On November 8th, the Somersett Owners Association (SOA) sent the following “Rockery Wall Lawsuit” Memo (dated November 1, 2019) to Assoiation members via email:
“Dear Somersett Homeowner:
On October 2nd, 2019, Judge Elliott Sattler ruled against the Somersett Owners Association on the Rockery Wall lawsuit. On October 21st, 2019, the Board met with Michael Schulman and Bradley Schrager from Wolf, Rifkin, Shapiro, Schulman & Rabkin, LLP to discuss the judge’s ruling and options available moving forward. The following are bullet points of some of the key items discussed and the responses provided by counsel.
- Cost to Appeal – Wolf Rifkin has agreed to charge the Association a flat fee for the Appeal Process of $15,000.00 plus nominal court costs. This is a heavily discounted cost provided by our law firm. In the event the Association would prevail and the case be remanded to district court, the Board would be able to negotiate a hybrid contingency fee structure that would limit out of pocket costs for the Association in the future.
- The Notice of Appeal was filed within the 30 days required after the early-October court ruling. It was noted that filing the Notice of Appeal reserves the Association’s right to appeal, however, we are not locked into the appeal and could withdraw from the process at several junctures in the future.
- The expected timeline for the appeal process is anticipated to be 18 to 24 months. The first step would be the Supreme Court Mediation process which comes at no cost to the Association. In the event mediation is unsuccessful, briefing would commence at regular intervals for the parties, and we would expect oral argument and a decision to take somewhere in the neighborhood of two years.
- Bradley Schrager would represent the Association in this appeal. He has handled many Nevada Supreme Court appeals and has argued before the justices on more than a dozen occasions.
Taking into consideration the aforementioned information, the Board feels spending $15,000.00 to possibly win millions, or at least to avoid millions in rockery wall repair costs, is worth the risk, and therefore voted to move forward with the appeal process. Michael Schulman, the Association’s lead attorney, will be available to answer questions at the Board of Directors meeting on December 12th. The meeting will take place at 5:30 pm at The Club at Town Center.
The Management Team”
The above formalizes what was made known (without details) to Association members in late October. However, it still raises the following questions/comments:
- What is the basis for the appeal? That is, what material facts that resulted in the summary judgement “as a matter of law” are in dispute?
- The $15K flat fee seems reasonable, and described as a “heavily discounted cost”, but discounted from what? Given all the legal fees collected from the SOA, perhaps pro-bono for the appeal process would have been in order.
- If we win the appeal, and the case goes back to trial, what would this cost the SOA? What is meant by, “the Board would be able to negotiate a hybrid contingency fee structure that would limit out of pocket costs for the Association in the future”? Bare in mind that the SOA has already incurred approximately $400K in legal fees, without even going to trial. Are we looking at another $400K or more? In the spirit of NRS 116.31088 SU believes Association members are entitled to an updated total cost estimate.
- How does this affect the Tolling Agreement between the SOA and the SGCC, which put on hold (until December 31st, 2019) litigation against the SGCC for $680K in Rockery Wall repair costs? Something the new Board will have to consider?
- Given the 30 day deadline to appeal the October 2nd Court ruling, and with the Board not meeting in executive session until October 21st, it is clear the appeal had to be filed before the next open Board Meeting, thereby precluding any owner input/comments and Board voting in public. One might question as to why the Board did not meet on this issue in early October in time for inclusion within the October 16th open Board meeting, or perhaps call a special meeting, which in SU’s opinion would have been the right thing to do.
- If a formal Board vote was required, how was it accomplished and documented? What was the discussion and how did the individual Directors vote? This is certainly not confidential and should have been addressed in the above memo. That said, it is fair to assume voting was documented via the signing of a written consent document as was used in initiating the original lawsuit. If a quorum of 66% was required, and Director Roland recused himself as previously, then all of the other four Directors (Fitzgerald, Strout, Retter and Leto) would have had to vote for the appeal.
Perhaps all of these and additional questions can be answered at the December 12th Board meeting where the SOA Attorney will be available to address them. As noted in the above memo, “we are not locked into the appeal and could withdraw from the process at several junctures in the future”.