*New Resource

When Senate Bill 563 ("SB 563") was signed into law this month, the fears of many people within the Community Association industry came true. The new legislation purports to provide better homeowner awareness of the affairs of their respective Associations and the ways in which those affairs are being managed by their elected Boards of Directors. However, many industry professionals and Board members are concerned that the new legislation will restrict a Board's ability to take the actions required to efficiently address the day-to-day issues that arise within their communities.

SB 563 amends several sections of the California Civil Code--most notably Section 1363.05, known as the "Common Interest Development Open Meeting Act." The amendments include new restrictions on actions without a meeting and what matters may be considered at a meeting. The amendments also provide new requirements with respect to meetings held in executive session as well as requirements for meetings held electronically or by teleconference.  

In response to requests made by our clients and industry partners, we have published a new resource on SB 563 which outlines these new restrictions and requirements. The resource, entitled "Senate Bill 563: Boards and their Business", is available for download from our library.

Asked - Upon being elected to serve on our Association's Board of Directors, our Management company gave me "Ethics Rules" to sign. These rules are not a part of our CC&Rs or our Bylaws. Am I required to sign the rules in order to serve on the Board?

Answered - Generally no. Association governing documents typically include a set of Bylaws that govern the corporate structure of the Association and the functions and duties of its Board of Directors. It is not uncommon for Bylaws to set certain eligibility requirements for Association members to serve as Directors. Such eligibility requirements can include, for example, ownership of property within the Association, being current on one's monthly assessments and not being in violation of any of the Association's rules or restrictions. We encourage our clients to adopt these types of eligibility requirements to help ensure those members elected to serve on the Board set a good example for the rest of the membership.

Requesting that Directors subscribe to certain "Ethics Rules" or "Codes of Conduct" is always an option available to an Association's Board of Directors. Such rules may help to provide guidance to new Directors who wish to better understand the scope of their responsibilities. However, in order to make subscribing to such rules a requirement to serving on the Board, it must be contained in the Association's Bylaws or elsewhere in the Association's governing documents. Every situation is different, however, and a definitive answer would require examining your Association's governing documents and the procedures used in adopting the Ethics Rules at issue.

To submit an online question to Tinnelly Law Group, click here.

An Association's Board of Directors exercises substantial authority and control over the direction and financial well-being of the Association. Proactive and concerned Association members often seek election to the Board of Directors in order to deal with perceived problems in the community. Unfortunately, these elections sometimes result in disagreements and disputes between competing candidates. These disputes may become so heated and contentious that individuals result to levying harmful statements and allegations against one another.

The question addressed in the recent decision of Cabrera v. Alam, (Jul. 27, 2011) No. G044023, 2011 DJDAR 11265, is whether such statements and allegations can give rise to a claim of defamation, or whether the statements are "privileged" communications and therefore a complete defense to a claim of defamation.

In Cabrera, Defendant Alam was running for reelection to the Board of Directors. Plaintiff Cabrera served as a previous president of the Association and was actively campaigning against Alam in favor of his competitors. During the Association's annual meeting and election, Alam accused Cabrera of defrauding and stealing money from the Association. Cabrera based his defamation cause of action against Alam on these accusations.

Alam filed an Anti-SLAPP motion to strike the claim under California Code of Civil Procedure Section 425.16. The trial court denied the motion on the basis that Alam had failed to show that the defamatory statements he made arose out of protected activity.

In reversing the trial court, the Court of Appeals found that Alam's statements were indeed protected activity "because they were made in a public forum at the [Association's] annual meeting and concerned an issue of public interest, namely, the qualifications of a candidate for office in the [A]ssociation."  

These Anti-Slapp cases are interesting when exploring the distinctions between Associations and governmental bodies. While Associations are typically recognized as private, self-regulating entities, there are certain scenarios where California Law recognizes the parallel between private Associations and governmental bodies that serve public functions. In this case, an Association meeting was recognized as a "public forum" and statements regarding one Association member at the meeting constituted an issue of "public interest".