SGCC Response and Counterclaim to SOA Complaint

In our previous Blog Post entitled “SOA Legal Complaint Against the SGCC”, SU summarized  the Somersett Owners Association (SOA) Complaint (allegations) against the Somersett Golf and Country Club (SGCC) along with an accessible copy of the Court filing document. On July 10th 2010, the SGCC provided its legal response to the SOA’s allegations along with a Counterclaim.  A complete copy of the SGCC’s legal filing may be accessed via the following link:

SGCC Response and Counterclaim, CV20-00872

Response to SOA Complaint

The SGCC response addressed all 103 of the numbered paragraphs in the SOA Complaint, most of which were just boiler plate. With regard to the paragraphs of substance, the SGCC basically denied all of the SOA’s allegations (summarized in previous Post) and offered up the following “Affirmative Defenses” (edited and paraphrased, not direct quotes).

  1. The SOA failed to state a claim upon which relief can be granted.
  2. The SOA’s claims are barred by the doctrine of laches (i.e., unreasonable delay in filing the Complaint).
  3. By its actions, the SOA has waived its claims against the SGCC.
  4. Because of its actions, the SOA should be estopped (prohibited) from asserting its claims, including the destruction of evidence relevant to the SGCC’s defense.
  5. The SOA’s own actions contributed to and exceeded any alleged breach on the part of the SGCC and the SOA’s damages, if any, should be reduced or denied by reason of the SOA’s negligent acts and omissions.
  6. The SOA failed to mitigate its damages and any recovery should be offset by the amount the SOA could have mitigated such damage.
  7. The actions and conduct of the SOA and other unnamed third parties acted as an intervening and superseding cause of any damages the SOA may have suffered, thus eliminating liability on the part of the SGCC.
  8. Defendant has made payments to the SOA ($500/month during the Tolling Agreement period) the amount of which should offset any amounts due the SOA by reason of its Complaint.
  9. The SGCC has expended effort, time and money to repair a portion of the damaged area, the value of which should be offset against any amounts due to the SOA.
  10. Some of the SGCC’s efforts to comply with both the Lease and Water facilities Agreements were impractical, if not impossible – Force Majure (an unforeseeable circumstance that prevents someone from fulfilling a contract).

Based on the preceding, the SGCC is seeking the following Judgements from the Court:

  1. An order dismissing the SOA’s Complaint and directing that the SOA recover no damages whatsoever.
  2. An order determining the value of payments made to the SOA and work performed by the SGCC and offsetting this against any sums due to the SOA.
  3. An order awarding costs, attorney fees and such other relief as the Court deems proper.

SGCC Counterclaim

The SGCC Counterclaim addressed the following Causes of Action ( edited and paraphrased, not direct quotes unless so indicated):

  1. Premises/Liability/Negligence – The SGCC contends that the SOA was aware there were problems with the Common Area above the SGCC’s leased property that constituted a dangerous condition and “failed to take appropriate measures to either discover the magnitude of the dangerous condition and/or make the condition safe and/or warn the SGCC of the condition and potential danger, all of which caused or contributed to the failure of the slope and rockery walls on the slope, a portion of which was upon SGCC’s property, and caused the SGCC to suffer those damages described herein.”
  2. Misrepresentation/Lease Agreement – The SGCC contends that had the “Association disclosed to the SGCC the issues with the adjoining area, the SGCC would not have entered into the Lease or would not have made the warranties concerning the property that it did”. Also “As a proximate result of the failure to disclose the defects in the adjoining area, The SGCC has been damaged in an amount potentially equal to the costs of repair of the entire slope, costs of repairs to its property, engineering fees, loss of business, and attorney’s fees and costs”
  3. Breach of Implied Covenant/Lease Agreement – More causes of actions based on the SOA’s wrongful conduct in not disclosing facts associated with the Common Area property adjacent to the SGCC leased property.
  4. Breach of Tolling Agreement – An allegation that the SOA has refused to acknowledge that the SGCC is to be given credit for the $500/month payments made to the SOA under the Tolling Agreement or to return these payments to the SGCC.
  5. Quantum Meruit – An allegation that the SOA has become indebted to, and refuses to pay, the SGCC for materials and labor expended as a result of damage to its property caused by work performed by the SOA on the adjacent Common Area property.

In its Counterclaim, the SGCC is seeking the following judgements (direct quotes).

  1. For damages equal to the value of the materials and labor expended to repair its Property as a result of the Association’s acts and/or omissions.
  2. For amounts paid to the Association pursuant to the parties’ Tolling Agreement.
  3. For loss of profits to the SGCC’s business as a result of the Association’s negligent maintenance of its property.
  4. For reformation of the Lease Agreement relieving SGCC of its warranty obligations based upon the misrepresentations of the Association.
  5. For reasonable attorney’s fees and costs incurred by the SGCC in prosecuting this Counterclaim, and
  6. For such other and further relief as the court deems just and appropriate under the circumstances.

The SOA has until July 31st to respond to the SGCC’s Counterclaim. When filed, SU will post on this website.

Comment

In January of this year an Executive Committee was formed (Consisting of Board members Fitzgerald, Baker and Hanson) whose purpose was to meet with representatives of the SGCC and negotiate a settlement on which party was responsible for which portion of the Rockery Wall repair costs and how the SGCC would reimburse the SOA for its agreed upon portion.  The Committee was to publish meeting minutes and to regularly report to the Board at Board meetings. Therefore, the  question is; did any of these meetings ever take place and if so, what were the results? If held, one would have to assume that they were unsuccessful and hence the filing of the Complaint by the SOA on June 5th. Perhaps the COVID-19 restrictions came into play here, but this does not excuse the Board from notifying Association members  as to the filing of the Complaint, as the legal fees are likely to be significant. So much for transparency.  However, if a notification was made and SU missed it – Our sincere apologies.

 

SOA Legal Complaint Against the SGCC

On June 5th the Somersett Owners Association (SOA) filed a Complaint with the Washoe County District Court (Case No. CV20-00872) against the Somersett Golf and Country Club (SGCC). The Complaint addresses two issues 1) Liability for Rockery Wall failure repairs and 2) Liability for Water Well Pump repairs. The filed Complaint consists of seventeen pages and may be accessed via the following link:

SOA Complaint Against SGCC, CV20-00872

In summary the Complaint (allegations) against the SGCC is based on the following:

  1. Failure to live up to the Warranty provisions of Section 9A of the Purchase Agreement (whereby the SOA purchased the Land and Water Rights owned by the SGCC), which included a four-year warranty provision, wherein the SGCC agreed, at their expense, to repair damage to or destruction of any part of the purchased property.
  2. Failure to live up to Section 8.1 of the Lease Agreement (whereby the SOA leased back the land and water rights to the SGCC) wherein the SGCC agreed, at their expense, to remedy all damage to or destruction of any part of the leased property.

The Complaint documents the history between the Parties’ leading up to the filing of the Complaint and categorizes seven “Causes of Action” against the SGCC as follows (as paraphrased by SU):

  1. Breach of Contract – The SGCC breached the contractual provisions of the Purchase Agreement, Lease Agreement and Water Facilities Agreement.
  2. Breach of Implied Covenant of Good Faith and Fair Dealing – The SGCC deliberately failed to perform the terms, provisions and covenants required by the Purchase, Lease and Water Facilities Agreements, including failing to reimburse the SOA for expenses incurred to repair the Rockery Wall failure damage.
  3. Breach of Express Warranty – The SGCC breached the express warranty of the Purchase Agreement by failing to repair the Rockery Wall damage.
  4. Unjust Enrichment – The SGCC unjustly benefitted from the SOA repairing the Rockery Wall damage, at SOA expense, without subsequent reimbursement from the SGCC.
  5. Equitable Relief/Specific Performance – The SGCC improperly replaced a failed Water Well pump (i.e., with an undersized pump), which risks under-utilization and abandonment of essential water rights.
  6. Declaratory Relief – A request for a judicial determination on the part of the Court as to the Parties’ rights and duties under the Purchase and Lease Agreements, as well as their rights and duties pertaining to the Rockery Wall failure. Also, a request for an order awarding the SOA the entire amount of expenses it incurred to repair the Rockery Wall damaged area.
  7. Equitable Relief – Specific Performance for Termination and Turnover of Premises – Given that the SGCC has defaulted on the terms of the Lease Agreement, as an alternate remedy, the SOA seeks eviction and turnover of the Premises, at its election, at the time of trial.

In summary, the SOA is seeking judgments against the SGCC as follows:

  1. For general, special, and compensatory damages
  2. Award of attorney fees and costs
  3. Judgement if favor of the SOA
  4. Water Well pump replacement
  5. An order to turn over the premises to the SOA
  6. A declaration of the Parties’ rights and obligations
  7. An award of pre-judgment and post-judgment interest

Note that the Complaint did not include any dollar value associated with the SOA’s incurred expenses for repair of the damaged area caused by the Rockery Wall failures, of which there were two, an upper wall on SOA common area property and a lower wall on SGCC leased property. It is the SOA’s contention (based on an engineering report) that the lower wall failure is what caused the upper wall failure and subsequent hillside damage. In a Tolling Agreement between the SOA and SGCC, which put litigation on hold, the damage repair cost was estimated at $680K. It should also be noted that the SOA had previously proposed to split the repair costs with the SGCC on a 50-50 basis.

The SGCC has filed a response to the SOA Complaint along with a Counterclaim, which will be addressed in a subsequent Blog Post.

July 22nd BOD Meeting

Following is the Agenda for the Somersett Owners Association (SOA) Board of Directors (BOD) Meeting at The Club at Town Center (TCTC) to be held at 5:30 PM on July 22nd.

July 22nd BOD Meeting Agenda

Given that TCTC is still operating under COVID-19 restrictions, owners may only participate in the meeting via “Zoom” videoconferencing. For those of you who may not be on the SOA email distribution list, following are the instructions for joining the meeting:

Click on this link
Meeting ID: 956 2423 0037
Password: 072840
Dial in for audio (if your computer doesn’t have audio capability): 1-346-248-779
Need help with Zoom? How to Join a Zoom Meeting (YouTube)

The Board Packet providing background information on Agenda items is also available on the SOA Website (www.somersett.net) under the SOA Committees and Meetings link.  Comments on agenda items follow (agenda items noted):

2.  Appoint Member to Open Board Seat:

An action to appoint a replacement for Board Member Joe Strout who had to resign because he was temporarily no longer a Somersett unit owner. Although the Board meeting Packet did not identify an appointment candidate,  It is anticipated that Mr. Strout, who is now a Somersett owner again, will be appointed to fill out his original term.

5  Committee Reports:

 5.b.  Communication  –  John Tozzi and Joe Capotrio were appointed as Chair and Vice Chair respectively. The Committee recommended approval of Alan Wild and Jennifer Pelfini as new Committee members. The Committee has completed preparation of a community wide survey document, which was subsequently approved by the Board for owner distribution.

5.c.  Strategic and Facilities  –  Recommended approval of the following: 1) TCTC Alcohol Policy, and 2) Charter for the Men’s and Women’s Clubs. Policy and Charter were not included within the Board Meeting Packet, assume they will be made available to all owners following approval.

5.e  Governing Documents Committee  –  Completed review of the SOA CC&R’s, Articles of Incorporation and Bylaws and provided recommended changes to the Board.  Some of the proposed changes will require Legal review as well as review by the Somersett Subdivision Developer (i.e., Somersett Development Company). A summary of the proposed changes may be accessed via the following link:  Document Review Committee Summary of Recommendations

6.  Financials:

All the intricate details for the April and May 2020 Financials as well as the 2019 Draft Audit are contained within the July 22nd Board Meeting Packet, which are available on the SOA website referenced above.

7.  Unfinished Business:

7.a.  Legal Updates

      1. The March 13th Rockery Wall Lawsuit mediation session between the parties was unsuccessful, with the SOA rejecting the Defendants offer of settlement (the SOA Attorney Legal Update Letter did not disclose the Defendants offer). The appeal briefing deadline before the court was then scheduled for July 30th and subsequently rescheduled for August 15th at the request of the parties.
      2. On June 5th, 2020 the SOA filed a civil action against the Somersett Golf and Country Club (SGCC) alleging breach of contract pursuant to the Purchase Agreement with regard to the Rockery Wall Failure and Water Well pump repairs. The SGCC answered with a counterclaim alleging Premises Liability/Negligence, Breach of Implied Covenant, Misrepresentation and Quantum Meruit (whatever all that means) on the part of the SOA The SOA has until July 31 to respond.

8.  New Business:

8.a.  Unanimous Written Consent #75  –  Contract approval to Black Eagle Consulting in the amount of $17,600 to produce a RFP for the Somersett Parkway Cut and Lost Creek Slope repairs.

8.b.  Unanimous Written Consent #76  –  Contract approval to Padovan Consulting in the amount of $11,200 for project management services related to item 8.a. above.

8.c.  Brightview Landscape Contract Renewal  –  A contract renewal in the amount of $1,440,868. Renewal period was not clearly identified within the Board Meeting Packet supporting documents.

8.d.  P-Card Approval  –  Approves FirstService employees Ryan Fields, Bernadette Rodas and Pauline Legaspi as SOA US Bank Purchase Card holders with a $1000 limit per purchase.

8.e.  Appointment of Communication Committee Members  –  See item 5.b. above

8.f.   Club Group Policy –  Establishes the policy/requirements for the formation of  SOA member groups using SOA facilities. Policy is accessible via the following link:  SOA Club Group Resolution

8.g.  Revised TCTC Rules and Regulations – The Board meeting packet did not contain a complete copy of the revised Rules and Regulations document, assume it will be made available to all owners following approval.

8.h.  Revised AGC Guidelines  –  The Board Meeting Packet did not contain a copy of the revised Guidelines, assume it will be made available to all owners following approval

8.i.  Discussion on Maintenance Agreement at the TCTC Roundabout – Not sure what this discussion is about, at the May BOD Meeting the Board approved sharing the maintenance costs on a 40% SOA and 60% Villages basis, even though the roundabout maintenance is a Villages responsibility.

8.j.  Discussion on Possible Refund of Assessments  –  Most likely related to TCTC assessments and the non-availability of use by owners during the COVID-19 restrictions

SOA Document Review Committee Summary of Recommendations

In Janurary 2020, the SOA Board of Directors approved the establishment of a “Governing Documents Review Committee” to review the SOA’s CC&R’s (i.e., the Declaration), Articles of Incorporation and Bylaws and provide recommended changes to the Board. Iinitially there were approximately twenty-four homeowners who showed an interest in serving on the Committee along with Board members Hanson and Retter. However, The subsequent shutdown of TCTC impacted meetings and the Committee boiled down to fourteen owners who continued to review the documents and discuss changes via video conferencing.

The Committee has completed its initial review of the CC&R’s, Articles of Incorporation and Bylaws and submitted its recommendations to the Board. The Committee submittal to the Board consisted of edited copies of the curent versions clearly indicating the recommended additions and/or deletions thereto. A letter summarizing the Committee’s recommendations was also submitted to the Board. For reader information, this letter may be accessed via the following link:

Document Review Committee Summary of Recommendations

What remains is: 1) Board apprvoals, 2) SOA Attorney review for compliance with Nevada Law, 3) negotiation with the “Declarant” (i.e., Blake Smith of the Somersett Devlopment Company) on changes that require his approval, and 4) submittal to Association members for ratiication, that is, a majority vote (i.e., > 50%) of all members in good standing.

Note that the Committee’s Charter did not include review of the “Somersett Aesthetic Guidelines”. However, it is SU’s understanding that this document is also under review by the Board.