AZ APP 1 : HOA BOARD CANNOT BAN DISSENTING DIRECTOR FROM EXECUTIVE SESSIONS

 

How very good and pleasant it is, when kindred live together in unity! (Psalm 133:1 [NRSV]).

And how nasty it can get when HOA board members can’t get along!

An HOA board member sided with a former association employee who alleged misconduct by the association’s general manager. The allegations were contained in emails that the board reviewed in executive session. The board voted, in executive session, to disavow the email. The dissenting director then proceeded to read the email aloud during public session, prompting an abrupt adjournment. The association’s attorney recommended that the association exclude the dissenting director from future executive sessions, and the board approved a motion to that effect.

After the dissenting director was reelected, the board offered to permit the dissenting director to attend executive sessions if she would agree to keep the discussions confidential. The dissenting director refused, and contended that the offer required that she admit to wrongdoing.

The dissenting director went to court and asked for a preliminary injunction requiring the board to allow her into executive sessions. The Superior Court declined to issue the preliminary injunction, but today the Arizona Court of Appeals reversed.

The appeals court said that the association did not have the authority to blanket ban a director from executive sessions. By doing so it prevented her from participating in management of the association’s affairs as required by statute. The board argued that the board, minus the dissenting director, was simply a special committee, which is allowed by law. The court did not buy that argument. The court noted there was no evidence that any special committee was formed, and that it would be improper to form a committee for the sole purpose of excluding a single director from the board’s deliberations.

The court also noted that the only procedure provided by the association’s governing documents for removal of a director was a recall election. Arizona statutes would have allowed the association to provide other or additional removal procedures.

The court did say that, in other cases, limited exclusion of a director from executive session might be allowed to address the director’s conflict of interest, or alleged misconduct, or litigation involving the director.

The cost of all this to the association is yet to be determined. The Court of Appeals awarded attorneys’ fees to the dissenting director for the appeal only. Whether fees will be awarded for the entire case is to be decided at a later date.

McNally v Sun Lakes (Oct. 13, 2016).