Although it may seem as though many of the laws surrounding Community Association management are set in stone, there are cases moving through the courts every day that can have a significant effect on the way Associations conduct themselves. Here is a brief roundup of some of the more notable cases from the past few months:
Following a fire at Bridgepointe Condo Association, a couple of individual units suffered damage. The insurers of one of those units, Universal North American Insurance Company, paid out on their policy accordingly, but then sought to recover that money, as they claim that the Association contributed to the fire by failing to properly maintain the premises. The Association argued that its bylaws, which the insurance holder had signed, prevented subrogation claims, in which a third party assumes another party’s legal right to collect a debt, and moved for summary judgment. The insurance company then argued that the Association’s master deed contradicted those bylaws, making the master deed the dominant policy.
The court granted the motion for summary judgment, ruling that the Association had intended to prevent any litigation against itself or amongst its residents. The court then further ruled that the insurance company should have known about the subrogation waiver since the insurance holder had known about it, rejecting the insurer’s argument that the bylaws conflicted with the master deed.
This case concerned the resident’s right to access specific Association documentations related to financial information. Twin Towers Condo resident Mark Dunbar requested access to the Association’s documentation in an attempt to investigate the thousands of dollars in special assessments the Association levied every year in addition to the regular assessments. The board adopted a policy based on the Nebraska Nonprofit Corporation Act, which divides records into categories for full or limited access.
The board denied Dunbar’s access to further documents, claiming that his request was not made in good faith and in service of a proper purpose, as Dunbar had previously posted some of the Association’s documents containing confidential information on his public website. Dunbar claimed that this violated the Nebraska Condominium Act, which states that an association must make financial records reasonably available to any owner. The court dismissed Dunbar’s claims after a trial, and he then filed an appeal.
The appeals court found that the Association’s policy violated both the nonprofit and the condominium act, as the policy only allowed for conditional access to the documents rather than the stipulated unconditional access. The court ruled that the balance between owners’ rights and privacy was not the Association’s to strike, but rather the legislature’s. However, in response to Dunbar’s claim that he had a right to copy the documents in question, the appeals court acknowledged that, although the nonprofit act did allow for copying records, that privilege was subject to the limited access requirements.
The trial court’s judgment was affirmed and reversed in part, and the case was remanded for further proceedings.
Joy Ellison, who owned a home in the Brookside Village Neighborhood Association, filed for bankruptcy in 2015 and received a bankruptcy discharge in 2016, which included a debt owed to the Association. In March 2017, the Association’s attorney, Fullett Rosenlund Anderson P.C., mailed a collection notice to Ellison’s home, indicating that the Association would terminate possession of the premises if the payment were not made in full in 34 days, addressing the recipient in the second person.
Ellison sued the attorney in federal court, alleging that the notice in violation of the Federal Fair Debt Collection Practices Act, which forbids debt collectors from engaging in deceptive or unfair practices, and bans threatening to take an action that cannot be legally carried out. The attorney then argued that the notice was directed at the property and that the act in question didn’t apply to Ellison because she was not a consumer.
The court concluded that the notice was sent as if from a debt collector to induce a payment, determining that the high-level legal language in the collection notice is unclear to an unsophisticated audience such as Ellison. The fact of whether Ellison was misled or knew that she didn’t owe any debt — because it was addressed in the bankruptcy discharge — was irrelevant. The court granted summary judgment, which is a ruling made without a trial, in favor of Ellison.