Chantiles v. Lake Forest II Master Homeowners Assn.

Citation37 Cal.App.4th 914,45 Cal.Rptr.2d 1
Decision Date07 August 1995
Docket NumberNo. G014505,G014505
CourtCalifornia Court of Appeals
Parties, 95 Cal. Daily Op. Serv. 6399, 95 Daily Journal D.A.R. 10,879 Thomas J. CHANTILES, Plaintiff and Appellant, v. LAKE FOREST II MASTER HOMEOWNERS ASSOCIATION, Defendant and Respondent.

John F. Kunath, Jr., Irvine, for plaintiff and appellant.

Richard A. Tinnelly and Anthony M. Garcia, Aliso Viejo, for defendant and respondent.

WALLIN, Associate Justice.

In this case we are asked to consider the extent of a homeowner association director's rights to inspect the records of the association under Corporations Code section 8334. 1 Here a director asks us to conclude his inspection rights are absolute and include an unfettered right to review and copy the ballots cast by the association's homeowner members in its annual election of its board of directors. The association asks us to hold, as the trial court did, that a director's rights of inspection must be balanced against the members' legitimate expectations of privacy in their voting decisions. We affirm.

* * * * * *

Thomas Chantiles was an elected member of the board of directors of the Lake Forest II Master Homeowners Association (the Association). The Association elects its seven directors annually. Voting is cumulative, meaning that each homeowner member has seven votes per election which may be divided however he or she wishes among the candidates, for example, the member may cast one vote for each of seven candidates or all seven votes for one candidate.

As required by law, voting is done by a proxy ballot, rather than by direct written ballot. The proxy ballots are mailed to each member. The ballot gives the member several options. He or she first designates a person as that member's voting proxy holder. If no person is named, by default, the chair of the Association's election committee is the designated proxy holder. The proxy holder is authorized to cast the member's seven votes. The member may indicate on the ballot how those votes are to be cast, i.e., he or she may directly vote for the candidates listed on the ballot. If no direction is made, the proxy holder has discretion to cast the votes in whatever way he or she chooses. The member may indicate on the ballot that the proxy designation is solely for the purpose of achieving a quorum and no votes may be cast for any candidate.

The member may either mail the proxy back to the Association or hand deliver it and place it in the ballot box. The chair of the election committee holds the ballots for tabulation. As an alternative, candidates may directly solicit proxies from members which the candidate hand delivers at the annual meeting for tabulation. The proxy ballot form which a candidate might directly solicit is slightly different from the form which is mailed to members, but contains the same options and information.

Chantiles had served as a director of the Association for many years. He ran for a tenth term in 1992 and was reelected, apparently as a member of a minority faction. Believing that he had been shorted by 800 to 1300 proxy votes, which he presumably would have cast for other candidates from his faction, Chantiles demanded the Association allow him to inspect and copy all of the ballots cast in the 1992 annual election. Citing its concern for preserving the privacy of individual voting members, the Association refused.

In July 1992 Chantiles filed a complaint, Orange County Superior Court case No. 693389, seeking a judicial determination of the validity of the election under section 7616. On August 19, counsel for the Association met with Chantiles to attempt to resolve the matter. The meeting was unproductive. In September the parties agreed to allow Chantiles to inspect the ballots in the Association's counsel's office, in the presence of a monitor for each side, but that meeting never took place. The complaint was dismissed without prejudice on December 1.

On December 18, 1992, Chantiles filed this petition for writ of mandate (Code Civ.Proc., § 1085) to compel the Association to permit the inspection and copying of the ballots under section 8334, which gives directors of nonprofit corporations the right to inspect and copy corporate records. The Association opposed the writ, arguing that unfettered access to the ballots would violate its members' expectations that their votes were private. It submitted declarations from 120 members who stated they believed their ballots to have been secret when they cast them, and they did not wish the ballots to be divulged to Chantiles.

The trial court concluded the ballots were the type of record to which a director had a right of inspection pursuant to section 8334. However, members had a legitimate expectation of privacy in their ballots against which the inspection right must be balanced. In May 1993 the court issued its writ of mandate. It ordered the Association to make available to Chantiles' attorney, John Kunath, Jr., all ballots cast in the 1992 election. Counsel for the Association, or another representative, could be present during the inspection. Mr. Kunath could take notes while inspecting, but those notes could not contain the names of voting members, only the names of their designated proxy holders. He could not disclose to anyone the names of persons who voted or how any individual voted, without further order of the court. The court reserved the issue of attorney fees and costs. Rather than conduct the inspection authorized by the court, Chantiles filed the instant appeal.

I

The Association contends the appeal is moot because Chantiles is no longer on its board of directors and therefore cannot assert a director's inspection rights. At the annual meeting on June 3, 1993, Chantiles was not reelected to the board of directors. 2 Although we have located no California case addressing the effect of a director's defeat, other states have held "the right of a director [of a nonprofit corporation] to inspect the books and records of the corporation ceases on his removal as a director, by whatever lawful means[.]" (State ex rel. Oliver v. Society for the Preservation of the Book of Common Prayer (Tenn.1985) 693 S.W.2d 340, 343.) Chantiles essentially concedes he no longer has a director's inspection rights, but asserts the appeal is not moot for several reasons. First, the trial court specifically reserved the issues of costs and attorney fees (see § 8337), which, Chantiles argues, cannot be decided if we dismiss the appeal. He also argues the issue of a director's inspection rights is one of public importance which we should decide, even if it is technically moot. Finally, he contends the issue is likely to recur between these same parties, as he may be reelected.

It is this court's duty " 'to decide actual controversies by a judgment which can be carried into effect, and not to give opinions upon moot questions or abstract propositions, or to declare principles or rules of law which cannot affect the matter in issue in the case before it. It necessarily follows that when, pending an appeal from the judgment of a lower court, and without any fault of the defendant, an event occurs which renders it impossible for this court, if it should decide the case in favor of plaintiff, to grant him any effectual relief whatever, the court will not proceed to a formal judgment, but will dismiss the appeal.' " (Consolidated Vultee Aircraft Corp. v. United Auto etc. Workers Local 904 (1946) 27 Cal.2d 859, 863, 167 P.2d 725; see also Eye Dog Foundation v. State Board of Guide Dogs for the Blind (1967) 67 Cal.2d 536, 541, 63 Cal.Rptr. 21, 432 P.2d 717; Finnie v. Town of Tiburon (1988) 199 Cal.App.3d 1, 10, 244 Cal.Rptr. 581.)

We may, in appropriate circumstances, exercise our discretion to retain and decide an issue which is technically moot. (Davies v. Superior Court (1984) 36 Cal.3d 291, 294, 204 Cal.Rptr. 154, 682 P.2d 349.) We do so when the issue is of substantial and continuing public interest. (DeRonde v. Regents of University of California (1981) 28 Cal.3d 875, 880, 172 Cal.Rptr. 677, 625 P.2d 220.) Such a resolution is particularly appropriate when the issue is " 'presented in the context of a controversy so short-lived as to evade normal appellate review' " (Evans Products Co. v. Millmen's Union No. 550 (1984) 159 Cal.App.3d 815, 820, fn. 5, 205 Cal.Rptr. 731; see also San Jose Mercury-News v. Municipal Court (1982) 30 Cal.3d 498, 179 Cal.Rptr. 772, 638 P.2d 655; Hardie v. Eu (1976) 18 Cal.3d 371, 379, 134 Cal.Rptr. 201, 556 P.2d 301); or when it is likely to affect the future rights of the parties (Evans Products Co. v. Millmen's Union No. 550, supra, 159 Cal.App.3d at p. 820, fn. 5, 205 Cal.Rptr. 731).

Membership in condominiums, cooperatives and planned unit developments, known as "common interest" developments, is increasingly common. (Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361, 370, 33 Cal.Rptr.2d 63, 878 P.2d 1275.) Common interest developments number in the tens of thousands. (See Sproul & Rosenberry, Advising California Condominium and Homeowners Associations (Cont.Ed.Bar 1991) § 1.1, p. 2 [by 1986 there were 13,000 to 16,000 common interest developments in California.].) Such developments are usually governed by a homeowners' association which is incorporated as a nonprofit mutual benefit corporation under section 7110 et seq. (Sproul & Rosenberry, supra, § 1.9, p. 9.) The homeowners' association is governed by a board of directors. (§ 7210.) The directors are elected by the association members for a term specified by the articles of incorporation, not to exceed four years. (§ 7220, subd. (a).) Chantiles, and the other directors of the Association, are elected for terms of only one year, as is common with many homeowners' associations.

We agree with Chantiles that the issue presented here, the extent of an elected directors' rights to inspect...

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