Legal Issues
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Misleading Information on Lawsuit Costs:
During the August 6 Open Session meeting, the Board reported that the ongoing lawsuit would only cost the association a $5,000 insurance deductible. Gene P. notes this figure only covers defense investigation/discovery costs and misleads members about the true financial exposure.
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Insurance "Reservation of Rights" & Disclosures:
The association's insurance company previously issued a "Reservation of Rights" notice (as documented in the September 5, 2025 Case Management Statement, Form CM-110). This means the insurer is funding the defense but warns it may refuse to pay any final judgment or settlement if the HOA is found liable for breaches of governing documents and fiduciary duty (which are generally excluded under California Insurance Code Section 533).
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Risk of Special Assessments / No Bankruptcy:
Gene P. clarifies that the lawsuit will not cause community "bankruptcy" in the traditional sense. Instead, if the HOA loses the upcoming October 9, 2026 jury trial and faces a judgment, the Board of Directors has the legal authority under California law (Civ. Code § 5605(b) exceptions / court orders) to bypass member approval and levy emergency special assessments directly onto homeowners to pay the judgment.
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Failed Pre-Trial Legal Strategy:
The Board’s previous Motion to Bifurcate the Trial—which was publicly defended as a time-saving measure—was actually denied by the Judge because its true intent differed. According to the filings, the HOA has lost all pre-trial motions in this litigation, and Gene P. warns that the upcoming October 9, 2026 Jury Trial carries severe risks due to overwhelming evidence of self-dealing and selective enforcement.
Lack of Transparency in the $259,095 Legal Expenditure Fund
Director David Boyd announced a total legal expenditure of $259K. To date, the membership has not received a breakdown of this legal cost. Litigation Committee Chair & Board Member David Boyd is absent from any education and has only limited experience with judicial matters, but now serves as Chair of the Litigation Committee. Our excessive legal expenditures must be managed with capable, skilled oversight.
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The Issue: Large "lump sum" reporting prevents members from seeing which cases are closed or now active, pending that continue to drain our reserves.
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The Demand: A detailed report by filing date, service, case number & Plaintiff & Defendant names (e.g., Case A, Case B) to disclose legal fees spent per case, management "special billing" hours, and administrative costs for each case.
Legal Expenditures and Transparency
Association funds have reportedly been expended on legal matters arising from governance disputes and alleged deviations from the LCPOA Articles of Incorporation and CC&Rs.
Additional legal expenses have reportedly resulted from disputes concerning member access to financial records, when particular members have requested documentation that management has allegedly declined to produce.
