LNSU #1 v. Alta Del Mar Coastal Collection Community Assn(2023) 94 Cal.App.5th 1050.

In this case, appellants LNSU #1 and LNSU #2, two homeowners in a common interest development managed by the Alta Del Mar Coastal Collection Community Association (the Association), appealed a judgment entered against them in their action against the Association for violations of the Common Interest Development Open Meeting Act. The court rejected the homeowners’ claims that: (1) the Association violated the Open Meeting Act when its board of directors took action in an executive session that it should have taken in a meeting open to all members; (2) the board failed to prepare minutes concerning a second executive session; and (3) certain directors discussed items of Association business via e-mails without giving all Association members notice and opportunity to participate in the discussions and without preparing related minutes. The court ruled that email communications by directors between board meetings is not a violation of the Open Meeting Act. The court decided that a "board meeting" is defined to mean “an in-person gathering of a quorum of directors at the same time and physical location for the purpose of taking action on items of association business.” The Court of Appeal found no reversible error with respect to appellants' Open Meeting Act violation claims and affirmed the trial court’s judgment. Therefore, email exchanges among directors where no action is taken do not constitute board meetings.

The Appellants also appealed post judgment orders denying their motion to strike or tax costs and granting the Association’s motion for attorney fees. The Court determined the trial court incorrectly awarded costs under a provision of the Open Meeting Act authorizing such an award to a prevailing homeowners association in an action the court finds “to be frivolous, unreasonable, or without foundation” but that the Association was not entitled to attorney fees or costs: "appellants’ action does not meet that description that the action was frivolous, unreasonable or without foundation], the Association is not entitled to costs." The Court thus reversed the order denying appellants’ motion to strike or tax costs and reversed the order granting the Association’s motion for attorney fees.

MANAGER TAKEAWAY: This case seems to raise more questions than it answers. It ruled against the plaintiffs because the definition of a Board meeting is limited to where the Board members are physically present at a physical location. This opens up the question of whether a Board meeting is not even a meeting if it occurs in any other way than in person, particularly in view of AB 648, discussed above. We will have to wait for a court or the legislature to straighten this issue out. In the meantime, the safest approach is to assume that any electronic Board meeting at which a majority of the Directors are present is a Board meeting, where the Open Meetings Act applies.

Beyond this, the statute is a Godsend in that it clarifies, for the first time, that Board members may discuss association business by email. Until now, this was an open question, and Board members discussed association business at their own risk. This is no longer the case, and managers may advise their Board members that the frequent practice of discussing association business by email is now perfectly legal.