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." (Cohen v. Kite Hill Community Assn (1983) 142 Cal.App.3d 642, 651.)
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. 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: (i) giving the accused notice of the alleged violation; (ii) providing a reasonable opportunity for the person to defend themselves; (iii) knowing the identity of the accuser; and (iv) giving the accused an opportunity to examine and refute the evidence. (Applebaum v. Board of Directors (1980) 104 Cal.App.3d 648, 657; Cason v. Glass Bottle Blowers (1951) 37 Cal.2d 134, 144; Civ. Code §5855; Civ. Code §4935(b); Corp. Code §7341(c)(3).)
A. Pre-Hearing Due Process.
- Notice of Rules. The association must adopt and publish Rules & Regulations.
- Notice of Procedures. The procedure for imposing penalties or suspending membership privileges must be in the governing documents. In the alternative, it must be annually sent to all members. (Corp. Code §7341(c)(1).)
- 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.) If the governing documents specify a longer notice period, the longer period must be used. For suspension of privileges, the notice must be at least 15 days prior to the hearing. (Corp. Code §7341(d).) The notice must be reasonably calculated to provide actual notice to the member. (Corp. Code §7341(d).) 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.)
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.
B. Disciplinary Hearing Due Process. Disciplinary hearings are sometimes called "Show Cause" hearings.
- Defense. The accused has the right to know the identity of his/her accuser and must have an opportunity to examine and refute evidence. This may include questions during the 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).)
- 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.
- Executive Session. Hearings should always be held in executive session.
C. Post-Hearing Due Process.
- 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); Corp. Code §7341(c)(2).) 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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