DISCUSSION ABOUT REOPENING ASSOCIATION FACILITIES IN THE PANDEMIC - 2021

By Jennifer L. Alexander, Esq. March 19, 2021 Posted in Community Association Law Share

Determining whether to open Association facilities or keep them closed this year is a harder choice than ever, in our ever-changing Covid-19 environment. It is mid-March, 2021, but we have experienced our first 60 degree day. It has been a year since Covid-19 hit.  Everyone thought that the safeguards would be temporary, but we are learning that nothing is easy in this pandemic. The vast majority of Associations closed their facilities last year, and nearly all have remained closed.

Little has changed except that vaccinations are becoming available. People are tired of social distancing, wearing masks and using hand-sanitizer. Many are angry that the facilities, they pay for, did not open last year. They are applying pressure on their Boards to open the facilities this year, and yet nearly all of the same concerns that kept them closed last year have not been abated. Unit Owners and Boards alike are looking for solutions, even if those solutions are a little “out of the box”.

Here is where we are, issue by issue:

Insurance:  Associations, Management Companies and Pool Contractors cannot buy insurance against allegations of negligence in deciding to open facilities during a pandemic, or for any alleged breach of Covid-19 safety protocols. It just can’t be purchased. When the N1H1 pandemic threatened years ago, insurance companies reacted by excluding coverage for viruses.

As many of you know, insurance generally provides two types of protection; indemnification against a judgment, and a defense from lawsuits.  Thus, if a Unit Owner, tenant or guest sues for negligence, even if there is no case, the Association would be paying for the defense of the suit, which could cost as much as $75,000. If such a suit ever results in a judgment against the Association, the Membership would be responsible for paying it, likely by assessment. The combined effect upon the Association (paying counsel fees and a judgment) could be substantial.    

The same is true of Directors and Officers Liability Coverage. Board Members are not covered for the decision to open facilities during a pandemic. An accusation that such a decision was negligent is not covered. Board members, officers, committee members and Managers are all unable to insure against this type of accusation. You can imagine that Board Members, officers, and committee members might be afraid to open facilities if opening them could result in their personal liability. Most governing documents indemnify the Board members, officers and committee members from liability (generally not the Manager or Contractors or lifeguards).

Executive Orders provide guidance and restrictions on behavior during the pandemic. For pools and fitness centers, there are accompanying Department of Health Standards currently governing the use and operation of these facilities. Administrative Orders also clarify applicability or ambiguity in the Executive Orders. Regardless of applicability in different circumstances, these Standards are the only governing standard of care during a pandemic. In a lawsuit alleging negligence, these Standards become the standard of care that the Association must meet in order to avoid breaching its duty. Additionally, even if many Boards decide to open pools, the duty of care is not reduced to the general consensus in the industry. In other words, a Board (or individual Board Members) cannot avoid liability by saying,  “Well, a lot of Associations opened their pools this year.” The Associations, and Board Members individually, can be sued. Without insurance, even the successful defense of a lawsuit could be costly.

Things that can be done:  While we cannot recommend reopening facilities in the current environment, because of the liability concerns stated, here are some ways an Association can minimize (not eliminate) the risk of liability:

1. Tort Immunity: There is a series of New Jersey Statutes that have been around for years, N.J.S.A. 2A:62A-12 through 14, which allow a community to vote to immunize the Association from liability for personal injury lawsuits. The statute N.J.S.A. 2A:62A-14, requires 2/3rds of the community to vote in favor of the immunity, and the immunity does not work to immunize Associations from tenants, guests, relatives or children of Unit Owners. It only applies to those who are deed owners of Units. Please note, however, that even if passed, such an amendment does not increase an association’s chances of obtaining insurance.  The amendment will only protect against negligent conduct, not gross negligence or willful misconduct.  Still, it is better than nothing.

2. Indemnification: Boards can consider By-Law Amendments specifically protecting Board Members, officers and committee members against lawsuits related to, or involving, Covid-19.  In addition, the Amendment can require that the Association provide a defense up front, rather than by reimbursement.  This type of amendment does not require a 2/3 affirmative vote of the community.  It can be passed by the Board and simultaneously sent out to the community to see if there is objection. If less than 10% of the community objects, the Amendment passes.

3. Vaccinations: By now, some of your residents have likely been vaccinated. In senior communities, generally more than a few have been vaccinated; some to the point of reaching essential herd immunity. Among those communities, the Boards are considering opening facilities, only to those who have been vaccinated. Some have suggested that not allowing those who refuse to get a vaccination is unlawful. We disagree. It is unlawful to discriminate on the basis of sex, race, nationality, religion, people with disabilities, etc. Discriminating on the basis of vaccination does not violate that requirement. Beyond those protected classes, discrimination is lawful if there is a rational basis for differentiating different classes of people. Allowing only vaccinated people to use facilities, in order to protect the health of the residents, amounts to a rational basis. As vaccinations become more available to the general population, discussions with respect to allowing only those who have been vaccinated to use Association facilities, will become more intense. Those who require a reasonable accommodation that may make they unable to have a vaccination must be dealt with on a case-by-case basis. Associations should involve their attorneys right away if such a circumstance comes to the Association’s attention. 

4. Waivers/Covenants not to Sue and Indemnification Agreements: There have been at least two attempts in the legislature to obtain immunity from suit with respect to Covid-19 lawsuits in the legislature. Both have failed to pass. Waivers of the right to sue, signed by users of Association facilities are essential in this environment. Waivers are not favored in the law. Evidence of a knowing waiver of a legal right must be established. The best protection for the Association is to have the  waiver should be signed, in person, and a witness should also sign the waiver. The witness should be prepared to testify in court that he/she watched the person signing the waiver read it first and then sign. . Administering a waiver over the internet does not have the same evidentiary support and may decrease the  waiver’s effectiveness.   We recommend that each time a person uses a facility, they sign a new waiver. The waiver should include, among other things, promises that the person signing the waiver has not been in contact with anyone who has had Covid-19 for an appropriate period. Signing such a document at the beginning of the pool season, or the year, is not as protective. For example, if the Association ever gets sued, and during the lawsuit, produces25 waivers from one individual, such a quantity of waivers amounts to solid evidence that the person understood his rights and willingly waived them. Waivers should also include a covenant of indemnification, saying that if the Association gets sued, with respect to an Owner’s family, tenant or guests getting Covid-19, the Unit Owner will indemnify them and pay for their its expenses. We do not recommend allowing guests to use Association facilities and thereby introduce a new population into the facilities, but if guests are to be allowed, it should be made clear to the Unit Owner who brought them in, that they will be responsible if someone is infected with Covid-19 over it. Children cannot legally contract, so it is important that the parents sign on their behalf. Children whose parents sign such waivers cannot be held to them once they turn 18, so these waivers are not perfect.   

5. Pools: There is no current sign whether the seven pages of Health Department Standards for the opening of swimming pools will change. The timing of both the vaccine distribution and the mutation of the virus, may mean that the Standards do not change before the start of the pool season. We hope that we are wrong, but as the saying goes, we should probably “plan for the worst, and hope for the best.” Even if you going to allow pool use, you will still require social distancing, and a waiver form.  You will still must have an “ambassador” to administer and enforce these Standards, and you must have someone cleaning constantly. The average increase in cost for the additional services for some associations (but generally outdoors only, and only during the summer) was about substantial, even for Associations with smaller pool areas. Please keep in mind that the Association’s plan to comply with State requirements must be approved by the local health official. This is a job in itself, and is essential if he pool is to be opened. 

6. Gyms: Last summer, Governor Murphy issued Executive Order 181 allowing independent gyms to reopen. As with the Order allowing pools to open, the Order was followed by pages of new Standards. Later, the Office of Emergency Management clarified that Associations were not covered by the Order unless the facility was open to the public. The problem with all this is that if an Association does not follow the Standards, it can be accused of being negligent. Again, we cannot recommend that gyms be opened, based upon the liability. Tennis Courts: Tennis is an easier sport to deal with, as the players are socially distanced in accordance with the rules of play. Still, frequently-touched surfaces like the gate should be cleaned frequently and the Association must provide a hand sanitizing station. Spectators should be limited or prohibited. Waivers are still important. Allowing only vaccinated persons to play will become a worthwhile discussion in this context, because the Association cannot likely afford an ambassador and constant cleaner for tennis courts. Those waiting to play must socially distance and wear masks.

 We hope you have found this helpful. Please feel free to call if you need to discuss specific procedures or if you require any other type of guidance. We can assist with waivers, amendments for tort immunity and indemnification upon request.

The information in this Client Alert is provided solely for information purposes. It should not be construed as legal advice on any specific matter and is not intended to create an attorney-client relationship. The information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular circumstances.  Each legal matter is unique, and prior results do not guarantee a similar outcome.

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