Community Association Update: Issue # 59

  • Email Discussions Between Board Members are not "Meetings"
  • Are Your HOA Volunteers Covered for Injuries?
  • What if Our HOA's Insurance is Canceled Due to Risk of Wildfires?
  • Court Steps in to Force Recalled Board to Step Down
Dear Steven,

This Community Association Update is part of our commitment to providing the highest quality legal services to our clients and industry partners. If your company or Association would like to see a topic or issue covered in future editions, feel free to call our offices, email us, or submit a question online!

Steven Tinnelly, Esq.

New Case Law-

Email Discussions Between Board Members are not "Meetings"

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The Open Meeting Act ("OMA") regulates how an HOA board may meet and conduct business. One of the most common questions we receive pertains to whether email exchanges between board members on items of HOA business constitute a “board meeting,” even if those emails are merely for discussion purposes without any vote (or “action”) being taken on the item via email.

Fortunately, we finally have an answer to this question from the California Court of Appeals by its ruling in LSNU #1, LLC v. Alta Del Mar Coastal Collection Community Association; an answer that will have a significant, immediate and beneficial impact on HOA governance throughout California.

That answer is no. Email exchanges between board members that merely discuss items of business are not within the statutory definition of a “board meeting” under the OMA and are therefore lawful.

The Court referenced two central provisions of the OMA upon which the homeowner relied in making their argument: Civil Code section 4090 (defining what constitutes a “board meeting”) and Civil Code section 4910 (prohibiting a board from “acting” on items of business outside of a board meeting). The Court determined that:

  • Email exchanges between board members are not a “gathering” of the Board, and therefore do not constitute a “board meeting” under the OMA; and

  • The OMA prohibits the board from “acting on” items of business outside of a board meeting, not from “discussing” those items outside of a meeting via email.

Many boards find it difficult to reserve all discussion on items of business solely for the board’s regularly scheduled meetings. This is due to a variety of common factors, such as the large amount of business that must be addressed at any given meeting, the intervals at which regularly scheduled meetings take place, and the need to share information regarding unforeseen or exigent issues that may arise between meetings. The Court’s holding in Alta Del Mar now confirms the ability of an HOA’s board members to email with one another to discuss items of business facing their community. This will allow for boards to be in a better position to take appropriate and timely action on those items during their actual meetings.  

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Are Your HOA Volunteers Covered for Injuries?

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HOAs rely on the efforts of their volunteer directors, officers, and committee members to perform all manner of tasks needed in assisting the HOA with its operations. Participation by these volunteers in common tasks such as site inspections, including slope inspections, landscape committee walk-throughs, and even meeting room set up and take down can all create a risk of personal injury to the volunteer.

If such injury were to occur, would the volunteer be covered by the HOA’s insurance policies?

The answer is yes with respect to an HOA’s worker’s compensation policy, but only if the HOA affirmatively “opts-in” to such coverage by adoption of a written declaration. In the course of our experience representing HOAs throughout California, we are finding that many boards form committees of volunteer homeowners without making this written declaration. To make matters worse, they often fail to even memorialize the formation of the committee and the persons to serve as its members. This is problematic.

Boards should pass a written resolution that memorializes (a) the board’s creation of the committee, (b) the board’s appointment of named individual volunteers to serve as members of that committee, and (c) the board’s adoption of a formal charter for the committee which defines the scope of authority and responsibility vested in the committee’s members. This resolution and charter should be drafted by the legal counsel and made part of the board’s meeting minutes. As different people are appointed or removed from the committee, the board may simply document those changes in its meeting minutes without having to pass a new resolution or amend the charter.

If your HOA board has not made a written declaration to “opt-in” to workers compensation coverage for volunteers, the HOA may be exposed to direct claims of personal injury. Boards should confirm adequate insurance coverage for their volunteers with their HOA’s insurance agent. They should also verify precisely what their insurance carrier requires in terms of a written declaration for the purposes discussed above.

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What if Our HOA's Insurance is Cancelled Due to Risk of Wildfires?

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If your HOA is located in a high-risk fire area, what can your board do if the current master policy of fire and casualty insurance on your condominium or townhome buildings is not renewed? Due to the massive wildfires that have swept California over the past two years, many insurance companies (and their re-insurance partners) are reassessing their willingness to underwrite fire and casualty insurance in the state. Those carriers that are willing to write coverage are limiting their risk exposure by greatly reducing the coverage limits available for purchase. To compound this problem, the premiums being quoted are 5-10 times the amount of the prior year’s premium, and for much less coverage.

Many HOAs are finding that they are unable to purchase “full replacement” coverage for the attached common buildings at any price. These HOAs are electing to purchase whatever reduced coverage is available (and affordable), and passing the increased premium costs back to the members as a special assessment. With the current lack of any legislative solution from Sacramento, combining reduced coverage under the HOA’s master policy with individual purchase of an HO-3 policy may be the only available option for members to protect their investment.

HOAs facing this problem should consult with their insurance broker and legal counsel to assure that the board is acting reasonably and obtaining adequate coverage. Boards should also consider whether any amendments to the HOA’s governing documents are needed to limit the risk of claims against the HOA for underinsuring the project and requiring members to obtain additional coverage on their individual unit policies.

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New Case Law-

Court Steps in to Force Recalled Board to Step Down

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The Court of Appeals recently ruled in Lake Lindero Homeowners Association, Inc. v. Barone that Corp. Code section 7616 may be used to validate a recall election removing the former board of an HOA, in addition to validating the election of a new board.

In Lake Lindero, the board was properly served with a recall petition to recall the entire sitting board. The HOA held an election meeting on December 19, 2019; however, quorum was not present. In compliance with the HOA’s bylaws, a majority of the members at the December 19, 2019 election meeting voted to adjourn the meeting to December 23, 2019, wherein only 25% of the votes of the membership would be required to constitute a quorum, as opposed to the usual 50%.

Thereafter, at the election meeting on December 23, 2019, the necessary quorum of 25% of the membership was present. The recall of the entire board passed, and a new board was elected and certified.

In January of 2020, Plaintiffs filed a complaint seeking a declaration under Corp. Code section 7616 validating the December 2019 recall election and the election of the new board. Plaintiffs' action was necessitated by Defendant Barone's (and his fellow recalled board members') refusal to recognize the validity of the December 2019 recall. The trial court granted Plaintiffs' request for declaratory relief and validated the December 2019 recall. Defendant Barone appealed.

The Court concluded Corp. Code section 7616(d) was broad enough to serve as a “procedural vehicle” to clarify Plaintiffs' recall rights under the HOA’s bylaws, even though the statute does not expressly mention recall elections. The Court reasoned that it was “just and proper” to enter an order confirming the recall, as it could not determine the validity of the election of the new board without first addressing the recall. The Court further concluded that having validly confirmed the recall and subsequent election of the HOA’s new board, the same code section authorized the trial court to enter an order confirming Defendant Barone had no authority to act on the HOA’s behalf....

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Welcome Another New TLG Attorney!

Timothy Majar, Jr., Esq.

Senior Attorney

Tim Mahar joins TLG with significant litigation and trial experience representing multi-national corporations, financial institutions, professional athletes, business owners, real estate developers, brokers and shareholders in a wide range of contract disputes, real estate, fraud, business tort, unfair business practices, and trade secrets claims.

Tim also gained extensive experience at his prior firm representing dozens of homeowners against HOAs in litigation and alternative dispute resolution. That experience has proven to be extremely valuable in now representing our HOA clients in their dealings with adverse homeowners and third parties. He's delivered impressive results for our clients since day 1 and we are proud to welcome such an exceptional attorney to our growing team.

Outside of work, Tim is a father of two and an accomplished amateur triathlete that's competed at the Ironman 70.3 World Championships.

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