Federal Court Dismisses Derivative Action Against HOA President for Lack of Jurisdiction

Timothy Pagliara initially sued his homeowners’ association for failing to maintain property and fiscal mismanagement. He later amended the complaint to drop the association and sue its president, Dan Dungan, individually, while pursuing a derivative action on behalf of the association under Florida law.

The court found that this switch triggered a jurisdictional problem: in a derivative suit, the corporation is considered the real party in interest. Because both the association and Dungan are Florida citizens, complete diversity required for federal jurisdiction no longer existed. Pagliara’s request to realign the association as a defendant failed because there was no evidence of active antagonism by the board against his claims, mere inaction was insufficient.

As a result, the court dismissed the amended complaint, without prejudice, for lack of subject-matter jurisdiction, leaving the substantive claims unaddressed.