An Owner Perspective on the SOA Rockery Wall Lawsuit Settlement

The following post submitted by Geoffrey Brooks, Somersett Homeowner:

SU Note: Following the announcement that the SOA Lawsuit Appeal against the Somersett Development Company et al had been denied, Mr. Brooks posted the following within the Discussion Forum on the SOA website. It is being republished here at his request. The following also contains Board President Mark Capalongan’s response, with his permission,  to Mr. Brook’s comments.

Geoffrey Brook’s August 4th SOA Website Post:

“I attended the legal meeting before the vote to pursue the rockery wall builders and developer. Schulman gave a presentation where little in the way of a “prima facie” case was made. (We were told that they did not want to tip off the legal opposition)

Most of the meeting revolved around discussing the Geotech report on how badly built the SOA owned 17 miles of walls were… Monitoring devices were put into place in some areas (now removed as no significant movement has been detected). The report created a climate of fear within the community …

Personal inspection using the GeoTech report of nearby rockery walls (not just in Somersett) at that time, including those near where my house is located (along with my neighbors) led us to the conclusion that any defects noted were minor and inconsequential. The danger of them tumbling down was obviously exaggerated (for the law-suit)!

At the meeting several folks spoke out against pursuing legal action. The community vote did not meet the CCR/NRS legal requirements. Back in 2011 when the SOA (developer controlled) was suing under Chapter 40 – the vote was held open until the CCR/NRS voting requirement was satisfied…

The Board actually had perfectly good reason not to pursue the law suit…(homeowners were not privy to the legal analysis, on which the suit was to be pursued).

But the fear for the safety of the community from collapsing rockery walls (based on GeoTech’s report) and under persuasion from our attorneys – justified their decision to go ahead, without proper legal community approval (per NRS and CCR’s).

I read through the original judgement against Somersett … The judge was all over our attorneys for not having a case, and making nonsensical arguments about how long a wall should last!

At a subsequent homeowner meeting, when the attorneys wanted the Board to pursue the appeal. We were told that this would be done essentially pro-bono. They were pursuing a similar case in Las Vegas; where the turnover date by the developer to the residents, is the date from which the “countdown” clock for 6 years start for any property now owned by the HOA. This would establish a new legal precedent!

In my business life, I never felt that being on the cutting edge of legal precedent was a good idea; whereas, conversely for science based projects it might be OK to be on the leading edge!”

Mark Capalongan’s Response:

“Hello Geoffrey,

That informational meeting is still on the web and can be viewed here:

https://www.youtube.com/watch?v=NWziVILTz48

Afterwards, 71% of the votes received were in favor of the lawsuit. Missing from the presentation was any discussion of the risks of bringing the lawsuit, the costs of that lawsuit, if the defendants had any ability to pay, and any estimated on the chances of success. The discussion seemed to be centered on the fact that the walls were bad, and defects were identified. Very little was said about the statute of repose, and in the end that’s all that mattered.

So homeowners were missing some key information when they voted. We forgot to ask (or the law team effectively evaded) the hard questions. In making the wrong case, the legal team pumped up the defect status to include some 70 miles of rock wall and did the entire community a disservice by overstating the risks and problems. Some of those claims made the papers.

For the appeal, the SOA paid a fixed cost up front. It wasn’t free.

In the end, this case was probably used to test the robustness of the statue of repose, something that should be left to deeper pockets (and scientists.) In the future anyone coming up against a similar situation will have an even tougher time of it.

Mark Capalongan”

Mr. Brooks response on August 4:

“Hi Mark

It is obvious that if the CCR’s and NRS had been followed to the letter, the suit would not have happened… The then Board decided to sue, based on the fact that by the end of January the 6 years the Statute of Repose for the Declarants turnover to the Homeowners would have expired.

Unfortunately, before the turnover, over 2000 homes had been built, and the SOA was a functioning entity for the homeowners, albeit controlled by the developer. A change in control, did not mean that the clock restarted from the infra-structure building viewpoint.

Future Boards can avoid esoteric legal theory being pushed by their attorneys, by following the R&R!

Back then, the Board was under pressure from many residents to get the private golf course to pay for the repair to their collapsed wall, and the SGCC encouraged the suit. Note that 2 of the Board members were members of the country club. Somersett HOA should not have paid to fix the golf course wall, the responsibility to repair and maintain leased property was clearly theirs.

The falling walls were attributed to an extreme weather event – a once in a 100 year storm. We have to ask ourselves whether this kind of event can happen again in the near term. We need to make sure that any wall built either 20 years ago, or today in Somersett drains properly, and is built on a stable land base.

I Appreciate your taking time to comment on past events, I believe that a litigation light existence is far less stressful!

Geoffrey”

Mark Capalongan’s Response:

“Several people have asked what the final cost of the rock wall case was.

From the past financial reports here is what I’ve found:

Looking strictly at the rockery wall case against Somersett Development as summed in account 77765 we might have spent $644K. However, the other legal expenses for 2018 and 2019 were also unusually high and probably included legal costs of the action against SGCC for that rockery wall.

Our average legal costs in a typical year average 100K. So for the period of 2018-2019 while the rockery walls were being litigated, our legal costs above normal were $844K.”

SU Note:  For those interested, the Court of Appeal’s legal ruling make be accessed vis the following link: 

Supreme Court Appeal Opinion 21-21960, Case No. 799211

 

4 thoughts on “An Owner Perspective on the SOA Rockery Wall Lawsuit Settlement

  1. Mark:

    Your above statement “Afterwards, 71% of the votes received were in favor of the lawsuit” is misleading. It was 71% of the votes received, but it was not 51% of the total members which was needed to proceed. The old HOA Board, HOA Attorney and Management Company knew this. Per NRS 116.31088 a vote of the HOA members was needed and a majority of the total members was needed to proceed. The HOA did not get the required number of votes to proceed, so the legal action should have ended. The HOA Board had no authority to proceed with the legal action and spent HOA funds. The legal strategy might have been bad, but the real wrong doing was how the HOA Board Members, HOA Attorney and the Management Company went from the members voting down the legal action to we (HOA Board) are acting on our own to proceed and spend HOA funds without the members approval. The members need full transparency about how all this occurred.

    1. As a point of reference, in a previous lawsuit against Moana Nursery and for the SGCC Purchase and Lease Agreement, where a majority vote of owners was required, the then BOD’s extended the voting deadline until the requisite number of votes (for or against) were obtained. That is the intent of the NRS statute and the SOA Board, on advice of Attorney, violated it. I suspect it was done to meet our Attorney’s re-defined statue of repose deadline, which the Court through out anyway.

  2. To Somersett United

    Were any of the HOA Board members that proceeded with the Wall Legal action on the HOA Board that were part of that previous lawsuit against Moana Nursery and for the SGCC Purchase and Lease Agreement?? Did the HOA have the same Legal representation and Management Company??

    1. Rick,

      The following in response to your questions, that is, to the best om my knowledge as captured from my files:

      1. The Moana Nursery Litigation was initiated by the three person Developer Board around June 2012. The settlement was reached on October 2013 under the first five person all-Homeowner Board, consisting of Tony Fakonas, Ray Lee, Curtis Chan, Dave Hughes and Danielle Kirby. SOA Attorneys at that time were Maddox and Associates. Do not recollect who the Management Company was.
      2. The SGCC Purchase & Lease Agreement was initiated by the same five person Board referenced in item 1 above in the November 2013 time frame. The executed Agreement occurred in August of 2014. Board members at that time were the same as referenced in item 1 except for Dave Hughes who was replaced by Chris Huff. I believe that by that time we had replaced Maddox & Associates with the Wolf, Rifkin, Shapiro, Schulman & Rabkin Law Firm. I believe FirstService Residential had become the Management Company.
      3. The Rockery Wall lawsuit was conceived in late 2017 under the SOA BOARD consisting of Glenda Powell, David Nisenfeld, Ryan Burns, Joe Fadrowsky and Tom Fitzgerald. The suit was filed in February of 2018 under Board members Ton Fitzgerald, Ryan Burns, Steve Guderian, Farnk Leto and Jason Roland (who excused himmself from the issue due to his wife’s employment with the Somersett Development Company).

      To our readers, if anyone else has a different recollection than that stated above, please post your response.

      Jim Haar – SU Editor

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