California Open Meeting Act

Here's an editorial in the Pasadena Weekly about enforcement of the Opening Meeting Act.

First trip to small claims court was useful for document production. In California, you can take the HOA to small claims court for document production and election procedures. The judgment required: payment of a fine, production of documents and mediation. The Open Meeting Act violations were supposed to be addressed in mediation.

Mediation is required to settle issues within a HOA. A member can refuse, but the HOA cannot. This is called Internal dispute resolution. Civil Code §1363.830(g). If the HOA does not have such procedures, the state rules apply. (Civil Code §1363.840)

The board refused to meet and address the secret meetings and this is what made us file in small claims court. At the time, one legal website indicated Open Meeting Act violations could be addressed there, but this was not allowed in Los Angeles County.

The second trip was as a result of a hearing brought by the board against us. This was dismissed due to the Board's failure to meet the four elements of a hearing and fraud. The problem was a decision made by the previous board and not one person and the current board failed to produce the minutes and the newsletters. The newsletter showed it was a board decision and not the actions of one director. Without the documents we could not have proven fraud. The judge dismissed this, but also dismissed the cross complaint. The cross complaint was about production of documents.

The judge made a mistake of law and we challenged the dismissal of the cross complaint in the third trip to small claims court. The board was forced to produce documents which further indicated the full extent of the fraud.

Mediation/arbitration is required in the state of California when one files in a higher court for civil claims (limited/unlimited). So either way, we would have been required to had mediation/arbitration. In Los Angeles County, you have two free services you can use. Farmers insurance insisted on a paid mediator.

What is disappointing is that the insurance specialist for Farmers Insurance, encouraged the board to disregard the small claims court judge's decision (production of documents and mediation). For this reason, we required a lawyer to get a full copy of the HOA insurance. Viewing and having a copy of one's insurance would seem like a no-brainer, but apparently not for Farmers Insurance. Civil Code 1365.2(a)(1)(D)

We have been to mediation twice and the board did not, to our surprise show up. Only the agent in one case and one representative with the agent in the other. Originally, I did not think we would need an attorney for mediation or production of the insurance, but under Farmers Insurance we did. Since we met in mediation in May, we know that in order to form their two replies, the board has met, in secret, at least twice. This goes against California state civil code in which a HOA board cannot take action without a meeting (except an emergency) and cannot have a meeting without notification of all members and including an agenda in that notification. This could invalidate any mediation contract signed. We pointed this out to Farmers specialist via our attorney. His reply was that the board would begin notification and sending agendas after the contract was signed. Our attorney had to again explain very clearly--no meeting = no action. No meetings without an agenda and notification. (SB 563 was signed by the governor last year in September and went into effect on January 1, 2012).

I am not sure if the insurance specialist is really that uninformed or if his and/or Farmers Insurance's strategy is to cause such a financial burden to the complainants that they will be forced to drop the case. I am not sure if this is a general policy for Farmers insurance, the particular agency or that particular insurance specialist. The first mediation contract we signed was broken by the Farmers insurance specialist.

When I talk about problems with the HOA board I mean legal problems. I mean there are state filings that are long overdue and we asked for copies to insure these were actually filed. The documents should have been filed last July (2011) and if not filed in February 2012 would result in a fine from the state. At some point, if these papers are not filed, it will mean a loss of corporation status. Our attorney does not believe these documents were filed.

The board also hired non-licensed workers for jobs that the state licensing board requires a contract and a license. The board did not require documents to prove the non-licensed worker had insurance.

We also believe the board have failed to file a 1099 as required for the contract work.

The board also wishes to install a playground, but does not know the full cost and when we asked about the cost of a accredited inspector, we received no response. At this time, there seems to be no plan to conform with state health and safety standards.

In general, we found that our fellow members didn't understand the concept of legal liability and perhaps still do not. For the original October court case, the board assured the members in a newsletter (that we didn't receive) that we had a weak case (and they had consulted a lawyer) and that the insurance would pay for any cost. As the board has refused to reveal the name of this attorney, we believe they have never consulted with an attorney.

While well-intentioned, SB 563 has no teeth. There is no quick economical way to take action. A civil court case might take years as did the one in Hawaii. The only way in California that the directors would be responsible personally for the cost would be if someone took them to court and they were found guilty of willful misconduct or negligence. Our attorneys told us it would take at least a year and lots more money.

That is great. Would love to hear more. I guess it depends a lot on the judge.

While not the topic of this thread, I suggest you read davis-sterling.com -> Main Index -> rental limitations. New legislation took effect in CA on 1/12 that hampers HOA's ability to set rental limits. I'm not familiar with it though.

Meantime, i'm happy to hear that your community is on a good path!

I agree with you, David, the CA rental restriction legislation is terrible! And it hits smaller HOA's the hardest.

We're 43% tenant occupied, but with 200+ units, it would take awhile to reach 50%.

I have a different take on the issue of the interpretation of SB563, or the revision to the "Open Meeting Act".

Here is one interpretation of a "meeting".

One dictionary defines a meeting as an act or process of coming together as an assembly for a common purpose.[1]

A meeting is a gathering of two or more people that has been convened for the purpose of achieving a common goal through verbal interaction, such as sharing information or reaching agreement.

I consider a Board meeting where "action" is taken. My understanding for the rewrite of 1363.05 was too many Boards were taking "actions without a meeting" and not putting those actions into the minutes of the next meeting.

I attended a CAI seminar recently with two attorneys present giving their interpretation of SB563. Both had different interpretations. What problems do homeowners have with Board members. It's them taking "action" without public discussion. If you are discussing topics via email with other Board members and a manager and/or vendor, these are purely for discussion and collection of information. The "action" that will be taken after all information is gathered should always be done in open session. That is why I am strongly in support of an agenda that is posted four day prior clearly identifying all the topics being discussed and potential action to be taken.