Homeowners Can't Sue Association Twice for Same Claims

Homeowners Can't Sue Association Twice for Same Claims



Q: The association I manage defended itself against a homeowner’s claims and won. We just became aware that a relative of the same homeowner is attempting to sue us for some of the same claims. I thought that we couldn’t be sued twice for the same claims. Is that true?

A: Yes. A homeowner can’t sue an association twice for the same claims. It’s not uncommon for a family member to have a power of attorney for a homeowner, especially in aging-in-place communities where elderly homeowners may need help making decisions and handling their finances. A power of attorney allows the family member to bring claims regarding the homeowner’s property as if he or she were the homeowner. But only one party—the person with a power of attorney or the homeowner—can sue the association for the same issues. A North Carolina court recently ruled in favor of an association in a situation similar to yours.

There, a couple living in a planned townhouse community granted a limited power of attorney to their daughter to allow her to vote on their behalf at association meetings and to communicate with the association when necessary. The power of attorney essentially gave their daughter the same rights and privileges as if she owned their townhouse. As her parents’ representative, the daughter filed several complaints—including fraud and breach of fiduciary duty—against the association over the course of several years, leading to protracted litigation that ended in the court ruling in the association’s favor each time.

Later, the homeowners attempted to sue the association for several of the same claims their daughter had earlier as their representative. The association objected, arguing that those claims had already been determined by a court and could not be brought again simply by naming the homeowners as the plaintiffs when their daughter had already litigated the same claims on their behalf.

The court ruled in favor of the association. It determined that two doctrines—res judicata and collateral estoppel—which were created “for the dual purposes of protecting litigants from the burden of relitigating previously decided matters and promoting judicial economy by preventing needless litigation”—applied to this case.

Under the doctrine of res judicata, or “claim preclusion,” “a final judgment on the merits in a prior action will prevent a second suit based on the same cause of action between the same parties or those in ‘privity’ with them,” said the court. Under the doctrine of collateral estoppel, or “issue preclusion,” “parties and parties in privity with them—even in unrelated causes of action—are precluded from retrying fully litigated issues that were decided in any prior determination and were necessary to the prior determination,” it pointed out.

Like res judicata, collateral estoppel applies only if the prior action involved the same parties or those in privity with the parties and the same issues. In general, privity involves a person with the same interest as another who also represents the same legal right previously represented at trial. For example, a person with power of attorney is in privity with the party that granted that power of attorney to him.

Here, the homeowners allowed their daughter to reside in their townhome and granted her a limited power of attorney “to request financial records, to vote proxy in association matters, and to attend association meetings on the homeowners’ behalf.” She also was deemed to be their agent through a limited power of attorney, granting her the same right as them. The court determined that the evidence indicates that a privity relationship exists between the daughter and the homeowners. Therefore, they were precluded from suing the association for the same claims that their daughter had, hoping for a ruling in their favor the second time [Brawley v. Elizabeth Townes Homeowners Association, August 2014].

 

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