A longstanding issue of ambiguity and occasional dispute arises regarding when a common interest development member tries to designate someone to attend a board meeting for them. The Davis Stirling Act, at Civil Code 4925(a) (its “Open Meeting Act”) says only that “any member of the association may attend meetings of the board of directors of the association.”
What if a homeowner brings an attorney with them, or has an attorney attend a board meeting in their place? If the member is an entity (LLC, or Trust, for example), who can attend and represent the entity/member? If the member executes a “power of attorney”, what would that need to include in order for someone to attend in place of the member?
These questions were finally answered in the case of SB Liberty LLC v. Isla Verde Association, in an opinion released for publication June 18, 2013. As a “published” opinion, it can be used for precedential value to guide associations in the future.
Isla Verde is an association of 87 homes in Solana Beach, into which Gregg and Janet Short bought a residence in 2006. They put ownership of the property first in a family trust, and later in an LLC called “SB Liberty LLC”. For reasons unexplained in the appellate decision, the Shorts sought to have their attorney attend a board meeting on their behalf. The association’s attorney told the Short’s attorney that he would not be permitted to attend. The Short’s attorney attempted to attend the meeting anyway and then refused to leave the meeting, which was adjourned to a director’s residence.
The Shorts then executed a “Specific Power of Attorney” purporting to give their attorney the right to attend board meetings at their behalf. The association rejected that power of attorney as a basis for attendance, noting that it did not give the attorney permission to vote the client’s membership interest.
The Shorts, through their LLC, SB Liberty, filed a lawsuit and sought an injunction to stop the association from banning their attorney from attending board meetings. The court denied the injunction, and SB Liberty appealed.
On appeal, the court supported the lower court’s ruling. In explaining its decision, the appellate opinion said:
- The Open Meeting Act gives members the right to attend, and the lawyer is not a member;
- The governing documents give rights to the members;
- The LLC’s proper representative would be its designated “manager” (Mr. Short) or a member of the LLC, and the attorney was neither; and
- The “power of attorney” held by the owner’s lawyer did not give the lawyer the right to vote on behalf of SB Liberty LLC.
The lessons drawn from this ruling are several:
- A “member” does not include the member’s lawyer.
- A “member” can be an entity but its representative must be a properly authorized LLC manager or member, or corporate officer, or trustee of a trust.
- A Power Of Attorney completely transferring management and control of the membership may be sufficient to allow a non-member to attend in the place of the member.
- The association can ban attorneys from attending board meetings, with or without the attorney’s member client.
Your association board meetings are for members, and unless your governing documents say otherwise, only members should be permitted to attend.
Written by Kelly G. Richardson
Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to Kelly@rodllp.com. Past columns at www.HOAHomefront.com. All rights reserved®.