Sticks and Stones: Boards Need to Think Twice Before Filing a Defamation Claim

Published on: December 22, 2006

Discussions of controversial and even not so controversial community association issues are not always models of civility and reasoned political discourse. In this respect, the decision-making process in many homeowner associations does not differ much from what passes for intelligent debate in the halls of Congress today. Insults, name-calling, and allegations of evil intent are not uncommon forms of expression for owners expressing their dissatisfaction with board policies and the trustees who adopt them. These verbal assaults can be sharp-edged, inaccurate, and intensely personal. But are they also defamatory? Trustees sometimes think so and seek to file suit against the offending owners to halt their tirades.

Demands for legal action usually come in response to something owners write rather than to public statements they make. It is flyers or e-mail communications circulated within the community, or alternative Web sites dissident owners establish to tell “the truth” about how the association is being mismanaged, that usually trigger the calls from trustees asking us to file libel suits on their behalf. The desire to fight back is understandable; no one likes to be called names or have their intelligence questioned or their motives impugned. But the legal framework makes it very difficult for trustees, however wronged they may feel, to win a defamation claim.

The Legal Framework

To understand why, it is helpful to understand some of the legal distinctions the courts will make and the standards of proof they will require. First, there is a difference between slander, which is spoken, and libel, which is written or otherwise communicated in a permanent form – the e-mail messages noted above, or statements carved in the clubhouse wall, spray-painted on a door, or plastered on a billboard.

Courts also distinguish between defamation claims filed by “private persons,” and claims filed by public figures, which are far more difficult to prove. That is important because courts in many jurisdictions have held that association trustees, by virtue of their leadership role in the community, inject themselves voluntarily into public debates, and so qualify as “limited public purpose” figures. As a result, in order to prove defamation, trustees must show not only that statements are untrue (the base-line requirement for private individuals), but also that the statements were made maliciously – that is, that the individuals responsible knew the statements were false, or made them with “reckless disregard” for their truth. And the evidence trustees present to prove malice must be “clear and convincing.”

That’s a tough legal standard – not as tough as “beyond a reasonable doubt” (required in criminal cases), but much higher than the “preponderance of the evidence” standard applied to other civil claims. “Preponderance of the evidence” requires only that the scales tip, however slightly, more one way than the other. It doesn’t have to be a lot — 51 percent will do. Beyond a reasonable doubt pushes the scale to 95 percent, while “clear and convincing” falls somewhere in between – around 75 percent.

For owners fighting a defamation claim, truth is an absolute defense, but they don’t have to prove that the statements were absolutely true – only that they were “substantially” true — or that they were not aware the statements were untrue, or had no reason to question their veracity. Under this legal framework, it is much easier for owners to deny allegations of malice than it is for trustees to prove them.

How Much Did it Hurt?

Simply proving that statements were libelous or slanderous isn’t enough; trustees pursuing a defamation claim must also prove that they have suffered “actual damages.” These may include monetary damages or harm to their personal reputation, personal humiliation, mental anguish and suffering, or physical suffering.

Establishing monetary losses will be particularly challenging. It is rare that “damage” from defamatory statements would spread beyond the boundaries of the community association. Allegations about poor decision-making or poor business judgment are unlikely to affect a board member’s law practice or harm sales at his/her retail store, or lead to a demotion or the loss of a job.

Non-monetary claims are more subjective and somewhat easier to establish. Trustees might claim, for example, that statements caused them emotional distress, forcing them to seek therapy for anxiety or medical treatment for insomnia or stomach ailments. But how much long-term psychological damage did the accusations of mismanagement or stupidity really cause? How much weight or sleep did you lose, how much was attributable clearly and exclusively to the defamation, and how much compensation should you receive? Judges and juries are likely to be skeptical in their judgments and stingy in their awards.

Concern about the Constitutional right of free speech will make judges in particular wary of suits that seem designed to quash dissenting views or that might have that effect. For all of these reasons, trustees seeking to pursue a defamation claim face a steep uphill legal climb. These actions should not be undertaken lightly and usually, they should not be undertaken at all.

Over the Top

The only exception to that advice is if the offending statements involve criminal activity of some kind — for example, allegations that a board member has stolen funds, committed fraud, or seduced a minor. These statements go far beyond anything that might be construed as reasonable criticism; their truth could be established easily (either the money was stolen, or the minor was seduced, or not); the owners responsible would be hard-pressed to argue convincingly that they had no reason to question the truth of the allegations they made; and the reputational and professional damage to the trustees targeted could be considerable.

But even in the most dysfunctional associations, the statements likely to offend board members rarely rise (or descend) to this level, and a libel action is unlikely to be the most effective response.

The angry outbursts that make trustees feel defamed usually come from owners frustrated because they have not had an opportunity – or don’t think they have had an opportunity – to express their views, air their criticism, or offer their suggestions. Responding by suing these owners is not only likely to be futile; it is likely to backfire, sending a message to all owners, not just the offending ones, that the board does not tolerate criticism or dissent. This is precisely the opposite of the message that boards should try to convey.

Creating an atmosphere that encourages open discussion, including criticism, can go a long way toward defusing tensions before they erupt in angry accusations and personal verbal attacks. Scheduling periodic open forums where owners can discuss their concerns, setting aside a designated time for owners to speak at board meetings, and creating an “owners’ corner” on the association’s Web site are some of the strategies boards can use to encourage input from owners and to make them feel their opinions are welcome and valued.

For Whom the Bill Tolls

If a board member decides that he/she has been defamed and insists on suing the owner or owners responsible, should the association pay the legal bills? The answer is not clear. You could argue that this is really a personal battle, which the offended board member —who, perhaps, is too easily offended — should fight and fund alone. But you could also argue, reasonably, that the action is related to this trustee’s service on the board and thus should be an association expense. The safest course in this case would be to have the full board vote on and approve the expenditure of funds.

But you don’t want to get to this point in the first place; with only very rare exceptions, boards simply should not pursue defamation claims. Like elected officials in the public sector, association trustees must accept criticism – even nasty, uncivil and unfair criticism – as part of their job. Board members who find themselves bristling at the slings and arrows hurled by outrageous owners would usually be far better served by developing a thicker skin than by calling an attorney.