I won a pretty interesting arbitration case last week. It’s an example of how a Board’s unwillingness to listen to reason, wound up needlessly costing all of the members some money. It’s a perfect example of how it’s possible to both win and lose at the same time. Here are the facts:
On September 22nd, 2015 Oasis at Palm Aire Association, Inc. was served with 89 votes in favor of recalling board member Dianne Bessette. Since there are 167 homes, only 84 valid ballots would have been necessary. However, in this case, 21 of the ballots were stale as the signatures on the ballots were in excess of 120 days old; clearly a violation of law. Therefore, when we subtract the 21 stale votes from the 89 that were served, there were only 68 valid votes in favor of the recall, which is short of the required 84. On September 25th, 2015 even though the Board and their counsel were admittedly warned not to count these stale ballots, the Board rejected Bessette’s legal argument without any justifiable basis, and voted to certify the recall and remove Bessette from the Board anyway.
Obviously, this left Bessette with no choice but to immediately file a Petition for Arbitration challenging the recall and her removal from the Board. Subsequent to Bessette filing her arbitration case, the Board suddenly realized that Bessette was right. So, they went back and corrected the 21 stale ballots by having the unit owners sign new ballots. They then held a second recall meeting and again certified the recall. The association then asked the arbitrator to consider the case closed, but to award the association prevailing party attorney’s fees and costs to be assessed against Bessette.
In response, on behalf of Bessette, I argued that even though Bessette was ultimately removed from the Board, she was actually the prevailing party in the case she filed. She was forced to file her arbitration case because the Board ignored the law. In effect, the Board then admitted error by correcting the 21 stale ballots and by holding another recall meeting, which in effect negated the first one. If not for the Board ignoring the law, Bessette would never have had to file anything and would never have had to hire an attorney. Therefore, the arbitrator should assess fees and costs against the association.
The Arbitrator agreed with Bessette and held “Indeed, in holding a meeting to consider the second recall agreement, the Association was admitting it committed an error in certifying the first recall because a fortiori an association cannot recall a member of the board who has already been recalled. The second meeting where the association for the second time certified the recall negated Petitioner’s earlier removal from the Board (whether acknowledged publicly or not) and Petitioner had regained her seat on the board if ever so briefly. This granted the relief requested in Petitioner’s petition. To this extent, Petitioner did indeed prevail.”
“The association knew or could have known by just reviewing the first 89 ballots, that 21 were useless because they had expired. A cursory review of the ballots would have revealed this truth and saved both parties fees and costs. Instead, the association proceeded to meet concerning the certification of the first recall without questioning the facial validity of the ballots. The primary purpose of holding a meeting to consider the recall is for the board to determine the validity of the ballots cast and to fail to do so in its rush to remove Petitioner, will not support a finding by the arbitrator that the association is the prevailing party. Essentially, the association wants to be named prevailing party to be awarded fees and costs because it mishandled the service of the first recall agreement. Under the circumstances, the Association’s motion will be denied and Petitioner will be named prevailing party and be awarded her reasonable fees and costs despite the fact that she did not get the relief she sought in a final order.”
The total amount at issue was $1,500.00. Of course, the association probably paid attorney’s fees in a similar amount to their counsel for these proceedings. That’s $3,000.00 that could have been spent on something beneficial for the community instead of attorney’s fees, had this particular Board simply obeyed the law and refused to count the ballots they were warned were illegal and couldn’t be counted.
Often times, the Board’s anger with a particular member of the community clouds their judgment. So heed this advice board members………. because it was given to me when I was just starting out in this profession. Even if you don’t like a particular member of the community, even if you think the member is annoying, even if you think the member is a trouble maker, keep in mind that even a broken clock is right twice a day.
