Or, Sometimes Judges Get it Wrong.

A surprising decision was recently published by the Fourth Circuit Court of Appeal (LNSU #1, LLC v. Alta Del Mar Coastal Collection Community Association). The case involved an interesting interpretation of the definition of “board meeting” and arguably dispensed with the requirement that board deliberations be conducted in an open meeting, allowing these deliberations to be conducted via email.

Section 4090(a) of the Davis-Stirling Act defines a “board meeting” as, “A congregation, at the same time and place, of a sufficient number of directors to establish a quorum of the board, to hear, discuss, or deliberate upon any item of business that is within the authority of the board.”

The Court of Appeal interpreted the definition to include a “physical location” requirement and held that email discussions do not constitute a “board meeting.”

The Court stated, “In sum, we conclude ‘board meeting,’ as defined by section 4090, subdivision (a), is an in-person gathering of a quorum of the directors of a homeowners association at the same time and in the same physical location for the purpose of talking about and taking action on items of association business. E-mail exchanges among directors on those items that occur before a board meeting and in which no action is taken on the items, such as those at issue in this case, do not constitute board meetings within the meaning of that provision.”

Analysis

This ruling contradicts long-standing and industry-standard legal advice regarding the use of email for board discussions and deliberations. Since the publication of the Open Meeting Act (Article 2 of the Davis-Stirling Act), legal counsel throughout the state have advised associations not to hear, discuss, or deliberate upon any item of business unless in an open board meeting, specifically advising board members to not use email for this purpose, except in the event of an emergency. This advice is supported by a plain text reading of the Davis-Stirling Act, specifically sections 4090, 4910, and 4920.

While many may see this case as an earth-shattering decision, we disagree. This decision complicates something that was straightforward and clearly defined by the Civil Code – do not hear, discuss, or deliberate upon any item of business via email (unless it is an emergency). These discussions must take place during a noticed, open meeting so the membership can observe the board conducting business (including deliberations and decision-making).

Ignores Intent of Open Meeting Act

The Open Meeting Act was enacted to ensure members could witness the board conducting business. By allowing deliberations by email, members (and potentially individual directors) are excluded from the process. If all discussion on a matter takes place via email, then the vote at an open meeting becomes a mere formality. As a result, members are unaware of the substance of discussions and deliberations and are in the dark about the basis for board decisions.

Ignores the Plain Language of the Civil Code

Civil Code section 4910(b)(1) states “the board shall not conduct a meeting [i.e., hear, discuss or deliberate] via a series of electronic transmissions, including, but not limited to, electronic mail….” A clear exception is made for emergency situations in Civil Code 4910(b)(2). The plain language of the statutes was apparently ignored in this decision and language that does not exist in the statutes was “added” to support the court’s reasoning.

Misguided Reasoning

This decision employs misguided reasoning to conclude that a board meeting must be held in a physical location, thus email cannot be considered a board meeting. This reasoning hinges upon the definition of “congregation” (as referenced in Civil Code section 4090(a)) and adding language to the Civil Code that does not exist.

Although the dictionary definitions of “congregation” cited in this decision do not include “physical location,” the court read that into the definition of “congregation” anyway, stating, “Although the definitions of ‘congregation’ in the dictionaries… say nothing explicit about physical location, the examples in those dictionaries ordinarily involve gatherings of persons in one location for a particular purpose.” The court concluded that, if a board meeting is a congregation and a congregation requires a physical location, email exchanges cannot be a board meeting.

However, emergency board meetings conducted by email are specifically authorized by Civil Code section 4910(b)(2) as a type of board meeting. This decision concludes that an emergency board meeting “is not a subset of the type of board meeting defined by section 4090(a)” but is a third type of meeting, “in addition to and different from those defined by section 4090.” This argument is not supported by any other provision in the Davis-Stirling Act.

Ruling May Overturned or Rendered Moot

This ruling can be overturned on appeal, superseded by another case, or made irrelevant by legislation.

Specifically, it is very likely that Assembly Bill 648 will become law and, as of January 1, 2024, the Civil Code will be amended to allow fully remote board meetings. This bill is currently awaiting the governor’s signature and by all indications, it will be signed. Once signed, any “physical location” requirement for board meetings will become moot as teleconference meetings will be authorized.

Takeaways

Continue to Limit Email Communication

Despite this ruling, we strongly encourage boards to limit email communication.

• Use email to push information or for administrative purposes only. Do not comment, express opinions, or discuss matters via email.
• Think of email as “evidence” mail. Emails are a permanent discoverable record, meaning they can be disclosed if subpoenaed. Imagine your email being read in open court, in front of a judge and jury. The board in this case certainly never thought their emails would become part of a published case with their comments attributed to them by name. For example, after receiving an email accusing the board of violating the association’s governing documents, the board’s email discussion included one board member replying, “Blah blah blah!” and another responding, “We need to get rid of (plaintiff). He is not part of our community.”

Remember the Purpose of the Open Meeting Act

• The Open Meeting Act was enacted to ensure transparency in board decision-making, including all deliberations. Is the decision-making process truly transparent if the full discussion takes place via email with only the vote taking place during a board meeting?
• Members may challenge decisions made by the board, especially if deliberations are conducted privately via email. Members can still argue decisions were made at unnoticed board meetings, despite this ruling. Litigation to defend these actions can be protracted and costly. This case was litigated for more than five years and cost the association more than $400,000 in legal fees. Err on the side of caution and be as transparent as possible in all decision-making activities.

Anticipate Meetings Without a Physical Location Required in 2024

• AB 648 will likely be signed by the governor, which will eliminate the physical location requirement for board meetings, allowing meetings to be conducted entirely by teleconference (and negating the court’s reasoning in this case).

And remember – sometimes judges get it wrong! Contact your favorite HGCT attorney if your association needs legal assistance with any board or member meeting questions.