Removing Incarcerated Director
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REMOVING INCARCERATED DIRECTOR

QUESTION: One of our board members got into an argument in a bar (far from our association, with no connection to HOA business) and killed someone. He also shot a second person.

He was quickly incarcerated and will probably stay behind bars for a long time. The board immediately appointed a replacement director but the confined director never resigned. In such a terrible situation, is a written resignation still needed?

ANSWER: The Davis-Stirling Act does not address director resignations. For that, we must turn to the Corporations Code. It states that, "Any director may resign effective upon giving written notice to the chairman of the board, the president, the secretary or the board of directors of the corporation...." (Corp. Code §7224(c).)

Still on the Board. If your incarcerated director has not resigned, he is still on the board. Replacing him without a resignation would be deemed an ultra vires act and invalid. An arrest is not sufficient reason to remove a director from the board. It is possible an investigation would exonerate the director and he could resume his duties on the board. From what you described, that seems unlikely, so let's look at your options.

Vacating a Seat. Sometimes, an association's bylaws will authorize the board to vacate a director's seat under certain circumstances; if, for example, a director fails to attend a specific number of meetings. We routinely add such provisions when we restate an association's bylaws. Without them, a board cannot remove a fellow director, only the membership can.

Removing a Director. For members to recall a director, the association must hold a recall election. Once can be called by the board or by the membership. If the bylaws or CC&Rs provide for cumulative voting, the membership may have difficulty recalling a director. A small minority of supporters can block his removal. That means resignation is your best option.

Resignation. One of your directors should visit your confined director and bring a simple "I resign from the board of directors effective immediately" for him to sign. If, for some reason, that is not possible, an oral resignation should be sufficient, either during the visit or by phone. I suspect your director will readily resign. If an oral resignation is all you can get, record that in the minutes. Doing so creates a written record of the resignation. It is unlikely anyone will challenge the resignation and equally unlikely a court would reject the resignation under the circumstances.

Recommendation. You should amend your bylaws to add director qualifications and remove cumulative voting. I also recommend eliminating quorum requirements for electing directors. Each of these changes will make your elections run more smoothly and give you the tools you need to remove directors.

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

Adams Stirling PLC