Month: July 2012

As the end of the year approaches, many community associations prepare for annual meetings, holiday parties and similar gatherings that often include sharing food and drink. These get-togethers can be good forums for thanking community volunteers, meeting neighbors, and generally fostering good will throughout the community; however, these gatherings are not always without peril. Where an association-sponsored event includes drinking alcoholic beverages, the association may be exposed to greater liability in the unfortunate event of an alcohol-related injury or death. The general rule in Georgia is that those who sell, furnish or serve alcoholic beverages should not be held liable for injury, death or property damage caused by an intoxicated person except in certain circumstances. See O.C.G.A. 51-1-40(b). These exceptional circumstances include when someone provides alcohol to a minor or to someone who is noticeably intoxicated. Id. In order to minimize an Association’s exposure to this type of “imputed liability,” a board of directors should carefully plan and manage Association events and take certain precautionary measures.

First, the Association should not sell alcoholic beverages unless it is properly licensed to do so and maintains adequate liability insurance. Selling alcoholic beverages includes “indirectly” charging for drinks, including by selling tickets to “exchange” for drinks or charging an additional admission fee for attendees who intend to drink.

If the Association is not licensed but would like to provide alcoholic beverages at an Association-sponsored event, the Association should designate responsible individuals to serve the beverages. These individuals should understand their responsibility with respect to not serving alcohol to a minor or to a noticeably intoxicated person, and the Board should establish some basic procedures to lessen the chances of this. This can include limiting the number of alcoholic drinks each person may have during the course of the event, limiting the number of drinks a single person can order at one time, and verifying the age of anyone the server does not recognize as being of legal drinking age.

In addition, the Board should have some procedures in place to prevent any guest who does become intoxicated from driving. For instance, if the meeting is held in the community, the Board could encourage members to walk to the event. If the event is held outside of the community, the Board could encourage carpooling with a “designated driver” and also arrange for a car or taxi service to be on call for the event. The Association should take reasonable steps to prevent an intoxicated person from driving, but does not need to go through extreme measures such as restraining an intoxicated person.

If the Association hires a caterer to provide alcoholic beverages or otherwise arranges for a cash bar at the Association gathering, the Association should be sure that the servers are properly licensed and insured. The contract for the bar service should include an obligation for the server to indemnify the Association in the event a minor or intoxicated person is served and then causes injury or death. If the Association does not want to provide alcohol, but would like to allow alcoholic beverages at an Association-sponsored event, it can allow attendees to bring their own beverages. By not directly furnishing the alcohol, the Association’s exposure to liability may be significantly reduced; however, at any Association event that involves drinking alcohol, the Board would be wise to designate some responsible individuals to take reasonable steps to ensure that no minors are drinking alcohol and that any intoxicated persons do not drive.

Finally, when planning for the event, the Board should consider obtaining additional host liquor liability insurance coverage. The Association’s insurer should be able to advise the Board as to what types of situations this coverage applies and what situations are excluded from coverage.

End-of- year Association gatherings can be beneficial to a community in many ways. An alcohol-related injury or death associated with such an event would negate any such benefit and open up the Association to liability. With careful planning and management, a board of directors can reduce the Association’s exposure to liability for alcohol-related accidents and can help keep community members safe and happy for the coming year.

“Eighty percent of success is showing up” – Woody Allen

The quote “Eighty percent of success is showing up” has been attributed to Woody Allen in reference to the notion that if one wants to aspire to something –whether it is writing, acting or something else – he or she needs to start doing that thing. While Allen discussed “showing up” in this manner in a metaphorical sense, a literal interpretation can apply to community associations. If the board of directors of your community association would like the association to take some action that requires approval of the members, the best way to ensure success is to have the association members actually show up at an association meeting where the action is to be considered. When proposing association actions to be approved by the membership, many boards of directors collect votes by proxy, by which a member entitled to vote but unable or unwilling to attend a meeting may delegate its voting rights to another individual who will be present at a meeting. Boards also often rely on proxies to count toward establishing a quorum for an association meeting. The bylaws of some associations specifically authorize a quorum requirement to be satisfied based on the presence of a certain number of members “in person or by proxy.” In the absence of this or similar language, however, an association action taken at a meeting where quorum was established through the use of proxies may be successfully challenged. Sometimes you really need members to show up.

The importance of having association members “show up” is illustrated by a recent opinion of the Georgia Court of Appeals in Demere Landing Condo. Assn. v. Matthews, (Ga. App., Feb 22, 2012). The dispute considered in Matthews involved a condominium association that gathered for a special meeting in order to consider and vote on a special assessment to pay for replacement of the roofs in the condominium. The bylaws of the association specifically authorized members to cast votes by proxy. The bylaws also provided that in order to establish a quorum – the number of members who must be present in order to legally call the meeting to order and take action – there had to be present “members entitled to cast 51% or more of the total authorized votes” of the association. The number of individuals present at the meeting together with the number of proxies submitted would have satisfied the quorum requirement; however, a homeowner objected to calling the meeting to order, stating that the proxies should not be counted toward the quorum requirement. The special assessment was adopted over this objection, the roofs replaced, and the special assessment billed to each owner. The objecting owner refused to pay and eventually filed suit against the association to challenge the special assessment on the grounds that it was not properly adopted due to lack of quorum at the association meeting. The Georgia Court of Appeals agreed that the special assessment was not valid.

In coming to its conclusion, the Court in Matthews applied the longstanding Georgia common law rule that use of a proxy – whether to cast a vote or to establish quorum – is not allowed. The Court looked to a Georgia Supreme Court decision from 1928 and to the provisions of the Georgia Condominium Act for the proposition that proxies cannot be used in establishing a quorum “[u]nless the condominium instruments or bylaws provide otherwise….” See O.C.G.A. § 44-3-103. In other words, in the absence of language specifically authorizing the use of proxies to count toward the quorum requirement, the requisite number of members must show up.

Most directors of community associations want association members to actively participate in community association matters. The recent decision of the Georgia Court of Appeals has made it clear that, unless your bylaws authorize members to cast votes and be represented at meetings by proxy, having members show up to meetings can mean the difference between an association’s actions being upheld or invalidated. Before proposing actions for approval by the association membership, board members should review their community’s governing documents to determine the requirements for taking such action and for holding a valid meeting at which such action is considered, including by satisfying the quorum requirement. After all, the success of a proposed action to be approved by membership may depend on having the members show up.