Would enact the Homeowner Association Accountability and Transparency Act of 2025 to make substantive changes to the Open Meeting Act, association records, and records inspection, and would impose additional penalties for violations of these provisions.
Current Status: Pending
FindHOALaw Quick Summary:
The Davis-Stirling Common Interest Development Act governs the management and operation of common interest developments by an association. If a provision of the Act requires an association to deliver a document by “individual delivery” or “individual notice,” the Act requires the association to deliver that document in accordance with the preferred delivery method specified by the member. Existing law also requires the board of an association to provide general notice of a proposed rule change at least 28 days before making the rule change, in accordance with certain procedures.
This bill would amend Civil Code Section 4360 to require the board to provide individual notice of a proposed rule change.
Existing law prohibits the board of a common interest development from taking action on any item of business outside of a board meeting. Existing law also prohibits the board from conducting a meeting via a series of electronic transmissions, except in specified emergency circumstances.
This bill would amend Civil Code Section 4910 to prohibit a majority of the members of the board, outside an authorized meeting, from conducting communications of any kind, directly or through intermediaries, to discuss, deliberate, or take action on any item of business within the board’s subject matter jurisdiction.
Existing law requires an association to generally give notice of the time and place of a board meeting at least 4 days before the meeting and requires the notice to contain the agenda for the meeting.
This bill would amend Civil Code Section 4920 to require the notice containing the agenda to have instructions on how a member may get a copy of the agenda packet for the open session portion of the meeting and would establish procedures for the board to follow in responding to those requests. This bill would also amend Civil Code Section 5200 to include all documents constituting the agenda packet of meetings of the members, the board, and any committees appointed by the board as association records.
Existing law authorizes the board to adjourn to, or meet solely in, executive session to consider litigation and other specified matters. Existing law requires any matter discussed in executive session to be generally noted in the minutes of the immediately following meeting that is open to the entire membership.
This bill would add Civil Code Section 4921 to require the board, if the association becomes involved in litigation, to announce the litigation at its subsequent meeting, including stating the name of the court and case number in the meeting minutes. The bill would also require the board, if the association files an insurance claim or has an insurance policy change, to announce the claim or policy change at its subsequent meeting. The bill would further amend Civil Code Section 4935 to require discussions regarding ongoing litigation to have the case name included as part of the executive session meeting minute notes.
This bill would add Civil Code Section 4941 to require open session meetings of the board to be electronically recorded using audio, or audio and video, and would consider the recordings to be a record of the association and to be available to members on the same basis as written meeting minutes. The bill would require notice to be given at the beginning of every open session of the board that the meeting is being recorded.
Existing law requires the minutes, minutes proposed for adoption that are marked to indicate draft status, or a summary of the minutes of a board meeting, other than an executive session, to be available to members within 30 days of the meeting and distributed to a member upon request and upon reimbursement of the association’s cost for making that distribution.
This bill would amend Civil Code Section 4950 to prohibit a charge for minutes distributed electronically. The bill would require the minutes, or proposed minutes, to include specified information, including the date and time of the meeting and whether a quorum of directors was established.
Existing law authorizes a member to bring a civil action for declaratory or equitable relief for a violation by the association of specified provisions governing board meetings within one year of the date the cause of action accrues. Existing law entitles a member who prevails in a civil action under these provisions to reasonable attorney’s fees and court costs.
This bill would amend Civil Code Section 4955 to require a court to void any action taken by the board at a meeting shown to be conducted in violation of the Open Meeting Act. The bill would authorize a cause of action under those provisions to be brought in either superior court or small claims court. The bill would also require a member who prevails in a civil action brought in small claims court to be awarded court costs and reasonable attorney’s fees incurred.
Under the Davis-Stirling Act, the operating rules are a part of the governing documents of a common interest development. The Act requires an amendment to the governing documents to be held by secret ballot.
This bill would amend Civil Code Section 5100 to exclude an amendment to the operating rules from the requirement that the amendment be held by secret ballot. The bill would also prohibit a member from being denied a ballot for any reason other than not being a member at the time when the ballots are distributed.
Existing law requires the board provide individual notice of the tabulated results of the election within 15 days of the election. This bill would amend Civil Code Section 5120 to require the meeting minutes and the individual notice of the election results to state the term for each elected director.
This bill would also amend Civil Code Section 5200 to include signature-redacted copies of voter outer envelopes to association election materials. It would further amend Civil Code Section 5205 to require the association to make available election records in the custody of an association’s vendors for inspection and copying by a member of the association. The association may not charge for the emailing of documents already in electronic format and which do not require any redacting.
Existing law authorizes a member to bring a civil action to enforce that member’s right to inspect and copy association records.
This bill would amend Civil Code Section 5235 to authorize a member to bring a civil action for declaratory, injunctive, and equitable relief and civil penalties. The bill would authorize a cause of action under those provisions to be brought in either superior court or small claims court. The bill would also require a member who prevails in a civil action brought in small claims court to be awarded court costs and reasonable attorney’s fees incurred. A prevailing association may not recover any costs unless the action is found to be frivolous, unreasonable, or without foundation.
The bill amend Civil Code Sections 5105, 5145, and 5230 to update definitions and would make various other related and conforming changes to the act.
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.
Would allow for teleconference board meeting in cases of federal, state or local emergencies.
Current Status: Chaptered
FindHOALaw Quick Summary:
The Davis-Stirling Common Interest Development Act defines a board meeting as a congregation, as provided, or a teleconference, as provided. Existing law 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, except as provided.
This bill would amend Civil Code Section 4090 and add Civil Code Section 5450 to establish alternative teleconferencing procedures for a board meeting or a meeting of the members if the common interest development is in an area affected by a federal, state, or local emergency.
This bill would declare that it is to take effect immediately as an urgency statute.
**UPDATE: SB 391 was signed by the Governor on September 23, 2021. Its changes to the law take effect immediately.
The Open Meeting Act grants HOA members the right to speak at membership meetings and open board meetings, except for executive session board meetings. (Civ. Code §§ 4925; 5000(b).) The time period for when members are permitted to speak during an open board meeting and address the board is commonly referred to as “Open Forum” or the “Member Comment Period.”
Time Limitations
A member’s right to speak at an open board meeting is subject to a “reasonable time limit” established by the board. (Civ. Code § 4925(b).) Time limits commonly utilized by HOAs in this respect range between 2 and 4 minutes per member.
Topics Discussed; Questions & Responses Civil Code Section 4930 generally prohibits the board from discussing or acting upon items that were not placed on the agenda that was included with the notice of meeting. (See “Board Meeting Agenda Requirements.”) However Civil Code Section 4930 “does not prohibit a member or resident who is not a director from speaking on issues not on the agenda.” (Civ. Code § 4930(a).) Thus, even if an issue is not listed on the agenda, a member may still speak on that issue. Additionally, regardless of whether a member makes a statement or poses a question about a non-agenda item, Civil Code Section 4930(b) allows a director, an agent of the board, or the association’s manager to do any of the following:
“Briefly respond to the member’s statements made or questions posed” by the member; (Civ. Code §4930(b)(1).)
“Ask a question for clarification, make a brief announcement, or make a brief report of the person’s own activities, whether in response to questions posed by a member or based upon the person’s own initiative.” (Civ. Code § 4930(b)(2).)
California HOAs are private membership organizations and not governmental or public entities. Members of the general public therefore do not have rights to attend a HOA’s board meetings or membership meetings. Unless an association’s governing documents provide otherwise, the rights to attend board meetings which are provided for in the Open Meeting Act are reserved for the association’s members. (Civ. Code § 4925.)
Determining Membership Status: Property Owners
An association’s governing documents define who qualifies as a member of the association entitled to attend board meetings. Most governing documents provide that ownership of a lot or unit is the sole qualification for membership in the association. Under such provisions, membership status will extend only to those persons on title to a lot or unit within the association—not to spouses of the owner, the owner’s tenants, agents or attorneys. While many associations permit nonmember spouses to attend board meetings, industry practice is to prohibit the attendance of nonmember tenants, agents (i.e., realtors) and attorneys of members.
Business Entities When ownership of a lot or unit is in the name of a business or other legal entity, the person who is entitled to attend board meetings on the entity’s behalf will likely depend upon whether the person is authorized under the entity’s managing or organizing documents to manage the entity’s business and affairs. (SB Liberty, LLC v. Isla Verde Association, Inc. (2013) 217 Cal.App.4th 272, 283.)
[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
Corporations Code Section 7211 allows for corporate boards to take board actions “without a meeting, if all directors of the board…individually or collectively consent in writing to that action.” (Corp. Code § 7211(b).) This “action without a meeting” (aka “unanimous written consent”) provision was historically relied upon by HOA boards of directors in order to conduct association business outside of board meetings. However, as a result of the 2012 amendments to the Open Meeting Act, HOA boards are generally prohibited from taking such “actions without a meeting”:
“The board shall not take action on any item of business outside of a board meeting.” (Civ. Code § 4910(a).)
“Items of Business” & Delegation An “item of business” for the purpose of Civil Code Section 4910’s prohibition on actions without a meeting means “any action within the authority of the Board, except those actions 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.” (Civ. Code § 4155 (Emphasis added).) Thus, a board may delegate some of its responsibilities to a manager or committee in order for certain actions to be taken between board meetings. (See “Delegating Duties & Authority.”)
Email Discussions Permitted
The prohibition on acting on items of business outside of a board meeting does not prohibit the board from discussing items of business via a series of email communications. (See LNSU #1, LLC v. Alta Del Mar Coastal Community Assn (2023).)
The Open Meeting Act contains several requirements governing the notice of board meetings which must be provided to an association’s members, as well as the items that must be placed on an agenda that is included with the notice. Those requirements vary depending upon the type of board meeting being held (i.e., whether the meeting is an open meeting, a meeting held solely in executive session, or an emergency meeting). The notice requirements that apply to board meetings are distinct from those that apply to membership meetings. A notice of board meeting must include an agenda of items to be discussed or acted upon by the board at the meeting. (See “Board Meeting Agenda Requirements.”)
Notice to Members
The type of notice that must be provided to members varies based upon the type of meeting being held.
Open Meetings Notice of the time and place of open board meetings must be provided to all members at least four (4) days prior to the meeting, unless the association’s governing documents require a longer period of notice. (Civ. Code § 4920.)
Teleconference Meetings – If the open board meeting is to be held via teleconference, Civil Code Section 4090(b) requires the association to specify within the meeting notice a physical location where members may attend and observe (listen to) the teleconference meeting, as well as address the board on association matters during Open Forum. (See “Teleconference Meetings.”)
Virtual Meetings – If the open board meeting is to be conducted virtually (entirely by teleconference without any physical location), Civil Code Section 4926 requires the association to also include within the notice: instructions on how to participate by telephone, the contact information of someone who can provide technical assistance with the teleconference process, and a reminder that members may request individual delivery of meeting notices with instructions how to do so. (See “Virtual Meetings.”)
Executive Session Meetings
Notice of the time and place of board meetings which are held solely in executive session must be provided to all members at least two (2) days prior to the meeting. (Civ. Code § 4920(b)(2).) If a provision of the association’s governing documents requires a longer period of notice, that provision does not apply to a meeting held solely in executive session “unless it specifically states that it applies” to that type of meeting. (Civ. Code § 4920(b)(3).)
Emergency Meetings
No notice is required for an emergency meeting. (Civ. Code § 4920(b)(1).) If a provision of the association’s governing documents requires notice, that provision does not apply to an emergency meeting “unless it specifically states that it applies” to that type of meeting. (Civ. Code § 4920(b)(3).)
Delivery of Notice to Members The notice of meeting, which includes the agenda, must be given to members by “general delivery” pursuant to Civil Code Section 4045. (Civ. Code § 4920(c).) General delivery includes any of the following methods:
“Inclusion in a billing statement, newsletter, or other document that is delivered by one of the methods provided in this section.” (Civ. Code § 4045(a)(2).)
“Posting the printed document in a prominent location that is accessible to all members, if the location has been designated for the posting of general notices by the association in the annual policy statement, prepared pursuant to Section 5310.” (Civ. Code § 4045(a)(3).)
“If the association broadcasts television programming for the purposes of distributing information on association business to its members, by inclusion in the programming.” (Civ. Code § 4045(a)(4).)
Posting the notice in a designated area (i.e., a bulletin board located at a common area pool or recreational facility) or including it within a billing statement or newsletter are the more common methods used by associations.
Request for Individual Delivery of Notice If a member requests to receive general notices by individual delivery, all general notices to that member (which would include notices of meetings), must be delivered to that member by individual delivery (i.e., first-class mail). (Civ. Code §§ 4045(b), 4040.) A member’s right to receive notices of meetings by individual delivery must be described in the association’s annual policy statement. (Civ. Code § 4045(b).)
Notice to Directors
The requirements for giving notice of a board meeting to members of the board (an association’s directors) are typically found in the association’s bylaws or articles. If the association’s governing documents are silent on this issue, Corporations Code Section 7211 provides for the following:
Regular Meetings. Regular meetings by the board may be held without notice being given to the directors “if the time and place of the meetings are fixed by the bylaws or the board.” (Corp. Code § 7211(a)(2).)
Special Meetings. Special meetings of the board require “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 to the corporation. (Corp. Code § 7211(a)(2).) “Electronic transmission” includes facsimile or email. (Corp. Code § 20.) An association’s articles or bylaws may not dispense with any requirement to provide a notice of a special meeting.
Waivers of Notice, Consent and Approvals by Directors As set forth in Corporations Code Section 7211(a)(3), a notice of meeting need not be given to a director who:
“provided a wavier of notice or consent to holding the meeting or an approval of the minutes thereof in writing,” or
“attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to that director.”
A congregation of a quorum of the board, at the same time and place, to “hear, discuss, or deliberate upon any item of business that is within the authority of the board.” (Civ. Code § 4090(a).) or
A teleconference where a quorum of the board, in different locations, “are connected by electronic means, through audio or video, or both.” (Civ. Code § 4090(b).)
Email Exchanges are not “Gatherings” of the Board
Email exchanges between board members do not constitute “gatherings” of the board:
“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 [the Open Meeting Act].” (LNSU #1, LLC v. Alta Del Mar Coastal Community Assn (2023).)
“Items of Business” & Delegation
The Davis-Stirling Act defines an “item of business” to mean “any action within the authority of the Board, except those actions 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.” (Civ. Code § 4155(Emphasis added).) Thus, a board may delegate some of its responsibilities to a manager or committee in order for certain actions to be taken between board meetings (i.e., the review/approval of architectural applications is often delegated to an “architectural committee”).
Email Discussions Outside of Board Meetings are Permitted The Open Meeting Act’s prohibition on taking action outside of a board meeting does not prohibit the Board from discussing items of business via email outside of a board meeting:
“By discussing items of Association business in e-mails… the directors did nothing contrary to the purpose of the [Open Meeting Act], because they took no action on those items in the e-mails. Although the [Open Meeting Act] prohibits the board from acting on items of Association business outside a board meeting…it does not prohibit the board from discussing the items outside a meeting.” (LNSU #1, LLC v. Alta Del Mar Coastal Community Assn (2023).)
HOA board meetings are governed by the “Common Interest Development Open Meeting Act” (“Open Meeting Act”) found at Civil Code Sections 4900 through 4955. The provisions of the Open Meeting Act contain requirements that:
Require the association to give notice of the time and place of board meetings and to post an agenda of items to be discussed or acted upon by the board at the meeting. (Civ. Code § 4920.)
Allow for the board to adjourn to, or meet solely in, executive session in order to consider or act upon specific types of matters. (Civ. Code § 4935.)
Require the board to keep and maintain various meeting minutes, as well as to inform members of their right to obtain copies of board meeting minutes. (Civ. Code § 4950.)
Set forth the rights of members to bring a civil action against the association for violations of the Open Meeting Act. (Civ. Code § 4955.)
