October 24, 2016
CERTIFIED MAIL
Oak Knoll Homeowners Association
Board of Directors
c/o Management Trust- Northwest
P.O. Box 23099
Tigard, OR 97281-9899
RE: Breach of
contract and violation of the Oregon Planned Community Act
Dear Board of Directors,
You have been put on notice by the homeowners since early 2000
that your individual and/or collective interpretation of Section 7.1 of the
CC&Rs regarding the “common improvements” of the Association - specifically
as to exactly what street trees are and are not the common improvements of
this Association - has long since been grossly inaccurate. Consider this letter
as the Board of Director’s FINAL
NOTICE on the matter described herein.
The Board of Directors, past [and] present members, have
been patently aware of their grossly inaccurate interpretation of CC&R
Section 7.1 since the Oak Knoll Homeowners Association was assumed from the
Declarant. And over the years since then, the Board has wantonly chosen to purposely
disregard the individual and collective homeowners’ voice in regards to its
grossly inaccurate interpretation of Section 7.1 regarding “and street trees on each Lot,” that is
until the fall of 2011.
In September 2011, a Town Hall meeting took place at Avamere
to present and discuss a proposed amendment to the CC&Rs at a cost of
$5,000.00 in order to memorialize the Board’s grossly inaccurate interpretation
of Section 7.1 of the CC&Rs in order to continue their self-imposed status
quo on maintaining only the street trees on Foothills Drive, and not “street trees on each Lot.”
The proposal failed, but not without the Homeowners
Association’s attorney from Vial Fotheringham, Christopher Tingey, first admitting that the Board has made
it a historical practice to purposely misinterpret Section 7.1 in regards to
the street trees within the Association. Tingey made it crystal clear that the
Board, past to present, simply
disagreed with how the Declarant wrote this section, and wantonly chose
to disregard it because they did not want the Association to be financially responsible
for “street trees on each Lot.” Not
once but twice Tingey made it known that Section 7.1 clearly states, ‘that
street trees on each Lot is what the Homeowners Association is responsible
for,’ and NOT the Board’s historical practice of just the street trees along Foothills Drive alone. As such, the
Board of Directors, past to present, have made it their position to decide the
matter themselves (that which is solely
reserved to a vote of 75% of the homeowners), and in effect changed what
CC&R Section 7.1 clearly states in order to make up their own version to be
carried out regarding the street trees in
direct contravention to what the CC&Rs clearly state.
Near the end of that meeting, Tingey advised the Board that
they could do a resolution to outline the Board’s longstanding interpretation
and historical practice, ‘but that resolution would not be
enforceable if it contradicted the governing documents; and it would not
hold up in court if and when challenged.’ Mr. Tingey’s correct
interpretation of Section 7.1 and subsequent advice to the Board about any
resolution outlining their interpretation would be unenforceable if challenged is factually and legally accurate.
Now fast forward to the Town Hall meeting that took place in
October 2014, with three years of continued back and forth debate with the
Board of Directors regarding their gross interpretation of Section 7.1
regarding the finances being spent on replacing and maintaining street trees
and sidewalk repairs caused by said street trees along Foothills Drive – all of
which are not “common improvements” of the Association - as being the core
issue to be discussed. Several homeowners turned out for this meeting, the
largest number that anyone has seen in years, and all but one homeowner (who lives on Foothills Drive and directly
benefits from the Board’s illicit conduct regarding this issue) disapproved
of the Board’s past inaccurate interpretation and self-imposed financial responsibility
being placed upon all the homeowners when this interpretation clearly only
benefited those living along Foothills Drive – and NOT the association as a
whole (i.e. just because Foothills is
assumed the main entrance to the Association, which it is not as an equal if
not great number of homeowners and guests access via Quail Drive, is neither
a factual or legal basis to assess fees against all homeowners for a
non-common improvement that does NOT benefit all Lots within the Association).
Several homeowners strongly voiced their discontent and
disagreement with the Board’s past and present gross interpretation
rationalizing their illicit practice and all but demanded that it be rescinded.
In the end, after 14 years of debating the obvious, the Board finally conceded
and reversed its long-standing inaccurate interpretation and historical
practice when it passed the 2015 budget at the November 2014 meeting.
President Tony Roos
then emphatically declared in writing within the November 2014 Oak Knoll
Homeowners Association Newsletter stating the following:
Note from the President
“Dear Homeowners and Tenants,
At our November Board meeting we
finalized our draft budget for 2015. The association will see an increase in
annual dues by $5 over last year.
The common elements that our
association is responsible for is the following:
·
Foothills parking strip Landscaping grass only
·
Roundabout Landscaping (including the Oak Knoll
monument)
·
Foothills Irrigation system
With
inputs from the October 7th Town Hall budget meeting, phone and
email responses, the Board has agreed that from this 2015 Budget forward the
Foothills street trees are the responsibility of the homeowners on Foothills
and will no longer be funded by the Association Budget.”
Despite this revelation, certain Board members clearly conspired
after the fact to reverse its final decision, “memorialized” within the
November 2014 Newsletter, and went forward with exactly what their attorney,
Christopher Tingey, told them in 2011 would
not hold up in court. The Board enlisted an entirely different attorney from the same law firm as Mr. Tingey to draft a clearly illicit
resolution that was passed January 19-20, 2016, which inherently and explicitly
contradicts the governing documents, as well as the Oregon Planned Community
Act. As such, this resolution is not enforceable and will not
hold up in court.
The Street Tree Maintenance Resolution of January 2016 is an
implicit breach of contract and fiduciary duties of the Board of Directors. The
intent of this resolution is to reverse the Board’s November 2014 decision to
finally correct a 15 year wrong perpetrated upon the homeowners at their expense
by the Board of Directors in order to put back into the Homeowners Association
budget the financial costs of maintaining, repairing, and/or replacing the
street trees only along Foothills Drive. It is an incontestable fact that this
resolution is in direct conflict with the CC&Rs, Bylaws and Oregon Planned
Community Act.
Section 7.1 of our CC&Rs states the following:
“Oak Knoll has or will have certain
improvements which are for the benefit of all Lots. These improvements include:
Sign monuments to be installed on Lot 29, Oak Knoll; traffic circle at
intersection of Foothills Drive and Center Street; planter strips along
Foothills Drive; [and] street trees
on each Lot…All of the common areas and improvements are collectively called
“Common Improvements.”
The “;” separates the statement “planter strips along
Foothills Drive” from “[and] street
trees on each Lot” (emphasis mine),
which directly implies the Declarant’s intent to separate the street trees from
the planter strips throughout the association, [and] not to include them in the planter strips. As it is clearly written,
it was/is the obvious intention of the Declarant that the Homeowner Association
shall be financially responsible for street trees on each and every individual Lot within the community, and not a selective set of street
trees on a selective street that only benefited those homeowners living on that
street, which is exactly what the Street Tree Maintenance Resolution was
written to accomplish (i.e. every other
homeowner would be denied that very same benefit of having their street trees
financially maintained by the Association, which is the opposite of what the
Declarant intended).
The factual and legal fact of the matter is that the Board
of Directors, as mandated by the governing documents and the Oregon Planned
Community Act, cannot change,
modify or amend the governing documents (i.e. CC&Rs) without the following requirements being duly met:
- · “…not less than seventy-five (75%) percent of the then Owners of Lots in Oak Knoll…” (CC&R Section 9.2);
- · “Consent Required. Except upon the approval of Mortgagees holding Mortgages of Lots which have at least seventy-five percent (75%) of the vote of Lots which are subject to Mortgages, no amendments may be made to this Declaration which add to or amend any material provision of the Declaration…” (CC&R Section 12.6.2); and
- · “The declaration may be amended only with the approval of owners representing at least 75% of the total votes in the planned community or any larger percentage specified in the declaration” (Oregon Revised Statute 94.590(1)(a)).
Despite the forgoing, the language used throughout the
Street Trees Maintenance Resolution establishes the clear intent of the Board
of Directors to circumvent the required 75% vote of the homeowners
to change, modify or amend the CC&Rs as they are clearly written to fit
their own gross misinterpretation and continue the status quo of that
inaccurate interpretation in maintaining their illicit historical practice in
regards to the street trees only along Foothills Drive.
The following being a clear example from the cited
resolution in order to change, modify and/or amend Section 7.1 of the
CC&Rs:
“J. Section 7.1 of the Declaration
identifies street trees and planter strips along Foothills Drive as
improvements benefiting all Lots. It further identifies the street trees, the
planter strips along Foothills Drive, and (sic) well as other improvements that
benefit all Lots as “Common Improvements.”
Section 7.1 of the Declaration makes absolutely NO such identification and/or
demarcation of the street trees [and] planter strips along Foothills Drive as being
“common improvements” benefiting all lots.
To reiterate, Section 7.1 clearly states that “Oak Knoll has
or will have certain improvements which are for the benefit of all Lots. These
improvements include: Sign monuments to be installed on Lot 29, Oak Knoll;
traffic circle at intersection of Foothills Drive and Center Street; planter strips along Foothills Drive; [and] street trees on each Lot…All of
the common areas and improvements are collectively called “Common
Improvements.”
Section 7.1 of the Declaration clearly identifies ONLY the
planter strips along Foothills Drive as a common improvement and nothing else
other than the traffic circle being related to Foothills Drive. The Declarant
made it perfectly clear that “[and] street trees on each Lot,” are a common
improvement of the Association, and NOT
just the street trees along Foothills Drive.
As such, Section J of the Street Tree Maintenance Resolution
clearly serves to change, modify and amend Section 7.1 as it clearly reads to
that which the Board of Directors wants it to read. Which is an albeit written
but factually inaccurate reading of CC&R Section 7.1 with the obvious
intent of the Board to rationalize its illicit historic practice of
disregarding the homeowners by denying them their (legal) right to vote on
whether or not the Board can cherry pick which street trees it wants to
financially maintain at the expense of the Association contrary to what the
governing documents clearly and explicitly state.
The following are further examples of the Board of
Directors’ intent to modify, change and/or amend CC&R Section 7.1, 7.3 and
8.1:
“NOW, THEREFORE, BE IT RESOLVED:
1.
Definitions.
As used in the Declaration, “street trees” is defined to mean the trees within
the community located in the planter strip along Foothills Drive and within the
roundabout.
2.
Association
Maintenance Responsibility. The Association shall continue to maintain
the street trees in accordance with its historic practice and Section 7.3 of
the Declaration. Said maintenance will include, but is not limited to, trimming
and replacing street trees when they die.
3.
Homeowner
Maintenance Responsibility. Owners shall perform maintenance on their
lots as follows:
a.
In accordance with Section 8.1 of the
Declaration, Owners shall maintain all other trees located on their lots which
do not meet the definition of a street tree under Section 1 of this Resolution.
b.
In accordance with Section 8.1 of the
Declaration, Owners shall maintain the sidewalks on their lots in good repair,
in a condition that does not pose a tripping hazard, and in accordance with all
applicable municipal ordinances regulating sidewalk maintenance.”
Regarding the above #1 Definition, there is no such
demarcation within the Declaration that defines “street trees” as it is defined
within the Street Tree Maintenance Resolution. Therefore, any such attempt to
define a term within the governing documents that is not defined therein is a
fundamental modification, change and/or amendment to the governing documents.
Regarding the above #2 Association Maintenance
Responsibility, since 7.1 clearly does
not define “street trees” outlined in #1 Definition, and the Board of
Director’s own resolution admits that the Declaration does not define “street trees” (Section N), Section 7.3 is not applicable. Moreover, this section
of the resolution also serves to do exactly what Mr. Tingey advised the Board
back in September 2011 would not hold up in court.
Regarding the above #3 Homeowner Maintenance Responsibility,
in addition to sidewalks, homeowners are also responsible for the [street]
trees on their lot as well. There are several sections within the CC&Rs (including
municipal ordinances) that clearly assign the legal responsibility of the
homeowner to take care of their own sidewalks, to include any damage caused by
the street trees, as well as the other trees on their lot.
This resolution in part and on the whole clearly sets out to
modify, change and/or amend the CC&Rs as they are clearly written to fit
the Board of Director’s illicit narrative that which rationalizes their grossly
inaccurate interpretation of CC&R Section 7.1 and its illicit historic
practice regarding the financial responsibility of the street trees only along
Foothills Drive.
The Board of Directors further breached the contract with
the homeowners via the Street Tree Maintenance Resolution by violating the
following:
Bylaws – Article V: Budget,
Expenses and Assessments
“Expenses and assessments shall be charged, assessed and
collected in accordance with the
Declaration.” (emphasis mine)
Since the street trees along Foothills Drive are not a common improvement of the
Association, the Street Trees Maintenance Resolution is null and void given the
fact that it violates of the governing documents and statutory law in circumventing
the required 75% vote of the homeowners to pass in order to change, modify of
amend the CC&Rs; as such, any assessments against the homeowners to enforce
this resolution is equally null and void.
Bylaws – Article III, Section (3)(g)
“Adoption in accordance with these
Bylaws of reasonable administrative rules and regulations for use of the common
areas.”
Since the street trees only along Foothills Drive are not a common area of the
Association, this resolution patently contradicting the governing documents and
statutory law, the resolution is neither reasonable nor binding upon the
homeowners.
This resolution is also an implicit breach of fiduciary
duties of the Board of Directors. In an article published by the law firm Vial
Fotheringham dated June 4, 2009, states the following in regards to the Board
of Directors fiduciary duties:
“A board member of an HOA has
multiple fiduciary duties that need to be met. The first of these duties is the
Duty of Care. Fulfilling the Duty of Care means to act with the care of a
reasonable prudent person. It also means that a board member needs to act in
the best interest of the HOA, and to do so in good faith. A board member who
meets this duty will regularly attend board meetings. In considering options
that are presented to the board they will exercise independent judgment. In
exercising independent judgment they will ensure that they are informed, and
relying on expert advice in making decisions concerning the HOA.”
First, there are several illicit acts that I could recite
that illustrate the Board of Directors’ collective failure to act with the care
of a reasonable prudent person; however that is for another letter at a later
date.
Second, reiterating the first, I could cite several illicit
acts (other than that which is described herein regarding this resolution) that
demonstrate the Board of Directors’ collective intent to purposely act against
the best interest of the HOA; however that is for another letter at a later
date.
Lastly, given the very nature and purpose of the Street
Trees Maintenance Resolution, it begs the question on exact what “expert
advice” the Board of Directors are relying upon when another attorney from the
same law firm warned the Board of the inherent danger of creating and passing
such a resolution that which would clearly serve to circumvent required 75%
vote of the homeowners to effect such a modification, change and/or amendment
Section 7.1 of the CC&Rs.
The next section of the Vial Fotheringham articles
continues…
“The next duty is the Duty of
Undivided Loyalty. This duty highlights the fact that board members need to
avoid conflicts of interest. If the board is presented with a matter that
presents a conflict of interest to an individual board member, that board
member should be recused from voting on the issue.”
Since Tony Roos was and continued to be the President of the
Oak Knoll Homeowners Association at the time of the signing of the Street Trees
Maintenance Resolution - given the fact that he presided over the Board during
the October and November 2014 meetings (in
which it was decided to rescind the long standing gross misinterpretation of
CC&R Section7.1 and declaring that the street trees along Foothills Drive
would no longer be a part of the Association’s 2015 budget going forward) –
his participation was/is an explicit conflict of interest.
The article by Vial Fotheringham then gives an example that
breaches the fiduciary duty of undivided loyalty:
“A classic example of a conflict of
interest is when a board member is presented with an opportunity to enter a
self-serving transaction. A self-serving or self-dealing transaction consists
of a fiduciary taking advantage of his or her position in a transaction and
acting for his or her own interests rather than for the interests of the
homeowners. When a fiduciary engages in self-dealing, she breaches the Duty of
Undivided Loyalty by acting in her own interests instead of the interests of
the represented party.”
Tony Roos, being the President who presided over the October
and November 2014 meetings wherein the decision was motioned and passed with
the 2015 budget to no longer continue their “historic practice” of funding
repairs, maintenance, or replacement of street trees as a result of the their
historic gross inaccurate interpretation of CC&R Section 7.1, only to cast
a vote to approve AND sign off on the Street Trees Maintenance Resolution [is]
a breach of his fiduciary duties in serving his own self-interests and that of
fellow board member James Gregory Meenahan.
James Gregory Meenahan is on record personally attacking me
at the October 2014 meeting alleging that I have cost the association thousands
of dollars in attorney fees (despite the
fact that the then management company’s representative rebutted him stating
that was not true), and that no one should take anything that “the wannabe
lawyer” has to say. This speaks to inherent bias on his part, and having
previously resigned from the Board of Directors (during a time in which he served taking personal bias against me due to
the Board’s collective failure to follow the governing documents and statutory
law regarding the planting of street trees; implementing a reserve account; and
implementing a reserve study), only to volunteer his time once again rather
conveniently after this October 2014 meeting in order to continue breaching his
fiduciary duty of undivided loyalty. A fact that he albeit admitted to
homeowners after the July 2016 meeting, telling them he has no interest to be
on the Board and would rather be home with his family…if this is true, which
most admissions are, then why did he volunteer his time once again after having
previously resigned years before?
Last but not least, the article from Vial Fotheringham
outlines the final fiduciary duty of Board of Directors of a Homeowners
Association:
“Finally, board members are faced
with the Duty to Act Within the Scope of Authority. Essentially, what this
means is that board members have an obligation to know and understand their
duties as outlined in the declaration, bylaws and …” Oregon Revised Statutory …
“code.”
There are more than 16 years of meeting minutes,
newsletters, resolutions, and written correspondence between the directors and
homeowners that demonstrate the Board of Directors individual and collective ignorance
as to their duties as outlined in the declaration, bylaws and statutory law. As
a result of their inability to act autonomously with confidence and an
understanding of their duties outlined in the declaration, bylaws and statutory
law – even admitting to this fact in several meeting minutes and newsletters - the
Board of Directors chose to hire three different management companies over the
years as a result of their inherent ineptitude.
I have more than 16 years of documented evidence, written
and recorded, that exemplifies and demonstrates their lack of understanding
their duties as outlined in the declaration, bylaws and statutory law.
The supporting evidence that I possess to substantiate my
case is as follows:
- · The Association’s governing documents (i.e. CC&Rs and Bylaws)
- · The Oregon Planned Community Act (i.e. ORS 94.550 to 94.783)
- · Oak Knoll Homeowners Association correspondence (e.g. Newsletters and written responses to inquiries on topic)
- · Oak Knoll Homeowners Association meeting minutes
- · Street Trees Maintenance Resolution of January 19-20, 2016
- · Letters published by Vial Fotheringham (e.g. duties and responsibilities of Board of Directors); and
- · Audio of relevant board and Town hall meetings (cited herein)
- o That which includes testimony from Vial Fotheringham’s own attorney and partner, Christopher Tingey, admitting that the Board has been inaccurate in its interpretation of CC&R Section 7.1, and that it wantonly and purposely chose to disregard it simply because the Board disagreed with the Declarant’s written position therein; and that any resolution clarifying the Board’s misinterpretation via historic practices would be unenforceable and declared as such if and when challenged in court.
- (Audio can be located here: http://okhawatchdog.blogspot.com/2016/09/audio-september-2011-town-hall-meeting.html)
I have an incontestable case against the Homeowners
Association for breach of contract, breach of fiduciary duty, and negligent
care and maintenance of the common areas where the street trees along Foothills
Drive are concerned (i.e. by maintaining
the historic practice of attending to only the street trees and sidewalks along
Foothills Drive, benefiting only those homeowners directly while all other
street trees “on each Lot” have been duly neglected by the Association).
The statutory requirement to seek mediation before any legal
action has already been met, to which the Board refused to acquiesce under the
advisement of counsel. Oddly enough that advice contradicts Vial Fotheringham’s
own founder’s legal philosophical view on mediation when it comes to disputes
among homeowners and their Board of Directors. Published at vf-law.com April 9,
2013, by Richard Vial is an article regarding “Mediation: The Essential
Building Block of Peaceful Society (Key to Successful HOAs)(Oregon Law).” The
following are a few excerpts from that article:
“Mediation is – at its core – the
process by which people in conflict choose to work toward a resolution of that
conflict by and between themselves, rather than simply submitting the question
to a third party that rarely has a stake in the issue (judge, jury, arbitrator
etc.) and will make a decision that becomes binding upon all parties. Everyone
involved in the legal affairs of homeowner associations have found that
disputes resolved through mediation are much more likely to avoid future
disputes than those left to be decided by these third party (or parties).”
“Our goal as community leaders
should be first to understand, not correct our fellow community members...When
conflict arises, our only hope of avoiding the overwhelming expense of formal
dispute resolution is to prepare to mediate by listening and understanding.”
“I have learned as a lawyer engaged
in HOA matters for over 30 years that litigation is a costly endeavor that can
potentially destroy communities in some cases. Being prepared to mediate is one
of the best ways we can serve our communities.”
I have no doubt that the reasoning of the Board’s counsel
not to attend mediation, given Richard Vial’s stated position above, will
eventually be called into question and held accountable for.
This letter is the Board of Directors FINAL NOTICE regarding the Street Trees Maintenance
Resolution. To comply, the Board must rescind the Street Trees Maintenance
Resolution post haste and going forward adhere to that which President Tony
Roos declared in the November 2014 Newsletter; that going forward the repair,
maintenance or replacement of street trees along Foothills Drive would no
longer be funded and financed through any part of the Oak Knoll Homeowners
Associations’ budget process.
If I do not hear from the Board of Directors by November 15,
2016, the appropriate filing will be submitted to the Yamhill County Circuit
Court seeking a Declaratory Judgment to force the Board of Directors to follow
the governing documents and statutory law as they are written; and an
Injunction against the Street Trees Maintenance Resolution in its entirety. As
well as any and all reasonable attorney and/or other relevant legal fees as
allowed by law.
Sincerely,
Homeowner
