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FIRING CONTRACTORS IN
EXECUTIVE SESSION

QUESTION: I received two conflicting attorney opinion letters on whether the termination of a contractor must be done in open session. What is your opinion?

ANSWER: Although terminating a contract is not one of the approved categories for executive session (Civil Code §1363.05(b)) canceling contracts should be done in executive session. Before ending a contract, boards often engage in a wide-ranging discussions about problems with the contractor, possible legal consequences related to the termination, and input from legal counsel on how best to minimize legal exposure. If the debate were done openly, it would compromise the association's legal position and expose the board to potential claims from the contractor. Accordingly, discussions related to the termination should take place in executive session. It goes without saying that anytime the board contemplates terminating a contract, it should get advice of counsel.

REMOVING COMMITTEE MEMBERS

QUESTION: Is it possible to vote a member off a committee if he/she works against the committee and gives out inaccurate information presented by the committee?

ANSWER: Unless your governing documents provide otherwise, committee members may be removed at any time, with or without cause. Unless the committee has been established by your governing documents and its members elected by the association, committees serve at the pleasure of the board. Accordingly, the board can remove committee members at will and without explanation. The board can also delegate such authority to the committee chair or to the committee itself.

VERIFYING COMPLAINTS

QUESTION: I know you've had a lot of comments already about owners' due process rights when there are violation complaints. If we have a number of owners complaining about the same thing, does someone from the board have to see/hear it for themselves to verify it, or can we take them at their word? 

ANSWER: Because people have the right to know the evidence against them and to present a defense (due process), claiming that two or three anonymous owners complained is not sufficient "evidence" to discipline a member. If the complaining parties refuse to be identified and the board cannot independently verify the complaint, the board cannot levy penalties.

FAILURE TO ACHIEVE QUORUM
FOR THE ANNUAL MEETING

At some point there is no benefit to continued attempts at an annual meeting when quorum (either in person or by proxy) is not even close to being achieved. Directors have a duty not to waste the corporation’s income, so at some point they should stop. I recommend that the board decide how many times they must try before stopping. The board should take into consideration the cost of noticing the members, the likelihood of success in reaching quorum, and any other factors which should be taken into consideration when making their decision. For example, if the association has 400 homes that must be noticed of the annual meeting, the board can expect to spend at least $500 in costs for paper, envelopes and postage. There may be additional expenses from the management company for a 2d and 3rd try which should be considered. I believe that they must try a second time. But beyond that, there is no obligation I’ve ever found stated in any statute or published appellate opinion for any follow-on meetings. -Richard P. Neuland, Esq. of Neuland, Nordberg, Andrews & Whitney

MEETING AT A BARBEQUE

QUESTION: In your June 28, 2009 newsletter, you stated it was okay for a majority of directors discuss matters if they are not scheduled to be heard. The Civil Code also notes that a board cannot discuss anything that is not on a published agenda. Therefore, shouldn't the quorum of board members refrain from any discussion of a matter unless the matter being discussed is published on an agenda of a duly noticed board meeting?

ANSWER: The statute does not prohibit directors from talking to each other outside of a board meeting; it only prohibits discussing matters scheduled to be heard by the board.

For example, if a majority of directors attend a barbeque and one of them says, “The landscaping is looking tired. I think we should tear out all the shrubs and plant flowers.” The other directors nod and one of them asks, “What kind of flowers and how do we pay for them?” The first director responds, “I like Geraniums and I think we can borrow money from reserves to pay for it. Let’s put it on the agenda for our next meeting." The other directors agree.

In my opinion, their flower discussion did not violate the Davis-Stirling Act. It does not meet the definition of a "board meeting." Civil Code §1363.05(j) Once the flower proposal is on the agenda, the board can discuss the matter in front of the members, debate the type of flowers to plant, investigate costs, and appoint a committee to make recommendations.