What you can do when your HOA’s Architectural Committee denies your request

White colonial house with a porch and plants

Last week I wrote an article that responds to the question, “Can an HOA reduce the amount of unpaid fees that I owe?” I have already been able to refer callers to that article for a detailed response to the question.

Today I received an email asking the second most common HOA question I get, namely, “Can the architectural committee reject a change I want to make to my property, when other homeowners previously made the same change?” Or sometimes the question is in the broader form of, “Can the architectural committee demand that I remove the completely reasonable changes that I made to my property?”

Although this article will deal with decisions (or lack thereof) by the architectural committee, the same reasoning applies the the HOA board of directors and the decisions the directors make. As with last week’s article, again the answer to these questions is apparent if you have the proper mindset about the nature of an HOA.

An HOA is a form of government. The reason that HOAs are formed, and the reason that people buy homes in HOA neighborhoods, is so that there will be an administrative body that keeps the neighborhood looking good, and prevents that weirdo across the street from painting his house purple. When you move into an HOA, you agree to live by he laws of the HOA and to subject yourself to future regulations that will be imposed by the Board.

As with any government, administrations come and go, and decisions and priorities can change with various administrations. For example, the regulations of an HOA will usually contain a color palette, dictating acceptable colors for the exterior and trims of the homes. One HOA board may decide that black shutters are beautiful and acceptable, but the next administration may ban them. Neither administration is right or wrong, it’s simply the preference of that particular board.

It’s no different than the federal government. At one time, the federal government decided that alcohol should be illegal. Citizens couldn’t simply ignore the new law, claiming it was unfair because people had been permitted to consume alcohol prior to the ban; it was the law. Then along came a new administration, that decided consuming alcohol was just fine.

Thus, the fact that 50% of the homes in the neighborhood have black shutters is no guarantee that the architectural committee must approve your black shutters. The architectural committee may have any number of reasons for reaching its conclusion. It may conclude that while black shutters are fine on a limited basis, the neighborhood now just has too many damn black shutters.

And so it is with the change you want to make, which you feel is entirely reasonable. It could be that the architectural committee has decided that given the location of your home, the change is not in the best interest of the neighborhood. It could even be that the architectural committee just feels that your requested change is too aggressive and would take too long to complete, thereby disturbing the neighbors.

So, just understand that when you moved into the HOA, in exchange for the promise that the HOA would not allow the guy across the street to paint his house purple, you gave the HOA the same sort of authority over you, in case you are the one who turns out to be the weirdo.

The HOA’s governing body is protected by what is called the “Business Judgment Rule”, which is codified at section 7231 of the Corporation Code. It provides that “[a] director shall perform the duties of a director . . . in good faith, in a manner such director believes to be in the best interests of the corporation and with such care . . . as an ordinarily, prudent person in a like position would use under similar circumstances.” Subdivision (b) provides that the director is entitled to rely on information, opinions, and reports presented by certain specified persons. Subdivision (c)  then provides, “[a] person who performs the duties of a director in accordance with subdivisions (a) and (b) shall have no liability based upon any alleged failure to discharge the person’s obligations as a director . . . .” The rule provides further: “no cause of action for damages shall arise against, any volunteer director . . . based upon any alleged failure to discharge the person’s duties as a director” of a nonprofit organization if that person: (1) performs the duties of office in good faith; (2) performs the duties of office in a manner believed to be in the best interests of the corporation; and (3) performs the duties of office with such care, including reasonable inquiry, as an ordinary prudent person in a like position would use under similar circumstances.” (Corp. Code § 7231.5, subd. (a).) The business judgment rule “sets up a presumption that directors’ decisions are based on sound business judgment. This presumption can be rebutted only by a factual showing of fraud, bad faith or gross overreaching.”

Let’s say your CC&Rs permit the construction of pools, complete with permissible dimensions, and you submit a plan that completely complies with the CC&Rs, only to have it denied because your neighbor is the president of the HOA, and he doesn’t want to have to deal with the construction. Under that scenario, you would have a good case to force the HOA to permit your pool, since the HOA is acting in an arbitrary and self-interested manner; it is acting in bad faith.

If you have that type of fact pattern, then call me, because I can help under those facts. But with anything short of such a fact pattern you are better served by working with the architectural committee to figure out what would make your proposal acceptable. If you feel that the architectural committee is being unjustifiably restrictive, then start a movement to remove the board so that a new architectural committee can be created. That’s how democracy works.

I get calls from homeowners who grow frustrated with me because I won’t agree to take their case. My reluctance is from years of experience, and because at least twice a week I get calls that go something like this:

Please help me. My request to paint my shutters black was denied by the architectural committee, but I went ahead and painted them anyway, because it wasn’t fair since other people in the neighborhood have black shutters. The HOA sued me, and I lost. Today, they went to court on a motion for attorney fees, and the court awarded the HOA $250,000. I’m going to have to sell my house to pay the $250,000 in fees. I don’t want to lose my home.

Shutters are a big one for some reason. Installing hardwood floors in condos is another popular one. It’s very sobering to see people losing their homes over the color of their shutters or the flooring they install, or because they think the palm trees they planted look just fine, or because they didn’t really think they could be compelled to park their car in the garage and not on the street. In any HOA litigation, the prevailing party is entitled to recover their attorney fees. I used $250,000 in the above example because that seems to be the typical amount of fees sought by the HOA. It isn’t always that much, but sometimes it is much higher. I recently received a call from a homeowner who was hit with $1.9 million in fees after a battle with his HOA.

If you want to go to the mat over a denial by the architectural committee, you’d better be very certain that the judge will agree with your assessment that the committee’s decision exceeds its authority. Just know that no court will substitute its opinion of what should be permitted by an HOA, over the opinion of that HOA that was elected by the members to make those sort of decisions.

Know also that even if you win, you can lose. Say you put up a gazebo in your backyard without approval by the architectural committee, and you get a letter from the board demanding the immediate removal of the gazebo. But you’re an American, dang it, and no one is going to tell you you can’t put a gazebo in your backyard, especially since it’s not even visible to the neighbors, and everyone else has an identical gazebo. So you tell the HOA to pound sand, and you reject the requests to participate in ADR. Since the HOA Board has a fiduciary duty to enforce the CC&Rs, the HOA sues you for building a gazebo without architectural committee approval.

In California, it takes no less than a year for a matter to go to trial, affording the attorneys on both sides the opportunity to get into all kinds of mischief, with lots of discovery and motions. You’ll probably pay $30,000 to $60,000 to an attorney from a small firm for all the pre-trial work, or if you decided that you really needed to show the HOA who’s boss and brought in a big firm, the fees will easily be in the six figures. The firm that works for the HOA will run up a far higher bill, because the HOA isn’t particularly concerned about the costs.

But luck is on your side. You catch the judge on a good day, and she decides you were 100% right that demanding the removal of the HOA was unreasonable. But you did build the gazebo without architectural committee approval, so the resolution she orders is that you must submit the plans to the architectural committee, and that the committee is not to deny your plans without good cause. Thus, you will likely get to keep your gazebo, but the HOA will be the prevailing party because it successfully compelled you to submit plans for architectural committee approval. The HOA thus brings a motion for attorney fees, and is awarded the aforesaid $250,000.

I’m intentionally adding a cynical tone, because I really want you to take this to heart. I’m not talking about you, of course, but let’s just say that sometimes people just get too full of themselves when it comes to people telling them what they can and cannot do with their property, and they don’t want to hear or consider the other side. They get lost in the minutia, and lose the forest for the trees (and a lot of my cases involve trees). They want to talk about how beautiful their wood floors are, how the only reason the HOA is demanding removal of the wood floors is because their child beat the president’s child at a science fair three years ago, how the HOA is denying approval under the wrong section of the CC&Rs, etc., etc. Never mind that their condo is on the second floor, and the noise has made the unit below unlivable. Even if you convince a court that the wood floors are permissible, it may still find that you were required to seek permission to install them. You may win the battle over the floors, but it will be a Pyrrhic victory.

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The Girl in the Red Bikini — A Facebook Tale

I present now a fascinating case that serves to illustrate a couple of points about Internet defamation. We’ll call this one the Girl in the Red Bikini.

Enter the Fayette County School District in Georgia. School District administrators decided it would be a good idea to warn their high school students about the dangers of posting photographs on social sites such as Facebook. They came up with a presentation with the theme, “once it’s there, its there to stay.” A perfectly valid message to teach the high schoolers.

But then they did something strange. They decided that to really drive home the point, the presentation needed embarrassing photos posted by current students. They snooped around on their students’ Facebook pages to find what they considered illustrative examples of the poor choices being made by their students.

One photo they decided was a good illustration was a photo of student Chelsea Chaney. Ms. Chaney had dared to post a picture of her standing beside a cardboard cut-out of the artist formerly know as Snoop Dogg (he now goes by Snoop Lion in case you missed the memo). Snoop (or, rather, his cardboard cut-out) is holding a can of something. I really can’t identify it from the photo. It could be a beer but it could just as easily be an energy drink. Worse, though, in the minds of the Fayette County School District, Ms, Chaney was wearing a bikini. Put those facts together, and you have what is obviously a very embarrassing photo that never should have been posted, apparently because it shows public drunkeness and promiscuity, at least in the warped minds of the District.

In reality, the photo was entirely innocent and implied nothing. (Obviously Ms. Chaney was not happy that the photo was posted so I won’t republish it, but it is already published here.) But imagine the shock of Chaney, seeing her photo come up on the screen at a school assembly, used as an example of poor choices. She didn’t think that was very cool, and is now suing the school district.

So what are the takeaways from this case (aside from not going to school in Fayette County)? The school district was idiotic to create this presentation, but it does serve to illustrate that the photos you post can have very unforeseen consequences, even if they aren’t inappropriate. Also, this is yet another example of the Barbara Streisand Effect. Chaney was justifiably embarrassed and angry that the photo was posted, but whereas before only her schoolmates saw it, now she has made it a topic of discussion all over the Internet. That may be a price she is willing to pay in order to combat this behavior, but just be aware that any action can fan the very flames you were hoping to extinguish.

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Jury Gets it Right – AEG Live Not Responsible for Michael Jackson’s Death

A Los Angeles jury just decided that Dr. Conrad Murray was hired by AEG Live, but that the company has no responsibility for any negligence by Dr. Murray that led to the death of Michael Jackson.

Attorneys for the plaintiffs had hoped that if they could convince the jurors that AEG Live hired Murray, they would hold AEG liable for Jackson’s death due to the negligence of Murray.

Sometimes in big cases like this, attorneys lose sight of basic legal principles. If decided properly, this case was properly unwinnable. In the first place, even if AEG did hire Murray, it would only be liable if it was negligent in some way. For example, if Murray was a quack and AEG was aware of that fact, it could be liable under a theory of negligent hiring. However, Murray had no history of negligence. There was no reason for AEG to suspect that Murray would be a risk to Jackson. The best plaintiffs’ counsel could do in that regard was to argue that Murray had financial problems. From there, they were hoping that the jurors would make the leap in logic that if Murray had financial problems, he might do anything to keep Jackson happy to keep his job, even if it was not good medicine.

The jurors rejected that logic. They did find that AEG Live had hired Murray, but that’s as far as they would go. They rejected all of the claims that would have supported an award of damages.

Additionally, even if the jury had found a basis for damages (plaintiffs were seeking between one and two billion dollars in damages), since the claim was for negligence, any award would have to be reduced by Jackson’s own contributory negligence. What is the percentage of Jackson’s culpability when he was the one demanding that Murray give him the drug that caused his death. Some would hold him only partially responsible, reasoning that the doctor should have intervened, while others would hold him entirely responsible, reasoning that people should be responsible for their own decision. Plaintiffs’ counsel suggested that any award should be reduced by 20% to account for Jackson’s contributory negligence.

This case was at best a Hail Mary, and with the benefit of my always perfect 20-20 hindsight, should never have been brought.

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Defamation is Bad, but it Doesn’t Justify Chilling Free Speech

Blocked in Canada

Our neighbors to the North are very American-like, until you get to issues of free speech. Most view Canada as the “least protective of free speech in the English-speaking world.” Reasonable minds can differ on some of Canada’s laws, such as prohibiting the media from identifying criminals until they have been convicted, but most of the law is still based on policies designed to prevent any criticism of the government. Canadians can be held liable by English-Canadian courts for comments on public affairs, about public figures, which are factually true, and which are broadly believed.

A recent parody video posted on You Tube illustrates just how lacking the concept of free speech is in Canada. The video is a fake cable company ad posted by Extremely Decent Films. It does not mention any cable company by name, and indeed it is specifically directed at American cable companies. Nonetheless, someone lodged a complaint in Canada, and that was sufficient to scare You Tube into removing the video, given the vagaries of Canada’s libel laws (although the video has since been reposted in response to articles such as this one).

Posted in Article, Cases, Communications Decency Act, Defamation, Internet Defamation, Law, Libel | Tagged , , | Leave a comment

Anti-SLAPP Victory: Reality Television is Free Speech

storage warsThe reality show “Storage Wars” has created a case that offers some important anti-SLAPP (and litigation) lessons.

In December, David Hester filed a lawsuit against A&E Television Networks alleging that producers of Storage Wars rigged the reality-television series by salting storage lockers with valuable items before they were auctioned off to buyers. The producers deny the claim, pointing out that they have no access to the lockers before they are sold, but it could be that they are adding the items with the assistance of the buyers, after the purchase, to make the show more entertaining. After all, if the show was nothing but lockers full of expired National Geographic magazines, that would get boring fast. But I digress.

According to his lawsuit, Hester was told that his contract would be renewed for season four, but after complaining about the “fraud” that was being perpetrated on the viewers, he was told his services would no longer be required. He sued A&E and another entity for wrongful termination (huh?), breach of contract, breach of the covenant of good faith, unfair business practices, and declaratory relief.

Lesson 1:  For every wrong, there is not necessarily a remedy.

Some attorneys just never get this. If I hire you for my television show, and I have the contractual right not to renew that contract at some point in the future, and you do something I don’t like, such as telling me you don’t like the way I am running the show that I’m paying you $750,000 to be on, then I just may decide not to keep you around. You are not some bastion for the public, given the task of making sure my show is pure. All reality shows are faked to some extent, and the viewers all know they are faked (although, incredibly, I did once run into a guy who thinks Ghost Hunters is totally legit).

It may stink that Hester got “fired” for wanting to keep the show honest, but if he wanted to make sure he never got fired for criticizing the show, the he should have added a “you may not fire me when I tell you your show stinks” clause to his contract.

Lesson 2:  A faked reality show is an expression of free speech.

Can you sue Stephen King when you find out Pet Sematary [sic] is not based on reality? Then why did Hester and his counsel think they could sue A&E for its fictional Storage Wars? Not surprisingly, A&E’s attorneys asked the same question in the form of an anti-SLAPP motion. The motion was a no-brainer, because it involves a free speech issue of public interest, bringing it within the anti-SLAPP statute, and there was zero chance of Hester prevailing on at least one or more of his causes of action, so the second element was a lock. As I have explained many times here, a SLAPP suit will often make no mention of defamation or any other obviously SLAPPable claim, but nonetheless will be a SLAPP.

Lesson 3:  Betting wrong on a SLAPP can be very expensive since some courts continue to rubber-stamp huge fee applications.

There is case authority for the proposition that if a court finds that a fee application on an anti-SLAPP motion was inflated, it can deny fees altogether, but I have yet to see a court follow the rule. In one case, I was brought in to challenge a fee application, and persuaded the court to knock off about 40% of the hours that were requested by the attorney who had successfully brought the anti-SLAPP motion. When the court stated in was reducing the fees by that amount, I reminded it of the authority that it could deny the fees altogether since defense counsel had been caught padding the bill. The judge responded, “Padding, what padding? I did not see any padding.” Well your honor, if the hours were all legitimate, then you should have awarded the full amount. But since you agreed with me that 40% of the time was inappropriate, then I would describe that as padding.

I have not reviewed the invoices for the anti-SLAPP motion in this case, nor do I know what other activities if any followed the original anti-SLAPP motion (for example, the plaintiff will sometimes request permission to conduct discovery following the motion and that takes time), so I offer no opinion on whether the time spent was appropriate. In the end, even after reducing the attorney fees requested by defense counsel, the attorney fees awarded still exceeded $120,000.

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Women Can be Fired for Being Too Attractive, Says Iowa Supreme Court

dental-assistantA seemingly horrible decision out of Iowa provides an extreme example of how discrimination is only actionable if it involves a protected class.

In a very rare move, the Iowa Supreme Court had already issued a ruling in this case but withdrew its own ruling to give it more consideration. On Friday it reissued the ruling, standing by it decision that a dentist acted legally when he fired an assistant because he found her too attractive.

The dentist fired the employee because he felt she was a threat to his marriage, and the court ruled that is permitted, even if the employee has not done anything to lead the boss to believe he would ever have a shot at a relationship. The court held that a firing under these circumstance does not amount to illegal sex discrimination because it is the result of feelings, not gender.

The court upheld the ruling of the trial judge, who dismissed a discrimination lawsuit filed against dentist James Knight, who fired his assistant Melissa Nelson, even though he admitted he always agreed that she had been a great employee for ten years she worked for him. The trial judge and the appeal court did not see the termination as having anything to do with gender, because Nelson was replaced by another woman, and Knight’s entire staff consists of women.

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Newsflash to Judge Lynn Hughes: Lactation is Related to Pregnancy

I reported a little over a year ago about a discrimination case out of Texas. A fired employee sued for wrongful termination based on discrimination, claiming that she was fired due to her request to use the bathroom to breast-pump.

The judge on the case was Lynn Hughes. Judge Hughes was apparently willing to begrudgingly admit that taking adverse job action against a woman because of her pregnancy could amount to illegal discrimination, but that was as far as he was willing to go. In an infamous decision, Judge Lynn Hughes held: “Lactation is not pregnancy, childbirth, or a related medical condition,” adding that after plaintiff gave birth, “she was no longer pregnant and her pregnancy-related conditions ended.” Based on that tortured logic, Judge Hughes held that the woman had no viable claim under Title VII’s prohibition (found in the “Pregnancy Discrimination Act,” or PDA) against discrimination based upon pregnancy, childbirth or a related medical condition.

To that, I responded: “The ruling is, of course, utter nonsense. Lactation occurs because of childbirth, and if a mother cannot pump or nurse, she is at risk of mastitis.” I predicted the case would be overturned on appeal, and I was right.

The United States Court of Appeals for the Fifth Circuit just reversed the ruling by Judge Hughes, holding: “The EEOC’s argument that Houston Funding discharged [the employee] because she was lactating or expressing breast milk states a cognizable Title VII sex discrimination case.” The Court also held that “lactation is a related medical condition of pregnancy for purposes of the PDA.” As my kids would say, “no duh”.

I occasionally see judges make ridiculous decisions that show a fundamental inability to apply legal reasoning and logic. This poor woman was denied her day in court for more than a year because of an indefensible decision by Judge Hughes, who could not figure out that lactation is a part of pregnancy. Had the appeal not been taken up by the EEOC, the terminated employee might never have had her chance at justice. This decision should force Judge Hughes to realize that being a judge is just not a good match with his skill set, and he should pursue some other endeavor. Indeed, the Texas Civil Rights Project has already filed a complaint with the Fifth Circuit Court of Appeals, claiming judicial misconduct and asking for Judge Hughes to resign, relating to some allegedly racial comments he made.

Although the Court of Appeals put the case back on track, the employee still has some hurdles to overcome. The Court specifically stated that “nothing in this opinion should be interpreted as precluding an employer’s defense that it fired an employee because that employee demanded accommodations.” Some cases have held that an employee cannot state a claim under the Americans with Disabilities Act for failing to “accommodate” breast-feeding or pumping, because lactation is not a “disability”. In this regard, the employer in this case appears to have been hoisted on its own petard. It claimed that the employee abandoned her job (which the Court rejected), so it cannot consistently claim that she was fired for making a request for an accommodation.

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Reporting a Fact is Never Defamatory

It is never defamation to report a fact, even if that fact is that a person was charged with a crime they did not commit. I understand why callers sometimes don’t understand this distinction. The completely innocent caller was falsely arrested, so it seems like a newspaper that reports the arrest is somehow making a false statement that the caller committed a crime. But look closer, caller. The paper did not report that you committed the crime, the paper reported that you were ARRESTED for the crime. Truth is an absolute defense to any defamation claim, and it is true that you were arrested.

What I don’t understand is how so many attorneys miss this point and pursue doomed defamation claims for their clients.

A recent example of this that caught my eye is a case out of Nevada. As reported by the Las Vegas Sun, the accounting firm of Deloitte & Touche was hired to perform an audit of a company called Global Cash Access Holdings, Inc., which is a publicly traded company that provided cash access services to the Nevada gaming industry.

The accounting firm uncovered information from an FBI bulletin which claimed that the two men who founded the company – Robert Cucinotta and Karim Maskatiya – were involved in criminal activity. As they were required to do by law, Deloitte & Touche disclosed this information to the audit committee. Cucinotta and Maskatiya were not happy with this disclosure, and felt it amounted to defamation because they were never convicted of any crimes and there was no evidence that they did anything criminal. They sued Deloitte & Touche, claiming that the disclosure cost the company $400 million in market capitalization and cost them $100 million personally.

But can you see why the comments by Deloitte & Touche were not actionable defamation? The accounting firm simply reported information that was contained in the FBI bulletin, as it was required by law to do. Certainly if those allegations against two principals of the company proved to be true it would greatly impact the value of the company, so that information was quite properly reported.

The Nevada Supreme Court, in a decision written by Justice Michael Cherry, said, “We agree with our sister jurisdictions that those who are required by law to publish defamatory statements should be privileged in making such statements.” In this case the court said Deloitte’s communication to the audit committee of the cash access company was required by the federal securities law.

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