In Hi-Country Prop. Rights Group v. Emmer, 2013 UT 33, the Plaintiffs owned property in a development that included undeveloped roads and common areas. Plaintiffs filed a derivative suit (derivative suit= suit by a shareholder, on behalf of corporation, to enforce a corporate right or action) as they alleged that the directors of the homeowners association favored their own properties when they allocated road construction and maintenance funds. Rather than defend the suit in a traditional manner, the Defendants created an independent committee, made up of two current directors and one prior director, to evaluate whether the corporation would benefit from the suit. Upon review the committee concluded that the corporation would not benefit, whereupon the district court dismissed the suit.
The Utah Supreme Court reversed and remanded to the District Court, holding that the members of the committee, all of whom owned property that had allegedly received preferential treatment, may not meet the "independent" requirement set by statute. The District Court was directed to actually determine, based on instructions provided by the Supreme Court, whether or not the Directors were actually “independent”.
Contact Larreau & Lythgoe, PC at 801-393-5555, if you feel that your homeowners association is less than impartial. We can advise you as to what laws are being broken and the best course of action to follow to protect your, and your community’s, property rights.