Question for the attorneys: Condo/Attorney situation

[john70t]

Much drama in "brief":

PRE-CIRCUIT COURT TRIAL:
1). I bought into a smaller condo building about eight years ago.
The Developer/President still owned one-third of the units and held almost a majority vote on the Association Board.

2). Owners were pissed after a few years, and finally got together.
No monthly statements yet. There were substantial bookkeeping "irregularities" involving the Developer co-mingling his personal companies with the management company(which had already been "fired"), hiding the records, lying, and denying calls for a required audit. The building was literally falling apart(roof collapsing, lights out, locks broken, etc), while all dues income disappeared and no required reserves held.

3). This led to a long drawn-out lawsuit in 2008 initiated and filed by the Board of Directors, which I was on, after a unanimous oral vote by all the owners to proceed. There were many emails from other owners telling the Developer to step down and provide an audit or we would go to court.
a). I was also elected unanimously to replace him as an interim Association President. I really didn't want to, but the other owners were pretty much lazy complaining slackers.
b). The Board tried to work with him, but at this point the situation and his character was pretty clear.
c). The Board made several rulings against him, but the Developer just ignored it all. Just about every single by-law in the book was violated.
d). The two other Board Members (who met with the attorney) told me to proceed as the "primary contact", then traveled in search of work. One attended the first court hearing.

CIRCUIT COURT TRIAL:
The Judge basically threw out the case for "lack of evidence", but the required management company was ordered.
All legal representatives knew each other personally and the Judge was once my mother's good friend...
a). A "qualified independent audit" was presented in court. It was 1-page piece of baloney, and our attorney didn't challenge it. The Judge had made it clear she wasn't going to review the matter and the defense opening argument was for dismissal.
b). The Association was ordered to review and decide whether to repay the developer/defendant's fees. It did so, after I voted as the sole determining vote. I was willing to let it slide, make peace, and the matter should have been over at that point.

Post CIRCUIT COURT TRIAL:
8). I did a layman review of the records after the audit was denied. The bookkeeping "irregularities" indicated an amount of roughly $40-60K missing, of which about $3K represented my money. There were also a personal bank transfer of $8K to his personal name off the books, and possibly more.
Without an audit, there was no way to be sure.

9). We both quit the Board of Directors. Meetings would just conclude with him yelling at me and ignoring votes. It was a joke. I thought the building would get back on track if I left and others had to deal with this "individual". Subsequently, many owners foreclosed or sold to leave this mess.
a). The following Board(s) then assessed the entirety of his private defense fees to my unit, in direct violation of the By-Laws.
They were even publicly threatened with "sharing John's costs" if they voted against his vendetta. Everyone was broke. Both new members had voted for the lawsuit/presidency but received favorable treatment/monies from the Developer. One didn't pay dues for eighteen months, while the Developer foreclosed on another property owner (who owed 1/6th the amount at $500). Rules were just being made up, demands for an audit were ignored, etc, etc...
b). All volunteer Board of Directors have legal immunity unless "adjudged guilty of willful malfeasance".
c). Many rules were broken by the Developer/President, the new management company, and now our new attorney (law partner of his defense council).
d). A lien was filed against my unit several years later, in 2010, and was paid under protest in full. I had significant cash property now worth almost nothing because of Wall Street.

DISTRICT COURT TRIAL:
10). My elderly mother(retired labor attorney) helped me take the Developer to court.
a) She insisted of naming him "Plaintiff", instead of the Association, as he was calling the shots and I had other damages. I had been repeatedly called a liar, threatened, lost rent, and my unit damaged among other things. One person was responsible for the mess.
b). The suit was tossed because the Judge ruled it should have been filed in Circuit Court, and should have been against the corporation.


Mom has quit, but after all this bull**** I would like some sort of justice.
I've had $3K embezzled, illegally paid $10K for helping enforce corporate laws, and nearly had a home stolen.
What are my options from here?

[TheMentat]

I'm not an attorney, but I am familiar enough with this sort of thing to be amazed with how bad things have gotten.

No useful advice from me, but good luck!

[Joeaksa]

Sounds like the judge is in the back pocket of the developer. You need a lawyer who is far away from them who is not "a friend" of the court who will do the right thing.

[GH85Carrera]

That sure makes me glad I did not buy a condo.

A friend of mine bought a nice condo years ago. A couple of years later he told me the worst mistake in his life was buying a condo, or at least that condo.

[McLovin]

Good luck.

Condo/Homeowners' association litigation make divorce proceedings look like a day at the beach.

[ossiblue]

Not an attorney either but, if you don't mind, some outside observations.

1. CIRCUIT COURT TRIAL:
The Judge basically threw out the case for "lack of evidence"
We only have your narrative so this jumps out. Given all your accusations, it appears someone (your attorney?) failed to document the issues with records, sworn statements, cited violations of law, etc. On what grounds, exactly, did you sue the developer? Apparently the judge felt the evidence you did present did not fit the grounds of the suit.

2. A "qualified independent audit" was presented in court.
Who produced the audit, and why do you consider it "baloney?" Did not your attorney have an audit conducted under the color of the board of directors and have it ready for the suit? Apparently not. The fact your attorney did not challenge the "piece of baloney" is telling. Why not?

I'm guessing that part of the suit was to have the court order an independent audit and that failed as the case was dismissed. However, couldn't the board have ordered an audit and present that as part of the evidence that was lacking? Was that done?

3. The following Board(s) then assessed the entirety of his private defense fees to my unit, in direct violation of the By-Laws.

All volunteer Board of Directors have legal immunity unless "adjudged guilty of willful malfeasance".

DISTRICT COURT TRIAL:
10). My elderly mother(retired labor attorney) helped me take the Developer to court.
a) She insisted of naming him "Plaintiff", instead of the Association, ...The suit was tossed because the Judge ruled it should have been filed in Circuit Court, and should have been against the corporation.

I see all these statements as related. Regardless of who may be manipulating the board, it was the board that assessed you damages and violated the by-laws. Yes, you sued the wrong entity. You sued one member of the board--the developer--and in doing so, you violated the same by-law you are using to defend yourself from the board's actions (immunity, unless for malfeasance.)

From what you've posted, if you were naming the developer as plaintiff, your suit should have been to prove malfeasance, not to defend yourself from the violations of the by-laws by the board. That would mean gathering evidence to show he did the things you say he did in your post--meaning all those things you posted need to be documented with records and sworn statements. Basically, doing again what failed in the initial court proceeding when the developer was sued by the board and it was all thrown out!

I understand your frustration, but maybe an outsider's point of view will clarify that mistakes may have been made by your board, your board's attorney, and your own attorney. It seems your immediate concern should be to go after the board and their actions against you from the failed suit against the developer. You need a competent attorney for that.

[john70t]

Originally Posted by ossiblue

Not an attorney either but, if you don't mind, some outside observations.

Outstanding. Keep 'em coming. I'm aware that we, then I/we, made some mistakes, or errors in procedure, and the brain welcomes an impartial perspective on the situation outside of this f'n knot in my stomach. The whole legal realm of condominium/contract/corporate law was quite new to me, and hope others here can learn from my mistakes.

Originally Posted by ossiblue

We only have your narrative so this jumps out. Given all your accusations, it appears someone (your attorney?) failed to document the issues with records, sworn statements, cited violations of law, etc. On what grounds, exactly, did you sue the developer? Apparently the judge felt the evidence you did present did not fit the grounds of the suit.

The Counts were:
I). Fraud- Not paying dues as the Developer and misuse of funds
II). Misrepresentation- Making other owners pay his share
III). Breach of Contract- Changing dues, not allowing audit, running board unanimously
IV). Breach of Fiduciary Duty- Not providing an audit, putting his company ahead of the association.

In retrospect the lawsuit was not focused enough on specific issues as there were so many. It could have been for the audit alone, as that was the main issue.

Originally Posted by ossiblue

Who produced the audit, and why do you consider it "baloney?" Did not your attorney have an audit conducted under the color of the board of directors and have it ready for the suit? Apparently not. The fact your attorney did not challenge the "piece of baloney" is telling. Why not?

It was 1-page, with one line per month: i.e. "January I paid $1800 in dues". The thing wasn't performed by an independent firm after mutual agreement by both parties. No letter heading showing the firm. Nothing matched the other records provided. It might as well been signed by Billy and written in crayon.

Our attorney was a disappointment for sure, but I'll address that separately in another post. That's a long story in itself. There was some strange and somewhat shady things he did initially, and obviously wasn't familiar with real estate branch of law, but he ended up doing his work pro-bono (free), and at least showed up to finish what he began. For that I can't fault him.

Originally Posted by ossiblue

I'm guessing that part of the suit was to have the court order an independent audit and that failed as the case was dismissed. However, couldn't the board have ordered an audit and present that as part of the evidence that was lacking? Was that done?

This was not done. The records were first in the hands of the original management company who "wasn't providing them" and were "still outstanding". In the President's position, this was an understandable situation at first, and I was actually the most sympathetic in explaining to other owners, but somewhere during those many years(4-5) he should have cut them loose and gotten someone else.
Instead, they continued performing all work after being "fired" and the entirety of our dues went into their pockets. I lived at the building for a while and very rarely witnessed them doing anything except banging away inside the developer's own condos. He also had several other properties...

The utility bills they were supposed to be paying with that dues money collected were also not paid(another $12-15K directly paid later on)
This all was later discovered as limited records were obtained.
(but wait, there's more)
The original management company's bookkeeper was charged with felony embezzlement, and so everything was blamed on her. The developer played the victim again and again. The other owners are either gone or sick of this mess.

In short, another Treasurer was elected, but the vote "denied", the checkbook retained in the original hands, and the cycle of "no records available" continued until the lawsuit with the new management company ordered.

We were provided a Quickbooks accounting after some fishy dodges and delays, but without being able to get bank statements, original utility bills, etc to match it all up it was pretty much useless.
Those same QB records showed no dues contributions, and tens of thousands in self "reimbursements" for the same bills the developer later claimed he paid in lieu of dues.
It was pretty convoluted.
Supposedly, this person previously was an accountant for a large firm that got into major trouble...

Originally Posted by ossiblue

I see all these statements as related. Regardless of who may be manipulating the board, it was the board that assessed you damages and violated the by-laws. Yes, you sued the wrong entity. You sued one member of the board--the developer--and in doing so, you violated the same by-law you are using to defend yourself from the board's actions (immunity, unless for malfeasance.)

You're correct that the official roles of that individual were intertwined. He was a private majority owner, the president, and the treasurer all at the same time. Where those boundaries ended I'm not sure, but all of them damaged the association.

This still is confusing to me, as the board can't sue itself.
At the Circuit Court trial, the majority Board members sued the individual.
According to the by-laws, the Board itself appoints the roles of President and Treasurer following being voted onto the board. (This was naturally denied/ignored.)
Additionally, a private owner doesn't retain special legal rights, but the defense attorney "misrepresented" the by-laws in court...

Originally Posted by ossiblue

From what you've posted, if you were naming the developer as plaintiff, your suit should have been to prove malfeasance, not to defend yourself from the violations of the by-laws by the board. That would mean gathering evidence to show he did the things you say he did in your post--meaning all those things you posted need to be documented with records and sworn statements. Basically, doing again what failed in the initial court proceeding when the developer was sued by the board and it was all thrown out!

That is a good point. I contacted the association twice and the attorney twice for the statutory justification of the assessment. I cited the specific by-laws which require such. There was no response, only public slander about "what a rotten person John is", and a lien filed.

Originally Posted by ossiblue

I understand your frustration, but maybe an outsider's point of view will clarify that mistakes may have been made by your board, your board's attorney, and your own attorney. It seems your immediate concern should be to go after the board and their actions against you from the failed suit against the developer. You need a competent attorney for that.

At this point I'm standing in front of Goliath without a money slingshot. I've considered filing the suit myself, being somewhat familiar with the procedures, but the court is rather mercilessly unforgiving to laymen, and there are always some details that could get the case thrown out.
I was thinking there are two actionable events:
1). Repay money claimed embezzled, or produce an audit (repeated ad nauseum).
2). Repay assessment collected under duress, or prove court-ruled malfeasance.

Thanks for the responses.

[rsNINESOOPER]

It might take a while to find a good guy lawyer who is willing to work with you unconventionally but it will do you good. Going to court without a lawyer is possible but your chances of winning a case in this area of law is remote. As a professional has mentioned already. Too many nooks and crannys for sleazy developers to hide from the law in.

That said I have had success in the past when I fought a landlord in court over a tennant improvement/ Renter property case. I found a lawyer who was willing to take the case based on having me do all the busy work including filing, writing etc. He would tell me what to do over email and I would do it. Anything that was written would be sent to him in a raw info format and he would polish it a little and send it back on his firms letterhead.
In short I was his lackie laborer. It ate a lot of my time up (long nights) but total cost to me was thousands less. I learned more about law going through that process then I learned in any of my pre law classes.

I would also recommend you find a case that resembles yours that has been won in your state/area. I would also do some digging to find out what other related suits have been won or lost against him. A sleaze bag like this guy has been in court before, he is a veteran and you are not. He will fight dirty while standing on lies and you probably won't.

He is acting this way due to confidence developed by success with his "system"

I have been navigating the construction/ developer industry as a designer and builder for close to 20 years.
I have yet to meet one guy in the game who did not bend rules and or do shady things to build a large operation. In a lot of ways developers are politicians because without elected officials in their pockets they will never get large. They donate a lot of money to campaigns including judges.

Good luck and keep up the fight- do not be discouraged but do it smart.

It would seem to me another way to get at him would be "Breach of contract" and look into diminished value in regards to your property based on the lack of repair and upkeep.

[ossiblue]

Wow! It's amazing how trying to keep things brief never really works.

Let's not rehash what went wrong at the initial court proceeding and instead focus on where you are now.

It looks like you have been assessed with the court costs of the failed action against the developer, which is a clear violation of the by-laws. You tried to remedy that in District Court by suing the developer and the court threw it out because it was an action by the association. You have paid the assessment to avoid complications. The association is stonewalling your attempts to get clarification on their violation of the by-laws. Does this sum it up?

Here's my perspective.

Focus only on the board's action against you--the assessment and lien. The board has provided you with absolutely no evidence that you are/were liable for any costs. Further, they have been notified of a violation of the by-laws and refuse to respond. I honestly don't see any recourse for you other than to get a real estate attorney who is familiar with these issues and go after the board.

"I've considered filing the suit myself, being somewhat familiar with the procedures, but the court is rather mercilessly unforgiving to laymen, and there are always some details that could get the case thrown out."


A very real fear. If nothing else, make an appointment with an attorney and discuss your position with him directly, bring with you all copies of by-laws, state codes of openness, records of attempts to get a board response, correspondences with the board, etc. to the meeting. If you come well prepared and focused only on the board's action against you, you should be able to get a reading of your strength, in court, if you proceed to sue the board.

EDIT: rsNINESOOPER posted while I was typing. I think his advice and experience is excellent--especially being the "lackie." If you have the time and can find a similar lawyer, that is a great route to take. Remember, you're going after the developer via the association. You are not trying to prove the developer a crook but rather that you have been illegally assessed and otherwise harmed by the association.

[Rot 911]

Two questions:

1. Was original case dismissed with or without prejudice?

2. Is the Association incorporated?

[john70t]

Originally Posted by Rot 911

1. Was original case dismissed with or without prejudice?

I couldn't find anything in the paperwork, but assume it was with prejudice.
However my self-review and finding of the $40-60K occurred after the trial, and the new management made the records "current".
The personal assessment and vendetta was also post-CC-trial.
Not res-judica or collateral estople, I'm hoping.

The Developer repeated "it's a closed case/summery disposition/etc", but there exists no specific judicial ruling in the court transcripts.

The by-laws are vague and not well written on some subjects.
They say an audit is required, but "an accounting" can be done instead "if an audit is not available".

I did request another audit with the second District Court trial. After a year of no response the new attorney demanded "in preparation for...":
1). The escrow account documentation first.
-This was supplied to her partner and the Board with the Circuit Court Trial several years before. I even sat down and reviewed with the Developer so the building could function with dues collected in the meantime.
-She either was lying, or never bothered to look. He demanded the same in public emails along with insults

2). The payment structure with our attorney.
-Quite irrelevant for accounting purposes.
-There are no such provisions/requirements.

Originally Posted by Rot 911

2. Is the Association incorporated?

Yes. It is a non-profit, I believe. Not sure if C or S.

Following the first association of directors, for 2 years neither of us were registered as even being on the Board.
Subsequent state filings stated "no change", and non-owners remained registered.

The Developer also kept the utility accounts first in the name of the building's previous owner from whom he purchased it, ringing up serious debt, then switched it to his own company. They were never actually in the name of our building's association until after the lawsuit.

[john70t]

rsNINESOOPER that's brilliant. Thank you.

[john70t]

Just a follow-up for those thinking of getting into a condo.....

The Board can pretty much do whatever the **** they want.
Judges, the management company and attorney can ignore existing Board votes, protect felony embezzlement of fifty grand by single members, pick and choose by-laws and federal corporate laws to enforce, and attorneys can adhere the private fees of a law partner to another owner without giving reason all the while telling a Judge bold-faced lies in a Court Of Law.
So says the Michigan Attorney Grievance Commission.

Attorneys usually won't work on contingency, unless there is a clear case and "an insurance company involved", and Judges will just ignore laymen filing a case Pro Se(self representing). Good luck with someone to take a case Pro Bono. Else, expect a $5,000 deposit.

From this crap I also learned there is very limited time for legal procedures.
In Mich:
-21 days to file a Motion of Reconsideration.
-28 days to file an Appeal.
-2 years to file after a claim has accrued for contract claims. (If those are spend waiting for delayed negotiations, then that time is up.)
-You have to act fast to ensure justice. Justice is a commodity.