The NEW YORK Supreme Court, in a decision filed on March 2, 2018, REVERSED the Court of Appeals’ decision discussed below. You can browse the Supreme Court’s decision here. As we talked about in our post below, which we submitted on December 14, 2016, we disagreed with the Court of Appeals’ reasoning, and thankfully the Supreme Court also does.
However, our important thing below still stands – although it may sometimes be considered a pain to follow board conference and voting methods, a cavalier attitude can come back to bite you. In this case, many years of litigation and many thousands of dollars in legal fees were wasted because of the failure to check out simple procedural steps. Don’t let that eventually your HOA. An unused conference table will not do your HOA much good.
There are times in the practice of homeowners’ association legislation when courts make rulings with which we as attorneys disagree but where an underlying principle or best practice is affirmed. A leading example is the N.C. Court of Appeals’ opinion of November 1, 2016 in the full case of Willowmere Community Association Inc. and Nottingham Owner’s Association Inc. v. City of Charlotte and Charlotte-Mecklenburg Housing Partnership. As is generally the full case whenever an HOA case gets to the NEW YORK appellate courts, the HOAs lost.
Without “standing”, generally thought to be the plaintiff’s having experienced sufficient individualized damage from the activities of the accused, the courtroom system doesn’t have jurisdiction to listen to the plaintiff’s plea whatsoever. Standing is designed to ensure that cases are grounded in actual, specific disputes and deter the processing of cases based upon conjectural or theoretical wrongs.
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Since lack of standing “bars the entrance way to the courthouse” for the plaintiff and can prevent valid legal claims from being adjudicated, courts typically use great treatment in throwing a case to credit to lack of position. In cases like this, the N.C. Court of Appeals agreed with the trial court, focusing on the failure of both HOAs’ planks of directors to follow proper procedures in making the decision to sue. Both planks had motivated to sue via email or telephone conversations, without formal board conferences or even written and authorized consents to action without a conference by the table associates.
Willowmere HOA argued that its board unanimously certified the lawsuit through a chain of email messages and that satisfied the N.C. The Nottingham HOA board did not call for a formal plank meeting to discuss submitting a lawsuit and did not respond via unanimous written consent. Rather, some of the board people conducted a telephone conversation with the management company and didn’t refer to the basic requirements of the bylaws regarding the power to start a lawsuit.
They didn’t deliberate and make a decision in a formal meeting or unanimously on paper. The Superior Court judge inquired into the standing issue on his own movement – neither of the defendants had argued that the HOAs lacked position to bring the challenge. We question the judges’ reasoning on the standing-up issue. Any difficulty. The HOAs could have suffered significant and specific damages had an improper rezoning been approved next to them, which should have gone to confer standing up enough. Bottom line: Don’t enter a hurry when coming up with decisions.