Takiguchi v. Venetian Condominiums Maintenance Corp. (2023) 90 Cal.App.5th 880.

This case involves an election and whether members present can be counted towards a quorum if they do not submit ballots. Venetian Condominiums Maintenance Corporation was a condominium project with 368 condominium units in the University Town Center area of San Diego. Ali Ghorbanzadeh owned 18 units at the Venetian. He was elected to Venetian’s board of directors in 2008. In 2009, Ghorbanzadeh appointed his son Sean Gorban to the board. They controlled the three-member board continuously from 2009 through at least 2021. Guy Takiguchi was elected as the third director in 2015. From 2009 to 2021, the board repeatedly failed to hold annual elections, either due to the absence of a quorum or for other reasons. Ghorbanzadeh’s seat was up for re-election at the 2020 annual meeting, and there were two other candidates for the seat, including candidate Nishime. The Ballot Box, Inc. contracted as the Venetian's inspector of elections, declaring there was no quorum for the meeting because Ballot Box had only received 166 ballots, and the quorum was 188. Candidate Nishime participated in the January 20, 2021, meeting remotely by computer and took multiple screenshots of the participants. Nishime was able to identify eight members who were present (representing 37 units). Had those units been counted with written ballots, there would have been a quorum of 203 present at the meeting. The eight participating members who represented units for which no ballot had been submitted included Ghorbanzadeh (representing 18 units), his son Sean Gorban (representing one unit), his other son Brian Gorban (representing three units), and an ally of Ghorbanzadeh’s who was also running for the director’s seat (representing one unit). An allegation asserted Ghorbanzadeh and his allies did not submit their ballots “in a deliberate and tactical effort to not reach quorum so they could remain in power another year or two.” Venetian submitted no evidence refuting this accusation. The Court of Appeal concluded the trial court properly ordered Venetian to hold a meeting for the purpose of counting the 166 written ballots cast for its January 20, 2021, annual member meeting and election. Substantial evidence supported the trial court’s finding that there was a quorum present for that meeting. By adjourning the meeting based on the purported absence of a quorum, Venetian failed to conduct the scheduled meeting or cover the noticed agenda items, which included counting the ballots and determining the results. [The conclusion and importance of the case is that a remedy exists if the corporation holds a meeting and a vote but refuses to count the ballots because of its incorrect view that the corporation’s quorum requirements weren’t met. In short, a board must hold annual meetings and properly count ballots and persons present for quorum purposes.

MANAGER TAKEAWAY: This case reminds us that a quorum is determined not just by the number of ballots received, but is determined by the number of persons present, in person, by ballot and by proxy. In this case, the inspector of election simply made a mistake by not counting the persons physically present in determining the quorum. Managers probably already know about the quorum rule stated here, but a refresher of what counts for a quorum is never unhelpful.