McNally v. Sun Lakes Homeowners Assoc. #1, Inc. – 10/13/2016

November 1, 2016

Court of Appeals Division One holds that a board of directors lacked authority to exclude a board member from attending executive sessions.

A board of directors of a non-profit corporation passed a motion barring a specific board member from future executive sessions after the board member shared privileged information in public session.  The board member unsuccessfully sought an injunction to require the board of directors to allow the board member to participate in executive sessions.  The Court of Appeals reversed, holding that the board’s motion unlawfully prevented the board member from performing her duties and responsibilities as a director.  Arizona law and the corporation’s bylaws protected a director’s right to attend meetings of the board of directors, including by requiring that every director receive notice of a meeting.  The board had other remedies available to prevent the director from disclosing confidential information, including seeking lawful removal of the director or an injunction to prohibit disclosure.  The board’s self-help remedy of banning the director from executive session, however, was not permitted under the circumstances of this case.

Presiding Judge Gould authored the opinion; Judges Swann and Orozco concurred.