Tuesday, October 18, 2016

FINAL DEMAND LETTER TO HOA - RE: Street Trees Maintenance Resolution (UPDATED)

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




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