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February 2010
15 Minutes Could Save You 15 Years in the Nut Farm
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Posted By CotoBlogzz |
02-06-2010 11:30 AM
Agoura
Hills, , CA - We love Geico’s (Government Employees Insurance Co.)
accidental success with the green gecko
character and subsequent advertising spots
pitching the slogan, 15 minutes can save you 15% or
more in car insurance.
When not using the gecko, the company uses a
series of rhetorical questions, such as
Ø
Is
Too Tall Jones too tall?
Ø
Does
Charlie Daniel's play a mean fiddle?
Although
lacking a gecko to pitch the theme, something similar
can be said about life in a homeowners association –
common interest development (HOA/CID) community:
“15 minutes studying HOA/CID statue could
save you 15 years or more in the nut house- not to
mention your wallet, or your life in general”
Likewise,
there are a number of questions to keep in mind, such
as:
Ø
What
is the purpose of a small claims court?
Ø
Who
should file a case in Small Claims court and who
should represent you?
Ø
What
is privileged information?
Ø
Is
it illegal or unethical to make stupid decisions when
spending residents’ money on their behalf?
Ø
Can
you tell the difference between a stupid board
decision and one intended to stifle criticism?
Ø
What
is the best business judgment rule?
After
a decade of covering the HOA/CID industry, we have
come to the conclusion that as diverse as these
communities are, the issues are in general the same,
the complaints are the same.
The Community Association Industry (CAI) slogan
“America's Advocate for Responsible
Communities” Is
very similar to the California Teacher’s Association
advocating a responsible budget by increasing taxes,
again and again, and again, and again – get the
point?
The
CAI tries to dismiss claims of David
Vs Goliath battles, where residents try to fight
an uphill battle against abusive HOA boards of
directors, as the exception and not the rule.
Perhaps the CIA folk should start subscribing
to the CotoBuzz Journal
Take
for instance the latest battle pitting Jan
Gerstel against the Morrison Ranch Homeowners
association board of directors:
Mr.
Gerstel started requesting information pertinent to
the management of the affairs of the association back
in February 2009.
The Board would proceeded play the game we call
HOA DIDL – Deny, Ignore, Delay and or Lie. In any case, the board would not respond or refuse to give
him the documents requested.
By October 2009, Mr. Gerstel reports having
accumulated seven violations for non production
of requested documents that the board was legally
required to provide:
1.
Failure to produce Association Member's list on time.
2.
Failure to produce Architectural Committee Minutes
from Jan 2007 to
3.
Request for Board Meeting Minutes 1998 to 2009
4.
Request for Board Meeting Minutes 1990 to 1997
5.
Request for Fountainwood Hillside Failure Documents
6.
Request for Minutes of Meet and Confer Board Meeting
7.
Request for executed contracts and contractor bids
Mr.
Gerstel proceeded to do what most “disgruntled”
(pejorative term used by abusive boards to dismiss
residents who stand up for their rights), – file a Small
Claims Court complaint.
The Complaint filed with court was for non
production of documents or failure to produce
documents within Civil Code requirements.
The
board's response was that Mr. Gerstel did not sue or
serve the right people. He had the board served at a
Board meeting. The
Judge subsequently addressed the issue and found the
service was correct and valid. The Judge also found
the board had not produced documents within specified
time frame for producing minutes.
The board admitted it did not and she ruled in
Mr. Gerstel's favor
Now
guess who represented each, the Morrison Ranch
Homeowners association, and who represented Mr.
Gerstel,
during the proceedings”
On the corner for the board, we found legal
counsel from the law office of Swedelson
& Gottlieb and for Mr. Gerstel? Himself.
We understand that the board did not like the
ruling and is planning to appeal.
LA
Times columnist and author D. Vanitzian
responded by saying “ How is it in the
best interest of the association to appeal a small
claims actions against a resident who has prevailed.
How does that show good faith.”, she said.
The business judgment rule provides protection
form liability for breaches of fiduciary duty for
directors and officers who act in the interest of the association, predicated on good faith.
To
answer the questions about Small Claims Court, we went
to the source:
On the question of who can represent whom, the
Court is very clear:
Question:
“Can I bring a lawyer?
Answer: No,
a lawyer can't represent you in court. But you can
talk to a lawyer before or after court, whereas to the
question: What is small claims court? The answer is
“Small claims court is a special court where
disputes are resolved quickly and inexpensively. The
rules are simple and informal.” Operative terms: Inexpensive
and expedient.
Now,
the abusive boards we are familiar with, often
erroneously use the privilege information argument in
the aforementioned DIDL game.
Then we hear from non other than Brian Martin,
SVP and general counsel of KLA-Tencor Corp. assertion
that a good number of attorneys do not understand the
concept. Heeding Mr. Martin's warning, we turned to the folks
who in essence wrote the book on the subject: The
Office of the General Counsel of the California State
University.
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"We are interested in the decision-making process used by the Morrison Ranch Estates HOA board that resulted in a compelling argument for using an attorney to represent the association in the case LAV 09V07093 Jan Gerstel Vs. Morrison Ranch Estates HOA. We understand that the board is considering appealing the ruling ? this cannot be true, right? If so, is this a unanimous decision? Is the board familiar with the proper handling of resident complaints that reach the Small Claims Court? Is the board familiar with the handling of privileged information ? Is the board familiar with the business judgment rule? IS the board familiar with the Rules of Professional conduct adopted by the California Bar?"
|
The
Morrison HOA board was gracious enough to respond by
the deadline as follows:
With
respect to the question of whether the board was
familiar with the best business judgment rule and
handling Small Claims Court, the answer was “Yes.
Yes. Yes” and added "“the Board of
Directors is not at liberty to discuss IDR or ADR
issues with you due to privacy that must be afforded
all members. The Board of Directors is aware there are
Rules of Professional Conduct adopted by the
California Bar.”
Now, if you just happen to live in a HOA/CID
environment, we suggest you answer the rest of the HOA
rhetorical questions. It could save you 15
years in the Nut Farm, not to mention your wallet or
even your life.
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