McNally v. Sun Lakes Homeowners Ass'n 1, Inc.
241 Ariz. 1
| Ariz. Ct. App. | 2016Background
- Colette McNally, an elected director of Sun Lakes Homeowners Association #1, was banned by the Board from attending all executive sessions after she forwarded and then read an employee's accusatory email in open session.
- The Board adopted a resolution disavowing McNally’s emails and, after counsel advised confidentiality, voted to exclude McNally from executive sessions for the remainder of her term; she was later re-elected.
- McNally sued seeking declaratory/injunctive relief (including enforcement of the HOA open meetings law), and filed a preliminary-injunction application to compel the Board to permit her attendance at executive sessions.
- The superior court denied the preliminary injunction; McNally appealed.
- The Court of Appeals reversed, holding the Board lacked authority to remove a duly elected director from all executive sessions and directing entry of a preliminary injunction allowing McNally to participate during the litigation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Board could lawfully exclude a duly elected director from all executive sessions | McNally: exclusion unlawful; it prevents her from performing statutory and bylaw duties to manage the association | Association: exclusion was a practical response to confidentiality breaches and effectively created a committee to discuss privileged matters without her | Court: Board lacked authority to ban a director from all executive sessions; exclusion unlawful |
| Whether creation of a committee under A.R.S. § 10-3825 could justify excluding McNally | McNally: committee argument cannot nullify director’s statutory duty to participate | Association: motion effectively created a committee excluding McNally to exercise board authority in executive session | Court: no record of a § 10-3825 committee; even if created, statute cannot be used to strip a director of duties required by A.R.S. § 10-3801 |
| Whether McNally’s conduct (reading the email) barred equitable relief under unclean-hands | McNally: even if misconduct occurred, the Board still lacked lawful authority to exclude her | Association: her public disclosure of allegedly confidential material constituted unclean hands and justified denial of injunctive relief | Court: did not rely on unclean-hands; even if unclean hands existed, it would not validate an otherwise unlawful exclusion |
| Whether the injunction request about open-meetings law was properly presented | McNally: sought relief enforcing A.R.S. § 33-1804 and participation in executive sessions | Association: procedural objections | Court: superior court did not abuse discretion in finding the open-meetings injunction insufficiently raised in the preliminary-injunction filing; McNally may refile properly |
Key Cases Cited
- Shoen v. Shoen, 167 Ariz. 58 (App. 1990) (standard of review for preliminary injunctions)
- IB Prop. Holdings, LLC v. Rancho Del Mar Apartments Ltd. P'ship, 228 Ariz. 61 (App. 2011) (deference to factual findings; legal questions reviewed de novo)
- Tierra Ranchos Homeowners' Ass'n v. Kitchukov, 216 Ariz. 195 (App. 2007) (review of challenges to discretionary association decisions)
- Hosea v. City of Phoenix Fire Pension Bd., 224 Ariz. 245 (App. 2010) (statutory provisions construed in context of the statutory scheme)
- Nickerson v. Green Valley Recreation, Inc., 228 Ariz. 309 (App. 2012) (articles/bylaws of a private organization constitute a contract for purposes of attorney-fees awards)