[WSBARP] Sample pleadings for Motion to Disburse Surplus Funds after Trustee's Sale - RCW 61.24?

[Rob Wilson-Hoss]

Sorry for the cross postings, but I want to see what anyone else thinks. So, 

 

 

Warning – this is more HOA technical stuff, but it does also apply to many general nonprofits as well.   

 

Does anyone have any thoughts about how an HOA can manage meetings when no one is there? Board meetings and member meetings are by the terms of the governing documents required at certain times, and decisions have to be made. There are statutes, but they depend on what the governing documents of the association say. This matters for whether or not they have a quorum, and whether or not they can make decisions. 

 

The following is organized this way:

 

1.	Statutes, member meetings, 24.03 and 24.06, the two nonprofit state statutory schemes, followed by comments in red;
2.	Statutes, board and committee meetings, 24.03 and 24.06, followed by comments in red;
3.	Unanimous consent statutes;
4.	Discussion, governing documents provisions;
5.	Discussion: what if the combination of governing document provisions and the statutes leads to a dead end – Board and member meetings have to have people present.

 

1.	Statutes, member meetings:

 

24.03.075: Except as otherwise restricted by the articles of incorporation or the bylaws, members and any committee of members of the corporation may participate in a meeting by conference telephone or similar communications equipment so that all persons participating in the meeting can hear each other at the same time. Participation by that method constitutes presence in person at a meeting.

 

If they fall under 24.03, then they can have member (or member committee) meetings with what I will call virtual access. But if their documents otherwise specify, there is no help for them here. 

 

24.06.100: If the articles of incorporation or bylaws so provide, members or shareholders may participate in any meeting of members or shareholders by any means of communication by which all persons participating in the meeting can hear each other during the meeting. A member or shareholder participating in a meeting by this means is deemed to be present in person at the meeting.

 

If they fall under 24.06, then the rule is opposite. They can only virtual access if their Bylaws or Articles so provide. 

 

2.	Statutes, Board meetings:

 

24.03.110: A majority of the number of directors fixed by, or in the manner provided in the bylaws, or in the absence of a bylaw fixing or providing for the number of directors, then of the number fixed by or in the manner provided in the articles of incorporation, shall constitute a quorum for the transaction of business, unless otherwise provided in the articles of incorporation or the bylaws; but in no event shall a quorum consist of less than one-third of the number of directors so fixed or stated. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors, unless the act of a greater number is required by this chapter, the articles of incorporation or the bylaws.

 

First, there is nothing directly addressing whether virtual access is possible or not. Second, according to the Court of Appeals, “present” means, well, “there.” Lowe v. Foxhall, unpub. Div II, Jan. 7, 2020, no. 51898-8-II. I have never thought that 24.03 Directors could appear at a meeting by proxy or otherwise than being present. One reason is that the next statute says that if you are under 24.06, you can virtual access to a Board meeting. A reviewing court would say, they chose to allow it under 24.06, and not under 24.03. Pardon my bluntness, but the legal fiction that the Legislature actually thought about any of this is, well, what they call in the world of real fiction, “magical realism.” Or better, “magical fantasy.”  

 

24.06.150: Unless the articles of incorporation or bylaws provide otherwise, any or all directors may participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating can hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.

 

Under 24.06, then, the default setting is yes, virtual access. But only a few are under 24.06. The choice, incidentally, to recommend one or the other requires a spreadsheet showing about 20 differences that might matter, most of which weigh in favor of 24.06. But it is impossible to predict for any particular association which of those factors may matter during its lifetime. Such as, this one. 

 

3.	Unanimous Consent statutes

 

RCW 24.03.465: Any action required by this chapter to be taken at a meeting of the members or directors of a corporation, or any action which may be taken at a meeting of the members or directors, may be taken without a meeting if a consent in the form of a record, setting forth the action so taken, shall be executed by all of the members entitled to vote with respect to the subject matter thereof, or all of the directors, as the case may be.

Such consent shall have the same force and effect as a unanimous vote, and may be stated as such in any articles or record filed with the secretary of state under this chapter.

 

RCW 24.06.510: Any action required by this chapter to be taken at a meeting of the members, shareholders or directors of a corporation, or any action which may be taken at a meeting of the members, shareholders or directors, may be taken without a meeting, if a consent in writing, setting forth the action so taken, is signed by all of the members and shareholders entitled to vote thereon, or by all of the directors, as the case may be, unless the articles or bylaws provide to the contrary.

Such consent shall have the same force and effect as a unanimous vote, and may be stated as such in any articles or document filed with the secretary of state.

 

So there is an exception for both statutes – unanimous written consent. They can hold a “meeting” which is informal, discuss everything you they need to discuss, but then vote by unanimous written consent. This will very likely only work with Boards, or very small associations, because they aren’t going to get unanimous consent from members on whether or not the earth is round. See, e.g., Kyrie Irving.

 

4.	Governing document discussion. 

 

These things vary widely. Few associations ever think of these issues. Few lawyers drag their clients through this part of their recommendations. Some associations want to make sure everyone is there to hear a discussion and vote. Some don’t. There is no uniformity. So, each association must look at its own documents, compare them to the statutes, and see where they are. 

 

5.	What to do if they are at a dead end?

 

For Board meetings, one possibility is to have virtual access meetings, and then get everyone on the Board to agree to support the results, in writing. For membership meetings, that will not likely be practical.

 

What to do when they have to meet both statutory requirements, and governing document requirements, and they can’t get there from here? Is there a national emergency, war time, pandemic, nuclear meltdown, earthquake, flood, fire, etc. exception to the rules that says if the times are extreme enough, then the process rules are adapted so that the association can make the best out of a bad situation?

 

Practically, this works, except when it doesn’t. What if something looks like an emergency, emergency powers are invoked, someone’s ox gets gored, and then, it wasn’t so bad after all. I have much experience with how far some members will go to work out their anger on their associations. A lawsuit from one of them is not outside the possibilities. 

 

          I would love to hear from anyone with any other thoughts. I get this question at least daily. 

 

Rob

 

Robert D. Wilson-Hoss

Hoss & Wilson-Hoss, LLP

236 West Birch Street

Shelton, WA 98584

360 426-2999

www.hossandwilson-hoss.com

rob at hctc.com

 

 

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