Courts Insist Associations Strictly Follow Policies and Procedures
By: STEFAN RICHTER, ESQ.
On February 2, 2012, the Commonwealth Court of Pennsylvania decided Barcia v. Fenlon, 2352 C.D. 2010. The case involved a request for injunctive relief in which Mr. Barcia sought to remove certain members of the Board of Directors after an alleged improperly held removal election. In 2010, Mr. Barcia circulated and presented to the Association, a petition for special meeting to “remove Members of the Board of Directors in accordance with Section 5303 (f) of the Act”. Prior to the meeting, the Board sent out solicitations for proxies, asking owners to sign a letter giving their proxy to a designated member of the Association. Barcia likewise solicited and received proxies. Immediately prior to the start of the meeting, Mr. Barcia’s attorney objected to use of proxies, arguing that proxy voting was not permitted by the By-Laws. The Board rejected Mr. Barcia’s argument and the removal vote consequently failed. Had the proxies not been counted, the vote would have been successful. Notably, Barcia in fact did cast his proxies during the meeting.
A month after the failed removal election, Barcia filed a claim against the Association for injunctive relief, seeking to remove the Board and to declare all actions taken after the meeting void. After Barcia’s complaint was dismissed on preliminary objections and, he appealed the matter to the Commonwealth Court.
Although the court clearly held that proxy voting was not permitted, Mr. Barcia’s claim nonetheless failed on principles of equity.
Under the doctrine of unclean hands: a court may deprive a party of equitable relief where, to the detriment of the other party, the party applying for such relief is guilty of bad conduct relating to the matter at issue. The doctrine of unclean hands requires that one seeking equity act fairly and without fraud or deceit as to the controversy in issue….
Has Barcia truly wanted to raise a principled or legal objection to proxy voting, and preserve a legitimate equity-based challenge to the result of the meeting, he should have refrained from prompting and participating in the proxy process and lodged a timely objection. He did not. Instead, he continued the gamesmanship, the corporate and legal maneuvering, and the attempts at manipulation that both factions have unfortunately exhibited throughout their feud.
However, rather than holding that the meeting was properly held, the Commonwealth Court declared the meeting a nullity – none of the Directors were accordingly removed.
Clearly, courts will continue to insist that Associations strictly follow the policies and procedures contained in their governing documents. Relief will not, however, be granted to those who themselves do not act in accordance with the identical provision they seek to enforce. What’s good for the goose …
This article is not legal advice and is provided for informational purposes only. Actual legal advice can only be provided after consultation by an attorney licensed in your jurisdiction.