Acting in good faith and a hypothetical situation

My Association's CCR's, in its Duties of Association section, states: " The Board of Directors of the Association shall oversee the activities of the Association to such an extent as it may take whatever action, in good faith, as it considers necessary to provide for the upkeep and aesthetic appearance of the Subdivision for the common benefit of all the members of the Association.

Would that duty of good faith be breached if the following scenario were to happen:

3 members, of a 5 member Board, gave notice of resignation to be effective March 15th. That Board had a Board meeting on March 11, and those 3 resigning Board members announced they decided to not resign, revoke their resignation notices and instead are going to vote the other 2 Board members off the board, which the Association's by-laws allow "with or without cause."

Basically the question is would giving resignation notice and then a week later rescinding those resignations to instead vote off 2 other members by breach of good faith and therefore violate the CCRs in those actions?

In By-laws: "7.05 Removal and Resignation. The Board may remove any Director from office, with or without cause, by a majority vote of the whole Board". -the rest of 7.05 deals with resignation, so I am not quoting it.

Only the last part is hypothetical. Three Board members gave notice to the whole membership that they are resigning effective March 15th. There is still a Board meeting planned for March 11th. A Board member suspect the last part will happen.

Sorry, it was a scenario.

Ah, so mainly real. I think we want to see more of your bylaws. Is, for instance, the quote you gave us in a section about officers?? Or in a section about directors?

So your bylaws say that the board must "accept" the resignation of the directors?

what do you mean they gave the whole membership their resignation? An announcement? A written letter to every Owner? what does that bylaw section say about resignation?

Yes, it is in the rest of 7.05. Here is the rest of it:

"Any officer or Director may resign at any time, giving notice to the Board, the President, or the Secretary. Such resignation shall take effect on the date of receipt of such notice, or at any later time specified therein, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective."

Note: Director is uppercase "D" and officer is lowercase "o".

As quoted above, 7.05 deals with resignations but it is also mentioned in Article four, which again deals with "Nomination, Election and Term of Office."

"4.05 Removal. Any Director may be removed from the Board, with or without cause, by a majority vote of the Members of the Association. Any Director may resign from the Board on thirty (30) days advance notice to the Board. In the event of death, resignation, or removal of a Director, his successor shall be selected by the remaining members of the Board, or if at the end of the year, by the Tract Owners at the annual meeting."

I do not know if any notice was given to the Board or if done within 30 days as 4.05 requires. I just know about that notice and it was made yesterday with an effective date of the 15th, so it was not within 30 days but there is no requirement to put the Members on notice anyway.

The only thing the Texas Nonprofit Corporations statute says on this is: Sec. 22.2111. "RESIGNATION OF DIRECTOR. Except as provided by the certificate of formation or bylaws, a director of a corporation may resign at any time by providing written notice to the corporation."

The Texas HOA statute is silent on the subject.

In my opinion, as long as the effective date has not yet arrived, the board members may withdraw their notice of intent to resign. Per the Bylaws, these same board members may remove other directors via a majority vote. I cannot back up my opinion with any statute or case law at the moment. Though I am betting that nationwide, there is case law about the validity of rescinding a resignation set for a future date.

A 2012 Texas appeals court decision appears to support the Bylaws of a nonprofit dictating that a board majority may remove directors. As interested (wink), see https://cases.justia.com/texas/first-court-of-appeals/01-12-00443-cv.pdf?ts=1396150433

Roger, I think you and I agree that it is only fair and reasonable to allow someone to withdraw her or his notice of resignation when the resignation is set for a future date. As for withdrawing the resignation thusly, and then voting off minority directors, said vote is lawful. While you allege a possible conspiracy, I see folks lawfully changing their mind. To me, it is politics. (It doesn't matter whether it is national, state, city, or HOA politics.) I think most politics, while often obnoxious, is legal conduct.

Thanks for this. I was thinking the same thing on 7.05 with "remove from office" being the key part on wording alone plus being in Article Seven which deals with "Officers and Their Duties." Removing a Director from office, lowercase o, is not the same things as removing said Director from his Director position on the Board, especially considering that wording is in the "Officers and Their Duties" section.

In other words, under 7.05 as quoted above, the Board can remove a Director, who is the Treasurer, from the Treasurer office but not from his Director position, right?

All politics is local. Someone said that. And it's true. Whenver I get to talk to a new homeowner and they voice disdain for "the politics" of the HOA I tend to write them off as being someone who'll be willing to get involved in the governance of the association. Sometimes they change their mind, but the first step is realizing that it is politics the minute two people disagree about something.

Roger did catch is error, Kelly. Review his recent posts.

Hypothetically, it is possible for a board member to rescind a resignation if they’ve only made the resignation orally. However, once the resignation is official,the board must give the members permission to return.

By the way, if everything goes smoothly and the three just go away, leaving two board members who will then appoint a third, I assume something needs to be done about the three just sending a notice to the membership when they were supposed to send their resignations to the Board, President or Secretary per the by-laws.

For check cashing authorization, dealing with outside parties, Directors insurance coverage, etc. I assume the resignation needs to be made official by the Board. The two remaining directors and the appointed third can check with the Association's legal council to see what needs to be done.

Anyone here know what it would likely entail? I am not an attorney, but my guess would be a letter, by the Board, to the three resigning people stating the Board accepts their resignations and even though notice was not sent directly to the Board, the Board recognizes their notice sent to Membership satisfying the notice requirement etc. all in legal proper speak.

Thanks. I was thinking the same thing, the directors are members so they were notified.

In CA and our bylaws, there's no need for the board to "accept" the resignations. What do your bylaws say?

The effective date of the resignations, date of the notice and the names of those resigning should be acknowledged by the Board and note in the next open meeting of the board.

Sorry, my above should have said "noted in the next open meeting MINUTES of the board."