Is the Attorney-Client Privilege Still Viable for Florida's Condo Boards?
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Loose Lips Sink Ships - Board Discussion of Obtaining Legal Advice Results in Waiver of Privilege.
Communications between an attorney and his or her client have been privileged and confidential for basically as long as there has been a legal system. Some say the attorney-client privilege has its roots in ancient Rome. Early English common law recognized the privilege as important to encourage disclosure of information that may be necessary for the attorney to provide effective counsel without fear of the information becoming public. Its no surprise that Florida's legislators recognized the value of the privilege and excluded attorney-client privileged documents from member inspection rights in Section 718.111(12), Florida Statutes.
Community association board members may not understand the privilege or how to protect the confidentiality of advice received from the association's attorney. Now and then I receive a copy of my letter to one client from another client asking whether the issue applies to them. I cringe when a contractor's attorney calls after receiving a copy of my letter identifying weaknesses in my client's position. The association is the client and has the right to voluntarily waive its privilege - but was there a discussion of the consequences of the waiver or was the disclosure by one board member who "was just trying to help"? Unfortunately, once the cat is out of the bag its very difficult, and in some cases impossible, to prevent further disclosure.
A recent Summary Final Order from the Arbitration Section of the Division of Florida Condominiums, Time Shares and Mobile Homes demonstrates that the privilege may be waived unintentionally, simply by discussing whether to obtain legal advice on a particular issue in an open forum.
In this case the board proposed increasing the budget by more than 35%. Owners questioned the board's authority to adopt such a large increase without the affirmative vote of the members. The discussion of whether the board should adopt the budget or obtain legal advice first was at a duly-noticed board meeting. Ultimately one of the board members made a motion to seek legal advice and the majority of directors voted in favor.
Later, one of the owners requested access to the official records, including the legal opinion analyzing the governing documents with respect to the budget increase. The association allowed access to all the requested records other than the legal opinion. The arbitrator ruled that since the board discussed the issue at an open board meeting there was no intent to keep its subsequent communications with or advice from the attorney confidential. The board was ordered to make the legal opinion available for inspection.
There is a lesson here - community associations may need to have policies in place to safeguard confidential information. Board members should understand this valuable privilege and think twice before discussing any sensitive legal issues in an open forum or with any third parties.
Is this arbitration decision being appealed? Does it have the same weight as a decision by the District or Circuit?
Thanks
Humm. Does this not put the Board in an impossible position? How can the Board make its decision to obtain an opinion and incur the associated expense other than in a noticed meeting? It seems to me that the arbitrator was way off base here.
Clay
I would question the arbiter's decision, not in this case, but about voting to seek council. Under this decision the board would have had to have made the decision to consult the attorney in an executive session meeting, which are not open to the general membership. While I am not familiar with statute 718, in 720 the statute that governs HOA's it states that:
"All meeting os the board must be open to all members except for meetings between the board and its attorney with respect to proposed or pending litigation where the contents would otherwise be governed by the attorney-client privilege.
This case did not deal with a situation that would end in litigation, so the contents of the meeting should be open to the membership. However, only meetings that require the presence of the attorney are privileged, but according to your description of the above situation, the discussion and vote to seek council would have to be in an executive session meeting for it to be protected, which requires the presence of the attorney. How can a board vote to seek council in private. It is a circular situation. The vote by a board to seek council is a normal operation of the board. The content of the meeting, if it concerns litigation or may in the future be part of litigation, should be covered by privilege. If there was concern that the subject or person of potential litigation should not be made public at that time, the board could limit discussion to such terms as, " ..... a motion to seek legal council on the matter known to the board members." Explaining to the membership present the principal of attorney-client privilege and the need to to act in such a manner to protect the association.
I own a condominium in Juno Beach FLA which has 49 units and 59 indoor parking spaces. Past Boards have decided to assign those additional 10 spaces to certain select individuals,including themselves, as second assigned spaces. The current Board has not been willing to cite any authority it has for making such an assignment. The Board voted to ask for a legal opinion but has refused me access to that opinion. Can the Board assign common property to the exclusive use of specified owners without the unanimous vote of all the Owners/Members of the Association?
I disagree.
Member's personal info should be kept private -- but
every other aspect of the association business should
be open and available to all members. Aside from the fact that the attorney's fees are being paid by all the members of the association -- the idea SHOULD be to discover truth and make sure justice is done. And there's no assurance that the attorney or the board are correct in their assumptions or actions.
Keeping secrets from the people who do the electing makes for tyranny, not community.
What other kinds of formats could the board discuss this situation in? Isn't any meeting of the board open to the members?
RESPONSE: EXACTLY! This is a major problem. While arbitration decisions do not carry the weight of case law, this decision puts boards in a 'catch - 22' which may need to be resolved legislatively.
Michael J. Gelfand, a Florida Bar Board Certified Real Estate Attorney posted the following analysis of this arbitration decision:
The decision is of interest for two distinct reasons. First, the decision short-circuits traditional attorney client privilege analysis, and undercuts the privilege as to every legal opinion sought by a client. Second, the decision appears to undercut the Division’s arbitration jurisdiction
1) Privilege. There is no indication that the sought after opinion of counsel was published to any person that was not within the envelope of the privilege. On a motion to dismiss, a summary final order was entered. Note as we pursue this further, that FAC 61B-45.030 requires that there be no disputed issues of material fact. In this regard, the decision’s extensive Procedural History indicates that there was no evidence received.
Thus, the arbitrator did not have testimony as to the intent of the Association as to confidentiality of the opinion after the opinion was delivered to the client. The decision expressly recognizes that intent is to be determined; however, the decision does not make any express finding as to intent!
In perhaps a unique approach to privilege, the opinion appears to hold that as a matter of law that when an opposing party has knowledge that an opinion has been sought by counsel, then no privilege attaches to the opinion. I am not aware of any decisional authority that focuses upon the decision to seek an opinion as a waiver of privilege, and none is cited in the decision in support of that proposition. Each citation regards intent relates to how the opinion is communicated; but, there is no factual finding that the opinion was published.
Alternatively, the decision creates a new rule that would abrogate the attorney-client privilege for every legal opinion. The decision’s rational of no privilege is that the client when seeking the opinion, in advance, intended to follow the opinions recommendations! The decision appears to reject the notion that an opinion not only addresses the rationales in support of a recommendation, but also likely would address the strengths of rationales that could undercut the opinions recommendation.
Ok, so now, consider flipping the tables. If the basis for determining privilege is based upon intent, presumably inferred by seeking the opinion in the first place, then an Association should be allowed to discover the legal opinions of a unit owner’s counsel, because, after all, the unit owner would not have wasted money obtaining an opinion unless intending to follow the opinion. Alternatively, as is common, an owner losses the privilege when the owner states that s/he has “a legal opinion stating that the association is wrong.”
2) Jurisdiction. The decision rejects the potential of an in camera inspection. Florida appellate courts have repeatedly required trial courts to perform an in camera inspection when there is a question of whether the content of a document is privileged. Thus, if an arbitrator cannot perform an in camera inspection, the forum is not capable of exercising its jurisdiction.
Thus, this decision would militate requiring the parties to seek relief in circuit court which undercuts the purpose of arbitration, but unless the DPBR adopts a policy overruling the decision, the decision would stand as a justification, if not an official blessing, from the DBPR to proceed immediately to court instead of arbitration for privilege claims.
Does anyone have the case number for this arbitration decision?
For anyone interested, the case number is 09-04-3047, Douglas Blass v. Illini Ass'n, Inc. (June 15, 2010).