Rockery Wall Lawsuit Appeal & SGCC Tolling Agreement

The following is an addition to the previous post on the December 12th SOA BOD Meeting Recap

ROCKERY WALL LAWSUIT APPEAL – Agenda Item 7.b

At the December 12th SOA Board Meeting, the SOA Attorney, Michael Schuman, was present to provide a Rockery Wall lawsuit update and to present and answer questions on the Decision to Appeal.

Update:

  • The SOA filed the Notice to Appeal on November 1, 2019
  • On the original lawsuit, the Defendant’s motions for Attorney fees and the SOA’s oppositions to such have both been filed. It appears that the SOA’s liability for such fees will be in the $100K – $150K range. This judgement is expected before year-end, but any awards will be placed on hold pending the Appeal decision.
  • A joint teleconference with the Settlement Judge was conducted on November 13 with a Mediation Session set for March 13, 2020.

Decision to Appeal:

Mr. Schulman gave a lengthy dissertation, albeit not very understandable or persuasive to the average soul, on the Decision to Appeal. Bottom line is that he primarily gave the same reasons for success that he did at the March 2018 homeowner information meeting on the initial lawsuit.

It appears that they are hanging their hat on refuting the Court’s decision as to when “substantial completion” of the Rockery Walls occurred. Hence, falling within the Statue of Repose limitations. He offered up his opinion that the presiding Judge has not been consistent in his rulings on this issue and therefore, worth appealing. Also that the potential cost of Rockery Wall failures in the future justified the decision to proceed with the lawsuit.

In addressing cost questions, Mr. Schulman advised that the $15K fee to the Association for filing the appeal was very reasonable. He dodged the question as to what “discounted fees” would be afforded the Association should we win the appeal and continue the lawsuit, that this had not yet been established. Regarding the total estimated cost for continuing the lawsuit, should the appeal hold up, Mr. Schulman advised that this is difficult to estimate at this time, but would not rule out another $400K – $500K. He commented on the fact that “expert” testimonies and documents would not have to be repeated. Therefore, no additional costs in this area.

Mr. Schulman also advised that the March 13 Mediation Session will most likely not produce any closure and that the Appeal will then go to the Supreme Court for resolution.

SU’s main criticism of Mr. Schulman’s presence was that, rather than keeping his Decision to Appeal comments and question responses sweet and simple, he obfuscated them with too much lengthy and tangential dialog. Thereby losing his audience.

SGCC TOLLING AGREEMENT EXECUTIVE COMMITTEE – Agenda Item 7.r

At the December 12th SOA Board Meeting, the Board approved the formation of an “Executive Committee” to interface with the SGCC for payment of repairs made on SGCC leased land as a result of the Hole 5 Rockery Wall failures. Note that these walls were not replaced, rather a hillside modification was made encompassing both the SOA common area portion and the SGCC leased portion.

Litigation against the SGCC for payment of their share of the repair costs (estimated at $680K) was previously placed on hold via a Tolling Agreement, in effect until December 31, 2019 unless renewed by both parties. In discussing this item, the Board voted to not extend the Tolling Agreement. A benefit to the SOA in that they can now proceed with a lawsuit against the SGCC if so desired. A benefit to the SGCC in that they no longer are obligated to pay the SOA $500/month as stipulated in the Agreement.

The Committee will consist of five members. Three of which will be those Board members not associated with the SGCC (i.e., Fitzgerald, Hanson and Baker) and two homeowners appointed by the Board. Ostensibly owners with “unbiased opinions”.

The SOA General Manager will prepare a Charter for the Committee and submit it to the Board for approval. Per the GM, it will be simple, probably no more than one short paragraph (good luck with that!) with a stated purpose of resolving the payment issue with the SGCC.

SU suspects that the preceding will not alleviate homeowner fears that, due to the SGCC’s financial woes, a settlement will be reached at the expense of the SOA. Many will question the need for such a Committee, given that the SGCC’s obligations under the Purchase Agreement are quite clear. Therefore, either they pay-up or the SOA sues them for breach of contract and payment of the repair costs. If this results in defaut on the part of the SGCC and the land reverts back to the SOA, then so be it.   –  A very controversial issue at best!

December 12th BOD Meeting Recap

Following is a recap of issues discussed and/or approved at the December 12th Somersett Owners Association (SOA) Board of Directors (BOD) Meeting (Note: Board Member Baker was not in attendance). Corresponding Agenda items are referenced. Also note that a recap of Agenda Items 7.b “Rockery Wall Lawsuit – Decision to Appeal” and 7.r “SGCC Tolling Agreement – Appointment of Executive Committee” will be covered in a subsequent Post. A copy of the BOD Meeting Agenda may be accessed via the following link:

December 12th BOD Meeting Agenda – Final

Homeowner attendance at the meeting was minimal and disapointing, which was surprising given the previous announcement that an SOA Attorney would be in attendance to answer questions on the decision to appeal the Court’s decision on the Rockery Wall Lawsuit.

Prior to start of the Meeting, Board Member Retter isued an appoligy to homeowner Dean Nishimura for interrupting his comment at the last Board meeting, which led to an unfortunate confrontation. Mr. Retter acknowledged that his interruption was inappropriate as all owners have a right to be heard without interrruption.

Homeowner Comments On Agenda Items

  • A request that in discussing Item 7.r, “Appointment of a SGCC Tolling Agreement Executive Committee”, the Board address the specific purpose/charter of the Committee and what they hope to accomplish.
  • An opinion on, whatever was decided on the Developer’s offer pertaining to Item 6.c “Ventana Ridge Easement Access”, that the BOD recognize a homeowner vote for acceptance is required and would be carried out.
  • A recommendation that the Item 7.l “Office Space for Vue/Village Community Manager at TCTC” request be disapproved, as sufficient space already exists in the Sub-Association’s conference room.
  • In reference to Item 7.r, that it is time for the SGCC to pay up for their share ($680K) of the Rockery Wall repairs on the SGCC land leased from the SOA.  The homeowner made the following points: 1) As the Lessee the SGCC is responsible for operating and maintaining their golf course, which was built on SOA land; 2) Somersett owners have paid $215 each out of the $1,200 assessment for the Golf Course repairs, it is not right that owners have to subsidize the SGCC; and 3) Fears that the Golf Course going brown and home values being affected are nonsense, the SOA owns the water rights and can easily keep green and open whatever portion of the land it so desires.

Financials

  • 5.a. & 5.b. Treasurers Report and October, September & August 2019 Financials – The Board approved the financial statements (e.g., Balance Sheets, Revenue & Expenses) for each of the four cost centers (i.e., Common Area, TCTC, Private Streets & Gates, Town Center). For those interested in all the details, the financial statements are included within the December 12th Board Meeting Packet accessible on the SOA website (www.somersett.net) under the SOA/Committees & Meetings tabs.

Old Business

  • 6.a. Legal Updates – The SOA Attorney Michael Schulman was present at the meeting to provide an update on the Rockery Wall Lawsuit and answer questions on the decision to appeal the Summary Judgement that ruled in favor of the defendants (Somersett Development Company et al.). See Item 7.b below.
  • 6.b Easement Access Appraisal for Ventana Ridge – The Board voted (3:1 with Board Member Retter voting NO) to sell the easement property in question to the Ventana Ridge Developer for $300,000 plus all associated costs. Given this is a sale of Common Area property, a homeowner vote will most likely be required.

Editor Comment: The requested easement involves a small section of SOA unused native land at the upper end of Painted River Trail, which essentially provides no usage benefit to the SOA. Easement will permit a Ventana Ridge road to connect to Peavine Creek Road in the residential area adjacent to Somersett. There will be no access to Somersett properties from Ventana Ridge.

  • 6.c String/Bare Bulb Lighting Policy – No progress since last Board Meeting, where the elements of the policy (see following link: Proposed String Lighting Policy) were approved. What remains is to officially incorporate within the SOA policy guidelines.

New Business

  • 7.a  Unanimous Written Consent, Generation Pool Proposal – An acknowledgement that the Board had previously approved Generation Pool to perform repairs to the TCTC kids play pool (resurfacing) in the amount of $58,500.
  • 7.b  Rockery Wall Lawsuit Appeal Decision – See subsequent SU Post on this item as well as Item 7.r “SGCC Tolling Agreement Appointment of Executive Committee”
  • 7.c  Canyon9 Landscape Maintenance Sealed Bids – Two bids for a three year contract were received, one from Reno Green (current vendor) and one from BrightView (Albeit a different Division from the one currently performing the Common Area landscape maintenance). Both were close in price with different provisions for years 2 & 3. Bids were referred to Staff for “apples to apples” evaluations. Whatever the decision, pricing will most likely be in the $285K/year range.
  • 7.d  Town Square and TCTC Landscape Maintenance – Bids were received from Signature Landscaping ($26,684 Town Square & $7,500 TCTC) and BrightView ($27,780 Town Square & $7,092 TCTC). The Board voted to accept the BrightView proposal. Given the closeness of the two proposals, they felt it was beneficial to have the same vendor as for the Common Area.
  • 7.e  IQ Technology Solutions Contract Renewal – IQ contract for IT support services was renewed at $2,455/month.
  • 7.f  Imagine Marketing & Design Newsletter – Annual contract for publishing of the Somersett Living Magazine was renewed at no cost to the SOA. Imagine makes revenue off of advertisements.
  • 7.g  Prestige Building Maintenance Contract Renewal – A Prestige Building Maintenance two year contract for TCTC Janitorial services (includes offsite bathrooms) was renewed at $6,250/month.
  • 7.h  Play Pool Electrical Work – Vasco Electric was awarded a $15,247 contract to upgrade the TCTC kids play pool pump control system.
  • 7.i  Upright Bike Proposal – Approved $3,037 purchase of a Precor UBK Upright for the TCTC Fitness Center with some BOD recommendations regarding placement.
  • 7.j  Flooring Replacement Proposals – Accepted the SI Legacy Commercial Floor Finishing proposal of $30,700 for carpet replacements at TCTC.
  • 7.k  Appoint Members to West Park Community Garden Committee – Homeowners Ken McNeil (Chair), Lorrie Moore, Gary Fleeman, Rosie Metsker and Jay Deputy were appointed to the Committee. K Kuan So was designated as an alternate
  • 7.l  Office Space for the Vue/Village Sub-Association Community Manager – Office space for the FirstService Residential Community Manager was approved for TCTC occupancy. A spare office space was available and it was determined beneficial for improved communications between Master and Sub-Association management.
  • 7.m  2019 Audit Proposal – Approved retention of Hilburn & Lein, CPAs as the SOA auditor. Fees estimated at $7,275.
  • 7.n  Amended Liquor License – Liquor license at TCTC was in the name of Mellissa Ramsey (former SOA Community Manager) who is moving out of state and no longer able to continue it. License was terminated effective immediately. Alternative is for the liquor license to be placed in the name of the SOA Board. No decision was made, situation will be looked into.
  • 7.o  Board Liaison Assignments for Committees – Assignments (Primary/Alternate) are as follows: AGC – Fitzgerald/Hanson; Finance – Baker/Strout; Communications – Retter/Hanson; West Park Garden – Strout; Facilities – Retter/Baker. SGCC assignments were placed on hold pending adoption of the SGCC Tolling Agreement Committee Charter (See Agenda item 7.r)
  • 7.p  2020 On-Site Reserve Study Proposal – Approved acceptance of the Browning Reserve Group proposal to perform the SOA Reserve Study. Price was $10,000.
  • 7.q  2020 BOD Meeting Date Calendar – Approved, see following link:   2020 Board & Executive Meeting Calendar
  • 7.r  SGCC Tolling Agreement Appointment of Executive Committee – See subsequent SU Post on this Item as well as Item 7.b “Rockery Wall Lawsuit Appeal Decision”

Board Member Comments

  • Board Member Retter suggested looking (in conjunction with the Communications Committee) into the holding of Town Center Meetings on important SOA issues. Also, wants to form a Committee to review and modify the SOA’s Governing Documents (e.g., the PUD, CC&Rs, Bylaws, and Aesthetic Guidelines).

Post Meeting Homeowner Comments

  • A homeowner shared information on traffic safety issues/initiatives primarily along the 4th Street Corridor. This included the consideration of a round-about to relieve the entrance/exit traffic safety issue at Mesa Park Road and 4th Street.
  • The owner of the storage facility adjacent to Sierra Canyon who wants to build an additional storage facility addressed the Board with some problems he is apparently having with the Aesthetic Guidelines Committee. His presentation was a little hard to follow for the uninformed on this project. Apparently it has something to do with setbacks and a desire to have a more open dialog with the AGC to resolve differences.
  • A comment on why the Board did not go out for competitive bidding on TCTC janitorial services given the magnitude of the contract ($150K over two years). Management Staff response was that competitive bids were difficult to obtain (15 sent out last time with only 2 responses, one of which was too high). Therefore, the decision to renew the current vendors contract based on no price increase and acceptable past performance. Also, a comment that the Communication Committee suggestion to consider inclusion of advertisements on the SOA website to generate revenue was a bad idea.
  • An opinion that the SOA Attorney did not give a positive enough response on their recommendation to appeal the Rockery Wall lawsuit decision to warrant moving forward with it. That even if we win the appeal, we will eventually loose the lawsuit at a significant cost in legal fees to the Association.
  • A kudos to the SOA and Somersett residents for their Holiday decoration efforts.

Note: Both of the above Homeowner Comment sections reflect what the writer remembers from attendance at the Meeting and listening to the audio tapes of such, which are not always clear. If any of the above characterizations are not entirely correct, corrections are welcome.