Email Discussions in California

For those in California.

https://www.roattorneys.com/blog/new-appellate-ruling-okays-board-email-discussions

I am not convinced that email conversations among the board members are a bad thing. The HOA board is not governmental but "quasi-governmental." The all-volunteer board's hands should not be tied the way a City Councilor's, County Commissioner's, and legislator's hands are tied.

In my opinion owners need to take more responsibility for voting out directors whose votes they do not like. Or if owners want directors who are responsive to concerns raised at board meetings (in the open forum segment in California), then sure, vote in directors who will be responsive.

Newbies come here spouting hyberbole and drama without a basis in the HOA's governing documents or statutes. Even when the forum's members finally get the newbies to home in on where they actually have some standing to ask the board to do xyz, they still often couch their posts in useless hyperbole and emotion.

I just about wish there was a law saying that any topic an owner raises at the open forum segment of board meetings must be presented in writing in advance and include reference to the parts of the bylaws, declaration or state statutes that support the topic. Why? To educate as much as anything else.

To those unhappy with the recent California appeals court decisions: See? Just look at South Carolina. What the court ruled can work fine.

I think it is highly likely that California legislators did in fact not want to tie the hands of all-volunteer HOA boards the way the hands of city councilors, county commissioners and legislators are tied.

As of this writing, I have not heard one peep that legislators are going to change the HOA Open Meeting Act to be more like the government Open Meeting Act.

I hear you that this is perhaps about differing state philosophies about what is 'good for society.' This is interesting. I will continue to ponder.

What you say is reasonable AFAIC. I would say all-volunteer boards are notorious for often being non-professional and unlearned about their obligations. Add egos and boards that do not know a board-created rule from a covenant and make up their powers as they go along. The risk of what you describe above seems much higher. I have seen what you describe in action on the boards of my past HOAs.

Last paragraph:

This new judicial interpretation should not encourage opening the floodgates for boards to discuss anything and everything by email and then wait for the formality of a board vote in the board meeting. Consider using email only to relay information and not to relay opinions, saving the discussions for the board meeting.

Per the California appeals court decision, certain email exchanges are now not "secret." California boards are now not hiding the fact that they may be having these discussions by email.

Nor in South Carolina are such email discussions "secret."

The appeals court decision explained why owners seeing deliberations is not what the statute contemplates and why in the court's opinion seeing deliberations was not necessary.

Owners who do not like how directors vote or how the directors respond to queries can throw them off the board.

Getting people to volunteer for boards is a huge problem. I can see advantages to how SC does things, along with the recent ruling by the California appeals court, and the approach of SC and the ruling can help take the load off directors' shoulders. You're just stuck in the rut of thinking open meeting, all the time (emergency decisions and executive sessions aside) and cannot imagine any other way.

You don't need a full board or quorum to handle CCRs enforcement. Typically, one or two board members can handle the hearings and make their recommendation on whether to fine or not to a quorum of board members, which should be done in executive sessions, NOT in open meetings.

If an Association is to have five board members, but they create an executive committee of two members to handle hearings, for instance, one is done in an executive session but is not a board meeting as it doesn't meet the quorum requirements.

Really? You are so smart, you can correct the court? You could write the judge a letter to say how wrong the decision was.

Terri

You ONLY think you know how boards are run.

Show me a citation where a quorum of the board is required to conduct a disciplinary hearing. I have seen a number of associations that have an executive committee handle the hearing and pass on to the full board whether to fine or not.

Correction: has a right.

Committee meetings don't require notice. Disciplinary hearings require notice.

In an attempt to clarify: It appears to me that Cohen v. Kite Hill and other California law do not place the burden of proof that a board's decision was not in good faith et cetera on the owner accusing the board of bad faith et cetera. Some discussion from the D-S site:

[quoting a 1988 California appeals court decision]The board members of a homeowners association are seldom professional managers, are very often uncompensated and most often are neighbors. Undoubtedly, the specter of personal liability would serve to greatly discourage active and meaningful participation by those most capable of shaping and directing homeowner activities. (Jaffe v. Huxley Architecture (1988) 200 Cal.App.3d 1188, 1193.)[end quote from decision]

The Business Judgment Rule (BJR) creates a presumption that directors' decisions are based on sound business judgment. This presumption can be rebutted only by a factual showing of fraud, bad faith or gross overreaching. (Ritter & Ritter v. The Churchill Condo. Assn. (2008) 166 Cal.App.4th 103, 123.) Corporate directors are presumed to have acted in good faith, on an informed basis, and in the honest belief that the action taken was in the best interest of the corporation. (Katz v. Chevron Corp. (1994) 22 Cal.App.4th 1352, 1366.)

If a board vote all by itself could be argued to be reasonable, I have doubts any email exchanges where deliberations occurred could cause a court to throw out the board's decision.

As much as some owners want to hold the all-volunteer board's feet to the fire, for the reasons stated in the Jaffe decision, the courts are hesitant to do so when a vote all by itself is reasonable.

From Cohen v. kite Hill. My point was regarding email discussions; that not having those discussions in open board meetings makes it harder to show good faith.

1) It is a settled rule of law that homeowners' associations must exercise their authority to approve or disapprove an individual homeowner's construction or improvement plans in conformity with the declaration of covenants and restrictions, and in good faith. ( Hannula v. Hacienda Homes (1949) 34 Cal.2d 442, 447 [ 211 P.2d 302, 19 A.L.R.2d 1268]; Branwell v. Kuhle (1960) 183 Cal.App.2d 767, 779 [183 Cal.Rptr. 767].) As the court in Hannula stated: "Each of the decisions enforcing like restrictions has held that the refusal to approve plans must be a reasonable determination made in good faith." ( Hannula v. Hacienda Homes, supra, 34 Cal.2d 442, 447.) The same requirement of good faith applies equally to the approval of plans. "The converse should likewise be true, . . . `[T]he power to approve plans . . . must not be exercised capriciously or arbitrarily.'" ( Bramwell v. Kuhle, supra, 183 Cal.App.2d 767, 779; see also Norris v. Phillips (Colo. App. 1981) 626 P.2d 717, 719.)

(2) Furthermore, in recognition of the increasingly important role played by private homeowners' associations in such public-service functions as maintenance and repair of public areas and utilities, street and common area lighting, sanitation and the regulation and enforcement of zoning ordinances, the courts have recognized that such associations owe a fiduciary duty to their members. (See Raven's Cove Townhomes, Inc. v. Knuppe Development Co. (1981) 114 Cal.App.3d 783, 799 [ 171 Cal.Rptr. 334].)

In a thoughtful article on Concepts of Liability in the Development and Administration of Condominium and Home Owners Associations (1976) 12 Wake Forest Law Review at page 915, the authors, Hyatt and Rhoads, note the increasingly "quasi-governmental" nature of the responsibilities of such associations: "The other essential role directly relates to the association's regulatory powers; and upon analysis of the association's functions, one clearly sees the association as a quasi-government entity paralleling in almost every case the powers, duties, and responsibilities of a municipal government. As a `mini-government,' the association provides to its members, in almost every case, utility services, road maintenance, street and common area lighting, and refuse removal. In many cases, it also provides security services and various forms of communication within the community. There is, moreover, a clear analogy to the municipal police and public safety functions. All of these functions are financed through assessments or taxes levied upon the members of the community, with powers vested in the board of directors, council of co-owners, board of managers, or other similar body clearly analogous to the governing body of a municipality. Terminology varies from region to region; however, the duties and responsibilities remain the same." ( Id., at p. 918, fns. omitted.)

As reflected by the law review article noted, membership in an association is usually mandatory. Such is true here. And the powers of such associations are extensive. "By his acceptance, the purchaser automatically becomes a member of the association created by the declaration and submits to the authority of the association and to the restrictions upon the use and enjoyment of the property contained in the declaration. Because each owner automatically becomes a member of the association upon taking title and because the association is empowered to levy and to collect assessments, to make and to enforce rules, and to permit or to deny certain uses of the property, the association has the power, and in many cases the obligation, to exert tremendous influence on the bundle of rights normally enjoyed as a concomitant part of fee simple ownership of property." ( Id., at p. 917.)

With power, of course, comes the potential for abuse. Therefore, the Association must be held to a high standard of responsibility: "The business and governmental aspects of the association and the association's relationship to its members clearly give rise to a special sense of responsibility upon the officers and directors. . . . This special responsibility is manifested in the requirements of fiduciary duties and the requirements of due process, equal protection, and fair dealing." ( Id., at p. 921.) (See Raven's Cove Townhomes, Inc. v. Knuppe Development Co., supra, 114 Cal.App.3d 783, 792-799.)

Yup, and my point was (1) to clarify that the burden is not on the board to show good faith; instead the burden is on the owner to show bad faith; (2) if the board's decision was reasonable enough, then it does not matter what the deliberations were, because the courts defer to all-volunteer boards' judgement.

You like to point out that it does not matter that HOA directors are all volunteers; boards must have their feet held to the fire. Au contraire. In the courts boards being composed of volunteers works in the favor of boards.

I agree boards should operate in good faith. But you are wrong to think that in litigation, boards have to meet a higher burden than owners when it comes to demonstrating good faith.

I disagree that email communications, where votes are not made, make things harder for boards.

Again, you get the last word. But I am firm in my position that these often hard-working volunteers* do not have to kowtow to anything but the covenants, bylaws and statutes.

*Said volunteers' work being so demanding that you will not do it.

I do more work to better the association than most directors do.

When I write statements like the above, I have in mind people like Florida Lori, Texas BillD, LmT, TimB4, DavidG45, possibly LetA, TimB4, and one or more of the Mark's here (sorry to be lazy). They work so hard, for no pay. I know they are not asking for pay. Also some or all may say they do not need to have a legal right to have email exchanges (without votes) without being concerned about open meeting requirements. Some or all may say they are fine doing this for pay. But I say: These folks's HOAs are lucky to have them.

I support owners' rights. But I continue to believe directors should be paid a nominal amount while retaining their liability protections. I do so because the amount of expertise and time that these folks have to give, along with the abuse they take, all for no pay, is absurd. I support any legislation or court ruling that can make directors' lives easier while still giving owners the right to fire the directors.

It's not my opinion, it's fact. Because of my work in spite of OPPOSITION from the board, we have:

Election rules
Legal elections
A reserve account
A reserve study
Open forum on the agenda
Detailed agendas
Collectible assessments
Collectible liens
Removal of invalid liens from members' properties
Executive sessions instead of secret meetings
Notice of executive sessions
More timely annual budget report
More timely annual policy statement

THE BOARD'S WORK HAS BEEN TO OPPOSE THESE NECESSARY IMPROVEMENTS. They have spent thousands of dollars of road maintenance funds fighting these improvements and SIX court judgments/orders.

Not the directors I named.

And no, I will not take your word for it that you do more work than your HOA's directors. You might, but I still want to hear their side of things.

Most boards can't be like mine. And I don't care if you believe me or not.

I'm surprised, Aidyl, that you're unwilling to show readers a citation from state that a hearing may be conducted without a meeting of the Board. Since you're the one insisting on this, it's on you, and is a basic courtesy, to show readers proof of your assertion.