In the case of Silk v. Feldman (2012) 208 Cal.App.4th 547, the California Court of Appeal, Second District, was asked to determine whether letters sent to the membership of an Association by a board candidate constituted an exercise of free speech.

Sherrill Silk and Philip Feldman each owned units within the residential beachfront development known as Malibu Bay Club. Between 1996 and 2000, Silk served on the Association’s Board of Directors. Feldman became a board member in 2009.

During the time that Silk served on the Board, the Association was involved in a lawsuit that was brought by the son of the developer to establish ownership over 36 parking spaces located within the development. In 1999, the case went to trial and the trial court ruled that the developer’s son rightly owned the parking spaces along with another portion of the Association’s common area. Based on that ruling, the parties held a mediation and settled all remaining issues in the case. The settlement was negotiated by the attorneys for the respective parties, and was later approved by the boards of the respective parties. Following the settlement, a full disclosure of the settlement was made to the Association’s members at numerous meetings, and through the publication of letters to the members, including the community newsletter.

Shortly after the settlement was reached, the developer’s son began offering the parking spaces for sale to the general public and to the members of the Association for $25,000 per space. In December 2003, [four years after the parking spaces first went on the market] Silk purchased six parking spaces for $114,000 or $19,000 per space.

In 2009, Feldman, an attorney, wrote a letter to the members of the Association on his law office letterhead that encouraged members of the Association to vote for him in the upcoming Board election. Feldman’s letter further noted that Silk [who was also an attorney] was running for the Board and to promote himself over Silk, Feldman accused Silk of overseeing the prior lawsuit for her own personal gain.

Later that year, Feldman sent a second letter to the members which stated in part:

… Silk was on the Board and without the knowledge of the lawyers who settled the Knox matter, she and [the Board’s] president cut secret deals to purchase nine parking spaces for themselves with manufactured rights to use our beach along with each space. They never revealed what they did and never apologized. Successive ‘friendly’ boards kept their secret for a decade.

Silk sued Feldman for defamation. In response to the lawsuit, Feldman filed a special motion to dismiss the lawsuit as a Strategic Lawsuit Against Public Participation (“SLAPP”) claiming his statements were an act of free speech and were therefore protected. A “SLAPP” lawsuit is an unmeritorious action brought by one litigant for the illicit purpose of misusing the legal system to chill the opposing party’s exercise of the constitutional right of free speech or right of petition guaranteed by the Federal and California Constitutions. The trial court denied Feldman’s motion to dismiss the lawsuit and he appealed.

In refusing to dismiss the lawsuit, the Court of Appeal eloquently stated that “not all speech is free” and that “speech can be costly.” The court found that Silk was likely to prevail on her claim against Feldman because Feldman’s letter accused Silk of a serious breach of her fiduciary duty as a director which amounted to libel per se and that the accusations against her were false.

Moral of the story: One should make sure any accusations made in campaign materials are accurate as it could cost you more than a seat on the board.