A property manager cannot campaign to oust a board of directors
Los Angles Times
Donie Vanitzian
07 August 2016

Our new board of directors, which we worked hard to get elected, finally fired our very bad property manager. Before the manager left his position he tried to remove the newly elected board and get his old director buddies back on the board.

The former manager wrote a petition to remove the entire new board. He used our association’s copy machine to make copies and faxed the petition from our association’s office to select owners. To get the necessary 5% signatures to start the removal process, he used our roster of titleholder names and telephone numbers to call owners instructing them to sign the petition. He specifically targeted the off-site owners telling them what I think were lies in order to obtain signatures.

The majority of homeowners objected to his phoning them and to the petition to remove the newly elected board because it was not written and distributed by owners. Our association attorney said “the petition is still valid because the corporations code does not specifically state that a manager can’t initiate, write, or distribute a petition to remove the board.” Is our attorney correct?

Just because the corporations code “does not specifically state that a manager can’t initiate, write, or distribute a petition to remove the board” does not mean those actions could hold up in court. The lone fact that a petition originates from a non-property owner may not by itself negate its validity, but the totality of the circumstances as described could do so.

The former manager’s actions included the unauthorized use of association resources and materials for “campaign purposes.” Even if the former manager were still employed by the association at the time of these actions, Civil Code section 5135 expressly prohibits the use of association funds for campaign purposes in connection with any association board election. That section defines “campaign purposes” as “advocating the election or defeat of any candidate that is on the association election ballot.”

Moreover, a former employee who uses his or her former employer’s resources without that employer's consent is stealing. Because those resources belong to the association, it has a cause of action against this former manager, and anyone aiding and abetting him, for reimbursement of expenses incurred in his improper endeavor—and any resulting damages.

The allegation that the manager told lies to titleholders for the purpose of influencing votes is even more troubling. It raises the question of whether he may have interfered in prior elections.

A manager, especially a former manager, lacks the requisite vested interest in the association to be able to participate in its governance. Accordingly, a manager who takes actions beyond the scope of his or her employment, let alone for an improper purpose, may be interfering with the association’s business.

The petition should be invalidated by the present board and if an election did in fact take place, owners should challenge it.

An attorney specializing in business transactions and breach by fiduciaries will be able to discuss several legal remedies the association can utilize against this former manager and any former directors who acted in concert.

Zachary Levine, a partner at Wolk & Levine, a business and intellectual property law firm, co-wrote this column. Vanitzian is an arbitrator and mediator.

The headline should read:

A property manager cannot should not campaign to oust a board of directors

Management companies getting involved in condo elections and requisitions is not unheard of in Ontario. Keeping the contract is a big incentive for them to do so, and so far, there are no penalities for doing so.

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