Thomas Chantiles

Thomas J. Chantiles

General Manager at

2173 Salk Ave. Suite 250, Carlsbad, California, United States

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Elected Member of the Board of Directors - Lake Forest II Master Homeowners Association

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Chantiles v. Lake Forest II

Thomas J. 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. Chantiles had served as a director of the Association for many years. He ran for a 10th term in 1992 and was reelected, apparently as a member of a minority faction. Believing that he had been shorted by 800 to 1,300 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 [37 Cal.App.4th 920] 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. Rather than conduct the inspection authorized by the court, Chantiles filed the instant appeal. I. [1a] 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. fn. 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 v. Soc. for Pres. 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. [37 Cal.App.4th 921] Finally, he contends the issue is likely to recur between these same parties, as he may be reelected. [1b] We agree with Chantiles that the issue presented here, the extent of an elected director's rights to inspect election ballots, is of significant public interest concerning a large number of citizens. For many Californians, the homeowners association functions as a second municipal government, regulating many aspects of their daily lives. The court in Cohen v. Kite Hill Community Assn. (1983) 142 Cal.App.3d 642 [191 Cal.Rptr. Chantiles begins by asserting that the homeowner members of the Association have no legitimate expectation of privacy in their voting decisions because the voting is done by proxy. A proxy by its very nature connotes revealing to another person one's voting choice. Furthermore, he argues, the homeowners must certainly realize that their votes will be revealed to the inspector of elections who is charged with tabulating the proxy votes, again negating any expectation of privacy. fn. Chantiles submitted nothing to the contrary. We consider next the extent of a director's inspection rights. Section 8334 provides, "Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation of which such person is a director. (See also Cal. Code Regs., tit. 10, § 2792.23, subd. (f).) Chantiles contends his inspection and copying rights are absolute and not subject to any privacy rights of the members. Although section 8336 provides that the trial court "may enforce the demand or right of inspection with just and proper conditions[,]" he argues that proviso applies only to conditions on the hours of inspection, not on the manner or extent of his inspection. We reject Chantiles's assertion because section 8334 gives him an "absolute right" to inspect, this right need not yield to any other right, not even a constitutional right. As Sproul and Rosenberry note, "[Section 8334's] broad and unqualified statement of a director's inspection rights can present difficult ethical and legal issues .... [For] example, what if a director who ran for office on a platform critical of the present general manager's conduct and salary demands the right to inspect the general manager's personnel file and to disclose its contents to the members ...? [] [T]he manager's constitutional right of privacy under [California Constitution, article I, section 1] may preempt a director's general rights of inspection[.]" (Sproul & Rosenberry, supra, § 2.52, pp. 103-104; see also Advising California Nonprofit Corporations (Cont.Ed.Bar 1984) § 8.53, p. 439 ["A director's right of inspection may be subordinate to other statutes specifically protecting confidential, private, or privileged records against inspection, although there is no such express provision."].) The need for balancing privacy rights against other statutory rights is well recognized. In Board of Trustees v. Superior Court, supra, 119 Cal.App.3d 516, the court conducted a " 'careful balancing' of the 'compelling public need' for discovery against the 'fundamental right of privacy' " when it denied a plaintiff's request for discovery of confidential personnel records. (Id. at p. 525.) In Heda v. Superior Court, supra, 225 Cal.App.3d 525, the court concluded a plaintiff's statutory right to trial preference based on the defendant's ill health was outweighed by the defendant's right of privacy when it denied the plaintiff discovery of the defendant's medical records. [37 Cal.App.4th 926] (Id. at p. 529.) Chantiles offers no compelling argument for concluding a balancing of rights is inappropriate. e hold that homeowners association members have a constitutional privacy right in their voting decisions, even when conducted by proxy ballot. A homeowners association director's statutory right to inspect the records of the association must be balanced against this privacy right. [5] We consider finally, whether the trial court's order properly balanced these competing interests. Chantiles states his purpose in inspecting the ballots was to determine whether he had been shorted proxy votes. It was his intention to compare the ballots with his own list of homeowners on which he monitored the proxies promised him. He would later determine whether a judicial challenge would be brought. Chantiles wanted to compare the votes he believed he had been promised to the votes he actually received. We can conceive of no greater violation of the privacy of the Association's members. Any neighbor may well have told Chantiles he would receive his or her proxy votes, but actually cast his or her votes otherwise. To now give Chantiles personal access to the names of those voting and how they voted certainly violates well-established social norms. The trial court offered a reasonable resolution. It appointed Chantiles's own attorney to review and tally the ballots, provided he not disclose the name of any individual voter, or how he or she voted, without further order of the court. Chantiles refused this resolution, which strongly suggests his motive was not simply to check the math, but to find out how his neighbors actually voted. He cannot now complain that he was denied such an opportunity. Chantiles argues the matter must be remanded for a determination of costs and attorney fees below. We need not remand the matter. The trial court may only exercise its discretion to award costs and attorney fees if it finds the Association acted [37 Cal.App.4th 927] without justification. It is not reasonably probable that the court would make such a finding here. Implicit in its ruling was that the Association had a duty to guard the privacy rights of its members in their voting decisions. Furthermore, the trial court offered a reasonable remedy to Chantiles which he refused. We affirm the trial court's conclusion. The Association's refusal to allow Chantiles the unfettered access to the ballots which he demands was not unjustified. Therefore, he is not entitled to costs and attorney fees. The judgment is affirmed. Respondent is entitled to its costs on appeal. Sills, P. J., concurred. CROSBY, J., Concurring.-Thomas J. Chantiles was a member of the homeowners association's board of directors when he filed this action. He lost that seat in an election after the trial court entered judgment. As he is no longer a director, he enjoys no inspection rights under Corporations Code section 8334; and for that reason alone I concur in the decision not to award him any relief. While the appeal is technically moot, in my view, as to Chantiles, the issue is one "of continuing public interest and likely to recur in circumstances where, as here, there is insufficient time to afford full appellate review" (Leeb v. DeLong (1988) 198 Cal.App.3d 47, 51-52 [243 Cal.Rptr. 494]). Proc., § 909.) Its proffered evidence is the declaration of the Association's general manager to the effect that Chantiles was not reelected. Chantiles objects to our receiving the declaration because it does not indicate the geographic location where it was signed. However, he readily concedes he was not reelected in 1993, and does not object to our receiving this fact. Because that is the only salient fact contained in the proffered declaration, we grant the Association's motion to take additional evidence. The Association also filed a separate motion to dismiss which we consider in conjunction with the appeal. FN 3. Accordingly, the Association's request for sanctions against Chantiles for maintaining a moot appeal is denied. FN 6. As discussed in section I, ante, since Chantiles is no longer a director, he has no current inspection rights. Nor do we perceive any legitimate corporate interest he would have in the future, if reelected, for inspecting the 1992 election ballots. Thus, as far as that election is concerned, this controversy is ended.

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