Rockery Wall Lawsuit NRED Intervention

At the June 27h BOD Meeting, via a “Legal Update” Attorney Letter dated June 27th, it was revealed that the SOA’s decision to proceed with the Rockery Wall lawsuit was under investigation by the Nevada Real Estate Division’s (NRED) Enforcement Section. This as a result of an Ombudsman Intervention Affidavit filed by a Somersett homeowner. The Affidavit alleges that the SOA BOD violated NRS 116.31088 by authorizing a civil action to proceed without the required number of Association Member votes to ratify such action. Specifically, out of the approximately 3100 Association ballots sent out, 953 ballots were returned, of which 716 were in favor. This represents only 23% of the total number of allocated members, not a majority as required by the statute. However, the Board subsequently voted to proceed based on the returned ballot results only. The NRS Statute, whose violation is in question reads as follows:

“To protect the health, safety and welfare of the members of the association. If a civil action is commenced pursuant to this paragraph without the required vote or agreement, the action must be ratified within 90 days after the commencement of the action by a vote or written agreement of the owners of the units to which at least a majority of votes of the members of the association are allocated. If the association, after making a good faith effort, cannot obtain the required vote or agreement to commence or ratify such a civil action, the association may thereafter seek to dismiss the action without prejudice for that reason only if a vote or written agreement of the owners of the units to which at least a majority of votes of the members of the association are allocated was obtained at the time the approval to commence or ratify the action was sought”.

Following an owner letter to the Board, the alleged violation was placed on the agenda for the May 23rd BOD meeting and addressed by Association Attorney John Samberg in which, per the meeting Minutes, “John Samberg was present and discussed that the Board acted in good faith and in accordance with the four corners of the law while filing this lawsuit. The Nevada statute has various components and requirements. We (the SOA attorney) believes that those requirements were met and the Board was acting in good faith on behalf of the community”. Although the wording of the statute leaves something to be desired, the requirement for a majority vote of all homeowners appears to be quite clear. Since Mr. Samberg did not offer any other legal basis to proceed with the lawsuit, a subsequent appeal to the NRED Ombudsman was initiated via the Intervention Affidavit process.

In retrospect, Mr. Samberg’s opinion that: “…the Board was acting in good faith on behalf of the community…;” is questionable given the following:

  1. The SOA law suit was filed with the District Court on December 29th without any prior notification to Association Members.
  2. Association Members were first notified of the lawsuit on February 23rd, almost 60 days after filing of the lawsuit, and provided with a ballot to either Ratify or Not Ratify.
  3. A Homeowner Information Meeting was held on March 10th to discuss the basis for the lawsuit. A major concern by those present was the 6-year statute of limitations on a Chapter 40 Claim for Damages. The SOA Attorney, without citing any other statutes, felt there was a work-around here, but would not reveal their litigation strategy.
  4. To be eligible for counting, all ballots were to be received by March 28th, which coincidently corresponded to the NRS 116.31088 90-day limit for ratification after commencement of the action (i.e., the lawsuit filing date).
  5. The vote count was not made available to Association Members until mid-April, citing Attorney reasons, which closely corresponds to the date of the “Unanimous Written Consent“ document referenced below.
  6. The BOD via a Unanimous Written Consent document, effective April 14th, approved proceeding with the lawsuit based on the returned ballot results. It should be noted that the Unanimous Written Consent process is normally reserved for emergency and/or time sensitive issues.  This in lieu of discussion and approval at the next regularly scheduled open Board meeting. Also it was not a unanimous consent as Director Roland abstained.

Should one consider the preceding a “Good Faith”effort on the part of the BOD? Of concern is why the BOD waited 60 days after filing of the lawsuit to notify Association Members and distribute ballots. Thus, leaving only 30 days for ratification with no time for any extension to solicit additional ballots should a majority vote not be reached. It should have been obvious to the BOD, based on past history, that a majority vote could not be reached in this time frame. Was the BOD counting on this, knowing that initial ballots are usually in favor, and that many who oppose will just not bother to submit ballots without further prompting? Especially given that at the March 10th Information meeting, a BOD spokesperson, in soliciting ballot submittals, stated that a non-submittal was essentially the same as a “No” vote.

The ratification issue is now in the hands of the NRED’s Enforcement Section, for which the SOA BOD has until July 16th to provide a response to the alleged violation. Will the NRED determine that the SOA BOD made an appropriate “Good Faith” effort and can proceed with the lawsuit, or that they are in violation of Nevada Law and must curtail activities until a majority vote of all allocated owners is accomplished? Only time will tell.

Note: Previous posts on this subject may be accessed via the following links:

 

June 27th SOA BOD Meeting Recap

Meeting Agenda  –  The revised agenda may be accessed by clicking on the following link.  Page numbers refer to the supplemental BOD Meeting Packet, which is available on the SOA website.

Revised June 27th BOD Meeting Agenda

A recap of some of the more significant items discussed and/or approved follow:

Item 4.f General Manager Report – The complete General Manager Report is available on the SOA Website. This report summarizes Aesthetic Guidelines (AGC) and Community Standards (CSC) Committee activity, The Club at Town Center (TCTC) activities and usage factors, Special Projects/Maintenance updates, and General Manager Activity. The General Manager section included:

Announced hiring of James O”Connnell to fill the open FSE Project Manager position and Jeff Lucas to replace Ron Eckhardt as Maintenance Operations Manager.

A proposal from High Sierra Forestry to oversee the Fire Fuel Reduction Program. Proposal forwarded to the Finance Committee for review.

An update on homeowner complaints about native vegetation fire hazards on adjoining Somersett Country Club property. Country Club response was that they had checked with the Fire Department and discovered no violations, and that “We will continue to be as proactive as we can on the golf course side with the limited maintenance crew we have, but there isn’t much we can do as far as getting out to specific properties”.

Editorial comment: Perhaps the new FSE Project Manager can review the Purchase and Lease Agreement with the Country Club to see if they are in violation of their maintenance responsibilities.

Item 6.a  Legal Update – The SOA Attorney letter addressing all pending litigation may be viewed via the following link  “June 27, 2018 SOA Legal Update. Regarding the Rockery Wall lawsuit, a Mediation session was held between litigants on June 22, 2018. However, the proceedings were deemed confidential, so no details were provided. Additionally, the Association received notice from the Nevada Real Estate Division of an owner complaint that the Association did not comply with NRS 116.31088 in proceeding with the Rockery Wall law suit. The NRED has asked the Association to provide copies of governing documents and those “documents relating to the actual vote to ratify the filing of the lawsuit”. The Association has until July 16, 2018 to respond.

Item 6.b   Website Standard Terms and Conditions  –  No update or approval was provided

Item 6.c  Pool Redesign Sealed Bid – Only one bid was submitted. That from Dennis Banks Construction in the amount of $470,183. This was higher than expected and much discussion ensued. This along with related items 7.a,b,c below were eventually referred to the Finance Committee for review and evaluation

Items 7.a,b,c  Pool Project Related Proposals – Proposals were received from three separate contractors for pool construction support activities. These for1) Construction Surveying, 2) Materials Testing, and 3) Structural Engineering Services. Total for all three came to about $14,000. This is in addition to the $470,183 referenced above. Bottom line is that the Pool Redesign Project with contingencies, and based on current proposals, will amount to approximately $500K. Given that the Club at Town Center’s 2018 total budget for upgrades was $500K and considering amounts already spent, the Pool Project will put the TCTC special projects well over budget.

Item 7.d  Permit Application and Emergency Plan for Canyon 9 Dam – The BOD accepted the House-Moran Consulting proposal in the amount of $8,000 for this work

Item 7.f  Resident Meeting to Discuss Document Changes – A homeowner meeting is scheduled for 5:30 PM on July 9th at TCTC. Purpose is to discuss perceived need for modification of the SOA Governing Documents, the constraints associated therewith, and the process for accomplishing. The meeting will not be open for discussion/comments on specific changes. This will come later if it is decided to proceed with modifications.

Homeowner Comments:

An owner complained about the reduced lap pool hours as being unfair to those who rely on lap pool use for exercise.

An owner presented a complaint to the SOA Board concerning the rude conduct of the BOD President at a homeowner initiated meeting to discuss TCTC Potluck Dinner policy. A copy of the owner complaint, reprinted with permission, is available for viewing via the following link: “SOA BOD President Complaint

Editorial Comment – Although not required by the Homeowner, SU felt it prudent to not disclose the owners name on this venue, hence its removal from the submitted complaint

An owner asked whether the recent Association Member email discussing burglaries and security patrols in Somersett implied that increased security patrols would ensue. The response was that increased patrols are not planned for at this time, only a more judicious look at patrol timing and routes.

June 27th BOD Meeting Agenda

The Somersett Owners Association (SOA) Board of Directors (BOD) open meeting is scheduled for Wednesday, June 27th at 5:30 PM at The Club at Town Center (TCTC) Sports Court. The Meeting Agenda may be accessed by clicking on the following link or on the Association website www.somersett.net under the SOA/Committees and Meetings tab.

June 27th BOD Meeting Agenda

The BOD Meeting Packet providing additional information on agenda items has not yet been published by the SOA. When released it will be available on the Association website under the same tab referenced above for Agenda access. Upon publication, this website will provide any agenda updates and relevent comments.

Note that the June meeting agenda contains several items related to redesign of the swimming pool at The Club at Town Center (TCTC), including the opening of sealed bids. Hopefully, results this time around will be satisfactory.