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.)
ASSISTANCE: Associations needing legal assistance can
contact us.
To stay current with issues affecting community associations, subscribe to the
Davis-Stirling Newsletter.