Small Claims Court is a “Crapshoot” in HOA and Condo Matters

Small claims court is a crapshoot at best but it is the only remedy for owners who cannot afford to pay an attorney to go to Superior Court when the board is violating the law. Parties cannot bring attorneys to small claims court, so I get my stories from the people who go there, not colleagues who “try cases there”. Before I tell you this story remember small claims is a court of “equity” meaning the hearing
officer or judge will try to rule based on what he or she thinks is “fair”. A party who is defending a claim and loses can appeal and then get a one day “trial” before a real judge. The party who sues cannot  appeal if he or she or they does not like the result.

In the HOA or Condo scenario, owners can ask for up to $10,000 in damages – associations are
limited to $5000 for up to 2 claims in a 12 month period and $2500 per claim thereafter in the same period of time.

Because the small claims limit increased this year from $7500 to $10,000, more boards may hire attorneys to try and elevate a small claim to superior court to force owners to get attorneys. Only time will tell. When there is less at stake, paying an attorney to go to the “big court” is a tougher decision. However, the superior court judge cannot ignore the law, or his/her decision is subject to appeal by either party.

Anyway, on the “equity” factor, here is an email from an owner who sought redress in small claims for
actions of a board that was not following the legal requirements of Civil Code Section 1363.05:

“Dear Beth:

 I thought you would like to know. We received a decision from small claims court today, and after 4 plus weeks, the judge ruled completely in favor of the [Association].

 

We laid out the case showing all violations including with respect to an executive session. We did write a demand letter [to the association before going to court] and never received a reply. They did distribute it without comment at [the annual association meeting].

 

Our case was laid out clearly and included the actual pertinent civil code sections and documentation. We emphasized that the case dealt solely with violations of the open meeting act.

 

The HOA countered with a petition signed by 13 of the 17 homeowners which supported the work of the BOD and specifically excused them from following “arcane” rules. … Two of my neighbors actually apologized for having signed the petition stating that they felt pressured because they had to
continue to live in the community. In addition to the petition, the HOA case revolved around how busy they were and the Architectural Committee (AKA the BOD) even had to meet via phone and email instead of calling a meeting. Another argument was that they were not a paid board and consequently did not have to meet the same standard that a paid board is held to. One homeowner, a trustee of the local community college board, reaffirmed this position in his testimony.

The judge pro tem did appear to listen to everything, but on three occasions said that neighbors have to get together to work things out. (I wonder if that would work with my next traffic violation.) He asked if we had been harmed or if this was just a “technicality.” We indicated that we had, [explaining
other issues]and pointed to our attorney costs. He also asked if an individual member could bring suit against the Association and we pointed him to 1363.09 which was one of our exhibits.

 

We are disappointed in the decision. It seems that the judge completely ignored the Davis-Stirling Act and has given the board license to ignore it as well. (I am sure they will.) We would be interested to know what you think. Do we have any recourse?”

Here’s my answer: “No, no recourse”.

The hearing officer did not find that violating the legal meeting requirements was actionable.

It is easy to sympathize with volunteer directors serving smaller associations that cannot afford
professional help. And the Civil Code is not one size fits all. However, any association board that continually meets in secret, hides information from owners, handles such things as voting on a very large special assessment or “firing board members” without following proper legal requirements should not get a “bye” – and I hope that is not just my opinion.

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