the abridged version.

Walter was shown the door off the board. Anyone wonder why?

Walter has a bug up his ass.

Walter wants to get even and cause the members of the board problems.

Walter has no regard for any cost his actions bring to the community.

Walter had some spare change to cover the cost of filing in small claims court.

What the members of the board and his neighbors have thought about Walter previously has been proven correct.


IF Walter is so cock sure his case is slam dunk why does he bother to sell it here?

Or why does he NEED to sell it here to people who have no skin in the game?

When's the court date Walter?

Win, lose, or draw you big play will accomplish very little positive for the community.

Who cares about that when you have the chance to get even.

Small and petty comes to mind......
LarryB13
(Arizona)

Posts:4099


05/19/2015 10:34 PM  
Posted By TimB4 on 05/19/2015 6:57 PM
Walt,
Let me see if I can summarize the order of events. Please correct anything I make a mistake with.

1) In 2014 you were serving as a Director (based on your first thread referenced earlier in this thread)

2) Prior to the annual membership meeting, the Board chose to decrease the number of Directors (which you believe to be a violation of your governing documents)

3) Prior to the annual meeting you had e-mail the Association attorney asking questions about the Board's actions, but never received a response.

4) Due to the decrease (although it's not clear if you even were a candidate) you were not reelected to the Board.

5) The President, being required to attend a deposition, contacted the Association attorney to accompany him even though the Association was not directly involved (but may have been indirectly involved) in the legal action the deposition was about.

6) In September 2014, the Board paid the attorneys bill associated with services provided for the deposition.

7) On an unknown date, you brought legal action against specific Directors for utilizing, and paying, the Association attorney for non-association business.

8) In January 2015, the Board discussed adopting a resolution to require board approval prior to contacting the Associations attorney (as no such resolution existed earlier).

9) Recently, date unknown, the Board adopted such a resolution as noted in the minutes of a Board meeting.




Tim,

You omitted what I consider the biggest fact of all: The CC&R's require the association to indemnify (that is, to pay for) the legal expenses incurred by any board member or officer in connection with their association duties. In this case, the president was subpoenaed as a witness in a squabble between two neighbors. I assume that she was subpoenaed in her role as president as opposed to being someone who was just passing by when things happened. The president wisely engaged the services of the association attorney as a slip of the tongue or an imprecise response to a question could result in the association becoming a party to the litigation when it had no liability. She would have been a fool to attend the deposition without counsel. If the BOD expected her to appear without counsel then they are all idiots.

The CC&R's wisely take the decision as to whether to pay for such legal services out of the hands of the board. They have no choice but to pay (and they likely have little authority to deny access to counsel but that is an issue for another day).

The biggest problem with HOA's and their boards is that they are made up of idiot homeowners who have no experience in dealing with legal matters or other business issues. Other than to draw up a will, how many members of this site have ever hired an attorney? Walt thinks it is a big deal that he spent all of $50 for legal advice (and got what he paid for). Walt's BOD seems to think it was a big deal to spend $1100 on legal fees. What a bunch of chumps.

The average homeowner/board member makes maybe $30 to $40 an hour. He craps in his pants when a lawyer bills his time at $300 because he has no idea what it costs to run a law office. So rather than pay for much-needed advice and/or representation, the average board will avoid the attorney in the misguided belief that they are saving money. The declarant in this situation apparently recognized that a BOD might balk at paying its legal bills so he removed the decision from the board.








TimB4
(Tennessee)

Posts:17830


05/20/2015 12:38 AM  
Larry,

Although I agree with you, Walter had already heard that argument and dismissed it.

I don't know if the President was called as a witness or a participant. If a participant, did the issue occur while the individual was on the Board? If it did, then the Association may have been named in any legal action as it could be argued the President was acting on behalf of the Association when the defamation occurred. Lack of details only allows speculation. Therefore, I'll give Walter the argument that this issue did not involve, directly or indirectly, the Association and the President should not have used the Association attorney.

That is the reason why I didn't include it as a reason why I thought Walter would lose the legal case.

However, the Board will be required to indemnify the President, and other name board members, in the legal action brought by Walter. This may lead to deferred maintenance, increased assessments due to increased insurance premiums or a special assessment for the Board to pay the legal expenses of defending these individuals against Walters legal action.



LarryB13
(Arizona)

Posts:4099


05/20/2015 2:13 AM  
Posted By TimB4 on 05/20/2015 12:38 AM

However, the Board will be required to indemnify the President, and other name board members, in the legal action brought by Walter. This may lead to deferred maintenance, increased assessments due to increased insurance premiums or a special assessment for the Board to pay the legal expenses of defending these individuals against Walters legal action.


This will be a very cheap case to defend.

The first thing the HOA's insurance-provided lawyer will do is move the case to the next higher level of court, where there are formal rules. (You cannot force a party to proceed in an informal court without his consent.)

Assuming that Georgia's rules of civil procedure are based on federal rules, the attorney will move for dismissal based on Rule 12, arguing that by citing the wrong statutes, failing to comply with the statutory notice requirement, and failing to have established the required standing to sue, Walter has not stated a claim on which relief can be granted. Two billable hours, tops. And they do not even need to file an answer to move for dismissal under Rule 12.

WalterM3
(Georgia)

Posts:371


05/20/2015 5:15 AM  
I am alleging malfeasance and bad faith. Board members are not indemnified against that. Seems to me that the HOA attorney will have to judge whether or not the defendants can win on the merits. If the court finds that it was malfeasance and bad faith, then the attorney won’t get paid.

Two of the defendants are no longer on the board. Another is currently the vice president and the other is the treasurer.

A neighbor of mine told a newly elected board member (although she was the president for two previous terms), that if HOA funds are used to pursue this case, then –he- will sue the Board. This case does not involve the HOA.

Further, this same former president now back on the board has told me to my face that she believes these Board members should pay the money back. I asked them to do that earlier. No response.

Walt
WalterM3
(Georgia)

Posts:371


05/20/2015 5:30 AM  
"The President, being required to attend a deposition, contacted the Association attorney to accompany him even though the Association was not directly involved (but may have been indirectly involved) in the legal action the deposition was about."

Here are quotes from the attorney invoices. The subpoena was served on 8/29/14.

9/3/2014 Received and reviewed lawsuit and deposition issue regarding Board member's testimony $180.00
9/4/2014 Telephone Discussion with Board president regarding deposition procedure. $112.50
9/4/2014 Received and reviewed lawsuit amongst Board members and implication to current Board. Advised Board president. $112.50
9/5/2014 Received and reviewed notice of deposition cancellation concerns. $45.00
9/5/2014 Prepared Status Report at client's request. Forwarded to property manager. $150.00
9/8/2014 Attended deposition of Board President regarding Board code of conduct and vetting of vendors $540.00


Do you think the HOA president should have contacted the HOA lawyer for the first 5? Shouldn't she have contacted her own lawyer? For instance, what on earth could the "implication to current Board" be for a defamation action?

Why should the Homeowners pay for that?

The HOA president was not deposed in any official capacity but to see if her knowledge of what had transpired could help the defendant prove the truth of his statements, which of course is proof against defamation.

The lawsuit was for a claim of one Board member that she had been defamed by a former Board member. It did not and could not involve the HOA. Unless maybe the plaintiff in the defamation action might add the HOA as a defendant?

I hope all this formats alright. A preview pane would be a great addition to this site.

Walt
WalterM3
(Georgia)

Posts:371


05/20/2015 5:51 AM  
And as I have said a dozen times, even if you could justify using the HOA attorney to attend a deposition based on a defamation action between two HOA members, the laws of Georgia require that a majority of the Board members must approve all actions in writing prior to the action by a procedure called an Action Without Meeting.

That ‘consent’ must then be appended to the minutes. That makes it a record of the HOA.

No AWM’s were captured in either 2013 and 2014. That is the Board members being ignorant of or not caring about their responsibilities under the Bylaws of the Association.

They should pay that money back. They haven’t even graced a request that they do so with an answer. They have made no defense of their actions. The two still on the Board have refused to resign. I asked them to resign at the April monthly meeting.

They will have to answer the Court of take a default judgment.

Walt
PitA


Posts:0


05/20/2015 7:52 AM  
Melissa:

They can be changed by a simple vote of the board.


Absolutely incorrect.

? How can the doc governing the BOD be changed merely by the BOD itself ?

Sort o' like the foxes setting the hen-house rules ?

Generally a majority vote of a quorum of the corporate membership itself would be required to change the corporate bylaws.

WalterM3
(Georgia)

Posts:371


05/20/2015 8:06 AM  
Posted By PitA on 05/20/2015 7:52 AM
Melissa:

They can be changed by a simple vote of the board.


Absolutely incorrect.

? How can the doc governing the BOD be changed merely by the BOD itself ?

Sort o' like the foxes setting the hen-house rules ?

Generally a majority vote of a quorum of the corporate membership itself would be required to change the corporate bylaws.





Our governing documents can only be changed by a 2/3 vote of the members of the Association.

Walt
LarryB13
(Arizona)

Posts:4099


05/20/2015 8:15 AM  
Posted By WalterM3 on 05/20/2015 5:51 AM
They should pay that money back. They haven’t even graced a request that they do so with an answer. They have made no defense of their actions. The two still on the Board have refused to resign. I asked them to resign at the April monthly meeting.


Gosh, Walt. It sounds like they do not take you seriously! Imagine that.
WalterM3
(Georgia)

Posts:371


05/20/2015 8:30 AM  
"a) Regardless if proper procedure was followed, the Board (as a whole) sanctioned the action of the President by paying the legal expenses incurred. This may have been a bad decision, but it was still a decision of the Board."

As I have posted a number of times, the Law of this state requires that the decision of the Board be made -prior- to the action. In writing.

Section 7. Action Without A Meeting. Any action by the Board of Directors or by any committee appointed by the Board of Directors required or permitted to be taken at any meeting may be taken without a meeting if, prior to such action, one or more written consents describing the action taken are signed by no less than a majority of the members of the Board of Directors or of such committee, as the case may be. Such written consent or consents shall be filed with the minutes of the proceedings of the Board of Directors or of the appropriate committee and such consent or consents shall be treated for all purposes as a vote at a meeting . Action taken under this provision is effective when the last Director or committee member signs the consent, unless the consent specifies a different effective date.

No do-overs.

Walt
NpS
(Pennsylvania)

Posts:4216


05/20/2015 8:31 AM  
Posted By LarryB13 on 05/20/2015 8:15 AM
Gosh, Walt. It sounds like they do not take you seriously! Imagine that.

iMaGiNe ThAt InDeEd.

Sikubali jukumu. Read all posts at your own risk.
WalterM3
(Georgia)

Posts:371


05/20/2015 8:31 AM  
"a) Regardless if proper procedure was followed, the Board (as a whole) sanctioned the action of the President by paying the legal expenses incurred. This may have been a bad decision, but it was still a decision of the Board."

As I have posted a number of times, the Law of this state requires that the decision of the Board be made -prior- to the action. In writing.

Section 7. Action Without A Meeting. Any action by the Board of Directors or by any committee appointed by the Board of Directors required or permitted to be taken at any meeting may be taken without a meeting if, prior to such action, one or more written consents describing the action taken are signed by no less than a majority of the members of the Board of Directors or of such committee, as the case may be. Such written consent or consents shall be filed with the minutes of the proceedings of the Board of Directors or of the appropriate committee and such consent or consents shall be treated for all purposes as a vote at a meeting . Action taken under this provision is effective when the last Director or committee member signs the consent, unless the consent specifies a different effective date.

No do-overs.

Walt
WalterM3
(Georgia)

Posts:371


05/20/2015 8:31 AM  
"a) Regardless if proper procedure was followed, the Board (as a whole) sanctioned the action of the President by paying the legal expenses incurred. This may have been a bad decision, but it was still a decision of the Board."

As I have posted a number of times, the Law of this state requires that the decision of the Board be made -prior- to the action. In writing.

Section 7. Action Without A Meeting. Any action by the Board of Directors or by any committee appointed by the Board of Directors required or permitted to be taken at any meeting may be taken without a meeting if, prior to such action, one or more written consents describing the action taken are signed by no less than a majority of the members of the Board of Directors or of such committee, as the case may be. Such written consent or consents shall be filed with the minutes of the proceedings of the Board of Directors or of the appropriate committee and such consent or consents shall be treated for all purposes as a vote at a meeting . Action taken under this provision is effective when the last Director or committee member signs the consent, unless the consent specifies a different effective date.

No do-overs.

Walt
WalterM3
(Georgia)

Posts:371


05/20/2015 8:33 AM  
Posted By NpS on 05/20/2015 8:31 AM
Posted By LarryB13 on 05/20/2015 8:15 AM
Gosh, Walt. It sounds like they do not take you seriously! Imagine that.

iMaGiNe ThAt InDeEd.




A good reason to take them to court.

Walt
WalterM3
(Georgia)

Posts:371


05/20/2015 8:46 AM  
You omitted what I consider the biggest fact of all: The CC&R's require the association to indemnify (that is, to pay for) the legal expenses incurred by any board member or officer in connection with their association duties. In this case, the president was subpoenaed as a witness in a squabble between two neighbors. I assume that she was subpoenaed in her role as president as opposed to being someone who was just passing by when things happened. The president wisely engaged the services of the association attorney as a slip of the tongue or an imprecise response to a question could result in the association becoming a party to the litigation when it had no liability.

How would that work? The defendant had the HOA president deposed. Can you explain exactly what you mean? Would the defendant add the HOA or the HOA president as an additional defendant?

Since this was a defamation suit, it could not possibly be related to any official duties of this person as president.

Walt
NpS
(Pennsylvania)

Posts:4216


05/20/2015 8:56 AM  
Posted By LarryB13 on 05/16/2015 9:28 PM
Walter,

After reviewing your state statutes I have come to the conclusion that your lawsuit is fatally flawed.


Just scanning this thread without reading all the posts. Yet it seems to me that the lawsuit will fail for another reason.

A magistrate court isn't just about dollar amount of the claim. It's also about nature of the claim. A magistrate judge isn't going to deal with anything as complex as whether an attorney should have been consulted by an HOA board.



Sikubali jukumu. Read all posts at your own risk.
LarryB13
(Arizona)

Posts:4099


05/20/2015 9:29 AM  
Posted By WalterM3 on 05/20/2015 5:30 AM
The lawsuit was for a claim of one Board member that she had been defamed by a former Board member.


Apparently there are lawyers involved in this litigation whose mission is to run up the billable hours, which is precisely why the president was spot-on to attend the deposition with counsel at her side.

Defamation suits brought by an elected or public official are virtually impossible to win due to the burden of proof. It has been this way since New York Times Co. v. Sullivan, 376 U.S. 254 (1964). See http://en.wikipedia.org/wiki/New_York_Times_Co._v._Sullivan for the condensed version. Maybe the news has not yet reached the Peachtree State?

The fact that this defamation lawsuit has reached the discovery stage instead of being dismissed earlier tells me that the attorneys for both parties are seeking to run up huge legal bills at the expense of their respective clients.




Unless maybe the plaintiff in the defamation action might add the HOA as a defendant?


Duh! You think?

That's exactly why the president required counsel when she was deposed. The litigation between the former board members is a black hole that will suck in and swallow anyone who gets too close.

LarryB13
(Arizona)

Posts:4099


05/20/2015 9:48 AM  
Posted By WalterM3 on 05/17/2015 2:03 AM
This is the suit that the online lawyer found. It was taken out by a few former board members:

Court of Appeals of Georgia.
CRITTENTON, et al. v. SOUTHLAND OWNERS ASSOCIATION, INC., et al.



Apparently you did not read this case. You can find it here: http://caselaw.findlaw.com/ga-court-of-appeals/1584296.html

The plaintiffs lost. Among other things, the court found that they had no standing to sue the corporation over an alleged misuse of funds.



WalterM3
(Georgia)

Posts:371


05/20/2015 11:05 AM  


From that case:

"Furthermore, plaintiffs' remaining portion of their petition for declaratory judgment regarding the proper election-voting procedures under SOA's bylaws, their negligent misuse of association funds claim, and their attorney-fees claim were also properly dismissed. While we disagree with the trial court that those claims are moot,8 we nevertheless find that plaintiffs lacked standing to sue on those claims individually rather than derivatively.

A “derivative suit is brought on behalf of [a] corporation for harm done to it[,] and any damages recovered are paid to the corporation.9 And although plaintiffs may bring direct actions for injuries done to them in their individual capacities by corporate fiduciaries, our Supreme Court has held that “to have standing to sue individually, rather than derivatively on behalf of the corporation, the plaintiff must allege more than an injury resulting from a wrong to the corporation.”10 In fact, “to set out an individual action, the plaintiff must allege either an injury which is separate and distinct from that suffered by other [members], or a wrong involving a contractual right of a [member] which exists independently of any right of the corporation.”11 Thus, “[f]or a plaintiff to have standing to bring an individual action, he must be injured directly or independently of the corporation.”12 Furthermore, “[t]he determination of whether a claim is derivative or direct is made by looking to what the pleader alleged,” and “t is the nature of the wrong alleged and not the pleader's designation or stated intention that controls the court's decision.”13 -

So the plaintiffs filed individually, my case clearly says it is derivative.

My exchange with the lawyer from the online service who is licensed to practice in Georgia:

Question

Craig, If the
officers of the corporation (this is an HOA) did commit malfeasance and disburse money improperly, do I have standing as a member of the Association to take them to court?



Answer
Yes,you could personally or through an attorney bring an action against the directors and I or officers for malfeasance or a similar action. The details of the civil case against the association would depend upon the specific factors in your case. Without knowing the specifics of your case ---- the suit could be in a derivative form, in other words you acting on behalf of the association. For an example of such a dispute, you can visit
http://caselaw.findlaw.com/ga-court-of-appeals/1584296.html.

----------------

Which is the case you cite (that I also referenced).

I think based on the quote I show above, since I clearly say in my pleading that I am acting derivatively, I am okay. Good thing I consulted a lawyer.

Walt
WalterM3
(Georgia)

Posts:371


05/20/2015 11:06 AM  
Yep. Definitely need a preview pane.

Walt
WalterM3
(Georgia)

Posts:371


05/20/2015 11:10 AM  
Posted By LarryB13 on 05/20/2015 9:48 AM
Posted By WalterM3 on 05/17/2015 2:03 AM
This is the suit that the online lawyer found. It was taken out by a few former board members:

Court of Appeals of Georgia.
CRITTENTON, et al. v. SOUTHLAND OWNERS ASSOCIATION, INC., et al.



Apparently you did not read this case. You can find it here: http://caselaw.findlaw.com/ga-court-of-appeals/1584296.html

The plaintiffs lost. Among other things, the court found that they had no standing to sue the corporation over an alleged misuse of funds.







Clear reading does not seem to be your strong suit.

“[t]he general rule is that a shareholder seeking to recover misappropriated corporate funds may only bring a derivative suit.”

Which is what I did, as my Statement of Claim clearly states. And that is what I am trying to do with my suit: "recover misappropriated corporate funds"

Walt
WalterM3
(Georgia)

Posts:371


05/20/2015 11:19 AM  
Posted By WalterM3 on 05/20/2015 11:10 AM
Posted By LarryB13 on 05/20/2015 9:48 AM
Posted By WalterM3 on 05/17/2015 2:03 AM
This is the suit that the online lawyer found. It was taken out by a few former board members:

Court of Appeals of Georgia.
CRITTENTON, et al. v. SOUTHLAND OWNERS ASSOCIATION, INC., et al.



Apparently you did not read this case. You can find it here: http://caselaw.findlaw.com/ga-court-of-appeals/1584296.html

The plaintiffs lost. Among other things, the court found that they had no standing to sue the corporation over an alleged misuse of funds.







Clear reading does not seem to be your strong suit.

“[t]he general rule is that a shareholder seeking to recover misappropriated corporate funds may only bring a derivative suit.”

Which is what I did, as my Statement of Claim clearly states. And that is what I am trying to do with my suit: "recover misappropriated corporate funds"

Walt




I will just quote myself.

It was obvious to me that I could only recover individually 1/240th (we have 240 units) of the misappropriated funds. That would be $4.75. So by asking the lawyer the right questions he showed me the way to go forward - through a derivative suit in which the relief I seek from the Court is that the homeowners be reimbursed, not myself.

All this bleating about suing the HOA -- I am trying to get money back in the HOA coffers, as my very first posting states.

Walt
MelissaP1
(Alabama)

Posts:10576


05/20/2015 11:36 AM  
Uhm... If you were to win and the HOA was re-imbursed... Doesn't this mean the members you sued get a portion of that money as well? They are members too. So using your logic that you will receive 1/240 then it means they will also receive their portion... Although no one will ever receive a re-Imbursement check even if you win... That money would just go back in to fill a "hole". A HOA is a non-profit and this money was missing creating hole...

Logic... love it or live by it...

Former HOA President
LarryB13
(Arizona)

Posts:4099


05/20/2015 11:50 AM  
Posted By WalterM3 on 05/20/2015 11:19 AM
I will just quote myself.

It was obvious to me that I could only recover individually 1/240th (we have 240 units) of the misappropriated funds. That would be $4.75. So by asking the lawyer the right questions he showed me the way to go forward - through a derivative suit in which the relief I seek from the Court is that the homeowners be reimbursed, not myself.

All this bleating about suing the HOA -- I am trying to get money back in the HOA coffers, as my very first posting states.

Walt

By Georgia law, you need a minimum of five percent of the members to join you to sustain a derivative lawsuit. My math says five percent of 240 is twelve. You need to find eleven other members to join your lawsuit in order to have standing. Without standing, your case will be dismissed and the court may assess all of the defendants' costs against you.
WalterM3
(Georgia)

Posts:371


05/20/2015 11:51 AM  
Posted By MelissaP1 on 05/20/2015 11:36 AM
Uhm... If you were to win and the HOA was re-imbursed... Doesn't this mean the members you sued get a portion of that money as well? They are members too. So using your logic that you will receive 1/240 then it means they will also receive their portion... Although no one will ever receive a re-Imbursement check even if you win... That money would just go back in to fill a "hole". A HOA is a non-profit and this money was missing creating hole...

Logic... love it or live by it...




Yes, they will get their $4.75 too.

It will have been shown how they arrogantly and ignorantly carried out their duties as Board members.

pour encourager les autres – "to encourage the others."

Walt
LarryB13
(Arizona)

Posts:4099


05/20/2015 12:07 PM  
Posted By WalterM3 on 05/20/2015 11:51 AM
It will have been shown how they arrogantly and ignorantly carried out their duties as Board members.


Just as you have demonstrated why you are no longer on the board.
WalterM3
(Georgia)

Posts:371


05/20/2015 12:11 PM  
Posted By LarryB13 on 05/20/2015 11:50 AM
Posted By WalterM3 on 05/20/2015 11:19 AM
I will just quote myself.

It was obvious to me that I could only recover individually 1/240th (we have 240 units) of the misappropriated funds. That would be $4.75. So by asking the lawyer the right questions he showed me the way to go forward - through a derivative suit in which the relief I seek from the Court is that the homeowners be reimbursed, not myself.

All this bleating about suing the HOA -- I am trying to get money back in the HOA coffers, as my very first posting states.

Walt

By Georgia law, you need a minimum of five percent of the members to join you to sustain a derivative lawsuit. My math says five percent of 240 is twelve. You need to find eleven other members to join your lawsuit in order to have standing. Without standing, your case will be dismissed and the court may assess all of the defendants' costs against you.




“[t]he general rule is that a shareholder seeking to recover misappropriated corporate funds may only bring a derivative suit.”

I'll just go with that. We'll see.

Proceedings in the magistrate court shall not be subject to Chapter 11 of Title 9, the "Georgia Civil Practice Act."

JUDICIAL DECISIONS

MAGISTRATE COURTS MAY FOLLOW CIVIL PRACTICE ACT. --The language of O.C.G.A. § 15-10-42, that magistrate courts are not subject to the Civil Practice Act, O.C.G.A. Ch. 11, T. 9, must be read to permit, rather than require, magistrate courts to follow the provisions of the Civil Practice Act, or any other appropriate rules and regulations relating to pleading, practice, and procedure, where to do so would 'administer justice' under O.C.G.A. § 15-10-44. Howe v. Roberts, 259 Ga. 617, 385 S.E.2d 276 (1989).

I think this covers me. The money was clearly not disbursed as required by Georgia law. Justice requires that the malfeasing Board members pay it back.



Walt
WalterM3
(Georgia)

Posts:371


05/20/2015 12:50 PM  
Posted By LarryB13 on 05/20/2015 11:50 AM
Posted By WalterM3 on 05/20/2015 11:19 AM
I will just quote myself.

It was obvious to me that I could only recover individually 1/240th (we have 240 units) of the misappropriated funds. That would be $4.75. So by asking the lawyer the right questions he showed me the way to go forward - through a derivative suit in which the relief I seek from the Court is that the homeowners be reimbursed, not myself.

All this bleating about suing the HOA -- I am trying to get money back in the HOA coffers, as my very first posting states.

Walt

By Georgia law, you need a minimum of five percent of the members to join you to sustain a derivative lawsuit. My math says five percent of 240 is twelve. You need to find eleven other members to join your lawsuit in order to have standing. Without standing, your case will be dismissed and the court may assess all of the defendants' costs against you.




I find several cases where individuals brought actions where they were the sole plaintiff. Did you cite a case on this 5% thing?

Walt
WalterM3
(Georgia)

Posts:371


05/20/2015 12:50 PM  
Posted By LarryB13 on 05/20/2015 11:50 AM
Posted By WalterM3 on 05/20/2015 11:19 AM
I will just quote myself.

It was obvious to me that I could only recover individually 1/240th (we have 240 units) of the misappropriated funds. That would be $4.75. So by asking the lawyer the right questions he showed me the way to go forward - through a derivative suit in which the relief I seek from the Court is that the homeowners be reimbursed, not myself.

All this bleating about suing the HOA -- I am trying to get money back in the HOA coffers, as my very first posting states.

Walt

By Georgia law, you need a minimum of five percent of the members to join you to sustain a derivative lawsuit. My math says five percent of 240 is twelve. You need to find eleven other members to join your lawsuit in order to have standing. Without standing, your case will be dismissed and the court may assess all of the defendants' costs against you.




I find several cases where individuals brought actions where they were the sole plaintiff. Did you cite a case on this 5% thing?

Walt
MelissaP1
(Alabama)

Posts:10576


05/20/2015 1:47 PM  
I have never seen nor will I hope to ever see a HOA give a re-imbursement check to any member. That's just not how a budget of a HOA works. A HOA is a Non-Profit and is to collect as much money as it spends out plus a capital/saving fund. So if the HOA was t get this money back. It would NOT go into any member's pockets. It would go back into the HOA budget to cover the legal expenses or the original missing money. Remember this is NOT a profit. It would be REPLACING money. Where you get the logic this is some kind of re-imbursement does not make sense.

How come I have a feeling if they decided to "compromise" with Walt he would stop his legal pursuit? Which means he is NOT doing this for his fellow HOA members. He's doing it for himself. I am sure if they came up and told him here is the $1400 and it's back in the HOA account, he'd still complain and demand a check to himself?

Former HOA President
TimB4
(Tennessee)

Posts:17830


05/20/2015 3:23 PM  
Posted By WalterM3 on 05/20/2015 5:30 AM
{emphasis added}
Here are quotes from the attorney invoices. The subpoena was served on 8/29/14.

9/3/2014 Received and reviewed lawsuit and deposition issue regarding Board member's testimony $180.00
9/4/2014 Telephone Discussion with Board president regarding deposition procedure. $112.50
9/4/2014 Received and reviewed lawsuit amongst Board members and implication to current Board. Advised Board president. $112.50
9/5/2014 Received and reviewed notice of deposition cancellation concerns. $45.00
9/5/2014 Prepared Status Report at client's request. Forwarded to property manager. $150.00
9/8/2014 Attended deposition of Board President regarding Board code of conduct and vetting of vendors $540.00





The bolded section indicates a potential indirect action against the Association. This of course would likely be why the Board chose to pay for the legal representation.


Posted By WalterM3 on 05/20/2015 5:30 AM
{emphasis added}
For instance, what on earth could the "implication to current Board" be for a defamation action?





Actions against Associations occur all the time. Recent example is the Zimmerman case in FL. Simply because the individual was a member of the Association, the attorney took action against the Association. The Association chose to settle rather than take a chance in court that they were even remotely accountable.

Posted By WalterM3 on 05/20/2015 5:30 AM
{emphasis added}
Why should the Homeowners pay for that?




The Association/members should pay for it because it can keep a special assessment from occurring or, worst case (as has happened in VA), the Association having to declare bankruptcy in order to pay a legal judgement against it.

Special assessments, legal battles and judgements against an Association can affect property values, as many potential buyers will not purchase within an Association that has these things occurring. This may require the current owners to lower the asking price or rent instead of selling.


Posted By WalterM3 on 05/20/2015 5:30 AM
{emphasis added}
The HOA president was not deposed in any official capacity but to see if her knowledge of what had transpired could help the defendant prove the truth of his statements, which of course is proof against defamation.




I didn't know that you were a party of the action or had direct knowledge of what transpired during the deposition.

Only those directly involved truly know what transpired. One can guess what occurred, but that would be all it is, a guess - with zero facts to support it.


Posted By WalterM3 on 05/20/2015 5:30 AM
{emphasis added}
Unless maybe the plaintiff in the defamation action might add the HOA as a defendant?




I believe you actually answered your own questions.
LarryB13
(Arizona)

Posts:4099


05/20/2015 4:53 PM  
Posted By WalterM3 on 05/20/2015 12:50 PM
I find several cases where individuals brought actions where they were the sole plaintiff. Did you cite a case on this 5% thing?


Walt,

So far every case you have cited involved plaintiffs who lost their cases. The most recent one was the jerk who sued in Magistrate's Court as a pro per litigant, lost his case, and then got sued by the other party for abuse of process.

Have you cited any cases where members successfully sued an association in a derivative action?




Did you cite a case on this 5% thing?


I gave you a reference to the statute previously. Was there some part of it that you did not understand? Do you think the legislature has no authority to enact such a statute? Do you think the courts will ignore it? Do you think the attorneys for the defendants won't know it and won't be able to find it?
BanksS


Posts:0


05/20/2015 5:23 PM  
I must be missing something here. Why would the HOA president use the services of the HOA attorney in a dispute between neighbors where the dispute has nothing to do with HOA business? Shouldn't she have obtained and paid for her own attorney? Or gave her deposition without an attorney. Just because you are being asked to give a deposition doesn't mean you have to hire an attorney. Why should the HOA pay for this? Are many of you saying, the HOA probably shouldn't have paid but they did and there is nothing that the membership can do about this now? Are you saying that Walt and the rest of the membership have no recourse against an improper use of the HOA attorney?

I don't understand why there was HOA involvement of a private dispute between neighbors. If someone would clarify this for me, I would appreciate it.
JonD1


Posts:0


05/20/2015 6:08 PM  
Posted By LarryB13 on 05/20/2015 9:48 AM
Posted By WalterM3 on 05/17/2015 2:03 AM
This is the suit that the online lawyer found. It was taken out by a few former board members:

Court of Appeals of Georgia.
CRITTENTON, et al. v. SOUTHLAND OWNERS ASSOCIATION, INC., et al.



Apparently you did not read this case. You can find it here: http://caselaw.findlaw.com/ga-court-of-appeals/1584296.html

The plaintiffs lost. Among other things, the court found that they had no standing to sue the corporation over an alleged misuse of funds.







See what $50 gets you in the way of legal services in Georgia?

Now for a few thousand more they could maybe find a case that supports your position....
JonD1


Posts:0


05/20/2015 6:12 PM  
Posted By LarryB13 on 05/20/2015 11:50 AM
Posted By WalterM3 on 05/20/2015 11:19 AM
I will just quote myself.

It was obvious to me that I could only recover individually 1/240th (we have 240 units) of the misappropriated funds. That would be $4.75. So by asking the lawyer the right questions he showed me the way to go forward - through a derivative suit in which the relief I seek from the Court is that the homeowners be reimbursed, not myself.

All this bleating about suing the HOA -- I am trying to get money back in the HOA coffers, as my very first posting states.

Walt

By Georgia law, you need a minimum of five percent of the members to join you to sustain a derivative lawsuit. My math says five percent of 240 is twelve. You need to find eleven other members to join your lawsuit in order to have standing. Without standing, your case will be dismissed and the court may assess all of the defendants' costs against you.





From your lips to God's ears.....
NpS
(Pennsylvania)

Posts:4216


05/20/2015 6:26 PM  
Posted By BanksS on 05/20/2015 5:23 PM
I must be missing something here. Why would the HOA president use the services of the HOA attorney in a dispute between neighbors where the dispute has nothing to do with HOA business? Shouldn't she have obtained and paid for her own attorney? Or gave her deposition without an attorney. Just because you are being asked to give a deposition doesn't mean you have to hire an attorney. Why should the HOA pay for this? Are many of you saying, the HOA probably shouldn't have paid but they did and there is nothing that the membership can do about this now? Are you saying that Walt and the rest of the membership have no recourse against an improper use of the HOA attorney?

I don't understand why there was HOA involvement of a private dispute between neighbors. If someone would clarify this for me, I would appreciate it.


Consider the source. Walter comes to the forum time and again with generic allegations about board member wrongdoing - and then asks whether his allegations are legally actionable. There is a supposedly a lawsuit - But Walter has yet to grace us with the content of the lawsuit - only his perceptions about the lawsuit.


Sikubali jukumu. Read all posts at your own risk.
JonD1


Posts:0


05/20/2015 6:26 PM  
Posted By BanksS on 05/20/2015 5:23 PM
I must be missing something here. Why would the HOA president use the services of the HOA attorney in a dispute between neighbors where the dispute has nothing to do with HOA business? Shouldn't she have obtained and paid for her own attorney? Or gave her deposition without an attorney. Just because you are being asked to give a deposition doesn't mean you have to hire an attorney. Why should the HOA pay for this? Are many of you saying, the HOA probably shouldn't have paid but they did and there is nothing that the membership can do about this now? Are you saying that Walt and the rest of the membership have no recourse against an improper use of the HOA attorney?

I don't understand why there was HOA involvement of a private dispute between neighbors. If someone would clarify this for me, I would appreciate it.




Well yes you are missing quite a bit.

As board President you represent the HOA and in ANY legal proceedings in that capacity where what you might say or information you might provide could have ramifications to the property you MUST have counsel.

As President of a corporation anyone who would suggest you appear without representation or fund that same service is ignorant.

And NO she had no duty to pay for her own legal representation in her role as board president.

And only an idiot would give sworn testimony without a lawyer present.

Your determination this was an IMPROPER use of HOA funds will be determined in court and not simply agreed to because Walt the $50 lawyer says so.


I would hope the HOA lawyer appears to defend Walt's case eats his lunch and then files a counterclaim for abuse of process seeking legal fees.

Wait


LarryB13
(Arizona)

Posts:4099


05/20/2015 6:43 PM  
Posted By JonD1 on 05/20/2015 6:26 PM
Posted By BanksS on 05/20/2015 5:23 PM
I must be missing something here. Why would the HOA president use the services of the HOA attorney in a dispute between neighbors where the dispute has nothing to do with HOA business? Shouldn't she have obtained and paid for her own attorney? Or gave her deposition without an attorney. Just because you are being asked to give a deposition doesn't mean you have to hire an attorney. Why should the HOA pay for this? Are many of you saying, the HOA probably shouldn't have paid but they did and there is nothing that the membership can do about this now? Are you saying that Walt and the rest of the membership have no recourse against an improper use of the HOA attorney?

I don't understand why there was HOA involvement of a private dispute between neighbors. If someone would clarify this for me, I would appreciate it.


Well yes you are missing quite a bit.

As board President you represent the HOA and in ANY legal proceedings in that capacity where what you might say or information you might provide could have ramifications to the property you MUST have counsel.

As President of a corporation anyone who would suggest you appear without representation or fund that same service is ignorant.

And NO she had no duty to pay for her own legal representation in her role as board president.

And only an idiot would give sworn testimony without a lawyer present.

Your determination this was an IMPROPER use of HOA funds will be determined in court and not simply agreed to because Walt the $50 lawyer says so.


Well said, Jon.

As I noted earlier, the underlying lawsuit for defamation between two former board members exists because the parties seem to be unaware of New York Times v. Sullivan. That case raised the bar so high that prosecution is nearly impossible when a defamation lawsuit is brought by an elected official (even an HOA official) or other public figures. Since the parties are bound and determined to bash each other's brains out at all costs and in reckless disregard for the law, no one but a total fool would appear for a deposition in that matter without legal counsel.

To top it all off, the CC&R's require the association to pay for counsel under such circumstances. The board does not have the option of refusing to pay.

TimB4
(Tennessee)

Posts:17830


05/20/2015 6:45 PM  
Posted By BanksS on 05/20/2015 5:23 PM
I must be missing something here. Why would the HOA president use the services of the HOA attorney in a dispute between neighbors where the dispute has nothing to do with HOA business?




Well, we don't really know anything about why the President was called to a deposition. We have Walters interpretaion of what has been in his Associatoins minutes, reported to the membership or discussed in open meetings.

The invoice cited by Walter indicates that the issue may have indirectly involved the Association as the Attorney briefed the board on that specific area.


Posted By BanksS on 05/20/2015 5:23 PM

Shouldn't she have obtained and paid for her own attorney?




That is Walters take on it.

It's unclear if the individual was being called to the deposition because they were the President of the Association, was directly involved in the issue or simply a neighbor passing by.

Perhaps, and this is nothing more than a wild guess, the issue of defamation occurred at a Board meeting, Committee meeting or membership meeting.

Posted By BanksS on 05/20/2015 5:23 PM

Or gave her deposition without an attorney. Just because you are being asked to give a deposition doesn't mean you have to hire an attorney.




As Larry pointed out, it makes sense to be represented at a deposition.

The attorney can make sure that the questions you are asked stay within the scope of the discovery process and can advise you on anything that you may not be sure of the right way to answer the trick question (for example: Have you quit beating your dog?)


Posted By BanksS on 05/20/2015 5:23 PM

Why should the HOA pay for this?




Again, we don't know in what capacity the individual was called, where the actual action that caused the deposition took place or if it can directly or indirectly involve the Association.

As I posted earlier in the thread, if there is any chance the issue can involve the Association, it makes sense to have the Association Attorney involved.


Posted By BanksS on 05/20/2015 5:23 PM

Are you saying that Walt and the rest of the membership have no recourse against an improper use of the HOA attorney?




Again, we don't know if it was improper use. Improper use is certainly the perspective Walter has. However, without knowing the specifics of everything around the issue it's really impossible to say if the use was improper or not.

Walter also didn't really say the use of the attorney was improper as much as he was saying proper procedure wasn't followed before involving the attorney (something Walter has admitted to doing himself - contacting the attorney about an issue without prior approval of the Board).

Posted By BanksS on 05/20/2015 5:23 PM

I don't understand why there was HOA involvement of a private dispute between neighbors. If someone would clarify this for me, I would appreciate it.




Again, we do not know the specifics around the issue. We only know what Walter has shared and filtered via his perspective (as he is not directly involved in the issue either).
BanksS


Posts:0


05/20/2015 6:53 PM  
Posted By JonD1 on 05/20/2015 6:26 PM
Posted By BanksS on 05/20/2015 5:23 PM
I must be missing something here. Why would the HOA president use the services of the HOA attorney in a dispute between neighbors where the dispute has nothing to do with HOA business? Shouldn't she have obtained and paid for her own attorney? Or gave her deposition without an attorney. Just because you are being asked to give a deposition doesn't mean you have to hire an attorney. Why should the HOA pay for this? Are many of you saying, the HOA probably shouldn't have paid but they did and there is nothing that the membership can do about this now? Are you saying that Walt and the rest of the membership have no recourse against an improper use of the HOA attorney?

I don't understand why there was HOA involvement of a private dispute between neighbors. If someone would clarify this for me, I would appreciate it.




Well yes you are missing quite a bit.

As board President you represent the HOA and in ANY legal proceedings in that capacity where what you might say or information you might provide could have ramifications to the property you MUST have counsel.

As President of a corporation anyone who would suggest you appear without representation or fund that same service is ignorant.

And NO she had no duty to pay for her own legal representation in her role as board president.

And only an idiot would give sworn testimony without a lawyer present.

Your determination this was an IMPROPER use of HOA funds will be determined in court and not simply agreed to because Walt the $50 lawyer says so.


I would hope the HOA lawyer appears to defend Walt's case eats his lunch and then files a counterclaim for abuse of process seeking legal fees.

Wait





But is the president being asked to give a deposition as the HOA president or just a neighbor who has information? If I have a nonHoa dispute with my neighbor and my fellow neighbor who happens to be president can use the HOA attorney to consult and take to the deposition with me and the HOA pays for it. I do not see that as being appropriate.

When I was being sued there were several people being deposed without an attorney. They came, answered questions and left. And they were sworn in and a transcriber was there. So I disagree that one must always have an attorney when giving sworn testimony.

TimB4
(Tennessee)

Posts:17830


05/20/2015 7:07 PM  
Posted By BanksS on 05/20/2015 6:53 PM

When I was being sued there were several people being deposed without an attorney. They came, answered questions and left. And they were sworn in and a transcriber was there. So I disagree that one must always have an attorney when giving sworn testimony.




I believe that this is a personal preference issue.

Although arguments can be made to have or not have an attorney present, I think it is prudent for any business to have legal counsel at any deposition.
FredN
(California)

Posts:87


05/20/2015 7:08 PM  
SHAREHOLDER DERIVATIVE ACTIONS: FROM CRADLE
TO GRAVE
Seth Aronson
Sharon L. Tomkins
Ted Hassi
Andrew R. Escobar
O’Melveny & Myers, LLP, Los Angeles, California


Here is some good info for all....
TimB4
(Tennessee)

Posts:17830


05/20/2015 7:26 PM  
Here is a link to Fred's recommendation:

Shareholder Derivative Actions: From Cradle To Grave January 2010 article

Additional info:

CORPORATE OVERSIGHT THROUGH DERIVATIVE ACTION (a pdf file)

NpS
(Pennsylvania)

Posts:4216


05/20/2015 8:12 PM  
Posted By TimB4 on 05/20/2015 7:26 PM
Here is a link to Fred's recommendation:

Shareholder Derivative Actions: From Cradle To Grave January 2010 article

Additional info:

CORPORATE OVERSIGHT THROUGH DERIVATIVE ACTION (a pdf file)


While these citations may be interesting, and they do apply to corporations, we deal with an odd-ball variety. Generally our corporations are non-profits - run by volunteers - who are typically owners - and are almost always uncompensated. For our HOA board members, there is a great deal of lattitude given by the courts - and for good reason. Both legal (BJR) and common sense.

Some board members stand tall. Others shake in their boots at the thought of being sued. But either way, we need them - because more often than not, there just aren't enough people willing to take on the added responsibility and disruption in their lives of serving on an HOA board.

Who am I to judge whether a scared board member should have been stoic or let the association money flow? Instead, I stand in judgment of those who find every infringement legally actionable in their own minds - but never seem to find any lattitude for those who actually have to make these difficult and uncomfortable decisions that come with being an HOA board member. It's easy for those who never serve to find fault - or if they serve, it's likely that they never get anything accomplished other than pursue their own agendas.

Derivative. Shmarivative. Either way, Walter is taking his board members to task through the courts because he thinks he has that right over an $1,100 expenditure. No thought for the drain on the Board member energies and emotions for having to deal with Walter's lawsuit in addition to the defamation lawsuit that Walter is crying so loudly about.

Shame on you Walter. Do you actually think that the way to remedy an inappropriate legal expenditure is to create a new legal expenditure for your HOA? How thoughtless and ridiculous.


Sikubali jukumu. Read all posts at your own risk.
JonD1


Posts:0


05/20/2015 8:27 PM  
Posted By BanksS on 05/20/2015 6:53 PM
Posted By JonD1 on 05/20/2015 6:26 PM
Posted By BanksS on 05/20/2015 5:23 PM
I must be missing something here. Why would the HOA president use the services of the HOA attorney in a dispute between neighbors where the dispute has nothing to do with HOA business? Shouldn't she have obtained and paid for her own attorney? Or gave her deposition without an attorney. Just because you are being asked to give a deposition doesn't mean you have to hire an attorney. Why should the HOA pay for this? Are many of you saying, the HOA probably shouldn't have paid but they did and there is nothing that the membership can do about this now? Are you saying that Walt and the rest of the membership have no recourse against an improper use of the HOA attorney?

I don't understand why there was HOA involvement of a private dispute between neighbors. If someone would clarify this for me, I would appreciate it.




Well yes you are missing quite a bit.

As board President you represent the HOA and in ANY legal proceedings in that capacity where what you might say or information you might provide could have ramifications to the property you MUST have counsel.

As President of a corporation anyone who would suggest you appear without representation or fund that same service is ignorant.

And NO she had no duty to pay for her own legal representation in her role as board president.

And only an idiot would give sworn testimony without a lawyer present.

Your determination this was an IMPROPER use of HOA funds will be determined in court and not simply agreed to because Walt the $50 lawyer says so.


I would hope the HOA lawyer appears to defend Walt's case eats his lunch and then files a counterclaim for abuse of process seeking legal fees.

Wait





But is the president being asked to give a deposition as the HOA president or just a neighbor who has information? If I have a nonHoa dispute with my neighbor and my fellow neighbor who happens to be president can use the HOA attorney to consult and take to the deposition with me and the HOA pays for it. I do not see that as being appropriate.

When I was being sued there were several people being deposed without an attorney. They came, answered questions and left. And they were sworn in and a transcriber was there. So I disagree that one must always have an attorney when giving sworn testimony.





You are not brought in for a deposition as 1) a private citizen or 2) a board member or president
they are one and the same. And for a $1,400 fee to assure the HOA is not dragged into a civil dispute I would advise and require a lawyer protecting the interests of the HOA BE PRESENT.

While you might disagree you should consider the possibility you are wrong too.

Anyone who assumes the role of board president must realize they are no longer simply a private citizen representing their own views and interests. They in fact speak for the board and the community. As in any corporation officers and board members involved in legal matters should always have counsel.

When in doubt bring a lawyer


WalterM3
(Georgia)

Posts:371


05/21/2015 12:00 AM  
Posted By NpS on 05/20/2015 8:12 PM
Posted By TimB4 on 05/20/2015 7:26 PM
Here is a link to Fred's recommendation:



Derivative. Shmarivative. Either way, Walter is taking his board members to task through the courts because he thinks he has that right over an $1,100 expenditure. No thought for the drain on the Board member energies and emotions for having to deal with Walter's lawsuit in addition to the defamation lawsuit that Walter is crying so loudly about.

Shame on you Walter. Do you actually think that the way to remedy an inappropriate legal expenditure is to create a new legal expenditure for your HOA? How thoughtless and ridiculous.





Do you think it was thoughtless and ridiculous for the Board members to not follow the law?

"Section 7. Action Without A Meeting. Any action by the Board of Directors or by any committee appointed by the Board of Directors required or permitted to be taken at any meeting may be taken without a meeting if, prior to such action, one or more written consents describing the action taken are signed by no less than a majority of the members of the Board of Directors or of such committee, as the case may be. Such written consent or consents shall be filed with the minutes of the proceedings of the Board of Directors or of the appropriate committee and such consent or consents shall be treated for all purposes as a vote at a meeting . Action taken under this provision is effective when the last Director or committee member signs the consent, unless the consent specifies a different effective date."

Corruption can't be winked at.

Walt
NpS
(Pennsylvania)

Posts:4216


05/21/2015 5:16 AM  
Posted By WalterM3 on 05/21/2015 12:00 AM
Do you think it was thoughtless and ridiculous for the Board members to not follow the law?

"Section 7. Action Without A Meeting. Any action by the Board of Directors or by any committee appointed by the Board of Directors required or permitted to be taken at any meeting may be taken without a meeting if, prior to such action, one or more written consents describing the action taken are signed by no less than a majority of the members of the Board of Directors or of such committee, as the case may be. Such written consent or consents shall be filed with the minutes of the proceedings of the Board of Directors or of the appropriate committee and such consent or consents shall be treated for all purposes as a vote at a meeting . Action taken under this provision is effective when the last Director or committee member signs the consent, unless the consent specifies a different effective date."

Corruption can't be winked at.


In your original post Walter, you quoted your lawsuit saying that the money recovered was "spent for personal gain of the two defendants." What personal gain? Did they pocket the money? No. They spent it on a lawyer because some domass HO sued them. They spent the money because that's what they thought they needed to do to protect themselves. And now some other domass comes along and sues them again - He buys a $50 lawyer and gets the magic derivative answer he needs to make things even messier.

Ahhh. But they didn't follow a procedural rule. And so Walter says that makes the expenditure invalid. Ok, assuming they made a mistake - so what. That was not for "personal gain." It was to protect themselves from domasses.

But wait - we have a new quote - "Corruption can't be winked at." Yes - that settles it - you will obviously win your court case on that.

Where is all this junk about "personal gain" and "corruption" coming from. There's no corruption if the directors acted in good faith when they spent the money on a lawyer. And you have described nothing to demonstrates that they didn't act in good faith.

Wink. Blink. Stink. You're the one who is forcing them to spend more time and money to protect themselves. And I still find that offensive.

Yes I read your Section 7. Under certain circumstances it could be important. But seeing the forest for the trees is even more important. And you fail to do so at every opportunity.


Sikubali jukumu. Read all posts at your own risk.
CyrstalB
(Maryland)

Posts:457


05/21/2015 5:27 AM  
Posted By WalterM3 on 05/19/2015 7:05 AM
Posted By CyrstalB on 05/19/2015 5:57 AM
If I were in Walts HOA, and he took the HOA through this BS, would I as a member be able to sue him to recoup the money spent on fighting it? Would the docs actually have to say that like it does for forcing covenant compliance?




Taking the HOA through what? For the 10th time I am not suing the HOA. I am trying to hold corrupt members of the Board responsible for their corrupt actions.

I have to wonder if some of the people who've posted on this thread don't like the concept of being held responsible.

Walt


The board is the HOA. The officers are the HOA, there for if you are suing someone to reimburse the HOA money, you are in fact, involving the HOA.

You are citing minutes from the Board meeting, and your very own basis for small claims court is they took an action without a meeting, I must be missing something here, as it was the HOA attorney you claim was present with the president and then the HOA was charged for it.

Are you sure your not suing the HOA? Has the ex president responded to your claim as an individual, outside of the HOA?

WalterM3
(Georgia)

Posts:371


05/21/2015 5:28 AM  
"In your original post Walter, you quoted your lawsuit saying that the money recovered was "spent for personal gain of the two defendants." What personal gain? Did they pocket the money? No. They spent it on a lawyer because some domass HO sued them. They spent the money because that's what they thought they needed to do to protect themselves. And now some other domass comes along and sues them again - He buys a $50 lawyer and gets the magic derivative answer he needs to make things even messier."

No, the defendant had the HOA president deposed because -he- was being sued.

I don't think anyone responded to this but a defendant can't join another party as a -defendant-, right? So there was no chance of the HOA being involved in this suit.

The money spent in a sense breaks down into two categories.

9/3/2014 Received and reviewed lawsuit and deposition issue regarding Board member's testimony $180.00
9/4/2014 Telephone Discussion with Board president regarding deposition procedure. $112.50
9/4/2014 Received and reviewed lawsuit amongst Board members and implication to current Board. Advised Board president. $112.50
9/5/2014 Received and reviewed notice of deposition cancellation concerns. $45.00
9/5/2014 Prepared Status Report at client's request. Forwarded to property manager. $150.00

Why would the HOA president use the HOA atorney for these charges? She should have got her own attorney. That is $600.00 of the Association money she just appropriated.

The other part was the actual deposition:

9/8/2014 Attended deposition of Board President regarding Board code of conduct and vetting of vendors $540.00

In a lawsuit to which the HOA could not possibly be joined for an issue -defamation- that could not possibly involve the HOA.

Walt


WalterM3
(Georgia)

Posts:371


05/21/2015 5:38 AM  
Posted By CyrstalB on 05/21/2015 5:27 AM
Posted By WalterM3 on 05/19/2015 7:05 AM
Posted By CyrstalB on 05/19/2015 5:57 AM
If I were in Walts HOA, and he took the HOA through this BS, would I as a member be able to sue him to recoup the money spent on fighting it? Would the docs actually have to say that like it does for forcing covenant compliance?




Taking the HOA through what? For the 10th time I am not suing the HOA. I am trying to hold corrupt members of the Board responsible for their corrupt actions.

I have to wonder if some of the people who've posted on this thread don't like the concept of being held responsible.

Walt


The board is the HOA. The officers are the HOA, there for if you are suing someone to reimburse the HOA money, you are in fact, involving the HOA.

You are citing minutes from the Board meeting, and your very own basis for small claims court is they took an action without a meeting, I must be missing something here, as it was the HOA attorney you claim was present with the president and then the HOA was charged for it.

Are you sure your not suing the HOA? Has the ex president responded to your claim as an individual, outside of the HOA?





No, she brainlessly responded to the e-mail where I provided the information, but did not address how this money was spent with no paper trail established <1>as required by law.

9/3/2014 Received and reviewed lawsuit and deposition issue regarding Board member's testimony in $180.00
9/4/2014 Telephone Discussion with Board president regarding deposition procedure. $112.50
9/4/2014 Received and reviewed lawsuit amongst Board members and implication to current Board. Advised Board president. $112.50
9/5/2014 Received and reviewed notice of deposition cancellation concerns. $45.00
9/5/2014 Prepared Status Report at client's request. Forwarded to property manager. $150.00
9/8/2014 Attended deposition of Board President regarding Board code of conduct and vetting of vendors $540.00

A lot of people have focused their comments on my standing to sue or the rectitude of the defendants using the HOA money for this purpose.

The tipping for filing this case was that the officers of the corporation did not follow a clear provision of the Bylaws that dictate how they must account for expending the homeowners' moneyprior to the expenditure of those funds.

Out of arrogance or ignorance they just didn't do it. They have made no apology nor provided any explanation. They have been asked to repay the money voluntarily; they have been asked to resign for the harm they have done to the Association.

If I prevail in this action, sitting Board members will have been shown to have harmed the Association. The dollar amount is not the point.


Walt
CyrstalB
(Maryland)

Posts:457


05/21/2015 5:52 AM  
Posted By NpS on 05/20/2015 8:12 PM

Shame on you Walter. Do you actually think that the way to remedy an inappropriate legal expenditure is to create a new legal expenditure for your HOA? How thoughtless and ridiculous.



Yes, he actually does think that he is not suing his HOA in any way shape or form.
WalterM3
(Georgia)

Posts:371


05/21/2015 6:11 AM  
Posted By CyrstalB on 05/21/2015 5:52 AM
Posted By NpS on 05/20/2015 8:12 PM

Shame on you Walter. Do you actually think that the way to remedy an inappropriate legal expenditure is to create a new legal expenditure for your HOA? How thoughtless and ridiculous.



Yes, he actually does think that he is not suing his HOA in any way shape or form.




The way I read the Covenants, the HOA cannot be involved because the issues are malfeasance and bad faith.

"(e) Indemnification. The Association shall indemnify every officer and director against any and all expenses, including counsel fees, imposed upon or reasonably incurred by any officer or director in connection with any action, suit, or other proceeding (including settlement of any suit or proceeding, if approved by the then Board of Directors) to which he or she may be a party by reason of being or having been an officer or director. The officers and directors shall not be liable for any mistake of judgment, negligent or otherwise, except for their own individual willful misfeasance, malfeasance, misconduct, or bad faith. The officers and directors shall not have personal liability with respect to any contract or other commitment made by them, in good faith, on behalf of the Association (except to the extent that such officers or directors may also be members of the Association), and the Association shall indemnify and forever hold each such officer and director free and harmless against any and all liability to others on account of any such contact or commitment. Any right to indemnification provided for herein shall not be exclusive of any other rights to which any officer or director, or former officer or director, may be entitled. The Association shall, as a common expense, maintain adequate general liability and officers' and directors' liability insurance to fund this obligation, if such insurance is reasonably available."

One question is -- will the Board members use the HOA attorney to defend themselves on an issue where they clearly did not follow the rules?

"Any action by the Board of Directors or by any committee appointed by the Board of Directors required or permitted to be taken at any meeting may be taken without a meeting if, prior to such action, one or more written consents describing the action taken are signed by no less than a majority of the members of the Board of Directors or of such committee, as the case may be."

They did not establish that paper trail. It doesn't exist.

They had a name for this in the Marine Corps -- "Failure to follow simple instructions."

Maybe I am miscomprehending some of you.

Do you think the Board members should follow the clearly stated rules -- especially when it comes to spending the homeowners' money?

Maybe you don't think that is important.

Walt
BanksS


Posts:0


05/21/2015 6:50 AM  




You are not brought in for a deposition as 1) a private citizen or 2) a board member or president
they are one and the same. And for a $1,400 fee to assure the HOA is not dragged into a civil dispute I would advise and require a lawyer protecting the interests of the HOA BE PRESENT.

While you might disagree you should consider the possibility you are wrong too.

Anyone who assumes the role of board president must realize they are no longer simply a private citizen representing their own views and interests. They in fact speak for the board and the community. As in any corporation officers and board members involved in legal matters should always have counsel.

When in doubt bring a lawyer






Hmm Jon, got a chuckle out of this one. While you may be very important in your role as president of your condo association, in reality you are just a small fish in a big pond.

I still hold to my opinion that board members should not use the HOA attorney for a private issue among neighbors. I would not take it as far as Walt because that is a consequence of living in a common interest community. Board members are imperfect just as all of us are and make mistakes just as all of us do. Would not be worth the hassle for the amount of money he is seeking.
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