Throughout the nation, our democratic system of government faces increasing scrutiny each year. This scrutiny is justified as challenges to election processes multiply. Whether it’s stockholder votes, HOA elections, or state and local elections, none are spared from the scrutiny they rightfully deserve.
An HOA directorship, once held in high regard, now suffers from a tarnished reputation that continues to deteriorate. In some areas, those serving as Directors or trustees struggle to grasp the simplest concepts, like “fiduciary responsibility.” If you’ve watched HBO’s Last Week Tonight recently, you’ll know exactly how dire the situation is. [For a deeper dive, check out my post: https://www.hoadvocate.com/homeowners-associations-last-week-tonight-with-john-oliver/]
In California, the bar to serve as an HOA Director is laughably low, with no requirement for education or training. Removing a Director is akin to pulling teeth, requiring a recall or a court order under Corporations Code § 7223. For those brave enough, my recently resolved 7223 Petition (Kruschen v. Annandale Townhouse Association, Inc., and Steven Gittleman) awaits your perusal: https://www.hoadvocate.com/wp-content/uploads/2023/03/2023-03-07-FA-23VECP00088.pdf
HOA elections in California are tightly regulated, thanks to Senator Bob Wieckowski, who waged war on corruption with SB-323 in 2019. [For the gory details, see: https://www.hoadvocate.com/new-election-rules-why/] Wieckowski’s crusade didn’t stop there; SB-432 in 2021 was another blow to those who seek to manipulate the system. [More on that here: https://www.hoadvocate.com/sb-432-wieckowski-does-it-again/]
According to an April 2, 2019, Senate Judiciary Committee report, “The California Appellate courts have ruled repeatedly that associations parallel in almost every way the powers, duties, and responsibilities of local government. The original legislation to create integrity in association elections built on these opinions by stating that ‘it is the intent of the Legislature to ensure that democratic principles and practices are in place with respect to the governance of common interest developments.’ Nowhere in association governance are democratic principles more vital than during elections […] Unfortunately, since their enactment, the California laws governing association elections have been ignored or violated or undermined […]. SB323 aims to address these abuses.”
A July 9, 2019, Assembly Committee on Judiciary report notes, “…SB323 makes it harder for associations to manipulate HOA elections and goes a long way toward restoring confidence in this essential democratic process.”
It’s crystal clear that safeguarding the integrity of HOA director elections isn’t just a state concern; it’s a rallying cry for conscientious HOA members everywhere. Obtaining a directorship through a flawed election undermines its legitimacy.
Despite my relentless warnings to the HOA beginning in September 2022, the election inspector, Michelle Kelly of Correct Elect, LLC, remained defiant. Michelle was made aware of the issues but turned a blind eye, refusing to rectify her errors or invalidate her sham election and start anew. An act of cowardice that would’ve spared the HOA further strife.
As a consequence, I took decisive action and filed a shareholder lawsuit under Corporations Code § 7616 and Civil Code § 5145. Los Angeles County Superior Court Case No. 23VECV05191, filed on November 20, 2023, exposed a litany of violations of state law and the HOA’s governing documents.
Among the litany of spectacular failures, the HOA neglected to mail election materials to all members, disregarded correct mailing addresses, failed to confirm nominations, bungled the distribution of a compliant candidate list, misidentified the 3-year terms of office, neglected to properly provide meeting notice to members, flouted in-person ballot counting meeting requirements, accepted non-compliant proxies, accepted proxies in lieu of ballots, and allowed 50 ballots to materialize after the predefined cutoff.
Did Annandale, Martinez, Wagner, Grossman, Perl, and Atkinson do the right thing and acknowledge their legal quagmire, ordering a new election? Absolutely not. They were hell-bent on squandering our HOA’s cash, with conservative estimates tallying over $100,000, to defend the indefensible notion that the failures had no impact on the election results. But math doesn’t lie. Add or subtract a ballot, and the results change. Deny members the right to vote, and the outcome is tainted.
For five interminable months, Annandale, Victor Martinez, Scott Perl, James Grossman, Jeff Atkinson, and Anthony Wagner flailed about incoherently with their lawyers, Leonard Siegel and Gerard Kilroy of Kulik Gottesman Siegel & Ware LLP. They thought deflection, character assassination, and scapegoating would save them. But I keep meticulous records. I’m a relentless communicator. As witness William Springer attested, I “don’t hold back.” The evidence presented was overwhelming and voluminous, and Judge Harmon affirmed in his order, “…the court finds that the defendant has not established that any noncompliance did not affect the results of the election.”
SUCCESS!
Per the judgment entered today, March 26, 2024:
•Annandale’s October 2023 director election is invalid and void.
•Defendants VICTOR RENE MARTINEZ, ANTHONY WAGNER, JAMES GROSSMAN, SCOTT PERL, and JEFFERY ATKINSON do not comprise the Board of Directors, and are not authorized to act on behalf of the Association, engage in Association business, or conduct Association affairs.
•A new director election shall be held in compliance with the relevant laws of the State of California and the Association’s CC&Rs, Bylaws, and Election and Voting Rules.
•Plaintiff is the prevailing party in this action.
I extend heartfelt gratitude to William Springer, and Doreen Murray of Sunrise Property Management Group, for their truthful testimony during the three-day bench trial in February. I owe a debt of gratitude to James E. Perero, partner at Myers, Widders, Gibson, Jones & Feingold in Ventura, and his associate Monique Fierro, for their astute prosecution of the case, demonstrating wisdom, intelligence, pragmatism, and a mastery of the subject matter.