One of the biggest law firms representing boards of directors of California housing communities has just published a recommendation, urging boards to break the law.
Adams Stirling, formerly named Adams Kessler, has urged boards to meet secretly whenever they intend to discuss the performance of a vendor.
Is that legal? No. Absolutely not. The law—California Civil Code Section 4935(a)—says: “The board may adjourn to, or meet solely in, executive session to consider litigation, matters relating to the formation of contracts with third parties, member discipline, personnel matters, or to meet with a member, upon the member’s request, regarding the member’s payment of assessments ….”
So, why does Adams Stirling recommend lawbreaking? Why does it recommend that boards discuss in “executive session” (i.e. secret meetings) a topic that the the law compels boards to discuss only in open meetings? Adams Stirling explains its rationale thusly: “… negative comments about the vendor could spread through the association and get back to the person. Even worse, it could travel outside the community to others. What follows next is a threat of litigation by the vendor alleging trade libel/slander.”
Note the implied morality here: If your housing community suffers from a vendor’s inferior workmanship, do not tell anybody about it; keep it a secret, so the vendor can victimize as many other customers as possible. Also note the jurisprudence of Adams Stirling: If anything that you discuss could conceivably result in you being sued for defamation, that risk justifies calling the discussion a consideration of “litigation” and therefore entitles you under the Civil Code to conduct your discussion in secret.
Finally, note the litigation worry that Adams Stirling ignores here: the risk that one of the members of the housing community sues the directors to reclaim the transparency guaranteed by the above-quoted provision of the Civil Code.
Adams Stirling makes money when its clients are sued, regardless of whether they’re sued for defamation or they’re sued for violating the democratic rights of their members. So, why balance the risks in favor of lawbreaking and anti-social behavior (i.e. not protecting your fellow housing communities from poor service)? Beats me.
About a quarter of California’s population, roughly 10 million persons, live in housing communities (condos, co-ops, etc.), where they are governed by boards of directors and have legal protections, including the right to have their boards do business in the open. Some in these communities make the mistake of treating Adams Stirling like an infallible guide to the law, or even as the law. They do so at their peril. Adams Stirling pontificates about hundreds of topics, sometimes convincingly and sometimes (as in this case) hazardously. Their published advice is free, and on this topic it’s worth less than what you pay.