NOTICE OF LAWSUITS

QUESTION: If my association is being sued, does the board have a duty to tell all the members? Our insurance rates have gone up because of one such lawsuit. It seems the homeowners have a right to know why.

ANSWER: Currently there is no statutory duty to report litigation to the membership. Over the years California  has enacted extensive disclosure requirements for homeowners associations. To date, the legislature has not required HOAs to give members notice of litigation other than intended litigation against developers for construction defects. Civil Code §1368.4.

Escrows & Audits. Nor do boards do not have a duty to volunteer information about litigation when units/lots go into escrow. Although sellers have an obligation to provide relevant information to buyers, associations have no duty to volunteer such information. Kovich v. Paseo Del Mar. Even so, most associations disclose litigation matters when asked. Moreover, any litigation that could have an unfavorable outcome for an association is disclosed in its annual financial statement to the membership pursuant to FASB Statement No. 5, Accounting for Contingencies.
Reserve Borrowing. Litigation disclosures also take place when an association transfers reserve funds to pay for litigation. Such disclosures to the membership occur "in the next available mailing."Civil Code §1365.5(d).

Case Law. The courts have noted, however, that boards have a general duty to disclose facts that materially affect the rights and interests of members. Ostayan v. Nordoff Townhomes. Whether a particular piece of litigation should be disclosed to the membership will depend on the facts surrounding the case and its potential impact on the membership.

Retaliatory? Interestingly, when owners sue their associations and boards disclose the litigation to the membership, plaintiffs sometimes get upset. They would rather that members not know. In one case I was involved in, the plaintiff actually complained to the judge that the disclosure was "retaliatory." He didn't think the membership had a right to know he had sued them. Nor did he think members should be told that a pending special assessment was due to his litigation. The court was not sympathetic.

Litigation Privilege. If an association discloses litigation to the membership, such disclosures are protected by the litigation privilege--a type of immunity given to statements in connection to litigation. The protections are found in Civil Code §47(b) and Code Civ. Proc. §425.16which are construed broadly to protect a litigants' access to the courts without the fear of being harassed by derivative tort actions. Thus, a board's communication to the membership about litigation is immune from tort liability provided it has some relation to the judicial proceedings. Healy v. Tuscany Hills.

RECOMMENDATION: Unless there is a reason to temporarily withhold information, boards should disclose the existence of litigation involving the association. When I refer to litigation I don't mean small claims actions. Such actions are by their nature small with limited, if any, impact on the association. Even so, these are routinely reported to the membership by many associations.

JOB SHARING

QUESTION: Can a couple that own one condo together share one board seat (job-sharing)?

ANSWER: No, they can’t. The membership elects a specific person to the board not the "Occupants of Unit #209." If Mr. Smith is elected to the board, Mrs. Smith can’t fill in when he is out of town. There is an amazing modern convenience today called the telephone. Mr. Smith can attend telephonically if he can't physically attend. Rumor has it that someday telephones will be portable.

CONDUCTING MEETINGS

QUESTION: If board members do not have the knowledge to conduct a meeting, who is responsible to guide them?

ANSWER: No one is "responsible" for guiding the board (unless the duty has been imposed via contract with the management company). The buck stops with the board. If directors don't know how to run their meetings, they have a lot of great resources available to fill that gap.

Written Materials. A simple 16-page illustrated guideline which serves as a basic introduction to parliamentary procedure is the A-B-C's ofParliamentary Procedure. Another more complete but easy to understand guide is the Complete Idiot's Guide to Robert's Rules. Both can be ordered throughAmazon.com.

Classes. Directors can also attend classes offered through the Community Associations Institute that teach boards the basics of parliamentary procedure. In addition, they can hire a parliamentarian to attend meetings and/or give them private training.

Other Resources. Additionally, boards can ask for guidance from their managers and legal counsel, most of whom have a working knowledge of running meetings. Both CAI and CACM teach this topic in their certification programs for managers. Many recording secretaries who take the minutes for board meetings also have a working knowledge of parliamentary procedure and can assist boards with their meetings. And last but not least, YouTube has a number of video training sessions on how to run meetings.

LAUNDRY NOISE

QUESTION: I was wondering if an association could limit my renter from doing laundry in her own unit to the hours of 8 a.m. to 10 p.m.? It does not specifically say washer/dryer or laundry in the noise ordinance.
ANSWER: Yes they can. Just as associations can regulate loud parties, loud music and anything else that might disturb neighbors, the specific disturbance need not be spelled out in your rules. The board has authority under thenuisance provisions of your CC&Rs to regulate noise from washers and dryers.

By 10 p.m. most people are headed for bed (in senior communities they're in bed by 8). If you properly insulate your laundry room against noise and vibration and purchase higher-end "quiet" machines, I bet your renter could run them all night long and no one would know it. If you don't want to spend the money, make sure your tenant washes clothes between 8 a.m. and 10 p.m. If her schedule does not allow it, she could hire domestic help to wash clothes during the day.

FEEDBACK

Committees. Your response to the question regarding manager certification made me chuckle. For those of us in SoCal who pay attention to the influence of the stars and planets---a Taurean's tendency toward down-to-earth practicality and no nonsense approach to finances would make him an excellent candidate for the position of manager. He would have received my vote also. -Susan M.

Ditto. I've got to ditto all the positive feedback that you received. You are a great source of knowledge and I've learned a lot from your newsletter and refer to your letter frequently. Thank you very much. -Sam M.

Newsletter. LOVE the newsletters--they're a big help to our little (37-unit) association. -Pamela D.

Adrian J. Adams, Esq. Adams Kessler PLC