On April 9, 2024, Hot Springs Village Property Owners Jeffery Atkins and Dennis Simpson filed a class action* Complaint against the Hot Springs Village Property Owners Association. Simpson said, “As you might imagine, we have thought LONG and hard about this…”
Simpson continued, “On the advice of our legal counsel, they suggest no interviews. But Jeff and I have put together just a statement we would share. It is our opinion that the POA Board and Management has lost its way, and we intend to fix it. We’ve taken this action to protect the interest of all property owners and ask the Courts to preserve the integrity of the governing documents.”
The Saline County Complaint alleges that the Plaintiffs were/are adversely affected by the actions and omissions of the Hot Springs Village Property Owners Association, the world’s largest gated community. The Complaint states that the HSVPOA Board of Directors, through the association and general management, is responsible for protecting the organization’s assets, members, and members’ investments, creating a fiduciary responsibility.
The suit says that the HSVPOA has an obligation to follow their own guidelines and procedures established in the Declaration and Covenants and Restrictions, but “there have been numerous instances of the HSVPOA creating a special assessment without a proper vote,” which violates the Declaration.
The complaint alleges that although the POA has previously lost court cases, it continues to operate in “a pattern of intentional misconduct.”
- The POA has shown extreme disregard for the Plaintiffs’ wishes and has invited litigation by recently stating during a rental registration fee discussion, “If you don’t like, hire a lawyer and litigate.”
- Despite having a fiduciary duty, the POA has facilitated and implemented improper financial transactions that adversely affect the Plaintiffs’ interests.
- The POA has a duty and obligation to pay costs for extending utilities (sewers and water) and providing roads to lots not having such. The POA recently implemented a policy to “avoid their obligation by imposing a system whereby property owners would now have to directly pay for utilities and roads…”
- The complaint states that the POA’s failure to pay for the installation of roads, sewer, and water utilities diminishes the value of underserved* lots.
The Complaint alleges implementation of special assessments without a Members’ vote
The Complaint also alleges the POA has implemented special assessments without a vote of Members. Examples of this include
- “Buy-in” fee for $250 for purchasers of unimproved lots and $1,500 for improved lots
- “Public Works” fee of $1,560 for roads to be built for each home
- “Deed Transfer” fee
- “Membership Assignment” fee
- “Tree Cutting Permit” fee” enforcing different rules for lot owners and homeowners
- Charging new buyers with assessments before receipt of deeds and also making them responsible for the entire year of assessments at once
- A” “Rental Registration” Fee of $50 is charged to file and register a rental and to provide the owner’s contact information for HSVPOA personnel or police. The suit alleges this fee is to “help the POA increase income and potentially provide bonuses to management.
Competing with Members in Breach of Fiduciary Duty
The Complaint states that HSVPOA has implemented a system of using assessment dollars to compete for lot sales by offering a 50% commission to realtors on POA-owned unimproved lots, which undercuts other lot owners and breaches fiduciary duty and potentially antitrust laws.
Protective Covenants
The Complaint says that traditionally, the HSVPOA operated under a “complaint” basis for protective covenant infractions but failed to enforce these rules on a regular basis. Additionally, the complaint alleges that enforcement is arbitrary and unfair and can depend on who makes the complaint. Specifically, the Board fined the Plaintiff for cutting a tree without a permit, but his neighbor did the same without recourse.
Breach of Privacy
The lawsuit states the HSVPOA has implemented a new software system allowing Property Owners Association account balances to be visible to Assigned Members, family members of Assigned Members, or Dependents of Assigned Members which is a breach of privacy.
“The Defendant HSVPOA made disclosures to the public or to persons about Plaintiffs financials not previously known to the public, and Plantiffs had a reasonable expectation that such facts would remain private.”
Conclusion
The suit alleges:
- Breach of fiduciary duty
- Breach of contract and covenant of good faith and fair dealing
- Constructive fraud
- Breach of contract
- Invasion of privacy
Requested compensation:
The Plaintiffs request compensation for damages and reasonable expenses and costs.
Atkins and Simpson v HSVPOA Complaint
*To my knowledge, this has not yet been certified as a class action. “To certify a class, a court generally needs to find that the proposed class is 1) numerous; 2) presents common questions; 3) that the class representative’s claims are typical of the class’ claims; and 4) that the class representative is an adequate representative.”
*Underserved lots are those without utilities and/or roads.
Note: I am not a legal expert. This is the Plaintiff’s side of the case. I have attempted to present this Complaint to the best of my ability without bias or favoritism. When it is filed, I will post the Answer to the Complaint (the Defendant’s side of the case). Atkins, Simpson v HSVPOA can be accessed here.
Click here to read the HSVPOA Board’s initial response to the Complaint.
By Cheryl Dowden
Click here to contact the HSV Gazette.
Click here to join our private Hot Springs Village Property Owners Facebook group. Be sure to answer the entry questions.
Click here to visit the POA website – Explore the Village.
When I asked once, to Tucker and other members about their behind the scene meeting concerning the future of HSV his reply to which I remember distinctly was, “They, the residents of HSV, do not know what is good for them.” I believe, the past BOD should be also held legally responsible for their reckless and feckless actions. I’m willing to give the new HSV management a chance, but we need to stop this insanity.
The soft and hard coverups needs to stop.
In here you have a bullseye on your back. The few get what they want at the expense of the rest.
Yea Larry & Shelly Hill! Love the “If the last few years have been a result of POA mismanagement and losing their way I hope they stay lost”. So true!
I’m sorry that speculators feel their lots are harder to sell because of fees; kinda think its blaming something else for their lack of business ideas. However, these fees benefit the Village and other builders seem to have no difficulty attracting buyers. If you want to penalize Villagers and force the Village to build and maintain roads/utilities to remote areas, shame on you. I’m quite certain the POA will work on trading lots with you and certainly hope you pursue this track.
Remember that the request for reasonable attorney fees and costs works both ways. If your suit is found to be frivolous and/or without merit, you may owe the POA. It would certainly be interesting to learn how hard you’ve tried to find a mutually beneficial solution rather than stamping your feet and bringing suit. Bad move in my opinion.
Several years ago the POA’s acquirement of the facilities from Cooper contained an agreement by the POA that in the future all new roads and utility construction and maintenance would be the responsibility of the POA. I thought at the time that this was a bad deal for the POA. I am sure this can be documented somewhere unless the documentation has been destroyed.
Indeed the POA could of should of proactively purchased Cortez Beach property from Cooper. Instead, our narcissist ceo (at that time) and her hand-fed lap dogs were “proactively” trying to persuade Property Owners that a $1.5 mil. pool needed to be built. For the record, the majority of Property Owners at that time were against bulding a pool as ROI was forecast to be low to none over the course of MANY years.
On the other hand, Cortez Beach was reported to have sold for under 500,000K. Please correct me if I’m wrong. The selling of Cortez Beach to a private owner–deeded as both residential & commercial property–was a travesty that continues to haunt many long time HSV Property Owners, and likley will for years for those of us who witnessed that great debacle.
If the last few years have been a result of POA mismanagement and losing their way I hope they stay lost; and please don’t try and “fix it.” Most recent example is the management response to the aftermath of the tornado which bordered on heroic; I am so glad current management was in place instead of these two gentlemen with their personal injury lawyers. We have a special place here and the greatest threats are going to come from the inside.
Good!!!!!! Wish it included all the lots we sold to that bogus California comany that Eric Estrada was the spike person for. The company then went bankrupt and we have never recived any POA dues or the property back. That is lost revenue. And allowing Cooper to srll Cortez Beach after one GM did thousands of improvements or un improvements when they made it step access instrad of original beach. And then sold it. And now asthetic and property value will decrease because POA will not pay for all downed trees. They haven’t cleaned up trees from tornado years ago before the one we just had. When we biught property assessments were $6 a minth and you could golf for free.
Susan, the California company you are referring to is National Recreational Properties (NRP). They haven’t had title to any lots for 15+ years. They transferred control to their lenders, who appear to be independent (non-associated) companies, but I do not know that for a fact. Most of the “NRP lots” have gone through the Commissioner of State Lands (COSL) for non-payment of property taxes, and have new owners. The POA had no control over Cooper selling the Cortez reserve property, but they could have proactively purchased from Cooper.
“Kudos and hurrahs” all around for our General Manager Kelly Hale, our POA staff and everyone who helped with the monumental task of clearing our roads after the recent tornado. Their expertise and speed were impressive and made it look easy, but it was far from simple. We Villagers are proud of you! Thank you, Patty MacDonald,