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Letter from Associations Attorney

Hi Dennis, We have a long-time, much respected member of our community, who recently presented his research into the removal and replacement of our association’s playground at a cost of $30K last November – December. His concerns are: (1) inspection report did not indicate any serious issue with the playground — all items were “low risk”; (2) the original larger “school age appropriate” structure was replaced with a smaller structure, appropriate for toddlers and preschool children – so perhaps the replacement was a material alteration, which would have been subject to membership approval according to our Bylaws; and (3) the Board acted on the basis of a three proposals, all from a single vendor referred by the CM, so, in effect, there was not a competitive bidding process on this major expenditure from our reserves.

Our dear neighbor asserted that the Board failed in their fiduciary duties of care and loyalty to the Association when they resolved to purchase a materially different play structure without notifying homeowners in advance of their pending investment decision. Thus, members were denied their rights under ARS 33-1804 Open meetings.

So, our dear neighbor presented these facts in open forum a month ago and has shared his research with many Members and we are all much more aware of the Board’s actions. The members have become more vigilant and active at Board Meetings as a result of our neighbor’s investigation. Many of us are are learning about Open Meetings, Notice Requirements, Bylaws, etc.

So, our dear member asked to be placed on the Board’s next meeting agenda to learn if the President discovered the missing proposals. Instead, our dear member received a terse email followed by a letter from the Association’s counsel. Apparently the letter was threatening in nature.

Our dear member wrote to the CM and asked to be placed on the Agenda. He has explicitly stated he does not plan to take any legal action against the Association or the Board over the playground. He would lke the Board to resolve to commit to a Three bid policy and provide not just Notice – but also the Agenda for future Board meetings.

The Board’s CM and legal counsel (a collection law firm) sent our dear neighbor a nasty letter informing him he would not be allowed to speak at the meeting about the playground – or he risks being sued for defamation. So, can an association’s legal counsel really take legal action to prevent our dear neighbor from speaking at the Open Session during Open Forum? Are there some phrases it is important to avoid at BOD meetings? We members have been told by several CMs and the Board that we must never say the words like “lawsuit” or “lawyer” in an open meeting. Please advise.

3 Responses

  1. Dennis Legere

    Eva,
    As you are aware I’m not an attorney so I will tread very carefully with this response. As for the decision to upgrade the playground I would have to see your CC&R and bylaws to comment intelligently on what your board can and cannot do. But as I’ve always stated most issues in HOA’s would be totally eliminated if board focused less on what they can and cannot do and focus more on what they should do in conducting the business of the community for the good of the entire community. On first blush it sound like the decision to replace the playground equipment was reasonable, however with an expense of that magnitude it is also apparent that a reasonable board would have looked at multiple options from multiple vendor to get the best value for the community. Part of the concern is that the upgrade to the common property required an approval of the membership. again I would have to actually see the bylaws to comment intelligently on that aspect of this issue. You address open meeting issue. The law here is very clear. The decision to replace this equipment had to be made at an open meeting and the board had to provide any member present in that meeting an opportunity to speak for or against the issue prior to the board vote. Additionally if the board offers an open forum for community members you are entitled to bring up any issue in a civil and respectful and non-accusatory manner. If you have a concern with n action then raise that concern with the board. The tactic of cease and desist letters from HOA attorneys sent to any homeowner that disagrees with a board decision is for the most part a scare tactic. Defamation is clearly defined in law the fundamental aspect of that law is that the statement either oral or written must be false, if it is true no matter how distasteful it might be to the subject of that comment it can never be defamation. Having said that you want to be very careful about general name calling a board member a liar or a thief even though you may believe it if it is not based in truth words like that can and will get you in trouble. If you believe that the board breached it’s fiduciary duty in taking the action that it did you are free to express that opinion at any time. That is the fundamental freedom of speech allowed every citizen in this country, and is in no way defamatory it is strictly your opinion based on your understanding of the rules governing your association. Even if you are wrong in your interpretation of those rules.
    You still have to be careful about what you say and stick to the truth as you know it and you will be OK. While saying or threating a law suit or litigation will surely raise some eyebrows in an open meeting of the board or the members and make some people very angry there is no law preventing you from making such a claim or statement. Just be careful not to use such a threat lightly it will have real consequences that you may not like or want. It will always be better to talk thru issues as much as possible and if you feel that the only way for you to get justice or to enforce the laws or the rules and covenants of the association is through the ADRE dispute resolution process or court litigation than just do it don’t threaten to do it.
    Dennis

  2. Dennis Legere

    Eva
    Another aspect of you message that I did not adequately address was the notification aspects of ARS 33-1804. While the public policy statement of 1804 clearly implies that the association has a duty to inform the members of the subject matter to be discussed at a meeting before the meeting that is not actually a provision of the current law. The association is required to provide notice of a meeting 48 hours prior to that meeting but is not currently required to provide the agenda for that meeting prior to the meeting. Once again the issue here is what they are required to do vs. what they should do if they really wanted people to attend and know what they are considering to do before hand. I will get that law changed some day, and will be part of my legislative proposals every year until I get it changed. Back to your point that your member felt that the board had a duty to inform the community prior to the meeting that they were considering this playground equipment, from Arizona Statutes perspective that is not currently correct.

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