When served with a lawsuit, you should immediately contact the association’s insurance carrier and attorney. The association will typically have 20 days to file an answer or other response to the lawsuit. The association’s attorney will need to act quickly to perform an investigation into the facts and draft an appropriate pleading.
The association should tender any lawsuits to its insurance carriers. Associations are sometimes tempted to avoid tendering disputes to their insurance carrier because they fear an increase in their rates or do not believe the policy provides coverage. Even if there is no coverage for the lawsuit, policies often require notice of all claims against the insured. If the association does not notify the carrier of the lawsuit, it may unwittingly forfeit coverage on future claims.
When the association’s attorney is contacted, the most complete compilation of information about the dispute should be provided. Your community manager can assist the board in not only forwarding the required information to the attorney, but also ensuring the correct information is documented as part of the association’s records. This will help ensure speedy and accurate communication. Having those lines of communication open early in the process will help the attorney analyze the case and possibly facilitate an early settlement or motion to dismiss the lawsuit.
Finally, the association should do everything it can to preserve written and electronic records related to the dispute, as well as any other evidence (recordings of meetings, photographs, etc.). Destruction of evidence could result in an association being sanctioned by the court including potential monetary fines or even the entry of a default judgment against the association.
Litigation is a time of stress and anxiety and is a time when the association should rightly rely on its attorney and insurance professionals. Those professionals are there to defend and protect the association and its board members, and the association should take advantage of their help.
By Mark Holmgren, Carpenter Hazlewood Delgado & Bolen, PLC