As a private government, HOAs are not subject to government immunity as other government entities. Its officers are not covered by limited immunity for discretionary decisions as government officials are. Can the HOA board escape liability because they are volunteers? Does their D & O insurance cover such negligence as appears to have occurred in the tragic incident described below? Or escape liability under the pro-HOA attorney’s business judgment rule defense (my emphasis)?
The business judgment rule thus provides significant protection to directors (and officers) from personal liability for their good faith, informed, business decisions. The presumption may be rebutted where it is shown that a director . . . did not inform himself of all information that was reasonably available, failed to exercise the requisite level of care . . . .
In other words, doesn’t the HOA board of directors have a duty of care as a prudent person acting in good faith, and under fiduciary duties to the HOA to properly supervise and oversee the acts of their agents? Under agency law and tort respondeat superior liability, the answer is YES. And how much can that liability amount to? Millions of $$$? I think in the following incident it could well be.
I call your attention to the killing of a 17 year-old in a gated Florida HOA by an armed HOA security guard who is not even a police officer. Read this report and judge for yourself: Shooter of Trayvon Martin a habitual caller to cops. By what authority do HOA governments usurp legitimate public government police powers to stop and detain others? A recent Illinois court says that stopping and detaining, no less shooting others, was a violation of government authority. See How far will independent HOA principalities go in usurping police powers.
HOAs must be held subject to the Constitution and the laws of the land. They must not be permitted to hide behind exaggerated claims of “private contract” exclusions and escape application of the 14th Amendment that applies to all legitimate public government entities. They must not be permitted to escape application of their state’s constitution and its Declaration of Rights.