[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(1) In the unpublished portion of this decision, we agree with defendant that the one-year statute of limitations bars plaintiff’s first cause of action.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.
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Wittenburg v. Beachwalk Homeowners Association
[Elections; Equal Access] Where a board utilizes HOA media to advocate its point of view regarding an upcoming election, equal access to such media must also be provided to any member advocating a point of view on the issue.
Schiffer & Buus, Eric M. Schiffer and William L. Buus for Plaintiffs and Appellants.
Adams Kessler, Mary E. Gram, Aide C. Ontiveros and Adrian J. Adams for Defendant and Respondent.[657]
OPINION
IKOLA, J.-
Defendant Beachwalk Homeowners Association (association) held an election to amend its bylaws. Plaintiffs Paul Wittenburg and Raymond Dukellis filed suit to void the result of the election, claiming the association’s board of directors (the board) failed to comply with Civil Code section 1363.03, subdivisions (a)(1) and (a)(2). [1] Subdivision (a)(1) governs the use of “association media,” such as a newsletter or Web site, during a campaign. If an association permits any “candidate or member” to advocate a point of view using association media, the association must give members with opposing viewpoints equal access to the same media. Subdivision (a)(2) requires an association to permit free access to common areas for purposes reasonably related to an election. After a bench trial, the court entered judgment for the association, finding it violated neither subdivision.
Plaintiffs contend the court erred in three ways. First, they claim the court erroneously interpreted subdivision (a)(1) as containing an exception permitting the board of directors to advocate a point of view using association media without triggering the equal-access requirement. Second, plaintiffs claim the court erroneously found certain communications, from the board, were merely informational rather than advocacy under subdivision (a)(1). Third, plaintiffs claim there is no substantial evidence supporting the court’s finding that the [658] association did not violate subdivision (a)(2) during the campaign. We agree on all three counts and reverse the judgment.
FACTS
Plaintiffs are individual homeowners and members of the association. The association is governed by a seven-member board of directors who must be members of the association to serve and are elected by a vote of the members of the association.
The present conflict stems from paragraph nine of the association’s Covenants, Conditions and Restrictions (CC&R’s), which states, “no alterations, additions, or improvements, in connection with the common areas of the PRD [Planned Residential Development] shall be made at a cost of more than one thousand dollars ($1,000.00) without the approval of at least two-thirds (2/3) of the voting owners . . . .” In October of 2010 plaintiffs sued the association, claiming the association had removed one pool, and were threatening to remove two more, without obtaining the two-thirds vote required by paragraph nine of the CC&R’s. In November of 2010, the court granted a preliminary injunction preventing the removal of any more pools without obtaining the two-thirds vote required under paragraph nine. We refer to that lawsuit as the “pool litigation.”
Rather than obtain a two-thirds vote to remove the pools, the board instituted a series of elections to amend paragraph nine of the CC&R’s to increase the dollar threshold for requiring a vote, and to reduce the number of votes required to approve expenditures. In November of 2010 the board sent a ballot and cover letter to the homeowners announcing an election to be held in December 2010. The cover letter, which was drafted by board members who supported the amendment, described paragraph nine of the CC&Rs as “over broad, ambiguous, and open to interpretation on many levels.” The board warned, “As long as this subsection of the CC&R’s remains in force, there will be disputes about what constitutes an alteration or an improvement. Additionally, obtaining two-thirds voter approval of every project over $1000 will gridlock our operations and drive up our costs through constant ballots and legal expenses.” Accordingly, the board proposed the following revision to paragraph nine: “The Association shall maintain the common areas and Association-owned assets, except as otherwise provided in the CC&Rs. The spending for operational, maintenance, and repair expenses shall be limited by Section 1366 . . . . Moreover, the Board of Directors may not make capital improvements to the common areas in any one fiscal year in excess of two and one-half percent (2.5%) of the Association’s budgeted gross expenses for [659] that year without the approval of a majority of the membership.” [2] The letter praised this alternative as more flexible and reasonable, while still “a workable method of fiscal restraint.” The letter concluded by warning, “If we don’t take action now to resolve the situation with the CC&Rs, the Association is destined to become further mired in conflict and expensive litigation.” As one board member at trial commented, the letter “is making a strong case” in favor of the amendment and agreed it was “encouraging them to vote yes on Amendment 8.”
Accompanying the letter was a one-page attachment containing a section entitled “Case for amending the CC&Rs,” and another section entitled “Case against amending the CC&Rs.” The document was written by board members who supported the amendment. The board did not ask any opposing members for written input for the “Case against,” but did listen to their arguments at homeowner forums and attempted to incorporate those arguments. The board specifically decided not to include any opposition material.
The board’s proposal generated significant interest in the community. Fliers circulated throughout the community on almost a weekly basis.
Shortly after the board sent out the election materials, a homeowner requested use of the “rental side” of the clubhouse to put on a “town hall meeting” to support other candidates for the board of directors who had a different view than the view expressed by the current board regarding the amendment. The association’s clubhouse is divided between one side available for free and another available for rental. The rentals are handled through the community manager and generally rental requests do not come before the board. The homeowner tendered a check to the community manager for $200 representing the cleaning deposit, believing he did not have to pay the usual $90 rental fee under subdivision (a)(2). Two days later, however, the community manager called the homeowner and stated the board had rejected the request to use the clubhouse for free. Accordingly, the homeowner paid the additional $90 fee. At trial one of the board members in support of the amendment testified the homeowner request never came before the board because it went through the community manager, but also acknowledged the board should have given the homeowner a refund.
In order to pass outright under the CC&R’s, the amendment required a yes vote from 75 percent of the members of the association. The board’s aim, however, was more modest: a yes vote from 50 percent of the members, which would allow the board to file a petition to have the CC&R’s amended [660] under section 1356, subdivision (c)(4). To achieve 50 percent, the board needed 227 yes votes. The December 2010 election fell short of that, garnering 188 yes votes, which amounted to 64 percent of the votes that were cast, but not 50 percent of the total number of association members.
The board scheduled another election for April of 2011. In February of 2011 the board sent ballots and voting materials to all of the members. Included with those materials was a two-page letter regarding the amendment that was nearly identical to the letter sent in connection with the prior election, as well as the same summary of the cases for and against the amendment. The proposed amendment underwent one change: for expenses that would require a vote under the amendment, instead of requiring a 50 percent vote as before, the revised amendment would require a 55 percent vote in favor of the expenditure.
The association had a newsletter that went to all members on a monthly basis. The board exclusively drafted all of the content of the newsletter. In the February 2011 issue of the newsletter, the board included a section entitled “Update on the Proposed 8th Amendment to the Beachwalk CCRs,” which listed a number of arguments in support of the amendment. For example, it asked, “Why is this so important and why does the proposed amendment benefit the community?” It answered by claiming paragraph nine was ambiguous, the proposed alternative was more modern and adaptable, and the amendment would help resolve the pool litigation. It also asked, “What will happen if the 8th amendment does not receive 227 yes votes?” It then listed several consequences, including the lawsuit regarding the pools would “drag on, generating huge legal bills,” any homeowner “with the will and financial resources to sue the” association would do so on the basis of paragraph nine, the association’s insurance rates would go up, otherwise willing homeowners would stop volunteering their time to the association, and operating costs would increase. As a result, the board promised to continue holding elections until the measure passed: “Therefore, we will be asking homeowners to vote on this issue again on the March ballot. And if we cannot get 227 yes votes in March, there will be another ballot on the same issue shortly thereafter.” The article concluded with an exhortation to the members to vote yes on the amendment: “Vote YES on the proposed 8th amendment to our CCRs so we can put our money to use on physically improving Beachwalk.” One of the board members who was in favor of the amendment testified this article was encouraging the homeowners to vote yes. Nonboard members were not invited to provide opposing viewpoints in the newsletter.
Shortly thereafter, a homeowner opposed to the amendment asked to write a response to the board’s newsletter article to be published in the March 2011 issue of the newsletter. The board refused the request because only board members were permitted to publish articles in the newsletter. [661]
At around the same time another homeowner opposed to the amendment requested use of a common area called the “greenbelt” for purposes of a political rally. The request was denied. The community manager explained by e-mail he was unable to obtain unanimous consent from the board, which was required for an action without meeting (which was necessary because no board meeting was scheduled between when the application was filed and the requested date for the rally). The homeowner replied with an angry e-mail decrying a violation of his rights under section 1363.03. The manager’s only response was to say he would pass the homeowner’s concerns on to the board, and he invited the homeowner to resubmit his request at the next regularly scheduled board meeting where a simple majority could approve his request, which was eight days after the date of the proposed political rally. The board members were concerned the homeowner had requested the greenbelt for the entire day, had requested the use of clubhouse tables and chairs, and had not specified the number of people that would attend. But there was no evidence those concerns were expressed to the homeowner, nor was the homeowner told he could resubmit the request with additional details or modifications and be approved prior to the date he had requested.
The association also had a glass-enclosed community bulletin board, which was controlled by the board. The newsletter was posted on the bulletin board, but nonboard members were not permitted to post materials to the bulletin board.
The board also maintained an association Web site. In March of 2011, the board added an update to the pool litigation on the Web site. The update concluded with another exhortation to vote yes on the amendment: “Members are encouraged to vote yes for the 8th Amendment so that the litigation can be resolved expeditiously.” That update was present on the Web site at least through September of 2011. The board would not have allowed nonboard members to post material on the association Web site, nor were members invited to.
Subsequently, in the April 2011 issue of the newsletter, the board included a similar insert describing the ongoing pool litigation and encouraging members to vote in favor of the amendment: “Members are encouraged to vote yes for the 8th Amendment so that the litigation can be resolved expeditiously.”
The April 2011 election likewise failed to receive 227 yes votes, falling short at 219 yes votes.
Shortly thereafter the board scheduled another election regarding the amendment for August 2011. In July the board sent out ballot materials [662] together with a similar cover letter encouraging members to vote yes on the amendment. This time the letter added, “This issue has already gone before the homeowners on two occasions (December 2010 and April 2011). In both cases, the majority of those members who cast ballots voted to amend the CC&Rs; however, neither ballot received the necessary 227 yes votes. Although the [association] is filing a petition with the courts anyway, it is entirely possible the petition will not succeed without the 227 yes votes. Therefore, we must continue to conduct ballots (at a cost of approximately $5000 per ballot) until we can obtain 227 yes votes, or the courts accept the argument that the Beachwalk community suffers from irredeemable voter apathy.”
No opposing homeowners asked to publish articles in the newsletter after the August 2011 election was announced, though two board members in favor of the amendment testified they would have refused such requests. As one of the board members stated, “I believe the policy is one of evenhandedness, no articles for the pro side and no articles for the con side.”
The deadline for returning the ballots was August 15, 2011. On that day, however, the board had not received the ballots of 75 percent of the membership, which was the minimum required to pass the amendment under the CC&R’s, so the board extended voting one week. The amendment ultimately received 258 votes in favor, and 105 against.
Having crossed the 227 vote threshold, the association petitioned the court to amend the CC&R’s. Afterwards, plaintiffs filed the underlying complaint to invalidate the results of the August 2011 election.
Plaintiffs alleged the association violated subdivision (a)(1) by permitting board members to advocate their point of view using association media (thereby triggering the equal-access clause), and then refusing to permit opposing members to utilize the same media to express their point of view. Plaintiffs also claimed they were denied free access to common areas as required by subdivision (a)(2).
After a three day bench trial, the court issued its judgment and statement of decision finding in favor of the association.
First, the court held the association had adopted election rules in 2007 in compliance with section 1363.03. This was based on uncontested evidence showing the association adopted rules in 2007 essentially mirroring the language of section 1363.03. Plaintiffs do not challenge that finding on appeal.
Second, the court held the equal-access requirement of subdivision (a)(1) inapplicable: “The plain language of the statute makes a clear distinction [663] between ‘candidates or members’ advocating a point of view and the ‘association.’ The statute provides by implication that the association, a non-profit corporation which acts through its board [citations], can endorse a candidate or point of view, but mandates that if a candidate or member is given access to the association’s media then all candidates and members advocating a point of view ‘including those not endorsed by the board’ must be given equal access. The weight of the evidence presented establishes that the board authorized and issued the newsletter information in the ‘Breeze’, the pre-election Website information, and the cover letter and other attachments to the ballot materials for the August 22, 2011 election. The court finds that Association, acting through its legally constituted board, used its own media to provide information related to the election and this did not trigger the provisions of [subdivision](a)(1).”[3]
Third, the court held there was no violation of subdivision (a)(2): “There was no persuasive evidence produced to prove that there was any violation of [subdivision ](a)(2) regarding free access to common areas. The weight of the evidence presented establishes that Association allowed access to common area meeting space in Clubhouse #1, in the greenbelt area, and in other open common area space during the campaign for the August 2011 election, at no cost, to all members advocating a point of view, including those not endorsed by the board, for purposes reasonably related to the August 22, 2011 election.” Plaintiffs timely appealed.
DISCUSSION
[1] The Davis-Stirling Common Interest Development Act (the Act) (§ 1350 et seq.) governs homeowner associations. The Act “consolidated the statutory law governing condominiums and other common interest developments . . . . [Citation.] Common interest developments are required to be managed by a homeowners association [citation], defined as ‘a nonprofit corporation or unincorporated association created for the purpose of managing a common interest development’ [citation], which homeowners are generally mandated to join [citation].” (Villa De Las Palmas Homeowners Assn. v. Terifaj (2004) 33 Cal.4th 73, 81, fn. omitted; see also That v. Alders Maintenance Assn. (2012) 206 Cal.App.4th 1419, 1425-1426.)
Section 1363.03 governs certain election procedures. The two provisions relevant to this appeal are in subdivision (a)(1) and (2). Those provisions [664] provide, “(a) An association shall adopt rules . . . that do all of the following: [¶] (1) Ensure that if any candidate or member advocating a point of view is provided access to association media, newsletters, or Internet Web sites during a campaign, for purposes that are reasonably related to that election, equal access shall 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. . . . [¶] (2) Ensure access to the 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.”
[2] Section 1363.09 subdivision (a) creates a right of action for a violation of subdivision (a)(1) and (2). If a court finds those provisions were violated, it may void the election results or impose civil penalties.
The Court Erred in its Interpretation of Subdivision (a)(1)
Plaintiffs first contend the court erred in interpreting subdivision (a)(1). In particular, plaintiffs contend the court’s board-member exception to the equal-access provision violates both the text and policy of subdivision (a)(1). We review the court’s statutory interpretation de novo (Corrales v. Corrales(2011) 198 Cal.App.4th 221, 226), and we agree the court erred.
[3] The court concluded the board is immune from the equal-access provision. The court reasoned that subdivision (a)(1) does not apply to an association’s use of its own media to endorse a candidate or viewpoint. But the text of subdivision (a)(1) does not support the court’s interpretation. The equal-access provision of subdivision (a)(1) is triggered any time a “member” advocates a point of view using association media. It is undisputed the board members in this case were — indeed had to be — members of the association. Thus, 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.
The statutory text further undermines the court’s interpretation by stating equal access must be granted to members advocating a point of view “including those not endorsed by the board.” (subd. (a)(1).) This provision demonstrates the Legislature’s particular concern that viewpoints opposing the board be heard. The court’s interpretation turns that concern on its head and ensures the board can utilize association media to the exclusion of viewpoints “not endorsed by the board.” As plaintiffs state in their brief, “If [665] the Court created [a board-member exception], it would allow those in power the advantage of using Association media to advocate a point of view to the exclusion of any opposing view. Such a construction would only further empower those individuals already in power, and would weaken those individuals not in power. Not only would such a construction be fundamentally unfair, but it would facilitate rather than cure the evils intended to be remedied by the statute.” We agree and hold board members are treated as any other member for purposes of subdivision (a)(1). [4]
The association argues, “Common sense dictates that a part of effectively fulfilling the duties owed by the Association includes providing recommendations to members about managing the property, protecting the Association’s financial well-being, and explaining the basis of Board recommendations.” We have no doubt this is so, and nothing about our holding precludes a board from fulfilling that duty. We hold only, that under subdivision (a)(1), 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 its viewpoint.
The Board Engaged in Advocacy
The court further concluded the board’s various communications were merely informational, and not advocacy: “The weight of the evidence presented establishes that the board authorized and issued the newsletter information in the ‘Breeze’, the pre-election Website information, and the cover letter and other attachments to the ballot materials for the August 22, 2011 election. The court finds that [the] Association, acting through its legally constituted board, used its own media to provide information related to the election and this did not trigger the provisions of” subdivision (a)(1). (Italics added.) The court erred.
[4] We are not aware of any cases, nor have the parties cited any, interpreting the term “advocating” as used in subdivision (a)(1). “We begin with the language of the statute. If the text is sufficiently clear to offer conclusive evidence of the statute’s meaning, we need look no further. [Citation.] If it is susceptible of multiple interpretations, however, we will divine the statute’s meaning by turning to a variety of extrinsic sources, including the legislative history [citation], the nature of the overall statutory [666] scheme [citation], and consideration of the sorts of problems the Legislature was attempting to solve when it enacted the statute [citation].” (Clayworth v. Pfizer, Inc. (2010) 49 Cal.4th 758, 770.)
[5] Black’s Law Dictionary defines “advocacy” as “[t]he act of pleading for or actively supporting a cause or proposal.” (Black’s Law Dict. (7th ed. 1999) p. 55, col. 2.) And the verb “advocate” is commonly defined to mean “to plead in favor of.” (Merriam-Webster’s Collegiate Dict. (10th ed. 2001) p. 18, col. 1.)
[6] This plain English definition, which we adopt, is consistent with the overall nature and purposes of section 1363.03. Subdivision (a)(1) was part of a bill that sought to “provide substantial new voting protections” to members of homeowner associations designed to “guarantee that basic democratic principles are in place during elections,” which had previously been “contaminated by manipulation, oppression and intimidation of members, as well as outright fraud.” (Assem. Com. on Judiciary, Analysis of Sen. Bill No. 61 (2005-2006 Reg. Sess.) as amended Apr. 12, 2005.) It is thus remedial in nature. “A statute which ‘is remedial in nature and in the public interest is to be liberally construed to the end of fostering its objectives . . . . ‘The rule of law in the construction of remedial statutes requires great liberality, and wherever the meaning is doubtful, it must be so construed as to extend the remedy.”” (People ex rel. Dept. of Transportation v. Muller (1984) 36 Cal.3d 263, 269.) The definition above is sufficiently broad to ensure one side of a debate cannot monopolize the use of association media. [5]
With the proper definition of advocacy in mind, we reject the court’s conclusion that the board’s communications were purely informational and thus not advocacy. Both the association Web site and newsletter contained the statement, “Members are encouraged to vote yes for the 8th Amendment so [667] that the litigation can be resolved expeditiously.” This plainly amounts to advocacy within the meaning of subdivision (a)(1). The cover letter that was sent with each of the election ballot materials, described in detail in the facts section above, likewise advocated for the amendment’s passage. One board member at trial described those letters as “making a strong case” in favor of the amendment and “encouraging them to vote yes on Amendment 8.” Our review of those materials confirms that description.
[7] Having engaged in advocacy, under subdivision (a)(1) the association was bound to permit other members equal access to association media. The undisputed evidence shows the association failed in its duty. On at least one occasion the board outright refused to publish an article in the newsletter opposing an advocacy article the board had published. And though the association nominally enacted rules parroting the language of section 1363.03, it was undisputed at trial that the board’s policy was to not permit homeowners to publish advocacy pieces in the newsletter or the association website, nor to permit homeowners access to the association bulletin board. Accordingly, the association violated subdivision (a)(1).
[8] For the guidance of the trial court, we note, contrary to the apparent assumption of the parties and the court during trial, a violation of subdivision (a)(1) does not automatically void the election results. Section 1363.09, subdivision (a), provides, “Upon a finding that the election procedures of this article . . . were not followed, a court may void any results of the election.” (Italics added.) [9] “Ordinarily, the word ‘may’ connotes a discretionary or permissive act; the word ‘shall’ connotes a mandatory or directory duty.” (Woodbury v. Brown-Dempsey (2003) 108 Cal.App.4th 421, 433.) The legislative history confirms that usage here. An earlier version of the Assembly bill that ultimately added subdivison (a)(1) read, “Upon a finding that the election procedures of this section . . . were not followed, a court shall void the results of the election.” (Assem. Bill No. 1098 (2005-2006 Reg. Sess.) as amended Apr. 11, 2005 § 1, italics omitted.) We conclude the change from “shall” to “may” was intended to grant the court discretion.
The Association Violated Subdivision (a)(2)
[10] Subdivision (a)(2) requires the association to give members free access to common areas “during a campaign” for purposes reasonably related to the election. The court held “[t]here was no persuasive evidence produced to prove that there was any violation of [subdivision ](a)(2) regarding free access to common areas” and that the association “allowed access to common area[s] for the August 2011 election, at no cost, to all members advocating a point of view, including those not endorsed by the board, for purposes [668] reasonably related to the August 22, 2011 election.” Under the unique circumstances of this case, the court erred by too narrowly defining the “campaign” as related solely to the association activities immediately preceding the August 22, 2011 election.
Plaintiffs presented evidence of two instances in which the association allegedly violated this subdivision.
In the first alleged violation, a homeowner attempted to reserve the rental side of the clubhouse at no cost to hold a town hall meeting in connection with the December 2010 election, but the community manager told him the board had rejected the request to use the clubhouse for free. Accordingly, the homeowner paid a $90 fee. At trial one board member testified the homeowner’s request never came before the board because it went through the manager, but also acknowledged she eventually became aware of it and admitted the board should have given the homeowner a refund. The only disputed aspect of this evidence is whether the board explicitly rejected the homeowner’s request or whether the community manager did so independently.
In our view, that dispute makes no difference. The community manager was hired by the association to handle clubhouse reservations on behalf of the association. Regardless of whether this request came before the board, the fact remains that the homeowner requested the free use of a common area for purposes reasonably related to the election, but was denied and told to pay a fee instead. Assuming this event is properly considered a part of the “campaign,” the court’s comment that there was no “persuasive” evidence is unavailing in this context because the evidence is, in relevant part, undisputed.
The second alleged violation occurred when, before the April 2011 election, a homeowner requested the use of a common area known as the “greenbelt” for purposes of a political rally. The request was denied in writing without explanation, other than to invite him to resubmit the request at the next regularly scheduled board meeting, which was eight days after the requested date of the political rally. The board members had concerns that the homeowner had requested the greenbelt for the entire day, rather than a specific time period, and had not specified the number of people that would attend. There was no substantial evidence, however, that such concerns had been expressed to the homeowner, nor was the homeowner told he could resubmit the request with additional details or modifications and be approved prior to the date he had requested. His request was simply denied. Again, assuming this event occurred as part of the “campaign,” the association’s legal obligation under subdivision (a)(2) was to “[e]nsure access to the [669] common area meeting space . . . to all members advocating a point of view . . . for purposes reasonably related to the election.” The board did not fulfill its obligation.
The association does not contest that these events occurred. Instead, it argues they are irrelevant because they occurred in connection with the December 2010 and April 2011 elections, not the August 2011 election, which is the election plaintiffs challenge. The premise underlying the association’s argument is that a violation is only relevant to a single election, after which the association is absolved of any wrongdoing for purposes of future elections.
[11] Subdivision (a)(2) does not explicitly address whether a particular violation may apply to multiple elections in circumstances such as those present here. It simply states access must be granted to common areas “during a campaign . . . for purposes reasonably related to the election.” The issue, therefore, is whether the “campaign” in this case encompassed all three elections or restarted after each election.
As a practical matter, most campaigns will correspond to a single election. In the unique circumstances of this case, however, we hold the campaign to pass the amendment did encompass the December 2010, April 2011, and August 2011 elections. This case is unique because the board threatened to, and did, hold multiple elections in short succession until the amendment passed. Shortly after the December 2010 election failed, the board sent a message to the homeowners in the newsletter articulating arguments in favor of the amendment and stating, “Therefore, we will be asking homeowners to vote on this issue again on the March ballot. And if we cannot get 227 yes votes in March, there will be another ballot on the same issue shortly thereafter.” They did not receive the required votes in the next election, so, true to their word, the board held another election and issued a similar warning: “This issue has already gone before the homeowners on two occasions (December 2010 and April 2011). . . . Although the [association] is filing a petition with the courts anyway, it is entirely possible the petition will not succeed without the 227 yes votes. Therefore, we must continue to conduct ballots (at a cost of approximately $5000 per ballot) until we can obtain 227 yes votes, or the courts accept the argument that the Beachwalk community suffers from irredeemable voter apathy.” (Italics added.) The board itself, therefore, tied the two prior elections to the August 2011 election and threatened to continue holding elections until the Amendment garnered sufficient votes. Under these circumstances, we hold the “campaign” encompassed all three elections. [670]
As noted above, however, we do not hold the court must void the August 2011 results, only that the violations of subdivision (a)(2) described above are relevant and should be considered in deciding whether to void the results of the August 2011 election.
DISPOSITION
The judgment is reversed. Plaintiffs shall recover their costs incurred on appeal.
O’Leary, P.J., and Rylaarsdam, J., concurred.
Respondent’s petition for review by the Supreme Court was denied September 11, 2013, S212545.
[1]. All statutory references are to the Civil Code. References to “subdivision (a)(1)” and “subdivision (a)(2)” are to section 1363.03.
[2]. The parties refer to this as the “8th Amendment” because it would be the eighth amendment to the CC&R’s. For clarity, we simply refer to it as the “amendment.”
[3]. The court also stated, “There was no credible evidence that any member of the Association changed his/her vote because of any information contained in any of the Association’s media or ballot materials.” Both parties agree, however, that this is not a relevant consideration. Thus we do not address it.
[4]. Plaintiffs filed a motion for judicial notice of the Senate bill analysis of Senate Bill 61, which was the bill that introduced subdivision (a)(1) and (2). (Sen. Bill No. 61 (2005-2006 Reg. Sess.).) A motion for judicial notice of published legislative history, such as the Senate Analysis here, is unnecessary. (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 45-46, fn. 9.) “Citation to the material is sufficient. [Citation.] We therefore consider the request for judicial notice as a citation to those materials that are published.” (Id. at p. 46, fn. 9.)
[5]. The parties debate whether we should interpret “advocating” as synonymous with “campaigning” as that term is used in the line of cases holding a public entity may not use public funds for “campaigning.” (See, e.g., Stanson v. Mott (1976) 17 Cal.3d 206; Vargas v. City of Salinas (2009) 46 Cal.4th 1.) The Stanson line of cases make a distinction between “campaigning” and “informational” activity. The analogous issue in homeowner association election, i.e. the use of association funds, is governed by section 1363.04, which prohibits the use of association funds “for campaign purposes in connection with any association board election [or] for campaign purposes in connection with any other association election except to the extent necessary to comply with duties of the association imposed by law.” (Id., subd. (a).) But this case is not about the prohibited use of association funds. It is only about the equal access rules found in subdivision (a)(1) and (2) – rules triggered by “advocacy,” not “campaigning.” Thus there is no need to distinguish (or not) between “campaigning” and “informational” activity. It is enough for our purposes to interpret the word “advocacy” and determine under that definition whether the board engaged in “advocacy.”
Related Links
“Equal Access to HOA Media Outlets During Election Campaigns” – Blog post from HOA Lawyer Blog, published 07/29/13
Corporations Code Section 7615. Cumulative Voting.
(a) If the articles or bylaws authorize cumulative voting, but not otherwise, every member entitled to vote at any election of directors may cumulate the member’s votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the member is entitled, or distribute the member’s votes on the same principle among as many candidates as the member thinks fit. An article or bylaw provision authorizing cumulative voting may be repealed or amended only by approval of the members (Section 5034), except that the governing article or bylaw provision may require the vote of a greater proportion of the members, or of the members of any class, for its repeal.
(b) No member shall be entitled to cumulate votes for a candidate or candidates unless the candidate’s name or candidates’ names have been placed in nomination prior to the voting and the member has given notice at the meeting prior to the voting of the member’s intention to cumulate votes. If any one member has given this notice, all members may cumulate their votes for candidates in nomination.
(c) In any election of directors by cumulative voting, the candidates receiving the highest number of votes are elected, subject to any lawful provision specifying election by classes.
(d) In any election of directors not governed by subdivision (c), unless otherwise provided in the articles or bylaws, the candidates receiving the highest number of votes are elected.
(e) Elections for directors need not be by ballot unless a member demands election by ballot at the meeting and before the voting begins or unless the bylaws so require.
Corporations Code Section 7614. Inspectors of Election.
(a) In advance of any meeting of members, the board may appoint inspectors of election to act at the meeting and any adjournment thereof. If inspectors of election are not so appointed, or if any persons so appointed fail to appear or refuse to act, the chairman of any meeting of members may, and on the request of any member or a member’s proxy shall, appoint inspectors of election (or persons to replace those who so fail or refuse) at the meeting. The number of inspectors shall be either one or three. If appointed at a meeting on the request of one or more members or proxies, the majority of members represented in person or by proxy shall determine whether one or three inspectors are to be appointed. In the case of any action by written ballot (Section 7513), the board may similarly appoint inspectors of election to act with powers and duties as set forth in this section.
(b) The inspectors of election shall determine the number of memberships outstanding and the voting power of each, the number represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies, receive votes, ballots or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine when the polls shall close, determine the result and do such acts as may be proper to conduct the election or vote with fairness to all members.
(c) The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.
Corporations Code Section 7613. Proxies.
(a) Any 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, subject to subdivision (f). Any proxy purported to be executed in accordance with the provisions of this part shall be presumptively valid.
(b) No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy, except that the maximum term of any proxy shall be three years from the date of execution. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto, except as otherwise provided in this section. Such revocation may be effected by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by the person executing the prior proxy and presented to the meeting, or as to any meeting by attendance at such meeting and voting in person by the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed.
(c) A proxy is not revoked by the death or incapacity of the maker or the termination of a membership as a result thereof unless, before the vote is counted, written notice of such death or incapacity is received by the corporation.
(d) Unless otherwise provided in the articles or bylaws, the proxy of a member which states that it is irrevocable is irrevocable for the period specified therein (notwithstanding subdivisions (b) and (c)) when it is held by any of the following or a nominee of any of the following:
(1) A person who has purchased or who has agreed to purchase the membership;
(2) A creditor or creditors of the corporation or the member who extended or continued credit to the corporation or the member in consideration of the proxy if the proxy states that it was given in consideration of such extension or continuation of credit and the name of the person extending or continuing the credit; or
(3) A person who has contracted to perform services as an employee of the corporation, if the proxy is required by the contract of employment and if the proxy states that it was given in consideration of such contract of employment, the name of the employee and the period of employment contracted for.
Notwithstanding the period of irrevocability specified, the proxy becomes revocable when the agreement to purchase is terminated; the debt of the corporation or the member is paid; or the period of employment provided for in the contract of employment has terminated. In addition to the foregoing paragraphs (1) through (3), a proxy of a member may be made irrevocable (notwithstanding subdivision (c)) if it is given to secure the performance of a duty or to protect a title, either legal or equitable, until the happening of events which, by its terms, discharge the obligations secured by it.
(e) A proxy may be revoked, notwithstanding a provision making it irrevocable, by a transferee of a membership without knowledge of the existence of the provision unless the existence of the proxy and its irrevocability appears on the certificate representing the membership.
(f) Subdivision (a) notwithstanding: (1) No amendment of the articles or bylaws repealing, restricting, creating or expanding proxy rights may be adopted without approval by the members (Section 5034); and (2) No amendment of the articles or bylaws restricting or limiting the use of proxies may affect the validity of a previously issued irrevocable proxy during the term of its irrevocability, so long as it complied with applicable provisions, if any, of the articles or bylaws at the time of its issuance, and is otherwise valid under this section.
(g) Anything to the contrary notwithstanding, any revocable proxy covering matters requiring a vote of the members pursuant to Section 7222; Section 7224; Section 7233; paragraph (1) of subdivision (f) of this section; Section 7812; paragraph (2) of subdivision (a) of Section 7911; Section 8012; subdivision (a) of Section 8015; Section 8610; or subdivision (a) of Section 8719 is not valid as to such matters unless it sets forth the general nature of the matter to be voted on.
Corporations Code Section 7612. Membership in Multiple Names.
If a membership stands of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, husband and wife as community property, tenants by the entirety, persons entitled to vote under a voting agreement or otherwise, or if two or more persons (including proxyholders) have the same fiduciary relationship respecting the same membership, unless the secretary of the corporation is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect: (a) If only one votes, such act binds all; or (b) If more than one vote, the act of the majority so voting binds all.
Corporations Code Section 7611. Record Date; Eligibility to Vote.
(a) The bylaws may provide or, in the absence of such provision, the board may fix, in advance, a date as the record date for the purpose of determining the members entitled to notice of any meeting of members. Such record date shall not be more than 90 nor less than 10 days before the date of the meeting. If no record date is fixed, members at the close of business on the business day preceding the day on which notice is given or, if notice is waived, at the close of business on the business day preceding the day on which the meeting is held are entitled to notice of a meeting of members. A determination of members entitled to notice of a meeting of members shall apply to any adjournment of the meeting unless the board fixes a new record date for the adjourned meeting.
(b) The bylaws may provide or, in the absence of such provision, the board may fix, in advance, a date as the record date for the purpose of determining the members entitled to vote at a meeting of members. Such record date shall not be more than 60 days before the date of the meeting. Such record date shall also apply in the case of an adjournment of the meeting unless the board fixes a new record date for the adjourned meeting. If no record date is fixed, members on the day of the meeting who are otherwise eligible to vote are entitled to vote at the meeting of members or, in the case of an adjourned meeting, members on the day of the adjourned meeting who are otherwise eligible to vote are entitled to vote at the adjourned meeting of members.
(c) The bylaws may provide or, in the absence of such provision, the board may fix, in advance, a date as the record date for the purpose of determining the members entitled to cast written ballots (Section 7513). Such record date shall not be more than 60 days before the day on which the first written ballot is mailed or solicited. If no record date is fixed, members on the day the first written ballot is mailed or solicited who are otherwise eligible to vote are entitled to cast written ballots.
(d) The bylaws may provide or, in the absence of such provision, the board may fix, in advance, a date as the record date for the purpose of determining the members entitled to exercise any rights in respect of any other lawful action. Such record date shall not be more than 60 days prior to such other action. If no record date is fixed, members at the close of business on the day on which the board adopts the resolution relating thereto, or the 60th day prior to the date of such other action, whichever is later, are entitled to exercise such rights.
Corporations Code Section 7520. Nomination and Election Procedures Required.
(a) As to directors elected by members, there shall be available to the members reasonable nomination and election procedures given the nature, size and operations of the corporation.
(b) If a corporation complies with all of the provisions of Sections 7521, 7522, 7523, and 7524 applicable to a corporation with the same number of members, the nomination and election procedures of that corporation, shall be deemed reasonable. However, those sections do not prescribe the exclusive means of making available to the members reasonable procedures for nomination and election of directors. A corporation may make available to the members other reasonable nomination and election procedures given the nature, size,and operations of the corporation.
(c) Subject to the provisions of subdivisions (a), (b), and (d) of Section 7616, the superior court of the proper county shall enforce the provisions of this section.
Corporations Code Section 7517. Corporate Acceptance or Rejection of Ballot.
(a) If the name signed on a ballot, consent, waiver, or proxy appointment corresponds to the name of a member, the corporation if acting in good faith is entitled to accept the ballot, consent, waiver or proxy appointment and give it effect as the act of the member.
(b) If the name signed on a ballot, consent, waiver, or proxy appointment does not correspond to the record name of a member, the corporation if acting in good faith is nevertheless entitled to accept the ballot, consent, waiver, or proxy appointment and give it effect as the act of the member if any of the following occur:
(1) The member is an entity and the name signed purports to be that of an officer or agent of the entity.
(2) The name signed purports to be that of an attorney-in-fact of the member and if the corporation requests, evidence acceptable to the corporation of the signatory’s authority to sign for the member has been presented with respect to the ballot, consent, waiver, or proxy appointment.
(3) Two or more persons hold the membership as cotenants or fiduciaries and the name signed purports to be the name of at least one of the coholders and the person signing appears to be acting on behalf of all the coholders.
(4) The name signed purports to be that of an administrator, executor, guardian, or conservator representing the member and, if the corporation requests, evidence of fiduciary status acceptable to the corporation has been presented with respect to the ballot, consent, waiver, or proxy appointment.
(5) The name signed purports to be that of a receiver or trustee in bankruptcy of the member, and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the ballot, consent, waiver, or proxy appointment.
(c) The corporation is entitled to reject a ballot, consent, waiver, or proxy appointment if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has a reasonable basis for doubt concerning the validity of the signature or the signatory’s authority to sign for the member.
(d) The corporation and any officer or agent thereof who accepts or rejects a ballot, consent, waiver, or proxy appointment in good faith and in accordance with the standards of this section shall not be liable in damages to the member for the consequences of the acceptance or rejection.
(e) Corporate action based on the acceptance or rejection of a ballot, consent, waiver, or proxy appointment under this section is valid unless a court of competent jurisdiction determines otherwise.
Corporations Code Section 7516. Written Consent for Action without Meeting.
Any action required or permitted to be taken by the members may be taken without a meeting, if all members shall individually or collectively consent in writing to the action. The written consent or consents shall be filed with the minutes of the proceedings of the members. The action by written consent shall have the same force and effect as the unanimous vote of the members.