Silent Defiance = New Lawsuit Against the Board

UPDATE: If you are fighting a Crime Free Lease Addendum in Arizona that gives your association the right to terminate your lease, the 2014 Arizona Legislature has provided you all the necessary ammunition you'll need. The legislature added ARS 33-1806.01 which provides that "Owner may designate in writing a third party (e.g., residential property manager) to act as the owner’s agent with respect to all Association matters relating to the rental unit, including the official recipient of legal notices."  This means that as of 2014, an owner can easily argue before the DFBLS that his/her HOA is attempting to re-interpret the law such that an owner "must" (forcibly, and under the threat of fine or lien) designate the HOA as a third party beneficiary to the lease. This is a clear violation of an owners right as defined in ARS 33-1806.01.

This will be my last post for 2012 so that I can set my frustrations aside and enjoy Christmas  and New Years with my beautiful family. Merry Christmas every

Pedro Lopez is quite the anomaly. According to the board, Pedro's term began in February 2010 as the 1 year director per Article 3.2 of the Bylaws. Pedro is allowed to continue serving until he is succeeded by another member of the community, and as the 1 year director, his seat must be renewed at each of the November member meets. Yet in our November 2012 meeting which will be resumed in January 2013 per a reschedule, Pedro was neither required to resubmit a candidacy form, nor did our Management Company or the board acknowledge that his seat is available for re-election.
I asked why the board was suppressing Pedro's succession on October 21st, and again on November 1st. My inquiries would have allowed the board and our Management Company to correct it's assertion that Pedro's seat was not available, but the questions went unanswered.
This week I have asked our Management Company and the board for the third time to correct it's assertion that Pedro's seat is not available. In the coming weeks, they will reveal their answer via the distribution of new candidacy forms. As the 1 year director, I expect to see Pedro draft a candidacy form in order to be re-elected to the board in January 2013.

If this does not occur, I'll be forced to seek answers through the courts, whereby our homeowner fees will be wasted to defend the indefensible - once again padding the pockets of Chander Travis. There are two extremely frustrating points to this latest violation of our By-laws and CC&Rs by our board:
First, the board, our Management Company, and Chandler Travis believe that they can remain silent and defiant without any repercussion, and they are quite right - when they violate the documents, ultimately a homeowner must seek a costly judgement for which any litigation fees and any civil violations will be paid either through insurance, or by homeowners dues. For rogue board members, there is nothing to be lost by silently defying the community documents, and for Chandler Travis, it is a huge payout.
Second, neither our Management Company or the Association's lawyer holds the board accountable for violating the community documents. Consider what occurs when a homeowner leaves a trashcan out, parks on the sidewalk, or has a slight emergence of weeds after a monsoon storm. In these cases, our Management Company and Chandler make an aggressive and cooperative effort to force the member to correct the violation. How is it that the association's lawyer has no allegiance to the homeowners when the board violates the community documents? Is Chandler a paid representative for the association, or a paid representative of rouge board members? How is it that the Management Company offers no sound advice to a rouge board?

Annual Member Meet Part II: The Good, Bad, & the Ugly...

This evening we had our second attempt at making quorum. We achieved 50 members present - just 4 shy of the required 54. The board claimed not to have powers in the governing docs to reduce quorum. As a last ditch alternative, Chris Gillies refused the option of allowing an informal vote to proceed, and stepping down if he lost. Option 2.4 was motioned and seconded again by the members and a third meeting will be scheduled on January 28th 2013. Here is the second installment of the good, bad, and the ugly:

THE GOOD:

Our turnout was still impressive and many folks volunteered to walk the community the weekend prior to our third attempt on January 28, 2013.

The community got to meet Lola. She actively approached folks before, during, and after the meet. She was reminded during the meet that she must continue to triage the bleeding of our homeowners dues, just as she did in 2011 when she cooperated with neighbors and the board to return thousands of dollars in maintenance fees. We are still bleeding Lola. Keep up the good work.

our Management Company has dropped their "all inclusive" rate to $6000 from $6600 monthly. On an unrelated note, there were only half the number of our Management Company staff from the previous meet in November.

our Management Company has radically modified there collection fees which may indicate that we may no longer be 10s of thousands in the hole for an upside down collections policy that went unnoticed by the board for over four years. Congratulations for shifting Management Company before the board had to go about the burdensome task of busting out a calculator.

Chris Gillies has chosen to come into compliance with the community documents and will no longer accept payments for services from the folks he represents. I commend Chris for setting an example for the members he represents - it must have been kinda rough to charge your neighbors fees and collections for not following the community documents while at the same time being payed to ignore a bylaw that protected Directors from conflict of interest. Welcome to the fold Chris. This may be a turning point for you and I.

Hugh (the gentleman who ran against Chris Gillies) was very vocal this evening and showed a demure and intelligence that pinned our President against the ropes on several occasions. While his writing style and grammar may not bode well for some, Hugh can certainly hold his own and take lead for positive change. I would give my left arm for the tact he has.

Many folks voiced their concerns this evening, and I thank them all.

Leslie Darrington called out the Management Company for not posting the A-Frame signs on Westwind Blvd on the day of the first and second annual meets notifying members, "HOA Meeting Tonight". I'm certain this will help make our numbers on January 28th.

Finally, a neighbor brought in a collections bill for $400+ dollars that was a culmination of a long battle between the board and our Management Company. Our Management Company has recently forgiven the bill, and the neighbor owes nothing! This is a result of our efforts ~ holding the board accountable to a standard of sensibility. Congratulations everyone.

THE BAD:

The board has made very little progress on bids for new management firms in the month since our previous meet. Steve Wadding has ruled that no other Management firm will be considered until the advisory committee has created an appropriate RFQ format. Under questioning from Hugh, Steve admits that this process is completely new, and has never been used in the history of our community. Meanwhile the advisory board sits on quotes and schedules for service from 3 of the top 10 management firms in Phoenix.

Without RFQ, or any other competitive bids, the board voted to accept a revised our Management Company contract for one year.

Steve Wadding refused to address the bleeding of $60K+ in association dollars over the last several years by an upside down collections policy. He characterized the data I presented to him, the board members, the lawyers, and the folks in the community as distortions, lies, and without reference or fact. I suppose I won't go running home to my Mommy knowing that our Management Company has only recently taken the appropriate steps to drastically reverse their collections policy. Meanwhile Steve can further wallow in his laziness and ignorance - his efforts to acknowledge that change is no longer necessary. How embarrassing for the other board members to have to sit in his shadow.

THE UGLY:

Me. That's right. I embarrassed my wife this evening and for her sake I can no longer attend these meetings while Steve remains President. He has the knack of bringing out the worst in me. So much that a neighbor I met for the first time today had to tell me to shut-up. THAT'S NOT TO SAY I WON'T SUBMIT MY ABSENTEE BALLOT THOUGH ON JANUARY 28TH, or walk the community the weekend prior to entice greater turnout. Certainly the folks at the meeting today held there own and didn't need my outbursts. In fact, I may have squelched some very productive dialogue with my outbursts. My apologies to everyone. I assure you that absent Steve Wadding's close proximity, I am a warm and charming person.

A Forty Two Thousand Dollar Question... may go unanswered...

UPDATE: Sgt. John Filas of the Avondale Police contacted me this morning concerning closure of DR#1262767. He indicated based on the evidence provided that since no money went missing, then no illegal activity occurred. He suggested that the evidence does support a breach of fiduciary responsibility by the board for which there are several civil remedies (ie: voting out board members, a civil case to remove the board members, or replacement of the management company).

He also acknowledged that four of the mis-appropriations do appear to be interest free loans or advanced payments and that the board likely approved of the activity noted in the summaries of the monthly financials in question. He pointed out that a rather humorous explanation for the $18K loan in June of 2011 was due to a "billing error" per the monthly financial summary because it's kinda easy to accidentally make a check for $24,300 vs. $6000!

June 2011: Total general and administrative costs were over budget by $32,092.02. Expenses for in-house collection were over budget. Management fees were overpaid in error. There will be no management fees paid until November 2011.

Yeah... been there done that...

ORIGINAL POST: On October 20, 2011, I asked the board, management company, and our associations lawyer why our Management Company made $42K in unauthorized payments to itself from our account at various times throughout 2010 and 2011. The question has gone unanswered to this date. Because I received no answers, I reported the findings to the Avondale Police Department in order to determine whether the transactions accounted for embezzlement of Non-Profit funds. As of this date, Detective Heatherington of the Avondale Police Department has closed the case. No reasoning has been provided, and the board has been given a pass to remain silent. Thankfully the illicit activity appears to have stopped as of June 2011 after our Management Company made an unauthorized $18K payment to itself.

If you are concerned that our board and our Management Company may have engaged in unauthorized lending of our Associations funds, and that they may never be held to account for these transactions, then I implore you to please make a call to the following individuals and lobby for the re-opening of DR#1262767. Also, please contact our Management Company, the board, and the associations lawyer to demand answers and accountability.

EVIDENCE
EVIDENCE SUMMARY: here
DETAILED FINANCIALS: 2010, 2011 (see page 8 on each)

POLICE INFO
AVONDALE NON-EMERGENCY POLICE: 623-333-7001
CASE DR#1262767
DETECTIVE ASSIGNED TO CASE: Heatherington (sheatherington@avondale.org)
SUPERVISOR OF DETECTIVE HEATHERINGTON: Sgt. John Filas

THOSE WITH THE ANSWERS - Send email to all of them here!
PRESIDENT: Steve Wadding
DIRECTOR AT LARGE: Pedro Lopez
OUR MANAGEMENT COMPANY: the owner
ASSOCIATION LAWYER: Chandler Travis

The article, "Preventing Fraud: From Fiduciary Duty to Practical Strategies" is a must read for our board members and the members of our community. It is inexcusable that our board continues to entertain negotiation of a new contract with our Management Company while remaining "pin-drop" silent on possible embezzlement. On Dec 10 this will become the $42K elephant at the center of our Homeowners meet - I'm certain our board and the associations lawyer will ignore it.