*New Case Law
The Court of Appeals recently ruled in Lake Lindero Homeowners Association, Inc. v. Barone that Corporations Code section 7616 may be used to validate a recall election removing the former board of a homeowners association (“HOA”), in addition to validating the election of a new HOA board.
In this case, the board was properly served with a recall petition for the entire sitting board. The HOA held an election meeting on December 19, 2019; however, quorum was not present. In compliance with the HOA’s bylaws, a majority of the members at the December 19, 2019 election meeting voted to adjourn the meeting to December 23, 2019, wherein only 25% of the votes of the membership would be required to constitute a quorum, as opposed to the usual 50%.
Thereafter, at the election meeting on December 23, 2019, the necessary quorum of 25% of the membership was present. The recall of the entire board passed, and a new board was elected and certified.
In January of 2020, Plaintiffs filed a complaint seeking a declaration under Corporations Code section 7616 validating the December 2019 recall election and the election of the new board. Plaintiff’s action was necessitated by Defendant Barone, and other prior board members, refusal to recognize the validity of the December 2019 recall. The trial court granted Plaintiff’s request for declaratory relief and validated the December 2019 recall. Defendant Barone appealed.
Defendant argued on appeal that Corporations Code section 7616 pertained to validating elections only and did not authorize Plaintiff’s action or the trial court to validate a recall election. The Court of Appeals disagreed with Defendant Barone’s narrow reading of the statute.
First, the Court found the statutory text of Corporations Code section 7616 to evidence a clear legislative intent providing trial courts with broad authority to determine the validity of board elections. While the Court acknowledged recall elections are not expressly referenced in the code section, the Court looked to subdivision (d) of Corporations Code section 7616 to support its holding, which authorizes the Court to “…direct any such other relief as may be just and proper.”
The Court concluded Corporations Code section 7616(d) was broad enough to serve as a “procedural vehicle” to clarify Plaintiffs recall rights under the HOA’s bylaws, even though the statute does not expressly mention recall elections. The Court reasoned that it was “just and proper” to enter an order confirming the recall, as it could not determine the validity of the election of the new board without first addressing the recall. The Court further concluded that having validly confirmed the recall and subsequent election of the HOA’s new board, the same code section authorized the trial court to enter an order confirming Defendant Barone had no authority to act on the HOA’s behalf.
|This case is an unfortunate example of an HOA board of directors refusing to recognize the will of its membership in exercising their rights to control the leadership of their community. HOA boards which are unclear about the procedural aspects of their board elections should consult with a qualified HOA lawyer for guidance.|