Whether a procedure is "fair"...depends on the particular circumstances and the purpose and nature of the organization. The panoply of due process is elastic and must be understood in the context of the organization, its membership, the discipline to be imposed, and the member's valuable interest affected by the action. ...To be informed of the charges, the proposed disciplinary action, and an opportunity in some manner to present countervailing evidence may satisfy the twin due process requirements of being substantively rational and procedurally fair, as opposed to a full blown adversarial process with the right to counsel and cross-examination. (Kurz v. Federation of Petanque U.S.A.)
Due Process Defined.
"An established course for judicial proceedings or other governmental activities designed to safeguard the legal rights of the individual." (American Heritage Dictionary
.) Due process is broadly defined as fairness when it comes to imposing penalties. Associations cannot levy fines
and suspend privileges
for rules violations (including repeat violations
) unless due process has been followed. Some elements of due process can be found in the Davis-Stirling Act and the Corporations Code while others are found in case law.
Elements of Due Process. "[A] private organization is required to proceed in its decision-making process in a manner that is both substantively rational and procedurally fair." (Kurz v. Federation of Petanque U.S.A.) There are two forms of due process:
- Substantive Due Process. This form of due process requires that decisions be reasonable and not arbitrary or capricious. (Ironwood v. Solomon.) The criteria for testing the reasonableness of an exercise of power by an association are (1) whether the reason is rationally related to the protection, preservation or proper operation of the property and the purposes of the Association as set forth in its governing instruments and (2) whether the power was exercised in a fair and nondiscriminatory manner. (Laguna Royale v. Darger.)
- Procedural Due Process. This form of due process requires that procedures used for determining violations and imposing penalties be fair. Elements of procedural due process include: (1) giving the accused notice of the alleged violation; (2) providing a reasonable opportunity for the person to defend themselves; and (3) giving the accused an opportunity to examine and refute the evidence. (Civ. Code §5855; Civ. Code §4935(b).)
A. Pre-Hearing Issues. Before hearings can occur, the Davis-Stirling Act impose various requirements. In addition, questions regarding tenants and discovery often arise.
- Notice of Rules. The association must first adopt and publish Rules & Regulations. In addition, a statement describing the association’s discipline policy, if any, including any schedule of penalties for violations of the governing documents must be annually sent to all members. (Civ. Code §5310(a)(8).)
- Notice of Hearing. Unless the association's governing documents provide for a longer notice period, the person accused of violating the rules must be given written notice of the violation and hearing by personal delivery or first-class mail, at least 10 days prior to the meeting at which monetary penalties are imposed. (Civ. Code §5855.) The notice must contain the following:
a. The date, time, and place of the hearing,
b. The nature of the alleged violation for which a member may be disciplined, and
c. A statement that the member has a right to attend the hearing and present evidence in his/her defense. (Civ. Code §5855(b); see sample notice.)
- Tenants. There is no requirement that the association give notice to a tenant of a violation hearing. If the owner wants to notify the tenant, that is at the owner's discretion.
- Pre-Hearing Discovery. There is no right of pre-hearing discovery, document production, interrogatories, requests for admissions, depositions or the like.
B. Disciplinary Hearings. Disciplinary hearings are sometimes called "Show Cause" hearings. Disciplinary hearings do not have to be run like a court trial to satisfy due process considerations. As with small claims court hearings, the hearing and disposition of a disciplinary actions should be informal, the object being to address rules violations promptly, fairly, and inexpensively. (See similar language for small claims actions at Code Civ. Proc. §116.510.)
- Executive Session. Hearings should always be held in executive session.
- Appearance at Hearing. Members also have the right to submit their defense in writing rather than make an appearance before the board. (Corp. Code §7341(c)(3).)
- Evidence. As in small claims court hearings, the person subject to discipline has the opportunity to examine and refute evidence produced at the hearing. (See Anonymous Complaints.)
- Witnesses. Witnesses can appear at the hearing but are not always necessary. If witnesses do appear, there is no right to directly cross-examine the witness. As with small claims hearings, the accused can direct questions to the hearing officers (usually the board of directors).
- Lawyers. Members do not have a right to a lawyer to represent them in disciplinary hearings. However, depending on the hearing model adopted by an association, a lawyer could be present.
C. Post-Hearing Requirements. The board's decision must be fair and reasonable, not arbitrary. The hearing and the board's decision should be geared toward modifying a person's behavior and not to punish.
- Findings. The board should make "findings" to support the board's decision regarding the alleged violation. (Ironwood v. Solomon.) For example, the board records in its executive session minutes that:
Although Mr. Smith denied the allegation, based on the testimony of security guard Alex Mann and the picture he took of the violation, the board finds that Mr. Smith's car was parked next to a fire hydrant in violation of Rule 4(b) of the Association's Rules & Regulations. Because this is a safety violation and it is also the second violation by Mr. Smith (with no extenuating circumstances offered by Mr. Smith for his violation), the Board voted to impose a fine of $500 against Mr. Smith.
The above sample findings show substantive due process by the association, i.e., the fine is reasonable and rationally related to the operations of the association.
- Notice of Decision. Unless the association's governing documents provide for a shorter notice period, notice of the board's decision must be given by personal delivery or first-class mail within 15 days following the board's decision. (Civ. Code §5855(c).) The letter of decision should include the board's findings. In other words, it should include its factual findings and how it arrived at its decision. (Ironwood v. Solomon.)
- Appeals and IDR. Depending on the circumstances, owners who have been disciplined may have a right to appeal the decision. Internal and alternative dispute resolution may have a role in the disciplinary process. See flowchart.
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