A member’s right to inspect and copy various association records is not absolute and may be limited in certain circumstances. (See “Records Not Subject to Inspection.”). However, Corporations Code Section 8334 gives each board member (each director of the association) the “absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation of which such person is a director.” Thus, unlike regular members of an association, directors generally (1) are not subject to the requirements of Civil Code Section 5205 (i.e., do not have to pay for the costs in producing records), and (2) have broader record inspection rights than regular members (i.e., can inspect executive session minutes).
Notwithstanding the term “absolute” under Corporations Code Section 8334, a director’s record inspection rights may still be limited in order to avoid conflicts of interest, to protect privacy concerns, and/or to protect the association from tortious acts and breaches of fiduciary duties by the director.
Avoid Conflicts of Interest:
“…a corporate director does not have the right to access corporate documents covered by the attorney-client privilege that were generated in defense of a suit for damages that the director filed against the corporation.” (Tritek Telecom, Inc. v. Superior Court (2009) 169 Cal.App.4th 1385, 1387.)
A director’s absolute right to inspect and copy corporate records “is subject to exceptions and may be denied where a disgruntled director announces his or her intention to violate his or her fiduciary duties to the corporation…” (Tritek at 1390.)
A director’s record inspection rights may be limited by the association’s duty to protect the privacy rights of its members in their voting decisions. (Chantiles v. Lake Forest II Master HOA (1995) 37 Cal.App.4th 914, 927 (“…the Association had a duty to guard the privacy of rights of its members in their voting decisions…the Association’s refusal to allow [the director] the unfettered access to the ballots which he demands was not unjustified.”).)
Protect from Tortious Acts:
“Where the corporation determines that an unfettered inspection [by the director] will result in a tort against the corporation, it may decline the request for inspection.” (Havlicek v. Coast-to-Coast Analytical Services, Inc. (1995) 39 Cal.App.4th 1844, 1856.)
A former director loses his/her broad record inspection rights once the former director loses his/her status as a sitting (current) director of the association (i.e., no longer serves on the board.) This is true notwithstanding the fact that the desired record pertains to a decision or action of the former director or of the board while the former director was serving:
“…current director status is required to pursue current inspection rights. This line of cases will not allow enforcement of any absolute director’s right of inspection to a former corporate director, when the reason for the inspection right (holding office and performing fiduciary duties as a director) no longer exists.” (Wolf v. CDS Devco (2010) 185 Cal.App.4th 903, 919.)
Related Case Law
- Wolf v. CDS Devco
(2010) 185 Cal.App.4th 903
[Director Inspection Rights; Former Director] A director loses his/her broader record-inspection rights upon loss of status as a director.
- Havlicek v. Coast-to-Coast Analytic Services, Inc.
(1995) 39 Cal.App.4th 1844
[Director Inspection Rights; Breach of Duties] A director’s rights to inspect corporate records may be denied where the corporation believes such rights will be used to commit a tort against the corporation.
- Tritek Telecom, Inc. v. Superior Court
(2009) 169 Cal.App.4th 1385
[Director Inspection Rights; Attorney-Client Privilege] A director’s right to inspect corporate records does not include the right to access attorney-client privileged information that was generated in defense of a suit filed by the director against the corporation.
- Chantiles v. Lake Forest II Master Homeowners Association
(1995) 37 Cal.App.4th 914
[Director Inspection Rights; Privacy] A director’s record inspection rights may be limited by the association’s duty to protect the privacy rights of its members in their voting decisions.