At one time or another, boards are confronted by the neighborhood bully or nonconformist. Board members must be in shape to have the endurance necessary to stand up for the association. Enforcement of an association’s documents is at the core of the powers that an association can flex. Confrontations with members that result in lawsuits should be a last resort when reason and persuasion fail. Lawsuits can be like marathons for both parties and should not be commenced unless the board is committed to finish the course.
Our experience shows that few board members and managers are prepared for the time and effort that will be expended in a lawsuit. The process is particularly taxing on new board members who come on to the board in the middle of the lawsuit. The commitment of time and costs of pursuing a covenant enforcement lawsuit can be painful. As time goes on, board members lose the enthusiasm that existed in the beginning and may want to drop out. It is easy to lose focus.
The purpose of this article is to:
· provide a succinct and realistic overview of the litigation process from beginning to end, and
· explain and discuss the support attorneys need at various times from the client and manager in order to make the process go smoothly and efficiently.
This article will focus on lawsuits in which associations seek to enforce use restrictions and/or architectural controls. The subject of these lawsuits ranges from excessive weeds and debris on a property to unauthorized painting or construction.
Constituent parts of a covenant enforcement lawsuit are:
1. Establishing the facts, confirming the behavior is a violation of an association’s documents, confirming the association has complied with all required procedures.
2. Preparation of the lawsuit papers.
3. Default (if the owner fails to answer).
5. Summary Judgment.
Each of these stages of a lawsuit build on the knowledge and information developed in the previous stages. Like a personal trainer that relies on a client’s personal history and medical condition to design a program to achieve the client’s goals, attorneys rely on board members and managers in the same way to achieve the association’s goals. It is imperative that the board and/or manager provide the attorney with as much information as possible before a lawsuit is filed so that there will be no surprises as the case proceeds.
WARM-UP FOR A LAWSUIT
Once it is clear that letters, fines and other measures will not pressure an owner to correct his or her violation, the only remaining action to force compliance is to prepare a covenant violation lawsuit. Since litigation has the potential to be a timely and very costly process, the litigators at WNCW will perform an independent review and analysis of all of the issues related to the violation and the various Declaration and by-law provisions at issue. In addition, we will perform a basic search of the land records to confirm the ownership of the property. It is common for title searches to discover a property is not owned or is not owned exclusively by the person shown as the owner on the association’s books and records. The association’s fining authority and authority to collect attorney’s fees (i.e. for assessments only; for assessments and fines; for assessments, fines and enforcement actions) will also be verified.
The litigator will also confer with the manager and the appropriate member or members of the Board of Directors to discuss the exact nature and history of the violation as well as verify that all procedures the board is required to follow prior to imposing a sanction have been followed. At this point, any other issues with this owner no matter how small or seemingly inconsequential need to be discussed so that they can be joined in the lawsuit. For example, violators often also owe assessments. A claim for the delinquent assessments can be added to the lawsuit.
All of that information will be reviewed and analyzed to confirm the association does not have any pre-existing condition that would affect the association’s ability to pursue the lawsuit. There will also be an analysis and a thorough discussion of any possible side effects that might result from a lawsuit. If all notices, hearings or other required procedures have not been satisfied, the lawsuit is not in shape to be filed. Likewise, if the violator is in better shape than the association as a result of the board acting without authority or in an arbitrary or capricious way, the lawsuit will likely not proceed until the association’s weaknesses have been eliminated.
Once this analysis and investigation is complete the lawsuit papers will be drafted. Over the years we have learned that attaching all documentation that is relevant to the covenant violation as an exhibit to the lawsuit results in the violator admitting many items that we would otherwise have to prove. Admissions allow the lawsuit to proceed more efficiently and saves both time and money. It is also intimidating because it shows the strength of the association’s claim.
The documents that we want to file with the lawsuit are as follows:
· Copies of the Declaration and By-Laws.
· ***PICTURES, PICTURES, PICTURES***
· All letters, notices, architectural applications, approvals, denials, etc.
· Board or ACC minutes regarding the specific issue and any minutes from violation hearings.
· All communications, e-mails or letters from the owner.
· Any recently adopted rules or regulations or revisions thereto.
· The identity of all witnesses who have had conversations with the owner or who have actually observed the violation.
· All e-mails, correspondence among the board members or with third parties regarding the issue.
In order to successfully prosecute a covenant enforcement action we need pictures, pictures and more pictures since most covenant violations are conditions that physically exist on a piece of property. It is imperative that either the Board or manager take pictures of the violation. The pictures should depict the violation on its own, in the context of the property in general and in comparison to neighboring properties. We want pictures of the violation at the time the first notice is sent to the violator and at the time the lawsuit is filed. If possible, we also like to have before, during, and after pictures showing the change in the appearance of the property. While many times the association does not learn about violations until they have existed for sometime, pictures need to be taken immediately upon learning of the violation and then subsequent pictures taken over time.
The reason for this is simple, a litigator can spend hours in front of a judge eliciting testimony from witnesses as to the nature, color, and scope of a violation — or he/she can simply show the judge and jury a picture of the violation. It has been said that pictures are worth a thousand words, and that is correct. It is safe to say that associations would prefer to present a few pictures as opposed to paying a lawyer to speak a few thousand words!
The lawsuit papers (known as a Complaint) will be drafted once all of these documents and pictures have been assembled. The Complaint will then be filed with a court. Once the case is filed, the Sheriff will serve the papers on the owner who will then have 45 days to file an answer.
If the owner fails to file an answer within 45 days of being served by the Sheriff, a motion for a default judgment will be drafted and filed with the court. This motion informs the court that the owner failed to answer the Complaint. By being in default, the violator is deemed to have admitted all of the allegations and verified the authority of all of the documents in the Complaint. The association will not have to present proof on those issues and the violator loses the right to defend the lawsuit. Depending on the county and the judge, the court generally takes anywhere from 2 to 6 weeks to issue an order holding the owner in default on the Complaint. That is an average. Some judges sign defaults when they get around to it which can be months after the motion is filed. If a case is before one of those judges, we are forced to wait because there is nothing a lawyer can do to convince/compel a judge to sign the motion.
Default Hearing – Damages
Once the judge signs the motion for a default judgment, the next step is to ask the court to award the association the relief it requested in the complaint. In most covenant enforcement cases, the association requests an order requiring the violator to remove the violation – tear down the unapproved deck – and monetary damages. A hearing will then be scheduled. At least one witness on behalf of the association will have to appear to present the evidence. The witness must be able to testify from personal knowledge of the existence of the violation, from the date the complaint was filed through the date of the hearing. The association’s witness must have actually seen the violation and be able to confirm the photographs, photographs, photographs accurately depict the property when the photo was taken. If the association is seeking daily fines, the association’s witness will also have to testify to the continuity of the violation.
If the association is seeking delinquent assessments, either the treasurer who actually keeps the accounts, or a representative of the management company who actually keeps the accounts, will have testify that a ledger accurately shows the amount of past due assessments owed by the violator. If fines are requested, the amount accumulated through the day of the hearing will have to be calculated and presented to the court. Finally, the litigator handling the case will testify as to the legal fees that were requested and provide evidence as to their validity.
If the owner files an answer within the 45 days, the case proceeds to the discovery phase. Under Georgia law the discovery phase of a lawsuit lasts a minimum of 6 months. The purpose of the discovery phase is for the plaintiff and the defendant (in this case the association and the owner) to exchange documents and information and possibly take depositions in order to fully explore the facts and issues of the lawsuit.
The discovery phase of a lawsuit consists of each side asking for the exchange of documents, to answer certain questions known as interrogatories and to admit certain statements of fact that each side believes are not in dispute. While each case is different, owners generally ask for, and are generally entitled to receive, the following documents in addition to what is attached to the Complaint:
· Board and/or ACC meeting minutes going back as far as 4 years.
· Identification of similar violations or modifications in the community within the past 4 years.
· Applications and/or approvals, denials of similar violations or modifications over the past 4 years.
· A list of who has been fined or has been put in violation in the past 4 years with regard to similar violations or modifications.
· The name and contact information for past and current members of the Board of Directors, Architectural Control Committee and manager.
Based on experience, the above list are items that judges require an association to disclose. If an owner asks for additional information, an objection can be filed which means the judge will decide if the owner is entitled to the requested information.
While the discovery phase is ongoing, additional pictures of the violation need to be taken to document the ongoing appearance of the property. Even if there have not been any changes, the additional pictures are necessary to show the continuity of the violation.
Depending upon the complexity of the case and whether or not the parties have greatly differing versions of the facts, it may be necessary to take depositions. The more complex and factually disputed a case is, the more likely that depositions will be needed. If depositions are needed, the owner will most likely want to depose the manager and/or one or more members of the Board of Directors or Architectural Committee. Further, the association may want to depose the owner and possibly contractors, engineers or architects if an architectural modification is at issue.
If depositions are to be taken, each side will identify the person(s) each wants to depose and the attorneys for both parties will agree on the date and time. Members of the board to be deposed by the defendant will meet with the association’s attorney one or more times to prepare their testimony. There will be an in-depth review of the facts and probable questions that will be asked by the defendant’s attorney will be discussed. The time that is necessary to prepare for a deposition depends on the complexity of the case. Preparation for a deposition is usually conducted at the association’s attorney’s office since that is where the files and evidence in the case are kept.
If the association’s attorney conducts depositions of the owner(s), witnesses, etc., it will be necessary that either a Board representative or the manager attend these depositions. This is necessary because information invariably comes out during a deposition that the litigator did not know. The association’s attorney will need to consult with someone in order to follow-up and properly examine the witness on those issues. Furthermore, settlement discussions often occur at the end of depositions so it is always good to have someone at every deposition who can respond to settlement offers.
This is the time in a lawsuit where a board’s conditioning and endurance is tested. There is no perfect case. No matter how fit a board is, there are always issues that develop during the discovery phase that show the weaknesses of the association’s case. Board members and managers get frustrated with the amount of time being spent on the suit. Depending upon the complexity of the case and the extent of the factual dispute, the discovery phase of a lawsuit can greatly range in the amount of time and cost involved.
Once discovery is completed, both sides will review the facts they feel are not in dispute. Depending on that analysis, both sides can file a motion for summary judgment. A motion for summary judgment is a motion filed with the court that sets forth the facts that are not in dispute and makes the argument that when the law is applied to those facts, the winner is obvious so judgment is awarded without a trial. If one party files a motion for summary judgment, the other party has 30 days to file a response. The response will attempt to show the matter cannot be resolved by such a motion because there are facts that are in dispute and/or the law does not support the other party.
In addition to all the documents that were requested in the beginning of the case and during discovery, the association will need to submit the following documents with its motion for summary judgment:
· New pictures of the property showing the present condition of the violation.
· An affidavit from a witness (usually either a manager or member of the Board) who has personal knowledge of the violation itself and has viewed it on numerous occasions both prior to and during the pendency of the lawsuit.
Even in situations where there may be a significant dispute of the facts, the association’s attorney may decide to file a motion for summary judgment to pin down the owner on a specific narrative of the facts. Also, a court has the ability to award partial summary judgment. In cases where there are numerous issues to be tried, a court will see how many of the claims can be eliminated by granting summary judgment on some, but not all of the issues. Motions that are disposed of by partial summary judgment do not go on to trial. Any resulting trial is much more efficient because there are fewer items to prove at trial.
TRIAL ON THE MERITS
When the owner has answered, discovery has occurred and the case has not been resolved on summary judgment or settled, the case will proceed to a trial on the merits before a judge or a jury. At this point, the case has probably been in litigation for 1-2 years, depending on the judge and County where the suit is filed. It is at this point that many board members, managers and owners, other than the defendant, hit the wall. Board members and managers have to reach inside for the final push to the conclusion. Trials are nothing like how they are portrayed on television. Opening statements always last more than 2 minutes, witness testimony is not riveting, procedural matters take up considerable time and closing arguments in covenant enforcement cases never evoke the emotion that happens on television.
A trial on the merits of the case requires both sides to present evidence. Evidence is testimony of witnesses and the introduction of documents. Every relevant document, ranging from the Declaration and by-laws, to the violation notices and meeting minutes, to the ledgers for assessments and application and denial forms for architectural changes will have to be separately entered into evidence and authenticated by a witness who has actual knowledge of those documents. While many documents will have been admitted by the owner either in their answer or during the discovery phase, there are always numerous documents that the association has to authenticate and establish at trial. Of course, we will need to introduce recent PICTURES of the violation at trial.
Witnesses who will be testifying on behalf of the association at trial will have to meet with the attorney and prepare for their testimony. All of the documents that will be discussed during their testimony will be reviewed in detail. The witness will learn how each document will be entered into evidence, why each document is being entered into evidence and what each individual witness knows about and can contribute to the trial. This preparation procedure is significantly longer than the preparation for depositions and, since the trial is the ultimate outcome of the case, requires extensive preparation for each witness.
It is very common for lawsuits to settle “on the courthouse steps” because the parties know the strengths and weaknesses of both sides of the dispute. Given that no case is perfect, uncertainty of the outcome leads to settlement in many cases. If the case does not settle, it will go to trial. At the conclusion of the testimony, the judge or jury will decide whose recollection of the facts is more accurate and whose position is supported by the law. The case may be over at that point or the decision can be appealed to the Georgia Court of Appeals or the Georgia Supreme Court.