CASE STUDY: Why Homeowners Must Have The Right To Record HOA Meetings

Brief Summary

I am a homeowner at and former member of the Board of Directors for Poudre Overlook Homeowners Association of Fort Collins. While a member of the Board, I observed other Board members acting out of compliance with the HOA’s governing documents, as well as state and federal statutes. I reported them to fellow board members who acknowledged the non-compliance, but wished to avoid it being documented or that those responsible be held accountable.

I formalized a complaint, listing each incident, and brought this up at that 5/14/2019 Board Meeting with the issues handed to each member in writing. I demanded that the Policy of Enforcement be followed, and that the CCIOA requirement that the matter be impartially investigated begin. The Board refused to take action.

I was also the Secretary of the Association (an Officer), and attempted to document the dispute within the 5/14/19 meeting minutes, but even what was discussed at open meetings was disputed – with multiple people taking notes. I proposed recording the meetings to end the disputes.

At the next meeting, I was told that I had to turn over my personal property (and my wife’s) as a condition to attend the meeting for the purpose of preventing me from recording the meeting. Ironically, I had begun recording when I walked in the door of a private residence – the new President, Mr. Walker Flanary.

Within the span of 14 confusing minutes, Mr. Flanary alternated between an absolute ban on recording to recordings were allowed if transcribed by a court reporter. But, within minutes, I was threatened with arrest for trespassing if I did not comply with his demands.

Ultimately, I attempted to continue attending the meeting, because I knew I was also being put on trial for having recorded a prior ACC meeting – which another member of the community, Mr. Andrew Campbell had also recorded, yet was not subjected to the same humiliation. The reason: The ACC had previously acted dishonestly, fraudulently, and abused their power/discretion in a matter that was literally over shade of gray (on roof shingles) that could have resulted $20,000 of out-of-pocket expense for those homeowners who were not actually violating any rule.

I stood up against this injustice as a board member, and ultimately the enforcement action was defeated (without a requested hearing) by a single vote. I’ve been retaliated against ever since by several members of that former Board.

Ultimately, it did not matter. The Larimer County Sheriff’s were called (at my request, because I no longer felt safe), and in spite of agreeing to turn off my recording device as a condition of attending the meeting, Mr. Flanary withdrew his offer, and demanded I leave unconditionally enforcing his homeowner rights, and refusing to relocate the meeting to a neutral location or reschedule the meeting (and allowing me to attend remotely).

You can listen to the recordings here:
Part 1 Recording
Part 2 Recording

A transcription of the recording is available here:
Part 1 Transcription
Part 2 Transcription

But, this is not how either the official meeting minutes (authored by Mr. Buck Hammond) nor Affidavits submitted under the guidance of Ms. Jen Hutchinson (Treasurer and Litigation Committee Chairperson) to Investigators for the State of Colorado described the interaction. Both sets of documents are, in fact, the evidence that homeowners need a statutory right to record meetings.

This is prima facie evidence (evidence based on the first impression; accepted as correct until proved otherwise) that without a recording, a homeowner has very little chance of proving to a court of law that an HOA Director has knowingly violated their Duty of Care of Duty of Loyalty in order to defeat the Business Judgement Rule.

If only Mr. Hammond’s meeting minutes and Ms. Hutchinson’s set of Affidavits are considered, I am an unruly person disrupting a board meeting requiring that the police be called to remove me. That sounds pretty bad, right?

But, with the recording, a much different situation is documented – which is ironically a debate over whether meetings should be recorded!

Here is the important part: Ms. Hutchinson and the current board KNEW that the recording existed and had possession of it BEFORE they created their false and misleading Affidavits. That is the key element for piercing the Business Judgement Rule in pursuit of violations of Duty of Care, which are therefore claims upon which relief can be granted by a court.

Most homeowners, and in fact, most people, have no idea what the details are for the Duty of Care, Duty of Loyalty (or any of the Duties of a Director in a Non-Profit Corporation), let alone what the Business Judgement Rule is. Therefore, it becomes necessary to describe them, which makes the entire advocacy long, dry, and in some cases, so boring as to put someone to sleep – before they arrive at the understanding necessary to support the need for this right to record.

But, the average homeowner just knows something is rotten with their Board, and wants something done about it. They don’t want to become embroiled in controversy, called a liar and “crazy”, to be subject to retaliation as a whistleblower, and, in the end, spend tens of thousands of dollars to have their case dismissed for reasons that make no logical sense. They only find out later that there is literally no possible ways to enforce CCIOA unless they have incontrovertible evidence that proves intentions and “knowing” that meets the “wanton and willful” criteria for actions where the Business Judgment Rule is a shield.

However, one only needs to look at the documentation of this specific incident to understand exactly how Directors abuse power and discretion with dishonesty and fraud at the expense of homeowners – who have a very difficult time holding such persons accountable.

Because there is significant detail, a separate article here contains the granular details. Suffice it to say that the official meeting minutes, which Trademark (the Community Area Manager) keeps hidden from their website, the Affidavits, and the recording and transcription demonstrate not only the dishonesty of former and current members of the Board of Directors for Poudre Overlook HOA, but they also are evidence of deliberate fraud and abuse of power/discretion while under investigation by the Colorado Civil Rights Division, a state investigator.

This raises the possibility of the matter being escalated to the Colorado Attorney General, as an attempt to present this type of fraudulent document may constitute a false exculpatory statement.

False exculpatory statements can be a serious matter in Colorado:

The text of Section 18-8-502 states that: (1) A person commits perjury in the first degree if in any official proceeding he knowingly makes a materially false statement, which he does not believe to be true, under an oath required or authorized by law. (2) Knowledge of the materiality of the statement is not an element of this crime, and the defendant’s mistaken belief that his statement was not material is not a defense, although it may be considered by the court in imposing sentence. (3) Perjury in the first degree is a class 4 felony.”

SOURCE: CRS 18-8-502

It appears to me that a false exculpatory statement meets the standard to pursue holding HOA Board of Director members accountable under CCIOA and the Non-Profit Act. Yet, without a means of Alternative Dispute Resolution by the State of Colorado, homeowners only have the option to seek mediation (which the HOA declines nearly every time), or to file in District Court – at the risk of attorneys fees if the case is dismissed.

Legal Background

The right to record a meeting or interaction with an authority has been contested for decades. The debate has only escalated as the proliferation of cell phones has put an audio or video recorder (and now, live streaming) in nearly every adult’s hands. And, when dealing with dishonesty, fraud, or abuse of power, a recording is nearly essential to raise a dispute or argument out of the morass of “he said, she said” to become actual objective evidence of what has occurred.

Even when such evidence is available, those that abuse their powers, even the powers that accompany being duly elected, some attempt to suppress, spoliate, or otherwise prevent such evidence from either being seen or heard, or from being considered by those judging the matter – formally or informally. Or, they try to prevent it from being collected in the first place – by banning recordings.

But, they may not even stop there – because preventing recordings in the 2020s is nearly impossible. Not only does nearly everyone have a recording device via their smart phones, but we also have devices such as Alexa or Siri that are perpetually recording us. And, the expectation of privacy from cameras and recorders while even walking down the street is no longer reasonable – as even homeowners now have cameras and recorders built into their doorbells.

Yet, in spite of this environment, some still attempt to portray those who are making the recordings as having nefarious or bad faith motives, even to the point of association recording activity with the actual commission of a trespassing-type crime – as if there is a law requiring the person recording to obtain the permission of those being recorded in advance. If you place a recording device in a room and capture their conversation without them knowing, that would be wiretapping or “bugging” – but that is not at all what we are talking about.

To be clear, I am writing from the State of Colorado which allows any adult to record themselves while interacting with others – with no requirement for notification of other parties. This is known as one-party notification, which is the law in most of the United States.

Therefore, in open Colorado HOA Board or Committee meetings, anyone who attends and participates is allowed to record the meeting under Colorado State Law. Yet, a trend is emerging among HOA attorneys (and insurance company attorneys, as this story will illustrate) to ban recordings by homeowners (or the boards) to avoid there being an accurate and objective record of what occurs at meetings.

Now, if recording meetings was solely a matter of annoyance or harassment, there would be a discussion about how such recordings are used. If, for instance, homeowners were taking audio or video to then post edited clips on social media in order to bully them in some fashion, that would of course be foundation for a discussion on how to handle such bad faith actions. But, that isn’t why homeowners or even board members are making the recordings – they have several good faith reasons to do so. But, most importantly, the best defense against such nefarious editing is for the HOA itself to have a master copy of the recording of a meeting, to defeat such editing by demonstrating the full context in rebuttal. A recording has both offensive and defensive potential, and both uses can be legitimate.

The primary reason a recording would be used for offensive purposes would be to hold a board member accountable for their words or actions. Under Colorado State Law, there are two standards that are important to consider. The first is under the Non Profit Act, which defines conduct that could result of the removal of a board member (and potentially barring them from future participation):

Universal Citation: CO Rev Stat § 7-128-109 (2016)

(1) A director may be removed by the district court for the county in this state in which the address of the nonprofit corporation’s principal office is located or, if the nonprofit corporation has no principal office in this state, by the district court for the county in which the street address of its registered agent is located, or, if the nonprofit corporation has no registered agent, by the district court for the city and county of Denver, in a proceeding commenced either by the nonprofit corporation or by voting members holding at least ten percent of the votes entitled to be cast in the election of such director’s successor, if the court finds that the director engaged in fraudulent or dishonest conduct or gross abuse of authority or discretion with respect to the nonprofit corporation, or a final judgment has been entered finding that the director has violated a duty set forth in part 4 of this article, and that removal is in the best interests of the nonprofit corporation.

(2) The court that removes a director may bar the director from reelection for a period prescribed by the court

So, the standard for using a legal recording offensively is to capture an instance where a board member is “engaged in fraudulent, dishonest or gross abuse of power or discretion with respect to a non-profit corporation”. An HOA, for the record, is a non-profit corporation.

However, catching an HOA Board member saying something untrue or abusing their power isn’t enough. Board members have a second way to avoid accountability, and it is something that wasn’t envisioned by the Legislature when writing CCIOA (Colorado Common Interest Ownership Act), which is the set of statutes that governing HOAs.

Instead we enter into the confusing and murky area of law, which leads to the topic of the innocent-sounding Business Judgement Rule. Basically, the concept arises from a series of legal arguments that is worth considering the details – because most homeowners have never heard of it or have considered the logic.

CRS § 7-108-401, as initially adopted and as amended by SB 19-086 prescribes standards of conduct for corporate directors and officers with discretionary authority. Under SB 19-086, CRS § 7-108-401(1) will require that directors and officers with discretionary authority discharge their duties

■ in good faith
■ with care, and
■ in a manner the director reasonably believes to be in the best interests of the corporation.

Currently, “with care” is defined as “with the care an ordinarily prudent person in a like position would exercise under similar circumstances.”4

Reference 4: CRS § 7-108-401(1)(b). The 2016 MBCA § 8.30(b) uses the phrase “with the care that a person in a like position would reasonably believe appropriate under similar circumstances.”

Source: Colorado Bar Association

If you are serving on an HOA Board, it is important that your decisions are protected from frivolous lawsuits by homeowners or other parties, and decisions made that are within the Duty of Care and Duty of Loyalty are therefore protected by the Business Judgment Rule, particularly if they are informed decisions, and most protected when they are informed by experts such as attorneys.

But, where does this concept of the so-called Business Judgement Rule arise?

Under the Delaware General Corporation Law, the business judgment rule is the offspring of the fundamental principle, codified in Del. Code Ann. tit. 8, § 141(a), that the business and affairs of a Delaware corporation are managed by or under its board of directors. In carrying out their managerial roles, directors are charged with an unyielding fiduciary duty to the corporation.^[14] The rationale for the rule is the recognition by courts that, in the inherently risky environment of business, Boards of Directors need to be free to take risks without a constant fear of lawsuits affecting their judgment.^[15]

 14. Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985).
15. ^ See Gagliardi v. TriFoods Int’l Inc., 683 A.2d 1049, 1052 (Del. Ch. 1996) (setting out rationale for the rule).

So, by design, it is very difficult to hold a member of the Board of Directors of a Corporation accountable for decisions that may simply be made because they either thought it was “good for business”, or because they were advised to make the decision by an expert or lawyer. Some would say this is nearly impossible, and cases brought against HOAs are typically dismissed for the simple fact that insufficient evidence exists.

“The presumption raised by the business judgement rule may be rebutted by the plaintiff. “The business judgment rule is a presumption that in making a business decision, the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company. Thus, the party attacking a board decision as uninformed must rebut the presumption that its business judgment was an informed one.”^[14] Further, rebuttal typically requires a showing that the defendants violated duty of care or loyalty (with courts assuming director’s good faith otherwise).

14. Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985).

So, combining what we know about Colorado’s Non-Profit Act with what we know about the Business Judgment Rule, for removal of a Board Member, it is necessary to show that a Board member knew, or should have known a decision violated the Duty of Care of Duty of Loyalty to the Corporation (the HOA), and therefore caused harm or damages – but did it anyways. The criteria are vague, but easy enough to understand – dishonesty, fraud, or abuse of power/discretion.

But wait, there’s more!

In June of 2020, I filed litigation in the Larimer County District Court against Poudre Overlook HOA and Mr. Hammond. The case involved claims of defamation, discrimination, and a failure to intervene in a case of Hostile Environment Harassment as described by FHA changes made in October of 2016. The case was dismissed in October of 2020, but is facing an Appeal that will be heard.

I also filed a case with the Colorado Civil Rights Division (CCRD), which is a part of DORA in August of 2020 regarding the failure to intervene in the hostile environment.

While the District Court case had already been granted a Motion to Dismiss in October, in November, the Board of POHOA decided to turn in a large amount of documents which included emails not only between Board members, but also between the Board and it’s advising attorneys – Mr. Peter Dauster, the standing HOA Attorney, and Ms. Debra Sutton of Sutton-Booker, which is the firm representing POHOA’s Insurance Carrier, American Family Insurance.

Concurrently, POHOA made the decision in September of 2020 to hire a Community Area Management company, Trademark Property Management.

In October of 2020, Mr. Thomas Walton, of Sutton-Booker wrote to Ms. Jen Hutchinson about recording meetings, and advised her to cease the practice. Although Ms. Hutchinson admits that just a year prior, in reaction to the attempt by Mr. Flanary to ban recordings by enforcing homeowner rights (trespassing) as exemplified in the 6/13/19 board meeting experience, she openly admits that she now wishes to reverse and stop/prevent recordings.

Since Ms. Hutchinson and the entire Board is getting legal advice from Mr. Walton, who is the attorney hired American Family Insurance specific to litigation, Ms. Hutchinson is therefore covered by the Business Judgement Rule in terms of personal liability.

However, Ms. Hutchinson’s response to Mr. Walton not only admits to having a desire or reason to stop recording meetings, but also makes an allegation that I have told lies (in emails, court filings, and in website communications) that contradict the recordings. It would seem, therefore, that if I am the liar Ms. Hutchinson claims I am, the recordings are necessary to defend against such falsehoods.

However, Ms. Hutchinson doesn’t come to the 1/27/21 Board meeting to say that attorneys have advised the Board to stop recording meetings and prevent owners from doing so. Instead, Ms. Hutchinson tells homeowners that Trademark, the CAM or Property Management Company, has a policy against being recorded, therefore, we have to put aside the right created by the 10/8/19 policy created by a unanimous board vote.

Mr. John Stamatakos, the owner of Trademark, attended the meeting and affirmed, along with his Account Manager, Theresa, that this was the policy of Trademark. And, with that announcement, recordings were once again banned by POHOA.

Now, Mr. Dauster, the POHOA attorney advising the board on retainer, also raised this issue in direct emails with me. However, he was completely unaware that the Board had taken this vote on 10/8/19, which likely led to advise that the policy was still in effect until there was a board vote to change that policy.

About 2 weeks in advance of the 4/13/21 POHOA Board meeting, they circulated an agenda which included voting to ban recordings of the HOA Board meetings. On the night of the meeting, a discussion occurred, with several homeowners, including myself, advocating against creating such a ban. One homeowner, Mr. Clark, pointed out that Colorado is a single-party state, which means they already had a right to record. I pointed out that this was neither what the community wanted nor did it appear to originate from requests by the community – and that there was evidence this was at the DIRECTION not by our standing HOA attorney, but by an attorney for the insurance company handling litigation.

But, the Board appeared to ignore the good reasons to record the meetings themselves, in particular to defend against people they claim are lying (me). Instead, they voted to restrict THEMSELVES from recording meetings, but ALLOW homeowners to continue to record meetings.

Don’t worry, I recorded all of this here: 4/13/21 Board Meeting Recording

Yet, this isn’t the most astounding thing about this action taken by the POHOA Board. I planned to write this article, as the Colorado Legislature is considering changes to CCIOA and I have been working with the sponsor, Rep. Brianna Titone regarding the right to record meetings ever since June of 2019 – when I was threatened with arrest.

So, in order to be thorough, I gave Trademark (and therefore the Board) advance notice and asked them a few questions. One of them was to see the actual written policy by Trademark, which is the CAM for many HOAs in Northern Colorado. I wanted to see both how this policy was written, whether it included any justification for the policy, and then contact some of the affected HOAs to see how that was received and was working in their HOA.

I got no response, and then our Account Manager, Theresa, finally responded to my email without really answering any questions. When I wrote back, I got an auto-responder message saying she was on vacation for a week. Since Rep. Titone was hosting stakeholder meetings that included discussions on the subject while Theresa was gone, I decided to call in to Trademark to get a copy of their policy against recording meetings.

Jessica answered the phone and proceeded to tell me that Trademark has no policy against recording meetings, but that usually the HOA makes up that kind of policy on their own. I asked why, then, would John & Theresa participate in the 1/27/21 meeting stating that they did have such a policy, and that would then be the reason POHOA had to change theirs?

The tone changed. I put on hold. Then I was told to email John directly. Which I did, and unsurprisingly, there’s been no response.

Trademark lied to the members of POHOA in a scheme to create the appearance of Board Members receiving “expert” advice from a CAM, hiding the fact that the directive actually came from an attorney hired by an insurance company. It was a deception, and not a minor one.

This is a deliberate attempt to give cover to the volunteer Board Members by not just Sutton-Booker, who are merely looking to exculpate their clients who are obviously caught giving false statements to a state investigator. While a CAM arguably should both know the law regarding Non-Profits, HOAs, and the duties and standards that apply, they are ultimately operating with a conflict of interest. If they call out Board members who are non-compliant with the law, they are then attacking their client, and risking the profits from the relationship.

Many times, Theresa, our Account Manager, has stated that Trademark is merely a “relay” between homeowners and the Board. But, this too is false. Trademark follows the direction of the Board and never challenges the Board, even when they knew or should have known that the board was non-compliant with the law or governing documents.

A recent exchange over snow removal, after a blizzard in March revealed that Trademark had not bothered to read the Snow Removal Policy prior to defending an exceptionally poor response to the storm – they didn’t show up till the 3rd day, trapping many homeowners in their homes while the adjacent neighborhood had pavement cleared on the 2nd day. Worse, they piled snow on the already-cleared sidewalks (which homeowners had cleared on their own), and denied any responsibility for clearing sidewalks. Ultimately, Trademark said they were just following orders.

But, we still haven’t gotten to the most disturbing part. As I’ve stated, I’ve been in litigation for nearly a year, with Sutton-Booker as the firm representing POHOA. My attorneys, Robinson & Henry, have informed me that Sutton-Booker has no actual knowledge or experience with CCIOA.

Full stop. The experts that POHOA Board members are listening to and action upon their advise don’t even have knowledge or experience with CCIOA. They merely know how to find a way to get cases dismissed against HOAs, mostly on technical grounds, or by simply raising the Business Judgement Rule.

If I didn’t have this recording of the 6/13/19 Board Meeting, or the emails the Board for some inexplicable reason made public (including their correspondence with their attorneys), I would likely be facing tens of thousands in legal fees as a judgment by the court. And, if this HOA follows the patterns of advice given by other scorched earth attorneys, the next move would be to drive us out of our homes.

So, the obvious question is: why don’t I just give up?

The answer is simple. Every non-profit corporation is recommended to have a COMPLIANCE OFFICER. The purpose of a Compliance Officer is to ensure that the Board and Officers are following the corporate governance documents and state/federal laws. In order to do so, that person has to have access to documents, and those who are witnesses need to be protected from retaliation with a whistleblower policy.

While HOAs are non-profit corporations, CCIOA does not require a Compliance Officer, nor is there ANY PARTY WHO ACTS AS ONE. The state absconds its duty to enforce CCIOA and merely records complaints (and then keeps the records of over 1500 annual complaints secret from the public). The policy won’t do anything, because it is a “civil matter”. And, the courts will simply dismiss every case brought before them, except for the very very few that has such evidence – like smoking gun recordings of deception, fraud, and abuse of power.

Even with such evidence in hand, however, there’s no guarantee that even a judge will rule in favor of homeowners. CCIOA is so vague, and the affirmative defenses of the Business Judgement Rule so broad, that a homeowner is most likely to waste tens of thousands in legal fees and often lose their home. All for attempting to fill the gap created by this dynamic and BE the Compliance Officer.

HB 21-1229 is currently being considered in the Colorado House. CRS 38-33.3-308 is being amended to create a right by homeowners to record meetings. If the evidence and argument sI’ve presented here isn’t sufficient to justify the absolute right of homeowners to record themselves at meetings (to defend against outrageous false affidavits), as well as the need to have such evidence to pierce the Business Judgement Rule and call into action the relief possible through C.R.S. 7-128-109, then we will continue to have parties like Sutton-Booker, Trademark Property Management, and Poudre Overlook HOA conspire to retaliate against homeowners seeking that their HOAs simply comply with the governing documents and state/federal laws.

I strongly support amending CCIOA, and that the legislature seek other means to stop these abuses, which are repeated hundreds of times annually across the state, affecting over 60% of the population.