This case involved a dispute between a HOA (“Association”) and a homeowner member (“Owner”) over:
(i) The imposition of fines against Owner for the purpose of penalizing him for expressing his opinions about Association’s management practices;
(ii) Claims by Owner that HOA had violated applicable state statutes by denying Owner a copy of a tape recording of the meeting at which Association’s board of directors considered the imposition of the fines against Owner;
(iii) Further claims on the part of Owner that Association’s board members breached their fiduciary duties owed to Owner by refusing to provide him with the opportunity to review the evidence that allegedly was the basis for the claims brought against him that resulted in the imposition of the fines.
The basis for Association bringing disciplining proceedings against Owner stemmed from claims by Association employees that Owner yelled profanities at the employees and engaged in conduct towards them that was characterized as “rude and disrespectful.” Based on the complaints from the employees, Association notified Owner that his conduct towards the employees was in violation of Association’s governing documents which prohibit “obnoxious or offensive activity from being carried on in any unit or in the common elements.”
After receiving Association’s notice, Owner requested a hearing before Association’s board of directors, which was subsequently held. Owner attended the hearing with his attorney. At the hearing, Owner’s attorney asked to review “all underlying evidence, information, and/or documents relating to the allegations” against Owner. After Association’s board denied the request of Owner’s attorney, the attorney sent Association’s attorney a letter in which he formally demanded a copy of the video and audio tape recording of the hearing and the evidence against Owner. Association did not comply with the demand and proceeded to impose penalties in the form of fines against Owner for his violations of Association’s governing documents. Owner paid the fines and then filed suit against Association and the board members.
The trial court granted Association’s motion to dismiss some of Owner’s claims, and then subsequently granted Association summary judgment on Owner’s remaining claims. Owner then appealed the trial court’s judgment.
On review, the appellate court found that Owner could state a cause of action for violation of his first amendment right to free speech by alleging that Association precluded him from expressing his political opinion or that Association penalized him for expressing his opinions. The appellate court further found that, since the video and audio recordings of the hearing on the claims against Owner were the only record maintained by Association of the proceedings, the recordings constituted “minutes” of the meeting, and because the applicable state statutes unambiguously grants members the right to inspect and copy minutes, Owner had a right to receive a copy of the video and audio recordings. Finally, the appellate court found that Association’s board members have a duty to treat association members “with the utmost candor, rectitude, care, loyalty, and good faith. When investigating charges of misconduct against a unit owner, the duty of candor imposes on the board members an obligation of “full, fair, complete, and timely disclosure of material facts concerning all allegations against the owner that may provide a basis for imposition of a penalty.”
In reversing the trial court’s judgment, the appellate court held that:
(i) Owner stated a valid claim against Association when he alleged that Association’s board members violated state statutes by penalizing him for expressing his personal opinion about Association’s management.
(ii) Owner stated a valid claim against Association when he alleged that Association’s board violated state statutes when they denied his request for a copy of the tape recording of the hearing at which the board considered the imposition of fines against Owner.
(iii) Owner stated a valid claim against Association when he alleged that Association and its board members breached their fiduciary duties owed to Owner by failing to disclose the evidence relied upon by Association in deciding to impose fines against Owner.
Illinois Appellate Court decision (June 14, 2018).
See case decision: Boucher_v._111_E._Chestnut_Condo._Ass’n_Inc.