In the course of human events, it's almost inevitable that somewhere, at some  point, tempers will flare and someone will say something awful about someone  else. It can happen after the PTA meeting, in the gym, at the office...even in  one's own condo building or co-op. Heated exchanges and personal vendettas are  unpleasant and can make for an acrimonious building environment, which is bad  enough—but what happens when the words do more than just sting or insult? What happens  when it's more than just an offhandedly rude remark, or when it's ongoing?  

 Allowed...Or Illegal?

 The good news for boards and owners of condos and co-ops is that most of what is  said and printed regarding life within the community—even when heated and contentious, and even if not entirely true—is broadly protected by law.  

 Board members and building residents, are known as a “qualified group.” Legally, this means that they are protected by the common interest privilege,  which was created to encourage open, free and frank discussion among members of  a restricted group. Another example of a 'qualified group' would be  shareholders or corporate board members. Communication among the 'qualified  group' is for the purpose of furthering the corporate business. As such the  group has a defense against libel and slander, even if it turns out to be  untrue—as long as the group is not acting maliciously.  

 When it is malicious it becomes defamation, and that's the stuff of which  lawsuits are made. And sometimes the line between the open discourse protected  by law and actionable defamation is thin. To stay on the right side of that  line—out of court—it behooves board members to study the basics of the laws regarding defamation.  

 According to the pros, defamation occurs when you publicly malign someone’s character by accusing him or her of doing something that is reprehensible or  criminal, and thereby damage their reputation. Written defamation is called  libel, and defamation that is spoken is called slander. If these can  substantiated in court, damages that result from such statements can result in  heavy penalties.  

 The Absolute Defense

 Boards and shareholders are protected in many respects from defamation. First  and foremost, truth is an absolute defense against charges of defamation. If  you can prove without a doubt that the person you accuse of having done  something awful actually did it, they cannot accuse you of defaming them.  

 “Expressions of opinion are not normally actionable,” says Ronald L. Perl, Esq., of     the law firm of Hill Wallack LLP in Princeton, “For example, the statement, 'I disagree with the board's decision to open the  pool a week early because of expense' is a legitimate expression of opinion  that should not trigger legal consequences.”  

 However, Perl notes that the statement, “The board president wants to open the pool early because he is getting a  kickback from the pool company,” crosses the line into defamation and would not be protected if untrue. The only  defense for this statement would be if you were able to prove beyond reasonable  doubt that the board president was indeed receiving a kickback from the pool  company. In this case truth is the best defense.  

 What Happens in the Community,

 Stays in the Community

 Legally, board members have a wide berth regarding what is said and published  within their community. Jennifer Loheac, Esq., of the law firm of Becker & Poliakoff in Morristown, says that, “New Jersey courts have recognized people [on the board or] running for the board  as a 'public figure' or 'limited public figure' which is a person who has  thrust him or herself into the public forum for specific purpose of limited  duration, later returning to private status.”  

 Loheac explains that this designation is critical because the burden to prove  defamation is heightened for a public figure. Private citizens can prove  defamation by showing that a false statement tends to harm the individual's  reputation. A “public figure” or “limited public figure” must additionally prove that the person making the defamatory statement did so  with “actual malice.”  

 In New Jersey, case law requires that the injured party show by clear and  convincing evidence that the alleged defamatory statement was made with  knowledge of its falsity or with reckless disregard for the truth. Loheac says,  “It's a very difficult burden to meet. And truth is an absolute defense to a  defamation claim.”  

 It is still up to the board to decide, to a certain extent, what can and can't  be said within the community. Loheac explains that the law requires every  community to accommodate “free speech within the community, but this speech is not to be uninhibited. To  the contrary, communities have an obligation to all residents to manage speech  within communities. The best way to manage free speech is to afford residents  certain designated times, places and manners to exercise speech. The best  course of action for every community is to continually educate membership about  the meaning of defamation, the harmful effects of harassment and bullying. Most  importantly, the community must know the legal consequences that can result.  

 Loheac adds, “While I never recommend altogether restricting membership speech, I have seen  communities limit comments to one per owner or limit the time frame for certain  comments. Some communities choose to consider membership questions and comments  only after the regular meeting agenda. When comments become unprofessional, the  board may close the meeting altogether to deprive the individual of an audience  for his or her rude communications.”  

 In setting the tone for speech in the community the board is in the position to  decide just how much information it chooses to publish about individual  residents in the minutes of meetings, which is a public document. Should the  board choose to publish names of shareholders who are in arrears, for example,  as fiduciaries boards are within their rights to do so. In this instance the  truth is the defense. Sometimes, publishing or notifying the community which  members are in arrears, may seem overzealous or reactionary, but the community  has the right to know what’s affecting the value of their investment. If their neighbor is a deadbeat, they  have the right to know that.  

 Ulterior Motives

 Charges of defamation are often brought against boards to discredit their  decisions. New York City Attorney Helene W. Hartig recalls a case in which a  would-be buyer was rejected by a board which declined to provide her with a  reason for the rejection—well within their right according to the bylaws of the co-op. (In fact, as it  turned out she was rejected for problematic finances.)  

 The purchaser, says Hartig, “knew that the managing agent had sat in on the interview and assumed that one of  the people in the interview had badmouthed her.” The rejected purchaser sued the managing agent personally and the building for  defamation, she recalls, “hoping this would cow the board into changing their minds. In fact, it only  strengthened the board’s resolve not to sell to her. Insurance handled the case and in the end it was  dropped.” The buyer’s deposit was returned, but no damages were awarded.  

 Some buildings are sued a lot, particularly very large ones that people perceive  to have deep pockets. According to Hartig, some people figure that “boards don’t like bad publicity. So for example, a would-be buyer who was rejected might  say, ‘Maybe I’ll hit the jackpot if I sue for discrimination [a distant cousin of defamation]  and they’ll wind up just paying to shut me up.’ You see all sorts of crazy lawsuits, especially in this recession.”  

 The most typical case is when people send out nasty emails, or they make a  statement in the middle of an association meeting on the order of “You sir, are a thief and a liar.” Such outbursts however are seldom considered defamation. Courts often give a  certain amount of slack to things said that reasonable, fair and ethical, that  people would view as completely outrageous and a violation of law.  

 When particularly egregious accusations are tossed at board members by  shareholders, legally defamatory or not, most lawyers recommend handing them  over to the building’s attorney for immediate action. A good example would be if someone from the  community accuses the treasurer of stealing money, or someone on the board  getting kickbacks from contractors. If such an accusation arises against a  board member it is appropriate to have the attorney for the building respond to  it.  

 When a board member is continually harassed—unwanted communication involving threatening behavior—or for that matter if a resident aims particularly outrageous or threatening  statements at another resident, the board might be able to find that person in  default of their lease under the stipulations in the proprietary lease, or in  violation of the association’s bylaws, which could be a basis for having that person's lease terminated, or  appropriate fines levied.  

 It should be noted that harassment is a category of offense separate from  defamation, that can sometimes veer into the criminal. An harassment suit often  results in a restraining order against the harasser. Where it gets sticky for a  condo building or co-op is when a resident is awarded a restraining order  against someone and their building's doorman and staff are then expected to  prevent that person's access. The solution for that is simple: if the “guest” shows up, instruct building staff members to call the police and let them  decide how to handle him or her.  

 Newsletters and Websites

 Most statements disseminated to residents of a building, whether by mass emails,  in newsletters or on websites, even when not true, fall within the qualified  privilege protection and are not actionable, again, unless they show malice.  

 According to attorney David L. Berkey of Gallet Dreyer Berkey, LLP, in  Manhattan, “If the material is false and is designed to injure the board member in  connection with his or business or his activities for the co-op or the condo,  then you getting outside the common interest privilege. In at least some  instances courts will enjoin the person from sending out those kind of letters.”  

 Berkey recalls a case he brought last year to stop a woman who had been  reprimanded by the board for violating many of the co-op’s rules from circulating materials which intended to injure the board  president's professional reputation. The disgruntled resident issued the  materials not only among residents, but to the board president’s prospective employers.  

 “It happens,” says Berkey. “The person decided to engage in retribution, accusing the board president of all  kinds of improprieties, most of them absolutely untrue, just designed to  slander him in the eyes of the community and to prevent him from getting any  work. The judge read three or four pieces of material that were circulated, and  he said, ‘That’s enough. Stop.’” The court issued a preliminary injunction stopping the woman from disseminating  any more materials.  

 For the most part, adds Berkey, “Even when we get called to stop egregious cases like that one, the boards will  suck it up and say, ‘This too will pass,’” even when the board is on the right side of the law—and they usually are. “They don’t respond, and most of the situations will just dissipate over time.”  

 Stephen B. Kotzas, a partner at the Toms River-based law firm of Berry,  Sahradnik, Kotzas & Benson, cites a recent Appellate Division of the Superior Court of New Jersey  case involving defamation. In “Tai vs. Crown View Manor I Condominium Association,” the plaintiff (the owner/resident of the condo) was seen walking off with a  water jug from the condo's lobby by someone from the management company. According to Kotzas, the association demanded reimbursement for the jug and sent  a copy of the letter to the association's board members and attorney along with  the manager of the location.  

 “Three months later the plaintiff filed suit against the association for  defamation, infliction of emotional distress and violation of the New Jersey  Condominium Act,” said Kotzas. “ The association moved for Summary Judgment, which was granted by the court. The court found for the association because the letter was published to seven  individuals, all of whom were associated with the operation and management of  the association. Only the plaintiff distributed the letter to third parties.”  

 He adds: “The court held that a plaintiff must establish, in addition to damages, that the  defendants (1) made a defamatory statement of fact; (2) concerning the  plaintiff; (3) which was false and (4) which was communicated to a person or  persons other than the plaintiff.” The court also held, Kotzas said, that the plaintiff must prove a fifth element,  that of “fault.”  

 Kotzas also says the court held that the letter warranted protection under a qualified privilege.  “Qualified privilege shields the defamatory statement if it’s made in furtherance of the interest that the qualified privilege is meant to  accommodate, regardless of whether those remarks turn out to be false or  defamatory. If the qualified privilege is abused, it will cease to protect the publisher  against the claim of defamation.” He added that the court contended that because the letter was written in  connection with a common interest protecting Crown View’s assets, it was protected by “qualified privilege.”  

 Petitioning to be Heard

 Another means by which shareholders and unit owners might express a grievance  with their board is by circulating a petition. The rules guiding how petitions  are to be handled are usually spelled out in the building's bylaws, which  stipulate how many signatures are necessary to compel the board to hold a  special meeting or vote to address a particular issue.  

 While shareholders or association members can force the board to call a special  meeting to hear their grievances or opinions about a policy, they do not get to  vote on the action the board should take.  

 “Petitioning is a method of political expression that constitutes protected  speech,” says Perl, “as long as the line is not crossed into defamation or the other types of  non-protected speech. A petition which takes a position on an issue affecting  the association is fine, the problem exists where the petition contains false,  libelous facts.”  

 According to Berkey, the cooperative or condominium board is entrusted with the  business of the corporation, and as such, “The board cannot be forced to take certain actions because the shareholders file  a petition.”  

 Sometimes, in their zeal to get their voice heard on an issue, a resident will  print up flyers and stick them under apartment doors, or knock on doors to  lobby for someone running for the board. The protocol for this sort of  expression is not in the bylaws but is controlled by the house rules created  and enforced by the board.  

 There are cases where people have carried signs of protest in front of their  co-op or condo building, and the courts have allowed it under their  constitutional right of association and assembly. (Though the jury is still out  on torches and pitchforks.) But a diligent board and manager can keep passions  from boiling over and grievances from turning into lawsuits.  

 Most smart and experienced board members believe that you need to give residents  a safety valve to vent. When a board tells the community that they're going to  raise maintenance fees 35 percent, the better part of valor would be to face  the community and take the heat. Any experienced board member knows that you’ve got to trust that your neighbors are responsible enough and smart enough and  in the final analysis will understand why the board made that particular  decision.  

 To stay on the right side of the law, says Hartig, “My advice to boards is to be very careful not to put their own personal agenda  or feelings above that of the apartment corporation—to act professionally, as a fiduciary, and to be careful what they say and how  they say it.” And that includes emails, which are discoverable in court.  

 Be careful not to veer into fiery rhetoric, she adds, because “one man’s fiery rhetoric is another man’s defamation.”    

 Steven Cutler is a freelance writer, reporter, and author living in New York  City and a frequent contributor to The New Jersey Cooperator. Editorial  Assistant David Chiu contributed to this article.