Berding | Weil Community Association ALERT Newsletter
Legal News and Comments for Community Association Boards and Managers Issue #65 • March 2011
Why Members Don't Care
by Tyler P Berding, Esq.
Many community association members are apathetic about association affairs because they don't see their association as significant to their lives—that nothing the association does or doesn't do will have a serious effect on them. This attitude often arises from the perception that a sale of their interest will pass any association problems on to someone else.
A community association is not the board of directors. It's not management. It's not legal counsel. A community association is the sum of its members—nothing more, nothing less. The ultimate fate of a community association is always in the hands of the owners. An association is dependent upon its members in numerous ways. Funding is the most obvious example. Without member assessments an association will cease to function—those assessments are usually the sole source of cash flow to pay operational expenses, staff salaries, and to accumulate reserves for future maintenance and repair.
But funding is only the start of an association's dependence upon its members. Owners are the members of the board. Owners decide if the governing documents--CCRs, Bylaws, Articles of Incorporation—remain the same or are amended. The assets of owners are security for the debts of the association. The owners must approve special assessments or increases in regular assessments above a certain amount. A decision to terminate the association requires member approval. Without a member vote, no action can be taken on any of the above.
We often hear arguments that even with member approval required for all of these critical actions, boards of directors still have too much authority. Boards are charged with conducting the day to day affairs of a community association and must be free to make decisions based on their business judgment and the fiduciary duty they have to all of the members. But there's another argument against expanding member authority--they won't exercise it. If you take too much authority away from the board and give it to the members, paralysis may be the result.
The Mediator's View:
An Interview with Jonathan Margolis
Jonathan Margolis was a successful defense attorney for many years before devoting his practice full time to the mediation of complex litigation. He is one of the best-known and most successful mediators of complex construction cases. We asked Jon a couple of questions that should be of interest to the parties on both sides of a construction case.
As a mediator who has settled many complex construction cases, how does an imminent trial date influence the mediation process?
An imminent trial date hugely influences the mediation process. In fact, it is probably the single biggest factor that aids a mediator in settling a case. The cost, risks and uncertainty associated with a trial, as well as the clients' concern about the amount of time that they will have to spend in court, are issues that almost always are significant enough to drive a case to settlement. Additionally, when trial is imminent, the real decision makers usually are involved in the negotiation process.
Does a firm's reputation for trying cases, whether defense or plaintiff, have any impact on your ability to forge a settlement?
A firm's overall reputation, as well as its reputation for ability and willingness to try a case, is important in the settlement process. This applies not only just before trial, but also throughout the case. Counsels' demeanor, cooperativeness (or lack thereof) and approach to settlement are the main factors in whether a case settles early or not. As trial approaches, the opposing counsel's perception of whether his opponent is prepared and willing to try the case becomes more significant.
How can an assigned trial judge be a catalyst for settlement?
The Judge's approach to the trial process as a whole is yet another huge factor in the settlement process. Judges who are known to have trial dates that “are set in stone”, and do not typically respond favorably to requests to continue, place tremendous pressure on the parties and counsel whether the Judge actually involves himself in settlement discussions or not. The timetable the Judge follows for the trial, for example with pre-trial motions or the trial day schedule, can also place pressure on the parties. Many trial judges repeatedly encourage the parties to continue settlement discussions with the mediator or Special Master. And of course some judges are very good at the settlement process itself.

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