New "Legal Fee Rule" is a huge mistake and needs to be repealed immediately.

This blog continues the analysis of the last paragraph of the Board President's March 11th "recap" of 2014 and the separate notice we all received dated March 7, 2015, announcing a new rule.

• A new rule was recently crafted and made official, in conjunction with our legal advisers, to insulate owners from unforeseen legal costs.

It is interesting to note that this new Rule was adopted February 23rd and made effective February 26th.  I wonder if this might possibly be targeted at my wife and me?  When we saw it and showed it to our lawyers they said what we have begun to think:  "Life is too short for this kind of treatment; you need to sell your condo and move." Yes, we do talk about that option almost every day.  But, except for the thug government we currently are being tortured by, we like living here and would like to stay if we can once again feel safe from abuse by Association Officers who are chronic Rule breakers who feel they are above reproach.  

Let me first ask why this Rule is even necessary if we already are paying $2,400 a year for $2,000,000 worth of insurance for the same thing?  

One introductory Whereas says that it is the intent of the Board of Directors to limit the potential costs to the association should a member of the association bring suit against the association as a whole. Wow is that inaccurate. Does the new Legal Fee rule really only apply when a law suit is brought?  No, the new Rule doesn't say that at all.  It covers any expense of any kind incurred when a Resident pursues a matter with the governing boards and loses. 

 

Before you can really understand what a huge deal this new Rule is you need to know that in American jurisprudence the standard rule for dispute resolution is that each party pays its own costs and expenses.  Sometimes, the law says the judge may award legal fees in appropriate cases, but it isn't that common that such fees are awarded.  

The second thing you need to understand is that when a condo board makes an assessment against a Resident, the assessment automatically takes on the force of a statutory lien against the Resident's condo. This means that the condo board is acting as a branch of the state government when it makes any kind of assessment such as the Rule proposes our Board can now do.  

Adopting this Legal Fee Rule is like a state adopting a new law.  It is an enormously powerful change in the relationship between Condo owners and the Association.  The important questions to ask before adopting this significant a new Rule are:  Does the Board have the power to adopt this major change in the fundamental relationship of Condo owners and the Association?  Or may this change only be adopted as a Bylaw change, requiring a super-majority vote of Condo owners? Or is it even a legal rule to begin with?

I don't think the Board's rule making authority granted in the Bylaws includes the power to make this kind of change by Rule.  I'd like to ask this question at the next Board meeting. Wouldn't you? Too bad they don't hold any.

There is a lot more to say about a Condo board, with ample insurance to defend itself, deciding in the middle of a controversy with a Resident to adopt a Rule that tells the Resident that, "in the event the Association retains an attorney to collect funds due, enforce any rule, bring any claim against a Unit Owner or defend any claim or allegation by a Unit Owner including any counterclaim, the Association shall, if it is the prevailing party in the claim or defense, be entitled to collect from the Unit Owner all of its costs and expenses, including reasonable attorneys' fees."

This Rule is not restricted to law suits.  So let's talk about how chilling this is to the abuse of process claim that we have made.  There is no argument whatsoever that the Board intentionally lied and broke many Rules. The record is clear and convincing.  So what did we do?  We asked them to reverse their bad act. They said no.  We filed a complaint against each Director for violating the Rules and the Board decided on its own that no Rules were broken.  (Which is wrong in so many ways it is hard to begin to know what to say.)  Then the Board set up an "appeal hearing" and told us that a record will be created whether we attend or not.  They refused to let us bring along three neutral observers and they refused to let my wife attend, who is co-owner of the condo and the dog.  They limited attendance to just the three persons present when our dog did perform a defensive bite when provoked by another Resident (in our opinion).  They say that the only issue that can be discussed is whether or not I broke the rule that a pet owner must act reasonably to control his or her pet; no discussion of the validity of the fine assessment will be allowed; and David Rasmussen (impartial and reasonable person that he is) will chair the hearing.  They said that only the Board President would be allowed to ask questions; and that we would have to pay the court reporter for being there and for the transcripts for the parties under the new Rule.  Plus, we had to assume, we would also be assessed for any legal fees the Board incurred "preparing" for this Kangaroo Court. 

This is pretty chilling on our rights. So what did we do?  We paid the Association $50 to end the appeal process. It was either that, or pay hundreds of dollars for a joke "appeal hearing" that was certain to end up with the Board prevailing.

Try to put yourself in our shoes.  Let's say you want to protest the fact that the Rules currently have the Board or the Residential Committee being assigned the task of deciding all appeals of Rule violations (which are initially made by the Board or the Residential Committee).  Think about how you could do that given the Legal Fee Rule?  You couldn't do it in any reasonable way. That is how we feel right now.