Recall Elections Under The New Election Code, or... The Kind of Stuff Lawsuits Are Made Of
by Stanley Feldsott and Erika Chong
Feldsott & Lee

It is not unusual to expect that sometime during the life of an association the board of directors will become involved in a recall election. As you can imagine, emotions run high at the meeting. Given the fact that it is the board that is subject to the recall that runs the recall election, these cases often times wind up in court. After the expenditure of significant monies on attorneys fees, a judge makes a determination as to whether the recall election was valid. Thus, it is extremely important that these elections be handled properly.

Recall elections involving a recall of the entire board pose far fewer technical problems. Corporations Code, §7222(a) provides, in pertinent part, that:

"In a corporation with fewer than fifty members, such removal is approved by a majority of all members (§5033).

"In a corporation with fifty or more members, such removal is approved by the members (§5034) [i.e., a majority of the quorum]."

The real challenges arise when less than all of the directors are being removed in an association whose bylaws authorize members to cumulate their votes pursuant to subparagraph (a) of Corporations Code, §7615 (almost all associations). in such situations, Corporations Code, §7222 provides, in pertinent part, that:

"No director may be removed ... when the votes cast against removal, or not consenting in writing to such removal, would be sufficient to elect such director if voted cumulatively at an election at which the same total number of votes were cast (or, if such action is taken by written ballot, all memberships entitled to vote were voted) and the entire number of directors authorized at the time of the director's most recent election were then being elected."

The formula used to determine the number of votes needed to defeat the removal of a director pursuant to Corporations Code, §7222 is as follows:

X is the number of votes needed to defeat the recall measure.

If the recall election is to be had at a meeting (the usual manner for such matters), S represents the total number of votes being cast at that recall meeting, not the total number of members in the association.

In the removal situation, D is always equal to 1, even if the meeting is being called to remove two directors. If two directors were to be removed, there would be two separate votes, one for removal of Director A and a second for removal of Director B. In each instance, D, in the formula, would be 1. See Corporations Code, §7222 which states:

"No director may be removed ... when the votes cast against removal ... would be sufficient to elect such director if voted cumulatively.......

N is the total number of directors authorized and not simply the number of directors elected at the prior meeting. Section 7222 states:

"The entire number of directors authorized at the time of the director's most recent election were then being elected."

The use of the singular possessive [Director's] suggests that it is not the most recent election, but rather the most recent election at which the director to be recalled was elected.

Recall elections start out via the calling of a special meeting of the members. This meeting can be called in accordance with the Bylaws or can be compelled by the members themselves through the petition process. The petition must be signed by at least 5% of the members and should demand the calling of a special meeting for the purpose of:

A. Recalling the board or certain named directors; and

B. Electing new directors if the recall is successful.

The entire matter is dealt with at one membership meeting. The Corporations Code requires the board to send out a notice of the meeting within twenty days after receipt by the association of the petition. The meeting must be set not less than thirty-five nor more than ninety days after receipt of the petition. Corporations Code, §7511(c). Members must now also be sent nomination forms prior to the mailing out of ballots for the meeting so they can nominate potential successors if the recall is successful.

The new elections law set out in Civil Code, §1363.03 requires that elections for the removal of directors be done through secret ballot by mail, voting in person at the meeting or by proxy if authorized by the governing documents. The ballots must be mailed by first-class mail or delivered to each member at least 30 days before the vote. It further requires the association to allow for cumulative voting, if cumulative voting is provided for in the governing documents. Since an election for successors to the recalled board must also be done by secret ballot, the ballot should allow members to vote in favor of, against or abstain from voting on the recall, and in a separate section or ballot, allow members to vote for or abstain from voting on the nominees for successors in the event that the recall is successful.

In general, elections of this type are decided by the mail-in ballots or proxies. The side that wins is the side that puts forth the greater campaign effort. After the passage of the new law, only other members are eligible to be proxy holders. Civil Code, §1363.03(d)(1)(A). Also, the Board can elect not to have the association send out proxies. If the governing documents allow for the use of proxies, then proxies can be prepared by members and used at the meeting. The proxies must be in a form that satisfies the new election code. Civil Code, §1363.03(d)(2). Proxies used in a recall election must afford the proxy giver an opportunity to instruct the proxy holder on whether to vote for, against or abstain on the recall issue. The voting instructions for the proxy must be on a separate page attached to the proxy. The Association does not need to send out proxies, only mail-in ballots.

If you are going to be embroiled in a recall election, you really should seek the advice of competent legal counsel. There is nothing worse than finding out that your proxies are invalid or that the board is not calling a meeting because your petition is defective. A sample petition, mail-in ballot and proxy are below.