Can a Board Member at a condominium association be sued personally?

By October 21, 2019 October 28th, 2019 Condo & HOA Law

Q.  Can a Board Member at a condominium association be sued personally or are lawsuits limited to only the association itself?

T.L., West Palm Beach

 

A.  Actually, Board Members of a condominium (or homeowners) association can be sued personally, but only within specific parameters. Even though Board members have a fair amount of protection under the law, it is actually a fairly common occurrence in Florida for Board members to be brought into lawsuits as direct Defendants. While those types of lawsuits are not generally successful, one thing to keep in mind is that even if a Board member is sued personally, the association should have insurance for those claims.

Board members of a condominium and homeowner’s associations owe the association a fiduciary duty to the association, no different than being on a board of a corporation. A person bringing such a claim must prove that the Board member breached his or her fiduciary duty to the association. A fiduciary duty is basically a legal obligation of one party to act in the best interest of another. Under Florida law, a claimant must provide that a fiduciary relationship exists and that there was a breach of that fiduciary duty which caused damages. Suing a director of an association for breach of fiduciary duty requires something more than just alleging that the director had a fiduciary duty that was breached. First, the law starts with the presumption that a director is immune from liability for any actions they take in relation to their role as a Board member. In order to be subject to liability, the director must have not only breached his or her duties as a director, but that such breach needs to rise to the level of criminal activity, fraud, self-dealing, unjust enrichment, or other improper personal benefit. It is also well-settled law in Florida that absent evidence of the foregoing behavior, directors of associations are not personally liable for the decisions they make in their capacity as directors. Florida law simply requires that directors of an association discharge their duties in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances and in a manner, they reasonably believe to be in the best interests of the corporation (i.e., the Association). In general terms, this is known as the “business judgment rule,” which is a standard originally created to determine if a director of a corporation (not necessarily an association) breached his or her fiduciary duty to the shareholders of a company. In effect, the homeowners in an association are the “shareholders” of the corporation. To determine if a director’s actions fall under the business judgment rule, Florida Courts look at (1) whether the association has the contractual or statutory authority to perform the relevant act and (2) the decision is reasonable. The business judgment rule will protect association board of directors, as long those directors act in a reasonable manner. In other words, decisions that are made in the “good business judgment of the association” are not generally actionable.

I hope that this helps you, but without knowing more about the particular issues at play, I cannot give you any specific advice. If you have questions about a particular problem at your association, I suggest you speak to an attorney who can provide you with a more targeted analysis of the issues.

 

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Harris B. Katz, Esq., is Managing Partner, Boca Raton of the Law Firm Goede, Adamczyk, DeBoest & Cross, PLLC. To ask questions about your issues for future columns, send your inquiry to: question@gadclaw.com. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, Adamczyk, DeBoest & Cross or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.

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