Tuesday, April 3, 2012

Internal Appeal Procedures and Dispute Resolution Standards Can Reduce Lawsuits


The Washington Court of Appealsrecently issued an unpublished opinion relating to the Prince Hall Grand Lodgeof Free & Accepted Masons of Washington. A member of the Grand Lodge was suspended after he raised allegationsthat one of the Grand Masters and the Grand Lodge Entertainment Committee hadmismanaged funds.  The member sued tocontest that suspension.  However, theGrand Lodge Constitution states that “no member … shall resort to civil courtsto establish any right or to redress any grievances arising out of themembership in the Order or connected therewith until … he shall have exhaustedthe remedies within the Order and in a manner provided by the Constitution, lawand regulations of this Grand Lodge.”

The appellate court upheld therequirement that members of the Grand Lodge must exhaust its internal appealprocedures before filing lawsuits.  It emphasizedWashington courts’ unwillingness to interfere with private associations’ interpretationsof internal rules and procedures unless they are arbitrary and unreasonable.  The court affirmed the dismissal of themember’s lawsuit because he did not pursue the proper appeal procedure (vote ofthe members at the next annual meeting) before filing it.     

Some Washington condominium andhomeowners associations have internal appeal procedures and dispute resolution standards in their original governing documents.  Many others do not.  For those associations in the latter category,amending the declaration or covenants to require exhaustion of internal appealprocedures and fulfillment of dispute resolution requirements (such asmandatory mediation) can help defuse some future disputes with owners before they turninto lawsuits.