Board President Racking Up Attorney Fees – Is It Legal?

In my other blog I recently did a blog on the Business Judgment Rule (see California Condo & HOA law found at www.californiacondoguru.com) , and received this email in response:

“Related to your article about Business Rule Judgment:

Is it legal for HOA President to contact attorney at HOA cost without even informing other board members? I am on HOA board; the former President contacted HOA attorney at least 15 times in the last year and did not even inform other board members. These unilateral actions cost our HOA at least $5000. Is this legal? If not what is the best course of action for our HOA? Should we file a small claim at small claims court?”

The other board members could seek recovery of the fees in small claims court. If a judgment was obtained (in other words if the court found that the President misused his or her powers), the board members might recover the cost for the Association, assuming the board members sued on behalf of the association and not individually. If they sued individually, then they could recover no more than their fair share of the losses.

The court would have to come to a finding that the President acted outside his or her authority as a board member, acted in bad faith or intentionally or willfully. If he or she was simply negligent in the behavior, but the hearing officer found that the association needed the legal advice, then there would likely be no judgment.

A better remedy might be for the other board members to vote the President out of office and muzzle him or her by giving an order not to contact the attorney, and letting the attorney know who is the proper contact.

Proceed carefully though. It is possible that the advice was needed and the President would normally be the proper contact for the lawyer.

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4 Responses to Board President Racking Up Attorney Fees – Is It Legal?
  1. Liz Dempsey
    April 13, 2010 | 8:36 pm

    do members at large have voting rights the same as the directors.

    • Beth Grimm
      April 21, 2010 | 5:02 am

      A “Director at Large” would have the same voting rights as other directors. Otherwise, I do not know whether you are suggesting a “Member at Large” is on the board, or not.

  2. Robert James
    April 25, 2010 | 1:46 am

    Can the Board President be censured by the Board for reckless and negligent misuse of HOA funds for legal services – especially for cases in which he directly violated a Board-approved mandate not to engage the HOA attorney without prior Board approval?

    • Beth Grimm
      May 4, 2010 | 4:47 am

      I would have to know what you mean by “censure” and also the facts and circumstances leading to the Board President’s actions to comment (don’t send them, legal advice would be required and a consultation would be needed). A Board President is often given fairly broad powers by the Board and the Bylaws and to comment on a set of facts that may have more to them than meets the “eye” would be irresponsible.