Missing the Heart of Palm

 

I. Introduction: In 2014, Palm v 2800 Lake Shore Drive Condominium Association, 2014 IL App (1st) 111290 (known as “Palm II” because it was the second reported opinion in the case) sparked a buzz of commentary and debate among condominium and common interest community association (“CICA”) attorneys (hereinafter collectively “CICA Attorneys”), board members, and property managers. Prior to Palm II, there was a consensus among most CICA Attorneys that boards could informally discuss association business as long as voting occurred at a properly-noticed meeting. While Palm II addressed many issues, none have caused more consternation than its holding that “not only must all board voting occur at meetings open to unit owners, so must all board discussion or consideration of association matters, except for discussion or consideration of the three specified exceptions.” Id., at ¶55. More than one article has suggested this interpretation, arguably the heart of Palm II, would be difficult, if not impossible, to follow.

At the center of Palm II lies a simple question: In 1993, when the legislature passed P.A. 88-417 to redefine “Meeting of Board of Managers” (requiring formalities of notice, an agenda, and a quorum) from a meeting held for the purpose of “discussing board business” to “conducting board business”, did it intend to subject more board activities to the required formalities, or fewer? The record shows the legislature intended to subject fewer actions to these formalities.

II. Background: Unlike commercial and charitable corporate boards, condominium and CICA boards (hereinafter collectively “Boards”) volunteer their time to serve the communities in which they live, almost universally without pay. Balancing work, family, and civic obligations with Board commitments is a difficult task that is compounded if Board members are not able to use emails or texts like most corporate boards. Answering emails in the checkout line or texting while watching a soccer game is a part of everyday life, and Palm II prohibits such communications regarding association matters if a quorum is involved.

Board actions typically fall into three general categories: 1) fact-finding and/or gathering information; 2) discussing and/or analyzing the facts and information; and 3) making a decision and/or voting. Although the categories easy to identify, slotting a specific conversation, email, or text into one category is often impossible. Moreover, Boards often discuss association issues that require no formal vote, or that are so trivial, formalities should not be required. The problem with Palm II is that all Board communications regarding association issues with a quorum “present” are subject to formalities, regardless of how trivial. A manager polling a Board via email to see if they think the temperature of the swimming pool is too cold? A president texting a Board to see who is in town for an upcoming meeting? Under Palm II, these, and a myriad of other communications now require notice, an agenda, and a meeting open to unit owners before they can legally be discussed. From a practical standpoint, Palm II will likely drive two undesirable trends. First, emails will be sent to just one Board member (to avoid a quorum), and then members will eventually string together the emails to individual members in an inefficient splintering of communications to avoid triggering a quorum. Second, Boards may give too much power to property managers to avoid cumbersome procedures. This holding of Palm II defies logic, is overly-formalistic, and fortunately, is not what the legislature intended.

III. “Conducting” Versus “Discussing” Business: In determining the intent of P.A. 88-417, the Palm II court considered the definitions of “discuss” (investigate or talk about), and “conduct” (generally to direct or take part), but then focused solely on the new statute, ignoring the old. It concluded “[nothing] in the wording of the statute leads us to conclude…‘conducting board business’ should be interpreted to mean only ‘voting on board business.’” Palm II, at ¶58. While it recognized “[one] cannot direct or take part in [i.e. conduct] the operation or management of a business unless one also discusses and considers that business before making decisions/voting on that business,” (Palm II, at ¶59), the Court concluded the change to “conducting” from “discussing” meant the legislature intended to trigger formalities earlier in the process of conducting Board business. While discussing is a necessary precursor to conducting Board business, it is easy to conceive of a Board discussing association issues without it rising to the level of conducting business (such as surveying the Board on the temperature of the pool). By triggering formalities only when conducting Board business rather than simply discussing it, the legislature clearly intended the opposite of what Palm II concluded.

The legislative history of P.A. 88-417 confirms it was intended to unshackle Boards. On May 18, 1993, the Illinois House considered the underlying bill, which arose from a Chicago Bar Association (“CBA”) effort to “clean up some inconsistencies” in the Condominium Property Act (the “Act”) “that do not simply work in condominium boards” especially “where a quorum might constitute three people.” See House of Representatives Transcription Debate, May 18, 1993, Page 30, Lines 22-23. The legislation was intended to help residents “live together a little easier.” Id., Pages 31, Line 3. When asked if the bill would “eliminate” voting rights, the sponsor answered it would not, as it was especially designed for “very small boards.” Id., Page 31, Lines 6-12. Over the past two decades, the CBA’s position has not changed, for in response to Palm II, the CBA Condominium Law Subcommittee proposed a revision to the Act (HB2645) that would have clarified that a “meeting of board of managers” would not include “mere discussion, conference, or working session at which no formal vote is taken.”

IV. Conclusion: Although the legislative response to Palm II (P.A. 99–0567) that expanded the exceptions to formalities was well-intentioned, it did not address the underlying problem. A quorum is still required to follow formalities for all other communications related to association business. An approach like the CBA’s suggested HB2645 is simple, and is consistent with a February 23, 2011 Attorney General Public Access Counselor opinion that school board members do not violate the Open Meetings Act by engaging in a “meeting” via email, when simply sharing information or exchanging non-deliberative casual commentary or remarks. Until the legislature clarifies its intent, associations will continue to unnecessarily struggle to balance efficient management with overly-protective unnecessary formalities.

In general, the exceptions are: 1) discussion of litigation; 2) consideration of employment matters; and 3) discussion of violations of rules and regulations. See 765 ILCS 605/18(a)(9)(A).
See Palm II, at ¶59, addressing: 1) investigations; 2) discussions; and 3) voting. See also Robert’s Rules of Order, addressing: 1) reports; 2) debate and discussion; and 3) voting. See Robert’s Rules of Order, 9th Edition, Sections 3, 10, 40, 42, 43, 47, and 50.

Scott E. Pointner, Esq.

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