Academy/Starting as a Board Member
Understanding pending litigation
Your association is being sued, or is suing someone. Here is what you can actually learn about it, and from whom.
You cannot judge a lawsuit's merits from board minutes alone, since minutes record votes, not arguments. Ask your association's attorney for a privileged briefing on any pending case. The board can discuss litigation in closed executive session, but in several states the fact that it was discussed must still appear in the next open meeting's minutes.
Old minutes won't tell you if the case is winnable
A new director often pulls two years of board minutes hoping to figure out whether the pending lawsuit is worth worrying about. Minutes are not built for that. Under Robert's Rules, a minute book records what the board did, not what anyone argued.
"Minutes are a record of what was done at a meeting, not a record of what was said."
Source: Robert's Rules of Order, Frequently Asked Questions, Robert's Rules Association
Litigation minutes tend to be thinner than most, because the discussion itself usually happens in closed session and only the vote to authorize an action gets recorded openly. A terse entry like "motion to authorize counsel to proceed, approved" is not evidence the case is weak, or strong. It just means the board followed the rule that debate is not transcribed.
Executive session is not the same as privilege
Executive session is the part of a meeting closed to everyone but the board, used for sensitive topics like pending litigation. It controls who is in the room. It does not, by itself, make the conversation legally privileged, and it does not necessarily mean the topic disappears from the record entirely.
"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."
Source: California Civil Code, section 4935, California Legislature
Under California's statute, any matter discussed in executive session must still be generally noted in the minutes of the next open meeting, even though the substance stays closed. Whether your state imposes a similar disclosure requirement, and exactly what counts as a permitted closed-session topic, varies. Check your own state's statute and ask the association's attorney.
What protects the board if the case goes badly
A new director sometimes worries that a lawsuit's outcome, win or lose, will expose individual directors personally. Courts generally look at how the decision was made, not how it turned out.
"where a duly constituted community association board, upon reasonable investigation, in good faith and with regard for the best interests of the community association and its members, exercises discretion within the scope of its authority under relevant statutes, covenants and restrictions to select among means for discharging an obligation to maintain and repair a development's common areas, courts should defer to the board's authority and presumed expertise."
Source: Lamden v. La Jolla Shores Clubdominium Homeowners Assn., Supreme Court of California
This is a California Supreme Court holding. Other states apply their own version of this deference, commonly called the business judgment rule, and the exact contours differ. The practical takeaway for you is the same everywhere: a documented, attorney-informed decision on how to handle the case protects the board far more than the eventual result does.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
The board discusses a pending lawsuit in closed session. The next open meeting's minutes say nothing about it at all. What should you flag?
You read two years of prior board minutes hoping to judge whether the pending lawsuit is winnable. What will the minutes actually show you?
A director assumes that because the board discussed the lawsuit in executive session, that conversation is automatically protected by attorney-client privilege. Why is this risky?
Sources
- Robert's Rules of Order, Frequently Asked Questions, Robert's Rules Association
- California Civil Code, section 4935, California Legislature
- Lamden v. La Jolla Shores Clubdominium Homeowners Assn., 21 Cal.4th 249 (1999), Supreme Court of California
Related elsewhere in the Academy
Starting as a Board Member
Next, learn what to ask for before your first meeting so litigation is not the only file you're missing.
Whether a discussion held in executive session must later be noted in open minutes, which topics may be discussed in closed session at all, and how far attorney-client privilege extends vary by state and by your association's own attorney's guidance.