Daily Development for Monday, January 17, 2005
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri

ASSOCIATIONS; POWERS OF ASSOCIATION; ELECTIONS:  A community or homeowners' association's role is to conduct its elections and count votes, not campaign or advertise against a candidate or disparage an otherwise eligible candidate even if there is an ongoing dispute between the association and the candidate.

Verna v. The Links at Valleybrook Neighborhood Association, Inc., 371 N.J. Super. 77, 852 A.2d 202 (App. Div. 2004); July 6, 2004. , further discussed under the heading: “Servitudes; Covenants; Use Restrictions; Parking.”

A owner in  a townhouse community was in a dispute with the association as to whether the association had the authority to prohibit him from parking his commercial van in the driveway or on the adjacent street.  Ultimately, the association won this litigation.

While the parking dispute was being litigated, the owner decided to run for the association's board of directors.  Once he publically expressed this desire, the board quickly imposed parking fines on him.  Then, the board held that the owner and his wife were not in good standing and were ineligible to vote until he paid the fines and signed an agreement that he would no longer park his commercial van on the association's property.  The board also sent a “candidate audit” to all unit owners, including a description of every candidate's past or current violations of the association's rules, whether the violations were resolved, and whether the candidates were in good standing and entitled to vote.

The owner with the van lost the election and then claimed that this audit was unauthorized by the governing documents.  He sought to void the election.  The association argued that it was not necessary for the association's governing documents to authorize specifically  such an audit.  The lower court agreed and dismissed the case, basing its decision on one of the association's bylaws which stated that the board had "the power to do all things incidental and necessary to the accomplishment of" its other enumerated powers.

The Appellate Division reversed, holding that circulating the audit exceeded the board's powers.  A board's actions incidental to conducting an election are only those steps necessary to the casting and counting of votes.  The Court reasoned that since the outstanding parking fine did not bar the owner's ability to run, there was no legitimate reason for the association to sponsor an advertisement about it.

Furthermore, the fact that the board had never previously issued such an audit demonstrated its ulterior motives.  One of the other members of the board was running for reelection in the same election.

Notwithstanding its ruling, the Court held that the owner was not entitled to a remedy other than declaratory relief.  Since board members were only elected to one-year terms, it would have been pointless for the Court to require a new election when subsequent elections had already taken place.  Furthermore, no monetary reward could be given because the position had no monetary value.

The owner also claimed that he was defamed by the candidate audit.  The lower court dismissed the claim, concluding that he was a public figure who failed to provide evidence of actual malice.  The Appellate Division affirmed, holding that by running in an election, the owner "had thrust himself into a spotlight" and he could then be viewed as a public figure.  Candidates for public office, even if they fail to win, take on the role as public figures for the limited purpose of their candidacy.  Regardless of the slight inaccuracy of the amount owed by the property owner, the audit did not convey a defamatory meaning.  The assertion that the owner was not in "good standing" was simply an opinion about his eligibility to vote.  The only time such a statement could be defamatory would be if it implied specific assertions of underlying objective facts that were false, which was not the case here.

Comment 1:   Are boards in New Jersey always   prohibited from developing “pre-election” statements from candidates, including a description of their adherence with association rules, or is would they be permitted to do so if the association had a Declaration, bylaw, or other rule permitting the practice?  The court states that there was no such provision authorizing the practice, so that’s as far as the opinion goes.  But one wonders whether any attempt by the Board to enact such a provision might be regarded as ulra vires for the same reason that the general authorization language did not permit it.  Electioneering in internal elections seems to exceed the Board’s authority.

Comment 2:   But is the prohibition simply a bar upon singling out one objectionable candidate and manipulating association authority to denigrate his candidacy?  The court could certainly be clearer as to whether it objected to the actual acts undertaken by the Board or to the motives underlying those actions.  It seems clear that motive certainly actuated the court at some level, which is both good and bad from the Association’s standpoint.  On the one hand, other forms of requiring or filing candidate qualification standards might be permitted.  On the other hand, a trial court might view itself as having the invitation always to look behind the stated motives of an association and condemn a number activities as invalid “electioneering.”

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