A Guest Editorial
by David W. Bernstein
Sun City Anthem resident David Bernstein is a retired New York attorney who has served our Association with distinction as a volunteer in several formal and informal capacities. He has taken the time to share his thoughts on the Trumpets matter currently before the Community and the Board. The Board is planning to survey the Community with two seemingly unacceptable alternatives, either accept the terms of the negotiated amendments to our existing lease or litigate. Mr. Bernstein offers the Community an intriguing and worthy solution for your consideration, albeit, as he suggests, an indirect one. RLJ, 12 March
Mr. Bernstein writes:
I am puzzled, very puzzled! Let me elaborate.
The Report by Jack Silas Leaves Many Questions Unanswered.
The Trumpets Story Goes Back a Long Way - Before 2005.
In 2005, during the campaign season, the Trumpets problem was on everyone’s mind and tongue. We were going to have accountants - forensic accountants, yet, no doubt to emphasize the heightened degree of scrutiny that would be employed - review all of the records, there would be full disclosure and there would be an openness that would be enlightening. Those were the promises made at that time.
Soon after the election in May 2005, we were advised that one team of directors began their negotiations with Trumpets. They continued for an undisclosed period until they were replaced with another team of directors. During all this time the Board received conflicting advice from multiple attorneys and successive reports from different accountants, while meeting with the negotiating team from Trumpets.
Again, from May 2005, to the end of February 2007, not a single interim report was released by the Board, and not a single indication was had as to the progress - or non-progress - that was being had. We were periodically promised that reports would be issued very shortly!! Then, we were told - for sure! - that the reports would come in November 2006!! Meanwhile: No reports. Nothing! The open society we were promised did not come to pass! Total secrecy prevailed! The only thing we were promised is that we, the residents, would make the final decision to accept or reject any settlement with the tenant!!!
During all of this time, Trumpets paid no rent, whatsoever.
Now, on February 28, 2007, we are given a report by Jack Silas, a CPA, who explained this passion for secrecy by advising that it was the decision of our Board, upon advice of counsel. That is the first puzzlement! Why was it necessary that the residents be kept in the dark and in total ignorance for so long?
Jack’s report then developed the magnitude of the fraud that had been allegedly perpetrated on Trumpets: He disclosed that they were promised that there were 130 actual catering contracts, only 35 of which materialized! It becomes even more amazing when we are advised that the estimated value of those missing 95 contracts would total almost ONE MILLION DOLLARS.
Nowhere do I remember in his report that he indicated who might have been the individual(s) who perpetrated that fraud upon the tenant. Was it an employee of Del Webb/Pulte? Or, was it a director or an employee of our Association? That little piece of information is really quite vital and happens to be a very material fact in any analysis of our legal rights. If it were the former, that only DW/P was to blame, is that why they made a separate agreement with Trumpets, to settle all disputes with them? Do we get to examine that contract, too? And if that contract settled Trumpets’ claim against DW/P, why then is that claim still of concern to us at this time?
Further, another aspect that was not disclosed: Was the promise of 130 contracts in writing or was it an oral declaration? Was the Association involved to any degree, and, if so, by whom? That, too, is information that is really quite vital and material. If it were a director or employee of the Association: I must ask why the following provisions in the Lease do not neutralize Trumpets’ claim in its entirety:
“Par 20.08 of the Lease:
- “There are no oral or written agreements or representations between the parties hereto affecting this Lease, and this Lease supersedes and cancels any and all previous negotiations, arrangements, representations, brochures, agreements and understandings, if any, between the parties hereto...” (Emphasis supplied)
- “2.05 Tenant’s Representation: Tenant represents and warrants, as follows:
- “(a) Tenant acknowledges that neither Landlord, nor any agent or representative of Landlord, has made any representation or warranty with respect to the suitable of the Premises or the Equipment for Tenant’s Permitted Uses, or the future profitability of any such present or future enterprise, and that Tenant has entered in this Lease based solely upon its own investigation and inspection of the Anthem Center, the Premises and the Equipment.” (Emphasis supplied)
Thus, even though Jack may have calculated the value of those 95 contracts with accuracy and exactitude, nonetheless, it is extremely doubtful that that million-dollar claim would have any substance even if it were in writing and was made by an employee of the Association.
Jack also indicated that he was awaiting a final report from the forensic accountant, but that his report might be delayed because of the pressures of tax season. After waiting this long for a full and complete report - since early 2005 and before - why the hurry that Jack’s report had to be made before all the data had been received?
What is Needed is an Analysis by an Attorney, Not Just an Accountant.
I am even more puzzled that we received no analysis of our legal position from an attorney, as he would be better able to appraise and evaluate the cross claims of both parties in this dispute and to make recommendations to us as to how best to proceed. As it is, the Board would have us be guided solely by an accountant’s report and the magnitude of the claims against us. Why is it necessary that the Board rush to judgment before all of the facts and an unbiased analysis of our legal position are presented? One can only become suspicious and conclude that they are trying to scare us into doing their bidding - quickly, fearfully and without thinking.
I would, therefore, propose that a new attorney be hired, as independent of the Board as can be had, to review our legal position (not to negotiate with Trumpets) and to report back to the residents - directly, not through the Board - as to how he would recommend we should proceed. If any delay is thus had which would thereby frustrate the Board from making the final decision, why does that cause a problem? It may even be better. The next Board - I am hoping - could be more capable of making the requisite decision.
There is a Third Alternative, But Only Indirectly.
If the vote by a majority of the residents is that we should not accept the amendment to the Lease and that we should litigate with Trumpets, bear in mind that the litigation once begun can always be settled and compromised by the new Board. In that way, those who prefer that we do ‘nothing’ - which is not now a choice available to us - could defer the final resolution of the problem to enable the new Board to consider same. But if the claim of Trumpets is now good, it would also enable them to enforce their right to exercise their option of renewal in October. And vice versa
I sincerely hope the Board will heed our need for more information and guidance. Their failure so to do will, unfortunately, be recognized as a dereliction of their duties and obligations to us, the residents. My final question of the present members of the Board is this: Is there something to be learned if others are able to review your past involvements with Trumpets? Is that the reason for this undue haste at this late date?
David W. Bernstein