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?
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.
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.
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