By Adam Martinez | Chairman of Rose Law Group Real Estate Litigation Department
The Arizona Court of Appeals on Wednesday reversed a trial court’s decision that permitted an HOA to exclude a rogue board director from executive board meetings. After the rogue director received an email from a former employee that accused a current employee of misconduct, the board met in an executive session to discuss the email. The board’s attorney advised the board to take no action and to avoid discussing the email with others.
Subsequently, during a regular board meeting, the rogue director began reading the email to association members in attendance. After refusing to stop, the board president adjourned the meeting, and the board subsequently approved a motion that banned the rogue director from all future executive sessions.
The rogue director filed a lawsuit for an injunction against the association to compel the board to allow her to participate in executive sessions. While the trial court sided with the HOA and denied the director’s request for an injunction, the Arizona Court of Appeals reversed the trial court’s decision and stated that no law or bylaw authorized the board to pass a motion excluding a director from executive meetings.
To be clear, there are ways for an HOA to exclude or remove a rogue director, but exercising “self-help” (taking action without court authorization) and passing a motion that is not permitted by statute or bylaw is not one of them. All association members are entitled to attend regular meetings. Officers and directors of the board are entitled to attend executive meetings.
There are circumstances where excluding a member or director could be appropriate, such as where there is a conflict of interest or the threat of disclosing confidential information or where conduct results in oppressive interference or disruption of corporate business. If a director, however, refuses to voluntarily recuse themselves, the association is required to obtain a court order, either for removal of the director or an injunction preventing specific conduct.
In this case, the Court found the association could have sought a court order to address its issue with the rogue director, but instead resorted to unlawful self-help. The court, therefore, held unless otherwise provided for in its governing bylaws or an applicable statute, an association may not exercise self-help to exclude a director from executive sessions.
A copy of the decision can be found here.
