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Say What? Court Says Boards Can E-mail

By Nathan McGuire, Esq.

The Court of Appeals for the Fourth Appellate District recently handed down a landmark decision impacting HOA governance. In LNSU #1 v. Alta Del Mar Coastal Collection Community Association, the court delves into the issue of e-mail communications between board members. For better or worse, the court essentially eviscerates the transparency component of the Open Meeting Act (located in the California Civil Code as part of the Davis-Stirling Act), allowing boards to communicate and deliberate by e-mail outside of a noticed and agendized meeting. And while not directly addressed in the court’s ruling, the court arguably opens the door for boards to deliberate using electronic forms of communication other than just e-mails. As boards and professionals within the HOA industry grapple with the implications of this ruling, there is a growing discourse about potential legislative changes and concerns regarding this perceived loophole.

The crux of the LNSU case lies in the alleged violation of the Open Meeting Act (OMA) by the Alta Del Mar Coastal Collection Community Association. Plaintiffs argued that certain e-mail exchanges among board members constituted secret meetings, breaching the transparency principles enshrined in the OMA. Section 4910 of the OMA prohibits boards of directors from taking action on any item of business outside of a "board meeting." A "board meeting" is defined in Section 4090 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’s logic is very straightforward: When directors e-mail each other it does not occur at the same time nor in the same place. The court was persuaded by the fact that e-mail communications are neither simultaneous nor in the same physical location. So, in contrast to the general consensus of the legislature’s intent, the court strictly construed 4910 as applicable only to 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."

Attorneys and other professionals have long argued that a strict reading of the statute is inconsistent with the legislative intent behind the Open Meeting Act and analogous cases under the Brown Act (which is similar, but applies only to public agencies), where courts have cracked down on individuals who found creative ways of skirting the Brown Act’s transparency requirements. The court didn’t read too much into legislative intent however, finding that had the legislature intended to preclude e-mail deliberations, it could have simply said so.

The court also does not give much attention to Section 4910(b)(2), which allows boards to conduct a meeting by e-mail in emergency situations with unanimous consent of the directors. The court determined that emergency meetings conducted by e-mail are a distinct method of meeting, distinguishable from both e-mail communications and in-person meetings.

The court’s ruling may have far-reaching consequences for the interpretation of the OMA in the context of modern communication channels, outside of just e-mail communications. To extend the court’s ruling to other forms of communication, it could be argued that boards can now communicate by video call (e.g., Zoom), video messages (e.g., Marco Polo), or electronic messaging (e.g., Whatsapp), since none of these very effective means of communication occurs in person or the same physical location.

The advent of digital communication platforms has transformed the way board members interact within HOAs. E-mail, once a tool for occasional correspondence, has evolved into a primary means of communication, particularly in the wake of the global shift to remote work and virtual collaboration. The LNSU case casts a spotlight on the legal implications of this evolution, necessitating a continued reevaluation of the Davis-Stirling Act to ensure its relevance in the digital age.

This is not a new thing. In recent years, the use of e-mail as a form of communication in HOAs has been injected into the Davis-Stirling Act. Members can now choose to receive communications from their HOA via e-mail instead of snail mail. And during the pandemic, HOAs and their boards and members got comfortable very quickly using video and teleconference technology in lieu of in-person meetings. In fact, member attendance and engagement at meetings actually increased during the pandemic. The timing of the LNSU decision is even more interesting given the passage of Assembly Bill 648, which took effect January 1, 2024, and allows for all meetings to be conducted virtually, without the need for any sort of declared emergency, like a pandemic.

While the requirement of a physical location is clearly going the way of the Dodo, the importance of transparency in HOA governance has never been more important. Whether allowed or not, secrecy without proper justification (like items which should be discussed in executive session) breeds distrust among an HOA’s members. Critics of the court’s decision point to what they perceive as an oversight regarding the OMA’s broader implications. They argue that the OMA, at its core, seeks to prevent secret decision-making processes that exclude homeowner observation and participation.

As the digital landscape continues to evolve, the intricacies of electronic communication within the realm of HOAs demand careful consideration. The LNSU case has ignited discussions about the need for legislative amendments to bring the Davis-Stirling Act up to speed with the technological advancements of the 21st century. Many industry experts and stakeholders argue that the Davis-Stirling Act’s language must be revisited to explicitly address electronic communications of all types, leaving no room for interpretation. The potential for future legislation to close this perceived loophole is a topic of considerable debate. Advocates for change believe that updating the law to encompass electronic communications would reinforce the principles of transparency and accountability, aligning with the broader objectives of the Davis-Stirling Act.

The LNSU #1 v. Alta Del Mar Coastal Collection Community Association case, to the extent it remains good law, serves as a watershed moment for the HOA industry, prompting a reevaluation of the existing legal framework of both the OMA and the Davis-Stirling Act. It is important to note that the case could be appealed or legislation could close the loophole, effectively reversing the court’s decision. Therefore, boards should tread lightly; even in the absence of legal implications, the political implications could be just as significant. And once boards are in the habit of e-mailing, it may be hard to stop.

Nathan McGuire, Esq., CCAL, is a founder and partner of McGuire Schubert Sohal LLP, specializing in representing community associations. He has been involved in CAI-CLAC for many years and is currently an emeritus delegate and serves on CAI’s Government & Public Affairs Committee.



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