By Deborah Goonan, Independent American Communities
Do you believe that HOA covenants, restrictions and rules help keep a neighborhood looking neat and tidy, discourage your neighbors from behaving badly, and foster some sense of community?
If so, read on.
All too often, we hear reports of overly restrictive HOA enforcement of rules. HOAs have been known to fine and sue homeowners over trivial “violations of standards” that range from painting the front door an unapproved color to parking the wrong kind of vehicle in the driveway or putting a purple playset in the back yard for the kids. These are the kinds of well-known issues that give HOAs a bad reputation.
The flip side of the coin: readers often contact me with complaints because their HOA won’t enforce their own rules and standards when necessary.
Now, it’s not that most homeowners truly care about the minor aesthetic issues. Usually, when an HOA resident makes a complaint to the Manager or the Board, there’s a significant disturbance. Maybe the neighbor is parking in someone else’s space, or regularly having loud parties until the wee hours of the morning. Maybe your neighbor’s house is abandoned and the grass and weeds are hip high, or your condo neighbor moved out a year ago and now the unit is infested with mold or cockroaches.
Or maybe your neighbor’s dog barks for hours at a time, several days per week.
And yet, no matter how many times you report the problem, your HOA does…nothing.
Today’s blog is a case study of true events. It is the story of Neil Brooks and his wife, Diana Jackson, who once owned a home in a small Fort Collins (Colorado) community governed by a homeowners association.
*Note: Although all of the events are well documented in pubic records, the names of non-public figures, such as Neil’s neighbors, have been changed. This case study is based upon a review of documentation and interviews with Neil Brooks. Other parties have not been contacted or interviewed, although their side of the story has been widely distributed throughout the HOA community and wider Fort Collins area, through local news media.
However, many details were not reported at the time these events took place, partially due to a legal settlement stipulating non-disparagement of the HOA and its former board Vice President.
It’s time to tell Neil’s story from the perspective of homeowners just seeking to live in peace, free from nuisance and harassment.
New Dream Home becomes a Nightmare
Neil Brooks and his wife, Diana Jackson, moved to Fort Collins, Colorado, in February of 2009. They purchased a lot-home package for $372,000 on one of the last available lots, and built a 1900 square foot ranch with many custom features. Brooks and his wife liked the fact that their small community was ideally located where they could enjoy some of Colorado’s best outdoor activities.
Neil had become medically disabled a few years before moving to Fort Collins, and he describes his disability as “chemically burned eyes, primary immune dysfunction, [with] chronic neuropathic eye pain.” Although he is not blind, the pain from his chemically burned eyes makes sleeping difficult. Daily naps were and still are a necessity.
Neil was fitted with custom, fluid-filled, scleral prosthetic lenses, which made it possible for him to engage in limited outdoor activities for therapeutic benefits, so long as he wore sunglasses to protect his sensitive eyes from excessive light. Despite the resulting eye discomfort, when he first moved to his new home, Neil and Diana would enjoy riding bicycles in and around their new City. They would cover a lot of ground – often 35 to 50 miles on each ride.
Neil explains, “My prosthetic lenses were as important to me as prosthetic limbs are to their wearers. Getting by without my lenses is like somebody losing their prosthetic legs. They can limp along on crutches, but … it’s an unmitigated misery.”
Unlike a prosthetic limb, however, the casual observer would be unaware of Neil’s “invisible” disability.
At first, the neighbors seemed friendly enough.
But not long after they moved into their home, Brooks discovered that his next door neighbors, Bill and Mary Milford*, had two large breed dogs that liked to bark. Neil and Diana have documented numerous occasions where the neighbors’ dogs barked early in the morning, late at night, and incessantly during daylight hours when his neighbors were not at home.
Because lots in the small HOA neighborhood were narrow, houses were only separated by a few feet, with a fence in between. Remember that Neil and Diana purchased a vacant lot, and were therefore not aware of precisely where and how the home would ultimately be situated on the lot.
Here are some photos provided by Neil, to give the reader a good idea just how close together the houses were, as well as the barking dogs.
Neil Brooks’ house is on the left, Milfords’ house is on the right.
View from Neil’s house to neighbor’s house, to show close proximity.
View of the Milfords’ back door from Neil’s bedroom window, and photo of the dogs out in the yard.
Neil’s bedroom window overlooked his neighbor’s back yard, where the two dogs were often kept. Even with windows closed, Neil says it was impossible to drown out the noise, making it difficult to get enough sleep, and exacerbating his medical condition.
After several weeks of dog barking, Neil knew he had to do something. He contacted his next door neighbors by email (because they were often not at home), explaining the situation and politely requesting that they take steps to control their pets.
At first, the Milfords took steps that resulted in less barking. Neil showed his appreciation by sending a gift basket with a thank you note.
But a few weeks later, the barking problem resumed. Over the course of a few months, Neil and his next door neighbors exchanged some heated emails about the problem. Bill became frustrated with Neil’s complaints, dismissing them as unreasonable, and told Neil in an email that there was nothing more he and his wife, Mary, could or would do to control their pets.
Homeowner seeks help from HOA
In October 2009, nearly 6 months after he had made his first contact with the Milfords about their dogs, Neil decided to contact his HOA manager for assistance.
After all, he reasoned, the HOA has Covenants, Conditions, and Restrictions (CC&Rs), and all residents are obligated to abide by those, right?
Specifically, the CC&Rs provided the following:
Surely, thought Neil, allowing one’s dog to bark continuously for hours at a time could be considered a nuisance. Therefore, the HOA should intervene and take action to get the situation under control.
As an aside for readers, it should be noted that the Declaration of CC&Rs for your HOA is considered to be a legal contract, the terms of which, in theory, are enforceable by law. Generally, the provisions set forth in those CC&Rs may be more restrictive than local ordinances.
That creates advantages and disadvantages over local ordinances, depending upon your perspective.
In theory, your HOA has the legal right to effectively force all members to comply with strict aesthetic guidelines and neighborly behavior standards, supposedly resulting in a pristine, attractive, and harmonious community for all to enjoy.
In reality, CC&Rs tend to be overly restrictive and their strict enforcement can be regarded by many HOA residents as oppressive.
On the other hand, enforcement tends to be selective, and your HOA is under no particular legal obligation to enforce the rules at all. More on that to follow.
HOA refuses to help
The HOA manager, Sara,* initially responded, according to court records provided by Neil, with a courtesy letter to the Milfords. The letter cited Article 8, Section 8.5 of the Association’s CC&Rs, and requested that the Milfords control their pets.
Another month went by with no relief, so Neil contacted Sara a second time. This time, the manager explained that the Board had decided not to pursue the matter. She said she was instructed to take no further action, and provided Brooks with the name and email of HOA board Vice President, Steve Hubbard.*
Neil emailed the board VP, and was told by Steve that the HOA board planned to stay out of the dispute.
At this point, the constant noise and interruption of his sleep was adversely affecting Neil’s health. Neil explained to Hubbard about his medical disability. He was desperate to obtain relief, and thought the HOA could be helpful.
But Neil discovered – as do many other residents of HOAs – that he was sadly mistaken.
In an email exchange with Steve, Neil asked for contact information for the other board members of his HOA, hoping to bring the problem to their attention as well, in hopes of obtaining assistance. Neil reasoned that the HOA had the authority to enforce its CC&Rs, perhaps by issuing a fine. Maybe that would motivate the Milfords to stop their dog(s) from barking.
According to court records, Steve Hubbard responded to Neil with a refusal to provide information about his fellow board members. He continued with a nasty tirade, accusing Neil of harassment and exaggerating the pet nuisance claims. The email went on to personally attack Neil as being unworthy of friendship or consideration, and dismissed Neil’s claims of disability. At the same time, the email praised the Milfords as good friends, well-respected in their small neighborhood of less than 50 homes. Steve stated in no uncertain terms that the HOA Board would not further address the issue, and demanded that Neil simply leave them alone.
The HOA washed their hands of the dog-barking issue, and advised Neil to take the matter to Larimer County Animal Control instead.
He did not realize it at the time, but Neil later discovered that throwing the problem to local law enforcement and the County Courts, there would be little to no chance of resolving the problem.
His HOA Board had just thrown Neil Brooks under the bus.
No help from Animal Control
Anyone who has ever lived near a barking dog can relate to this problem, even dog owners.
What was Neil to do now that his barking-dog-owning neighbors and the HOA flatly refused to take action?
Upon the instruction and recommendation of the HOA, Neil filed complaints with Larimer County Animal Control and later, the Fort Collins Police Department.
The Police department would not respond to complaints without a referral from Animal Control.
Animal Control informed Neil that they would not take action on his complaint unless and until one other neighbor also filed a complaint.
However, most of Neil’s neighbors were at work during the day – including the dog owners – so the incessant barking did not seem to bother them – at least not to the same extent. Another factor is that many residents of the neighborhood happened to be dog owners themselves. Neighbors were reluctant to file formal complaints, because they would ultimately be obligated to testify before the County Judge against the Milfords.
It turns out this is the common course of handling dog-barking complaints all over the country. Local ordinances seem to be designed to protect irresponsible dog owners and make it next to impossible for victims of incessant dog barking to effectively enforce noise-related nuisance laws.
For an excellent explanation of the vexing, nationwide dog-barking problem, and why it’s nearly impossible to get assistance from local law enforcement, animal control, or the civil court system, read barkingdogs.net, written by educational psychologist Craig Mixon.
At first, Animal Control offered to set up Mediation between Neil and the Milfords. After some consideration, both parties agreed to try to work things out. But when Neil and his wife showed up for Mediation that had been scheduled in January 2010, no one else appeared. The session had been cancelled without his knowledge.
Here’s a copy of the email from Mediation Coordinator Jenny Kidd, apologizing for the mixup.
From: Jenny Kidd <email@example.com>
To: Neil Brooks <firstname.lastname@example.org>
Sent: Wednesday, January 6, 2010 9:05 AM
Subject: Re: Mediation process problem
Oh Neil, I am SO sorry. I was certain I’d communicated our decision to hold off on mediation, as it felt tensions were running too high to make much progress. I spoke with [Mr. Milford] right before I left town and he knew we called the mediation off, but apparently I didn’t close the loop with you. I truly apologize for you having to come all the way down here for nothing. I try to be as organized as possible but my caseload is very heavy and occasionally something falls through the cracks.
I got the sense from [Mr. Milford] that he was hesitant about mediation. If you are still interested in trying I can ask him to reconsider. In most cases it never hurts to try.
Again, my sincere apologies for my communication error. It was very hectic right before I left town and I’m sure that’s where the glitch occurred.
City of Fort Collins
Neighborhood Services Division
The legal battle ensues
From there, the situation just went downhill.
In May of 2010, the Milfords threatened to sue Neil Brooks and his wife Diana Jackson for harassment. That threat, combined with their inability to mediate, prompted Neil to file a Civil Suit against the Milfords, his HOA, and the Board VP Steve Hubbard.
The Milfords did not follow through on their threat to sue Neil. However, for the next year, attorneys for all three parties conducted several depositions, and examined all relevant documentation, including emails and the HOA’s social media discussion forum.
Hubbard testified in depositions that HOA Manager Sara*, had visited the property once following Neil’s complaint, but did not observe Milfords’ dogs barking. He also claimed that the HOA had not received any complaints from other owners. Court records also revealed that the HOA had a meeting where they briefly discussed the dog barking nuisance complaint, and how to handle it.
Sara said she had consulted with the HOA’s attorney, who advised that since the dispute only involved parties residing in two homes – that of Neil and his wife and their neighbors, the Milfords – rather than the entire community, the board had no further obligation to address nuisance complaints.
What Board VP Steve Hubbard failed to mention – also documented in his deposition – was that he once had a problem with another homeowner’s dogs barking. Steve said that he had written a note to those dog owners asking them to tend to their pets, and that solved the problem.
Testimony of all the parties involved clearly documents the following:
- The Milfords never met with Neil and Diana in person to discuss the nuisance complaints. All communication was by email.
- In addition, all parties testified under oath that no one from the HOA personally made any attempt to speak to Neil Brooks or Diana Jackson, even though Brooks had offered to meet in person with the HOA on several occasions. Instead, Neil was told, in no uncertain terms, to drop the subject and to not contact anyone on the board about the matter.
- The Milfords and Steve Hubbard were personal friends, and neither of them liked Neil.
- The HOA Board decided to stay out of the conflict and therefore failed to enforce nuisance covenants.
- The reason for choosing non-enforcement was that Neil and his wife were the only homeowners directly affected by dogs barking next door.
- Only one other neighbor lived close enough to be bothered by the barking, but that neighbor also owned a dog and did not want to file any formal complaints with either the HOA or Animal Control.
- After the Board decided not to take action, and following Neil’s threat of a lawsuit, Hubbard, Mr. Milford, and their friends decided to join forces against Neil. The HOA even removed Neil and Diana from the community’s email forum, so the board and other owners could discuss their strategy to oppose and marginalize the homeowners without Neil or Diana’s knowledge.
In the meantime, the Milfords failed to curtail the nuisance. In July 2010, one of their two dogs died unexpectedly. However, Mr. Milford quickly brought home another dog, and the barking resumed.
Not long afterward, the Milfords put their house on the market, but the property was not sold until May 2011, just prior to the first court hearing.
Court rules in favor of HOA
In June 2011, Judge Daniel J. Kaup conducted a pre-trial hearing on Neil’s case.
Neil’s attorney argued that Steve Hubbard and the HOA did not fulfill their fiduciary duties, and failed to act in good faith. According to written exhibits attached to deposition transcripts, shortly after Neil received Hubbard’s email refusing to offer HOA assistance with regard to the disputed dog-barking nuisance, a series of emails and comments were posted by Hubbard, Mr. Miller, and several homeowners and board members on a Google Group hosted by the HOA. The group discussed how they all needed to stick together to exclude and oppose Neil and Diana, and to support the Milfords.
However, according to Colorado law – and corporate law across the U.S. – a board has a fiduciary duty to act in good faith.
The Business Judgment Rule
Not only does the Business Judgment Rule provide a standard by which directors can measure their conduct, it also provides a legal defense to many claims against the association.
Under the Business Judgment Rule, a court should not interfere with or regulate the conduct of the board when the board has acted reasonably and in good faith. In fact, courts have held that directors of a common interest community who have acted in good faith and not arbitrarily have not breached their fiduciary duty.
However, the Judge was not persuaded by any of these facts, relying solely on an HOA Board’s discretion to act or not, dismissing the case with no option of a jury trial. Kaup did allow the case against the Milfords to continue.
Judge Kaup’s decision is summarized in the hearing transcript: (Emphasis added)
The Court finds as a matter of law that there is no genuine issue on material fact as it relates to the two affirmative defenses raised, that being the business judgment rule and the provisions in the covenants which allow for discretion of the HOA to take action or to refrain from taking action. Clearly the HOA became aware of this complaint, they met as a board and their decision was not to proceed forward to take action involving this case and that is supported by their right by law to discretionarily determine which of these actions to take. Fundamentally the Court disagrees with Plaintiffs’ position that there’s an affirmative duty or a breach of a fiduciary duty when the board of an HOA and one of their members acting in their official capacity elicit a decision and decide to proceed or not proceed, that lies within their sound discretion and that is a law that needs to be upheld and that is what the Court finds in this case.
Judge Kaup’s stance on the Business Judgment Rule is shared by other legal experts. Here’s an essay citing a similar opinion. (Emphasis added)
Association Boards and the “Duty to Act”
…if the Board establishes a policy in terms of how it chooses to enforce the documents, it will be on record as to the attitude and procedure it will utilize in enforcing these documents. By way of example, if a chronically alcoholic homeowner is pounding on the walls of his neighbor’s unit, and that is the only unit that is being affected and the complaining neighbor demands action by the Board, the Board is then faced with the task of determining whether or not this is a community wide issue which should be dealt with by the association as opposed to the individual member who is aggrieved. To the extent that the issue does not involve a community wide situation, the Board may have the right to exercise its own business judgment to forbear from instituting any type of administrative and/or legal proceeding to deal with the violation, even if it is a valid complaint, and leave that matter to the individual complaining homeowner to pursue as he or she may choose including litigation or an alternative dispute resolution process.
Contrast this to a Florida attorney’s opinion on the duty of the board to address nuisances. However, note that in the example cited, more than one household is complaining about bad behavior from their neighbors. Perhaps the fact that the matter was publicized on local TV news will probably help prod a reluctant board to act? (emphasis added)
TV News Report on Orlando HOA Neglecting to Act Against Nuisance Resident (VIDEO)
A recent news report by WFTV Channel 9 (ABC) in Orlando focused on the accounts of some of the residents of the Cypress Head at the Enclave gated community in Oviedo indicating that the HOA has neglected to take action against a homeowner whose tenants are creating an extreme nuisance.
The takeaway from this episode for HOAs is that they would be wise to be very diligent in their efforts to effectively contend with residents who are creating a nuisance for their neighbors. In addition to the prospect of litigation, the HOA in this case was also hit with an extremely negative news report by one of its local TV stations, and such a report can adversely affect the community’s reputation and property value.
The point is, legal opinions and state laws vary with regard to how broad the HOA board’s discretion is when deciding whether or not to enforce nuisance covenants. However, it is quite common for the court to give HOAs the benefit of the doubt, especially if they have consulted with a manager, attorney or other “expert” to guide the board’s decision. Often, even minimal action by the HOA is sufficient to convince the court that the board has acted in good faith.
(See references below for examples of how different courts apply the Business Judgment rule. More recently, about a dozen states have adopted judicial standards that require greater accountability of Association Governed community boards, and lower burdens of proof for property owners. Unfortunately for Neil, Colorado is not among these states.)
The nuisance claim against the Milfords was settled confidentially out of court a few weeks later. After having his case against the HOA essentially thrown out, Neil felt it was best to opt for an out-of-court settlement with the Milfords.
In August 2011, at a follow up hearing, Neil’s attorney attempted to convince the Court that it had erred in its earlier ruling in June. However, Judge Kaup was not swayed. He upheld his summary judgment in favor of the HOA, and proceeded to order Neil Brooks to pay the HOA’s substantial court costs and attorney fees. According to Judge Kaup, as recorded in the written hearing transcript (August 2011): (emphasis added)
as I’ve stated before many, many times, granting summary judgment is a rare thing for the Court to do, but it’s supported here and I’m not convinced that there’s any other issue for the Court to consider or any reason for the Court to reconsider its position. I also normally am asked whether a party should leave the courtroom before they just [exit], but he’s been upset so the Plaintiff — I’m not going to say anything further about it and he can go ahead and leave. The problem is he should have stayed for the end result as to what happens when these cases are brought and you lose in court, and that’s the issue of attorney fees and costs. We’re talking about a lot of money and now the burden shifts to [the HOA] to tell me why it’s that much money.
The reader can decide if the tone of the Judge’s statement was appropriate.
Neil was ordered to pay $68,000 to cover the HOA’s legal fees. He was stunned and financially ruined:
I had to liquidate my retirement account to pay it. In the few days that took, they were already garnishing Diana’s wages. That was it, though. I had a couple grand left in checking, and the remaining equity in our house. They had truly taken everything I had.
Neil wonders to this day, “How could this have happened?”
The stress of the lawsuit had only exacerbated his health problems, and Brooks was unable to pay another attorney to appeal the case.
He and Diana thought they would be able to try to put the ordeal behind them. But they were wrong. Instead, their neighbors shunned Neil and Diana, blaming them for suing the HOA in the first place.
Having won in court, some HOA board members and neighbors felt they have “proven” their point that Neil was nothing but a troublemaker.
Due to the unwelcoming environment and persistent neighborhood stress, the couple soon relocated and sold their home.
References on the Business Judgment Rule:
Telford v. Sagewood Homeowners Association
Fiduciary Duties of HOA Board Members
The Business Judgment Rule (Colorado HOA Law)
A few states have enacted enhanced standards for the Business Judgment Rule, according to this 2009 publication. (AR, CA, KY, LA, NY, PA, WA)
Board Member Decision Making: The Business Judgment Rule Plus Authored and presented by Augustus H. Shaw, IV Shaw & Lines, LLC
A New Standard – The Business Judgment Rule Plus
Although the Business Judgment Rule and the Reasonableness Standard are currently implemented by Courts, a new standard is emerging; one that blends the Business Judgment Rule and the Reasonableness Standard. This standard, which I refer to as the Business Judgment Rule Plus, as provided for in case-law and as proposed in the comments of the Restatement at Sections 6.13, combines the requirements of Section 6.13 and 6.14 of the Restatement along with the principles of the Business Judgment Rule and Reasonableness Standard. Restatement 6.13 adopts aspects of both Standards. It requires an Association to (1) use ordinary care and prudence in managing the property and financial affairs of the community that are subject to its control; (2) to treat members fairly; (3) to act reasonably in the exercise of its discretionary powers including rulemaking, enforcement, and design-control powers; and (4) to provide members reasonable access to information about the association, the common property, and the financial affairs of the association. It also imposes a duty on the members to prove a breach by the Association of these duties.
CONCLUSION AND TRENDS
Whether a jurisdiction uses the Reasonableness Standard or the Business Judgment Rule, the general trend in courts today pulls from both of these standards. Whether we coin this new standard as the Business Judgment Rule Plus or the Restatement Standard, it is becoming clear that the Business Judgment Rule alone does not provide enough protection for the members of a common interest community, while the Reasonableness Standard lacks sufficient protection for board members who are likely unfamiliar with board member duties and practices. The Business Judgment Rule Plus or the Restatement Standard molds together the protection of the business judgment rule, while accounting for the rights of an association’s members by not fully insulating board members and making them liable for unreasonable decisions and judgments.