Records Retention: Risks of Failing to Comply with the Statute - Evidence and Spoliation
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As promised in last time, this post continues to address issues regarding an Association’s failure to comply with the statutory mandates of records retention. This post is a bit more intense as there are exceptions to consider.
Spoliation/Presumption Against the Association in a Lawsuit/Arbitration
If the missing documents are important to a case regardless of who the opposing party might be (e.g., member, contractor, manager, etc.), the Court could find that the Association spoliated the evidence. This is a fancy way of saying the Association destroyed evidence. This finding could be issued regardless of the intent of the Association. After a finding of spoliation the Court could instruct a jury that if the evidence were not destroyed it would serve to show that the Association conducted itself inappropriately as it pertains to the issues in the case. In essence the Association is then burdened with having to show it did nothing wrong. This does not always work and a finding could be made against the Association such that it would loose the case. In addition to the presumption against the Association a Court could also sanction the Association with the sanction taking the form of the striking of pleadings (claims or defenses depending on the role of the Association in the case) in addition to a monetary fine (commonly referred to as a sanction).
Evidence Used Against Association in a Lawsuit/Arbitration
If the Association retains records past the time mandated by the statute could this could also work against the Association. The Association should create a succinct procedure for destroying records which exceed the 7 year retention required for most records. The only exception to this is if a case is already pending against the Association or if the Association believes a case could be filed against it on a specific issue which is the subject of the records which are subject to destruction. The Association should speak to its attorney if it is not certain if this “exception” applies at any given time.
Knowing there is a rule and an exception is great but not understanding why they are important does not help the Association at all. The problem with keeping records past the mandated time when the exception is not present is that at time those records could show the Association did something inappropriately. For example, assume the governing documents require a 75% member vote to be amended. In 2000 the Board put an amendment prohibiting the over-night parking of motorcycles at the Association up for a membership vote. The Association voted to pass the amendment by 73% but due to a counting error it was believed the full 75% vote had been obtained. Based on the error, the amendment was recorded and became a part of the Association’s governing documents. In 2009, a new member of the Association begins parking his motorcycle over-night at the Association. The Board makes a demand which the member refuses to comply with and legal action is taken. As part of discovery, the Association is asked to produce all records regarding the amendment of the documents. The Association having not discarded any of its records since its creation in 1980 produces all records to counsel who is required to produce those records to the member. The ballots and voting materials show the vote was 73% and the amendment never passed. The Association looses its case and could have to pay the legal fees and costs incurred by the member in defending against the case. On the other hand if the records had been properly destroyed (1 year for the ballots and 7 years for all other pertinent records) there would have been no way to show that the vote was not the 75% mandated by the governing documents, the amendment would have been upheld and the Association would have prevailed.
You may ask, why the records were produced if the Association was not required to keep them? Simple, once the Association determines records pertinent to a case were not discarded, it cannot then destroy them as this could lead to a claim of spoliation. The Association can also not ask its counsel to destroy the records or otherwise refrain from producing them as that would result in an ethical violation of the rules governing attorney conduct which could result in both a claim of spoliation against the Association and disciplinary action against the attorney.
Do not despair remember I promised that the third post on this issue would give Associations guidance on how to limit their exposure.
During our board of directors' meetings, the discussions are tape recorded. The recording secretary then uses the tapes to write the minutes of the meetings. The board-approved written minutes are distributed to Association members who have requested them and are also kept on file at the condo.
Question: Since the minutes are written and filed in the condo, do we also have to keep the tapes or can they be reused or tossed?
Thank you.
Response: If the Association saves the tapes then they become official records and cannot be destroyed until seven (7) years have elapsed. However, if the Association adopts a policy indicating that the tapes will only be retained until written minutes are produced, then it may re-use the tapes each month going forward. If the Association is involved in litigation, please discuss disposal of tapes with counsel. In fact, it is a good idea to review the records retention policy with counsel any time the board contemplates making a change.
My HOA Board of Directors tried "experimenting" with audio recordings of board meetings. The Boards "webmaster" (a non-director) made four months of recordings, and readied them for placement on the HOA's website.
The Board then decided to not record meetings, and ordered the webmaster to destroy the recordings.
Are they in violation of any "public record" statutes?
What is the proper way for an association to fine and sanction a member and then get a money judgment against them for the attorney fees?
Do the deed restrictions need to provide for such actions by the association, and does a member have rights to due process and does a complaint need to be filed against them in order to get a money judgment against them? Does the member have a right to respond to defend themselves?