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Keep self-interest out of lawsuit against board

April 27, 2003|Stephen Glassman and Donie Vanitzian | Special to The Times

Question: I've been a board member for more than two years in an association that has 600 units. I have watched other board members manipulate how our association is run by the contracts and promises they make to vendors.

These board members receive vacations, large gift certificates and cash from the vendors with which we contract.

The vendor for our association's laundry machines has given several board members thousands of dollars throughout the years to continue with his contract. In turn, those board members make sure the board votes to raise the price of doing laundry in order to generate more revenue for themselves. The board uses the laundry free.

The roofer has a condominium in Colorado where several board members have spent weeks with their families free, but homeowners are still complaining of roof leaks he fails to fix. None of the board members' roofs leak.

In exchange for another vendor contract going on eight years, the manager makes sure his pet board members receive expensive gifts and cash as a thank you for his renewal. The board lets him hire his buddies to work around our complex. The work is substandard, but because the board is indebted to him they turn a blind eye.

Over the years the landscaper has given board members cash and all-expense-paid vacations, yet his gardening is terrible.

A receptionist who works in our association attorney's office has become the liaison between the attorney and the board, and now she takes our minutes. Because of her presence we cannot discuss the attorney's fees, advice or firing him.

She acts as his spy, tries to influence how we refer to her boss during the meetings and omits all references to him in the minutes. She was instrumental in drafting a costly settlement agreement the attorney advised our board to enter into.

This has all turned into "standard operating procedure," and I am expected to keep my mouth shut about it. Can I sue the board members for my share of the vendor gifts or force them to return what they have received?

Answer: Suing to get your share of the graft sounds more like sour grapes than a genuine concern for the interests of the homeowners you are supposed to represent and the care of the complex in which you live. Conditioning a lawsuit against the board for your "share" would make you just as guilty as they are.

Board members have a fiduciary duty to every homeowner to act in accordance with the law, fulfill their responsibilities regarding maintenance of the complex and not act in a manner inconsistent with the best interests of the association. Provided all you say is true and can be proved, a task that might be difficult, then the lawsuit is not for your share but for the breach of the board members' fiduciary duty owed to the association.

The measure of damages may be difficult to judge but not impossible. A court may find that the cost of the repairs you allege are required is one measure, a disgorging of the "gifts" board members have received could be another or both might be the price the board would have to repay.

Under California's Davis-Stirling Act, any homeowner can sue to enforce the covenants, and if successful, can recover their attorney's fees of that lawsuit. Having proof in hand before you make the allegations in a lawsuit is critical to success.

In this case, your position has been diminished by your desire to be included in the graft.

Stephen Glassman and Donie Vanitzian are the co-authors of ''Villa Appalling! Destroying the Myth of Affordable Community Living'' (Villa Appalling Publishing Inc., 2002). Please send questions to: P.O. Box 451278, Los Angeles, CA 90045 or e-mail your queries to: NoExit@mindspring.com.

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