Outbursts, Fistfights, and Lawsuits: Good Faith is the Cure to Election Woes

President Dick Tatetor, along with the same four unit owners, have been on the board at Harmonious Meadows Condominium for the last nine years.

A group of five unit owners, let’s call them the “opposition,” have decided to run for the board. The condominium’s governing documents require that the board set up a nominating committee but do not otherwise elaborate. The opposition contacted the board to be on the ballot for the upcoming election. A month prior to the election, however, the opposition was informed by the board that they were not “chosen” by the nominating committee and that only the current board had been selected as nominees. The opposition would have to utilize a secondary avenue to nomination in the bylaws, which allowed for addi­tional nominees up to two weeks prior to the election by written support of 20 percent of the unit owners.

While the opposition was obtaining the necessary signatures, the current board (acting as the nominating committee) sent notice to the unit owners of the annual meeting. The notice, on association letterhead, only included the current board as the nominees for the upcoming election. The notice did not mention the possibility of any other unit owners running for the board and also included a proxy, to be returned to the board.

The opposition obtained the necessary signatures and notified the unit owners of their secured nomination. Upon learning of the new nominees, some unit owners signed new proxies for the opposition and some, but not all, also signed revocations of their prior proxies given to the board.

The incumbent board sent correspon­dence on association letterhead to the unit owners containing self-proclaimed accolades of the board with disparaging remarks about the opposition. The board posted campaign material in the com­mon area but did not allow the opposition to post anything. The board also imposed requirements regarding proxy forms and revocations that had never existed in prior years. Among these rules was the requirement that the board authenticate the opposition’s proxy forms prior to the meeting and the requirement that all proxy forms be handwritten.

At the meeting, unit owners requested to hear from the opposition so they could be informed when voting. The board would not allow the opposition to speak. Unit owners made motions to be heard and/or to ask questions prior to voting but were denied. There were multiple outbursts from unit owners demanding to be heard; all were ignored.

After the voting, the board took a recess to count the votes. President Dick Tatetor then announced that the incum­bent board had all been voted back in, with the smallest margin being five votes. The opposition was informed that some of their proxy forms were not considered valid and cited numerous technicalities that did not exist in the bylaws. The board stated they had multiple proxy forms and had also obtained revocations for many of the opposition’s proxies. The board refused to share details regarding the voting and proxy forms.

Ultimately, a fistfight broke out between unit owners who supported the current board and those who supported the new candidates. The police were called. The meeting adjourned. The opposition has brought suit against the association for among other things, lack of due process.

Avoiding the Mess

Heated meetings and zealous elections arc common in a community associa­tion setting. The board has a lot of power and discretion, and the best way dissatisfied unit owners can change the way their association is being governed is to run for and get elected to the board. More often than not, overthrowing the incumbent board is not as easy as getting the most votes.

While succeeding in overthrowing the board would have been a favorable result for the opposition and their supporters, the conflict itself could have been avoided had the board conducted itself in good faith. Pursuant to the Rhode Island Condominium Act Section 34-36.1-1.11 the board is required to act in good faith. Failure to do so may subject die board to penalties pursuant to 34-36.1-4.17, which may include payment of the opposition’s attorney fees.

The Nomination Process

As a general rule, a nominating com­mittee should be inclusive rather than exclusive and should never be one and the same as the current board. Nomi­nating committees should be used to reasonably screen the candidates based on concrete, disclosed criteria. For example, many association docu­ments prohibit a unit owner who is delinquent in assessments, or otherwise in violation of association rules and regulations, from running for the board. The committee should also be charged with gathering and disseminating information to unit owners about the candidates prior to the election.

Unfortunately, most documents that require a nominating committee fail to specify how the committee is formed, how to request nomination, and what criteria must be used by the committee, among other things. Documents should be amended to fill in the gaps with respect to the functions and parameters of a nominating committee or amended to abolish the committee entirely and instead lay out clear rules for getting on the ballot. A board must not capitalize on the failure to have set standards and use their power to prevent competition and secure their re-election. Shutting unit owners out from the process is a per se violation of the duty of good faith.

The Election Process

While the board can use their incum­bency as part of their platform, they cannot use their current position as a board member to control the election process and mislead the unit owners. Sending propaganda on association letterhead, soliciting proxies as “the board” under the guise of no opposi­tion, posting campaign material as the board (to the exclusion of the opposition), and other actions and omissions are all violations of the statutory requirement of good faith.

Associations should have clear rules and regulations regarding campaigning and elections. While every scenario cannot be accounted for, a set of ground rules can ensure that the process goes more smoothly. Associations often find it helpful to have a “meet the candidate night” or other gathering that promotes transparency in the process and opens up the lines of communication between unit owners. The board, in carrying out its duty in good faith, should put forth a reason­able effort to ensure that unit owners are well informed and never misled regarding the election process.

Meetings and Voting

Many governing documents set forth a bare-bones agenda for the annual meeting. While the agenda may not provide candidates or other unit owners the chance to speak, the board should always encourage a reasonable amount of open discussion and the exchange of info. The board’s failure to do so creates the impression of bad faith. Meetings where unit owners are given an opportunity to be heard and are able to participate in the process generally run smoothly and result in an association that is better informed and more participatory overall.

To the extent any unit owners give proxies for a meeting, they should be dealt with at the meeting and not required beforehand, as unit owners have the opportunity to revoke their proxies by showing up at the meeting and giving notice of their revocation. The board should never invalidate a proxy without a solid legal basis. The board should ascertain what an owner’s intention was with respect to the proxy holder and always use good faith in determining the validity. If anything, the proxy can be provisionally accepted until validated by the unit owner subse­quent to the meeting.

Transparency with respect to election results is also key. There should be full disclosure regarding voting records and

proxy forms, unless otherwise prohibited by statute. The association should have clear rules regarding ballots, the counting of votes, and should establish protocol in the event of a dispute.

When the opposition loses by a relatively small number, it is evidence of significant dissent. The board should put aside personal differences and include those unit owners in the process by com­mittees or otherwise since the dissent will not cease just because the election is over.

Contested and heated elections wall always exist, and associations should amend their documents to provide for specific ground rules regarding the elec­tion process. However, it is a board that exercises good faith in carrying out an inclusive, open, and transparent elec­tion process that is the greatest line of defense to outbursts, ensuing fistfights, and lawsuits to invalidate an election.