Moana Nursery Litigation Ratification

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Somersett residents recently received a letter from the SOA’s attorney which contained a ballot on whether or not to ratify the SOA Board’s decision to continue litigation (i.e., through the filing of a lawsuit) against Moana Nursery.  This action being required because negotiations with Moana Nursery to resolve defect claims associated with installation of the common area main line irrigation system have not been successful.  The letter further stated Association expenses to date (defect corrections and fees) are over $400,000 and do not include any unknown future costs.

 It is SU’s opinion that Somersett residents should vote “Yes” to ratify the decision to continue the litigation against Moana Nursery.  This seems like the logical path given the situation as stated in the attorney letter.

What the letter did not address is the Somersett Developers liability with regard to this issue.  The “Tolling Agreement” signed between the SOA Board and the Somersett Development Company (SDC) in early 2010 states that: “Each party agrees to jointly pursue and cooperate in pursuit of a claim against Moana Nursery and Hansen Landscape Architects …” and “…each of them shall bear their own attorneys fees…”.  The attorney letter implies that the $400,000 in corrective work, the $8,000 in expert fees, the $40,000 in attorney fees and an estimated $10,000 in future attorney fees are an Association expense.

It is SU’s opinion that none of the above should have been or should be an Association expense.  The irrigation system installation was not performed via a SOA contract, but rather by the Developer and/or its subcontractors.  Therefore, the corrective work and all claims against Moana Nursery and Hansen Landscape Architects should have been the sole responsibility of the SDC.  Given this, it is hard to understand the reason behind the “Tolling Agreement” to proceed jointly.  Fortunately the Agreement also states: “In making this cooperative Agreement, Somersett Owners’ Association does not relinquish any rights or claims it has or may have against Somersett Development Company, LLC in the future”.  Hopefully the new all homeowner SOA Board to be elected in November will recognize where the liability for defect corrections really lie and proceed accordingly against SDC for any unrecovered SOA costs.