(a) Notwithstanding any other law or the association’s governing documents, a board meeting or meeting of the members may be conducted entirely by teleconference, without any physical location being held open for the attendance of any director or member, if all of the following conditions are satisfied:
(1) The notice for each meeting conducted under this section includes, in addition to other required content for meeting notices, all of the following:
(A) Clear technical instructions on how to participate by teleconference.
(B) The telephone number and electronic mail address of a person who can provide technical assistance with the teleconference process, both before and during the meeting.
(C) A reminder that a member may request individual delivery of meeting notices, with instructions on how to do so.
(2) Every director and member has the same ability to participate in the meeting that would exist if the meeting were held in person.
(3) Any vote of the directors shall be conducted by a roll call vote.
(4) Any person who is entitled to participate in the meeting shall be given the option of participating by telephone.
(b) Subdivision (a) does not apply to a meeting at which ballots are counted and tabulated pursuant to Section 5120.
Related Links
AB 648 Signed! Virtual HOA Meetings
-Published on HOA Lawyer Blog (October 2023)
LNSU #1, LLC v. Alta Del Mar Coastal Community Association
[Board meetings; E-mail Exchanges] E-mail discussions between HOA Board Members are not “meetings” within the definition of the Open Meeting Act.
James E. Friedhofer; Knottnerus & Associates, Wilfred Knottnerus and Mark B. Simpkins for Plaintiffs and Appellants.
Gordon & Rees, Craig J. Mariam, John B. Fraher, and Scott W. McCaskill for Defendant and Respondent.
OPINION
IRION, J.
Appellants LNSU #1 and LNSU #2, two homeowners in a common interest development managed by the Alta Del Mar Coastal Collection Community Association (the Association), appeal the judgment entered against them in their action against the Association for violations of the Common Interest Development Open Meeting Act (OMA; Civ. Code, § 4900 et seq.; subsequent undesignated section references are to this code). After a bench trial, the court rejected appellants’ claims that the Association violated the OMA when its board of directors took action in an executive session that it should have taken in a meeting open to all members, the board failed to prepare minutes concerning a second executive session, and certain directors discussed items of Association business via e-mails without giving all Association members notice and opportunity to participate in the discussions and without preparing related minutes. We affirm the judgment.
Appellants also appeal postjudgment orders denying their motion to strike or tax costs and granting the Association’s motion for attorney fees. The trial court awarded costs under a provision of the OMA authorizing such an award to a prevailing homeowners association in an action the court finds “to be frivolous, unreasonable, or without foundation” (§ 4955, subd. (b)). The court awarded attorney fees under a provision of the Davis-Stirling Common Interest Development Act (Davis-Stirling Act; § 4000 et seq.) applicable to an action to enforce the governing documents of a homeowners association (§ 5975, subd. (c)). We conclude the Association is not entitled to attorney fees or costs, and reverse the challenged orders.
I.
BACKGROUND
A. Parties
The Association is the governing body of a common interest development in San Diego County that includes 10 homes. At most times pertinent to this appeal, the Association had a board of five directors, including Martin Mueller, Richard Pyke, Ponani Sukumar, Anthony Valeri, and Douglas Woelkers.
Appellants LNSU #1 and LNSU #2 are limited liability companies each of which owns a home in the Association. Sukumar is a manager of both entities. Sukumar sometimes sent Douglas Grimes as a proxy to attend Association board meetings. Grimes at some point became a manager of LNSU #2 and was elected to the Association’s board in June 2017.
B. E-mails Among Directors
From August 2016 through March 2017, Mueller, Pyke, Valeri, and Woelkers exchanged multiple e-mails concerning Association business. Several examples are summarized below.
- On August 23, 2016, Valeri sent Mueller, Pyke, and Woelkers e-mails proposing items for the agenda for a board meeting on August 25, describing appellants’ plans to construct 10,000 square feet of underground living space on their lots, and suggesting imposition of a fine if the plans were not submitted to the board. Mueller responded with a question about another lot approximately 30 minutes later.
- On August 26, 2016, Pyke responded to Valeri’s August 23 e-mails by asking, “Any reaction to our HOA meeting yesterday?” In a separate e-mail, Woelkers responded that he “sense[d] we are heading towards an acrimonious relationship with [Sukumar]” and would need to take “some kind of punitive action just to uphold the precedent of the rules of the [Association].”
- On October 11, 2016, Mueller sent Pyke, Valeri, and Woelkers an e-mail about the landscaping plans for appellants’ lots to state his position appellants should not be granted an extension of time to submit their plans and agreed to a board meeting to address the issues.
- On October 11, 2016, Valeri sent Mueller, Pyke, and Woelkers an e-mail concerning a hearing and potential imposition of a fine on another homeowner for violating the Association’s landscaping guidelines. Woelkers responded the following day to urge consistency in application of the rules regarding hearings and fines to all homeowners.
- On January 30, 2017, Valeri sent Pyke, Mueller, and Woelkers an e-mail stating he had removed an item from the agenda for the February 1 board meeting and how he would “like to get [Grimes] out of everyone’s hair.” Mueller responded the following day that he could not attend the meeting.
- On February 5, 2017, Valeri forwarded Mueller, Pyke, and Woelkers an e-mail he had received from Grimes accusing him (Valeri) of violating the Association’s governing documents and complaining of delays in approval of appellants’ landscaping plans. The following day, Pyke responded,” Blah blah blah!”; and Mueller responded, “We need to get rid of Douglas Grimes. He is not part of our community.”
- On March 3, 2017, Valeri sent Mueller, Pyke, and Woelkers an e-mail about whether to have a hearing on appellants’ landscaping plans and whether to levy a fine. Valeri stated he would be having a call with an attorney on” how to handle this situation over the longer term.” Ten minutes later, Pyke responded, “I think maybe we let the fines slide since [appellants have] submitted plans.”
C. E-mails from Sukumar and Grimes
During the same period that Mueller, Pyke, Valeri, and Woelkers were exchanging e-mails with one another, Sukumar and Grimes sent the directors many e-mails about Association business. Some examples follow.
- On September 26, 2016, Grimes sent all directors and two other individuals an e-mail to offer a meeting to discuss appellants’ landscaping plans without other members of the Association present.
- On October 18, 2016, Grimes sent all directors an e-mail asking them to vote that the requirement of notice to neighbors of appellants’ landscaping plans had been satisfied.
- On November 16 and 17, 2016, Grimes and Sukumar exchanged e-mails about the draft of an e-mail concerning board approval of appellants’ landscaping plans, which Grimes later sent to the directors.
- On February 5, 2017, Grimes sent all directors an e-mail accusing Valeri, in his capacity as president of the Association, of having acted “contrary to the spirit and letter of the [Association’s] governing documents” and “interfered with Sukumar’s efforts to landscape [appellants’ lots] in complete accordance with the Design Guidelines.”
- On February 19, 2017, Sukumar sent all other directors and Grimes an e-mail stating that, subject to two conditions, he approved Woelkers’s application to the board to replace a brow ditch with a buried pipe.
- On February 24, 2017, Sukumar sent all other directors, Grimes, and two other individuals an e-mail complaining of delays in approval of appellants’ landscaping plans and requesting a board hearing be postponed and held at a neutral location.
- On March 5, 2017, Sukumar sent all other directors, Grimes, and another individual an e-mail responding to modifications requested by Woelkers to the landscaping plans appellants had submitted.
- On March 10, 2017, Sukumar sent all other directors, Grimes, and two other individuals an e-mail concerning the scheduling of a board meeting to discuss appellants’ landscaping plans.
- On March 29, 2017, Sukumar sent all other directors and his attorney an e-mail complaining of the board’s failures to produce documents he had requested and requesting items be put on the agenda for an upcoming board meeting.
D. April 3, 2017 Board Meeting
The board met in executive session on April 3, 2017. Sukumar and all other directors except Mueller attended. They discussed appellants’ landscaping plans and voted 3-0 (Sukumar recused himself) to adopt the recommendations of the design review consultant to reject portions of the plans concerning driveway gates and walls. The directors voted 3-1 (Sukumar was in the minority) to retain legal counsel.
E. Prior Litigation
On July 17, 2017, appellants filed a complaint against the Association and its inspector of elections, Therese McLaughlin, to challenge the election of three directors held on June 22, 2017. Appellants alleged that although Grimes had received the third highest number of votes and was eligible to serve on the board because he was a manager of LNSU #2, McLaughlin erroneously determined Grimes was ineligible. While the action was pending, two of the three newly elected directors resigned, and McLaughlin reversed her position and decided Grimes had been validly elected to the board. Sukumar, who was still a director, and Grimes held a board meeting on October 17, 2017, from which Valeri, who was also still a director, was absent. At that meeting, Sukumar and Grimes appointed Girish Prasad, a manager of appellants, to the board. The newly constituted board later voted to oust Valeri as president of the Association, to install Grimes as president and chief financial officer, to install Sukumar as vice-president and secretary, and to look for replacement legal counsel. The trial court enjoined Prasad from serving on the board and stayed the board’s actions concerning appointment of officers and retention of new counsel. On appellants’ appeal, this court affirmed those orders. (LNSU #1 v. McLaughlin (Dec. 20, 2018, D073366) [nonpub. opn.].)
F. August 28, 2017 Board Meeting
On August 28, 2017, while the prior action was pending, the board met in executive session to discuss the litigation. No minutes were prepared for the meeting.
G. Current Litigation
- Pleadings
Appellants commenced the present action against the Association on June 28, 2018, by filing a complaint alleging violations of the OMA. Specifically, appellants alleged the Association violated the OMA by conducting board meetings and taking action on Association business via e-mails without providing all homeowners notices and agendas in advance of the meetings, without allowing all homeowners to participate, and without making minutes available to homeowners. (See §§ 4910, subd. (a), 4920, subds. (a), (d), 4925, 4930, subd. (a), 4950, subd. (a).) Appellants further alleged the board held executive sessions on matters that should have been the subject of meetings open to all members, and did not note the general nature of the matters discussed in the executive sessions in the minutes of the next board meeting that was open to all homeowners. (See § 4935, subds. (a), (e).) Appellants sought a declaration that the Association had violated the OMA, an injunction requiring compliance, civil penalties, costs, and attorney fees. (See § 4955.)
The Association answered the complaint with a general denial and many affirmative defenses. As its 17th affirmative defense, the Association alleged “all the claims against [it] are barred, in whole or in part, by the doctrine of unclean hands.”
- Pretrial Proceedings
In discovery, the Association provided a response to appellants’ request for admissions that Valeri verified. The Association admitted directors had exchanged e-mails on matters of Association business and the exchanges violated several provisions of the OMA. In response to a request asking the Association to admit it had no facts to support its affirmative defense of unclean hands, the Association responded with certain objections and then stated: “Admit that [the Association] does not contend that the allegations regarding the [OMA] violations identified in [appellants’] Supplemental Response to Special Interrogatories, Set One as [the Association] understands them are barred by the doctrine of unclean hands. Otherwise denied. Discovery and investigation are ongoing.”
The Association filed a motion for summary judgment or, in the alternative, summary adjudication on the grounds there was no actual controversy that would warrant declaratory relief, because the Association did not contest that at most 10 OMA violations had occurred; there was no need for injunctive relief, because the latest violation alleged by appellants had occurred more than two years earlier and there was no evidence of continuing violations; and the court could determine the number of violations and set the amount of civil penalties, if any. The court ruled appellants had not met their burden to establish the threat of future harm, summarily adjudicated the cause of action for injunctive relief against them, and otherwise denied the motion.
- Trial
The case proceeded to a bench trial on appellants’ claims for declaratory relief and civil penalties. In a joint trial readiness report, the parties identified as the legal issues in dispute: (1) whether the e-mails identified by appellants constituted OMA violations; (2) the number of OMA violations each e-mail constituted; (3) whether the two executive sessions identified by appellants violated the OMA; (4) the number of OMA violations that each executive session constituted; and (5) the number and amount of statutory penalties, if any, to which appellants were entitled.
In their trial brief, appellants argued the e-mails the directors had exchanged concerning appellants’ landscaping plans and other Association business violated the OMA because no notices or agendas for the meetings were given to all members of the Association, not all members were allowed to attend and to speak at the meetings, and no minutes were prepared for the meetings. They argued the April 3, 2017 executive session of the board violated the OMA because the board took action on landscaping plans it should have considered in a meeting open to all members, and the August 28, 2017 executive session violated the OMA because the board prepared no minutes describing what was discussed in the session. Appellants also argued the Association’s defense of unclean hands was groundless because they were given no notice of what the allegedly unclean acts were or who allegedly committed them. Appellants asked the trial court to assess 638 civil penalties of $500 each and to award them costs and attorney fees.
In its trial brief, the Association conceded the e-mails were sent but contended the directors did not know at the time they sent them that they could be violating the OMA, and argued that because appellants’ managers (Sukumar and Grimes) had sent similar e-mails during the same period, appellants were “inequitably seek[ing] relief against the Association for the exact same conduct they engaged in.” The Association stated the April 3, 2017 board meeting “arguably” violated the OMA, because the board discussed appellants’ landscaping plans in an executive session rather than in a meeting open to all members, but pointed out Sukumar and Grimes attended the meeting and were allowed to participate. The Association conceded the failure to prepare minutes for the August 28, 2017 executive session violated the OMA, but argued appellants should not be rewarded because it was their unlawful attempt to take over the board (which was the subject of the prior action) that prevented the preparation of minutes. The Association urged the trial court to deny appellants’ claims for relief.
On the first day of trial, the court granted the Association’s unopposed request to take judicial notice of the record in the prior action arising out of the June 22, 2017 election of directors to the Association’s board. The court then heard opening statements from counsel and testimony from Woelkers. Valeri, Grimes, and Sukumar testified the following day. In overruling an objection to a question asking Sukumar whether certain e-mails violated the OMA, the court stated “it’s going to be up to the [c]ourt what constitutes a meeting” under the statute. The court admitted the e-mails described in parts I.B. and I.C., ante, and other documents. The trial court denied appellants’ motion to strike all evidence regarding the Association’s affirmative defense of unclean hands. After the close of evidence, the court asked counsel, “Is there any law on whether an e-mail constitutes a meeting?” Counsel agreed it was a novel issue on which the court would be making new law.
On the third and final day of trial, the court heard closing arguments from counsel. During appellants’ argument, the court asked counsel whether certain e-mail exchanges were board meetings within the meaning of the OMA. Appellants’ counsel answered the exchanges were meetings if the directors discussed “specifics” or offered an “opinion” about a proposed board action, but not if they discussed putting a matter on the agenda or scheduling a meeting. In its closing argument, the Association argued the exchanges were not board meetings within the meaning of the OMA, because the directors were not in the same place at the same time when they exchanged the e-mails and took no action on Association business in them.
After hearing closing arguments, the trial court ordered the parties to submit proposed statements of decision for its review. In their statement, appellants proposed that the court conclude the e-mail exchanges among directors constituted meetings under the OMA and cited statutory and case law purportedly supporting that conclusion. The Association proposed in its statement that the trial court reach the opposite conclusion and cited statutes, cases, and legislative history purportedly supporting that conclusion.
- Trial Court’s Decision and Judgment
After issuing a tentative decision in favor of the Association and considering appellants’ objections thereto, the trial court issued a final statement of decision that largely adopted the Association’s proposed statement. The court ruled the April 3, 2017 executive session of the board substantially complied with the OMA because appellants’ representatives (Sukumar and Grimes) participated in the session. The court ruled appellants’ unclean hands in unlawfully attempting to take over the board caused the failure of the preparation of minutes generally noting what had been discussed at the executive session held on August 28, 2017, and barred appellants from obtaining relief for that failure. The court ruled the e-mail exchanges among directors of which appellants complained were not board meetings under the OMA, and appellants’ unclean hands in sending similar e-mails to directors barred them from obtaining any relief based on the exchanges. The trial court entered a judgment that appellants take nothing from the Association.
- Postjudgment Motions
a. Appellants’ Motion to Strike or Tax Costs
The Association filed a memorandum of costs totaling $8,874.61 for filing and motion fees; deposition costs; service of process fees; court reporter fees; models, enlargements, and photocopies of exhibits; electronic filing or service fees; and other costs. Attached to the memorandum were invoices and receipts for the various claimed costs.
Appellants filed a motion to strike or tax costs. They argued the Association could not recover any costs, because the provision governing costs in actions under the OMA allows a homeowners association to recover costs against a homeowner only if the court finds the action “to be frivolous, unreasonable, or without foundation” (§ 4955, subd. (b)), and their action did not fit that description. Appellants also argued the court reporter fees ($1,960.00) were not recoverable, because the parties had agreed to share those costs; and the “[o]ther” costs ($735.18) were insufficiently documented.
In opposition to appellants’ motion, the Association argued that as the prevailing party it was entitled to recover costs. The Association claimed it was entitled to costs as “the prevailing party” “[i]n an action to enforce [its] governing documents” (§ 5975, subd. (c)), because appellants alleged in their complaint that they had made requests under the Association’s governing documents, those requests underlay their claims for relief, and they recovered nothing in the action. The Association also claimed it was entitled to costs because appellants’ action was “unreasonable” and “without foundation” (§ 4955, subd. (b)) in light of their unclean hands in sending e-mails of the type they alleged violated the OMA and their steadfast resistance to the Association’s efforts to end the litigation, as evidenced by their rejection of a settlement offer,[1] opposition to the motion for summary judgment in which the Association conceded 10 OMA violations, and changing position on how many OMA violations occurred. Based on appellants’ failure to accept the settlement offer, the Association argued it was entitled to recover its postoffer costs. (See Code Civ. Proc., § 998, subd. (c)(1).) The Association finally contended the court reporter fees it had claimed were allowable as costs, and the “other” costs it had claimed were for fees for virtual hearings held during the COVID-19 pandemic.
In reply, appellants argued the statute governing costs was section 4955, subdivision (b), not section 5975, subdivision (c), because their action was to enforce the OMA, not the Association’s governing documents. Appellants further argued the Association could recover no costs, because the action was not frivolous. They also argued the unavailability of costs under section 4955, subdivision (b) rendered the cost-shifting provisions of Code of Civil Procedure section 998 inapplicable.
b. Association’s Motion for Attorney Fees
The Association moved for an award of $409,282.50 in attorney fees. It sought fees under the same statutes and for the same reasons as it sought costs.
Appellants opposed the motion. They argued the controlling statute was section 4955, subdivision (b), which they claimed under no circumstances authorizes an award of attorney fees to a prevailing homeowners association in a homeowner’s action for violation of the OMA. Appellants also argued the amount of fees the Association had requested was unreasonable.
In reply, the Association repeated and expanded on points it had made in its initial motion papers, and argued the fees it had requested were reasonably incurred.
c. Trial Court’s Orders
The trial court denied appellants’ motion to strike or tax costs. It ruled that section 4955, subdivision (b) authorized the Association’s recovery of costs, because appellants'”pursuit of litigation was unreasonable at multiple stages. . . . Among other reasons, [appellants] pursued the litigation despite unclean hands and rejected a reasonable settlement offer.” The court awarded all claimed costs.
The trial court granted the Association’s motion for attorney fees in part. It ruled fees were recoverable under section 5975, subdivision (c), because the Association had prevailed in an action in which “the complaint asserted requests under [the Association’s] governing documents” and “sought to enforce [the] governing documents.” The court further ruled that “although not necessary for an award of fees under . . . section 5975(c), the court has already found that [appellants’] litigation was unreasonable. [Citation.] Accordingly, [the Association] is entitled to its reasonable fees from the date of its [Code of Civil Procedure s]ection 998 offer.” After consulting with the parties and considering the record, the trial court awarded the Association $348,306 in attorney fees.
The trial court amended the judgment to add the awards of attorney fees and costs.
II.
DISCUSSION
A. Appeal of Judgment
Appellants attack the judgment on several grounds. They contend the trial court erred by interpreting “board meeting” as used in the OMA not to include the e-mail exchanges among directors, and the Association’s failure to assert that interpretation before trial precluded its assertion after trial under principles of waiver or judicial estoppel. Appellants argue that undisputed facts showed the Association violated the OMA by considering their landscaping plans at the April 3, 2017 executive session, rather than at a meeting open to all homeowners, and by failing to note what was discussed at the August 28, 2017 executive session in the minutes of the next board meeting open to all homeowners. Appellants contend the defense of unclean hands does not bar their claims for OMA violations based on the directors’ e-mail exchanges. They ask us to reverse the judgment and to remand the matter for a new trial.
- Appealability and Standard of Review
The trial court’s judgment finally disposed of the parties’ dispute and is appealable. (Code Civ. Proc., § 904.1, subd. (a)(1); UAP-Columbus JV 326132 v. Nesbitt (1991) 234 Cal.App.3d 1028, 1034-1035.) On appeal from a judgment based on a statement of decision after a bench trial, we review questions of law de novo and the trial court’s findings of fact for substantial evidence. (Gajanan Inc. v. City and County of San Francisco (2022) 77 Cal.App.5th 780, 791-792; Aljabban v. Fontana Indoor Swap Meet, Inc. (2020) 54 Cal.App.5th 482, 496.)
- OMA Violations Based on Board’s Executive Sessions
We first address appellants’ claims of error regarding the two executive sessions of the Association’s board. The OMA limits the matters a homeowners association board may consider in an executive session to “litigation, matters relating to the formation of contracts with third parties, member discipline, personnel matters, or to meet with a member, upon the member’s request, regarding the member’s payment of [past-due] assessments.” (§ 4935, subd. (a).) “Any matter discussed in executive session shall be generally noted in the minutes of the immediately following meeting that is open to the entire membership.” (Id., subd. (e).) Appellants contend undisputed facts showed the Association violated these statutes by discussing their landscaping plans at the April 3, 2017 executive session and by failing to prepare the required minutes concerning the topics discussed at the August 28, 2017 executive session. We conclude appellants forfeited these claims of error.
In their opening brief, appellants expend little effort on discussing the April 3, 2017 executive session. The pertinent portion of the statement of facts describes matters the board discussed and voted on, and states Sukumar and Grimes attended but Grimes was not allowed to speak. As purported record support, appellants cite a trial exhibit (“TE 21, pp. 1-23”) that is not included in their appendices. In the corresponding portion of the legal argument, appellants say the trial court “appeared to conclude” the Association violated the OMA by discussing appellants’ landscaping plans in an executive session rather than in a meeting open to all members, and then go on to argue “the [c]ourt was prohibited from excusing the violation under the facts of the case” as “a mere `technical error’ or [`]immaterial omission'” because other homeowners were excluded and Grimes was not allowed to speak. This portion of the brief contains no citation to the record or legal authority and no reference to the substantial compliance doctrine on which the trial court relied in its statement of decision to conclude there was no OMA violation.
Such a factually and legally unsupported claim of error does not satisfy appellants’ burden on appeal. We presume the trial court’s judgment is correct, and to overcome that presumption appellants must affirmatively establish prejudicial error by providing an adequate record, citing to the record, and presenting a persuasive argument with citations to supportive legal authorities. (Cal. Rules of Court, rule 8.204(a)(1)(B), (C); Jameson v. Desta (2018) 5 Cal.5th 594, 609; Lee v. Kim (2019) 41 Cal.App.5th 705, 721 (Lee); Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1246.) It is not our role as an appellate court independently to review the record for error and to construct arguments for appellants that would require reversal of the judgment. (United Grand Corp. v. Malibu Hillbillies, LLC (2019) 36 Cal.App.5th 142, 153; Benach v. County of Los Angeles (2007) 149 Cal.App.4th 836, 852 (Benach).) Rather, where, as here, the appellants’ opening brief makes contentions unsupported by proper record citations or cogent legal arguments, we may treat the contentions as forfeited. (E.g., County of Sacramento v. Singh (2021) 65 Cal.App.5th 858, 861; Lee, at p. 721.) Although in their reply brief appellants discussed the substantial compliance doctrine on which the trial court based its ruling and cited one case concerning the doctrine, that discussion comes too late. An appellant may not put off to its reply brief the presentation of a legal argument supporting a claim of error asserted in its opening brief, for to do so would unfairly deprive the respondent of the ability to rebut the argument. (Bitner v. Department of Corrections & Rehabilitation (2023) 87 Cal.App.5th 1048, 1065, fn. 3 (Bitner); Hernandez v. First Student, Inc. (2019) 37 Cal.App.5th 270, 277-278.) We thus conclude appellants forfeited their claim of error concerning the April 3, 2017 executive session. (Bitner, at pp. 1065-1066; Benach, at p. 852 & fn. 10.)
We reach the same conclusion on appellants’ claim of error regarding the August 28, 2017 executive session. In their opening brief, appellants barely discuss that session in the statement of facts or the legal argument. Appellants quote the meeting agenda and as purported support cite a trial exhibit (“TE 102”) that is not in their appendices. In the legal argument, appellants contend a new trial should be granted because undisputed evidence established the board’s secretary was tasked with preparing the minutes, and no evidence showed any of their managers ever lawfully held that position. Appellants do not reference the trial court’s ruling that the required minutes for the August 28, 2017 executive session were not prepared because of their unlawful attempt to take over the board and that their resultant unclean hands barred their claim that the Association’s failure to prepare the minutes violated the OMA. Appellants cite the statute they alleged was violated, but no other legal authority. They do not explain why, as a factual or legal matter, the conduct on which the trial court relied does not bar their claim. Appellants expand on their argument in their reply brief, but still cite no legal authority to support their contentions. This claim of error has thus been forfeited. (Bitner, supra, 87 Cal.App.5th at pp. 1065-1066 & fn. 3; Lee, supra, 41 Cal.App.5th at p. 721; Benach, supra, 149 Cal.App.4th at p. 852 & fn. 10.)
- OMA Violations Based on Directors’ E-mail Exchanges
We next consider appellants’ claim that the trial court erred by concluding the directors’ e-mail exchanges did not constitute board meetings within the meaning of the OMA. Appellants contend a series of e-mails among directors on a matter of Association business, such as those of which they complain, fits within the definition of “board meeting” in section 4090, subdivision (a), and the Association should be barred from asserting a contrary position because it did not do so until after the close of evidence at trial. We are not persuaded.
a. Waiver or Estoppel
We first address appellants’ contention that the Association’s litigation conduct bars it from arguing the directors’ e-mail exchanges were not board meetings within the meaning of the OMA. Appellants correctly point out that in a verified response to their request for admissions, the Association admitted the e-mails violated several provisions of the OMA, and in its summary judgment motion, the Association did not contest some of the e-mails constituted board meetings that violated the OMA. (See pt. I.G.2., ante.) Appellants also correctly point out that not until closing arguments did the Association contend the e-mails did not meet the statutory definition of a board meeting. (See pt. I.G.3., ante.) A “litigant cannot be permitted to blow hot and cold in this manner” if “[s]uch a strategy subjects the opposing party to unwarranted surprise” (A & M Records, Inc. v. Heilman (1977) 75 Cal.App.3d 554, 566) or “would prejudice his or her opponent” (Garcia v. Roberts (2009) 173 Cal.App.4th 900, 913).
Here, however, the Association’s change of position did not unfairly surprise or prejudice appellants. They could not rely on any admissions the Association had made in the summary judgment motion, because such admissions were only for the purpose of the motion and did not estop the Association, as the unsuccessful moving party on the claims for declaratory relief and civil penalties, from taking a contrary position at trial. (Myers v. Trendwest Resorts, Inc. (2009) 178 Cal.App.4th 735, 747-749; see Filtzer v. Ernst (2022) 79 Cal.App.5th 579, 587 [judicial estoppel requires party to be estopped to have successfully asserted position it later abandoned].) Nor could appellants rely on the Association’s response to their request for admissions. During trial, the court considered whether to allow appellants to put on evidence of OMA violations not identified in discovery and the Association to put on evidence of unclean hands not disclosed in discovery. Appellants suggested the court either “allow everybody to put in whatever they want at this time, regardless of what the responses were before,” or “exclude both.” The court ruled the parties would not be bound by their discovery responses and “allow[ed] all that evidence to come in.” Having invited and benefited from that ruling, appellants may not now seek to hold the Association to its discovery responses. (See § 3521 [“He who takes the benefit must bear the burden.”]; Mesecher v. County of San Diego (1992) 9 Cal.App.4th 1677, 1685 [party forfeits right to attack on appeal procedure it agreed to at trial].)
Moreover, the record shows appellants were aware before and during trial that the key legal issue to be decided by the court was whether the e-mail exchanges of which they complained constituted board meetings under the OMA. In their joint trial readiness report, the parties identified as the first legal issue in dispute, “Whether the Emails identified by plaintiffs constitute OMA violations.” During trial, the court told the parties “it’s going to be up to the [c]ourt what constitutes a meeting” under the statute. The parties presented their competing views on the issue orally during closing arguments and in writing in their proposed statements of decision. The court was not bound by the Association’s earlier concessions that the e-mails constituted meetings under the OMA. “No litigant, of course, can effectively `abandon’ the correct reading of a statute; [the court] must independently determine the best interpretation . . . regardless of what the parties argue.” (Spanish Speaking Citizens’ Foundation, Inc. v. Low (2000) 85 Cal.App.4th 1179, 1230; see Evid. Code, § 310, subd. (a) [court must decide all questions of law, including construction of statute]; County of Madera v. Superior Court (1974) 39 Cal.App.3d 665, 668 [“proper interpretation of statutory language is a question of law for the court”].)
Because the issue of whether the directors’ e-mail exchanges constituted board meetings under the OMA was a legal one for the court to decide, appellants’ complaint that the Association’s change of position at the end of trial prejudicially prevented them from obtaining and presenting pertinent evidence lacks merit. Specifically, appellants claim that “[h]ad [the Association’s] switch of argument taken place earlier, [they] could have cross-examined both Valeri and Woelkers on the involved directors’ understandings and motivations at the time.” Such matters, however, are irrelevant to the question of statutory interpretation the trial court had to decide. (See Evid. Code, § 310, subd. (a) [construction of statute is question of law for court]; City of Rocklin v. Legacy Family Adventures-Rocklin, LLC (2022) 86 Cal.App.5th 713, 728 [“It is the role of the judge to decide purely legal issues.”]; Maia v. Security Lumber & Concrete Co. (1958) 160 Cal.App.2d 16, 21 [witness’s understanding of statute is inadmissible because “[c]ourts are bound by the statute, not by individual opinions of its interpretation”].) Appellants also claim the issue of whether an e-mail exchange constitutes a board meeting under the OMA may depend on factors that are in part factual (e.g., whether the e-mails functioned as in-person meetings, or whether directors had continuous access to e-mails and the ability to reply in a reasonable time), and they could have explored such factors more fully in discovery and at trial had they known earlier the Association was contesting the issue. Such exploration was unnecessary, because the trial court admitted into evidence all the e-mail exchanges appellants claimed violated the OMA and therefore had the information it needed to decide whether they constituted board meetings within the meaning of the OMA. (See, e.g., Estate of Madison (1945) 26 Cal.2d 453, 456 [“The construction of a statute and its applicability to a given situation are matters of law to be determined by the court.”]; accord, In re Marriage of Martin (2019) 32 Cal.App.5th 1195, 1199.)
b. Whether E-mail Exchanges Were Board Meetings
We now turn to the dispositive question of statutory interpretation: Were the directors’ e-mail exchanges that appellants claim violated the OMA “board meetings” under the statute? We review the trial court’s interpretation of the statute de novo. (Segal v. ASICS America Corp. (2022) 12 Cal.5th 651, 658; Royals v. Lu (2022) 81 Cal.App.5th 328, 344.) We begin by examining the language of the statute, giving that language its usual and ordinary meaning and adopting a construction that is consistent with the apparent legislative intent. (Lee v. Hanley (2015) 61 Cal.4th 1225, 1232-1233; Yu v. Superior Court (2020) 56 Cal.App.5th 636, 644.)
The OMA is part of the Davis-Stirling Act, which defines “board meeting” as “either of the following:
“(a) A congregation, at the same time and place, of a sufficient number of directors to establish a quorum of the board, to hear, discuss, or deliberate upon any item of business that is within the authority of the board.
“(b) A teleconference, where a sufficient number of directors to establish a quorum of the board, in different locations, are connected by electronic means, through audio or video, or both. A teleconference meeting shall be conducted in a manner that protects the rights of members of the association and otherwise complies with the requirements of this act. Except for a meeting that will be held solely in executive session or conducted under Section 5450 [which pertains to meetings during a state of disaster or emergency], the notice of the teleconference meeting shall identify at least one physical location so that members of the association may attend, and at least one director or a person designated by the board shall be present at that location. Participation by directors in a teleconference meeting constitutes presence at that meeting as long as all directors participating are able to hear one another, as well as members of the association speaking on matters before the board.” (§ 4090.)
The Davis-Stirling Act defines “board” as “the board of directors of the association” (§ 4085) and “item of business” as “any action within the authority of the board, except those actions that the board has validly delegated to any other person or persons, managing agent, officer of the association, or committee of the board comprising less than a quorum of the board” (§ 4155).
Appellants rely solely on subdivision (a) of section 4090 for their claim that the directors’ e-mail exchanges constituted board meetings that violated the OMA. They contend “[t]he usual and ordinary meaning of the phrase `congregation, at the same time and place’ encompasses a `virtual’ assembly by means of email,” because, they say, e-mail allows all directors to communicate with one another simultaneously on items of board business in the same place, namely, cyberspace. We reject this construction of the statutory language as inconsistent with its usual and ordinary meaning.
To determine the usual and ordinary meanings of words used in a statute, courts consider the dictionary definitions of those words. (Wasatch Property Management v. Degrate (2005) 35 Cal.4th 1111, 1121-1122; Turo Inc. v. Superior Court (2022) 80 Cal.App.5th 517, 521.) We have consulted three dictionaries available at the time the Legislature enacted the OMA to determine the meaning of the phrase “congregation, at the same time and place.” (§ 4090, subd. (a), as enacted by Stats. 2012, ch. 180, § 2.) Two define “congregation” as “an assembly of persons: gathering.” (Webster’s 3d New Internat. Dict. (2002), p. 478; Merriam-Webster’s Collegiate Dict. (11th ed. 2003) p. 262.) An “assembly” is defined as “a company of persons collected together in one place usu. for some common purpose (as deliberation and legislation, worship, or entertainment)” (Webster’s, p. 131), and a “gathering” as “a coming together of people in a group (as for social, religious, or political purposes)” (id., p. 940). A third dictionary defines “congregation” similarly as “a gathered or assembled body; assemblage” (Random House Unabridged Dict. (2d ed. 1987) p. 430), and “assemblage” as “a group of persons . . . gathered” (id., p. 125). That dictionary defines “place” as “a space, area, or spot, set apart or used for a particular purpose: a place of worship; a place of entertainment.” (Id., p. 1478.) The other two define “place” as “a building or locality used for a special purpose,” and offer as examples “<~ of amusement>,” “<~ of worship>,” “,” and “.” (Webster’s, p. 1727; Merriam-Webster’s, p. 946.)
From these definitions and examples, we conclude a “board meeting,” as defined by section 4090, subdivision (a), means a gathering of a quorum of the directors of a board of a homeowners association at the same time and in the same physical location for the purpose of transacting any matter of association business that is within the board’s purview. By using the word “congregation,” the Legislature intended the directors come together for a common purpose. By specifying the congregation be “at the same time and place,” the Legislature intended the directors simultaneously come together in one location so that they can “hear, discuss, or deliberate upon any item of business that is within the authority of the board.” (Ibid.) Although the definitions of “congregation” in the dictionaries cited in the preceding paragraph say nothing explicit about physical location, the examples in those dictionaries ordinarily involve gatherings of persons in one location for a particular purpose—for deliberation and legislation (e.g., the U.S. Capitol), for religious worship (e.g., a church or temple), or for social engagement or entertainment (e.g., a night club or theater). Every example of a “place” in those dictionaries is a physical location—a building, a place of worship (e.g., a church or temple), a place of amusement or entertainment (e.g., a theater or stadium), a place of education (e.g., an elementary school or college), or a fine eating place (a café or restaurant). We think it is clear from the words chosen that in enacting section 4090, subdivision (a) the Legislature had in mind the traditional board meeting of a homeowners association, i.e., one where the directors gather in the same room with homeowners to talk about and to act on matters of association business. Hence, by sending e-mails to one another through cyberspace, often hours or days apart and from different homes and offices, the Association’s directors did not simultaneously gather in one location to transact board business, and therefore they did not conduct a “board meeting” within the meaning of section 4090, subdivision (a).[2]
In urging us to construe section 4090, subdivision (a) to include e-mail exchanges among the directors of a board of a homeowners association on matters of association business, appellants argue that “[l]egally, a `[b]oard [m]eeting’ under [the] OMA is capable of being conducted via electronic transmissions.” We agree a board meeting conducted by electronic means is permitted by the OMA, but not by virtue of section 4090, subdivision (a). Subdivision (b) of section 4090 defines “board meeting” as “[a] teleconference, where a sufficient number of directors to establish a quorum of the board, in different locations, are connected by electronic means, through audio or video, or both.” In this type of meeting, “[p]articipation by directors . . . constitutes presence at that meeting as long as all directors participating are able to hear one another, as well as members of the association speaking on matters before the board.” (Ibid.) The e-mail exchanges at issue in this case do not qualify as such a board meeting, however, because they did not allow the participating directors “to hear one another.” (Ibid.) In any event, appellants have expressly disavowed reliance on section 4090, subdivision (b).
Appellants also rely on section 4910, subdivision (b) as support for their contention that a series of e-mails among directors can satisfy the “same time and place” requirement of section 4090, subdivision (a). Section 4910, subdivision (b) prohibits the board from conducting a board meeting “via a series of electronic transmissions, including, but not limited to, electronic mail,” except “as a method of conducting an emergency board meeting” to which all directors consent in writing. An emergency board meeting may be called “if there are circumstances that could not have been reasonably foreseen which require immediate attention and possible action by the board, and which of necessity make it impracticable to provide notice” four days before the meeting. (§ 4923; see § 4920, subds. (a), (b)(1).) Appellants argue an emergency board meeting by e-mail would not be possible unless that type of meeting were a subset of the type defined by section 4090, subdivision (a). We are not persuaded.
Section 4910, subdivision (a) states, “The board shall not take action on any item of business outside of a board meeting.” As noted above, the statute goes on to prohibit the board from conducting a meeting by a series of e-mails unless there is an emergency and all directors give written consent. (§ 4910, subd. (b).) Considering these subdivisions together, as we must (Smith v. LoanMe, Inc. (2021) 11 Cal.5th 183, 190), we read them as authorizing the board, in an emergency as defined by section 4923, to dispense with notice to homeowners and to conduct a meeting and take action on a matter of association business via a series of e-mails or other electronic transmissions, provided all directors give written consent to that procedure. There would have been no need to add these specific provisions if, as appellants argue, an exchange of e-mails among directors on a matter of association business already qualified as a board meeting under section 4090, subdivision (a). We must avoid an interpretation that would make a statutory provision redundant and interpret the provision in a way that gives it independent meaning and enables it to perform a useful function. (Plantier v. Ramona Municipal Water Dist. (2019) 7 Cal.5th 372, 385-386; Garcia v. McCutchen (1997) 16 Cal.4th 469, 476.) We therefore read section 4910, subdivision (b) as specifying a third method, in addition to and different from those defined by section 4090, by which the board may conduct a meeting and take action on a matter of homeowners association business, and which may be used only in an emergency as defined by section 4923. It is not a subset of the type of board meeting defined by section 4090, subdivision (a), by which the board may take action on association business matters in nonemergency situations.
Appellants contend “Corporations Code section 7211 . . . also supports the interpretation that the Legislature in general believes a board meeting is capable of being conducted by email.”[3] To confirm that belief, however, we need not look beyond the OMA. By expressly authorizing the board of a homeowners association to hold a meeting and take action by a series of e-mails when there is an emergency and all directors consent in writing to proceed that way (§ 4910, subd. (b)(2)), the Legislature obviously believed a board meeting was capable of being conducted via e-mail. The enactment of a separate provision to authorize that type of board meeting shows, contrary to appellants’ position, that the Legislature did not believe that type of meeting fell within the scope of section 4090, subdivision (a).
Apparently anticipating we might reject their arguments based on the text of the OMA, appellants advise against “exclusive and myopic reliance on statutory language,” and urge consideration of “the overriding purpose of [the] OMA.” That purpose, they say without any analysis or citation of authority, is to permit “all [homeowners association] members [to] have access to the [b]oard’s discussions and action on official [association] business.” Appellants argue their interpretation of section 4090, subdivision (a) as including the directors’ e-mail exchanges at issue in this case furthers that purpose, but an interpretation that excludes them frustrates that purpose by allowing a board to make all decisions on association business via private e-mail exchanges and later hold a meeting as “mere theatre” to confirm the decisions. We disagree.
To discern the purpose of the OMA, we look to its words as the most reliable indicator of legislative intent and consider them in the context of the statute as a whole. (Hoffmann v. Young (2022) 13 Cal.5th 1257, 1266; Union of Medical Marijuana Patients, Inc. v. City of San Diego (2019) 7 Cal.5th 1171, 1184; Olmstead v. Arthur J. Gallagher & Co. (2004) 32 Cal.4th 804, 811.) The first substantive provision of the OMA states, “The board shall not take action on any item of business outside of a board meeting.” (§ 4910, subd. (a).) With exceptions for emergency board meetings (§ 4923) and executive sessions (§ 4935), subsequent OMA provisions provide for input of homeowners in board actions by requiring homeowners be given at least four days’ notice of a board meeting (§ 4920, subd. (a)), the notice contain the meeting agenda (§ 4920, subd. (d)), homeowners be allowed to attend and speak at the meeting, (§ 4925), the board not discuss or take action on any item of business not on the agenda (§ 4930, subd. (a)), and minutes of the meeting be made available to homeowners within 30 days (§ 4950, subd. (a)). In short, the OMA “mandate[s] open governance meetings, with notice, agenda and minutes requirements, and strictly limit[s] closed executive sessions.” (Damon v. Ocean Hills Journalism Club (2000) 85 Cal.App.4th 468, 475 (Damon).) These various requirements make clear the purpose of the OMA is to ensure members of a homeowners association are informed about and have input into the actions to be taken by the association’s board of directors on matters affecting the community in which they live. (See Golden Eagle Land Investment, L.P. v. Rancho Santa Fe Assn. (2018) 19 Cal.App.5th 399, 416, 417 (Golden Eagle) [board’s “possess[ion of] broad powers to affect large numbers of individuals through [its] decisions and actions” requires “[h]olding open meetings and taking account of various opinions among community members” before acting on items of association business].)
Our interpretation of section 4090, subdivision (a) as not including the e-mail exchanges of which appellants complain does not frustrate the purpose of the OMA. Section 4090, subdivision (a) defines one method by which the board of directors of a homeowners association may act consistently with the purpose of the OMA, namely, by holding an in-person meeting where homeowners have an opportunity to voice their opinions on items of association business, and then voting on what actions to take on the items. By discussing items of Association business in e-mails (e.g., whether to approve appellants’ landscaping plans and whether to fine another homeowner), the directors did nothing contrary to the purpose of the OMA, because they took no action on those items in the e-mails. Although the OMA prohibits the board from acting on items of Association business outside a board meeting (§ 4910, subd. (a)), it does not prohibit the board from discussing the items outside a meeting. Had the Legislature intended to prohibit such discussions, it knew how to do so. In the Ralph M. Brown Act (Gov. Code, § 54950 et seq.), an open meeting law that governs public agencies and the provisions of which “parallel” those of the OMA (Damon, supra, 85 Cal.App.4th at p. 475), the Legislature provided: “A majority of the members of a legislative body shall not, outside a meeting authorized by this chapter, use a series of communications of any kind, directly or through intermediaries, to discuss, deliberate, or take action on any item of business that is within the subject matter jurisdiction of the legislative body” (Gov. Code, § 54952.2, subd. (b)(1)). Interpreting section 4090, subdivision (a) to include the e-mail exchanges at issue in this case, as appellants would have us do, would effectively add to the OMA a similar provision prohibiting directors from discussing items of association business except at a board meeting. We refuse to adopt an interpretation of a statute that would require insertion of language the Legislature knew how to include but did not include. (Code Civ. Proc., § 1858; Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 545; Yao v. Superior Court (2002) 104 Cal.App.4th 327, 332-333.)
In sum, we conclude “board meeting,” as defined by section 4090, subdivision (a), is an in-person gathering of a quorum of the directors of a homeowners association at the same time and in the same physical location for the purpose of talking about and taking action on items of association business. E-mail exchanges among directors on those items that occur before a board meeting and in which no action is taken on the items, such as those at issue in this case, do not constitute board meetings within the meaning of that provision. The trial court therefore correctly rejected appellants’ claims that the e-mail exchanges were board meetings that violated the OMA.
- Unclean Hands Defense
Appellants’ last challenge to the judgment is to the trial court’s ruling that their “unclean hands” in sending the directors e-mails on matters of Association business barred them from pursuing claims that the Association violated the OMA when the directors exchanged similar e-mails among themselves. Appellants contend the doctrine of unclean hands is not available as a defense to a claim for violation of the OMA; the doctrine does not apply to the undisputed facts of this case; and principles of waiver, abandonment, or estoppel preclude the Association from asserting the defense. Because we have rejected appellants’ contention that the e-mail exchanges on which they based their claims constituted board meetings to which the notice, agenda, homeowner participation, and minutes requirements of the OMA apply, their claims the Association violated the OMA by not complying with those requirements fail as a matter of law. We therefore need not, and do not, decide whether the trial court correctly applied the unclean hands doctrine to bar the claims.
B. Appeal of Postjudgment Orders
Appellants also attack the trial court’s postjudgment orders denying their motion to strike or tax costs and granting the Association’s motion for attorney fees. They contend the trial court erred by awarding attorney fees under section 5975, subdivision (c), because that section applies to actions to enforce the governing documents of a homeowners association, not to an action like theirs that seeks relief for violations of the OMA. Rather, appellants argue, the statute that applies to their action is section 4955, subdivision (b), which never allows a homeowners association to recover attorney fees from a homeowner. Appellants further contend attorney fees were not recoverable under Code of Civil Procedure section 998, because that statute does not provide an independent basis to award fees, and the settlement offer the Association made under the statute was invalid for requiring a general release. As to costs, appellants contend the trial court relied on the correct statute (i.e., § 4955, subd. (b)), but erred by finding their action was “unreasonable” and therefore justified an award to the Association. They also contend the court abused its discretion by awarding the court reporter fees and “other” costs sought by the Association. Appellants ask us to reverse the challenged orders.
- Appealability and Standard of Review
“A postjudgment order which awards or denies costs or attorney’s fees is separately appealable.” (Silver v. Pacific American Fish Co., Inc. (2010) 190 Cal.App.4th 688, 693; see Code Civ. Proc., § 904.1, subd. (a)(2) [postjudgment order is appealable]; DeZerega v. Meggs (2000) 83 Cal.App.4th 28, 43 [postjudgment order awarding attorney fees is appealable]; Jimenez v. City of Oxnard (1982) 134 Cal.App.3d 856, 858, fn. 3 [postjudgment order denying motion to tax costs is appealable].) We review the trial court’s determination on whether the statutory criteria for an award of costs or attorney fees have been met de novo, and its determination on the amount of costs or fees for abuse of discretion. (Mountain Air Enterprises, LLC v. Sundowner Towers, LLC (2017) 3 Cal.5th 744, 751; McGuigan v. City of San Diego (2010) 183 Cal.App.4th 610, 622-623.) Whether an action is “frivolous,” “unreasonable,” or “without foundation” under a statute authorizing an award of costs or attorney fees in such an action presents a question of law we review de novo where, as here, the pertinent facts are not in dispute. (Rudisill v. California Coastal Com. (2019) 35 Cal.App.5th 1062, 1070; Smith v. Selma Community Hospital (2010) 188 Cal.App.4th 1, 31-33 (Smith).)
- Attorney Fees
We first consider the court’s award of attorney fees to the Association. Each party to an action must pay its own attorney fees unless a statute or contract requires the opposing party to pay them. (Code Civ. Proc., § 1021; Tract 19051 Homeowners Assn. v. Kemp (2015) 60 Cal.4th 1135, 1142; Srouy v. San Diego Unified School Dist. (2022) 75 Cal.App.5th 548, 558-559.) No contractual attorney fee provision is at issue here. The Association therefore may recover its attorney fees from appellants only if a statute authorizes recovery. The Association contends that because appellants’ action was, at least in part, an action to enforce the governing documents of the Association and it prevailed in the action, the trial court properly awarded fees under section 5975, subdivision (c). Appellants counter that they sued not to enforce the Association’s governing documents but to enforce the OMA, which does not authorize an award of attorney fees to the Association. As we shall explain, appellants are correct.
The governing documents of a homeowners association are enforceable in a civil action by a homeowner or by the association. (§ 5975, subds. (a), (b).) The Davis-Stirling Act defines “governing documents” as “the declaration and any other documents, such as bylaws, operating rules, articles of incorporation, or articles of association, which govern the operation of the common interest development or association.” (§ 4150.) The “declaration” is the document that “contain[s] [the] legal description of the common interest development”; states whether “the common interest development is a community apartment project, condominium project, planned development, stock cooperative, or combination thereof”; and “set[s] forth the name of the association and the restrictions on the use or enjoyment of any portion of the common interest development that are intended to be enforceable equitable servitudes.” (§§ 4135, 4250, subd. (a).) “In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs.” (§ 5975, subd. (c).) An award of attorney fees to the prevailing party is mandatory in such an enforcement action. (Champir, LLC v. Fairbanks Ranch Assn. (2021) 66 Cal.App.5th 583, 590; Rancho Mirage Country Club Homeowners Assn. v. Hazelbaker (2016) 2 Cal.App.5th 252, 263; Martin v. Bridgeport Community Assn., Inc. (2009) 173 Cal.App.4th 1024, 1039.)
To determine whether appellants sought by their action to enforce the Association’s governing documents, and therefore were liable for attorney fees because they failed to do so, we examine the allegations of their complaint. (See Gause v. Pacific Gas & Electric Co. (1923) 60 Cal.App. 360, 367 [“the nature of the action must be determined from the allegations of the complaint”]; Vera v. REL-BC, LLC (2021) 66 Cal.App.5th 57, 65-66 [reviewing allegations of complaint to determine nature of action for limitations purposes].) The only express reference to the governing documents in the complaint is in a paragraph describing the Association as “a nonprofit mutual benefit association existing by and under the laws of the State of California, and . . . governed by the Davis-Stirling Act, the California Corporations Code, and the Association’s governing documents, including, without limitation, its Covenants, Conditions and Restrictions (`CC&R’s’), its Articles, its By-Laws, and its Community Election Rules as published in the [Association’s] Community Handbook. The foregoing are collectively referred to herein as the `Governing Laws and Rules.'” Later in the complaint appellants alluded to the governing documents by alleging they had repeatedly requested minutes of all board meetings from the Association “in accordance with the Governing Laws and Rules.” The complaint nowhere mentions section 5975; the charging allegations neither cite nor quote any provision of any governing document; the prayer for relief does not ask the court to enforce any provision of the governing documents; and no governing document or part thereof is attached to the complaint. We would expect to find such content in the complaint had appellants sought enforcement of the Association’s governing documents under section 5975. Its absence shows this case is not that type of enforcement action.
The content of the complaint instead shows appellants sued the Association for allegedly violating the OMA. The complaint is labeled one for “VIOLATIONS OF COMMON INTEREST DEVELOPMENT OPEN MEETING ACT [Civil Code §§ 4900, et seq.].” Its first paragraph states that appellants “seek[ ] declaratory and equitable relief, and statutory penalties against [the Association] for violations of the [OMA].” The charging allegations of the complaint quote many provisions of the OMA, and then go on to state facts showing how the Association violated those provisions. In particular, the paragraphs referencing the “Governing Laws and Rules,” which as noted include the governing statutes and documents, alleged the Association’s failure to provide the board meeting minutes as requested by appellants violated the OMA, not the governing documents. Appellants prayed for a judgment declaring the Association violated the OMA and specifying the number of violations; an injunction requiring the Association to comply with the OMA; and civil penalties, costs, and attorney fees as provided in the OMA. (See § 4955.) Hence, appellants’ action was plainly one to enforce the OMA, not the Association’s governing documents. (See Black’s Law Dict. (11th ed. 2019) p. 668 [defining “enforce” as “[t]o give force or effect to (a law, etc.); to compel obedience to”].)
In urging us to reach a contrary conclusion, the Association points to appellants’ participation in alternative dispute resolution as statutorily required before filing an “enforcement action,” certification of such participation in the complaint, and litigation of “enforcement issues” at trial as indicators that their action was one to enforce the governing documents. We are not persuaded.
The alternative dispute resolution requirements of the Davis-Stirling Act apply not only to actions to enforce the governing documents of a homeowners association, but also to actions to enforce the OMA. (§§ 5925, subd. (b) [defining “enforcement action”], 5930, subd. (a) [requiring alternative dispute resolution before filing enforcement action], 5950, subd. (a) [requiring party commencing enforcement action to file certificate regarding alternative dispute resolution efforts].) Appellants’ compliance with those requirements did not transform their action to enforce the OMA into one to enforce the governing documents.
Nor did such a transformation occur as a result of appellants’ litigation tactics. The questioning of the Association’s directors at trial about appellants’ landscaping plans, on which the Association relies for its characterization of the action, did not involve any governing document and was designed to show the Association violated the OMA when directors discussed matters in executive session that should have been discussed in a session open to all homeowners and conducted board meetings via private e-mails. Moreover, in determining the nature of the action, we find it significant that none of the governing documents were introduced at trial and that the trial court made no mention of them in its statement of decision. The court described the action as one alleging violations of the OMA and determined no such violations had occurred. The record thus shows the parties litigated and the court decided claims under OMA, not claims under the Association’s governing documents.
Because appellants sought to enforce the OMA, the provision of the OMA concerning costs and attorney fees governs the award in this case. (See Department of Forestry & Fire Protection v. LeBrock (2002) 96 Cal.App.4th 1137, 1141 [attorney fees must be “specifically authorized” by applicable statute]; Covenant Mutual Ins. Co. v. Young (1986) 179 Cal.App.3d 318, 321 [same].) Under that provision, “[a] member who prevails in a civil action to enforce the member’s rights pursuant to this article shall be entitled to reasonable attorney’s fees and court costs. . . . A prevailing association shall not recover any costs, unless the court finds the action to be frivolous, unreasonable, or without foundation.” (§ 4955, subd. (b).) Construing the identically worded predecessor version (former § 1363.09, subd. (b)), the Court of Appeal concluded it authorizes the award of ordinary costs to a prevailing association in an action that is frivolous, unreasonable, or without foundation, but it does not authorize an award of attorney fees to the association in such an action. (That v. Alders Maintenance Assn. (2012) 206 Cal.App.4th 1419, 1427-1430; accord, Retzloff v. Moulton Parkway Residents’ Assn., No. One (2017) 14 Cal.App.5th 742, 748-749 (Retzloff).) Under this authority, the Association could not recover attorney fees from appellants.[4]
In sum, the trial court erred by characterizing appellants’ action as one to enforce the Association’s governing documents and awarding the Association attorney fees under section 5975, subdivision (c). As we have explained, appellants sought to enforce the OMA, which does not allow the Association to recover attorney fees from appellants. We therefore reverse the order granting the Association’s motion for attorney fees.
- Costs
We now turn to the trial court’s award of costs to the Association. A homeowners association that prevails in an action alleging violations of the OMA “shall not recover any costs, unless the court finds the action to be frivolous, unreasonable, or without foundation.” (§ 4955, subd. (b).) In opposition to appellants’ motion to strike or tax costs, the Association argued the action was unreasonable and without foundation because appellants had unclean hands that barred the action, rejected a settlement offer “which included everything [they] were seeking,” opposed the motion for summary judgment even though the Association was willing to concede limited liability to end the litigation, and kept on changing the number of OMA violations for which they sought civil penalties. The trial court found appellants'”pursuit of litigation was unreasonable at multiple stages” based on their unclean hands and rejection of a reasonable settlement offer, and denied their motion to strike or tax costs. The court erred in so doing, as we explain below.
Neither the OMA nor any published opinion defines “frivolous,” “unreasonable,” or “without foundation” as those terms are used in section 4955, subdivision (b). Such terms, however, are used in other cost-shifting statutes that courts have construed. For example, in Smith, supra, 188 Cal.App.4th 1, the Court of Appeal construed Business and Professions Code section 809.9, which authorizes an award of costs and attorney fees to the prevailing party “if the other party’s conduct in bringing, defending, or litigating the suit was frivolous, unreasonable, without foundation, or in bad faith.” The Court of Appeal adopted the view that “a matter is frivolous if any reasonable attorney would agree it is completely without merit in the sense that it lacks legal grounds, lacks an evidentiary showing, or involves an unreasonable delay.” (Smith, at p. 33, italics added; see Retzloff, supra, 14 Cal.App.5th at pp. 752-753 [adopting same definition for “frivolous” as used in § 5235, subd. (c)].) The Court of Appeal held an action is “without foundation” if there is no direct or circumstantial evidence supporting the plaintiff’s factual assertions, or if there is no statute, regulation, case law, or other legal authority supporting the plaintiff’s legal contentions. (Smith, at pp. 30-31.) For the term “unreasonable,” the Court of Appeal adopted the “any-reasonable-attorney standard,” which asks “whether any reasonable attorney would have thought the claim tenable” based on “the facts known to the plaintiff when [it] filed or maintained the action.” (Id. at p. 32.)[5] The terms “frivolous,” “unreasonable,” and “without foundation” partially overlap, since to determine whether an action may be described by any one of them requires the court to assess the grounds underlying the plaintiff’s factual or legal positions and the reasoning process linking those grounds to the ultimate conclusions advocated by the plaintiff. (Smith, at p. 33.) To decide whether appellants’ action qualifies as any of the quoted terms, we shall apply the Smith court’s definitions.
We first consider whether appellants’ unclean hands made their prosecution of the action “unreasonable,” as the Association urged and the trial court found. The trial court’s ruling that the unclean hands doctrine barred the action does not necessarily lead to the conclusion that the “`”action must have been unreasonable or without foundation.”‘” (Pollock, supra, 11 Cal.5th at p. 951 [cautioning against such “`”hindsight bias”‘” when awarding costs].) We need not delve deeply into the unclean hands doctrine, nor decide definitively whether the trial court correctly applied the doctrine, to decide whether appellants’ action was “unreasonable” within the meaning of section 4955, subdivision (b). The applicability of the unclean hands doctrine to appellants’ action was sufficiently debatable that a reasonable attorney could have concluded the doctrine did not bar the action.
To decide whether to apply the unclean hands doctrine, which prevents a plaintiff from profiting from its own inequitable conduct in a transaction by barring relief on a directly related cause of action (DD Hair Lounge, LLC v. State Farm General Ins. Co. (2018) 20 Cal.App.5th 1238, 1246; Camp v. Jeffer, Mangels, Butler & Marmaro (1995) 35 Cal.App.4th 620, 638-639), one factor courts consider is analogous case law (Jay Bharat Developers, Inc. v. Minidis (2008) 167 Cal.App.4th 437, 445-446; Blain v. Doctor’s Co. (1990) 222 Cal.App.3d 1048, 1060). This court and others have held the unclean hands doctrine cannot be applied to defeat claims under statutes designed to protect one class of persons from the activities of another. (See, e.g., East West Bank v. Rio School Dist. (2015) 235 Cal.App.4th 742, 752; Mendoza v. Ruesga (2008) 169 Cal.App.4th 270, 279; Ticconi v. Blue Shield of California Life & Health Ins. Co. (2008) 160 Cal.App.4th 528, 544.) The OMA may qualify as that type of statute in that it protects homeowners by prohibiting the board of directors of the homeowners association from holding secret meetings at which it takes action on matters directly affecting the homeowners and their community. (See §§ 4910, subd. (a), 4925; Golden Eagle, supra, 19 Cal.App.5th at p. 416; Damon, supra, 85 Cal.App.4th at p. 475.) It was therefore at least arguable under existing case law that as a matter of law the unclean hands doctrine did not bar appellants’ claims for violations of the OMA. (See East West Bank, at p. 752 [unclean hands doctrine did not apply as a matter of law when no analogous case law supported application]; Smith, supra, 188 Cal.App.4th at p. 41 [position is arguable when consistent with language in some cases].) Because a reasonable attorney could have concluded the claims were not barred, appellants’ decision to pursue them was not “unreasonable” (or “frivolous” or “without foundation”) within the meaning of section 4955, subdivision (b). (Smith, at pp. 30-33 [defining quoted terms].)
We next consider whether appellants’ rejection of the Association’s settlement offer (see fn. 1, ante) shows their continued pursuit of the action was “unreasonable” (§ 4955, subd. (b)), as the trial court found. Again, we must resist the distorting effect of “`”hindsight bias”‘” and not conclude that decision “`”must have been unreasonable or without foundation”‘” simply because appellants recovered nothing at trial when they could have settled for $25,000.01 plus costs and attorney fees. (Pollock, supra, 11 Cal.5th at p. 951.) Rejection of a reasonable settlement offer (i.e., one within the range of reasonably possible trial results) may indicate bad faith (i.e., unreasonable litigation conduct). (Covert v. FCA USA, LLC (2022) 73 Cal.App.5th 821, 834 (Covert); Pinto v. Farmers Ins. Exchange (2021) 61 Cal.App.5th 676, 688.) Any assessment of the reasonableness of the offer must take into account the information known or available to the parties at the time of the offer. (Covert, at p. 834; Arno v. Helinet Corp. (2005) 130 Cal.App.4th 1019, 1025.)
When the Association made its offer, there was no case law on whether e-mail exchanges of the type of which appellants complained constituted board meetings in violation of the OMA, and if so, how many violations occurred in the exchanges. The parties’ positions on those issues varied all the way through the end of trial. The amount of civil penalties, if any, appellants were likely to recover was thus uncertain. Moreover, civil penalties were not the only remedy appellants sought; they also requested declaratory and injunctive relief. The Association did not agree to any such relief in the settlement offer, which therefore did not “include[ ] everything [a]ppellants were seeking,” as the Association erroneously asserts. To the contrary, the offer required appellants to release their claims for declaratory and injunctive relief, as well as any other claims “that could have been asserted by [appellants] in relation to the allegations of the Complaint.” “Requiring resolution of potential unfiled claims not encompassed by the pending action renders the offer incapable of valuation.” (Ignacio v. Caracciolo (2016) 2 Cal.App.5th 81, 87.)
Given the difficulty in valuation and the uncertainty in the law, it is unclear whether the Association’s settlement offer was “`within the “range of reasonably possible results” at trial.'” (Covert, supra, 73 Cal.App.5th at p. 834.) We thus cannot say that no reasonable attorney would have rejected the offer, so that to have done so was “unreasonable” (or “frivolous” or “without foundation”) within the meaning of section 4955, subdivision (b). (Smith, supra, 188 Cal.App.4th at pp. 30-33 [defining quoted terms].)
The Association offers grounds in addition to those relied on by the trial court to affirm the award of costs. It argues appellants’ action was “frivolous, unreasonable, or without foundation” (§ 4955, subd. (b)) because appellants: (1) failed to produce any evidence to support their claim for injunctive relief, which was summarily adjudicated against them; (2) opposed the Association’s attempt to resolve the matter by motion for summary judgment by conceding liability for 10 civil penalties; and (3) kept on changing their position on the number of OMA violations to prolong the litigation and to deplete the Association’s resources. We are not persuaded.
We disagree with the Association’s contention that the adverse summary adjudication ruling shows appellants’ request for injunctive relief was “unreasonable and without foundation.” In opposition to the Association’s motion for summary judgment/adjudication, appellants presented evidence the Association had failed to produce minutes for certain board meetings, and argued the failure violated the OMA and warranted injunctive relief. The OMA requires the production of minutes of board meetings and authorizes injunctive relief. (§§ 4950, subd. (a), 4955, subd. (a).) Although the trial court ruled against appellants on the ground they had not met their burden to establish the threat of future harm (see, e.g., Connerly v. Schwarzenegger (2007) 146 Cal.App.4th 739, 751 [“Without a threat of present or future injury, no injunction can lie.”]), their request for injunctive relief was not so lacking in legal or evidentiary support that no reasonable attorney would have pursued it. (See Smith, supra, 188 Cal.App.4th at pp. 30-33 [discussing meanings of “unreasonable” and “without foundation”].)
We also disagree that appellants’ refusal to accept the number of civil penalties the Association was willing to concede to resolve the case by summary judgment and their later changes in position on the number of penalties they were seeking justify the award of costs. The trial court denied the summary judgment motion on the grounds that appellants had raised triable issues of fact on the number of OMA violations for which a penalty could be imposed and the OMA was ambiguous on whether a separate penalty could be awarded to each appellant for each violation. That denial precludes a finding that no reasonable attorney would have thought appellants’ position tenable. (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 824; Clark v. Optical Coating Laboratory, Inc. (2008) 165 Cal.App.4th 150, 183-185.) After denial of the summary judgment motion, the parties continued to litigate the case on the assumption the directors’ e-mail exchanges challenged in the complaint violated the OMA. Not until the end of trial, in response to questioning by the court, did the Association take the position the exchanges were not board meetings within the meaning of the OMA. Given the parties’ shared erroneous assumption, the number of e-mails involved, and the lack of case law on point, appellants’ changing position on the number of violations subject to a civil penalty was not so lacking in factual or legal support that it was “frivolous, unreasonable, or without foundation.” (§ 4955, subd. (b); see Smith, supra, 188 Cal.App.4th at pp. 30-33 [defining quoted terms].)
The Association also argues it is entitled to recover costs under Code of Civil Procedure section 998, subdivision (c)(1), which requires a plaintiff that rejects a defendant’s settlement offer and does not obtain a more favorable judgment to pay the defendant’s postoffer costs. We disagree. The cost-shifting provisions of that statute do not apply when a more specific cost-shifting statute applies to the claims at issue. (Cruz v. Fusion Buffet, Inc. (2020) 57 Cal.App.5th 221, 240-241; Arave v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (2018) 19 Cal.App.5th 525, 551-553.) Under the OMA, “[a] prevailing association shall not recover any costs, unless the court finds the action to be frivolous, unreasonable, or without foundation.” (§ 4955, subd. (b).) Because we have determined appellants’ action does not meet that description, the Association is not entitled to costs.
In sum, we conclude the OMA precluded the Association from recovering any costs from appellants. We therefore need not, and do not, decide whether the particular items appellants have challenged (i.e., court reporter fees and “other” costs) were recoverable. We reverse the order denying appellants’ motion to strike or tax costs, and direct the trial court on remand to deny all costs and strike the amended judgment awarding costs.
III.
DISPOSITION
The judgment is affirmed. The order denying appellants’ motion to strike or tax costs is reversed. The order granting the Association’s motion for attorney fees is reversed. The matter is remanded to the trial court with directions: (1) to vacate the order denying appellants’ motion to strike or tax costs, and to enter a new order granting the motion and denying all costs; (2) to vacate the order granting the Association’s motion for attorney fees, and to enter a new order denying the motion; and (3) to strike the amended judgment. In the interest of justice, the parties shall bear their own costs on appeal.
McCONNELL, P. J. and DATO, J., concurs.
[1] On October 10, 2019, the Association offered, “[i]n full settlement, release and dismissal of the Complaint . . ., including the settlement of all claims asserted or that could have been asserted by [appellants] in relation to the allegations of the Complaint,” to pay appellants $25,000.01 and their “reasonable attorney’s fees and taxable costs” incurred in the action up to the date of the offer. The offer stated it was an offer to compromise under Code of Civil Procedure section 998 and was “subject to the terms and conditions” of the statute. Under the statute, “[i]f an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment . . ., the plaintiff shall not recover his or her postoffer costs and shall pay the defendant’s costs from the time of the offer.” (Code Civ. Proc., § 998, subd. (c)(1).) Such costs include attorney fees when authorized by contract or statute. (Id., § 1033.5, subd. (a)(10).) Appellants allowed the Association’s offer to lapse.
[2] If, as appellants contend, cyberspace qualifies as a “place” within the meaning of section 4090, subdivision (a), because the directors “met” there “to exchange ideas and opinions on [Association] items of business” by sending e-mails to one another, it is unclear how the Association could have discharged its obligation under the OMA to “give notice of the time and place of a board meeting at least four days before the meeting.” (§ 4920, subd. (a).) Appellants provide no answer in their briefs.
[3] As pertinent to appellants’ contention, the cited statute authorizes a director of a corporation to participate in a board meeting “through use of electronic transmission by and to the corporation, other than conference telephone and electronic video screen communication,” provided the director “can communicate with all of the other directors concurrently” and “is provided the means of participating in all matters before the board, including, without limitation, the capacity to propose, or to interpose an objection to, a specific action to be taken by the corporation.” (Corp. Code, § 7211, subd. (a)(6).) This statute does not apply to meetings of the board of directors of a homeowners association. The OMA provides, “Notwithstanding Section 7211 of the Corporations Code,” the board “shall not conduct a meeting via a series of electronic transmissions, including, but not limited to, electronic mail,” except for an emergency board meeting. (§ 4910, subd. (b).) The use of the “notwithstanding” phrase expresses a legislative intent to have the OMA provision override the Corporations Code provision that would otherwise apply. (Ni v. Slocum (2011) 196 Cal.App.4th 1636, 1647.)
[4] In the trial court, the Association sought attorney fees under section 4955, subdivision (b), on the ground appellants’ action was “unreasonable” and “without foundation.” The court did not award fees on that ground, which the Association has abandoned on appeal. The court did, however, limit the award to fees the Association incurred after appellants rejected the Code of Civil Procedure section 998 settlement offer (see fn. 1, ante), apparently because the court found appellants’ continued litigation thereafter was “unreasonable.” Code of Civil Procedure “section 998 does not grant greater rights to attorney’s fees than those provided by the underlying statute,” but “merely expands the group of those who are treated as prevailing parties and who therefore may be entitled to attorney’s fees as prevailing parties under the relevant statute.” (Mangano v. Verity, Inc. (2008) 167 Cal.App.4th 944, 951; see Ford Motor Credit Co. v. Hunsberger (2008) 163 Cal.App.4th 1526, 1532 [Code Civ. Proc., § 998 “does not independently create a statutory right to attorney fees”].) Because the relevant statute (§ 4955, subd. (b)) gave the Association no right to recover attorney fees from appellants, Code of Civil Procedure section 998 did not authorize the fee-shifting ordered by the court.
[5] We reject appellants’ contention that costs could be awarded to the Association only if the trial court found the entire action was unreasonable when it was filed. Our Supreme Court has held that when a defendant may recover costs for defending a “`frivolous, unreasonable, or groundless'” action, recovery is available if “the court finds the action was objectively without foundation when brought, or the plaintiff continued to litigate after it clearly became so.” (Williams v. Chino Valley Independent Fire Dist. (2015) 61 Cal.4th 97, 101, 115, italics added; accord, Pollock v. Tri-Modal Distribution Services, Inc. (2021) 11 Cal.5th 918, 951 (Pollock).) As the Smith court implicitly recognized, an action that was not unreasonable when filed may become so later if factual discoveries or legal developments make the action untenable, because the court must “analyz[e] the facts known to the plaintiff when he or she filed or maintained the action” to determine whether it was unreasonable. (Smith, supra, 188 Cal.App.4th at p. 32, italics added; cf. Zamos v. Stroud (2004) 32 Cal.4th 958, 970 [“continuing to prosecute a lawsuit discovered to lack probable cause” is unreasonable and subjects attorney to liability for malicious prosecution].
Related Links
Email Discussions Between HOA Board Members are not “Meetings”
-Published on HOA Lawyer Blog (September 2023)
AB-648 (Valencia) Common interest developments: procedures: meetings by teleconference
Would authorize a board meeting or a meeting of the members to be conducted entirely by teleconference.
Current Status: Chaptered
FindHOALaw Quick Summary:
The Davis-Stirling Common Interest Development Act governs the management and operation of common interest developments. It defines a board meeting as a congregation or a teleconference and requires, among other things, a board meeting held by teleconference to identify at least one physical location so that members of the association may attend. Existing law also establishes alternative teleconferencing procedures for a board meeting or a meeting of the members if gathering in person is unsafe or impossible because the common interest development is in an area affected by a federal, state, or local emergency.
This bill would add Civil Code Section 4926 to authorize a board meeting or a meeting of the members to be conducted entirely by teleconference if specified conditions are satisfied. These conditions would include, among others, a requirement that the notice for the meeting provide clear instructions on how to participate by teleconference and would require each director and member to have the same ability to participate that would exist if the meeting were held in person. The bill would exempt from these teleconference provisions a meeting at which ballots are counted and tabulated pursuant to Civil Code Section 5120.
**AB-648 was signed in to law on September 22, 2023 and takes effect January 1, 2024.
View more info on AB 648from the California Legislature's website
SB-391 (Min) Common interest developments: emergency powers and procedures.
Would allow for teleconference board meeting in cases of federal, state or local emergencies.
Current Status: Chaptered
FindHOALaw Quick Summary:
**UPDATE: SB 391 was signed by the Governor on September 23, 2021. Its changes to the law take effect immediately.
from the California Legislature's website
Related Links
Talega Maintenance Corporation v. Standard Pacific Corporation
[Board meetings; Protected Speech & Anti-SLAPP] Statements made at HOA Board meetings are not matters of “public interest” nor “official proceedings” that are entitled to constitutional protection under anti-SLAPP statutes.
Newmeyer & Dillion, James S. Hultz and Uliana A. Kozeychuk for Defendants and Appellants.
The Law Offices of Jeri E. Tabback and Jeri E. Tabback for Plaintiff and Respondent.
OPINION
IKOLA, J. —
Plaintiff Talega Maintenance Corporation (HOA), a homeowners association, sued two developers for construction defects. The developers, who developed the residential community itself, also developed certain trails adjacent to the housing community. The trails were badly damaged during rains and flooding in 2005 and again in 2010, allegedly as a result of construction defects.
The HOA also sued three former employees of the developers. The employees were appointed by the developers to be members of the HOA’s board of directors at various times since 2003.[FN. 1]
The HOA alleges the employee defendants committed fraud, negligence, and breached fiduciary duties in performing their duties as board members. In particular, the HOA contends it is not financially responsible for repairing the trails; the developers are. Yet the developer board members, who comprised a majority of the board, represented that the HOA was responsible and expended HOA funds to investigate and repair the trails.
[726] Defendants filed an anti-SLAPP motion [FN. 2] pursuant to Code of Civil Procedure section 425.16 [FN. 3] to strike the fraud, negligence, and fiduciary duty claims, contending they arise from protected statements made at the HOA board meetings. The trial court denied the motion and defendants appeal from that denial. We affirm.
FACTS
The following facts are taken from the complaint and the declarations filed in connection with the anti-SLAPP motion.
Defendant Talega Associates, LLC, purchased land for what became a 3,900-acre master planned community in San Clemente known as the “Talega Project.” Ultimately, more than 3,500 homes housing more than 9,000 residents were built. Plaintiff is the homeowners association for the Talega Project. Defendant Standard Pacific Corporation (collectively with Talega Associates referred to as Developers) was a “Guest Builder” that purchased unimproved lots and built separate communities within the Talega Project. The complaint alleges the Developers planned and constructed the Prima Deshecha and Cristianitos regional riding and hiking trails (the Trails), which are the trails at issue here. Defendants Patrick Hayes, Jerome Miyahara, and James B. Yates (collectively, Developer Board Members) were employees of Talega Associates who were appointed to represent Talega Associates on the HOA’s board of directors. At all relevant times, the Developer Board Members comprised a majority of the HOA’s board of directors.
In approximately 2005, the Trails suffered a partial slope failure as a result of severe rains. By that time, title to a portion of the damaged property had already transferred to the HOA. The Developer Board Members represented that the HOA was responsible to pay for repairs to the property it owned — the allegedly fraudulent statement — and to that end expended over $500,000 of HOA funds. According to the complaint, however, the Developer Board Members knew, but failed to disclose, that under the relevant controlling documents, the Developers were responsible for the cost of repairs. Further, the Developer Board Members knew, but failed to disclose, that the damages were the result of the Developers’ improper construction of the Trails, as explicitly pointed out to them by agents of Orange County.
In 2010 rains again damaged the Trails. This time, however, the independent board members had formed an executive committee — with no Developer [727] Board Members — that hired its own consultants to investigate the cause of the damages. From the consultants, the independent board members learned for the first time that the Developers were bound forever to provide repairs to the Trails, that the Trails were not actually completed, and that the Trails’ failures were likely the result of construction defects.
The HOA filed suit in September of 2012, alleging causes of action for breach of fiduciary duty, fraud, constructive fraud, construction defect, negligence, and declaratory relief. Each of the defendants filed anti-SLAPP motions targeting the causes of action for breach of fiduciary duty, fraud, constructive fraud, and negligence. At the hearing on the motions the court recognized it was a close call, stating, “I don’t think it’s a slam dunk. It could go either way. And I just want to give it some more thought as to the extent to which it might operate to strike some but not all of the allegations; or whether it is an all or a nothing.” Ultimately, the court denied the motions in their entirety, stating, “[Defendants] failed to establish that any statements were an exercise of free speech. Additionally, [defendants] failed to establish that statements at issue were made before, or in connection with, an official proceeding authorized by law. Moreover, even if the statements were made in a public forum via a [homeowners association] open board meeting, [defendants] have not demonstrated that they involved a matter of sufficient public interest or an exercise of a free speech right.” Defendants timely appealed.
DISCUSSION
I. Legal Principles
Section 425.16, subdivision (b)(1), the anti-SLAPP statute, states, “A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.”
(1) The anti-SLAPP statute “requires the court to engage in a two-step process. First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity…. [Citation.] If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim.” (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 [124 Cal.Rptr.2d 507, 52 P.3d 685].)
“The sole inquiry under the first prong of the anti-SLAPP statute is whether the plaintiff’s claims arise from protected speech or petitioning [728] activity. [Citation.] Our focus is on the principal thrust or gravamen of the causes of action, i.e., the allegedly wrongful and injury-producing conduct that provides the foundation for the claims. [Citations.] We review the parties’ pleadings, declarations, and other supporting documents at this stage of the analysis only `to determine what conduct is actually being challenged, not to determine whether the conduct is actionable.'” (Castleman v. Sagaser (2013) 216 Cal.App.4th 481, 490-491 [156 Cal.Rptr.3d 492] (Castleman).)
As used in the anti-SLAPP statute, “`act in furtherance of a person’s right of petition or free speech … in connection with a public issue’ includes: (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law, (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law, (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest, or (4) any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or on an issue of public interest.” (§ 425.16, subd. (e).)
(2) “An order denying a special motion to strike under section 425.16 is immediately appealable. [Citations.] Our review is de novo; we engage in the same two-step process as the trial court to determine if the parties have satisfied their respective burdens. [Citations.] If the defendant fails to show that the lawsuit arises from protected activity, we affirm the trial court’s ruling and need not address the merits of the case under the second prong of the statute.” (Castleman, supra, 216 Cal.App.4th at p. 490.)
II. The Constructive Fraud, Breach of Fiduciary Duty, and Negligence Causes of Action Are Not Subject to the Anti-SLAPP Statute
(3) Of the four causes of action subject to the anti-SLAPP motions, we can immediately rule out all but the fraud cause of action. Section 425.16, subdivision (e)(1), (2) and (3) apply to “any written or oral statement.” [FN. 4] The breach of fiduciary duty, constructive fraud, and negligence claims are principally based on the Developer Board Members withholding information and improperly directing the expenditure of funds. These are not “written or oral statements.” Accordingly, those subdivisions do not apply.
The only possible application would be subdivision (e)(4), which pertains to “any other conduct in furtherance of the exercise of the constitutional right [729] of petition or the constitutional right of free speech….” (See, e.g., Lieberman v. KCOP Television, Inc. (2003) 110 Cal.App.4th 156 [1 Cal.Rptr.3d 536] [television station’s gathering of information to be used in broadcast was protected conduct]; No Doubt v. Activision Publishing, Inc. (2011) 192 Cal.App.4th 1018 [122 Cal.Rptr.3d 397][creation of a video game featuring the likeness of members of a famous rock band was expressive work constituting protected conduct].) Although defendants have paid lip service to the application of subdivision (e)(4), they make no effort to explain how withholding information they had a fiduciary duty to divulge, or expending funds to investigate and repair the Trails, is constitutionally protected conduct.
(4) Instead, defendants insist that these causes of action are in fact based on express statements made at board meetings, and thus should be treated the same as the fraud cause of action. Defendants recount that plaintiff’s attorney admitted at oral argument in the trial court that “[t]he fraud allegation is based on a statement that was made at a board meeting.” They then leap to the following conclusion: “In fact, allof the causes of action are based upon the allegation that the Defendants controlled, directed, and/or voted for certain actions taken by the HOA in connection with the Regional Trails. [Citation.] Therefore, the HOA’s admission … extends to all of the subject causes of action.” But that is a non sequitur. Controlling, directing, and voting for certain actions are not statements.
We recognize, nonetheless, that voting can constitute protected activity. (See Schroeder v. Irvine City Council (2002) 97 Cal.App.4th 174, 183, fn. 3 [118 Cal.Rptr.2d 330] [stating in dicta, with respect to city council member votes, “voting is conduct qualifying for the protections afforded by the First Amendment”].) Nonetheless, voting is not per se protected activity. (See Donovan v. Dan Murphy Foundation (2012) 204 Cal.App.4th 1500, 1506 [140 Cal.Rptr.3d 71] (Donovan)[stating, with respect to the vote of a nonprofit organization board member, “The mere act of voting, however, is insufficient to demonstrate that conduct challenged in a cause of action arose from protected activity.”].) Here, the HOA’s claim arises from the act of spending money in violation of the Developer Board Members’ fiduciary duties. The allegations in the complaint concerning the breach of fiduciary duty cause of action, for example, include no mention of voting. While the expenditure of money may have been precipitated by a vote, “the fact that protected activity may have triggered a cause of action does not necessarily mean the cause of action arose from the protected activity.” (Id. at p. 1507; see Graffiti Protective Coatings, Inc. v. City of Pico Rivera (2010) 181 Cal.App.4th 1207, 1218 [104 Cal.Rptr.3d 692][conduct challenged in action alleging city failed to comply with competitive bidding requirement was not officials’ communications or deliberations, but their failure to obey state and local laws].) The vote [730] was merely incidental. Thus the anti-SLAPP statute does not apply to the HOA’s causes of action for breach of fiduciary duty, constructive fraud, and negligence.
III. The Fraud Cause of Action Is Not Subject to the Anti-SLAPP Statute
The fraud cause of action presents a closer question. The HOA alleges the Developer Board Members fraudulently misrepresented that the HOA was financially liable for repairing the Trails. The HOA’s counsel conceded this representation was made at a HOA board meeting. Defendants contend subdivisions (e)(1), (2) and (3) apply.
A. Homeowners Association Board Meetings Are Not Official Proceedings
Subdivision (e)(1) applies to statements “made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law.” (Italics added.) Defendants contend homeowners association meetings are official proceedings authorized by law. In support of their contention they note that courts have described a homeowners association as a “quasi-governmental entity” (Silk v. Feldman (2012) 208 Cal.App.4th 547, 553 [145 Cal.Rptr.3d 484] (Silk)), and that the meetings and activities of homeowners associations are heavily regulated under the Davis-Stirling Common Interest Development Act (Civ. Code, § 4000 et seq.). Neither party cited, nor have we found, any case directly addressing the issue of whether a homeowners association meetings is an “official proceeding” for purposes of subdivision (e)(1).
We begin our analysis with two cases that found the proceeding before it was an official proceeding authorized by law. The first is the seminal case analyzing “official proceeding,” Kibler v. Northern Inyo County Local Hospital Dist. (2006) 39 Cal.4th 192 [46 Cal.Rptr.3d 41, 138 P.3d 193] (Kibler). The issue in Kibler was whether a hospital’s peer review disciplinary proceedings were “`official proceeding[s]'” for purposes of the anti-SLAPP statute. (Kibler, at p. 197.) The plaintiff was a doctor who had been disciplined. He sued the hospital based on statements made during the proceedings and the hospital brought an anti-SLAPP motion. (Id. at pp. 196-197.) In concluding the hospital peer review proceedings are official proceedings, the court relied on three considerations. First, peer review proceedings are required of hospitals and heavily regulated. (Id. at pp. 199-200.) Second, because hospitals are required to report the results of peer review proceedings to the Medical Board of California, peer review proceedings play a “significant role” in “`aid[ing] the appropriate state licensing boards in their responsibility to regulate and discipline errant [731] healing arts practitioners.'” (Id. at p. 200.) Third, “[a] hospital’s decisions resulting from peer review proceedings are subject to judicial review by administrative mandate. [Citation.] Thus, the Legislature has accorded a hospital’s peer review decisions a status comparable to that of quasi-judicial public agencies whose decisions likewise are reviewable by administrative mandate.” (Ibid.)
The second case reaching a similar result is Fontani v. Wells Fargo Investments, LLC (2005) 129 Cal.App.4th 719 [28 Cal.Rptr.3d 833], disapproved on other grounds in Kibler, supra, 39 Cal.4th at page 203, footnote 5. In Fontani a former securities broker-dealer sued his former employer based on statements the latter made to the National Association of Securities Dealers (NASD) concerning the reasons for the plaintiff’s termination. (Fontani, at p. 725.) The issue was whether the proceeding before the NASD was an “official proceeding” for purposes of subdivision (e)(1). (Fontani, at p. 728.) In answering in the affirmative, the court relied on the following observations: “In its capacity here, the NASD exercises governmental power because `it is the primary regulatory body for the broker-dealer industry’ and thus performs uniquely regulatory functions typically performed by a governmental regulatory agency. [Citations.] More specifically, while the NASD may perform some private functions, … it stands as a regulatory surrogate for the [Securities and Exchange Commission]. The federal securities laws `”delegate[] government power” to [self-regulatory organizations] such as the New York Stock Exchange … and the NASD “to enforce … compliance by members of the industry with both the legal requirements laid down in the Exchange Act and ethical standards going beyond those requirements.”‘” (Id. at p. 729; see Vergos v. McNeal (2007) 146 Cal.App.4th 1387, 1396 [53 Cal.Rptr.3d 647] [administrative grievance procedure set up by Regents of the University of California, “a constitutional entity having quasi-judicial powers,” deemed official proceeding].)
Next we turn to two cases holding the proceeding at issue was not an official proceeding.
In Garretson v. Post (2007) 156 Cal.App.4th 1508 [68 Cal.Rptr.3d 230], “[t]he key issue” was “whether defendant’s act of noticing a nonjudicial foreclosure sale of plaintiff’s property constitutes protected activity under the anti-SLAPP statute.” (Id. at p. 1515.) The court noted that nonjudicial foreclosure sales are governed by a comprehensive statutory framework and that the end result is a “final adjudication of the rights of the borrower and lender.” (Id. at p. 1516.) The court also noted that nonjudicial foreclosure activity is protected by the litigation privilege. (Id. at p. 1518.) Nonetheless, the court concluded a nonjudicial foreclosure is fundamentally a “`private, contractual proceeding, rather than an official, governmental proceeding or [732] action.'” (Id. at p. 1520.) The court distinguished Kibler on the basis that nonjudicial foreclosures “are not closely linked to any governmental, administrative, or judicial proceedings or regulation, such as the state licensing and regulation of physicians in Kibler.” (Garretson, at p. 1521.)
In Donovan, supra, 204 Cal.App.4th 1500, the plaintiff was a former member of the board of directors of a nonprofit charitable organization who sued the organization and current board members for wrongful removal. (Id. at pp. 1502-1503.) The defendants contended the board meeting at which the plaintiff was removed was an official proceeding because “board of directors meetings and majority voting are authorized under the Corporations Code, and the issue whether to retain [the plaintiff] was an issue of consideration before the [board of directors].” (Id. at p. 1508.) The court rejected that contention and distinguished Kibler on the basis that board decisions are not subject to review by administrative mandate and because, though meetings of the board of directors were authorized by statute, “the actual procedures are left to the private organizations.” (Donovan, at p. 1508; see Olaes v. Nationwide Mutual Ins. Co. (2006) 135 Cal.App.4th 1501, 1508 [38 Cal.Rptr.3d 467] [private company’s sexual harassment grievance protocol not an official proceeding].)
(5) In this spectrum of cases, homeowners association meetings fall outside the scope of official proceedings. Although the word “official” in subdivision (e)(1) is not coextensive with “governmental” (Kibler, supra, 39 Cal.4th at p. 203), the case law demonstrates that nongovernmental proceedings must have a strong connection to governmental proceedings to qualify as “official.” Thus, although courts have recognized the similarities between a homeowners association and a local government, even going so far as to describe a homeowners association as a “quasi-governmental entity, paralleling the powers and duties of a municipal government” (Silk, supra, 208 Cal.App.4th at p. 553), a homeowners association is not performing or assisting in the performance of the actual government’s duties, as was the case in Kibler and Fontani. Further, unlike the hospital peer review board decision in Kibler, decisions by the board of a homeowners association are not reviewable by administrative mandate. Thus they have not been delegated government functions to the same extent. Finally we note that although no case has directly addressed this issue, multiple cases have addressed anti-SLAPP motions arising from statements at homeowners association board meetings, and all such cases have analyzed the case under the rubric of subdivision (e)(3) or (4). (See, e.g., Silk, at p. 553; Cabrera v. Alam (2011) 197 Cal.App.4th 1077, 1086-1087 [129 Cal.Rptr.3d 74]; Damon v. Ocean Hills Journalism Club (2000) 85 Cal.App.4th 468, 474 [102 Cal.Rptr.2d 205] (Damon).) Our holding is consistent with the approach taken in those cases.
[733] B. Whether the HOA or the Developers Were Liable to Pay for Repairs to the Trails Was Not an Issue Under Consideration by a Governmental Body
Subdivision (e)(2) applies to statements “made in connection with an issue under consideration or review by a legislative, executive, or judicial body.” Citing allegations in the complaint that the Developers worked closely with the County of Orange and City of San Clemente in the construction of the Trails, defendants contend “there can be no dispute that the construction and condition of the trails were issues under consideration and review by governmental agencies, and alleged statements regarding these issues were protected speech.”
The problem is, the relevant issue is not the general construction and condition of the Trails. Rather, the allegedly fraudulent statement concerns who has to pay for repairing the Trails. There is nothing in the record suggesting the County of Orange or City of San Clemente was considering that issue.
(6) Courts have generally rejected attempts to abstractly generalize an issue in order to bring it within the scope of the anti-SLAPP statute. For example, in the context of subdivision (e)(3), where the statement must concern an issue of public interest, the court in World Financial Group, Inc. v. HBW Ins. & Financial Services, Inc. (2009) 172 Cal.App.4th 1561, 1570 [92 Cal.Rptr.3d 227], stated, “While employee mobility and competition are undoubtedly issues of public interest when considered in the abstract, one could arguably identify a strong public interest in the vindication of any right for which there is a legal remedy. `The fact that “a broad and amorphous public interest” can be connected to a specific dispute is not sufficient to meet the statutory requirements’ of the anti-SLAPP statute. [Citation.] By focusing on society’s general interest in the subject matter of the dispute instead of the specific speech or conduct upon which the complaint is based, defendants resort to the oft-rejected, so-called `synecdoche theory of public issue in the anti-SLAPP statute,’ where `[t]he part [is considered] synonymous with the greater whole.’ [Citation.] In evaluating the first prong of the anti-SLAPP statute, we must focus on `the specific nature of the speechrather than the generalities that might be abstracted from it.'” (Italics added.) Similarly, here, our focus is not on some general abstraction that may be of concern to a governmental body, but instead on the specific issue implicated by the challenged statement and whether a governmental entity is reviewing that particular issue. On the record before us, this requirement is not satisfied.
[734] C. Who Was to Pay For Repairing the Trail Was Not an Issue of Public Interest
Subdivision (e)(3) applies to statements “made in a place open to the public or a public forum in connection with an issue of public interest….” Plaintiff concedes homeowners association meetings constitute a public forum, and thus the issue boils down to whether the alleged fraudulent statements were in connection with an issue of public interest.
(7) “The definition of `public interest’ within the meaning of the anti-SLAPP statute has been broadly construed to include not only governmental matters, but also private conduct that impacts a broad segment of society and/or that affects a community in a manner similar to that of a governmental entity.” (Damon, supra, 85 Cal.App.4th at p. 479.) “Although matters of public interest include legislative and governmental activities, they may also include activities that involve private persons and entities, especially when a large, powerful organization may impact the lives of many individuals.” (Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 650 [49 Cal.Rptr.2d 620], disapproved on other grounds in Equilon Enterprises v. Consumer Cause, Inc., supra, 29 Cal.4th at p. 68, fn. 5.) However, “in cases where the issue is not of interest to the public at large, but rather to a limited, but definable portion of the public (a private group, organization, or community), the constitutionally protected activity must, at a minimum, occur in the context of an ongoing controversy, dispute or discussion, such that it warrants protection by a statute that embodies the public policy of encouraging participation in matters of public significance.” (Du Charme v. International Brotherhood of Electrical Workers (2003) 110 Cal.App.4th 107, 119 [1 Cal.Rptr.3d 501].)
It is the latter requirement that is absent with respect to the fraud cause of action here. There is no indication in the record that there was any controversy, dispute, or discussion surrounding the Developer Board Members’ representation that the HOA was liable to pay the repair costs. To the contrary, a declaration submitted by an independent board member states, “I believed [the Developer Board Members’] representations, as I had no reason to believe at the time that they were not telling me the truth or acting in the best interest of the Association.” This suggests there was no controversy about the issue, and nothing in the record contradicts that inference. The Developer Board Members made their statements and others believed them without dispute. Given the absence of any controversy, dispute, or discussion, the issue of who was to pay for the repairs, which was of interest to only a narrow sliver of society, was not a public issue.
By contrast, in cases involving statements made at public homeowners association forums where the court found there was a public issue, the [735] requirement of an ongoing controversy was satisfied. In Damon, for example, “each of the alleged defamatory statements concerned (1) the decision whether to continue to be self-governed or to switch to a professional management company; and/or (2) [the general manager’s] competency to manage the Association.” (Damon, supra, 85 Cal.App.4th at p. 479.) “Moreover, the statements were made in connection with the Board elections and recall campaigns.” (Ibid.) Indeed, “[b]y the end of 1997, the senior citizen residents of Ocean Hills were largely split into two camps: those who favored [the general manager’s] continued service and those who wanted [him] terminated as general manager.” (Id. at p. 472.) In Cabrera v. Alam, supra, 197 Cal.App.4th at page 1082, the statement at issue was an accusation in the midst of an election campaign that a past president had stolen money from and defrauded the homeowners association. In Silk, supra, 208 Cal.App.4th at page 551, the challenged statement was again in the context of a board election and implied an incumbent board member had engaged in selfdealing. In contrast to these cases, the total absence of controversy in the present case is plain. Accordingly, the allegedly fraudulent statement here did not concern a public issue.
(8) Because defendants failed to meet their burden to show the challenged causes of action arose from protected activity, “we affirm the trial court’s ruling and need not address the merits of the case under the second prong of the statute.” (Castleman, supra, 216 Cal.App.4th at p. 490.)
DISPOSITION
The order is affirmed. Plaintiff shall recover its costs incurred on appeal.
Moore, Acting P. J., and Thompson, J., concurred.
[FN. 1] The complaint also listed the County of Orange as a defendant solely because it has an easement on the trails at issue and is a party to one of the agreements subject to the declaratory relief action. Any reference to “defendants” in this opinion excludes the County of Orange.
[FN. 2] SLAPP is an acronym for “`strategic lawsuit against public participation.'” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 815, fn. 1 [124 Cal.Rptr.3d 256, 250 P.3d 1115].)
[FN. 3] All statutory references are to the Code of Civil Procedure unless otherwise stated.
[FN. 4] “References to “subdivisions (e)(1),” “subdivision (e)(2),” “subdivision (e)(3),” and “subdivision (e)(4)” are to section 425.16.
Related Links
“Requesting HOA Enforcement Held to be Constitutionally Protected Activity” – Published on HOA Lawyer Blog (January 2018)
SB Liberty, LLC v. Isla Verde Association, Inc.
[Board Meetings; Attendance Rights] The right to attend a HOA’s board meetings extends only to the HOA’s members, not a member’s agent or attorney.
Lepiscopo & Associates Law Firm and Peter D. Lepiscopo for Plaintiff and Appellant.
Epsten Grinnell & Howell, William S. Budd; Gates, O’Doherty, Gonter & Guy, Thomas A. Scutti and Douglas D. Guy for Defendant and Respondent.
OPINION
P.J. NARES
INTRODUCTION
In 2006 Gregg and Janet Short (together the Shorts, who are not parties to this appeal but are interested persons) purchased a home in the Isla Verde residential community (Isla Verde). They then transferred title to themselves as trustees of their family trust and later transferred title to plaintiff SB Liberty, LLC (SB Liberty), a California limited liability company organized in early 2011, which is owned by the Shorts as trustees of their trust and is managed by Gregg Short, SB Liberty’s sole manager. The Shorts reside in the home. Defendant Isla Verde Association, Inc. (the Association) is a California nonprofit mutual benefit corporation that is an association of the Isla Verde homeowners. It is undisputed that SB Liberty is a member of the Association.
This action against the Association for injunctive relief (among other things) arose when the Association’s board of directors (the Board) denied SB Liberty’s retained counsel, Peter D. Lepiscopo, access to the Board’s September and October 2011 meetings. SB Liberty brought a motion for preliminary injunction seeking to enjoin the Association and the Board from taking any action to prevent or interfere with SB Liberty’s representatives, including Lepiscopo, attending and participating in the Board’s meetings. The court denied the motion.
[275] SB Liberty appeals the denial of its motion for preliminary injunction, contending (1) the Association─a “quasi-government entity”─has prevented SB Liberty─whose association, speech, and member rights are fundamental in nature─from attending the open sessions of the Association’s Board meetings by excluding its chosen representative─attorney Lepiscopo[1]─from those meetings, thereby causing SB Liberty to suffer great and irreparable harm; and (2) SB Liberty is entitled to send the representative of its own choosing (Lepiscopo) to the open sessions of the Board’s meetings because SB Liberty is a member of the Association but not a natural person. We affirm the order denying SB Liberty’s motion for preliminary injunction.
FACTUAL AND PROCEDURAL BACKGROUND
A. Factual Background
Isla Verde is a residential community consisting of 87 single-family properties located in the Lomas Santa Fe area of Solana Beach. The Association is a nonprofit mutual benefit corporation established to conduct the business of Isla Verde’s member homeowners. The Association conducts its business pursuant to various governing documents, including the articles of incorporation (Articles), protective covenants and restrictions (PC&Rs) and bylaws (Bylaws).
The Association operates through its board of directors (Board), which consists of seven Association “members,” which the Bylaws define as “[e]very beneficial owner (as defined by California Code, and as distinguished from a security owner) of real property situated in . . . Isla Verde.”
The Bylaws contain rules governing the meetings of members and the Board. Article XV, section 15.14, of the Bylaws provides that “[a]ny member in good standing may attend any [Board] meeting, except those portions of such meetings which are declared as ‘Executive Session’ meetings.” (Italics added.)
After the Shorts transferred title of their home to themselves as trustees of their family trust in mid-2006, they submitted architectural plans to remodel the their house, which eventually led to a dispute between the Shorts and the Association regarding the scope of the construction the Shorts were permitted to perform, eventually resulting in litigation brought by the Association.
SB Liberty’s articles of organization were filed in early 2011, establishing it as a limited liability company with Gregg Short designated as the sole manager.
[276] Later that year, the Shorts’ retained counsel, Lepiscopo, provided notice to the Association’s legal counsel, William S. Budd, that he represented the Shorts. In that notice, Lepiscopo requested various documents and a “detailed summary of the purpose for and status of any proposed amendments to the governing documents.”
Thereafter, Lepiscopo advised Budd that he might attend the September 14,2011 Board meeting on behalf of the Shorts. Budd advised Lepiscopo that he was not planning to attend the September meeting and asked that Lepiscopo not attend, stating that “the Rules of Professional Conduct prohibit communication with a represented party without permission from that party’s attorney.”
Lepiscopo replied, indicating his attendance at the upcoming September 14 Board meeting would not implicate the Rules of Professional Conduct because he would be appearing as a representative of his clients, whom he again identified as Gregg and Janet Short.
On the day before the Board meeting, Budd reiterated in an e-mail to Lepiscopo that he was not allowed to attend the Board meeting over Budd’s objection, as it would violate rule 2-100 of the Rules of Professional Conduct, and also instructed Lepiscopo that he could not communicate with his client without Budd’s permission.
Lepiscopo responded with a letter, which he sent to Budd by e-mail and fax, disagreeing with Budd’s interpretation of rule 2-100 and stating that he (Budd) and the Board “do not hold a veto over [the Shorts’] right to decide the manner in which they attend any [Association] Board meeting,” and reiterating that he (Lepiscopo ) planned to attend the September 2011 board meeting on behalf of the Shorts as their representative.
Lepiscopo attempted to attend the September 2011 Board meeting on behalf of the Shorts, but was denied access to the meeting. Specifically, after he advised the Board that he represented the Shorts, Lepiscopo was asked to leave and was advised that the Shorts could be at the meeting, but not their attorney. When Lepiscopo refused to leave, the meeting was adjourned to a board member’s residence.
The next day the Shorts, as trustees of their family trust, recorded a grant deed conveying ownership of their residence to SB Liberty, a California limited liability company.
About a week later the Shorts, as trustees of their trust, and Gregg Short, as the manager of SB Liberty, executed─as principals─a “Specific Power of [277] Attorney” (which they recorded two days later) that purportedly gave Lepiscopo─as their attorney-in-fact or agent─the right to “present requests and motions” to the Board and to “attend and participate” in the Board’s meetings on their behalf, “as fully, to all intents and purposes, as [the] Principals might or could do if personally present.”
Thereafter, Lepiscopo notified Budd of his intention to attend the Board’s October 2011 meeting on behalf of the Shorts. Lepiscopo attached to his letter a copy of the recorded power of attorney.
In a reply letter, Budd stated that the power of attorney “is really nothing more than authorization from the Shorts to act as their attorney”; “[i]t doesn’t confer any power on you except to attend meetings and advocate their interests”; and “[i]t doesn’t even qualify as a proxy because it expressly withholds the power to vote at membership meetings.” Budd also stated:
“[W]hile [the Power of Attorney] purports to give you the power to make motions, you may not [do so] for two reasons: First, only Board Members can make motions at board meetings. Second, only members can make motions at membership meetings. That power of attorney does not appear to confer any membership rights to you because a membership cannot be parsed out among different people. In other words, one person cannot have voting rights, while another has the right to make motions at membership meetings.”
In his letter, Budd advised Lepiscopo that he would forward to the Board Lepiscopo’s correspondence and his “request to attend meetings on behalf of the Shorts.” Budd informed Lepiscopo of the time and place of the Board’s October 2011 meeting and stated that the Board would consider in executive session his request to attend, and it would advise him of their decision before the open session began.
At the October 12, 2011 Board meeting, after the Board met in executive session, the Board’s chairperson advised Lepiscopo that the Board had met and voted to exclude his attendance at the meeting, asked him to leave, and he did.
B. Procedural Background
SB Liberty commenced this action against the Association in late October 2011, by filing a complaint in which it sought injunctive relief, a refund of allegedly unlawful increases in annual dues, specified civil penalties, and declaratory relief. SB Liberty attached to the complaint copies of the Articles, the PC&Rs, and the Bylaws.
[278] 1. SB Liberty’s motion for preliminary injunction
Soon thereafter, SB Liberty filed an ex parte application for an order to show cause hearing re preliminary injunction and for the issuance of a temporary restraining order pending hearing on a preliminary injunction (motion for preliminary injunction), seeking (as pertinent here) a preliminary injunction restraining and enjoining the Association and its Board “from taking any and all action, whether directly or indirectly, to prevent or interfere with SB Liberty’s representatives, including its legal counsel, Mr. Lepiscopo,” from (1) “presenting written motions or proposals to [the Association] prior to any HOA Board Meeting”; (2) “attending and fully participating in the November 2011 HOA Board Meeting”; and (3) “attending and fully participating in any future HOA Board Meeting.”
In support of its motion, SB Liberty asserted the Association is a quasi-governmental entity and, as SB Liberty’s “association and member rights are fundamental in nature,” its loss of such rights constituted irreparable harm. SB Liberty also asserted the Association’s governing documents and various sections of the Civil Code and Corporations Code “support SB Liberty’s position that Mr. Lepiscopo was authorized to attend the September and October 2011 [Association] Board meetings.”
In its opposition to the motion, the Association argued “[t]here is no legal basis for allowing a member’s legal counsel to appear before the Board without his client present, and without [the Association’s] counsel at the Board meeting.” The Association also asserted that Lepiscopo’s direct contact with the Board without the Association’s permission would be a violation of rule 2-100 of the Rules of Professional Conduct; “[t]he only persons allowed to attend a meeting are members”; Lepiscopo was “neither an officer nor [a] member of [SB Liberty]”; and SB Liberty’s power of attorney did not grant Lepiscopo “rights of membership or ownership in SB Liberty’s real property.”
Following a hearing on the motion and submission of supplemental briefing by the parties, the court took the matter under submission.
2. Ruling
On December 28, 2011, the court issued its order denying the Association’s motion for preliminary injunction. Regarding the issue of whether SB Liberty had met its burden of showing a reasonable probability of prevailing on the merits, the court first noted that the parties could not “point to a particular section, or sections, of the law” or any treatises pertaining to the issue of whether SB Liberty, as a member of the Association, could “designat[e] a [279] representative to attend, and participate in, [Association] meetings.” The court stated it “was left to conclude that the issue . . . must be decided on general principles of law relating to [common interest developments], corporations, [limited liability companies (LLC’s),] and agency.”
The court found it was undisputed that SB Liberty became a member of the Association when the Shorts transferred ownership of their lot to SB Liberty. Citing sections 17150 and 17151 of the Corporations Code, the court explained that “[m]anagement of an LLC is vested in all members [of the LLC] unless the articles of organization provide otherwise,” and an LLC can be managed by one or more managers who need not be members of the LLC. The court also found it was undisputed that SB Liberty’s counsel, Lepiscopo, was not a member of SB Liberty.
The court rejected SB Liberty’s claim that the decision to exclude Lepiscopo from Association meetings as SB Liberty’s designated representative was an abridgement of its First Amendment freedom. Noting that SB Liberty was “free to appear through its manager [(Gregg Scott)] and its members” and finding that Lepiscopo was neither a manager nor a member of SB Liberty, the court concluded that “SB Liberty’s freedom has not been abridged by an act of the [Association].”
Noting that SB Liberty’s complaint described the Association as a nonprofit mutual benefit corporation, the court found the Board had the authority under Corporations Code section 7210 to determine how to conduct its meetings and to exclude nonmembers from its meetings. Citing Corporations Code section 7320 and noting that “[t]he parties fail[ed] to point to a provision of the [Articles] or [Bylaws] which authorizes a member to transfer membership or any right arising from membership except the right to vote by proxy,”[2] the court found SB Liberty “is not allowed to transfer its membership rights to [Lepiscopo].” The court concluded that SB Liberty “ha[d] failed to show a reasonable probability of prevailing on this issue at trial.”
DISCUSSION
In support of its claim that the court erroneously denied its motion for preliminary injunction, SB Liberty contends that (1) the Association is a “quasi-government entity” and SB Liberty’s association, speech, and member rights are fundamental in nature; (2) it is entitled to send the representative of its own choosing─attorney Lepiscopo─to the open sessions of the Board’s meetings because SB Liberty is a member of the Association but not a natural [280] person; and (3) by preventing Lepiscopo from attending and participating in those meetings on behalf of SB Liberty as its representative, the Association has caused it to suffer a loss of its fundamental rights, which constitutes great and irreparable harm. These contentions are unavailing.
A. Applicable Legal Principles
The general purpose of apreliminary injunctionis to preserve the status quo pending a determination on the merits of the action. (Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528.) “‘The granting or denial of a preliminary injunction does not amount to an adjudication of the ultimate rights in controversy. It merely determines that the court, balancing the respective equities of the parties, concludes that, pending a trial on the merits, the defendant should or . . . should not be restrained from exercising the right claimed by him.'” (Ibid.)
A trial court must weigh two interrelated factors when deciding whether to grant a plaintiff’s motion for apreliminary injunction: (1) the likelihood that the plaintiff will prevail on the merits at trial; and (2) the relative interim harm to the parties from the issuance or nonissuance of the injunction; that is, the interim harm the plaintiff is likely to sustain if the injunction is denied as compared to the harm the defendant is likely to suffer if the preliminary injunction is issued. (People ex rel. Gallo v. Acuna (1997) 14 Cal.4th 1090, 1109; Butt v. State of California (1992) 4 Cal.4th 668, 677-678.)
Thus, “[t]he trial court’s determination must be guided by a ‘mix’ of the potential-merit and interim-harm factors; the greater the plaintiff’s showing on one, the less must be shown on the other to support an injunction.” (Butt v. State of California, supra, 4 Cal.4th at p. 678.) “A trial court may not grant a preliminary injunction, regardless of the balance of interim harm, unless there is some possibility that the plaintiff would ultimately prevail on the merits of the claim.” (Ibid.) Accordingly, the trial court must deny a motion for a preliminary injunction if there is no reasonable likelihood the moving party will prevail on the merits. (Common Cause v. Board of Supervisors (1989) 49 Cal.3d 432, 447; see Yu v. University of La Verne (2011) 196 Cal.App.4th 779, 786-787 [order denying a motion for preliminary injunction should be affirmed if the trial court correctly found the moving party failed to satisfy either of the two factors].)
Appellate review of a trial court’s order granting or denying a motion for preliminary injunction generally is “limited to whether the trial court’s [281] decision was an abuse of discretion.” (Butt v. State of California, supra, 4 Cal.4th at p. 678; Yu v. University of La Verne, supra, 196 Cal.App.4th at pp. 786-787.) “A trial court will be found to have abused its discretion only when it has ‘”exceeded the bounds of reason or contravened the uncontradicted evidence.”‘” (IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 69.) The burden rests with the party challenging a trial court’s decision to grant or deny a preliminary injunction to make a clear showing of an abuse of discretion. (Ibid.)
However, as this court explained in California Assn. of Dispensing Opticians v. Pearle Vision Center, Inc. (1983) 143 Cal.App.3d 419, 426, “when the matter is solely a question of a violation of law the standard of review is not abuse of discretion but whether statutory or constitutional law was correctly interpreted and applied by the trial court.”
B. Analysis
In denying SB Liberty’s motion for a preliminary injunction, the court found that the Board may exclude from the open sessions of its meetings a person like Lepiscopo who is not a member of the Association and determined that SB Liberty failed to meet its burden of showing a reasonable probability of prevailing on the merits at trial. The court did not err.
We first conclude that SB Liberty’s claim it is entitled to send the representative of its own choosing─here, Lepiscopo─to participate in the open sessions of the Board’s meetings on SB Liberty’s behalf, is unavailing. SB Liberty relies in part on Civil Code section 1363.05, which is known as the Common Interest Development Open Meeting Act and is part of the Davis-Stirling Common Interest Development Act (Civ. Code, § 1350 et seq.).[3] (See Civ. Code, §§ 1350 & 1363.05, subd. (a).) With exceptions not pertinent here, subdivision (b) of Civil Code section 1363.05 provides that “[a]ny member of the association[[4]] may attend meetings of the board of directors of the association . . . .” (Italics added.) Subdivision (h) of that section provides that “[t]he board of directors of the association shall permit any member of the association to speak at any meeting of the association or the board of directors, except for meetings of the board held in executive session.” (Italics added.)
[282] The Association’s governing documents define who qualifies as a member of the Association and address both the rights of members and their participation at Board meetings. Article I, paragraph 7, of the PC&Rs defines “Member” as “an Owner, as defined below, who is entitled to membership in the Association as provided in this declaration.” That paragraph also provides that “[o]wnership of a Lot shall be the sole qualification for membership in the Association.” Article I, paragraph 8, of the PC&Rs defines “Owner” as “the Record owner or owners, whether one or more persons or entities, of fee simple title to any Lot, but excluding those having such interest merely as security for the performance of an obligation.”
Similarly, article III of the PC&Rs states that “[t]he owner of a lot shall automatically, upon becoming an owner of same, be a member of the Association” and provides that a member “shall remain a member thereof until such time as his ownership ceases for any reason.” That article also provides that “[n]o member shall resign his membership,” and “[m]embership in the Association shall not be transferred, encumbered, or alienated in any way, except upon the sale or encumbrance of the lot to which it is appurtenant.”
Regarding the qualifications and rights of members, article III, paragraph 3.1, of the Bylaws provides that “[t]hose members whose annual dues and assessments (if any) are current shall be considered ‘Members in Good Standing'” and that such members “have all rights inherent with that membership, including, but not limited to the right to vote on all measures submitted to the membership at any meeting or mail ballot,” as well as “the right to serve on any committee” and “the right to serve as directors and/or officers.”
Paragraph 15.14 of article XV of the Bylaws, which is titled “Participation of members other than directors at meetings of the [Board],” provides that “[a]ny member in good standing” may attend the open sessions of the Board’s meetings and delineates the scope of their participation at such meetings:
“Any member in good standing may attend any [Board] meeting, except those portions of such meetings which are declared as ‘Executive Session’ meetings. Once an agenda item has been declared open for discussion they may ask to be recognized for the purposes of addressing the meeting in relation to that agenda item. [¶]Members may submit written proposals to the Secretary proposing matters for discussion and/or resolution. . . . [¶] The Board shall consider members’ proposals and consider and decide . . . the issues raised.” (Italics added.)
Here, the court found, and the Association does not dispute, that SB Liberty became a member of the Association when the Shorts transferred ownership of their lot to it.
[283] However, it does not follow (as SB Liberty contends) that, by virtue of its status as a member of the Association, SB Liberty is entitled to send Lepiscopo to attend and participate in the open sessions of the Board’s meetings on SB Liberty’s behalf as its representative. SB Liberty is a California limited liability company. Under the Beverly-Killea Limited Liability Company Act (Corp. Code, § 17000 et seq.) (the Act), management of the business and affairs of a limited liability company[5] is vested in its members[6] unless the articles of organization provide otherwise. (Corp. Code, § 17150.)[7] Under the Act, the articles of organization of a limited liability company “may provide that the business and affairs of the limited liability company shall be managed by or under the authority of one or more managers who may, but need not, be members.” (Id., § 17151, subd. (a).)
Thus, under the Act, the business and affairs of SB Liberty must be managed by the members of SB Liberty or, if authorized by its articles of organization, by Greg Short, who is the sole manager of SB Liberty. (Corp. Code, §§ 17150, 17151, subd. (a).)
Here, it is undisputed, as the court properly found, that Lepiscopo is not a member of SB Liberty. The record also shows he is not a manager of SB Liberty authorized by its articles of organization to manage its business and affairs. Thus, Lepiscopo is not authorized to manage the business and affairs of SB Liberty, and SB Liberty’s members and/or manager cannot delegate such management authority to him.
Furthermore, article III of the Association’s PC&Rs and applicable statutory authority prohibit SB Liberty from transferring to Lepiscopo any right arising from SB Liberty’s Association membership─except the right to vote [284] by proxy (see Corp. Code, § 7613)[8]─such as the right accorded to Association members under Article XV, paragraph 15.14, of the Bylaws to attend and participate in the open sessions of the Board’s meetings.[9] As the court properly found, the specific power of attorney executed by the Shorts (discussed, ante) did not expressly give Lepiscopo the right to vote on behalf of SB Liberty.
In addition, as the court also properly found, the Board had the authority to determine how to conduct its meetings and, thus, the power to prevent a nonmember (Lepiscopo) from attending and participating in those meetings on behalf of SB Liberty as its representative. (Corp. Code, § 7210;[10] see Burt v. Irvine Co.(1964) 224 Cal.App.2d 50, 51.)
Also unavailing is SB Liberty’s claim that by preventing Lepiscopo from attending and participating in the open sessions of the Board’s meetings on behalf of SB Liberty, as its representative, the Association has caused SB Liberty to suffer great and irreparable harm. The record shows, as the court properly found, that SB Liberty at all times was free to attend and participate in those meetings through its members or (if permitted by its articles of organization) its manager, Gregg Short. SB Liberty has failed to meet its burden of showing the exclusion of Lepiscopo from those meetings as its representative was an abridgment of its First Amendment or membership rights.[11]
[285] For all of the foregoing reasons, we affirm the court’s order denying SB Liberty’s motion for a preliminary injunction.
DISPOSITION
The order denying SB Liberty’s motion for preliminary injunction is affirmed. The Association shall recover its costs on appeal.
WE CONCUR:
McINTYRE, J.
AARON, J.
[1] Lepiscopo represented SB Liberty during the trial court proceedings in this matter and also represents SB Liberty on appeal.
[2] The court found that “[t]he agency agreement signed by [the Shorts] does not give Lepiscopo the right to vote.”
[3] “‘Common interest development’ means any of the following: [¶] (1) A community apartment project. [¶] (2) A condominium project. [¶] (3) A planned development. [¶] (4) A stock cooperative.” (Civ. Code, § 1351, subd. (c).)
[4] “‘Association’ means a nonprofit corporation or unincorporated association created for the purpose of managing a common interest development.” (Civ. Code, § 1351, subd. (a).)
[5] The Act defines “limited liability company” as “an entity having one or more members that is organized under this title and is subject to the provisions of [Corporations Code] Section 17101.” (Corp. Code, § 17001, subd. (t).)
[6] The Act defines “member” as “a person who: [¶] (1) Has been admitted to a limited liability company as a member in accordance with the articles of organization or operating agreement, or an assignee of an interest in a limited liability company who has become a member pursuant to [Corporations Code] Section 17303. [¶] (2) Has not resigned, withdrawn, or been expelled as a member or, if other than an individual, been dissolved.” (Corp. Code, § 17001, subd. (x).)
[7] Corporations Code section 17150 provides: “Unless the articles of organization include the statement referred to in subdivision (b) of [Corporations Code] Section 17151 vesting management of the limited liability company in a manager or managers, the business and affairs of a limited liability company shall be managed by the members subject to any provisions of the articles of organization or operating agreement restricting or enlarging the management rights and duties of any member or class of members. If management is vested in the members, each of the members shall have the same rights and be subject to all duties and obligations of managers as set forth in this title.” (Italics added.)
[8] SB Liberty’s complaint alleges, and the Association’s PC&Rs indicate, that the Association is a California nonprofit mutual benefit corporation. Corporations Code section 7613, subdivision (a), which is part of the Nonprofit Mutual Benefit Corporation Law (Corp. Code, § 7110 et seq.), provides (subject to restrictions not pertinent here) that “[a]ny member may authorize another person or persons to act by proxy with respect to such membership except that this right may be limited or withdrawn by the articles or bylaws.” Article XII, section 12.3, of the Association’s bylaws provides that “[m]embers may vote in person or by written proxy.”
[9] As noted, article III of the Association’s PC&Rs provides “[m]embership in the Association shall not be transferred, encumbered, or alienated in any way, except upon the sale or encumbrance of the lot to which it is appurtenant.” Corporations Code section 7320, subdivision (a)(1) of the Nonprofit Mutual Benefit Corporation Law (see fn. 8, ante) provides: “Subject to [Corporations Code] Section 7613: [¶] (a) Unless the articles or bylaws otherwise provide: [¶] (1) No member may transfer a membership or any right arising therefrom.” (Italics added.)
[10] Corporations Code section 7210 of the Nonprofit Mutual Benefit Corporation Law (see fn. 8, ante) provides: “Each corporation shall have a board of directors. Subject to the provisions of this part and any limitations in the articles or bylaws relating to action required to be approved by the members ([Corporations Code] Section 5034), or by a majority of all members ([Corporations Code] Section 5033), the activities and affairs of a corporation shall be conducted and all corporate powers shall be exercised by or under the direction of the board
[11] We express no opinion regarding the issue─which is not presented here─of whether an attorney appointed by an LLC member of the Association as the LLC’s manager would have the right to appear at the open sessions of the Board’s meetings on behalf of the LLC as its representative. It is undisputed that attorney Lepiscopo was not a member or manager of SB Liberty
Related Links
Homeowner Attorneys at your HOA’s Board Meetings? This Could Become the New Normal – Published on HOA Lawyer Blog (January 29, 2016)
Corporations Code Section 7221. Removal of Director for Cause.
(a) The board may declare vacant the office of a director who has been declared of unsound mind by a final order of court, or convicted of a felony, or, in the case of a corporation holding assets in charitable trust, has been found by a final order or judgment of any court to have breached any duty arising as a result of Section 7238, or, if at the time a director is elected, the bylaws provide that a director may be removed for missing a specified number of board meetings, fails to attend the specified number of meetings.
(b) As provided in paragraph (3) of subdivision (c) of Section 7151, the articles or bylaws may prescribe the qualifications of the directors. The board, by a majority vote of the directors who meet all of the required qualifications to be a director, may declare vacant the office of any director who fails or ceases to meet any required qualification that was in effect at the beginning of that director’s current term of office.
Corporations Code Section 7215. Minutes of Meetings; Evidence; Board Resolution.
The original or a copy of the bylaws or of the minutes of any incorporators’, members’, directors’, committee or other meeting or of any resolution adopted by the board or a committee thereof, or members, certified to be a true copy by a person purporting to be the secretary or an assistant secretary of the corporation, is prima facie evidence of the adoption of such bylaws or resolution or of the due holding of such meeting and of the matters stated therein.
Corporations Code Section 7211. Board Meetings; Requirements and Procedures.
(a) Unless otherwise provided in the articles or in the bylaws, all of the following apply:
(1) Meetings of the board may be called by the chair of the board or the president or any vice president or the secretary or any two directors.
(2) Regular meetings of the board may be held without notice if the time and place of the meetings are fixed by the bylaws or the board. Special meetings of the board shall be held upon four days’ notice by first-class mail or 48 hours’ notice delivered personally or by telephone, including a voice messaging system or by electronic transmission by the corporation (Section 20). The articles or bylaws may not dispense with notice of a special meeting. A notice, or waiver of notice, need not specify the purpose of any regular or special meeting of the board.
(3) Notice of a meeting need not be given to a director who provided a waiver of notice or consent to holding the meeting or an approval of the minutes thereof in writing, whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to that director. These waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meetings.
(4) A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place. If the meeting is adjourned for more than 24 hours, notice of an adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of the adjournment.
(5) Meetings of the board may be held at a place within or without the state that has been designated in the notice of the meeting or, if not stated in the notice or if there is no notice, designated in the bylaws or by resolution of the board.
(6) Members of the board may participate in a meeting through use of conference telephone, electronic video screen communication, or electronic transmission by and to the corporation (Sections 20 and 21). Participation in a meeting through use of conference telephone or electronic video screen communication pursuant to this subdivision constitutes presence in person at that meeting as long as all members participating in the meeting are able to hear one another. Participation in a meeting through use of electronic transmission by and to the corporation, other than conference telephone and electronic video screen communication, pursuant to this subdivision constitutes presence in person at that meeting if both of the following apply:
(A) Each member participating in the meeting can communicate with all of the other members concurrently.
(B) Each member is provided the means of participating in all matters before the board, including, without limitation, the capacity to propose, or to interpose an objection to, a specific action to be taken by the corporation.
(7) A majority of the number of directors authorized in or pursuant to the articles or bylaws constitutes a quorum of the board for the transaction of business. The articles or bylaws may require the presence of one or more specified directors in order to constitute a quorum of the board to transact business, as long as the death of a director or the death or nonexistence of the person or persons otherwise authorized to appoint or designate that director does not prevent the corporation from transacting business in the normal course of events. The articles or bylaws may not provide that a quorum shall be less than one-fifth the number of directors authorized in or pursuant to the articles or bylaws, or less than two, whichever is larger, unless the number of directors authorized in or pursuant to the articles or bylaws is one, in which case one director constitutes a quorum.
(8) Subject to the provisions of Sections 7212, 7233, 7234, and subdivision (e) of Section 7237 and Section 5233, insofar as it is made applicable pursuant to Section 7238, an act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the board. The articles or bylaws may not provide that a lesser vote than a majority of the directors present at a meeting is the act of the board. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting, or a greater number required by this division, the articles or the bylaws.
(b) An action required or permitted to be taken by the board may be taken without a meeting, if all members of the board shall individually or collectively consent in writing to that action. The written consent or consents shall be filed with the minutes of the proceedings of the board. The action by written consent shall have the same force and effect as a unanimous vote of the directors. For purposes of this subdivision only, “all members of the board” does not include an “interested director” as defined in Section 5233, insofar as it is made applicable pursuant to Section 7238.
(c) Each director present and voting at a meeting shall have one vote on each matter presented to the board of directors for action at that meeting. No director may vote at any meeting by proxy.
(d) This section applies also to incorporators, to committees of the board, and to action by those incorporators or committees mutatis mutandis.
Civil Code Section 4950. Minutes of Meetings.
(a) The minutes, minutes proposed for adoption that are marked to indicate draft status, or a summary of the minutes, of any board meeting, other than an executive session, shall be available to members within 30 days of the meeting. The minutes, proposed minutes, or summary minutes shall be distributed to any member upon request and upon reimbursement of the association’s costs for making that distribution.
(b) The annual policy statement, prepared pursuant to Section 5310, shall inform the members of their right to obtain copies of board meeting minutes and of how and where to do so.
