Would prohibit an association from enacting a rule prohibiting a member from contacting another owner or resident for campaign purposes in a public or association election.
Current Status: Chaptered
FindHOALaw Quick Summary:
Existing law prohibits an association from denying a resident physical access to the common area. This bill would add Civil Code Section 4515 to prohibit an association from enacting a rule prohibiting members from exercising their rights to peacefully assemble and freely communicate with one another for campaign purposes relating to a candidate for public or association office, or on any issue that is the subject of a public or association election, or pending legislation or association rulemaking. This bill would not apply to commercial solicitation, or to any member who wants to prevent any solicitation on his or her separate interest.
**UPDATE: SB 407 was signed by the Governor on September 11, 2017. Its changes to the law will become operative on January 1, 2018.
Where the procedural requirements applicable to an association’s election are violated by the association, a member of the association may bring a civil action against the association for declaratory or equitable relief. (Civ. Code § 5145(a).) Election challenges may be brought in either superior court or, if the amount of the demand does not exceed the jurisdictional limits of smalls claims court, in small claims court. (Civ. Code § 5145(c).)
Challenge Period: 1 Year
The period within which a member may bring an action is one (1) year from the date the election violation occurred or one (1) year from the date the inspector of elections notifies the board and membership of the election results, whichever is later. (Civ. Code § 5145(a).) This time period coincides with the length of time that the ballots are required to be kept in the custody of the association’s inspector of elections following the tabulation of the vote and before custody of the ballots may be lawfully transferred to the association. (Civ. Code § 5125.)
Remedies
Civil Penalties – Where a member prevails in the action against the association, the court may impose a civil penalty against the association of up to five hundred dollars ($500) for each violation, except that each identical violation is subject to only one (1) penalty if the violation affects each member of the association equally. (Civ. Code § 5145(b).)
Costs & Attorney’s Fees – Where a member prevails in the action against the association, the member is “entitled to reasonable attorney’s fees and court costs.” (Civ. Code § 5145(b).) If a member prevails in a civil action brought in small claims court, the member is entitled to court costs and “reasonable attorney’s fees incurred in consulting an attorney in connection with the civil action.” (Civ. Code § 5145(b).)
If the association prevails, the association is entitled to recover its “costs” only if the “court finds the action to be frivolous, unreasonable, or without foundation.” (Civ. Code § 5145(b).) However, “costs” does not include attorney’s fees; even where the court finds the action to be frivolous, the association is not entitled to recover its attorney’s fees when it prevails in the action:
“While we agree that the trial court’s conclusion that [the member’s] decision to file this lawsuit was indeed frivolous, we must also agree with [the member] that the plain language of [Section 5145] does not support an award of attorney fees to [the association], as unfair at that may seem.” (That v. Alders Maintenance Corporation (2012) 206 Cal.App.4th 1419, 1428.)
Whether or not the member has prevailed in the action against the association is a determination made at the end of the lawsuit. If a member secures only interim relief (e.g., a preliminary injunction), that does not, in itself, entitle the member to an award of her attorney’s fees. (Artus v. Gramercy Towers Condominium Association (2018) 19 Cal. App. 5th 923.)
Void Results of Election – Where the court finds that the association violated the required election procedures, a court shall void the results of the election, unless the association establishes, by a preponderance of the evidence, that the association’s noncompliance did not affect the results of the election. The findings of the court must be stated in writing as part of the record. (Civ. Code § 5145(a).)
Inspection of Ballots Where an action is filed to challenge the election process, the association’s inspector(s) of elections is required, upon written request, to make the ballots available for inspection by the member or the member’s authorized representative. (Civ. Code § 5125; See also “Inspection of Ballots.”)
[Elections; Legal Challenges] Where a HOA prevails in an action brought against it on the basis of alleged election violations, the HOA is not entitled to recover its attorney’s fees even where the action is found to be frivolous.
COUNSEL
Dinh Ton That, in pro. per., for Plaintiff and Appellant.
Law Offices of Nicholas T. Basakis and Nicholas T. Basakis for Defendant and Respondent.
OPINION
MOORE, J. —
Plaintiff Dinh Ton That disagreed with the results of a recall election conducted by his homeowners association. He first brought a small claims action, then a writ of mandate, and then the instant action, asserting violations of association rules and the relevant statutory scheme. Defendant Alders Maintenance Association demurred to his complaint, arguing the statute of limitations had run on his first cause of action. The court sustained the demurrer. Plaintiff amended his complaint, adding a second cause of action under Business and Professions Code section 17200. Defendant again demurred, arguing a number of reasons why such a claim could not be maintained. The court sustained the second demurrer without leave to amend. [1422] The court also awarded defendant attorney fees of approximately $15,000. Plaintiff argues this should be reversed because the relevant statute does not specify that prevailing associations are entitled to attorney fees.
(1) In the unpublished portion of this decision, we agree with defendant that the one-year statute of limitations bars plaintiff’s first cause of action. In the published portion, we agree with defendant that in the present context, a homeowners association is not a “business” within the meaning of Business and Professions Code section 17200. We agree with plaintiff, however, that the relevant statute does not permit the association to recover attorney fees, despite our agreement with the trial court’s conclusion that the action was frivolous.
I. FACTS AND PROCEDURAL HISTORY
Plaintiff is a homeowner in The Alders, a 248-unit condominium complex in Irvine. The Alders is maintained and governed by defendant. In early 2009, a number of homeowners, including plaintiff,[1] attempted a recall of the sitting board of directors. The recall election took place on February 9. It did not, however, achieve a quorum, which required 50 percent of the membership to be present in person or by proxy. While 124 members were required for a quorum, 119 members were present at the meeting. A motion was made by director Joseph Brockett to close the meeting, and the motion was seconded and approved. According to defendant, prior to the meeting’s closure, no motion was made to adjourn the meeting to a later time. One member did raise the question of an adjournment after the meeting was closed, but the closure of the meeting prevented further official business. The closure of the meeting without adjournment[2] essentially concluded the recall effort.
On February 26, plaintiff filed a small claims action seeking $500 as a civil penalty. He alleged defendant and certain individuals “wrongfully … required a quorum” and failed to give the members present an opportunity to adjourn the meeting. Plaintiff also sought injunctive relief that would require defendant to bring the 119 proxies and ballots to the court hearing and require counting by an independent third party. On March 6, the small claims court filed an order stating that it had determined “Small Claims court does not have jurisdiction to monitor elections.” Plaintiff filed a dismissal without prejudice on April 8.
[1423] On March 9, plaintiff filed a verified “Emergency Petition for Peremptory Writ of Mandate in the First Instance as well as for an Alternative Writ” in superior court. He sought a court order directing defendant to conduct the recall election at an adjourned meeting with a smaller quorum. On March 20, the court denied the petition as well as plaintiff’s request for reconsideration.
Plaintiff appealed on May 19, 2009. (That v. Alders Maintenance Association (Oct. 1, 2009, G042070) [app. dism.].) That case was briefed, but while the matter was pending, defendant conducted its regular annual election on July 29. Defendant filed a motion to dismiss the appeal, which we granted on October 1, 2009, on the grounds that it was moot. The remittitur was issued on December 1.
Once back in the trial court, plaintiff sought leave to amend his complaint to state a cause of action for “Declaratory, Injunctive Relief and Civil Penalties per [Civil Code] § 1363.09.” In addition to declaratory and injunctive relief (the precise nature of which is unclear), plaintiff sought $2,000 in civil penalties for violating the Civil Code relating to association election laws.
The motion for leave to amend was initially set for hearing on February 1, 2010. On December 21, 2009, at a case management conference, the hearing was continued to March 1, 2010, at the request of defendant’s counsel on grounds of medical necessity. At that hearing, plaintiff acknowledged that his claim was governed by a one-year statute of limitations.
On March 1, the court denied the motion for leave to amend, finding that a writ petition was not a pleading which was subject to amendment under Code of Civil Procedure, section 473, subdivision (a)(1). Further, plaintiff had not met the necessary procedural requirements.
Plaintiff then filed the instant action on March 5, 2010, nearly 13 months after the February 9, 2009 recall election. On April 28, he filed a first amended complaint (FAC) which purported to allege “Violation of Article 2 of Chapter 4 of Title 6 of Part 4 of Division 2 of the Civil Code, Including Section 1363.03(b), for Declaratory and Injunctive Reliefs [sic] and Civil Penalties Under Civil Code Section 1369.09.” The FAC sought adjudication of the same issues raised in the writ petition, specifically whether defendant and its agents had acted properly during the attempted recall election on February 9, 2009. Plaintiff sought the court’s decision on a number of “issues [1424] to be decided and permanent injunctions requested.” Plaintiff requested civil penalties under Civil Code section 1363.09, subdivision (b), alleging four violations and $2,000 in penalties. He also requested the court’s decisions be “published” to all members of the association.
Defendant filed a demurrer, arguing the FAC failed to state a claim upon which relief could be granted. Defendant argued that the FAC was time-barred by Civil Code section 1363.09, subdivision (a), which states that a cause of action for violating laws relating to association elections must be brought “within one year of the date the cause of action accrues.” Plaintiff opposed, arguing judicial and equitable estoppel among other reasons why the demurrer should be overruled. The court sustained the demurrer, but granted plaintiff leave to amend to state another cause of action.
Plaintiff then filed his second amended complaint, which purported to state causes of action for “Violation of Article 2 of Chapter 4 of Title 6 of Part 4 of Division 2 of the Civil Code, Including Section 1363.03(b), for Declaratory and Injunctive Reliefs [sic] and Civil Penalties Under Civil Code Section 1369.09, for Violation of [Business and Professions Code] Sections 17200 et seq., for Declaratory and Injunctive Reliefs [sic] and Restitution Thereunder.” The first cause of action was essentially identical to the FAC. The second cause of action alleged defendant violated the unfair competition law (UCL), Business and Professions Code section 17200 et seq.
Defendant demurred to the second cause of action, arguing the facts in this case, specifically, the conduct of an association recall election, did not state a cause of action under the UCL as a matter of law. Defendant also moved to strike the first cause of action, arguing it was identical to the FAC, which had been the subject of a successful demurrer, as well as parts of the prayer for relief. Plaintiff opposed, offering a number of arguments on both the demurrer and motion to strike. The trial court granted the motion to strike and sustained the demurrer without further leave to amend, noting plaintiff had not met the actual injury requirement for claims under the UCL.
On January 10, 2011, the trial court granted defendant’s motion for attorney fees and awarded $15,020.50 pursuant to Civil Code section 1363.09, subdivision (b). The court found some of plaintiff’s actions, including filing a complaint barred by the statute of limitations, “frivolous.” Plaintiff filed his appeal on February 9, 2011, and also sought writ relief, which we denied in case No. G044799.
[1425] II. DISCUSSION
Plaintiff seeks review of the trial court’s decisions to sustain the demurrers to the FAC and SAC (second amended complaint), and to grant attorney fees to defendant.[3]
A. Standard of Review for Demurrers
“In reviewing the sufficiency of a complaint against a general demurrer, we are guided by long-settled rules. `We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.’ [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.]” (Blank v. Kirwan(1985) 39 Cal.3d 311, 318 [216 Cal.Rptr. 718, 703 P.2d 58].) We review the trial court’s decision de novo. (McCall v. PacifiCare of Cal., Inc.(2001) 25 Cal.4th 412, 415 [106 Cal.Rptr.2d 271, 21 P.3d 1189].)
While a general demurrer admits all facts that are properly pleaded, the “`court does not, however, assume the truth of contentions, deductions or conclusions of law. [Citation.]'” (Soliz v. Williams(1999) 74 Cal.App.4th 577, 584 [88 Cal.Rptr.2d 184].)
B. Relevant Statutory Law
(2) The Davis-Stirling Common Interest Development Act (the Davis-Stirling Act) (Civ. Code, § 1350 et seq.) governs homeowners associations. The Davis-Stirling Act “consolidated the statutory law governing condominiums and other common interest developments…. Common interest developments are required to be managed by a homeowners association (§ 1363, subd. (a)), defined as `a nonprofit corporation or unincorporated association created for the purpose of managing a common interest development’ (§ 1351, subd. (a)), which homeowners are generally mandated to join [citation].” (Villa De Las Palmas Homeowners Assn. v. Terifaj(2004) 33 Cal.4th 73, 81 [14 Cal.Rptr.3d 67, 90 P.3d 1223].)
[1426] (3) Civil Code section 1363.03 et seq. govern association election procedures. Civil Code section 1363.09 creates a right of action for violation of those procedures: “A member of an association may bring a civil action for declaratory or equitable relief for a violation of this article by an association of which he or she is a member, including, but not limited to, injunctive relief, restitution, or a combination thereof, within one year of the date the cause of action accrues….” (Civ. Code, § 1363.09, subd. (a).) The same section permits a court to void an election if it concludes that election procedures were not followed. (Ibid.)
Civil Code section 1363.09, subdivision (b) (hereafter subdivision (b)) states: “A member who prevails in a civil action to enforce his or her rights pursuant to this article shall be entitled to reasonable attorney’s fees and court costs, and the court may impose a civil penalty of up to five hundred dollars ($500) for each violation, except that each identical violation shall be subject to only one penalty if the violation affects each member of the association equally. A prevailing association shall not recover any costs, unless the court finds the action to be frivolous, unreasonable, or without foundation.”
C. Statute of Limitations on Plaintiff’s Civil Code Section 1363.09 Claim[*]
D. Plaintiff’s Business and Professions Code Section 17200 Claim
(4) Plaintiff’s second cause of action, offered to circumvent the statute of limitations on the first, is under the UCL. The UCL is codified in Business and Professions Code section 17200 et seq. Section 17200 prohibits any “unlawful, unfair or fraudulent business act or practice.” (Italics added.)
We cannot find, and plaintiff does not cite, a single published case[7] in which a homeowners association has been treated as a “business” under the UCL, and we are unpersuaded by plaintiff’s claims in favor of such a reading of the statute. Plaintiff argues that associations are businesses, citing O’Connor v. Village Green Owners Assn.(1983) 33 Cal.3d 790 [191 Cal.Rptr. 320, 662 P.2d 427]. That case is readily distinguishable. In O’Connor, the [1427] California Supreme Court held that an association was a “business establishment” under the Unruh Civil Rights Act (Civ. Code, §51). Treating associations as businesses in that context is consistent with — and indeed, necessary for — fulfilling the fundamental purposes of that statutory scheme, the protection of civil rights.
The UCL’s purpose does not require the same broad construction of the word “business.” “The UCL’s purpose is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services. [Citation.]” (Kasky v. Nike, Inc.(2002) 27 Cal.4th 939, 949 [119 Cal.Rptr.2d 296, 45 P.3d 243].) An association does not participate as a business in the commercial market, much less compete in it. The dispute here is not related to any activity that might be deemed in the least bit commercial. Indeed, it is solely related to the conduct of association elections, a subject covered thoroughly by the Davis-Stirling Act itself. (Civ. Code, § 1363.03 et seq.)
(5) We do not foreclose entirely the notion that the UCL could apply to an association. If, for example, an association decided to sell products or services that are strictly voluntary purchases for members or nonmembers, it might be liable for such acts under the UCL. But applying the UCL to an election dispute would simply make no sense. An association, operating under its governing documents to maintain its premises and conduct required proceedings, possesses none of the relevant features the UCL was intended to address. Applying the UCL in this context would both misconstrue the intent of that statute and undermine the specific procedures set forth in the Davis-Stirling Act. An action under the UCL “is not an all-purpose substitute for a tort or contract action.” (Cortez v. Purolator Air Filtration Products Co.(2000) 23 Cal.4th 163, 173 [96 Cal.Rptr.2d 518, 999 P.2d 706].) We therefore find the court properly sustained defendant’s demurrer to the second cause of action.
E. Attorney Fees[8]
Subdivision (b) states: “A member who prevails in a civil action to enforce his or her rights pursuant to this article shall be entitled to reasonable attorney’s fees and court costs, and the court may impose a civil penalty of up to five hundred dollars ($500) for each violation, except that each identical violation shall be subject to only one penalty if the violation affects each member of the association equally. A prevailing association shall not recover any costs, unless the court finds the action to be frivolous, unreasonable, or [1428] without foundation.” The trial court’s order stated, in relevant part: “Plaintiff knew when the action was filed that his claims under CC1363.09 were barred by the statute of limitations. Such a bar is grounds for finding an action to be frivolous. [Citations.]”
Defendant argues that the language ofsubdivision (b) does not specifically state that associations are not entitled to attorney fees because the language regarding prevailing associations mentions only “costs” and not fees. Defendant argues that when authorized by statute, reasonable attorney fees are allowable costs, and therefore, once the association has established the action is frivolous, the attorney fees provision becomes reciprocal.
(6) “In ascertaining the meaning of a statute, we look to the intent of the Legislature as expressed by the actual words of the statute. [Citation.] We examine the language first, as it is the language of the statute itself that has `successfully braved the legislative gauntlet.’ [Citation.]” (Wasatch Property Management v. Degrate(2005) 35 Cal.4th 1111, 1117 [29 Cal.Rptr.3d 262, 112 P.3d 647].) The “resort to legislative history is appropriate only where statutory language is ambiguous.”[9] (Kaufman & Broad Communities, Inc. v. Performance Plastering, Inc. (2005) 133 Cal.App.4th 26, 29 [34 Cal.Rptr.3d 520].)
(7) While we agree with the trial court’s conclusion that plaintiff’s decision to file this lawsuit was indeed frivolous,[10] we must also agree with plaintiff that the plain language of the statute does not support an award of attorney fees to defendant, as unfair as that may seem. Statutory[11] attorney fee awards must be specifically authorized by a statute. (Code Civ. Proc., [1429] § 1021.)
(8) While defendant argues that Code of Civil Procedure section 1033.5, ivision (a)(10) permits recovery of fees as an item of costs, such recovery is only permitted when authorized by contract or statute, which brings us right back around to the language of subdivision (b). Plaintiff points out that if the Legislature had intended the last sentence of subdivision (b) to include attorney fees as well as costs, it could and would have said so. Further, other provisions in the Davis-Stirling Act clearly indicate an entitlement to attorney fees where the Legislature deemed them appropriate. (See, e.g., Civ. Code, § 1365.2, subds. (e)(3), (f).) We reluctantly agree.
Defendant’s arguments on this point are simply unpersuasive. Defendant asserts the use of the word “any” in the phrase “a prevailing association shall not recover any costs” reflects the Legislature’s intent to preclude either costs or attorney fees unless the action is demonstrably frivolous. But “any” costs could refer to any of the cost items listed in Code of Civil Procedure section 1033.5, subdivision (a). Defendant also argues plaintiff’s interpretation “completely ignores the punitive nature of the provision, which is clearly intended to punish a member who puts an association in the position of having to expend money to defend a frivolously meritless lawsuit.” But no such punitive intent is evidenced by the language of the statute. Further, defendant cites no authority in support of its position.
(9) “`This court has no power to rewrite the statute so as to make it conform to a presumed intention which is not expressed.’ [Citations.]” (California Teachers Assn. v. Governing Bd. of Rialto Unified School Dist.(1997) 14 Cal.4th 627, 633 [59 Cal.Rptr.2d 671, 927 P.2d 1175].) We sympathize with defendant’s position on this issue and agree that the Legislature should amend the statute to create an entitlement to attorney fees for the association if an action is “frivolous, unreasonable, or without foundation.”
(10) But we must rule on the statute before us, and therefore we agree with plaintiff that subdivision (b) does not authorize the court to award a prevailing association attorney fees.
III. DISPOSITION
The trial court’s decision sustaining the demurrers is affirmed. The order awarding costs to defendant that include attorney fees is reversed, and the [1430] matter is remanded to the trial court to enter a new costs award. Each party shall bear its own costs on appeal.
Bedsworth, Acting P. J., and Aronson, J., concurred.
[*] Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is certified for publication with the exception of part II.C.
[1] According to the property manager, defendant had previously received a judgment against plaintiff for $177,904.69.
[2] Had the meeting been adjourned, it would have continued the recall election to a later date with a smaller quorum requirement.
[3] Plaintiff’s briefs purport to seek review of other issues as well, but these are the only questions properly before this court, as dictated by the relevant standard of review and substantive law.
[*] See footnote, ante, page 1419.
[7] Plaintiff cites a number of purported cases currently pending in the superior court, or decided by the appellate division, which have done so. Such cases have no binding or persuasive authority. The only published case involving an association and the UCL our research located was Turner v. Vista Pointe Ridge Homeowners Assn.(2009) 180 Cal.App.4th 676 [102 Cal.Rptr.3d 750], but that case did not address the substance of the plaintiffs’ UCL claim. (180 Cal.App.4th at p. 688.)
[8] Plaintiff requests that we direct “supplemental briefing” on this issue because the word limit on appellate briefs requires him to present his argument in “skeletal” format. The request is denied.
[9] We previously granted defendant’s unopposed request for judicial notice of the legislative history of Civil Code section 1363.09. If we were to consider the legislative history, we would find that it provides only limited support for defendant’s argument. The legislative history includes a number of committee reports and readings, but most of these documents merely state the bill would allow prevailing associations to recover “litigation costs” if the action is frivolous. Only one document, a partisan bill analysis, states that it would permit recovery of attorney fees by associations. To constitute cognizable legislative history, a document must shed light on the view of the Legislature as a whole. (Kaufman & Broad Communities, Inc. v. Performance Plastering, Inc., supra, 133 Cal.App.4th at p. 30.)
[10] Plaintiff argues that the mere fact that he filed this lawsuit after the statute of limitations had run is not sufficient for a finding of frivolousness. We do not agree with plaintiff that tardiness was the only basis for the court’s finding.
[11] Defendant also argues it is entitled to attorney fees based on the CC&R’s (covenants, conditions and restrictions). It points to a provision which states: “In the event action is instituted to enforce any of the provisions contained in this Declaration, the party prevailing in such action shall be entitled to recover from the other party thereto as part of the judgment, reasonable attorney’s fees and costs of such suit.” The trial court rejected this argument, pointing out that no evidence had been presented that the quoted portion of the CC&R’s applied to this case. A copy of the CC&R’s was not provided to the trial court, therefore there was no way to evaluate whether it included any provisions relating to elections, “or that this action implicated any of [the CC&R’s] provisions.” For the same reasons, we reject this argument. While the CC&R’s might create an entitlement to attorney fees, defendant simply failed to make the necessary evidentiary showing in the trial court.
In general, an association is prohibited from using association funds for “campaign purposes” in connection with:
Any association board election, or
Any other association election except to the extent that the use of association funds is “necessary to comply with duties of the association imposed by law.” (Civ. Code § 5135(a).)
“Campaign Purposes” Defined The term “campaign purposes” with regard to this issue includes, but is not limited to, the following:
Advocacy – the term “campaign purposes” includes expressly advocating the defeat of any candidate that is on the association election ballot. (Civ. Code § 5135(b)(1).)
Candidate Photo or Candidate Name – the term “campaign purposes” includes the inclusion of a photograph or prominently featuring the name of any candidate on any communication from the association or the board within thirty (30) days of an election. (Civ. Code § 5135(b)(2).)
*Exception: Balloting Materials– A candidate’s photo or name may appear on the ballot, ballot materials, or any other communication that is legally required. (Civ. Code § 5135(b)(2).)
Associations are required to adopt and adhere to election rules in connection with elections that require the use of secret ballots. Those election rules must, among other requirements, provide candidates and association members with access to association media and common area meeting spaces for purposes that are reasonably related to the election. (Civ. Code § 5105(a).)
Equal Access to Association Media The election rules must ensure that if any candidate or member* advocating a point of view in connection with the election is provided access to association media (i.e., newsletters, websites, etc.) during a campaign for purposes that are reasonably related to that election, the association must provide equal access to all candidates and members advocating a point of view on the issue, including points of view that are not endorsed by the board. (Civ. Code § 5105(a)(1).) The association may not edit or redact any content from such communications, but may include a statement specifying that the candidate or member, and not the association, is responsible for the content. (Civ. Code § 5105(a)(1).)
*Director Points of View & Advocacy – The term “member” has been interpreted by the California Court of Appeals to also include directors of the association (members of its board):
“…to the extent board members advocated their point of view in association media, whether expressing a personal viewpoint, or the collective viewpoint shared by a majority of the board members, the text of the equal-access provision straightforwardly applies…while in the midst of an election, the board must either give equal access to opposing viewpoints, or forego the use of association media to advocate [the board’s] viewpoint.” (Wittenburg v. Beachwalk HOA (2013) 217 Cal.App.4th 654, 664-665.)
Thus, where the board utilizes HOA media to advocate its point of view in connection with an election, it must also provide equal access to that media to any member or candidate advocating a point of view on the issue.
Equal Access to Common Area Meeting Spaces The election rules must also ensure that access is provided to the association’s common area meeting space, if any exists, during a campaign*, at no cost, to all candidates, including those who are not incumbents, and to all members advocating a point of view, including those not endorsed by the board, for purposes reasonably related to the election. (Civ. Code § 5105(a)(2).)
*A “Campaign” May Pertain to Multiple Elections – The term “campaign” does not necessarily apply to a particular election. If an association holds multiple elections in short succession, and those elections pertain to the same generalized matter, the term “campaign” could encompass activities relating to the multiple elections as a collective group for the purpose of challenging the results of the election on the basis that equal access was wrongfully denied. (Wittenburg at 669.)
Violations of Equal Access Requirements; Judicial Enforcement In an association violates the equal access requirements, a member of the association may bring a civil action for declaratory or equitable relief within one (1) year of the date the cause of action accrues. (Civ. Code § 5145; See also “Legal Challenge to Election.”) Causes of action based upon violations of the equal access requirements may also be brought in small claims court. (Civ. Code § 5145(c).)
Attorney’s Fees – If a member prevails, the member is entitled to his/her reasonable attorney’s fees and court costs, and the court may impose up to five hundred dollars ($500) for each violation. (Civ. Code § 5145(b).) By contrast, if the association prevails, it is not entitled to any of its costs “unless the court finds the action to be frivolous, unreasonable, or without foundation.” (Civ. Code § 5145(b).) However, the term “costs” does not include attorney’s fees; a prevailing association is not entitled to recover its attorney’s fees even where the court finds the action to be frivolous. (That v. Alders Maintenance Corp. (2012) 206 Cal.App.4th 1419, 1428; See also “Legal Challenge to Election.”)
Void Results of Election – When a court finds that an association violated the equal access requirements, or any other requirements applicable to the balloting and election procedures, Civil Code section 5145 requires the court to void the results of the election “unless the association establishes, by a preponderance of the evidence, that the violation did not affect the results of the election.” The findings of the court must be stated in writing as part of the record. (Civ. Code § 5145(a).)
Expenditure of Association Funds Civil Code section 5135 generally prohibits the use of association funds for “campaign purposes” in connection with board elections and other elections, subject to certain exceptions. (Civ. Code § 5135(a); See also “Association Funds in Campaigns.”) However, association funds may be used in connection with campaign communications that must be provided to comply with the equal access requirements discussed above. (Civ. Code § 5135(b)(2).)
Provide Equal Access to Association Media – The election rules must ensure that if any candidate or member advocating a point of view is provided access to association media (i.e., newsletters, websites, etc.) during a complain “for purposes that are reasonable related to that election,” equal access must also be provided to all candidates and members advocating a point of view, including those not endorsed by the board, for purposes that are reasonably related to the election. (Civ. Code § 5105(a)(1); See also “Equal Access During Campaigns.”) The association may not edit or redact any content from those communications, but may include a statement specifying that the candidate or member is responsible for the content, not the association. (Civ. Code § 5105(a)(1).)
Provide Access to Common Area Meeting Space – The election rules must ensure access to the association’s common area meeting space (if any exists) during a campaign at no cost, to all candidates (including non-incumbents), and to all members advocating a point of view (including those not endorsed by the board), for purposes reasonably related to the election. (Civ. Code § 5105(a)(2); See also “Equal Access During Campaigns.”)
Specify Nomination Procedures – The election rules must specify the procedures for the nomination of candidates, consistent with the association’s governing documents. A nomination or election procedure is not reasonable if it disallows any member from nominating himself or herself for election to the board. (Civ. Code § 5105(a)(3); See also “Candidate Nomination.”)
Specify Qualifications for Voting – The election rules must specify the qualifications for voting, the voting power of each membership, the authenticity, validity, and effect of proxies, and the voting period for elections, including the times at which polls will open and close, consistent with the association’s governing documents. (Civ. Code § 5105(a)(4).)
Specify Method of Selecting Inspector(s) of Elections – The election rules must specify a method of selecting the association’s inspector(s) of elections, utilizing one of the following methods: (a) appointment of the inspector(s) by the board, (b) election of the inspector(s) by the membership, or (c) any other method for selecting the inspector(s). (Civ. Code § 5105(a)(5); See also “Inspectors of Elections.”)
Allow Inspector(s) to Appoint/Oversee Additional Persons – The election rules must allow for the inspector(s) of elections to appoint and oversee additional persons to verify signatures and to count and tabulate votes as the inspector or inspectors deem appropriate, provided that the persons are “independent third parties” within the meaning of Civil Code Section 5110(b). (Civ. Code § 5105(a)(6); See also “Inspectors of Elections.”)
Require Retention of Voter List and Candidate List as Election Materials– The election rules must require retention of, as association election materials, both a candidate registration list and a voter list. The voter list must include the name, voting power, and either the physical address of the voter’s separate interest, the parcel number, or both. The mailing address for the ballot must be listed on the voter list if it differs from the physical address of the voter’s separate interest or if only the parcel number is used. The association must permit members to very the accuracy of their individual information at least 30 days before the ballots are distributed. The association or member must report any errors or omissions to either list to the inspector(s) who must make the corrections within two (2) business days. (Civ. Code § 5105(a)(7).)
Prohibit the Denial of a Ballot to a Member – The election rules must prohibit the denial of a ballot to a member for any reason other than not being a member (an owner of a separate interest within the association) at the time when ballots are distributed. (Civ. Code § 5105(g)(1).)
Ballots for Persons with a General Power of Attorney – The election rules must prohibit the denial of a ballot to a person with a general power of attorney for a member. The election rules must also require the ballot of a person with a general power of attorney for a member to be counted if returned in a timely manner. (Civ. Code § 5105(g)(2)-(3).)
Delivery of Election Rules with Ballots
The election rules must also require the inspector(s) of election to deliver, or cause to be delivered, at least 30 days before an election: (a) the ballots, and (b) a copy of the election rules. (Civ. Code § 5105(g)(4).)
Election Rules Delivery Methods– Delivery of the election rules as indicated above may be accomplished by individual delivery (e.g., mailing a copy to each member with the ballots) or posting the election rules to an internet website and including the corresponding website address on the ballot together with the phrase, in at least 12-point font: “The rules governing this election may be found here:”
Floor Nominations & Write-Ins Notwithstanding any other provision of law, the election rules may provide for the nomination of candidates from the floor of membership meetings or nomination by any other matter; those rules may also permit write-in candidates for ballots. (Civ. Code § 5105(b); See also “Candidate Nomination.”)
*No Changes to Election Rules within 90 Days of an Election –Election rules may not be changed less than ninety (90) days prior to an election. (Civ. Code § 5105(h).)
There is no law that explicitly establishes qualifications for persons wishing to serve on an association’s board of directors. There may be qualifications established in provisions of an association’s governing documents—typically in its bylaws. However, those provisions often include language that merely “encourages” adherence to stated qualifications, rather than making them mandatory requirements. Where director qualifications are entirely absent from an association’s governing documents, there may be circumstances where any person (i.e., non-owners, tenants, etc.) may be eligible to serve as a director and ultimately elected to the board.
Adopting Director Qualifications In order to make adherence to specific director qualifications mandatory, an association may be required to formally amend its bylaws or its election rules. The limitations and requirements applicable to doing so will depend upon various factors, such as the nature/purpose of the desired qualifications and the language already contained within the governing documents.
Amending the Bylaws An association’s bylaws may be amended according to the procedures and voting requirements contained within the bylaws. Bylaw amendments to incorporate director qualifications will often require membership approval through a formal election utilizing secret ballots. (See “Amendments to Bylaws” and “Elections Requiring Secret Ballots.”) Where a director ceases to meet required qualifications in effect at the beginning of the director’s current term of office, Corporations Code Section 7221(b) allows the board to declare the director’s seat vacant. (See also “Removal & Recall of Directors.”)
Director Qualifications vs. Candidate Qualifications
Director qualifications govern who remains qualified to continue to serve on a HOA’s board of directors. Candidate qualifications, by contrast, govern who is qualified to run for and be elected to the HOA’s board of directors in a director election.
Candidate Qualifications within Election Rules Associations are required to adopt election rules that comply with the requirements set forth in Civil Code Section 5105. (See “Election Rules.”) Election rules are “operating rules” that may be adopted and amended by the board without membership approval. For information on the types of candidate qualifications that may or must be adopted as part of the election rules under Civil Code § 5105, see “Candidate Qualifications.” Persons who do not satisfy the candidate qualifications in effect at the time of nomination are disqualified from nomination. (See “Candidate Nomination”.)
“Reasonable” Director Qualifications Once adopted, director qualifications may be enforced provided that they are “reasonable.” Reasonableness is determined by whether the qualification is rationally related to the protection, preservation or proper operation of the association. (Laguna Royale Owners Assn. v. Darger (1981) 119 Cal.App.3d 670.)
Director qualifications that are commonly adopted by associations include:
Being a member of the association
Being in “good standing” (i.e., not in violation of the governing documents, delinquent in assessments, etc.)
Not involved in litigation with the association
Attending a minimum number of board meetings as a director
Not having a familial relationship with another sitting director
Not being a co-owner with another sitting director
An association’s “operating rules” (aka “Rules & Regulations”) are regulations adopted by the board that apply “generally to the management and operation of the common interest development or the conduct of the business and affairs of the association.” (Civ. Code § 4340(a).)
Distinct From Declaration Unlike the association’s declaration (“CC&Rs”), operating rules are not contained in a recorded document and generally do not require membership approval for their adoption, amendment or repeal by the board. (See “Adopting & Amending Operating Rules.”)
Operating Rule Subject Areas Civil Code Section 4355 identifies specific subject areas where a rule or regulation adopted by the board would constitute an operating rule. Those subject areas include:
Member discipline, including any schedule of monetary penalties (fines) for violations of the governing documents and any procedure for the imposition of monetary penalties.
Any standards for delinquent assessment payment plans.
Any procedures adopted by the association for resolution of disputes (i.e., an IDR policy).
Board Actions which do not Constitute “Operating Rules” Civil Code Section 4355(b) exempts the following board actions from the procedural requirements applicable to adopting, amending, or repealing “operating rules.” As such, the following actions/items do not constitute “operating rules” as contemplated by Civil Code Section 4340(a):
A rule change that is required by law, if the board has no discretion as to the substantive effect of the rule change; or
Issuance of a document that merely repeats existing law or the governing documents.
When Valid and Enforceable Civil Code Section 4350 contains five (5) requirements that must all be satisfied before an operating rule becomes “valid and enforceable.” Those requirements include:
The rule is in writing;
The rule is within the authority of the board conferred by law or by the CC&Rs, articles of incorporation or association, or bylaws of the association;
The rule is not in conflict with governing law and CC&Rs, articles of incorporation or association, or bylaws of the association; (See also Ekstrom v. Marquesa at Monarch Beach HOA (2008) 168 Cal.App.4th 1111.)
The rule is adopted, amended, or repealed in good faith and in substantial compliance with the Civil Code’s procedural requirements governing the adoption, amendment, and repeal of operating rules; and
Without authorization of the board, no corporation funds may be expended to support a nominee for director after there are more people nominated for director than can be elected.
A corporation with 500 or more members may provide that upon written request by any nominee for election to the board and the payment of the reasonable costs of mailing (including postage), the corporation shall within 10 business days after such request (provided payment has been made) mail to all members, or such portion of them as the nominee may reasonably specify, any material, which the nominee may furnish and which is reasonably related to the election, unless the corporation within five business days after the request allows the nominee, at the corporation’s option, the rights set forth in either paragraph (1) or (2) of subdivision (a) of Section 8330.
