Reader Questions - Why Can’t They Observe?

Mr. Richardson,

I am a new board member. The present board does almost everything in executive session. Then the president makes short announcements at the open board meeting [as to what were the decisions]. When questioned, the president responds that information in executive session is confidential. I have spoken out that these items need to be agendized, discussed and voted on in open meetings. The board has now decided to investigate me for violation of confidential information in executive session because I have related at open meetings that the announcements of actions in executive session should have been agendized and voted on in open meetings.

Please help. I will shut up if I am wrong.

D.A., Palm Desert

Dear D.A.,

No need to shut up if you’re right… and you are right. The Davis-Stirling Act at Civil Code 4935 lists the only matters which can be handled in closed session. That statute is part of the “Open Meeting Act,” sometimes confused with the Brown Act (Government Code 54950). The Brown Act applies to public bodies, while the Open Meeting Act applies to residential common interest developments. Per Civil Code 4935, only the following matters are allowed in closed session: personnel (dealing with employees paid directly by the association), member discipline or common area damage reimbursement hearings, lien foreclosure votes and delinquency payment plan discussions, litigation, and formation of contracts. If it does not fall within that list, it cannot be discussed in closed session.

Of the permissible executive session topics, two are commonly overused – personnel and contract formation. Many boards are unaware that “personnel” does not include filling board vacancies, or appointing or removing committee members or chairs. In the Open Meeting Act context, personnel discussions are discussions about HOA employees. Also, usually, the HOA manager is not an employee, but works for a management firm and so is not employed by the HOA… and is not “personnel” in this context.

The other area frequent abuse of executive session involves the subject of “formation of contracts.” The language is clear – “formation” is not vendor selection, or discussion of proposals, but the formation of the contract terms after selecting the prospective vendor in an open meeting. Frankly, many lawyers allow or even encourage the improper expansion of this topic so that all vendor interviewing, discussion, and selection is conducted in secret. This hurts the legitimacy of the board and violates the law. Vendor discussions, except for negotiations and litigation, are for open meetings.

When a vendor is being considered, vendor presentations and discussions about those presentations should be during open session. Why cannot the members hear the pros and cons of the different proposals? The HOA members attending cannot participate in board discussions, but they should be able to listen. After the preferred vendor is selected, the contract terms must be finalized. That discussion of terms along with the HOA’s counteroffer and negotiating strategy, occurs in closed session, to protect its negotiating position.

Boards sometimes justify doing so much of their deliberation in closed session because of their fear of interference or disruption from attending homeowners. However, the answer is not to work in secret, but instead to train directors and non-directors toward more orderly open meetings.

Thanking you for your question,
Kelly

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 [email protected]. Past columns at www.hoahomefront.com. All rights reserved®.