Published on: December 20, 2007
Majority rules. That is the simple but essential concept on which a democracy rests, and it works reasonably well most of the time in common interest communities, where volunteer board members set policies and make rules for their self-governing communities.
But some board members don’t understand, or are unwilling to accept, that in order for the majority to rule, the minority must support decisions with which it disagrees. When these board members find themselves on the losing end of a vote on an issue about which they feel strongly, they continue the battle, taking their disappointment into the community and seeking from owners the support they were unable to win from other board members. They rail against the decision, accuse the board’s majority of acting irresponsibly and encourage owners to protest the offending policy or ignore it.
This behavior undermines the board’s decision-making process and breeds dissatisfaction and dissension in the community. Instead of being a unifying force, these dissenters create tensions or exacerbate them, and the damage they do over time can’t be overstated.
The Duty of Loyalty
How should boards respond? Ideally, they should try to prevent these situations from developing in the first place by educating board members about their role, making sure they understand that their fiduciary duty, to put the association’s interests ahead of their own, includes a duty of loyalty to the association. And that duty of loyalty implies an obligation to accept and support board decisions, including decisions they don’t like. Board members who refuse to accept majority rule typically make two arguments:
- They are the ones who are acting in the best interests of the association; it is the board members in the majority who are violating their fiduciary obligation to the community by making a “bad” decision.
- The board member, no less than anyone else, has an absolute right to express his/her views, and that Constitutional right to freedom of speech includes the right to complain about board decisions and to speak out against them.
These arguments raise some interesting legal questions and the courts haven’t dealt with them directly in the common interest ownership context, but the Colorado Supreme Court came close in a 2004 decision, Krystkowiak v. W.O. Brisben Companies, Inc. The suit involved a dispute between a developer and a neighborhood association that was objecting to the large-scale apartment complex the developer planned to build across from the home of a neighborhood resident. That resident (Krystkowiak) created the neighborhood association to fight the proposal and served on a committee negotiating with the developer.
The neighborhood group eventually reached a settlement in which the developer agreed to modify the project’s design in return for which the residents agreed to end their protest. But Krystkowiak wasn’t satisfied with that resolution. When he continued his protest, the developer sued him, arguing that he was bound to accept the terms of the association’s agreement and that his continued opposition constituted improper “tortuous” interference with the developer’s legitimate business plan.
Krystkowiak argued that his first amendment right to freedom of speech allowed him to continue his individual protest notwithstanding the neighborhood association’s agreement to end its opposition. The court agreed, finding that “a member of a neighborhood association does not forfeit his individual rights by virtue of his membership in the organization.” When Krystkowiak’s views diverged from those of the association, the court said, “he was free to disassociate from the organization and continue his petition against the development in his individual capacity….The fact that [he] was initially acting in a representative capacity did not subsume his individual rights,” the court said.
Stand (Down) and Fight
On its face, the decision might seem to support the dissident board member who asserts his “Constitutional right” to rail against a majority decision, but the court made another crucial point. It said Krystkowiak was free to “disassociate” from the neighborhood association when he disagreed with its policy, and that is precisely what dissenting board members should do. If the board makes a decision they don’t like and can’t in good conscience support, they should resign from the board and lead a campaign either to challenge the decision or to replace the board members who voted for it. But they should lead that protest from outside the board, not from within it.
It is important to note here that we are not just talking about board members whose views differ from those of the majority. Disagreements are inevitable and desirable; a vigorous exchange of ideas among board members can produce more thoughtful, better formulated decisions. The concern is not with board members who disagree with the majority, it is with board members who refuse to accept that the debate ends when the board votes, and who express their opposition in ways that undermine the board’s credibility and its ability to govern the community. These board members are arguably violating their fiduciary duty by putting their individual right to speak out ahead of the duty of loyalty that requires them to support the board’s decisions. What about their right to freely express their views?
The court in the Krystkowiak noted properly that people don’t check their constitutional rights at the door when they join an organization. But the court also noted that “First Amendment rights are not absolute…. [Those rights] may be limited by contract.” It is “well-recognized,” the court added, “that the First Amendment will not protect people who have contracted away their First Amendment rights.”
Citing that principle, other courts have ruled in favor of companies that have fired employees for making derogatory comments about the company in an Internet blog. The courts have said in these cases that an employee’s right to free speech takes a back seat to the common law duty of loyalty employees owe their employers, under the implied or actual contract between them.
Board Member’s Pledge
This suggests a strategy that associations can apply by requiring volunteers serving on the board to sign a contract detailing the obligations of board members. And that contract or pledge should include language making it clear that board members are accepting some limitations on their First Amendment right to freedom of expression. The agreement might say, for example: “I agree to abide by the decisions of the majority, including decisions with which I may disagree, and will avoid saying or doing anything that would impede the enforcement of board decisions or otherwise discourage their acceptance by association residents.”
Signing an agreement of this kind may not prevent angry board members from speaking out inappropriately against board decisions, but it would counter their argument that they have a free speech right to do so.
Boards that find themselves dealing with a “loose cannon” should also review their procedures to make sure they permit an open debate in which all members are encouraged to express their views. At a minimum, these procedures should require members to listen to others respectfully, without interrupting them and without ridiculing their views. In any participatory democracy, participants are usually more willing to accept majority rule if they don’t feel excluded or abused by it.
Of course, there are people who are convinced that they are “right” and everyone else is wrong, and their disruptive behavior as board members can have a toxic effect on the community the board can’t ignore. Where action is required, boards have only two options: They can initiate removal proceedings, which typically require a vote of the owners; or they can file suit, charging the board member with violating his/her fiduciary duty to the association.
Litigation, while sometimes necessary, is always a last resort. Boards considering this avenue should be aware that Directors and Officers (D&O) liability policies, which cover suits in which board members are personally involved, sometimes exclude litigation that pits board members against each other. Even if your board is not currently dealing with a member who refuses to play well with others, you should review your existing insurance policy to make sure it would cover litigation against a disruptive board member, should that become necessary in the future.