HOA Nut House

By BRENDA SCHORY - bschory@kcchronicle.com

CAMPTON HILLS – A homeowners association has filed suit against its former board seeking nearly $70 million in damages.

According to court papers filed this week, Fox Mill Homeowners Association in Campton Hills is suing its former board and management company, various companies and 13 individuals, claiming that from 1994 to 2008, board members used the association’s dues for their own personal benefit in a scheme to defraud the association.

The 40-page complaint filed in Kane County alleges board members engaged in “self-dealing” in that they used their own ancillary companies to do lawn maintenance and pool cleaning, rather than competitive bidding for the best price.

The lawsuit also claims the former board, Fox Mill Limited Partnership, controlled by B&B Enterprises, also took out a $250,000 mortgage on a parcel owned by the homeowners for personal use, then later sold the parcel back to the homeowners association for $250,000.

The suit claims the previous board kept association fees artificially low, “solely for their own profit and benefit and were without any regard to the residents of Fox Mill.”

“The dues should have been higher,” said James Newman, an attorney who also lives in Fox Mill and serves on the homeowners association board. “They kept them lower so people would buy homes. The average dues were $1,000 a month. They should have been $1,500 to $2,000.”

As a result of the previous board’s actions, when the homeowners took over the board in July 2008, the reserve account had less than $84,000 when it should have had more than $6 million, the lawsuit states.

The amount sought is the total of money the previous board and management company made off the homeowners association through fraud, the lawsuit states.

The suit also claims that attorney Patrick Griffin was working for the previous board and management company while serving as the attorney for the homeowners association without disclosing the conflict of interest to the homeowners.

Among the suit’s allegations against Griffin was that he drew up a lease for tenants in a homeowner association-owned house for an employee of B&B Enterprises, but setting the rent below market.

Griffin said he had not seen the complaint and could not comment.

Raul Brizuela, an employee of B&B Enterprises and a former board member, also had not seen the complaint, but said it was part of an ongoing controversy being caused by Newman in the subdivision.

“All I can say is this lawsuit to me is just further evidence that any community we could have in our development is obviously almost destroyed by this tendency to pursue legal action,” Brizuela said. “I have no idea why Mr. Newman would name me in this lawsuit.”

Newman said the homeowners association board voted to sue to recover financial damages when the former board and management company would not cooperate with their request to pay back the money.

Newman said he abstained from the vote and agreed to take the case on contingency because other lawyers would have cost too much.

“I tried to resolve it,” Newman said. “The only response we get is an extended middle finger.”

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