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!

One thought on “Rockery Wall Lawsuit Appeal & SGCC Tolling Agreement

  1. How did this decision take place? Who voted for this, or was it unanimous? Did this need to be ratified, at a regular Board meeting, because I don’t remember any ratification. Terrible decision.. a waste of $15,000 SOA money, as pursuing the case could result in another $400K, in addition to the $400K that was already wasted on attorney fees.. and that’s a conservative estimate.. Then we could still lose, and have to pay winner’s attorney cost..

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