Published on: September 8, 2017
Under the Volunteer Protection Action Act (42 U.S.C. §14501) (hereinafter the “Act”), volunteers of a non-profit organization or a governmental agency have immunity, meaning they are generally protected, from negligence claims, if they are acting within the scope of their responsibilities in the organization/agency and they are properly licensed and/or certified (to the extent required) and authorized to act. Under the Act, volunteers are not protected if the harm and/or injury occurred through the operation of a motor vehicle. Further, the Act will not cover crimes of violence, international terrorism for which the person has been convicted, hate crimes, sexual offenses which result in a conviction, misconduct for which the person has been found to have violated a federal or state civil rights law, or where the person was under the influence of intoxicating alcohol or drugs at the time of the misconduct. The Act will also not protect volunteers for reckless misconduct or gross negligence.
It is not entirely clear, however, whether the Act applies to community associations. In the (unpublished) case of Kashani v. Rochman, the plaintiffs argued that homeowners associations are not covered by the Act because they are “not organized and conducted for public benefit or operated primarily for charitable purposes, and there is nothing in the Act or its legislative history to suggest it was intended to benefit homeowner associations.” See Kashani v. Rochman, 2013 WL 635962 at * 7 (Cal. Ct. App. Feb. 21, 2013) (observing that the Act defines “nonprofit organization” as a tax-exempt organization described in 26 U.S.C. § 501(c)(3) or “any not-for-profit organization which is organized and conducted for public benefit and operated primarily for charitable, civic, educational, religious, welfare, or health purposes and which does not practice any action which constitutes a hate crime”). Unfortunately, the Court of Appeal did not reconsider the trial court’s finding that the homeowner association satisfied the definition of a civic league, and therefore was entitled to immunity under the Act, and the Court of Appeal, declined to rule conclusively on whether the Act applies to community associations, disposing of the case on other grounds.
Massachusetts, like many states, has Good Samaritan laws which protect physicians, nurses, physician assistants and respiratory therapists from liability when they give emergency care or treatment other than in the ordinary care of practice, when done in good faith and without charging a fee. Also, people can be protected from liability when they attempt to render emergency care (including but not limited to cardiopulmonary resuscitation (hereinafter “CPR”) or defibrillation, which is relevant for those associations with onsite defibrillation machines), when performed again, in good faith, and without compensation. However, persons are not protected from acts or omissions that are grossly negligent.
Ordinarily, board members of a community association will not be individually liable for simple mistakes of judgment or negligence (excluding gross negligence), unless he or she engages in willful misconduct and/or bad faith. However, the specific indemnification language contained within the association’s governing documents must be considered. The term indemnification refers generally to an agreement of one party to protect another from responsibility for loss or damage.
Board members must fully understand their duties and responsibilities set forth in the association’s governing documents. To that end, in the case of O’Brien v. Christensen, 422 Mass. 281 (1996), two men were injured when a railing on a third floor porch of a building gave way and they fell more than twenty-five (25) feet onto a neighbor’s porch. The plaintiffs brought suit against the condominium trustee, carpenter who had repaired the railing that failed and the middleman who had hired the contract on behalf of the trustee. The Supreme Judicial Court found that the condominium trustee’s liability was determined by the express obligations contained within the condominium’s declaration of trust which required the trustee to “make repairs, additions, improvements to or alterations of the common elements and to be responsible for the proper maintenance and repair of the common elements,” and that the condominium trustee was therefore liable for the negligence of the contractor.
While some claims brought against community association boards and their members are covered by a directors and officers insurance policy (hereinafter “D&O policy”), there are of course situations where a judgment could enter for an amount which far exceeds any insurance available. Further, board members should be aware that in those circumstances wherein an insurer agrees to defend a claim under a reservation of rights, the insurer could withdraw coverage of the claim at any time if it comes into possession of information which would render the claim to be excluded under the applicable policy, such as often the case with punitive damages or intentional torts (such as fraud or intentional infliction of emotional distress). Additionally, many D&O policies will note cover claims of slander, libel or defamation or cover claims relating to environmental pollution.
Practically speaking, all board members should abide by what is often referred to as the “business judgment rule,” which requires a board member to act on an informed basis (and not in haste), in good faith and in the best interests of the association. Further, board members should avoid participating in actions of the association wherein there may be a conflict of interest, i.e., is the board member asking the association to waive a fine assessed to his or her own account? Also, board members should be cautious about acting outside of the scope of their authority. For example, if the board collectively votes to take action with respect to a certain matter, an individual board member dissenting from such vote, cannot then take action to undermine the vote of the entire board.
It is often remarked that volunteers of community associations have “thankless” roles, and the old adage that “no good deed goes unpunished” may ring true for those persons facing liability for acting as a member of a community association board. For those board members making informed decisions, in good faith, and in the best interests of the association, there are certainly safeguards (however, not fail safes) to avoid personal liability found through statute, case law, the association’s governing documents and insurance. However, for those board members that are still wary of their exposure to liability, it may be beneficial to meet with the association’s counsel to discuss the specific duties and responsibilities owed to their particular association and to engage in a risk management assessment with counsel to identify any acts or practices that may expose the individual board members to liability.
If you have any questions regarding this article, please contact Jennifer Barnett at firstname.lastname@example.org.