I think this HOA board has opened itself up to being sued.
To spend most or all of your reserves and even money needed for day to day operations is a pretty good indication that there were personal agendas and some big egos involved.
I know that I would sue the board and solicit others to join if the facts in this case are accurate.
I can’t imagine what the board was thinking to bankrupt itself over something so trivial and was essentially settled.
Typically, the Board members are protected from suits by the members of the HOA. If the Board violates the Bylaws, then a member of the HOA sues the HOA. The association is typically required to carry insurance for just such occasions. The worst you can do to a Board member is to remove them from the Board or possibly have them jailed for fraud if there was fraud involved.
I can imagine that the HOA in the article will suffer a significant rise in the cost of their insurance policy. This alone should motivate the members to choose better Board members.
The membership of the association should have recognized that the HOA was in the wrong long before anything like $400K in legal expenses was incurred. You snooze, you lose.
I was President of a small HOA for about 18 months. Whenever there was a conflict, I tended to move very slowly like a glacier moving a very large stone. There was plenty of time for an affected member to get out of the way, but once I determined that the Board was in the right, the process moved right along.
“I cant imagine what the board was thinking to bankrupt itself over something so trivial and was essentially settled.”
Most likely they were thinking about not paying the lawyer(s) that promised them their lawsuit was a sure thing.