Legal Question in Business Law in Washington

shareholder interfering with a corporations ability to conduct business

this question is regarding a single shareholder in Homeowners association (which is also a for profit corporation).

Is there a law that prohibits a shareholder from filing nuisance lawsuits in an attempt to disrupt the board of directors ability to conduct the business of the homeowners association ( collecting annuals dues, enforcing the covenants, allocating funds for improvements etc..)?

And,in such a case, do the remaining shareholders (500+)have any rights to combat these types of lawsuits?

Asked on 12/03/05, 3:54 pm

1 Answer from Attorneys

Lee Brettin Brettin Law Office

Re: shareholder interfering with a corporations ability to conduct business

The actual question I believe is whether or not there "[i]s there a law that prohibits a [person] from filing nuisance lawsuits." The short answer is that a lawsuit must have some minimal basis to proceed. Lawyer’s are obligated to evaluate the basis of a suit before filing. Lawyer’s may be aggressive and challenge existing case law and the interpretation of statues. If a suit does not meet certain minimal standards, however, the attorney faces the prospect of a dismissal and potential sanctions imposed by the court and in some cases the client may be obligated to pay the other side’s attorney fees and costs.

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Answered on 12/05/05, 1:13 pm

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