No one likes a lawsuit. Whether filing one or finding yourself on the receiving end of one, they can cause stress, anxiety and an upending of daily life. They can be expensive, take months—even years—to resolve, and often result in hurt feelings and ruined relationships. For co-op, condo and HOA board members and residents, the situations are no different, and litigation levied by or against a corporation, association, board or even individual resident can lead to countless sleepless nights for all parties involved.
Turn to the Experts
When that unwelcome registered letter arrives in the mail and is opened to reveal notice that a lawsuit has been filed, they should remain calm. “The first thing the defendant should do is consult their lawyer,” says Adam Cohen, an attorney at the law firm of Pullman & Comley in Bridgeport, Connecticut. “The deadlines, procedures, and strategy are very difficult to navigate without one. In most jurisdictions, the defendant’s first official action is to file an ‘appearance’ form with the court and the plaintiff, which acknowledges the complaint and provides contact information for himself or his lawyer to be used going forward.”
The second thing to do is get in touch with the right people—and whatever the specific issue, the 'right people' are the building’s legal counsel and insurance carriers. Should a board find itself named in a lawsuit, they should notify their attorney and make sure that the case is brought to the attention of the board’s insurance carrier as soon as possible, says Robert J. Braverman, a partner at the law firm of Braverman Greenspun, PC in Manhattan. “The board should have the managing agent immediately forward the legal papers to the building’s attorney so that he or she can ensure that an appropriate and timely response is interposed and to its insurance broker so that the appropriate insurance companies can be placed on notice. Very often there is insurance coverage available under the building’s general liability or directors and officers (D&O) liability insurance policy.”
Different types of insurance may cover different types of allegations or claims, says Eric Goidel, a partner with the Manhattan-based law firm Borah Goldstein Altschuler Nahins & Goidel. “Depending on their claim, there are different avenues to pursue. If there is an allegation of personal injury, they should turn to the carrier of their general liability policy as well as their umbrella and directors’ and officers’ carriers. For wrongful termination or discrimination case, the umbrella policy or D&O coverage might be invoked.”
Some Big 'Don'ts'
Just as important as what to do when on the receiving end of a lawsuit is what not to do. Board members and managers “should not engage the person making the claim, because things might be said or exchanged in a letter that might come back to haunt them and compound the problem later,” says Goidel. So as much as you might want to dash off a salty letter to the person you view as overly litigious, it's crucial that you resist that impulse.