Georgia Ct. Removes HOA President for Mismanagement and Appoints Receiver to Take Charge of HOA

Supreme Court of Georgia decision (February 6, 2017).

This case involved a dispute between an individual who had served as a director and the president of an HOA (“Association”) for several years dating back to 2011. In 2012, several homeowners got together and filed a lawsuit against the president and other directors seeking to remove him from his positions as president and a director due to alleged mismanagement of the Association including the conversion of Association funds. The homeowners contended that the president wrongfully caused the Association to enter into a contract with a payroll company owned by the president’s wife and a landscape company that was owned by his stepson to the detriment of the Association.

Initially, the trial court appointed an independent receiver to monitor the Association and control its finances. The receiver subsequently appointed a property management company for the Association that had been approved by the Court, but the property manager resigned after encountering interference from the president.

In 2015, a petition was filed in an effort to enjoin the Association’s board of directors, and particularly the president, from exercising management authority over the Association. The trial court: (i) found that the president had actively worked to the detriment of the Association; (ii) removed the president from the Association’s board of directors; and (iii) called for an election to fill his unexpired term in accordance with the Association’s bylaws. The trial court further ordered that the remaining directors cooperate with the receiver and the property manager to effectively operate the Association.

The removed director/president appealed the trial court’s decision contending that there was insufficient evidence to establish that he had acted improperly. The appellate court ruled that the record contained “significant evidence” that the former president of the Association had used his position to act against the best interests of the Association. His removal from the board prevented the further waste of assets that the receiver was appointed to protect and enabled the Association to maintain the status quo.

See case decision: McCoy_v._Bovee_(Ga._2017)1