Arizona Court Says HOA Cannot Exclude Director from Executive Session Meetings

Arizona Appellate Court decision (October 13, 2016).

In this case, the board of directors of a homeowners association passed a motion to exclude a fellow board member who had been elected to the board by the homeowners from attending the board’s executive session meetings. Such action was taken by the board at the recommendation of the association’s legal counsel after the director refused to agree to keep matters that were discussed in the executive session meetings confidential. In response to said action, the board member filed a court action in which she sought an injunction to compel the board of directors to allow her to participate in the executive session meetings of the board. The trial court denied her application for a preliminary injunction and she appealed the decision to the appellate court.

On review, the appellate court reversed the decision of the trial court. The appellate court ruled that the trial court had abused its discretion in denying the application for a preliminary injunction. The court found that neither Arizona law nor the association’s governing documents authorized the action that had been taken by the board of directors. To the contrary, the appellate court found that by passing the motion, the association’s board had prevented the director from performing her duties and responsibilities as a director.

Because the director had been duly elected by the association’s members, the board did not have the discretionary power to exclude her from the executive session meetings of the board. The court commented that, “Instead of resorting to an unlawful self-help remedy, the Association could have taken other courses of action to protect confidential information. For example, the Association could have sought to remove McNally from the Board by filing a judicial removal action…. The Association also could have sought an injunction prohibiting McNally from disclosing confidential information discussed in executive session.”

Finding in favor of the director, the appellate court also awarded her attorney fees.

See case decision: McNally_v._Sun_Lakes_Homeown