1st Party Claims
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FIRST PARTY CLAIMS

Background. The board of Queen Villas HOA hired one of its directors to manage the association's construction defect lawsuit. The director overpaid herself from the association's checking account. TCB Management processed the checks without notifying other directors, failed to obtain the signatures of two directors on the checks and failed to furnish monthly financial reports to the board. The Queen Villas sued the management company.

Court's Decision. The company defended by claiming that the indemnity clause in its contract with the association protected it from liability. The court ruled that such clauses protect against third-party claims, not against first-party actions brought by the association. Accordingly, the indemnity provision did not protect the management company from claims against the management company made by the association. (Queen Villas v. TCB Property Mgmt.)

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