In California, 10,000,000 win while 60 lose rights

Two battles

I have been involved in 2 long-running battles to win some basic democratic rights for myself—and for 10 million other Californians. Recently both of these conflicts came to opposite ends.

Battle #1 was fought in the courts. It ran for 5.5 years, from early 2012 until late 2017, and involved 2 lawsuits, with a total of almost 700 legal papers filed in court.

Battle #2 was fought in the legislature. It ran for 4 years, from 2013 to 2017, and involved attempts to persuade the Senate and Assembly to adopt 2 proposed bills.

In both struggles, my allies and I were trying to win rights for members of what California calls “common interest developments”. If you are a California homeowner or tenant in a condominium association, housing cooperative, planned development, or community apartment project, then you are one of the 10 million Californians—a quarter of the population—living in common interest developments (CIDs).

The rights I was fighting for include:

  • Freedom of speech
  • Freedom of assembly
  • Freedom of association
  • Freedom of the press
  • Right to vote
  • Right to be a candidate for elective office
  • Due process
  • Right to witness meetings of governing bodies
  • Freedom of information (right to inspect records)

In essence, here is the problem: CIDs are private associations with somewhat governmental powers, such as the power to tax, to punish, and to deport. These powers come with nonpolitical names (such as “assess”, “discipline”, and “evict”), but courts have pointed out the similarities and, on that basis, recognized the state’s power to protect CID residents from the abusive exercise of those powers. The state has enacted protections for CID residents, mainly in two places: the Corporations Code and the Civil Code. But the protections are sloppily formulated, and questions often arise as to what they mean. On occasion, courts intervene to interpret them, or the legislature and governor amend those codes to resolve such questions.

Even to summarize the arguments for and against the claims about these rights would try the patience of almost any reader. You can find those in pleadings in the above-cited litigation.

Back, then, to the news.

Battle #1

The litigation came to an end in October 2016 with the court’s final approval of a settlement between Berkeley Town House Cooperative Corporation (BTHCC) and me. BTHCC is a housing cooperative in Berkeley, with 60 units (membership limited to seniors). The settlement, as I interpret it, was a compromise between my claims and BTHCC’s defenses, and it was so vaguely formulated as to invite post-settlement conflict. It secured a few rights for the 60 members, but only a fraction of what I had claimed the members were entitled to.

As could be expected, after the settlement BTHCC and I promptly began to disagree about whether BTHCC was complying with its settlement obligations. Most crucial was a dispute over BTHCC’s required disclosure of financial records. The settlement required BTHCC to disclose to me (so that I, in turn, could scrutinize them and further disclose them to the other BTHCC members) the “general ledgers” of BTHCC from 2010 to 2016. I argued that BTHCC’s disclosure had to include every income and expense transaction, with the payer or payee identified. But BTHCC claimed that it had the right to keep the income transactions secret, and, if it did disclose any, it could lump them together and conceal the identities of the payers. BTHCC makes about 30 payments a month, but takes in about 60 payments (of assessments by members) a month. So BTHCC claimed it could let me see about a third of all the transactions and that would count as total disclosure. I brought BTHCC back to court to enforce its disclosure obligation. BTHCC resisted. Lengthy pleadings set forth my arguments, and those of BTHCC, in detail.

Finally, the court issued an order on 22 August, giving a 100% victory to BTHCC in the disclosure dispute. Since it was not certified for publication (as some appellate decisions are), it cannot be cited as precedent in similar lawsuits, but it resoundingly denied to the 60 members of BTHCC the right to see who has been paying and who has not been paying to BTHCC the required monthly assessments. Has the Board of Directors been allowing itself and its friends to pay late? Has the Board been lax in enforcing members’ obligations to pay? Has money fallen through the cracks? BTHCC was preventing its members from answering such questions, and, thanks to this court decision, it will be able in the future, too, to keep the sources and amounts of its income secret.

Battle #2

Meanwhile, a legislative battle began in early 2013 with a failed effort by me to get the Civil Code amended. The proposed amendment would state, for the first time, that constitutionally guaranteed civil liberties apply inside CIDs. Any rule violating Article 1 of the California Constitution, where basic civil liberties are set forth, would be invalid. The procedure under which I made this proposal required unanimity among stakeholders, and there was no such unanimity. Attorneys who represent CIDs in disputes with their members argued, as they typically do, that CID members enjoy civil liberties outside the walls of the CIDs, but not inside. So my proposal gathered some opposition, and the committee considering it refused to endorse it for lack of unanimity.

Two years later I was a member of a group proposing a somewhat similar bill. This time it had a senatorial sponsor and did not require unanimity. This bill, SB-407, was less comprehensive but more explicit. It protected members’ freedoms of speech, assembly, and press in various contexts. For the first time, CID members could gather and discuss public and CID issues in a CID’s common areas without needing to get advance permission, pay fees, or buy insurance coverage. If a CID denied any of these rights, members could go to small-claims court to get an order and collect a $500 penalty.

Experience led me to expect vocal opposition to such an expansion of CID member rights. Amazingly, however, the initial opposition evaporated during negotiations over SB-407. It was amended during the legislative deliberations in such a way as to satisfy all the major stakeholders. In the end, it was adopted by both houses with near-unanimous votes. Two weeks ago, on 11 September, the governor signed it into law. So, as of 1 January 2018, all 10 million CID residents in California will be explicitly entitled to a new set of democratic rights.

Why did we have a relatively easy time getting this bill adopted? The sponsorship of Senator Bob Wieckowski and the indefatigable advocacy of the Center for California Homeowner Association Law were, by all appearances, crucial. The bill also got support from the American Civil Liberties Union of California, the California Alliance for Retired Americans, the California School Employees Association, the Community Associations Institute–California Legislative Action Committee, the Golden State Manufactured-Home Owners League, and the Non-Profit Housing Association of Northern California. There was no organized opposition.

Ironically, BTHCC, too, played a significant part in this bill’s adoption. Back in early 2013, during the litigation between BTHCC and me, I arranged a meeting in a BTHCC common area with invited expert guests to discuss—of all things—civil liberties in CIDs. The BTHCC Board of Directors (then composed of Almalee Henderson, Margaret Tuggle, Judith Wehlau, Lydia Gans, and Raymond Dirodis) hired an attorney, Stephanie J. Hayes, to threaten me and any visitors to the meeting with arrest for “trespass” if I did not cancel the meeting and disinvite the visitors. This threat was consistent with a position, then taken by the Board and since then never officially rescinded, that it had the sole power to decide who may meet in the BTHCC common areas and what topics may be discussed there. The Board has further claimed that it can require members to seek permission for any gathering at least 2 weeks in advance, and anybody who meets in a common area without such permission can be fined. (The Board has prohibited other meetings because of content, for example refusing to let a group discuss affordable housing. And it also prohibited interviews of BTHCC members by makers of a documentary on housing cooperatives.)

Three years after this threat of arrest, it backfired. The advocates of SB-407 gave the legislature a copy of the threat letter from the BTHCC attorney, and used it as the main item of evidence that some CIDs “stifle free expression”.

Morals of the story

“You win some and you lose some”. I lost the battle for complete disclosure of BTHCC’s finances to its 60 members. But, three months later, my allies and I won a battle to get specific freedoms of speech, assembly, and press guaranteed by statute for the first time to the 10,000,000 residents of CIDs in California. Yes, BTHCC defeated my efforts to secure disclosure. But its heavy-handed plan to bring police to bear on people for discussing civil liberties inadvertently helped convince the legislature and governor to write new protections into the law.

On the basis of these experiences, what can you do if you are one of the millions of CID members and you want full financial disclosure? After exhausting your in-house remedies, should you take your CID to court, try to get the legislature to make the law more explicit, run for a position on the board of directors, or just give up?

My choice was to take BTHCC to Superior Court, with attorney representation. This was due to special factors that would probably not apply to you. I was pursuing other claims, too. They resulted in BTHCC recovering over $200,000 from two contractors, BTHCC being forced to stop concealing seismic risks in its building from prospective members, and my own recovery of over $300,000 to pay for attorney fees.

If you faced a refusal to disclose CID records, you would have judicial options that I did not have. Starting in 2014, after I filed my first lawsuit, the legislature made it possible to sue for disclosure of records in small-claims court. So now, if you want to see records and your CID denies them to you, you can file a small-claims complaint at nearly no expense and pursue it without an attorney. Of course, your small-claims judge might rule the same way as the judge in my case, but there is no assurance of that. And you can ask for a $500 penalty as well.

You could also try to follow the legislative route, asking for a Civil Code amendment that would erase the ambiguity as to whether a CID must let its members see, in full detail, the records of all transactions on both sides of the ledger, income as well as expenses.

Then there is the political option: becoming a candidate in the next election for directors of your CID. Once you are a director, you have more unlimited rights to see records, and you are likely to be granted access to all the details. You can even propose a board resolution publishing the entire general ledgers of all income and expense accounts for access by all members.

If my experience is a guide, such activism, whether judicial, legislative, or political, is likely to interfere with your social life. You may be branded a traitor and face ostracism. You may be harassed. (I had blue cheese smeared on my apartment door, water poured onto my head, and posters posted calling me a “creep” and a “scorpion”.) Why? After all, you would be fighting for your fellow members’ rights. Paradoxically, most of them despise the right to full financial disclosure. Most want to be kept in the dark about whether their fellow members are paying what they owe. (Like my grandma, who said “If you ever start dating a non-Jewish girl, don’t tell me.”) They have the legal right to enforce your obligation to pay your monthly assessments, but they want to be denied the information that would make such enforcement possible.

For the same reason, I consider all of these approaches to be long shots. Your opponents in court will likely try to make your personality the issue, rather than their secret-keeping. Representatives in the Senate and Assembly will likely fear the wrath of numerous constituents. And a candidate for a directorship who seeks to open the books will have a hard time getting elected, unless the position is uncontested.

You do, however, have another option: to give up, by either ignoring the problem or moving out. Given the odds, this is tempting. Why not let only the directors know whether they are mismanaging the funds? Just trust them. Trust, clearly, is the easiest approach.

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