It usually happens on a Friday afternoon. The mail is delivered as is customary, and low and behold you see an unfamiliar envelope. DORA (Department of Regulatory Agencies) has sent you a letter. Curiosity peaks your interest for a nano-second before the prospect of a nice weekend returns to the forefront of your mind. Unbeknownst to you, the letter inside that envelope is a Complaint and Request for Information from the Colorado Civil Rights Division (CCRD), and the minimal time you are permitted to respond is ticking away.
An association faced with a CCRD complaint has little time to react, and several decisions have to be made quickly. Almost always these complaints arise out of some previous exchange between the association and an owner or resident, usually imposition of a fine and/or denial of some request made by the individual. The allegations range from failure to provide a reasonable accommodation for a handicapped resident to selective enforcement of the covenants against a minority or enforcement of rules that discriminate against children.
Back to the unopened letter gathering dust in the mail pile. It is dated three days before you got it (Tuesday) and a response is due within ten days of that date. For those keeping track, when you finally open that envelope on Monday or maybe even Tuesday, you have four to five days left to submit a response.
So now what? You have contacted the attorneys and gathered your documentation. Now the whirlwind begins. The association must decide whether or not to submit the claim to its insurance company. Assuming the insurer accepts the claim and provides a defense, you may or may not have to deal with new counsel who is unfamiliar with the association, usually unfamiliar with association law, and has no personal relationship with the association.
When contemplating whether to submit a claim to insurance there are a few items to keep in mind. First, this is a relatively expensive process in a very short period of time ($7k-$10k). The association’s deductible could be as high as $5,000, which would make the windfall for submitting to insurance relatively small. Submitting the claim to insurance may result in a rise in the premium. The rise in premium over time may be more expensive than the association paying the cost out-of-pocket.
However, associations who make the informed decision not to submit the claim to insurance should be cautioned. While the chances are slim, it is possible that this complaint may gain traction and ultimately lead to a lawsuit wherein the association would spend significantly more money to defend the allegations. If that were to occur, and the association chose not to submit the claim to insurance at the time the CCRD Complaint was received, the insurance company could deny coverage based on the association’s failure to timely notify it of the claim. At that point the association would be responsible for all defense costs associated with the lawsuit and any potential damages awarded against it.
One additional point regarding insurance is the timing of the expenses and what insurance will pay for. The insurance company will only cover defense costs from the date the claim was submitted forward. If an association was to wait until the day prior to the deadline for the Response to submit the claim to its insurance company, and a majority of the legal work had been completed, the association may find itself paying for those legal services even though submission to the insurance company occurred. The longer an association waits to submit the claim to insurance, the more it will pay out of its own pocket.
Once representation is decided, the key players in the association (board president, manager, architectural committee) need to be prepared for constant communication and document requests until the association’s response is submitted. The short period of time to respond and the relative complexity of the underlying issue (denial of architectural request, noise violation, covenant enforcement) will require the association’s attorneys to work quickly and efficiently to prepare a timely response. Counsel will likely prepare affidavits and will require detailed information for submission with the Response. In addition, those who are requested to provide affidavits must sign and notarize the sworn statements and get them back prior to the deadline.
Once the Response is prepared, the documents are attached and the affidavits ready, the Response will be submitted on behalf of the association. The Colorado Civil Rights Division has (9) nine months to render a decision and often requests additional time to do so. This request for an extension usually comes in (60) day increments. Expect this process to last approximately one year from receipt of the Complaint.
The key to a successful defense is a timely and professional response with accurate facts and proper documentation.
For more information on the CCRD process, please contact a Altitude Community Law attorney at 303.432.9999.