Informing the Community When Litigation by a Homeowner is Pending

Is anyone on this forum aware if the name of a homeowner can be disclosed to the rest of the community as it concerns a lawsuit that has been threatened but has not officially become a legal matter in the courts? My limited experience tells me that once something goes into litigation, all mouths are to be kept shut but when threats are thrown about by a resident and the HOA has to use community resources to invest in legal advice to deal with the said individual's threats, it ought to be in the interest of the rest of the homeowners to know why their dues are going to increase as a result of high legal consultation fees. Can someone please elucidate me on this issue? Thanks.

It's cheaper for the HOA to counter-sue against a suit than to bring one up. So your HOA may want to consider this option if indeed this suit is filed by the owner. You may have to hire a lawyer to represent the HOA in court since it is a corporation. There is an option of allowing a board member to do it if they are trusted enough to represent but not recommended.

Most lawsuit threats are empty. If this one isn't, then the HOA's rules should allow for a resolution without a court battle. The HOA is to be ran by members for it's members. Which means the rules of the HOA should provide the solution the the issue within itself. People just tend to go to the lawyers/court to force the HOA to comply with their own rules anyways.

I would inform the membership of the issue as they are stockholders. However, I would not tell them the name of the owner involved. Maybe refer them as a lot number. Let them know what the situation and that the HOA has to hire the necessary legal help to handle the issue. Because of the sensitivity of the situation the BOARD will keep the matter amongst themselves but let what procedural information is going on reported. Such as if the case has been filed, for the amount, and when it's coming up to court etc...

This case could basically come down to an insurance claim on the HOA's insurance if they win. You need to talk to your insurance company to find out the cap on lawsuit payouts. It's not the million dollars or so your policy may be for. Ours was only around 60 - 80K. If the court awards more than that, then the membership may have to pay up the difference.

Best piece of advice about lawsuits...If you sue your HOA, your suing yourself and your neigbhors. This person has to pay any special assessment your HOA raises to pay for this legal advice/assistance. Unless the court orders they don't have to pay any special assessments. The suing member may be subject to paying the HOA partly for their own lawsuit.

Thank you Melissa, for your reply. I was typing a response to Jon when your message appeared.

Very good information from both of you. I'll need to take everything that's been shared and present it to the other board members. Thank you.

My 2 cents, in this type of situation the threat of litigation is used as a scare tactic by the homeowner in an attempt to get the board to back down. It is merely a card they are playing in a real life game of poker. My advice, if you are doign things by the book I wouldn't blink much when a threat is passed, other than to give the information to your attorney as an FYI. In this case I would bring up the name or even disclose it at this point to the membership. just my take

Gwyneth,

As Brad and Melissa pointed out, most threats are just that, a threat. This isn't to say that the Association shouldn't circle the wagons (so to speak), but then you need to wait and see what happens.

I understand you concern of wanting to keep the membership informed. However, I don't think you need to do that just yet. I would wait until an actual action has been filed. Then, when you inform the membership of the litigation, keep it ambiguous. Otherwise you may inadvertently back the person into a corner where they feel that they have no choice but to go to court. Something like:

The Association has received word that a member has initiated legal action against the Association claiming selective enforcement of the covenants. The Board has turned the matter over to our Attorney and, based on legal advice, will not discuss the specifics of the case but will keep the Association posted.

Since the member has threatened legal action in writing, I think a visit to the Attorney for advice on how to respond to any specific complaints might be warranted. Ask the individual to specify who is in violation and then investigate and follow through if needed.

Based on your posting, you indicate that this same individual has brought legal action before. If your willing to share what was the outcome of those cases (win, lose, settlement)?
Has the board ever filed a counter claim for legal fees in defending itself?
Has the Association ever used your D&O insurance to cover some or all of the costs of these complaints?

I don't think you should mention the individual by name to the community. This may be a violation of privacy. Once the case is actually filed, if a member is interested, they can certainly look it up and get the names. However, the Board needs to be above this.

Thank you so very much, TimB, David W, BradP and MelissaP. Your advice and experience mean a great deal.

To answer some questions, the original threat of litigation (first major problem) really intimidated the board and the directors relented. Not all were in agreement but there was a majority vote (3 vs.1) to allow the person to get away with what he had done. As one of the more active community members, I knew this would set an extremely unhealthy precedent-- showing all concerned and particularly this individual-- that the Board has no teeth and indeed, it proved true. More threats quickly followed. In one instance, the insurance company rejected the individual's claim for damages. In another, the federal Fair Housing Act was 'invoked' when the individual used a completely spurious argument as to why something had to be erected just for the homeowner and the board lost that one and the bully got his way.
The board has never filed a counter-claim but I think that is a wonderful suggestion. I am not aware of the board using D&O insurance to cover any costs. I shall look into that.

You've all been extremely helpful. Sometimes when one is 'in' a situation, it's hard to step away from the immediate threat. There is just a great deal of fear and intimidation felt. However, your answers here have provided invaluable perspective and a wealth of shared experience. I am truly grateful.

Gwyneth:

Sounds like you have yourself a first class PIA to deal with.

My first comment here would be more than likely none of us posting here are lawyers that practice in your state. The opinions posted here MIGHT offer some useful legal advice while others would have no connection to your situation. IMO an attorney who spcializes in HOA matters (NOT a general practice attorney) would be your best source of how to handle this within reason.

Now on to the PIA. Most people make threats in regards to what THEY fear most. Thos owner thinks lawsuits will force the Board to do things HIS way.The Board has a duty to uphold the By-laws and Rules of your property in a fair and equally applied manner. If the Board is doing so I would suggest you continue and IF your lawyer gives you the opinion the Board is acting in a legal manner.

My other suggestion would be wait until this PIA acutally files a suit. To answer him and his threats serves no real useful purpose.
That plays into his hands. Save copies of his messages, provide a copy to your attorney and continue with business as usual in regards to his violations.

As to providing his name to the other owners. I have been involved in three lawsuits since joining my Board. All brought by another party against the Board. In each case the owners were made aware of who was responsible for each of these cases and their cost to the property. Of course certain specific details were kept to the Board members as doing otherwise would be less than wise.

Once a lawsuit is actually brought it becomes a matter of public record at that time either the Board, or a concerned property owner might make the other owners aware.

Now there are in fact many ways to skin a cat. This information does not have to come directly from the Board it can but does not have to. IF as you suggest this owner is providing his version of the facts well IMO taking the high road limts the effectiveness of your actions. IMO you fight fire with a bigger fire not silence. Because the reality is there are many gullible folks out there that will assume the details they were provided are in fact true in the absence of another version. Tough to change this after the fact.

IMO let this PIA foam at the mouth, bark at the moon and make all the threats they wish. You can sit back or you can address this as a Board or simply by providing copies of his threatening letters to the owners FYI. IMO it would depend on who and what kind of person you are dealing with.

Here we took the raod that brought their actions into the light of day. IN the end all three lost in court and they have been held responsible for their actions by having their neighbors and friends understand THEY cost all of us money needlessly.

Good luck and Happy Holiday to all except the PIA.............

What is the IDEAL outcome you hope this disclosure to the members will produce?

The motive for this disclosure is to embarass and/or inflict other 'social' harm within the community to the individual or family. Legal or not, It serves NO OTHER PURPOSE. I hope the BoD is not involved.

I'd be looking into why the BoD has spent thousands of dollars on threats.

Sidenote, actual re read Kansas law regarding this and it specifically says that we do not have to share information regarding potential or existing litigation. That is one of the exceptions in the list of open records we have to keep and give out if requeted.