Condo association has to foot bill for president’s misstep
Palm Beach Post
By Ryan Poliakoff
23 July 2016
Question:
We live in a seven-unit condo on the beach. Our town owns the vacant
property between our condo and the ocean. The president of our condo
took it upon himself to destroy 28-year-old landscaping on the town
property. The cost of destroying their property was $760. If this
landscaping change had occurred on our property, the destruction of
mature landscaping would have been a material change and would have
required six of the seven members to agree.
The president maintains that this was general maintenance. Why would he
think that we should pay for maintaining the town property? The town
has its own maintenance department. There was no board meeting. He
acted totally on his own accord.
Why should our condo be held responsible? The town now wants the
condominium to pay to landscape the destroyed area with mature trees
and plants, at a cost of $2,500. The members of our association are
very upset. How can we be held accountable for the actions of an
out-of-control president? Do we have any alternatives other than
removing him from the board? We do not see why we have to pay for our
president’s illegal behavior. — D.G.
Answer:
First, given his conduct, it’s not clear to me why you don’t want to
remove this man from the board, or at the very least, why the board
would not elect a different president. Consider yourself lucky that
this was just a four-figure mistake.
The first question that comes to mind is whether it can be argued that
your president was acting on his own, as an individual, and totally
unrelated to his service to the association. If that were the case,
presumably the town would go after him individually (as they would if a
non-board member had destroyed town property). But, given that he is on
the board, is an officer, and was purporting to do “maintenance” on
behalf of the association, it is unsurprising that the town is looking
to the corporation to repair the damage.
Therefore, the next question is whether your president breached his
fiduciary duty to the association and may be held personally liable for
the expense. As you may know, every director and officer has a duty to
the unit owners to put the needs of the owners, and the association,
above his or her individual needs. He or she is required to discharge
his or her duties in good faith, with the same care as an ordinarily
prudent person in the same position and under the same circumstances,
and in a manner believed to be in the interests of the association.
But, despite this duty (called a “fiduciary duty”), the Condominium
Act, in conjunction with Florida’s Not for Profit Corporation Act,
provides additional protections for directors and officers against
personal liability.
Pursuant to both laws, a director or officer may not be held personally
liable for acts taken on behalf of the association unless those acts
constitute a violation of criminal law, constitute a transaction from
which the officer or director derived an improper personal benefit, or
constitute an act of recklessness or omission that was in bad faith,
with malicious purpose, or in a manner exhibiting wanton and willful
disregard of human rights, safety or property.
As you can tell, this is an extremely high standard, and suits for
breach of fiduciary duty are rarely successful. The only argument I can
see in your case is that the president trespassed onto and destroyed
town property, both of which acts are undoubtedly crimes. So, you might
be able to argue that he breached his duty of reasonable care in
trespassing onto and destroying neighboring property, and by committing
a crime in the process. But, the law further protects directors and
officers if the person had reasonable cause to believe that his or her
conduct was lawful, or had no reasonable cause to believe his or her
act was unlawful; and so, I think you still have an uphill battle.
Plus, you might not be able to recover attorney’s fees expended in
trying to pursue the president, so you would likely spend far more on
the principle of holding him accountable than the amount of actual
damages that the association could recover.
Instead, I suggest you chalk this up to a relatively inexpensive lesson
for you and your neighbors, and that you immediately vote to remove him
from the board.
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