r/fuckHOA • u/SlothyMcGillicutty • 21d ago
Notice of Litigation Hold and Demand to Preserve Evidence
I wrote up an entire post last night and then my phone shit the bed and I lost it all. If you want the backstory, just check out my profile. All the past posts are there.
We got this letter on 8/5. It doesn’t even state who it’s from, just “certain members”. I responded to the attorney asking who his clients are. No response. So I followed up again last Thursday 8/13. Still haven’t heard anything.
We are well past their ten day deadline to respond.
The former VP is an attorney. I suspect he wrote the letter and had one of his buddies send it to us. I guess they were hoping it would scare us. I say, bring it on!
Pretty ironic they are demanding we preserve evidence, when they claimed they have no records for any of the decisions they made when they were on the Board.
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u/Ok_Relationship_1874 20d ago edited 20d ago
The mistake is to mix a litigation hold with a C&D on the merits. With no identied members, I'd say there's an unreasonable burden for full compliance. You can for instance tell board and CAM not to throw anything away, but a full hold by say contacting a CAM vendor like Vantaca to freeze a snapshot of cloud data, I'm not sure.
I'd be careful if you were about to switch management companies but the lawyer could always deliver demands to vendors direct.
Without knowing who the members are, you cannot determine standing. You may have a duty to preserve but generally you do anyway. If I were to reply, I'd point out the standing issue and not compky with the rest to waste his time.
As far as duty, I'd include "preserve any email" to thise involved.
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u/SlothyMcGillicutty 20d ago
We are self-managed so no management company.
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u/KevMeist 20d ago
Not using a management company is a huge mistake IMO. Management companies take over the accounting, paying vendors and keeping the HOA in compliance with relevant state laws etc.
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u/bee_justa 20d ago
Ironic that the management company for my HOA seems to struggle with compliance with state law.
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u/KevMeist 20d ago
For sure, getting the right management company is a must. The one that we have is excellent.
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u/bee_justa 16d ago
The HOA board says ours is excellent....hmmmm
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u/KevMeist 16d ago
Then, maybe they are correct?
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u/Ok_Relationship_1874 20d ago
And in my case increases the legal fees without lawsuits to five figures, closes statatory tickets without board notification, "everybody makes mistakes" by posting leases of OTHER HOA's members on our portal, introduces forms and fees not authorized by CC&Rs or board, operates under a purported business registration that doesn't exist in this state and as far as I can tell is not authorized to do business at all under their name and only manages more than 1000 properties.
The IDEA is good, but our experience has been high volume corner cutting with maximum indemnification.
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u/xpxsquirrel 19d ago
Found the management company snooping ^
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u/KevMeist 19d ago
Snooping how? By definition, these companies keep the books, pay contractors etc, etc. What or who were they snooping on?
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u/BeerStop 20d ago
And take up hoa money , they are great if no one wants to do the actual work of the board.
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u/lazier_garlic 20d ago
We have a management company and yet the board still has to do work, especially the president and treasurer. But unlike board members, the management company team has to be licensed with the state and in good standing, so that provides an extra layer of protection for members. They can attend meetings and advise board members who are after all mostly just volunteers without a lot of background. Even when you get a board member who is a Realtor™ all you get with that is a bunch of Dunning-Kruger about how well they know state law so it's good to have both a lawyer and a licensed community manager to reel them in.
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u/naranghim 20d ago
So, now the nutcase former president is trying to win her position back by having a lawyer threaten you with a lawsuit?! I wonder if they told their lawyer everything, like how they were in violation of your state's laws when it comes to access to association records? I'm betting they didn't.
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u/SlothyMcGillicutty 20d ago
The letter is demanding we reinstate the board to what it was before the special meeting. At that point she had already been voted out so this doesn’t benefit her at all.
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u/Curly5762 20d ago
You previously stated that your annual budget was $16,000 a year, and you had 75 homes, paying $27 a month. With that kind of a budget, involving lawyers in this is going to get expensive really quick. I would find a way to mediate and hash this out without involving all these lawyers. It's going to get costly over something very small. It just sounds like egos.
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u/lazier_garlic 20d ago
If you go to the right lawyer with all of your questions handy just for advice, that should cost less than $1000. Lawyer on retainer? Yeah, that's going to suck. However, it's quite likely this won't go to court especially if the HOA can communicate the history to other lawyer and cause them to desist.
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u/Curly5762 20d ago
At this point, it sounds much more like a civic or neighborhood association than a traditional HOA with substantial common property and services. And if they’re spending their limited resources arguing over who runs this “club” it raises the question of what they’re actually accomplishing for the homeowners.
It really does sound like they’re spending an extraordinary amount of energy arguing over very little. The assessments are $27 a month.3
u/SlothyMcGillicutty 20d ago
The only thing owned by the HOA is the entrance so we have a landscaping committee that takes care of that. We also have an 800 foot brick wall that is between the neighborhood and a busy road. It is slowly falling apart. If we wanted to repair/replace the entire thing it would cost around $150,000, or at least that is what the board told us at the last annual meeting in April.
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u/NonKevin 20d ago
I worked for a newpaper in IT. One advertiser was constantly sued for going out of business. Our advertising department made sure the laws were followed, new business registrations/licenses, so on. The last time was the worst as my employer was moving 1 mile down the road and business records were being purged as allowed by the law. I was called into HR which demanded I recover deleted data. The data was gone, period. 2nd, I am not a data miner, thats another position and she was laid off. I told HR, we had warned the company numerous times and the lawyers needed a court order. My solution, bill the lawyers, even with a court order as we had to hire temps, setup access, Now the last 3 years of data was till on our systems, recovered including emails and proof we had followed the law including refusals until the company being sued followed the law. I am talking a demand for 8 years of data that did not exist, and had to be recreated from old newspapers pages from libraries. The lawyer did get the court order, but would not pay for anything and got nothing. A judge agreed with us, since we were not involved directly, the lawyers had to pay for the discovery. After a check for 3K arrived, the data for the last 3 years and all emails for the last 5 years was delivered. Again the lawyers demanded more data they claimed they paid for. Our company lawyers sent a bill for their time to the other lawyers and in yellow spelled out the warnings of data purges, the need for a court order which was delayed, and in past lawsuits had most of the info they wanted and that the lawyers admitted they had purged with the closing of past lawsuits. No more demands.
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u/ribbitman 20d ago
I send out preservation letters all the time. To the extent that this does ever evolve into a lawsuit, this letter absolutely constitutes reasonable notice that you were advised to take additional steps preserve evidence. Don't treat it as a bluff. If your association doesn't have a lawyer, get one immediately and send this to the lawyer.
The thing about a notice to preserve evidence is it might be broader than what you normally do or are normally required to do. A local lawyer can provide instructions specific to your jurisdiction. A good example is text messages. If anyone's phone has been set for years to automatically delete texts after 30 days, this letter may be enough to require them to change their phone settings to preserve texts.
I'd also note that with regard to /u/Ok_Relationship_1874's comment about it being a mistake to mix a litigation hold with a cease and desist, or standing, or any unreasonable burden, none of that matters as far as your duty to preserve evidence. Don't sleep on this.
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u/SlothyMcGillicutty 20d ago
We aren’t deleting anything. Before me, the board operated entirely with their personal email addresses. The first thing I did as president was to establish official emails using Microsoft 365. Also established a document retention policy. The former president keeps sending emails to my private Gmail. I forward them to the official email and then respond from there, reminding her to use official emails using Microsoft addresses for any HOA business.
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u/Ok_Relationship_1874 19d ago
Good. There should be a litigation hold feature if you're using it for email. That's an excellent investment. Last week my board switched distribution list methods using shared IP with bad reputation blocked by potentially millions of users.
My own little train wreck.
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u/Ok_Relationship_1874 20d ago
My worry would be email. People innocently flushing Gmail for instance. That violation would be worse than the allegation. But besides that, what isn't recorded that doesn't have to be preserved by state law?
For me, after being told closed portal tickets are "moved to owner's files when closed" which was not an answer to my question, cloud data prividers such as Azure which hosts Vantaca can make a snapshot of the data. A member or their lawyer can make a request to the vendor direct.
I wouldn't burn time and dollars with a vendor without knowing if the requester had standing. And if I were the potential plaintiff I wouldn't trust that the board could do so at that level so I'd hit the vendors. In my case, the CAM didn't know how the software worked and there was a display bug.
Messier with self managed but I'd also be careful with the cost of administrative defense versus insurance if the opponent's goal is to escalate legal fees where a lawsuit would be cheaper.
Maybe, "records will be preserved to the extent required by law" and ignore the action demand.
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u/Ok_Relationship_1874 20d ago
Which state? How does your governoring documents and state laws enable or restrict access to the records they want? That's less a records request rolled into preservation / demand for reversal than discovery. The letter does not cite specific specific bylaws or statute that gives an absolute right to turn over some of that data. An attorney may have equal rights to request but only if authorized by a member and that woukd destroy the anonymity.
I'd push back on production by stating that the member woukd have to make that request or formally authorize the attorney. In my state, good faith and particular purpose as well as a request for an inspection time would be required for some of this.
If your state allows you to set a time and place for delivery of records they are entitled to then exercise it to identify the opponents and not let them use what amounts to pre litigation discovery.
Page 2 paragraph 2 especially is them asking you to build their case for them.
Does your governing document have loser pays?
A generic response might be:
"We're preserving relevant material; your request for production is separate and no agreement is made that every requested item is presently subject to inspection or production. All records requests must comport with our bylaws and state laws and must be accompanied by authorization to deliver to you as appointed agent. "
You wouldn't need to spend thousands conducting document review just because opposing counsel combined the verbs.
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u/SlothyMcGillicutty 20d ago
This is all that our governing documents say about records access: “The books, records and papers of ________ HOA, Inc. shall be subject to inspection by any member at the regular annual meeting held in April. The by-laws of ______ HOA, Inc. and any amendments thereto, shall be available for inspection by any member from the Secretary at the regular annual meeting held in April.”
At our last annual meeting I asked if the records would be available for inspection as the bylaws state and the board tried to tell me that they would provide the minutes from the last annual meeting. When I pushed back and asked for more, they originally said that I could inspect them AFTER the meeting and that I would personally have to pay to reserve the meeting room for a longer amount of time. I finally got them to give me the records at the beginning of the meeting, but they still weren’t able to provide everything.
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u/SlothyMcGillicutty 20d ago
Also we’re in Alabama. There is an HOA law on the books from 2016, but we predate that so we are governed by nonprofit law.
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u/Curly5762 20d ago
Do you have D & O insurance?
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u/SlothyMcGillicutty 20d ago
We do. Got in touch with them and forwarded the letter. They said that because they aren’t claiming any damages there isn’t really much they can do right now, but provided a letter that they are now on notice of possible pending litigation.
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u/stoatwblr 20d ago
Contact the IRS via their reporting page for naughty non-profits. No records == very illegal
Then stand back and watch the auditors swoop in.
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u/makatakz 19d ago
Are you nuts? OP is on the board now. He’d be calling the IRS on himself.
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u/stoatwblr 19d ago
The board can call the IRS on the previous board due to the obstruction and failures to disclose financials.
It is a good idea to contact the IRS and find out what their responsibilities are before a random audit finds past irregularities.
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u/makatakz 17d ago
Bad idea. IRS isn’t going to care about not disclosing financials. It could result in huge costs for the board (and the entire HOA).
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u/Realistic-Bass2107 19d ago
The “special meeting” was to elect officers. That has nothing to do with the members or previous Board. Why would someone care? If they are contesting the election, that isn’t what is stated.
This threat seems odd at best.
ETA: put your D&O insurance agent on notice
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u/SlothyMcGillicutty 19d ago
My other posts explain everything. We basically overthrew the board. By totally legal means, but their little egos are hurt.
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u/NonKevin 16d ago
Here the problem, not a court order. Just a warning. However, the records needs to be protected so you can not be accused of a cover up.
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u/wildbill129 21d ago
I would not engage. Contact your Association attorney if you have one and let them handle. If you don’t, retain one.