Published in the ECHO Journal, July 2013
Do you think you can put a price tag on respect among board members? On the value of striving for consensus when unanimous agreement is out of the question? On choosing to participate in the decision making process over choosing to let personal egos or agendas rule? For understanding the goal at hand – which is to get the Association business done responsibly?
Yes, you can put a price tag on these things. And it correlates directly with the effort boards make to work together no matter how wide the chasm of differences. Every difficult decision a board has to make is exacerbated when directors engage in antics, games, arguments, power struggles, secrecy, exclusion, cliques, and “eg-o-lympics”.
Serving on the board is not about “winning” or losing. When someone “wins”, by contrast, someone else loses. It’s not a competition. It is specifically about managing assets of others as well as your own, in the most responsible way, and making decisions based on what is best for the community.
Serious discord among board members can increase the costs of an association exponentially. And the more entrenched or dysfunctional a board becomes, the higher the ultimate cost. Because when boards become deadlocked, paralyzed by infighting, unable to achieve quorum, discouraged by a bully, or resign en masse, it adversely affects the ability to accomplish important business, and discourages others from participating in association affairs and stepping up to relieve other members on the board. Serious dissention often requires the help of a professional to get things back on track.
So of course, it is better not to let things get out of hand in the first place.
THE VALUE OF RESPECT CANNOT BE OVERSTATED, OR OVERRATED.
In a perfect world, all of the board members in all of the associations in California would be civilized, hard-working, have unlimited business and interpersonal skills, be compassionate about doing service, make good decisions, have time, show up, and act like adults at all times!
But it’s not a perfect world. People serve on the board for various reasons. It’s a volunteer position — some provide good service but others are merely filing a seat and leave the decision making to the stronger personalities. And some need to be right 100% of the time. Some need to be the center of attention, and some have a chip on their shoulder.
Here are some strategies that might help in these situations.
- Someone Take the Wheel and Learn Some Helpful Resources/Techniques For Dealing With Difficult People and/or Consensus Building: If someone on the board can spend some time learning techniques to deal with the types of interpersonal issues that get in the way of thinking rationally and acting reasonably, he or she may be able to “crack the code” in an association that is experiencing dissention among directors. The web is full of articles on dealing with difficult people and difficult situations. I’ve written numerous publications myself. The library is full of books on subjects of resolving conflict in all kinds of situations, at home, at work, with teenagers, among boards. One quick Google search using the phrase “dealing with difficult people” turns up more than 10 pages of resources) pointing to articles and tips. A search on “building consensus” turned up even more resources. I found a great model on resolving disagreements and consensus building techniques related to articles posted on “Wikipedia”. Of course time is an issue but have you ever tallied up the time that is wasted when boards fight? The toll can be staggering. It can tear down defenses and cause people otherwise willing to give time to service to go running the other way.
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Create a Safe Place And Forum To Conduct Business. Try methods of promoting the right atmosphere to get business done with the least disruption such as:
- Use of parliamentary procedure as a way to keep order in the process – it’s required by California law anyway.
- Use of an Executive Committee of all board members except the one who needs to be excluded because of a propensity to disclose sensitive and confidential information to the wrong people – which concept is supported by the Chantilles case decision in California. Some practitioners believe that the absolute right of access by a director to Association records, although granted in the Corporations Code, is limited by the decision in the Chantilles case.
- Use Outside Resources to Bring Good Information To the Table: Sometimes more information can resolve a disagreement, assist in making good choices, promote the best interests of the community, and recognize errors in thinking. That information could be in the form of articles on topic, meaningful statistics, surveys of owners, and/or opinions of experts. The internet is full of information, just be careful to consider the source.
- Recognize That There Is No Place For Emotional Reactions or Acting Out In A Business Meeting. Let’s say there is a director who interrupts incessantly, yells or threatens trying to get their way. The very best thing other board members can do is NOT REACT IN KIND. Anger breeds anger and escalates the fight. It’s not easy because when a person feels they are being attacked, the adrenaline flows and the “fight or flight” reaction is to be expected. But try this instead: when Harry or Mary stands up and starts yelling their position instead of delivering it with “aplomb”, the best response when the person runs out of steam is, “Thanks for sharing your opinion… we can see you are very compassionate in your view.” And then go on to another director or “call the question.” You know, all the obnoxious person is spouting is information. If you look at it that way – just information, rather than the way it is being delivered, — and don’t buy into the angst with which it was delivered, it is easier to react objectively and effectively.
- Don’t Discount the Benefit of a Trained Professional. There are professional facilitators and also some attorneys and managers that are skilled in working with boards – helping directors listen to each other, find areas of agreement, addressing inappropriate behaviors, finding solutions to impasse, locating and utilizing resources and information. Using a good facilitator or educated or experienced professional to step in or make suggestions may be just the pill the board needs.
- Use Board Powers to choose good officers and unseat problem officers, issue mandates, encourage codes of conduct or commitment, and provide leadership. Don’t choose the trouble maker to be the president. If a director such as president abuses his or her position, it can be a very big problem. The bylaws of the association usually give the board the right to appoint, and unseat, officers, at will. The board cannot remove a director from the board but often can “neutralize” the problem director by taking away their office and re-appointing another director to fill that office. Additionally, some documents allow boards to “vacate” a director’s position for failure to attend meetings or failure to qualify in other ways. “Vacating” a director’s board seat prevents them from participating in board business and opens up a vacancy on the board, but it should not be done lightly, or as a strategic move to change the majority. It should not be done (in my opinion) without at least minimal due process allowing the director to explain themselves or to cure whatever leads to the threat.
- Don’t continue indefinitely to fight over impasse. Find a solution to break an impasse. Bring in additional information or a facilitator to help. If considering litigation, choose a process that is less contentious or expensive such as ADR – alternative dispute resolution. It comes in many forms (see below). Continuing to fight to the point where important business cannot be moved forward is a breach of fiduciary duty. Every director has a responsibility to act in the best interests of the association, not their own individual interest, clique, ego or power grab. It may take tossing a coin, or rallying behind a new board candidate to break impasse. Just don’t muddle around in it too long.
ADR Processes Using Resources Outside the Association
If a board needs outside help, there are processes far superior to initiating litigation or recall – which comes in different forms: Just a note about each appears below:
Negotiation (talking things through, presenting information, and coming to agreement):
Basically, the board could use anyone to facilitate negotiations over something upon which the board cannot agree. Each side could bring in their own suggested expert or party with an objective view to help. Representatives to help with the “negotiations” might be contractors, vendors, attorneys, or trained facilitators that can help with negotiations.
Conciliation (agreeing to seek an objective outside opinion):
This is different from negotiation in the sense that the directors agree to submit a dispute to an outside person with the expertise sufficient to offer an objective decision or opinion on the questions that need resolving. If both sides or all parties agree to submit the differences to a conciliator and agree to abide by that person’s recommendation, it is one way to resolve a dispute that the directors cannot resolve on their own. This is much like submitting a question about interpreting the association governing documents or a potential legal issue to an attorney for an opinion.
Mediation (using a trained facilitator to help the parties find areas of agreement in process):
Mediation is voluntary except where a judge in a court case orders the parties to mediation. It involves a facilitator who is trained in mediation processes. The parties come together with the facilitator and discuss the issues and desired outcomes. It could have been invented for homeowner association disputes because it is one process where the parties are encouraged to talk about how they feel about the differences, not just what they want. Through the dialogue, the directors are more likely to “hear” each other even if they do not agree with each other, because the mediator will make sure the opportunity is generated. And once a person can actually hear another person, it gives them a new perspective and many times, that changes the dynamic, in a good way. A mediator is not a judge and does not pressure the parties to settle, but provides an excellent opportunity to find a viable solution to the problem.
Arbitration (letting a hearing officer listen to the positions and subsequently rule on what to do):
Arbitration is a lot like court. Each side presents their issues, arguments and supporting items to their position to a hearing officer and that person makes a ruling. I do not think this is the best solution to internal board disputes. This is more like a court process than anything else, and is more expensive and involved than mediation. It may resolve one issue, but does nothing to promote ongoing board productivity.
California law (Civil Code Section 1369.510 etc.) requires homeowner associations and homeowners in them, who have a dispute with each other or their neighbor, to first attempt to engage the other side in ADR before filing a lawsuit. The statute says that the homeowner or association that wants to bring a complaint for injunctive relief or declaratory relief, coupled with damages of less than $5,000.00, has to serve the other party with a “Request for Resolution” prior to filing a lawsuit, asking them to participate in an ADR proceeding. There are exceptions if there is a statute of limitations that may expire or a need for immediate relief, but the intent of the statute is to get associations and/or homeowners to try ADR in CC&Rs disputes; before filing a lawsuit. (CC&Rs = Declaration of Covenants, Conditions and Restrictions that regulate a common interest development). This Request for Resolution should name the parties, state the dispute in simple terms, and request that the other side engage in ADR. The opposing party has 30 days to respond to this Request for Resolution. If the other party does not respond or rejects the offer within 30 days, the Request is deemed rejected and a lawsuit may be filed. There are no further hoops to jump through. If the Request is accepted by the other party, the parties together have 90 days to resolve the dispute, or they can agree to extend the time.
If it is not resolved in 90 days, then the party wishing to file a lawsuit is entitled to do so, having satisfied the statute. If a party with a claim as described does not send a Request for Resolution to the other party, but files a lawsuit instead, the judge has various options. He or she may dismiss the lawsuit without prejudice to going through the steps again and then filing, or allow it to go forward taking into account the parties’ compliance with the statute (or noncompliance) when it comes time to consider an award of attorney fees.
Since the prevailing party in an enforcement action is entitled to recover attorney fees, the implication is that the judge could reduce the attorney fees award if either party refuses to participate in ADR.
Hopefully the information in this article will provide some ideas for finding solutions when boards have fallen into dysfunction mode.
By Beth A. Grimm, Esq. ECHO East Bay Resource Panel Chairperson, a 20+ year member of ECHO and CAI, and author of FINDING THE KEY TO YOUR CASTLE, THE CONDO OWNERS HANDBOOK by Sourcebooks, THE DAVIS STIRLING ACT IN PLAIN ENGLISH, and other helpful community association publications. Visit www.californiacondoguru.com for more information.