Berding | Weil - Attorneys At Law

Directors Gone Wild!

While directors who act badly are a tiny minority of those who volunteer to serve on an association's board of directors, it's also true every now and then a “bad apple” ends up on the board. They might be abusive to residents and contractors, might mis-treat people based on their race, color or religion; they might disrupt meetings, speak out of turn, reveal executive session confidences or personal information about delinquent owners or purport to speak for the Association without the authority to do so.

The board is not powerless to deal with these problems. Here are some options and considerations that will apply to some of the challenges wild directors pose:

The personal touch: A private “chat” with a friendly director (or perhaps two but not more) behind closed doors can sometimes achieve positive results with a director who has acted badly.

No indemnification: Directors who act in good faith are typically going to be protected from claims provided they act in “good faith,” such protection coming from their right to be indemnified by the Association and/or its insurer. However, harassment based on someone's race, religion or other protected classifications can easily be characterized as not “in good faith” creating significant personal exposure for the director who is the target of such claims. Many directors assume they are fully protected and advising them they are not might help engender better behavior.

Strip the director of “officer” authority: In most associations, directors also serve as officers: President, Vice-President, Secretary or Treasurer. Generally, the board strips someone of their officer position. This is a way of punishing bad behavior and also limits that removed officer's mantle of authority as an officer.

Declare the director's position “vacant”: Generally, only the members can remove a director from serving on the board. A vote to do so can be initiated by 5% of the members or a majority of the board and one or more officers (check the bylaws). But, if a director no longer meets the qualifications for serving, the board can declare their position vacant. Sometimes, those qualifications include being a member “in good standing” and that can mean not being in violation of the CC&Rs. If the CC&Rs ban “nuisance” behavior and the director's harassment of residents rises to that level, a majority of the board might, in effect, be able to remove the director from the board. This procedure should not be undertaken without careful consideration and the advice of counsel.

Consider initiating a recall: Again, the decision to recall a director usually rests with the members but if a recall vote is initiated, directors can bring to the Association's attention the concerns about the difficult director. Of course, the targeted director can be expected to reply and the campaign could get ugly. Lots of rules are in play here including a ban on use of association funds for campaigning. Still, it is an option but not one to act on lightly.

Form a “Committee of the Board”: These are special committees – think of them as “sub-boards” – whose members must be directors but only those chosen by the majority of the board to serve. A Committee of the Board (sometimes called an Executive Committee) can deal with almost any subject consistent with the Committee's charter. Typically, this kind of Committee might handle big construction projects, important contract negotiations or governing document amendments. The “difficult” director can be excluded from this kind of Committee and, while he or she could attend Committee meetings, would have no “vote” on decisions made.

Notification to residents, owners and contractors: The board can send a notice (or include a newsletter article) to residents, owners and contractors that confirm that only designated persons (typically the President and the manager) have the right to speak for and on behalf of the Association. This can minimize damage or risks arising out of crazy, mean or discriminatory statements improperly made by those directors speaking without proper authority.

Immediately repudiate unauthorized statements: If a board learns that the difficult director has harassed residents or made improper demands on management or contractors, those statements should be immediately repudiated (especially if they involve statements based on race, ethnicity, etc. or purport to bind the Association to unauthorized expenses).

Censure? It is tempting to “censure” a director but “shaming” a person is not usually a good way of motivating behavior. Still, if a board chooses to censure, it is probably better to do so in executive session, giving the director a chance to address the concerns. If the goal is to advise owners of the censure (which is not necessarily wise), a way to do so is to summarize the executive session censure vote in minutes of the next open meeting. This should be done very carefully to minimize defamation type claims.

Nuisance? Most CC&Rs prohibit conduct, which unreasonably interferes with enjoyment of private property and common area. The “nuisance” ban applies to directors as much as anyone else and improper harassment (especially based on the supposed director's authority as a board member) can trigger fines or other penalties, depending on the governing documents.

A board comprised of members with different points of view can strengthen a community. Disagreements over policy are not bad. What is bad are out of control directors who do not respect authority or who choose to actively undermine decisions made by a board majority or who treat residents or contractors badly. The suggestions above are not “cut and paste.” These cases are typically very delicate and involve questions of ego, intelligence, courtesy, confidentiality and other considerations. Before the board majority “takes on” a difficult director, they should consider the larger goals of the membership and how best to achieve those goals in the least divisive way possible.

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