A substantial disagreement with my attorney occurred when he told me
that I was not damaged when the Board of a California resident-owned
mobilehome park persisted in providing members (including myself)
with financial reports which did not comply with the Bylaws or state
Corporations Code in that they did not comply with GAAP and
understated the expenses of the corporation. In so doing the Board
falsely implied that they were properly managing the non-profit
association and satisfactorily meeting expense requirements. They did
this by doctoring the books to eliminate the depreciation accounts and
substituting a ?transfer to reserve? . This lesser amount gave the
appearance that the bottom line was acceptable.
The attorney?s reasoning appears to be that because I didn?t incur any
out of pocket expenses if I chose to stay with my membership, there
was no compensatory damages. He stated that the actual owner?s equity
is whatever it is and if the Board misstated the equity there was no
damage to me.
My point of view is different. Members are entitled to an accurate
accounting and the Bylaws specifies GAAP which requires that
depreciation be taken on depreciable assets. It must be noted the
corporations is a resident-owned mobilehome park and not a Common
Interest Realty Association (CIRA). The corporation owns all real
estate assets and spaces are rented (leased) to individual members to
accommodate the member?s mobilehomes which they own as personal
property. In this situation the Bylaws are an equitable servitude and
a member has the right to request compliance by the Board and other
members.
If the Board of Directors declines to correct this situation or submit
to arbitration, a member?s recourse is Superior Court. Since the
member is compelled to this recourse in order to recover his rights to
an accurate accounting of the corporation?s business, the legal
expenses can be claimed as compensatory damages per Matthew Bender.
With Compensatory Damages the Court may award punitive damages to
dissuade further deceptions by the corporation and others as it
chooses.
Therefore injury and damages have been incurred by a member when
knowingly false reports are prepared by management in violation of
state law and bylaws.
Which opinion is correct?
PS While the above statement appears minor in nature, please note that
this Board has claimed revenues which were actually not received,
applied member?s payments for mortgage reduction (capital
contribution) to expenses, omitted payments to San Diego County,
marked up assets from the closing of one fiscal year to the beginning
of the next, omitted tax payments from the income statements but
applied them to member?s equity in the equity box, provided members
with unaudited statements when audited statements were available. |
