18 June 2020 Directors News
June 18, 2020
18 June 2020 Directors News
Over the past several months, the current RAWS Board of Directors has been considering the validity of two issues, a lawsuit against a former employee and the filing of an insurance claim to recover lost funds. A former Board member and a few supporters have maintained that these actions are an absolute priority for this Board. As most members are aware there is a criminal investigation currently being conducted by the Nueces County Sheriff’s Office. This investigation and the execution of a search warrant were initiated prior to the election of the new Board of Directors. There are no previous Directors serving on the current Board, so the stipulation that the current Board of Directors has any detailed knowledge of previous misappropriations or mismanagement, is obviously untrue.
The Board of Directors are conscientious about every member’s issues and concerns, and therefore has established a legal committee headed by Director R. George to address the concerns of a few members regarding the lawsuit and insurance claim. The RAWS agenda lists an item for Director George to share the information he has acquired from members and former Directors concerning actions to be considered by this board to pursue both legal action and the insurance claim.
The Board of Directors must consider the following list of factual possibilities and potential issues when considering any legal action proposed or recommended by Director George in addressing the claims made by members and former Directors.
Legal action against a former employee:
- RAWS would need a lawyer familiar with both civil collection as well as insurance litigation experience.
- RAWS would need to advise the attorney who the proposed defendants in the litigation are so that he can run a conflict of interest review with he and his firm.
- Director George needs to provide the evidence that will be used to state and prove a cause of action against the individual or individuals that RAWS is seeking to recover funds from.
- RAWS would need to determine what the fee arrangement is and have an engagement letter from the attorney.
- A former Board Member and a few other members insists that a litigator be retained to file a lien against assets of the proposed defendant(s). In this situation, there are two types of liens, a judgment lien and a “lis pendens”. A judgment lien is an Abstract of Judgment filed after a Jury finds for the plaintiff, and a Court enters a judgment.
A “lis pendens” is a notice filed in the office of public records that the ownership of real property is the subject of a legal controversy and that anyone who purchases it, takes it subject to any claims asserted in the action and thereby its value might be diminished. Filing a “lis pendens” is an action taken prior to filing suit and has an adverse effect on the title to property. If you file a “lis pendens” to potentially capture property prior to obtaining a judgment and the Court proves you wrong, RAWS will be subject to some serious potential liability.
- Litigation is expensive and takes a long time to finalize.
Filing an insurance claim:
- Concerning the insurance claim, the litigator must have the information to provide the items the representative of the insurance company has been demanding. That includes the evidence on a day-by-day, invoice by invoice and check-by-check basis. The litigator will also need to make sure that the person or persons were not acting with authority provided by previous Boards of Directors. Once the information is provided to the agent for the insurance company, a lawyer with insurance experience will negotiate as they do in all insurance cases.
- There is a pending criminal investigation and RAWS will need to make sure that the lawyer does not interfere with that investigation.
- In most criminal cases whether by a plea of guilty or a jury’s finding of guilt, the Court will order as a part of the punishment that the defendant pay restitution. In this scenario, a collection lawyer would have the tools to enforce the Judge’s order.
- With a pending criminal investigation a potential defendant would more than likely take the 5th amendment as a civil lawyer tries to perfect his evidence. That is until the criminal case is resolved.
- These events need to be approached cautiously and ensure RAWS is not exposed to liability because a few members, or previous Directors want to proceed at a rapid pace.
- There is a concern that the alleged nefarious activity was discovered in July of last year, and that the documentation to perfect the claim with the insurance company still has not been provided to the insurance company. The company most likely has strict requirements to perfect a claim, and probably has issued a Reservation of Rights letter reserving the right to deny the claim because information was not been provided in a timely manner.