Property Manager May Be Liable to HOA For Tortious Conduct and Breach of Contractual Obligations

This case involved a lawsuit between a 734-unit condominium owners association (“Association”) and its longtime property management company (“Manager”). In 2017, Association sued Manager seeking to recover monetary damages for breach of contract and breach of fiduciary duty. Association’s attorney in the lawsuit against Manager had previously represented Manager in an unrelated matter.

Manager filed motions in the trial court to: (i) dismiss Association’s claim for damages for breach of fiduciary duties on the basis that the two claims involved the same underlying conduct and were therefore duplicative; and (ii) to disqualify Association’s attorney because the law firm had previously represented Manager in a suit brought by a landscape contractor seeking damages for nonpayment of money owed for services rendered pertaining to Association’s property. The trial court granted both of Manager’s motions and Association appealed.

Regarding Association’s claim for damages based on breach of fiduciary duties, the appellate court stated that if the two claims are based on the same facts and seek identical damages, they are duplicative, but that was not the case, as Association had alleged specific breaches of trust that involved duties that were beyond the duties that were set forth in the management agreement. The court further stated that whether, or not, a condominium managing agent owes a fiduciary duty to the condominium association depends on the functions that the manager assumes. Citing a case precedent, the court further stated :