Senate Bill 323 (Wieckowski) introduced significant changes to the election process for residential common interest developments. The important changes include the following:
Qualifications that must/can be imposed on candidates for election to the Board. The legislation imposes one mandatory candidate qualification on all residential Associations and lists four permissive qualifications that an Association could decide to implement for candidates.
Limits on suspension of member voting rights. Members that are delinquent in the payment of assessments cannot be denied a ballot.
New documents/lists are required. (Voter List and Candidate Registration List.)
The legislation introduces two new general delivery notice requirements for election of directors (the “Candidate Registration List” notice and the “Nomination” notice). Ballots still need to be mailed out at least 30 days prior to election. However, now a Candidate Registration List notice must be provided at least 30 days prior to the ballots being mailed. Further, at least 30 days prior to the Candidate Registration List notice, an Association will need to provide the Nomination Notice. Planning for and implementing these new notice requirements will lengthen and complicate the election process.
Associations must permit members to verify the accuracy of their information on the Voter List and Candidate Registration List at least 30 days prior to the ballots being mailed. The Association or member shall report any error to the inspector of elections who is required to correct the error within 2 business days.
New provisions granting a member the right to transfer voting rights via general power of attorney.
Inspectors of elections cannot be under contract for the provision of services to the Association (except a contract for provision of inspector of election services).
Limits on when the election rules can be amended (no amendment less than 90 days prior to an election).
The Association sought to amend its bylaws to eliminate cumulative voting. The Association’s Board distributed the secret ballots and sent a two-page letter soliciting membership support for the proposed amendment and providing the Board’s rationale for the amendment. The Association also posted neutral notices in the elevators urging members to vote. At the time, the only complaint made by the plaintiff was that Association materials were used and that members who opposed the proposed amendment were not given an opportunity to post their own messages in the elevators.
The election proceeded and the vast majority of voting members approved the amendment. A month later, the plaintiff filed a lawsuit against the Association alleging, among other things, that the Association did not give all members an opportunity to be heard and that it appointed an interested inspector of elections. The plaintiff also sought preliminary injunctive relief to prevent the implementation of the amendment. In granting the preliminary injunction, the trial court found there was sufficient evidence that the Association: (1) failed to provide equal access to Association communications for those members with opposing views and (2) used Association funds for “campaign purposes” in enclosing the two-page letter with the secret ballots.
Following the issuance of the preliminary injunction, the Association held a second election on the bylaw amendment. The result of the second election was the same as the first election—the membership strongly supported the amendment.
After a three day trial, the trial court found that the plaintiff never asked for equal access to Association media to present an opposing view. (Notably, the plaintiff requested and was granted access in connection with the second election.) The trial court also found that the two-page letter that was enclosed with the secret ballots merely explained the Board’s reasons for proposing the amendment and, therefore, the Board did not violate the prohibition against using Association funds for “campaign purposes.” As a result, the trial court denied the plaintiff’s request for injunctive and declaratory relief, determined that the Association was the prevailing party, and denied plaintiff’s request for statutory fees and costs.
On appeal, the plaintiff argued that the trial court should have granted declaratory relief and that she was entitled to statutory fees and costs because she was successful in obtaining the preliminary injunction against the Association. In affirming the trial court’s judgment and denial of fees and costs, the Court of Appeal concluded that: (1) there was no actual controversy, especially since the Association corrected any perceived deficiencies in the first election by holding the second election; and (2) interim attorney fees and costs were not awardable.
