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March 2010
Back-of-the-Check Contract - Only in a Common Interest Development (CID)
Posed By CotoBlogzz 02-19-2010
Agoura
Hills, CA -
Recently
the property manager sent Mr. Gerstel a note on behalf
of the board, alerting him that a
”check in the amount of $280.00 has been
sent via FedEx to your home. It should be
delivered tomorrow morning. Your delivery
signature is required for the envelope.”
Mr. Gerstel tells us that on February 18,
2009 he indeed received
a check with a little apparently innocuous surprise: on the back of the check, the following note appeared: “We
would like the stub to reflect that it is payment in
full satisfaction of all claims made in Small Claims
Case No. LA V09V07093 for not timely producing
although provided to Gerstel the providing -Member
List, _Architectural Committee Minutes -Unredacted
Board of Director Minutes from 1998 through 2009
-Board of Director Minutes from 1990 through 1997 -Fountainwood
Hillside Failure Documents -June 10,2009 Meeting and
Confer Minutes – Current Contracts, Salaries to
vendors, Emplyees, Contractors, Purchase Orders,
Credit Card Statements, Reimbursment Requests for
Board Members.”
It
would be an understatement to say that Mr.
Gerstel was less than satisfied with the
back-of-the-check contract:
“ By
accepting that check I would be agreeing to the
Board’s modification of the judges decision”
he said, then added. “This is a very
unethical tactic and I believe it is another move by
the Board’s attorneys to try and include all
violations of the law by the Board in a case that only
pertains to one issue… the laundry list of
other violations the Board describes in their release
were not litigated and cannot be included in this
judgment.”
-
The laundry list Mr. Gerstel alludes to include the following allegations:
- 1. Failure to
produce Association Member's list on time.
- 2. Failure to produce Architectural Committee Minutes from Jan 2007 to
- 3. Request for Board Meeting Minutes 1998 to 2009
- 4. Request for Board Meeting Minutes 1990 to 1997
- 5. Request for Fountainwood Hillside Failure Documents
- 6. Request for Minutes of Meet and Confer Board Meeting
- 7. Request for executed contracts and contractor bids
This
back-of-the-check maneuver action reminds us of LA
Times columnist and author D. Vanitzian
comments when we asked her about the Morrison Ranch
Estates' HOA board's actions anent Business Judgment: “ How is it in the best interest of the
association to appeal a small claims actions against a
resident who has prevailed. How does that show good
faith.” - The business judgment rule
provides protection form liability for breaches
of fiduciary duty for directors and officers who act
in the interest of the association, predicated
on good faith. Perhaps a similar question can be
asked in this case:
“ How is it in the best interest of the
association to write a back-of-the-check contract?.
How does that show good faith.
Mr.
Gerstel wisely returned the check to the Morrison
State Ranch HOA with a note saying in part: “I do
not agree that this payment is in satisfaction of any
other misconduct by the Board and cannot accept the
check as written. I will only accept a check that
reflects the satisfaction of the one issue ruled on by
the court as stated above. No other issue stated
on the check has been resolved.
But
wait, there is more. Recall that we
previously mentioned that complaints in a typical
common interest development adhere to Pareto’s Law
(80-20)? That
is, at least 80 percent of the complaints show up in
most associations.
Take for instance the case of Mr. Ed Caruso in
Coto de Caza.
As the father of a resident, he wanted to know
what was going on in the community and wanted to
attend open session meetings.
But in order to do so, he had to in essence,
sign a Shut
Up rule:
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Late last year we received a similar treatment from
the Coto de Caza board of directors
when we started to investigate the board’s
actions in trying to commercialize
residents’ private information - legal counsel
sent us a back-of-the-envelope contract, which in
essence says, you can lookie
but no talkie.
Perhaps
the only good news is like the Tea Baggers,
disgruntled HOA residents have figured out how
to play the game.
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