WE KNOW HOW THE BOOK ENDS:  RECALL MITCH HILL

June 04, 2006

Congratulations to all Coto District Delegates, in the words of George Thagard as reported by the Orange County Register June 2, 2006 “ Change is good.  It is absolutely fine with me.  I think that if educated people are given the same information as me, they will make the same decisions I would have”.

 Or perhaps Thagard refers to the Orange County Register’s founder’s idea that Plain Folk Cannot Tell Right from Wrong.  For example, see below (Intelligent Decisions, or Decisions, Decisions? )  for partial list of decisions made on Thagard’s watch, which we contended would fail to meet the Business Judgment Rule (CALIFORNIA SUPREME COURT ADOPTS "JUDICIAL DEFERENCE" RULE IN CHALLENGES TO BOARD DECISIONS

So despite all the weapons of mis-disinformation and the artificial roadblocks created by the current board to manipulate the results of the election – the board failed miserably.  The 2006-2007 Coto District delegates were able to read between the lines and made the right decision.

However, we know how the story ends:  We have seen it many times.  Those who have promoted public safety as the number one Coto issue, are either black-balled or simply out-voted by Varo/Mezger/Hilll.  Consider that for over five years, we have been  promoting the notion that in order to manage public safety one needs management tools. 

As recent as Lyle’ appointment to the board vacated by Sean Larkin, he felt the current board was doing a fine job, and he attributed the traffic problems to Coto Soccer Moms.  Now, Lyle thinks the private security services Coto residents are paying for is a waste of money, and simply “a pretty face”!.  According to the OCR, Lyle now knows that 16-2 0 “..year olds received the most citations for speeding or not stopping at stops signs within Coto”.   We should point out to Lyle that according to CHP data, Coto residents in the age group of 40-50 years of age, get just as any citations as the 16-20 old kids – an now a commercial:  Just like the board seems to have adopted the CHP report as a management tools, we urge them to use the CotoBuzz commissioned Sheriff’s management tools.

And the point is?  The point is that if you take any position that does not further Varo/Mezger’s personal goals, you are not going to be listened to.  We can point to Sean Larkin’s resignation as an example.  Then there is the blatant firing of the safety committee chairperson, replaced by a highly paid security consultant and a group of non-home owners.

So how does the story end?  Initially Yocham and Zipperman come in very exited about the possibilities.  They try to be different. They use collaboration, rather than confrontation (the approach CotoBuzz has preached since inception).  They use an accommodating and compromising conflict resolution approach, as they want to be constructionists.  The problem is that Varo/Mezger continue pursuing their personal agendas.  Yocham and Zipperman become vocal and frustrated.  When, major decisions need to be made, Mitch Hill shows up to cast the deciding vote in favor of Var/Mezger, and Yocham and Zipperman resign. 

Note:  It has been previously estimated that “Mitch Hill has missed 25% of CZ Board Meetings, and an even higher percentage of more critical Executive Session Meetings

So, if educated district delegates do not want to see the story end as we have predicted, you may just want to consider a Recall Mitch Hill effort!

Intelligent Decisions, or Decisions, Decisions?.

Breach of Fiduciary Duty:  Immediately after seizing control of the management affairs of the association, the board terminated a contract with the California Highway Patrol to provide traffic control without a suitable replacement.  A real reason was never produced for the termination, but it is generally acknowledged that the board has an extreme dislike for the CHP to the point of calling them extortionists in public, and during open session board meetings.  Repeated calls to the board to utilize institutional memory by consulting with all known experts on the matter were ignored.  Instead, the board continues to pursue personal agendas (turn the association into a city), rather than the personal safety and personal effects of residents.  In essence, an act of gross negligence and reckless endangerment, which have already produced the first traffic fatality in the last 10 years. Corporations Code §7231(b), Corporations Code § 5230, Corporations Code § 5239, Scott v. Williams, 607 S.W.2d 267, 272 (Tex. App. 1980),   R. Clark, Corporate Law 124-5 (1986), Cedar Cove Efficiency Condominium Ass'n v. Cedar Cove Properties, Inc., 558 So. 2d 475, 479-480 (Fla. Dist. Ct. App. 1990); Farrington v. Casa Salana Condominium Ass'n, 517 So. 2d 70, 71 (Fla. Dist. Ct. App. 1987); Tiffany Plaza Condominium Ass'n v. Spencer, 416 So. 2d 823, 826 (Fla. Dist. Ct. App. 1982).

Breach of Fiduciary Duty  - Gross Negligence - Good faith is determined by motive and intent. Most board members are well-intentioned, in spite of what you read in the newspapers. Sometimes that is hard to determine for sure, but it is easy to claim innocence, using the well tested LID (Lie, Ignore, Deny) methodology often used by the CZ board of directors, so a lack of good faith would have to be fairly obvious.

Willful and wanton behavior is an act that is intended to or likely to cause distress or harm of some kind. Gross negligence is a lot worse than ordinary negligence.

Making a mistake such as poor budgeting is usually ordinary negligence, but making a mistake involving conduct that one knows is wrong, is against the law, or is ill advised crosses the line. These points can be argued by lawyers. The best protection comes from acting reasonably.

There is also protection in the Corporations Code (7231 and 7231.5) in statute commonly known as the "safe harbor" statutes. If a board member acts in a manner he or she believes is in the best interests of the (in an incorporated) Association and with reasonable inquiry or reliance on information, opinions, reports, statements, or other data, financial or otherwise, prepared by officers or employees believed to be reliable and competent in the matters presented, or by independent counsel, accountants or other persons qualified to give opinions, the board member cannot be sued for the action. Again, "good faith" plays a large part in things.

So, is it good faith for the Coto de Caza Board of directors to place their personal agendas (turning Coto into a city, for example) ahead of public safety?  For example, simply dismissing domain expertise, institutional memory and various comprehensive proposals without any explanation  A refusal to accept and act on information indicating that accident rates is out of control and eventually causes a fatality?  To add insult to injury, Robert Varo, the CZ Master association's president writes  “I am disappointed that the OC Sheriff’s Department has been unable to get their act together as it was Sheriff Corona who personally requested that we do not contract with the City of Rancho Santa Margarita” – Robert Varo, CZ Association President’s Letter January 2006.  If this is not gross negligence, we do not know what it!  Corporations Code §7231(b), Corporations Code § 5230, Corporations Code § 5239, Scott v. Williams, 607 S.W.2d 267, 272 (Tex. App. 1980),   R. Clark, Corporate Law 124-5 (1986), Cedar Cove Efficiency Condominium Ass'n v. Cedar Cove Properties, Inc., 558 So. 2d 475, 479-480 (Fla. Dist. Ct. App. 1990); Farrington v. Casa Salana Condominium Ass'n, 517 So. 2d 70, 71 (Fla. Dist. Ct. App. 1987); Tiffany Plaza Condominium Ass'n v. Spencer, 416 So. 2d 823, 826 (Fla. Dist. Ct. App. 1982).

Breach of Fiduciary Duty  - Depraved Indifference:  We have been asking Mr. Varo and this board to focus on association matters, rather than to pursue personal agendas.  Finally, in  the January 2006 issue the CZ Master Association’s President’s Letter, Mr. Varo recognizes that “It is important that while I and others on the board have our personal opinions on these subjects and the CSD process, the process must be driven by residents and not by the board…!  “

However, once again the board is using association funds to promote the CSD/City Hood issues by inviting “…some residents who will take the reins on the investigation of the merits and/or lack thereof associated with the formation of a CSD.”

Remember that this is the same board that for over two years has refused to form a security committee, even though we have made several comprehensive proposals and have volunteered to lead the committee.

This is the same board that has refused to do anything, including responding to a number of calls for action, immediately after the first traffic fatality in 10 years!

This is the same board that has refused to even acknowledge the security challenge we issued them.

If this is not depraved indifference, we do not know what is!  People v Gaudet, 115 AD2d 183, 495 NYS2d 253 (3^rd Dept 1985), People v Knapp, 113 AD2d 154, 495 NYS2d 985 (3^rd Dept 1985), US cert denied 479 US 844, . In People v Steinberg, 79 NY2d 673, 680, 584 NYS2d 770 (1992), the Court of Appeals addressed acts of omission as the basis for criminal liability, In People v Murphy, 235 AD2d 933, 654 NYS2d 187 (3^rd Dept 1997)

Breach of Fiduciary Duty - Due Diligence – The board terminated a security director, proponent of a pro-active traffic control within the community and replaced him with an access control director- basically relegating security to the back burner, with fatal consequences. Corporations Code § 7231, Corporations Code § 5230,Burt v. Irvine Co. (1965) 237 Cal.App.2d 828

Breach of Fiduciary Duty – Conflict of Interest -   Funding of non-organization entities, includes placing personal agendas (turning the association into a city),  as a top priority, rather than the personal safety of residents. Corporations Code § 1353.6, Corporations Code § 5230, Corporations Code § 5233, Killean Acres Homeowners Ass'n v. Keever, 595 So. 2d 1019 (Fla. Dist. Ct. App. 1992); Hidden Harbour Estates, Inc. v. Basso, 393 So. 2d 637 (Fla. Dist. Ct. App. 1981), Nahrstedt v. Lakeside Village Condominium Ass'n, 878 P.2d 1275, 1281-82 (Cal. 1994).

Breach of Fiduciary Duty – Discriminatory Practices:  Widespread use of discriminatory practices, such as the arbitrary opening of the Oakview/Oakknoll gates by prominent residents, against the advice of former board members.  Providing non-association organizations with funds to promote personal agendas, while denying resources to residents more interested in accident and crime prevention. Providing  services to residents, including the exercise of their free speech rights, conditioned on non-disclosure agreements.  Selective enforcement of CC&Rs, compromising the personal welfare and well being of residents.  Corporations Code § 7231, Corporations Code § 5230, Corporate Law 124-5 (1986), Higley v. Kidder, Peabody & Co., 920 P.2d 884 (Colo. App. 1996),  Nahrstedt v. Lakeside Village Condominium Ass'n, 878 P.2d 1275, 1281-82 (Cal. 1994).

Breach of Fiduciary Duty – Arbitrary Decisions – The board of directors, rather than rely on the expertise provided by the property manager, used association funds to hire a general manager reporting to Keystone, the association’s property manager.  In essence, arbitrarily discarding the expertise usually provided by a property management company and replacing it with a puppet -  Evidence shows that said general manager is incapable of executing  basic core management functions such as planning, organizing, controlling and reporting on community issues in general and personal security specifically.  Evidence shows the general manager participating in a number of cover-ups. Corporations Code § 7231, Corporations Code § 5230, Scott v. Williams, 607 S.W.2d 267, 272 (Tex. App. 1980),  Corporations Code §  5233, Nahrstedt v. Lakeside Village Condominium Ass'n, 878 P.2d 1275, 1281-82 (Cal. 1994).

Breach of Fiduciary Duty- Due Diligence – The board terminated the contract with Maxicom Consultants.  Repeated requests to review the procurement process used in arriving at this decision were ignored.   So far we have not found evidence that  due diligence was used. This decision has a significant financial impact on the management of the association.   Corporations Code § 7231, Corporations Code § 5230, Burt v. Irvine Co. (1965) 237 Cal.App.2d 828

Breach of Fiduciary Duty- Free Speech Rights - Unprecedented use of legal counsel funds to silence critics and use of threatening letters to stifle free speech.  Corporations Code § 1353.6, Corporations Code § 5230, Nahrstedt v. Lakeside Village Condominium Ass'n, 878 P.2d 1275, 1281-82 (Cal. 1994).

Breach of Fiduciary Duty- Due Diligence - Termination  of Securitas – arguably the largest private security company in the world, replaced by the one of the smallest ones in the region.  Audit of the process found no evidence due diligence was used.  Repeated requests for such evidence were ignored.  Corporations Code § 7231, Corporations Code § 5230, Burt v. Irvine Co. (1965) 237 Cal.App.2d 828, Killean Acres Homeowners Ass'n v. Keever, 595 So. 2d 1019 (Fla. Dist. Ct. App. 1992); Hidden Harbour Estates, Inc. v. Basso, 393 So. 2d 637 (Fla. Dist. Ct. App. 1981, Nahrstedt, 878 P.2d at 1278. (CA)

Breach of Fiduciary Duty- Due Diligence - Multiple Transponder Programs, without any real plan.  Multiple requests for evidence that due diligence was used were un-answered.  This action compromises personal safety and well-being. Corporations Code § 7231, Corporations Code § 5230, Burt v. Irvine Co. (1965) 237 Cal.App.2d 828, Killean Acres Homeowners Ass'n v. Keever, 595 So. 2d 1019 (Fla. Dist. Ct. App. 1992); Hidden Harbour Estates, Inc. v. Basso, 393 So. 2d 637 (Fla. Dist. Ct. App. 1981, Nahrstedt, 878 P.2d at 1278. (CA)

Breach of Fiduciary Duty – Conflict of Interest - Landscaping management institutionalizes discriminatory practices that reward districts sympathetic to the board. Corporations Code § 1353.6, Corporations Code § 5230, Corporations Code § 5233, Killean Acres Homeowners Ass'n v. Keever, 595 So. 2d 1019 (Fla. Dist. Ct. App. 1992); Hidden Harbour Estates, Inc. v. Basso, 393 So. 2d 637 (Fla. Dist. Ct. App. 1981), Nahrstedt v. Lakeside Village Condominium Ass'n, 878 P.2d 1275, 1281-82 (Cal. 1994).

Breach of Fiduciary Duty – Conflict of Interest -  Election Reform Proposals we advanced were not even considered, where other trivial matters have been funded.  The California Legislature and the Governor knew differently, as the governor signed into law CID reforms intended to do exactly what we proposed – the board calls this legislature, an attempt to micro-manage! Corporations Code § 1353.6, Corporations Code § 5230, Corporations Code § 5233, Killean Acres Homeowners Ass'n v. Keever, 595 So. 2d 1019 (Fla. Dist. Ct. App. 1992); Hidden Harbour Estates, Inc. v. Basso, 393 So. 2d 637 (Fla. Dist. Ct. App. 1981), Nahrstedt v. Lakeside Village Condominium Ass'n, 878 P.2d 1275, 1281-82 (Cal. 1994).

Breach of Fiduciary Duty – Conflict of Interest -  Board member appointment cover up. – process used to appoint a replacement candidate with one unconditional supporter of the board’s agenda was questionable and there is ample evidence of a cover up. Corporations Code § 1353.6, Corporations Code § 5230, Corporations Code § 5233, Killean Acres Homeowners Ass'n v. Keever, 595 So. 2d 1019 (Fla. Dist. Ct. App. 1992); Hidden Harbour Estates, Inc. v. Basso, 393 So. 2d 637 (Fla. Dist. Ct. App. 1981), Nahrstedt v. Lakeside Village Condominium Ass'n, 878 P.2d 1275, 1281-82 (Cal. 1994).

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Comments:

Hello All:  When an employee misses 25% of work and long before unless for serious illness, the employee is fired.   When a student misses 25% of classes, the student will receive a failing grade and/or be dropped from the class.  When a soldier is AWOL, the soldier will be court marshaled and end up in jail and/or dishonorably discharged.  Mitch Hill has missed 25% if CZ Board Meetings, including another one last week, and an even higher percentage of more critical Executive Session Meetings.  Since he can't or won't attend most CZ Board Meetings, Mitch should do the honorable thing and Resign.   If Mitch Hill does not resign, CZ Delegates, you need to do your job for the good of all CZ Members and Recall Mitch Hill from office.  Joe Morabito

P.S.  Sean Larkin missed 59% of CZ Board Meetings before leaving the area and the Board.  Let us hope that is not the service standard we have established for serving as a CZ Board Member. 

Hi Jan:

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