Berding | Weil Community Association ALERT Newsletter
Legal News and Comments for Community Association Boards and Managers Issue #80 • October 2011
First Thing We Do, Let's Ban All the Bloggers!
All speech is not necessarily objective or persuasive— merely posting something on the Internet does not make it right, or even important.
by Tyler P. Berding, Esq.
Anyone who surfs the web for useful stuff about community associations has seen three kinds of information posted there--the good, the bad, and the ugly. “Good” information provides accurate facts and useful advice related to those facts. “Bad” information, while often inadvertent, provides neither accurate facts nor useful advice and is usually the result of carelessness or lack of experience. “Ugly” information, on the other hand, is accurate facts used as a cover for bias that either intentionally misleads or is simply invective—or both. The facts used, true as far as they go, are nevertheless intended to disguise or “beard” a political or social agenda. To illustrate “ugly” information, assume that the following is a blog post. It is reproduced here in its entirety as it appears in the blog—all of the emphasis is in the original. You tell me into which category this “information” falls:
“HOA boards can be sued and not covered by insurance
Much of the abuse by boards, the management firms, and attorneys are tortious acts that are illegal and also constitute a fraud upon the members. You will not hear this at pro-HOA seminars sponsored by local governments and/or taught by CAI attorneys.
“D & O” means “directors and officers.”
“Most, if not all, D&O policies contain a provision that excludes intentional criminal and fraudulent acts committed by board members,” says Collins. “However, [our policy] will continue to defend the directors and/or officers until such time that a criminal action can be proven. The policy will then cease to provide any further protection once it is determined that a board member knowingly committed a criminal or fraudulent act.”
D&O coverage also doesn't indemnify a board or board member against decisions madein bad faith,” or with illegal intent. If a board is found to have acted in an illegal manner—deliberately discriminating against a prospective buyer, for example—and are hit with punitive damages, members are on their own when it comes to paying them.
The reason for pursuing these actions acts of bad faith is to force the homeowner into court, where the attorney gets his fees and the HOA gets a free ride, most of the time. Directors and officers are legally bound to act in good faith toward their members.
Yes it's ugly, but let's analyze why. The title is an accurate statement of fact—boards can be sued and not be covered by insurance. But the implication is that somehow this headline is “news.” It's not new or especially informative. Anyone can be sued, and in many cases there will be no insurance coverage—either because no policy exists, or because it is not intended to cover the loss complained of. The title misleads the reader into thinking that something important is about to follow.
The choice of words in the first sentence of the opening paragraph lays bare the intent of the writer, and it has nothing to do with the benefits of obtaining insurance. The blog poster asserts that boards of directors of homeowner associations, their managers and counsel abuse the members. Not only do they abuse them, they do it tortiously, illegally and fraudulently (emphasis mine.) There is no support provided--it's simply a statement loaded with the author's belief—what a prosecutor (and doesn't that really describe the blog's author?) would call a “charging allegation.” In a courtroom, however, such allegations would have to be backed up with evidence or the case would be dismissed--and worse, the prosecutor could face court sanctions.


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