## 52-12 & 67-12, McBeth v. Fountain Hills CA, Muse v. Fountain Hills CA (consolidated) (May 1, 2014) (Panel: Stevens, Stone, Zajic)

Two members of an HOA filed separate complaints against the HOA for improperly conducting an election and for improperly holding closed meetings.  One member also raised claims that the HOA did not maintain accurate minutes and had damaged his lawn; the other member claimed that the HOA did not allow inspection of its records and had improperly revoked his pool passes.  Because some issues overlapped, the hearing panels voted to consolidate the two cases so that they would be heard together by the same hearing panel.

On the election issue, the facts showed that the HOA had allowed nominations from the floor of persons who were not present at the election.  The members argued that this violated an HOA practice.  However, there was nothing in the HOA documents that required a person to be personally present at an election in order to be nominated from the floor.  The panel held that the HOA did not violate any law or association document.

On the closed meeting issue, the panel found that the HOA’s board of directors, at least once, conducted business by email; on other occasions, it met in person without any advance notice to the community.  The panel ruled: 1. a “meeting” of the board takes place when the board discusses, by email or in person, or otherwise, the association’s business and makes decisions on that business; 2.  when the board gathers, in person, by email, or otherwise,  to discuss the association’s business but does not make decisions, that is not a “meeting;” 3. the gathering of a committee of the board, whether in person or by email or otherwise, to discuss and make decisions concerning the association’s business, is also a “meeting” governed by the “open meetings” law; 4. a meeting of the board or its committees conducted by email is a closed meeting and as such must comply with the provisions of the “open meetings” law, it can only be held for a reason permitted by the law and the minutes of the next meeting must state the purpose of the closed meeting and the vote to close it.  The panel held that the board violated the “open meetings” laws by failing to give notice of its meetings,   to make proper reports in the minutes, and by making decisions at email meetings, although none of the infractions was serious enough to require the revocation of the decisions made.

On the issue of the minutes, there was a dispute over whether the minutes contained in sufficient detail all the comments and arguments raised at the meetings.  The panel held that the main purpose of minutes was to record the decisions of the board, if any were made; and that the board had the discretion to decide how detailed the minutes should be. 

On the pool pass issue, the panel made no findings because the passes were subsequently issued.

On the document disclosure issue, the evidence showed that there was confusion over the specific documents that the member wished to see.  This was important because many documents were in storage and not readily available on demand.  The panel ordered the member to make his requests more specific and ordered the HOA to cooperate with the member in resolving any confusion that arose.

Finally, the panel held that under Chapter 10B, Section 8, it had no jurisdiction to consider the member’s claim that the HOA had caused damage to his lot.  This claim does not fall under any of the specific grants of authority found in the law.  [Editor’s note:  the member has the right to sue for such damages in Small Claims Court.]

The panel ordered the HOA to review the requirements of the open meetings law and to comply with them in the future.

In a separate order, the hearing panel held that the board of directors has the legal authority to exclude one of the complainants, who was also a member of the board, from the board’s meetings at which it discussed his case.  The panel held that for a board member to be present at the board’s discussions of his own complaint was a conflict of interest on his part, and it would give him an unfair advantage over the association, because the association did not have the right to participate in that person’s preparation of his own case.  In addition, it would prevent the association’s attorney from giving frank and complete advice to his client and interfere with the association’s ability to defend itself.  The panel ordered that the board could exclude the member from its discussions on his complaint.