Qualified Privilege Protects Board Member, Manager from Defamation Claims

We recently wrote about community association board members’ attempts to rein in “bad owners” by filing defamation lawsuits against them. But what about when the tables turn, and an owner pursues defamation allegations against board members or managers?

The Michigan Court of Appeals recently upheld a lower court’s dismissal of just such an action, finding the defendants were protected by a qualified privilege (Square Lake Hills Ass’n v. Garland, Mich. App. 2020). While the court’s opinion was unpublished (meaning it can’t be cited as precedent), it provides a useful illustration of this powerful defense for managers, board members, and associations. Be forewarned, though — the privilege has its limits.

Boat Dispute Roils the Waters

The owner in the case parked a boat and trailer on his premises in violation of the association’s bylaws. After the association sued him, seeking an order that he remove the boat and trailer, he counter-sued the association, some board members, the management company, and the company’s employee who managed the community.

Among other things, he claimed the management company, its employee, and a board member made several false allegations and defamatory statements intended to destroy his reputation and professional standing. The alleged statements included announcing at a board meeting that he had a gun, was violent, and was going to harm someone. The trial court dismissed the case before trial, and the owner appealed.

As the Court of Appeals explained, Michigan (like other states) recognizes a qualified privilege for communications on matters of “shared interest” between parties. And, if a party accused of defamation had a qualified privilege to make the statement, the claimant can overcome that privilege only by showing that the statement was said with “actual malice.”

Both the trial court and the appellate court agreed with the defendants that they had a qualified privilege to make the statements at issue because the meeting attendees had an interest in whether the owner had a gun, was violent, or posed a risk. Because the owner didn’t show the statements were made with actual malice, he failed to overcome the privilege defense.

Qualified Privilege Isn’t a Failsafe Life Preserver

“Tempers run high at association meetings,” says Kevin Hirzel, managing member of Hirzel Law, PLC, a Michigan-based firm that works with community associations. “Things get said.”

Typically, that leads to no more than hurt feelings. But, if those things result in litigation, you and your board members may be able to turn to qualified privilege as a defense.

“In any sort of context where people are acting in an official function, the law recognizes an interest in them speaking freely without the threat of a defamation suit every time they open their mouth,” says Dan Artaev, managing partner at Artaev at Law PLLC in Michigan. “Qualified privilege gives them some protection from a defamation claim in that context of performing their official responsibilities.

“Board members are acting in a quasi-official role when they make statements at a meeting, so the privilege generally covers them. It applies to managers, as well.”

There are limits, though. “As long as what you’re saying is related to anything in the realm of association operations, you’re going to have a qualified privilege in that meeting,” Hirzel says. “But if you just randomly sat up at a meeting and said someone was a pedophile, you’re not going to have the privilege.”

That’s because the privilege is qualified, not absolute.

“If a statement is made with actual malice — meaning with an intent to harm or injure the person some way, whether financially or reputation-wise — the privilege doesn’t apply,” Artaev says.

“Actual malice in an HOA context would be, for example, if a board member is making statements to get the cops out to the owner’s house. In this case, if things had escalated beyond mere statements about the owner having a gun and being violent to the police being called or some other adverse action, that might have been actual malice. The thing about actual malice is that it’s pretty fact-specific.”

In other words, you generally have no clear-cut test or bright-line rule you can rely on to determine whether a statement could create liability.

For that reason, Artaev advises board members and managers against reading this case to mean they can say whatever they wish without fear of liability. “You don’t have license to say anything and then just invoke qualified privilege,” he says. “You also have to make the statements in good faith and for some sort of official purpose.”

Moreover, while the HOA prevailed in this case, it still had to litigate for years. Its costs may have been covered by directors and officers insurance, but, if so, the premiums probably increased as a result of the claim.

As in so many matters in HOA, the best defense is a good offense, one that reduces the odds of problems rising to the level of litigation.

“It sounds like tempers got a bit hot at this meeting,” Hirzel says. “This whole lawsuit probably could have been avoided if the board or manager had called security or police to remove the owner instead of engaging with him. Diffusing tension during the meeting is a better approach.”