What Are The Parameters for HOA Executive Sessions With Regard to Litigation?

A reader sent me this question recently. It relates to meeting in executive session to discuss litigation.

California law says: (a) The board may adjourn to, or meet solely in, executive session to consider litigation…”

This is very broad language. If in doubt, take a gander at a Merriam-Webster dictionary.

“con·sid·er

verb \kən-ˈsi-dər\

: to think about (something or someone) carefully especially in order to make a choice or decision

: to think about (something that is important in understanding something or in making a decision or judgment)

: to think about (a person or a person’s feelings) before you do something in order to avoid making someone upset, angry, etc.

**

I would say this covers a threat of or pending litigation, or any subject involving a lawsuit where the association is a party, or owners are parties and there is a chance the association might become involved (whether filing or defending), or even the idea of deciding what to do with regard to any situation where litigation may be a an option.

In addition, anytime the board is discussing matters with the association’s attorney, there is a privilege that attaches allowing for an executive session and the discussions are entitled to confidentiality, whether or not they involve discussions of litigation.

The reader wanted to know some specifics:

“Does the word litigation actually mean a lawsuit specifically, or arbitration within the court system.”

Arbitration within the court system is an easy one because anytime something arises “within the court system” it involves some kind of court action involving litigation. Arbitration that arises outside of the court system is another thing. Some documents require arbitration as a precursor or alternative to litigation and so more often than not, the parties are discussing these things as a way to avoid litigation, and there you have it. Again, there is the aspect of “considering” litigation, even in discussing the alternative. The law even speaks of requiring parties to attempt to engage each other in ADR (alternative dispute resolution prior to filing a lawsuit).

So I would say more often than not, discussion of arbitration even involves some aspect of litigation or avoidance of it.

Another question: “But Boards of Directors often use this exception to the Open Meeting Act to keep certain issues secret that perhaps should not be kept secret. For example, our Board in my HOA has said often says that with regard to various issues that if certain matters are discussed in open session, then someone “might” file a lawsuit. Is this example beyond the parameters of what the legislature intended by giving the Board the option to hear it in executive session? “

Yes, I would say this goes well beyond what the legislature intended. Anticipating there may be litigation anytime a difficult issue arises may be a byproduct of living in California because this is a legally prolific state, but using it to discuss difficult issues when there has been no threat and no litigation is being considered is improper.

And there was another question: “Even if certain issues fall within the parameter of ‘to consider litigation,’ this exception to the Open Meeting Act falls into the ‘may’ and not into the ‘shall’ category of items for executive session per Civil Code 4935. Would you give some examples of when ‘to consider litigation’ is appropriate for a Board to discuss in open session in light of this exception’s ‘may’ characterization?”

Some boards discuss litigation with the developer, or at least certain aspects of it, with the membership even if they would have the right to discuss everything in executive session. I have seen one board hold an open “hearing” at the beginning of the board meetings where they serve cookies and milk to allow owners to come in that have received warning letters and talk to the board about them. The board calls on the “offenders” one by one. It decreases the stress level and illustrates to owners that the board is addressing violations but not in a hostile manner. Of course (see below) an owner can request an executive session if the matter relates specifically to possible disciplinary action.  Some boards invite vendors to come in and address the board as well as members about the services they offer.

But of course, I believe there are boards that are more “secretive” than they really need to be, especially when having to discuss sensitive subjects like discovering that there is a shortage of funds in the reserves for some big project that is due.

See below the specifics in the statute about what kinds of things give the boards “discretion” to adjourn to executive session and what subjects require (“shall”) closed meetings:

California Civil Code Section 4935. ADJOURNMENT TO EXECUTIVE SESSION

(a) The board may adjourn to, or meet solely in, executive session to consider litigation, matters relating to the formation of contracts with third parties, member discipline, personnel matters, or to meet with a member, upon the member’s request, regarding the member’s payment of assessments, as specified in Section 5665.

(b) The board shall adjourn to, or meet solely in, executive session to discuss member discipline, if requested by the member who is the subject of the discussion. That member shall be entitled to attend the executive session.

(c) The board shall adjourn to, or meet solely in, executive session to discuss a payment plan pursuant to Section 5665.

(d) The board shall adjourn to, or meet solely in, executive session to decide whether to foreclose on a lien pursuant to subdivision (b) of Section 5705.

(e) Any matter discussed in executive session shall be generally noted in the minutes of the immediately following meeting that is open to the entire membership.

 

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2 Responses to What Are The Parameters for HOA Executive Sessions With Regard to Litigation?
  1. Georgianna
    March 20, 2014 | 2:29 pm

    Excellent post however , I was wondering if you could write a litte more on this subject?
    I’d be very grateful if you could elaborate a little bit more.
    Appreciate it!

    • Beth Grimm
      April 24, 2014 | 5:02 pm

      If you have generic questions to pose that might help others if I were to answer them, I will do my best.