A member’s right to inspect and copy various association records includes the inspection and copying of the association’s membership list. (Civ. Code § 5210(b)(6); Corp. Code § 8330.) The membership list would include the “name, property address, mailing address, [and] email address, as collected by the association in accordance with Section 4041” of all members except for those who have opted-out of the membership list pursuant to Civil Code Section 5220. (Civ. Code § 5200(a)(9).)
Purpose for the Request
The member requesting the membership list must state the purpose for the request, which must be reasonably related to his or her interest as a member. (Civ. Code § 5225.) If the board reasonably believes that the list will be used for another purpose, it may deny the member’s request. If the request is denied, in any subsequent action brought by the member pursuant to Civil Code Section 5235 the association will have the burden to prove that the member would have used the list for purposes unrelated to his interest as a member. (Civ. Code § 5225; Tract No. 7260 Association, Inc. v. Parker (2017).)
Liability for Misuse of Membership List
The membership list is a corporate asset of the association. (Corp. Code § 8338(a).) Pursuant to Corporations Code Section 8338(a), without consent of the board, the membership list may not be:
(1) Used to solicit money or property unless such money or property will be used solely to solicit the vote of the members in an election to be held by their corporation.
(2) Used for any purpose which the user does not reasonably and in good faith believe will benefit the corporation.
(3) Used for any commercial purpose or purpose in competition with the corporation.
(4) Sold to or purchased by any person.
Any person who misuses a membership list is liable to the association for any damage caused by the misuse, including punitive damages for fraudulent or malicious misuse of the membership list. (Corp. Code § 8338(b); See also “Misuse of Association Records.”) Where the association prevails in an action based upon the misuse of the membership list, the association may recover its costs and expenses, including reasonable attorney’s fees. (Corp. Code § 8338(d).)
Petition to Set Aside Request
Where an association believes the membership list will be used for an improper purpose, it may petition the superior court for an order setting aside the demand for the membership list. (Corp. Code § 8331.)
Copying & Mailing Costs
The association may bill the requesting member for the direct and actual costs of copying and mailing the membership list. The association must inform the member of the amount of the copying and mailing costs, and the member must agree to pay those costs, before the association copies and mails the membership list. (Civ. Code § 5205(f); See also “Fees & Costs for Records.” )
Deadline for Production
The membership list must be provided within the time frame specified in Corporations Code Section 8330 (ten (10) business days). (Civ. Code § 5210(b)(6); See also “Deadlines for Producing Records.”)
Email Addresses
Member email addresses are included within the scope of information contained on an association’s membership list, where such email addresses “were collected by the association in accordance with Section 4041.” (Civ. Code § 5200(a)(9).) Civil Code Section 4041 addresses the annual notice of owner contact information that each owner is required to submit to the association, and which the association must solicit from all members at least thirty (30) days prior to the distribution of the association’s annual budget report. (Civ. Code § 5200(a)(9).)
Membership List Opt-Out
Any member of the association may opt out of having their contact information included on the association’s membership list by notifying the association in writing of the member’s to be contacted by an alternative process. (Civ. Code § 5220.)
Related Links
Access to HOA Membership List Must be for a Proper Purpose – Published on HOA Lawyer Blog (April, 2017)
Email Addresses in Membership Records – Published on HOA Lawyer Blog (December, 2010)
Guarding Your HOA Members’ Contact Information – Sample Privacy Policy and Membership List Opt-Out Form provided by Tinnelly Law Group
Worldmark v. Wyndham Resort Dev. Corp.
[Membership List; Email Addresses] The “addresses” of members which must be disclosed with a member’s request to inspect the membership list pursuant to Corp. Code § 8330(a) includes the members’ email addresses.
Romero, Park & Wiggins, H. Troy Romero; Baker Hostetler, Peter W. James, Thomas D. Warren and Lisa I. Carteen for Plaintiff and Appellant.
Snell & Wilmer, Richard A. Derevan, Steven T. Graham and Todd E. Lundell for Defendant and Appellant.
Robin D. Miller, in pro. per., for Defendant and Respondent.
Girard Gibbs, Jonathan K. Levine and Elizabeth C. Pritzker for Interveners and Respondents.
OPINION
BLEASE, Acting P. J.—
California’s Corporations Code grants members of a nonprofit mutual benefit corporation the right to inspect and copy, or obtain for a reasonable charge, the record of the names, addresses, and voting rights of the members of the corporation upon 10 business days’ written notice, provided it is for a purpose reasonably related to the person’s interest as a member. (Corp. Code, § 8330, subd. (a)(1), (2).)[1] Such a record may be kept in electronic form. (§ 8320.) A record that is “written” includes an “electronic communication[]” (§§ 5079, 8310) and an electronic communication includes an e-mail. (§§ 5079, 20.)
Appellant WorldMark, The Club (WorldMark), is a California nonprofit mutual benefit corporation owned by its more than 260,000 members. It owns vacation time-share resorts throughout North America, including California, and the Pacific. Respondent Wyndham Resort Development Corporation (Wyndham) is an Oregon corporation that manages the operations of WorldMark’s resorts pursuant to a management agreement.
A WorldMark member, respondent Robin Miller, invoked section 8330 to demand that WorldMark “make available” to its members a petition proposing amendments to the corporation’s bylaws. When WorldMark refused to do [1022] so, Miller demanded a right to inspect and copy WorldMark’s membership records, including the e-mail addresses of its members, for the purpose of distributing his petition to amend the bylaws. E-mail is one of the methods that WorldMark uses to communicate with its members. When WorldMark denied the demand, it proposed the use of a third party mail house to send the petition by conventional mail as a “reasonable alternative” that achieved the purpose identified in Miller’s demand. (§§ 8330, subds. (b) & (c), 8331, subd. (a).)
When Miller refused, WorldMark petitioned the superior court to set aside Miller’s demand (§ 8331, subd. (a)) on the ground it had satisfied its statutory obligations in proposing an alternative (§ 8330, subd. (b)(1)). The trial court denied the petition because the alternative was not reasonable as it was too costly and ordered WorldMark to allow Miller to inspect and copy WorldMark’s membership register, including the names, addresses, e-mail addresses, telephone numbers, and voting rights of its members. (§ 8331.) This appeal followed.
WorldMark’s primary contention is that there is no statutory authority for the trial court’s order requiring it to produce its member e-mail addresses. We shall conclude that the term “members’ … addresses,” in section 8330, subdivision (a)(1), which a corporation is required to disclose, is sufficiently broad to encompass e-mail addresses in light of the section’s purpose and in light of allied sections that allow a corporation to communicate with its members for the purpose of the corporation’s business.
We shall modify the trial court’s order to provide that the information Miller seeks may be made available to him electronically at his option, that no further written demand is necessary, and affirm the order as modified.
FACTUAL AND PROCEDURAL BACKGROUND
WorldMark is a California nonprofit mutual benefit corporation. It is owned by its more than 260,000 members. WorldMark owns vacation time-share resorts in California and throughout North America and the Pacific. WorldMark members own credits, rather than a fractional ownership interest in a particular resort.
Wyndham is an Oregon corporation that manages the operations of WorldMark’s resorts pursuant to a management agreement. All of WorldMark’s properties were purchased and developed by Wyndham. Wyndham transferred ownership of the resorts to WorldMark, and retained [1023] the exclusive right to market and sell the original credits created by the development of each resort. WorldMark members may also advertise, sell, and transfer their credits to others.[2] Other companies also compete with Wyndham for the resale of existing time-share credits.
Miller’s first attempt to contact other WorldMark members is evidenced by a letter dated August 8, 2008, addressed to the WorldMark board of directors. Enclosed with the letter was a membership petition with proposed resolutions attached. Miller requested that the board make the petition available to the membership via WorldMark’s e-mail list in order to have the measures voted on at WorldMark’s annual meeting, which was scheduled to be held on October 23, 2008. Miller did not request a list of WorldMark member e-mail addresses, but merely requested that the board distribute his petition via e-mail. Miller indicated that by including the measures at the board’s annual meeting, the significant expense of calling a special meeting would be avoided.
Miller’s proposed petition expressed a concern over the domination of WorldMark’s board of directors by current or former Wyndham executives, the failure to conduct meetings at which member motions could be raised and voted upon, the absence of any independent owners on the board, and the lack of meaningful member representation in the governance of WorldMark. The proposed resolutions would, if passed, revise WorldMark’s bylaws to address these concerns.
The response to Miller’s letter came from Stephanie Aardal, WorldMark’s director of board and owner relations. Aardal’s letter stated that Miller’s request did not comply with section 3.3(c) of WorldMark’s bylaws requiring a written request signed by members holding 5 percent of the voting power.[3] Miller’s request was declined.
[1024] Miller sent a second letter on August 25, 2008. He urged the board to reconsider, and noted that the board could call a meeting without obtaining any signatures, and he was requesting that the board do so. He also noted that no signatures were required to distribute his petition to the membership.
Aardal answered Miller’s letter, and again informed him that it was his responsibility to gather the minimum 5 percent owner support to bring the petition to the membership. Aardal stated that the board would take appropriate action when he submitted the names of those signing the petitions and copies of the original signed petitions, provided he had received a valid number of signatures.
Miller responded by letter (his third) on September 9, 2008. Since the board refused the request to distribute his petition, he gave notice that he wanted an opportunity within five days to personally inspect WorldMark’s membership records, including its e-mail list. He acknowledged that he would use the information only to distribute his petition.
Instead of scheduling an opportunity for Miller to inspect the membership register as provided in the WorldMark bylaws, Aardal wrote back to Miller informing him that the membership register did not include e-mail addresses, and enclosing a copy of WorldMark’s “Policies and Procedures” regarding the inspection of WorldMark’s membership roster. The Policies and Procedures were approved by WorldMark’s board of directors, but were not part of the bylaws.
The document stated that the policy of the board was that members not be allowed to inspect or copy the membership roster “because of privacy concerns and because [of] the roster’s tremendous commercial value ….” Instead, the board would provide a “reasonable alternative as provided by California law.” The alternative procedure required that the member deliver to WorldMark’s offices a copy of the materials he or she desired to be sent to the other members. If WorldMark determined that the content was not commercial in nature and was reasonably related to the affairs of the corporation, it would contact the member demanding payment for WorldMark’s cost of providing the information, then upon receipt of payment, would provide the member with the name of a mail house to contact in order to arrange the mailing of the materials at the owner’s expense.
Miller sent a fourth letter on September 26, 2008, and for the first time referenced section 8330. The letter stated in part:
“Notwithstanding the Club’s refusal to acknowledge the hundreds of member signed Petitions submitted over the past month, you’ve been made [1025] amply aware of the substantial owner voting power endorsing this Petition and supporting its distribution to the membership.
“Be advised that this demand for membership access has been endorsed by WorldMark owners holding voting rights well in excess of the `authorized number’ specified in section 5036 of the California Corporation[s] Code. Be further advised that pursuant to section 8330 of that Code the undersigned, individually & collectively, hereby demand access to the Club’s records of the member names, voting rights and corresponding e-mail addresses for personal inspection & copying at the Redmond office within five (5) business days from the date of this communication. Further evidence of endorsement is now being executed and sent to your attention.
“The purpose for the requested information is to enable a timely & cost effective electronic distribution of the Membership Petition prior to the Annual Meeting set for October 23, 2008.”
On October 7, 2008, the WorldMark board of directors sent Miller a letter detailing its “serious concerns about the detrimental effect the petition measures would have on the Club if implemented.”
On October 10, 2008, Miller went to WorldMark’s offices in Redmond, Washington, and presented WorldMark with a list of members purporting to constitute the authorized number to make a demand under section 8330. Miller demanded the e-mail addresses of the members.
On October 15, 2008, Aardal sent Miller a letter acknowledging the receipt of the signed membership petitions, but rejecting Miller’s request to disclose e-mail addresses. Aardal stated this time that the e-mail addresses were owned by Wyndham, and that Wyndham “strenuously” objected to their production. The letter stated that it would “take some time” to determine whether the petitions submitted by Miller satisfied the authorized number of members. WorldMark again proposed the alternative of providing the membership list to a mailing house, which would distribute the petitions, and further agreed to pay 50 percent of “the costs associated with administering the mailing, including processing, presorting, addressing and delivering your mailing” to the post office. Miller would, however, be responsible for providing the finished printed materials and paying the postage.
On October 22, 2008, Miller sent a fifth letter to WorldMark. He rejected the alternative WorldMark offered because (1) it was not responsive to his stated objectives, (2) it lacked the efficiency of e-mail communication, (3) it [1026] lacked the cost-effectiveness of e-mail communication, (4) the cost of the alternative was unreasonable, and (5) the alternative could not achieve the stated objectives in a timely manner. Miller again demanded compliance with his request, referencing section 8331.
The same day (Oct. 22, 2008) WorldMark filed its petition under section 8331 to set aside the demand for inspection and copying. The petition alleged WorldMark had offered Miller a reasonable alternative, but that he had rejected the alternative and “escalated” his demand to include e-mail addresses. WorldMark alleged (1) Miller had not satisfied the requirements of section 8330 in submitting his request, (2) e-mail addresses were not part of the membership list, therefore not subject to disclosure under section 8330, subdivision (a)(1), (3) WorldMark did not own the e-mail address list, (4) WorldMark believed the e-mail addresses would be used for an improper purpose, and (5) the alternative proposed by WorldMark was reasonable.
On October 27, 2008, the trial court set a hearing and stayed the production of any information pending the hearing. It was, of course, impossible at this point to get any information to the membership in advance of the October 23, 2008, meeting. On October 30, 2008, the Wixons filed a motion for leave to intervene, and applied to stay the hearing pending a ruling on their motion. The Wixons asserted that they were plaintiffs in a class action against Wyndham in federal court. The federal action alleged, inter alia, that WorldMark directors refused to provide WorldMark members who were attempting to mount a proxy drive with access to the WorldMark membership register, and that this was part of a long effort to manipulate WorldMark board elections to ensure Wyndham’s continued domination of WorldMark.
The trial court denied interveners’ application to stay the hearing, stating that interveners’ rights would not be affected by disposition of the case, since it bore only on Miller’s rights. However, the trial court granted the motion to intervene.
On January 23, 2009, the trial court denied WorldMark’s application for a protective order, and ordered WorldMark to make the membership register, including names, addresses and e-mail addresses, telephone numbers, and voting rights available for inspection and copying.
WorldMark appealed the order, and petitioned this court for a stay of the trial court order pending appeal. This court initially granted the stay pending appeal. However, Miller and the Wixons moved to vacate the stay after WorldMark placed a ballot proposal before its membership seeking to retroactively amend the bylaws to authorize WorldMark to respond to any [1027] request to inspect and copy the membership register by distributing the member’s message through a mail house or other third party distributor.
In response to the motion to vacate, this court modified the stay to permit enforcement of the trial court’s order except insofar as the order required that e-mail addresses be subject to disclosure.
Five days after we modified the stay, the attorney for interveners sent a letter to WorldMark formally demanding production in electronic form of the membership register, including names, addresses, and telephone numbers.[4]
WorldMark responded to interveners by letter from its counsel refusing the demand. The excuses given were that (1) the trial court order required only inspection and copying, not production in electronic form, (2) the attorney’s representation that the information would not be used for an improper purpose was insufficient, (3) the letter did not specify the purpose of the request, and (4) the member had not given reasonable notice. The letter further stated that WorldMark had “grave concerns about the process it has been afforded in the Court of Appeal,” and that notwithstanding its bylaw provisions, “WorldMark’s constituent documents do not permit WorldMark to disclose the Membership Register because of the coalescence of the Bylaws and the laws of other states where WorldMark has members and properties.”
On November 19, 2009, Miller personally sent a letter to WorldMark renewing his demands for access to the membership list, including the mailing addresses, voting rights and telephone numbers of the members. He reiterated his declaration that he would comply with all restrictions on terms of use of the information as contained in the bylaws and ordered by the court.
WorldMark responded to Miller’s letter by letter from its counsel advising Miller that there were “significant new facts and circumstances” bearing on his request. The letter referenced a Florida judgment prohibiting the copying and distribution of the names, addresses, or e-mail addresses of any WorldMark members without their consent. The letter further stated that since Miller had made several requests for information, none of which complied with the bylaws, WorldMark did not know to which request to respond. It further stated Miller had not complied with the conditions of the trial court order.
The Florida judgment to which WorldMark referred was entered in a case filed by five WorldMark members, and referenced a Florida law prohibiting the disclosure of the names, addresses, or e-mail addresses of any members. [1028] WorldMark filed its answer to the Florida complaint two days after the complaint was filed, and essentially admitted all the allegations of the complaint.[5] In response to the Florida plaintiffs’ motion for judgment on the pleadings, WorldMark submitted no vigorous opposition, but specifically referenced the California action against Miller and indicated that without a judicial declaration under Florida law it might be compelled to produce the membership register under order of the California court. Accordingly, a final judgment was entered in the Florida matter granting the plaintiffs a permanent injunction from the production of WorldMark’s membership register. The Florida judgment was entered on November 4, 2009, a mere nine days (seven business days) after the action was filed.
DISCUSSION
I. Rights of Inspection
(1) Section 8330 provides that a member of a mutual benefit corporation has the right to “[i]nspect and copy the record of all the members’ names, addresses and voting rights, at reasonable times, upon five business days’ prior written demand upon the corporation which demand shall state the purpose for which the inspection rights are requested ….” (§ 8330, subd. (a)(1).) A member may also “[o]btain from the secretary of the corporation, upon written demand and tender of a reasonable charge, a list of the names, addresses and voting rights of those members entitled to vote for the election of directors …. The demand shall state the purpose for which the list is requested. The membership list shall be made available on or before the later of ten business days after the demand is received or after the date specified therein as the date as of which the list is to be compiled.” (§ 8330, subd. (a)(2).)
The corporation may deny a member or members access to the list if it “reasonably believes that the information will be used for another purpose, or where it provides a reasonable alternative pursuant to subdivision (c) ….” (§ 8330, subd. (b)(1).)[6]
[1029] Both sections 8330, subdivision (b)(1) and 8331, subdivision (f) provide that in any subsequent action to enforce the rights of a member to inspect membership records of the corporation, the corporation has the burden of proving that the member will allow use of the information for purposes unrelated to the person’s interest as a member or that the alternative method it proposes will reasonably and in a timely manner achieve the purpose set forth in the demand.
Thus, in reviewing the trial court’s order, we must determine (1) whether the trial court’s determination that the member will not permit the membership list to be used for an improper purpose is supported by substantial evidence, and (2) whether the alternative proposed by the corporation was reasonable.
A. Substantial Evidence Supports Miller’s Proper Purpose
The trial court’s order is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of the correctness of the order. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133 [275 Cal.Rptr. 797, 800 P.2d 1227].) “When a finding of fact is attacked on the ground that there is not any substantial evidence to sustain it, the power of an appellate court begins and endswith the determination as to whether there is any substantial evidence contradicted or uncontradicted which will support the finding of fact.” (Primm v. Primm (1956) 46 Cal.2d 690, 693 [299 P.2d 231].) “Substantial evidence is evidence that is `reasonable, credible, and of solid value’; such that a reasonable trier of fact could make such findings. [Citation.] [¶] It is axiomatic that an appellate court defers to the trier of fact on such determinations, and has no power to judge the effect or value of, or to weigh the evidence; to consider the credibility of witnesses; or to resolve conflicts in, or make inferences or deductions from the evidence.” (In re Sheila B. (1993) 19 Cal.App.4th 187, 199 [23 Cal.Rptr.2d 482].)
Miller repeatedly asserted in his communications to WorldMark his intent to use the membership information solely to contact other members regarding his proposed petition to amend the corporation’s bylaws. WorldMark’s contrary evidence consisted of its claim that Bill Stephan, one of the 36 members who signed an endorsement of Miller’s petition, was the director of sales and marketing for a company in direct competition with Wyndham.
[1030] Inherent in the trial court’s ruling was the finding that WorldMark’s speculation in this regard was not sufficient to meet its burden of proving that “the member will allow use of the information for purposes unrelated to the person’s interest as a member ….” (§ 8330, subd. (b)(1).) Miller’s representations regarding his intent to use the information solely for a proper purpose constitutes sufficient evidence to support the trial court’s finding on that issue.
B. The Alternative Was Unreasonable
The trial court made several findings with respect to the reasonableness of the alternative presented by WorldMark. It found that the cost to Miller of the proposed alternative would be $1 per member for alternative mailing, resulting in a cost of over $260,000.[7] It also found the alternative did not comport with section 7.1 of WorldMark’s bylaws, which provides that the membership register shall be made available to any member for inspection and copying upon reasonable notice. The trial court found that the Policies and Procedures for requests to inspect and copy the membership register passed by the board were a violation of the bylaws that had not been shown to be in compliance with the provisions for modification of the bylaws.
In determining whether the alternative offered by WorldMark was reasonable, we look to the purposes of the statutory scheme, as well as the purpose of Miller’s request. The obvious purpose of the statute is twofold: to allow members access to the membership list for purposes related to their interests as members, and to protect the sensitive nature of a nonprofit corporation’s membership lists.
The comments based on the legislative committee summary to section 6330, which deals with public benefit nonprofit corporations and which contains language virtually identical to section 8330, states in part:
“A danger exists in allowing too free an access to membership lists; however, the potential for abuse must be balanced against a member’s legitimate needs and rights to utilize lists in election contests and for purposes reasonably related to a member’s interest.
[1031] “The old nonprofit law allowed one member to gain access to a membership list for a purpose reasonably related to the member’s interest as a member. However, a member had to bring suit to enforce this right if the corporation refused to provide the list. The new nonprofit law adopts the former law as to the rights of a single member except that it allows the corporation to provide a `reasonable alternative.’ …
“… The committee felt that the above provisions would draw a proper balance between a member’s need for adequate access to membership lists and the need of a corporation to protect itself from wrongful exploitation of an important asset.” (Coms. Based on Legis. Com. Summary, Deering’s Ann. Corp. Code (2009 ed.) foll. § 6330, p. 209.)
We derive from Miller’s numerous requests that in addition to wanting the membership list for the proper purpose of contacting the membership about bylaw changes, he specifically requested e-mail addresses in order to distribute his materials in an inexpensive and timely manner, so they could be considered at the annual meeting of the WorldMark board scheduled to occur approximately two and one-half months after his first request.[8] The process proposed by WorldMark would have served its own interest in protecting the membership list, but would have failed to satisfy either of the interests asserted by Miller.
(2) The cost of contacting and distributing information to other members is a legitimate factor in determining the reasonableness of any alternative. It is especially pertinent to the consideration of this case, where the membership of the corporation is extremely large, making the cost of contacting the other members by conventional mail such a significant factor that, as a practical matter, a member is completely prohibited from attempting to contact other members for corporate business. The costs go even higher when a third party is paid to physically sort, copy, and mail the information.
The proposed alternative also would not have accomplished Miller’s purpose in a timely manner. Although Miller sent his original request some two and one-half months prior to the annual meeting, WorldMark did not propose its alternative until October 15, 2008, only eight days before the scheduled meeting.[9] At that point the only way to transmit the information in a timely manner was electronically.
[1032] WorldMark argues that the trial court erred in assuming that member e-mail addresses were required to be produced under section 8330. WorldMark reasons that the cost of mailing the information through a third party mail house would not have been significantly more expensive than Miller’s cost of mailing the information himself, especially since WorldMark offered to share the cost associated with using the mail house.
However, we shall conclude in the next part that the language of part 8330, read in the light of allied sections, is sufficiently broad to encompass e-mail addresses in light of the obvious purpose of the statute. Thus, in determining what constituted a reasonable alternative for purposes of sections 8330 and 8331, the trial court could consider options that involved the electronic transfer of the information to the members, including e-mail.
II. E-mail Addresses
WorldMark argues it had no obligation to disclose the e-mail addresses of its members because neither section 8330 nor its own bylaws required it to do so, and because it does not own the membership roster, which it claims is owned by Wyndham.
WorldMark’s claim that e-mail addresses are not part of its membership register, if accurate, is relevant only to its disclosure requirements under its own bylaws, since section 8330 et seq., do not include the term “membership register.” Even if e-mail addresses are not considered part of the membership register under WorldMark’s bylaws, this fact would not invalidate WorldMark’s obligation to disclose the e-mail addresses as required by statute or under other terms of its bylaws.
Section 7.1(a) of the WorldMark bylaws states that the “Membership register (including mailing addresses and telephone numbers)” must be made available for inspection and copying by any member. However, in addition to the membership register, WorldMark must also make available its articles, bylaws, declaration, rules, books of account, minutes of proceedings, “and all other records of the Program maintained by the Club or its Manager ….” (§ 7.1(a), italics added.) This inclusive language is broad enough to encompass the e-mail addresses of its members.
[1033] Moreover, as indicated, section 8330 provides for the disclosure of the members’ names, addresses, and voting rights. WorldMark argues that this language does not include e-mail addresses because the statute was enacted in 1978, and at the time it was passed the Legislature did not contemplate the inclusion of e-mail addresses. We disagree.
(3) Although section 8330 has not been amended since its enactment, allied sections within the statutes governing nonprofit corporations have been amended since the advent of electronic mail.[10] The ultimate purpose of these amendments is to allow electronic communication for the purpose of communicating with shareholders regarding the corporation’s business.
Thus section 8320 was amended in 2004, as part of legislation providing for the use of electronic communications, to provide that the “record of [the corporation] members … their names and addresses and the class of membership held by each ….[¶] … shall be kept either in written form or in any other form capable of being converted into clearly legible tangible form ….” (Id., subds. (a) & (b); Stats. 2004, ch. 254, § 27.) The distinction between a tangible form and one that is not, clearly includes an electronic form that can be made into a tangible form. This reading is supported by the simultaneous enactment of sections 8321 and 8322, which allow certain financial information of the corporation to be distributed annually via “electronic transmission by the corporation (Section 20).” (Stats 2004, ch. 254, §§ 28, 29.)
(4) In the same enactment section 5079, which applies to section 8330 by virtue of section 5002, was amended to provide that the term “[w]ritten” includes “an electronic transmission by a corporation that satisfies the requirements of Section 20.” (Stats. 2004, ch. 254, § 13.)[11] Section 20 specifically includes electronic mail within the definition of an electronic transmission.[12]
[1034] WorldMark points to other statutes that specifically reference both addresses and electronic mail addresses, and argues that these indicate the Legislature made a deliberate choice to exclude e-mail addresses from section 8330. For example, Civil Code section 1798.91, subdivision (a)(2) defines individually identifiable information to mean information that “includes or contains any element of personal identifying information sufficient to allow identification of the individual, such as the individual’s name, address, electronic mail address, telephone number, or social security number, or other information that, alone or in combination with other publicly available information, reveals the individual’s identity.” (Italics added.)
(5) However, the term “address” as used in section 8330 is sufficiently broad to include e-mail addresses. (6) Even before the advent of the Internet and electronic mail, the term “address” was defined as: “[t]he location at which a particular organization or person may be found or reached.” (The American Heritage Dict. (New College ed. 1981) p. 15.) An e-mail address fits within this definition because it is a location, albeit an electronic location, at which a person or organization can be reached. Nothing in the statute limits the term “address” to mean only a physical street address. One could not seriously argue that the term excludes post office boxes. An electronic mail address is nothing more than an electronic post office box.
(7) Where, as here, the term used in the statute is susceptible to more than one reasonable interpretation, we may look to the purpose the Legislature sought to achieve and the statutory scheme of which the statute is a part. (Polster v. Sacramento County Office of Education (2009) 180 Cal.App.4th 649, 663 [103 Cal.Rptr.3d 291].) The Legislature could not have intended in 1978 that the term “addresses” specifically would include e-mail addresses, since the concept of widespread and instantaneous communication by electronic mail was the stuff of science fiction in 1978. Nevertheless, as noted, the code, of which section 8330 is a part, was amended in 2004 to provide for [1035] electronic communications to and from nonprofit mutual benefit corporations and their members, including specifically e-mail. The purposes implicit in the enactment of the amendments were to provide for the disclosure of records the corporation maintained electronically and to allow the corporation to communicate information to and from its members via electronic mail. (§§ 20, 5079, 8320, 8321, 8322.)
(8) Furthermore, the legislative purpose of the statute indicates the Legislature would have intended the inclusion of e-mail addresses in the original statute had it anticipated the existence of such. The comments based on the legislative committee summary indicate the purpose of the statute was to balance a member’s legitimate right to contact the membership for election contests or purposes reasonably related to the member’s interest, against the potential for abuse in allowing too free an access. (Coms. Based on Legis. Com. Summary, Deering’s Ann. Corp. Code, supra, foll. § 6330, p. 209.)
The addition of e-mail addresses would do nothing to upset the balance that the Legislature sought to achieve. Such balancing was accomplished by the process of allowing the corporation to propose a reasonable alternative. The use of e-mail addresses to achieve this goal does not affect the balance. Thus, the corporation may either give the list of member e-mail addresses to a requesting member for a proper purpose, or propose an alternative in which it sends the requested information to the membership via e-mail, without disclosing the e-mail addresses to the requesting member.[13]
In this case, because of the extremely large membership and the resulting cost of copying and mailing any kind of communication to each member, denial of the right to contact other members by e-mail effectively denies a member the right to contact other members for a proper purpose. Such a result would unfairly upset the balance sought by the enactment of this legislation, and cannot be a result that the Legislature intended.
[1036] (9) The application of an expanded definition of the term “address” to section 8330 fulfills the direction that “courts must be sufficiently receptive to the notion of adapting legal principles to address societal changes brought upon by new technologies, [and] where, as here, the issue involves an interpretation of existing statutes, we must maintain our usual deference to the Legislature in such matters and ask ourselves first how that body would have handled the problem if it had anticipated it. [Citation.]” (People v. Butler (1996) 43 Cal.App.4th 1224, 1229 [51 Cal.Rptr.2d 150].) “This is a particularly apt formulation of the standard in cases of emerging technology lest our laws be interpreted only in light of yesterday’s accomplishments.” (Id. at p. 1235.)
We are not persuaded differently by the cases cited by Wyndham, Citizens for Civic Accountability v. Town of Danville (2008) 167 Cal.App.4th 1158 [84 Cal.Rptr.3d 684] (Citizens) and InSyst, Ltd. v. Applied Materials, Inc. (2009) 170 Cal.App.4th 1129 [88 Cal.Rptr.3d 808] (InSyst). InSyst held that delivery of instructions to obtain an electronic copy of a judgment did not amount to service of a file-stamped copy of the judgment for purposes of triggering the time in which to appeal. (Id. at p. 1140.) However, the court indicated that a superior court clerk could electronically serve a triggering document if electronic service had been authorized. (Id. at p. 1139.) The court’s decision turned on whether an e-mail explaining where to obtain a document was the same as actually transmitting the document. The decision is not helpful to our analysis.
Citizens, supra, 167 Cal.App.4th 1158, also involved whether an e-mail from the superior court clerk directing the parties to a Web site where they could find an electronic copy of the judgment was the equivalent of service of a file-stamped copy of the judgment. (Id. at p. 1160.) Citizens held that the time for appeal was triggered only by the mailing of the judgment via the United States Postal Service. (Ibid.) However, the court recognized that the term “mail” was reasonably susceptible of multiple meanings, and resolved the ambiguity by applying the principle that ambiguities should be resolved in favor of preserving the right to appeal. (Id. at p. 1163.) That principle is not at play in this case.
We reject WorldMark’s claim that it does not “own” the e-mail addresses of its members, but that such addresses are “owned” by Wyndham. WorldMark’s bylaws provide that a member may inspect and copy all records of the vacation owner program, whether maintained by the corporation or by its manager [1037] (Wyndham).[14] Moreover, Miller presented evidence that WorldMark’s online reservation system operated via the e-mail addresses of the participating members, and that its online proxy/ballot voting system also utilizes the members’ e-mail addresses. WorldMark may not thwart a member’s legitimate attempt to communicate via e-mail by claiming that it does not “own” the addresses of its own members.
III. Miller’s Demand Satisfied Section 8330
We reject WorldMark’s argument that Miller’s request did not comply with section 8330, subdivision (b)(2). Subdivision (b)(2) states that the right of inspection and copying may be exercised by: “The authorized number of members for a purpose reasonably related to the members’ interest as members.” The “authorized number of members” is defined in section 5036, which also provides that any right that may be exercised by the authorized number may be exercised “by a member with written authorizations obtained within any 11-month period from members who, in the aggregate, hold the equivalent voting power. Any such authorization shall specify the right to be exercised thereunder and the duration thereof (which shall not exceed three years).” (Id., subd. (d).) WorldMark claims Miller’s authorizations were inadequate because they did not specify the duration of the authorization.
(10) However, section 8330 provides that the rights of inspection and copying may be exercised either by a single member or by the authorized number of members. Thus, it was not necessary for Miller to obtain authorizations from any other members in order to exercise his right of inspection and copying.
IV. Scope of 8330 Request
WorldMark argues the trial court should not have allowed the Wixons to intervene, or considered WorldMark’s bylaws in determining the scope of disclosure in a section 8330 proceeding. We disagree.
We will not reverse the order either because the trial court allowed the Wixons to intervene or because the trial court considered the bylaws when [1038] making its determination. The intervention of the Wixons has no bearing on our determination, and our conclusion that the e-mail addresses must be disclosed is based upon statute, not upon WorldMark’s bylaws.
(11) Finally, WorldMark rejected respondents’ postjudgment request for the disclosure of its membership register in electronic form because the trial court order did not require disclosure in electronic form. Our review of the relevant statutory framework indicates that if the records are maintained in electronic form, a member may request that such records be turned over in electronic form. Section 8310 provides that if a record subject to inspection and copying under the statute is not maintained in written form, the corporation must make the record available in written form. That section provides that the terms “written” and “in writing” also include “cathode ray tube and similar electronic communications methods.” Section 5079, which has been amended since section 8310 was last amended in 1982, further provides that the terms “[w]ritten” and “in writing” include “facsimile, telegraphic, and other electronic communication as authorized by this code ….”
The first sentence of section 8310 provides: “If any record subject to inspection pursuant to this chapter is not maintained in written form, a request for inspection is not complied with unless and until the corporation at its expense makes such record available in written form.” Substituting the word “electronic” for the word “written,” as both sections 8310 and 5079 indicate we must, we conclude that if a record is maintained in electronic form, the corporation must make the record available in electronic form or written form, at the member’s request.
We shall therefore modify the trial court’s order to provide for the disclosure of the information in electronic form or written form at the option of respondents. Respondents need not make any further request for information.
DISPOSITION
The trial court’s order is modified to provide that the information Miller seeks, including e-mail addresses, shall be made available to him in electronic form at his option and that no further written demand is necessary. If any member’s address is not in electronic form WorldMark shall provide a written copy of such address to Miller. Consistent with the trial court’s order, Miller or his duly appointed representative must acknowledge in writing his agreement not to use or allow use of the membership information for commercial or other purposes not reasonably related to the affairs of the club. In all other respects the judgment (order) is affirmed. The stay is vacated upon finality of the judgment.
[1039] Costs are awarded to Robin Miller and interveners.
Robie, J., and Cantil-Sakauye, J., concurred.
[1] Further references to a section are to the Corporations Code unless otherwise indicated.
[2] The Wixons are named plaintiffs in a federal class action against Wyndham. Their federal complaint alleges that an active resale market in WorldMark credits has arisen with the advent of the Internet, and that because the price of resale credits is typically lower than the price of credits purchased from Wyndham, Wyndham has suffered a negative impact on its sales. As a result, they allege, Wyndham has instituted certain programs that destroy the resale market for credits and have a negative impact on WorldMark members.
[3] Section 3.3(c) of WorldMark’s bylaws, entitled “Special Meetings” states: “Special meetings of the Members for any lawful purpose and at any time shall be scheduled in response to a call by the President, by the Board, or upon receipt of a written request signed by Members holding five percent (5%) of the Voting Power held by Members other than Declarant. Such meetings must be duly noticed and held not less than thirty-five (35) days nor more than ninety (90) days after request therefore is received by the President or Secretary. If notice is not given by the Secretary within twenty (20) days of such receipt by the Club of a request for special meeting, then the person(s) requesting the meeting may give notice.”
Miller’s initial request was not directed at a special meeting of the Board. Moreover, section 8330 imposes no such limitation upon a member’s request.
[4] Respondents’ request for judicial notice is granted.
[5] WorldMark stated it had no knowledge of some of the allegations.
[6] Subdivision (c) of section 8330, states in full: “The corporation may, within ten business days after receiving a demand under subdivision (a), deliver to the person or persons making the demand a written offer of an alternative method of achieving the purpose identified in said demand without providing access to or a copy of the membership list. An alternative method which reasonably and in a timely manner accomplishes the proper purpose set forth in a demand made under subdivision (a) shall be deemed a reasonable alternative, unless within a reasonable time after acceptance of the offer the corporation fails to do those things which it offered to do. Any rejection of the offer shall be in writing and shall indicate the reasons the alternative proposed by the corporation does not meet the proper purpose of the demand made pursuant to subdivision (a).”
[7] WorldMark argues for the first time in its reply brief that Miller never tendered evidence that the cost of mailing under the alternative would be at least $260,000. Arguments raised for the first time in the reply brief are untimely and may be disregarded. (Hernandez v. Vitamin Shoppe Industries Inc. (2009) 174 Cal.App.4th 1441, 1461, fn. 10 [95 Cal.Rptr.3d 734].) In any event, we may take judicial notice under Evidence Code section 452, subdivision (h), that the current cost of a first-class stamp is 44 cents, thus for postage alone (not including the cost of paper, copying, sorting, and handling) the cost to mail 260,000 first-class letters would be $114,400, an amount that is still prohibitive for the average member.
[8] Although Miller’s purpose of contacting the membership prior to the 2008 annual meeting can no longer be accomplished, his purpose of having his proposed bylaw amendments distributed to the membership and put up for a vote may still be accomplished at a future meeting.
[9] Section 8330, subdivision (c) provides that the “corporation may, within ten business days after receiving a demand … deliver to the person or persons making the demand a written offer of an alternative method of achieving the purpose identified in said demand without providing access to or a copy of the membership list.”
[10] Both parties also point to the Vacation Ownership and Time-share Act of 2004 (Bus. & Prof. Code, § 11210 et seq.). WorldMark cites it to show that the language is similar to that of the Corporations Code, and does not specify e-mail addresses. Respondents cite it to show more expansive language which they contend would include e-mail addresses. Neither party contends the time-share act is applicable here.
[11] “`Written’ or `in writing’ includes facsimile, telegraphic, and other electronic communication as authorized by this code, including an electronic transmission by a corporation that satisfies the requirements of Section 20.” (§ 5079.)
[12] Section 20 provides: “`Electronic transmission by the corporation’ means a communication (a) delivered by (1) facsimile telecommunication or electronic mail when directed to the facsimile number or electronic mail address, respectively, for that recipient on record with the corporation, (2) posting on an electronic message board or network which the corporation has designated for those communications, together with a separate notice to the recipient of the posting, which transmission shall be validly delivered upon the later of the posting or delivery of the separate notice thereof, or (3) other means of electronic communication, (b) to a recipient who has provided an unrevoked consent to the use of those means of transmission for communications under or pursuant to this code, and (c) that creates a record that is capable of retention, retrieval, and review, and that may thereafter be rendered into clearly legible tangible form. However, an electronic transmission under this code by a corporation to an individual shareholder or member of the corporation who is a natural person, and if an officer or director of the corporation, only if communicated to the recipient in that person’s capacity as a shareholder or member, is not authorized unless, in addition to satisfying the requirements of this section, the consent to the transmission has been preceded by or includes a clear written statement to the recipient as to (a) any right of the recipient to have the record provided or made available on paper or in nonelectronic form, (b) whether the consent applies only to that transmission, to specified categories of communications, or to all communications from the corporation, and (c) the procedures the recipient must use to withdraw consent.”
[13] Our holding does not mean that a corporation will be unable to prevent the disclosure of e-mail addresses or physical mailing addresses in the future. Miller originally presented WorldMark with an alternative that would have satisfied the concerns of both sides—the transmission by WorldMark of Miller’s petition via e-mail. This would have accomplished a quick and inexpensive dissemination of the material to the WorldMark membership without necessitating the disclosure of membership information. However, WorldMark rejected the request, and that alternative is no longer at issue here. The important point in terms of the individual member’s access, is that in this day and age of instantaneous electronic transmission of data, a corporation may not insist on a slower and more expensive form of communication when a member requests a form of electronic communication and the corporation has the capability of complying with the request.
[14] The bylaws provide that a member’s access to such documents must be “for a purpose reasonably related to his interests as a Member.” Thus, Wyndham’s alarm that any member would be able to access the Social Security numbers or consumer credit histories of other members is unfounded.
Related Links
Access to HOA Membership List Must be for a Proper Purpose – Published on HOA Lawyer Blog (April, 2017)
Misuse of Association Records
A member of an association has certain rights to inspect and copy various association records. However, the member’s request to inspect association records must be for a proper purpose reasonably related to his or her interest as a member. (Civ. Code § 5230; Corp. Code §§ 8330, 8333; See also Tract No. 7260 Association, Inc. v. Parker (2017).)
Actions for Misuse of Association Records
Where a member sells association records, uses them for a commercial purpose, or uses them for any other purpose not reasonably related to his or her interest as a member, Civil Code Section 5230 allows the association to take legal action against the member for injunctive relief and damages:
“(a) The association records, and any information from them, may not be sold, used for a commercial purpose, or used for any other purpose not reasonably related to a member’s interest as a member. An association may bring an action against any person who violates this section for injunctive relief and for actual damages to the association caused by the violation.
(b) This article may not be construed to limit the right of an association to damages for misuse of information obtained from the association records pursuant to this section or to limit the right of an association to injunctive relief to stop the misuse of this information.” (Civ. Code § 5230(a)-(b).)
Corporations Code Section 8338 also provides an association with a cause of action against a member in connection with the member’s misuse of the association’s membership list.
Misuse of Member’s Personal Information by Association or Manager
An association or its managing agent are prohibited from:
- Selling a member’s personal information for any purpose without the consent of the member; (Civ. Code § 5230(c)(1)(A).)
- Transmitting a member’s personal information to a thirty party without the consent of the member, unless required to do so by law, including but not limited to situations where the transmission of the information must be made in response to a member’s request to inspect association records as defined under Civil Code Section 5200. (Civ. Code § 5230(c)(1)(B).)
If an association violates the above restrictions, a member may bring an action against the association for injunctive relief and actual damages caused by the violation. If the member’s action is successful, the member is entitled to recover reasonable costs and expenses, including reasonable attorney’s fees. (Civ. Code § 5230(c)(2).)
Recovery of Attorney’s Fees & Costs
Where an association is successful in enforcing its rights under Civil Code Section 5230, the association is “entitled to recover reasonable costs and expenses, including reasonable attorney’s fees.” (Civ. Code § 5230(d).)
Related Links
Access to HOA Membership List Must be for a Proper Purpose – Published on HOA Lawyer Blog (April, 2017)
Records Not Subject to Inspection
A member’s right to inspect and copy various association records is not absolute and may be limited by the year the requested record was prepared as well as the contents of the requested record.
General Time Limitations: Current and Previous Two (2) Fiscal Years
An association is only required to produce records for its current fiscal year and for its two (2) previous fiscal years. (Civ. Code § 5210(a)(1); See also “Deadlines for Producing Records.”) However, minutes of member meetings, board meetings, and meetings of committees with decision-making authority must be made permanently available for inspection. (Civ. Code § 5210(a)(2).)
Records Which may be Withheld or Redacted
The following includes records which are not subject to inspection and/or which may be withheld or redacted pursuant to Civil Code Section 5215:
- Information which, if released, is reasonably likely to lead to (1) identity theft (i.e., bank account numbers of members or vendors, social security or tax id numbers, credit card numbers, etc.), (2) fraud in connection with the association, or (3) compromising the privacy of an individual member of the association. (Civ. Code § 5215(a)(1),(2),(4); Civ. Code § 5215(a)(5)(c); See also Chantiles v. Lake Forest II Master HOA (1995) 37 Cal.App.4th 914.)
- Association employee information (i.e., name, social security number, or other personal information), except for employee compensation information to be set forth by job classification or title. (Civ. Code § 5215(b).)
- Information which is privileged under law (i.e., documents subject to attorney-client privilege, documents relating to litigation in which the association is or may become involved, confidential settlement agreements, etc.). (Civ. Code § 5215(a)(3); See also Smith v. Laguna Sur Villas Community Assn. (2000) 79 Cal.App.4th 639.)
- Records of goods or services provided a la carte to individual members for which the association received monetary consideration other than assessments. (Civ. Code § 5215(a)(5)(A).)
- Records of disciplinary actions, collection activities, or payment plans of members other than the member requesting the records. (Civ. Code § 5215(a)(5)(B).)
- Executive session minutes and other information from executive sessions of the board (i.e., board packets). (Civ. Code § 5215(a)(5)(D).)
- Proposed contracts (i.e., not executed contracts). (Civ. Code § 5215(a)(5)(D).)
- Interior architectural plans, including security features, for individual homes. (Civ. Code § 5215(a)(5)(F).)
Written Explanation for Withholding or Redacting Records
An association that denies or redacts records must, if so requested by the requesting member, “provide a written explanation specifying the legal basis for withholding or redacting the requested records.” (Civ. Code § 5215(d).)
Costs of Redacting Records
Where any record requested by a member will need to be redacted before being produced, the association may charge the member “an amount not in excess of ten dollars ($10) per hour, and not to exceed two hundred dollars ($200) total per written request, for the time actually and reasonably involved in redacting an enhanced association record.” (Civ. Code § 5205(g).) The association is required to inform the member of the estimated redacting costs, and the member is required to agree to pay those costs, before redacting the records and providing them to the member. (Civ. Code § 5205(g); See also “Member Record Inspection Rights” and “Fees & Costs for Records.”)
Limitation of Liability
“No association, officer, director, employee, agent or volunteer of an association shall be liable for damages to a member of the association or any third party as the result of identity theft or other breach of privacy because of the failure to withhold or redact that member’s information under this subdivision unless the failure to withhold or redact the information was intentional, willful, or negligent.” (Civ. Code § 5215(c).)
Related Links
Access to HOA Membership List Must be for a Proper Purpose – Published on HOA Lawyer Blog (April, 2017)
Deadlines for Producing Records
Civil Code Section 5210 requires an association to produce various association records within the time frames provided below after receipt of a member’s request to inspect specifically identified association records.
Minutes of Board and Member Meetings
Minutes of board meetings and member meetings must be made available to members within thirty (30) calendar days following the meeting and distributed upon request by a member. (Civ. Code § 4950.)
- Minutes Prepared During Current Fiscal Year – must be provided to the member within ten (10) days following the association’s receipt of the member’s request. (Civ. Code § 5210(b)(1).)
- Minutes Prepared During Prior Years – must be provided to the member within thirty (30) calendar days following the association’s receipt of the member’s request. (Civ. Code § 5210(b)(2).)
Minutes of Committee Meetings with Decisionmaking Authority
Minutes of committees with “decisionmaking authority” for meetings commencing on or after January 1, 2007 must be made available within fifteen (15) calendar days following approval. (Civ. Code § 5210(b)(5); See also “Committee Meeting Minutes.”)
Fiscal Records & Governing Documents
Any statement or record available pursuant to Civil Code Section 5300 (insurance, budget, financial statements, etc.) or pursuant to Civil Code Section 4525 (governing documents, construction defects, assessment changes, etc.) must be made available within the specified time frame:
- Records for Current Fiscal Year – must be provided within ten (10) business days following the association’s receipt of the member’s request. (Civ. Code § 5210(b)(1).)
- Records for Prior Fiscal Years – must be provided within thirty (30) calendar days following the association’s receipt of the member’s request. (Civ. Code § 5210(b)(2).)
Membership List
The association’s membership list must be provided within the time frame specified in Corporations Code Section 8330 (ten (10) business days). (Civ. Code § 5210(b)(6); See also “Membership List.”)
Member Record Inspection Rights
A member of an association has certain rights to inspect and copy various association records. Those rights cannot be limited by contract or by the association’s articles or bylaws. (Corp. Code § 8313.) However, not all records are subject to inspection and copying by a member. Those limitations, along with the requirements and procedures applicable to requesting and inspecting association records, are principally governed by Civil Code Sections 5205, 5210 and 5215.
Records Subject to Inspection
Association records are broken down into two (2) categories: (1) “association records” (Civ. Code § 5200(a)), and (2) “enhanced association records” (Civ. Code § 5200(b)). “Association records” include such items as annual budget reports and financial statements, income tax filings, board meeting minutes (except for executive session minutes), and executed contracts. “Enhanced association records” include such items as invoices, canceled checks, purchase orders, credit card statements, and reimbursement requests submitted to the association. (See “Records Subject to Inspection.”)
Records Not Subject to Inspection
Many association documents contain sensitive, confidential or privileged information. While such documents may fall within the purview of an “association record” or an “enhanced association record,” they may be withheld or redacted. (Civ. Code § 5215; See also “Records Not Subject to Inspection.”)
Proper Purpose Requirement
A member’s request to inspect association records must be for a proper purpose:
“…association records, and any information from them, may not be sold, used for a commercial purpose, or used for any other purpose not reasonably related to a member’s interest as a member.” (Civ. Code § 5230; See also Tract No. 7260 Association, Inc. v. Parker (2017).)
This proper purpose requirement is also referenced in Corporations Code Sections 8330 and 8333. A member’s misuse of records may subject the member to legal action by the association for injunctive relief and damages. (Civ. Code § 5230(b); See also “Misuse of Association Records.”)
Time Periods for Desired Records
An association is only required to produce records for its current fiscal year and for its two (2) previous fiscal years. (Civ. Code § 5210(a)(1); See also “Deadlines for Producing Association Records.”) However, minutes of member meetings, board meetings, and meetings of committees with decision-making authority must be made permanently available for inspection. (Civ. Code § 5210(a)(2).)
Right to Designate Agent
A member may designate another person to inspect and copy the specified records on the member’s behalf. (Civ. Code § 5205(b); Corp. Code § 8311.) Such a designation must be made in writing. (Civ. Code § 5205(b).)
Costs of Copying, Mailing & Redacting Records
An association may charge the member for the direct and actual cost of copying and mailing the requested records. (Civ. Code §§ 5205(f), 4950(a); See also “Fees & Costs for Records.”) An association may also charge the member “an amount not in excess of ten dollars ($10) per hour, and not to exceed two hundred dollars ($200) total per written request, for the time actually and reasonably involved in redacting an enhanced association record.” (Civ. Code § 5205(g).) An association is required to inform the member of the amount of copying and mailing costs, including estimated redacting costs, and the member is required to agree to pay those costs, before providing the member with the requested records. (Civ. Code § 5205(f)-(g).)
Electronic Production of Records
A member has the option of receiving the requested records “by electronic transmission or machine-readable storage media as long as those records can be transmitted in a redacted format that does not allow the records to be altered.” (Civ. Code § 5205(h).) Where records are delivered by such means, “[t]he cost of duplication shall be limited to the direct cost of producing the copy of a record in that electronic format.” (Civ. Code § 5205(h).)
Deadlines for Producing Records
An association must produce the requested records within specified time frames following the member’s request. (Civ. Code § 5210(b); See also “Deadlines for Producing Association Records.”)
Location for Inspecting & Copying Records
Records must be made available at the association’s onsite business office or, if there is none, at a location agreed upon by the member and the association. (Civ. Code § 5205(c)-(d).) If there is no onsite business office and no alternate location can be agreed upon, or if the member submits a written request directly to the association for copies of the records, the association may mail them to the member by individual delivery within the applicable deadlines for producing the requested records. (Civ. Code § 5205(e).)
Enforcement of Inspection Rights
If an association wrongfully denies a member’s valid request for records, the member may bring a lawsuit (including a small claims suit where possible) against the association to enforce the member’s inspection rights. (Civ. Code § 5235(a),(c).) If the association is found to have unreasonably withheld access to association records, the member is entitled to reasonable costs and expenses, including reasonable attorney’s fees, and the association may be further subject to a civil penalty of up to five hundred dollars ($500) for the denial of each separate written request. (Civ. Code § 5235(a).) If the association prevails, and if the court finds the member’s action to have been “frivolous, unreasonable, or without foundation,” the association may recover its costs from the member. (Civ. Code § 5235(c).)
Related Links
Access to HOA Membership List Must be for a Proper Purpose – Published on HOA Lawyer Blog (April, 2017)
Records Subject to Inspection
Most of the books, records and items of information maintained and generated by an association during the course of its operations are subject to inspection and copying by a member. (Civ. Code § 5205; See also “Member Record Inspection Rights.”) The records of an association that are subject to inspection and copying are broken down into two (2) main categories: “association records” and “enhanced association records.” (Civ. Code § 5200.)
“Association Records”
Civil Code Section 5200(a) defines “association records” to include all of the following:
Financial Records:
- Financial documents contained within the association’s annual budget report and annual policy statement that must be distributed to the members pursuant to Civil Code Sections 5300 and 5310 (i.e., operating budget, reserve summary, financial statements, insurance information, etc.). (Civ. Code § 5200(a)(1); See also “Annual Budget Report” and “Annual Policy Statement.”)
- Interim financial statements, periodic or as compiled, containing any of the following: (a) balance sheet; (b) income and expense statement; (c) budget comparison; (d) a “general ledger” of transactions over a period of time. (Civ. Code § 5200(a)(3); See also “Financial Statement.”)
- State and federal tax returns. (Civ. Code § 5200(a)(6).)
- Reserve account balances and records of payments made from reserve accounts. (Civ. Code § 5200(a)(7).)
- Check registers. (Civ. Code § 5200(a)(10).)
Vendor & Employee Contracts:
- Executed contracts not otherwise privileged under law. (Civ. Code § 5200(a)(4).)
- Written board approval of vendor or contractor proposals or invoices. (Civ. Code § 5200(a)(5).)
- Information concerning the compensation paid to employees, vendors, or contractors. (Civ. Code § 5215(b).)
Governing Documents:
- The association’s governing documents (i.e., CC&Rs, bylaws, articles of incorporation, operating rules, condominium plan, etc.) (Civ. Code § 5200(a)(11).)
- Schedule of monetary penalties (fines) for violations of the governing documents. (Civ. Code §§ 5200(a)(1), 5310(a)(8).)
Agendas & Meeting Minutes:
- Agenda and minutes of meetings of the members, the board, and any executive committees appointed by the board pursuant to Corporations Code Section 7212; excluding, however, minutes and other information from executive sessions of the board as described in Civil Code Section 4935. (Civ. Code § 5200(a)(8).)
Association Election Materials:
- Returned ballots, signed voter envelopes, the voter list of names, parcel numbers, and voters to whom ballots were to be sent, proxies, and the candidate registration list. Signed voter envelopes may be inspected but may not be copied. (Civ. Code § 5200(c).)
Miscellaneous:
- Membership lists, including names, property addresses, mailing addresses, and email addresses but not including information for members who have opted out pursuant to Civil Code Section 5220. (Civ. Code § 5200(a)(9); See also “Membership List.”)
- Escrow documents required to be provided to a member pursuant to Civil Code Sections 4525 through 4545 (i.e., governing documents, document disclosures, violation notices regarding that member’s unit, construction defects, etc.). (Civ. Code § 5200(a)(2); See also “Transfer Disclosures & Escrow Documents.”)
- All inspection reports of exterior elevated elements that were compiled pursuant to Civil Code Section 5551. (Civ. Code § 5200(a)(15).)
Enhanced Association Records:
- “Association records” also include anything which constitutes an “enhanced association record” pursuant to Civil Code Section 5200(b). (Civ. Code § 5200(a)(13).)
“Enhanced Association Records”
Civil Code Section 5200(b) defines “enhanced association records” to include “invoices, receipts and canceled checks for payments made by the association, purchase orders approved by the association, bank account statements for bank accounts in which assessments are deposited or withdrawn, credit card statements for credit cards issued in the name of the association, statements for services rendered, and reimbursement requests submitted to the association.” Anything which constitutes an “enhanced association record” is also an “association record.” (Civ. Code § 5200(a)(13).)
Time Periods for Producing Records
An association is only required to produce records for its current fiscal year and for its two (2) previous fiscal years. (Civ. Code § 5210(a)(1); See also “Deadlines for Producing Association Records.”)
- Exception: Minutes of member, board, and committees with “decisionmaking authority” must be made permanently available for inspection. (Civ. Code § 5210(a)(2).)
- Exception: Inspector’s reports compiled pursuant to Section 5551 (pertaining to exterior elevated elements) must be made available for inspection at least two (2) inspection cycles. (Civ. Code § 5210(a)(3).)
Request for Inspection & Production Requirements
Subject to certain limitations, members and directors of an association have varying rights to inspect association records. (See “Member Record Inspection Rights;” See also “Director Record Inspection Rights.”)
Collection Policy
An association’s collection policy sets forth the “association’s policies and practices in enforcing lien rights or other legal remedies for default in the payment of assessments.” (Civ. Code § 5310(a)(7).) Those policies and practices typically include the recording and foreclosure of assessment liens, obtaining money judgments, and suspending membership privileges.
Contents
The collection policy also sets forth the association’s policy for imposing late charges, interest, collection fees and costs, payment plans, the member’s right to dispute the assessment debt through internal dispute resolution (IDR), and the member’s right to request alternative dispute resolution (ADR). (Civ. Code § 5660.) The collection and foreclosure notice required by Civil Code Section 5730 is often attached or incorporated into the collection policy.
When Distributed
The collection policy is a required part of the association’s annual policy statement that must be distributed to the members within thirty (30) to ninety (90) days before the end of the association’s fiscal year. (Civ. Code § 5310(a)(7); See also “Annual Policy Statement.”)
Pre-Lien Letter
At least thirty (30) days prior to recording an assessment lien on an owner’s separate interest for delinquent assessments, late charges, interest, collection fees and costs owed by that owner to the association, the association is required to provide the owner with a pre-lien letter (aka “intent to lien letter,” “pre-lien notice,” etc.) via certified mail. (Civ. Code § 5660.)
Required Information
The pre-lien letter must be sent to the owner of record via certified mail and include all of the following information:
- Description of Collection/Lien Enforcement Procedures – A general description of the collection and enforcement procedures of the association (i.e., a description of the association’s assessment collection policy). (Civ. Code § 5660(a).)
- Debt Calculation Method – A general description of the method of calculation of the delinquent amount owed to the association.(Civ. Code § 5660(a).)
- Right to Inspect Records – A statement that the owner has the right to inspect the association’s records pursuant to Civil Code Section 5205. (Civ. Code § 5660(a).)
- Required Foreclosure Notice – The following statement in 14-point boldface type, if printed, or in capital letters, if typed: “IMPORTANT NOTICE: IF YOUR SEPARATE INTEREST IS PLACED IN FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR ASSESSMENTS, IT MAY BE SOLD WITHOUT COURT ACTION.” (Civ. Code § 5660(a).)
- Itemized Statement of Debt – An itemized statement of the charges owed by the owner, including items on the statement which indicate the amount of any delinquent assessments, the collection fees and costs, reasonable attorney’s fees, and any late charges and interest, if any. (Civ. Code § 5660(b).)
- Non-Liability for Association’s Error – A statement that the owner shall not be liable to pay the late charges, interest, collection fees and costs if it is determined that the assessment was paid on time to the association. (Civ. Code § 5660(c).)
- Right to Request Meeting to Discuss Payment Plan – The owner’s right to request a meeting with the board to discuss a payment plan, as provided in Civil Code Section 5665. (Civ. Code § 5660(d).)
- Right to Request IDR – The owner’s right to dispute the assessment debt by submitting a written request for dispute resolution to the association pursuant to the association’s “meet and confer” program established pursuant to Civil Code Section 5900 et. seq. (Civ. Code § 5660(e); See also “Internal Dispute Resolution (IDR).”) If the owner requests IDR before the lien is recorded, the association must participate in IDR with the owner prior to recording the lien. (See “Pre-Lien Dispute Resolution.”)
- Right to Request ADR – The owner’s right to request alternative dispute resolution (ADR) with a neutral third party pursuant to Civil Code Section 5925 et. seq. before the association may initiate foreclosure against the owner’s separate interest, except that binding arbitration shall not be available if the association intends to initiate a judicial foreclosure. (Civ. Code § 5660(f).)
Related Links
“Pre-Lien Demands and FDCPA Concerns” – Published on HOA Lawyer Blog (April, 2017)
Annual Policy Statement
Civil Code Section 5310 requires an association to distribute an annual policy statement that provides members with information about the association’s policies. The annual policy statement must include all of the following information:
- Person Receiving Communications to the Association – The name and address of the person designated by the association to receive official communications to the association pursuant to Civil Code Section 4035. (Civ. Code § 5310(a)(1).)
- Right to Request an Alternative Mailing Address – A statement explaining that a member may submit a request to have association documents and notices sent to up to two (2) different specified addresses, pursuant to Civil Code Section 4040(b). (Civ. Code § 5310(a)(2).)
- Location for Posting of General Notice – The location, if any, designated by the association for posting of a general notice, pursuant Civil Code Section 4045(a)(3). (Civ. Code § 5310(a)(3).)
- Right to Receive General Notices by Individual Delivery – Notice of a member’s option to receive general notices by individual delivery, pursuant to Civil Code Section 4045(b). (Civ. Code § 5310(a)(4).)
- Right to Receive Copies of Meeting Minutes – Notice of a member’s right to receive copies of meeting minutes, pursuant to Civil Code Section 4950(b). (Civ. Code § 5310(a)(5).)
- Statement of Assessment Collection Procedures – The statement of assessment collection policies and procedures required under Civil Code Section 5730. (Civ. Code § 5310(a)(6).) This statement includes a notice that members who are delinquent in the payment of assessments may request to meet with the board to discuss a payment plan. (Civ. Code §§ 5730(a); See also “Payment Plans.”)
- Assessment Collection Policy – A statement describing the association’s policies and practices in enforcing lien rights or other remedies for delinquent assessments. (Civ. Code § 5310(a)(7); See also “Collection Policy.”)
- Discipline Policy & Schedule of Penalties – A statement describing the association’s discipline policy, if any, including any schedule of penalties for violations of the governing documents pursuant to Civil Code Section 5850. (Civ. Code § 5310(a)(8); See also “Fine Policy & Schedule.”)
- Dispute Resolution Procedures – A summary of the dispute resolution procedures, pursuant to Civil Code Sections 5920 and 5965. (Civ. Code § 5310(a)(9); See also “Internal Dispute Resolution (IDR)” and “Alternative Dispute Resolution (ADR).”)
- Architectural Standards – A summary of any requirements for association approval of a physical change to property, pursuant to Civil Code Section 4765. (Civ. Code § 5310(a)(10); See also “Architectural Standards” and “Architectural Application & Approval Process.”)
- Address for Overnight Assessment Payments – The mailing address for overnight payment of assessments, pursuant to Civil Code Section 5655. (Civ. Code § 5310(a)(11).)
- Additional Required Information – Any other information that is required by law or the governing documents, or information which “the board determines to be appropriate for inclusion” in the annual policy statement. (Civ. Code § 5310(a)(12).)
When Distributed
The annual policy statement must be distributed to the members within thirty (30) to ninety (90) days before the end of the association’s fiscal year. (Civ. Code § 5310(a).)
How Distributed
The annual policy statement must be distributed to all members by individual delivery. (Civ. Code §§ 5310(b), 5320(a).) An association is permitted to distribute the annual policy statement in one of the following forms: (Civ. Code § 5320(a)(1)-(2).)
- The full annual policy statement; or
- A summary of the annual policy statement. The summary must include a general description of the content of the annual policy statement, as well as instructions on how the member may request a complete copy of the annual policy statement at no cost to the member. The content description and instructions must be printed in at least 10-point boldface type on the first page of the summary.
Notwithstanding the above, if a member has requested to receive association reports in full, the association must deliver the full annual policy statement to that member, rather than the summary referenced above. (Civ. Code § 5320(b).)
