President Roz Berman's Board Report, June 26, 2008 [distributed by RMI's email Bulletin, 26 June]
Please note that the run-on report by Roz Berman has been edited by Ron Johnson to provide context to the items being reported. These items have been broken down into numbered sections below, with each section heading in ALL CAPS and contained in a bracket [ ] to distinguish the added headings from the original report. In some instances, additional material has been added for further clarification, as in numbered Items 2 and 4, which are italicized and also contained in a bracket [ ].
[1. S&D CAFE V, LLC LITIGATION STATUS.]
Since my May President’s report, our attorneys have inspected documents that S & D Cafe V, LLC produced at the offices of their attorney, Mike Mushkin. A number of documents that had been requested had not been produced, notably financial books and records. Only profit and loss statements were produced. Sales and use tax reports were also missing for the year 2004. Our attorney contacted Mr. Mushkin to get a firm date for production prior to a scheduled status hearing yesterday before the Discovery Commissioner. Mr. Mushkin did provide some documents to our attorneys yesterday. An additional conference with the Discovery Commissioner is scheduled for Friday.
With the agreement of the parties, the Court has extended the date by which our attorneys can complete our discovery (depositions, written interrogatories and demands for documents). This was necessary because of the delay in obtaining documents from plaintiffs, which in turn has delayed our scheduling of depositions. The new discovery cut-off date is December 19, 2008. The last date by which to file dispositive motions is now January 20, 2009. We are considering whether to renew our motion to dismiss certain claims, particularly fraud and the failure to plead it with particularity.
Pursuant to the Amended Scheduling Order, the case will be taken off the September trial calendar and we will receive a new trial date within the next 60 days. There was a status check before Judge Elizabeth Gonzalez yesterday.
[2. POTENTIAL LIABILITY ISSUE.]
Per the Board's authorization at its June 12 Executive meeting, we have served Notices to Del Webb/Pulte pursuant to NRS Chapter 116. 3111 [see NRS section 116.3111 below] that it may be liable for certain acts and omissions during the time Del Webb maintained control of SCA and its board.
[Although unstated in her report, this liability issue addresses the Association's claim against the Developer for the amount of the shortfall in transition reserves as determined by the recently concluded 2005 "look-back" reserve study.]
[NRS 116.3111 Tort and contract liability. Neither the association nor any unit’s owner except the declarant is liable for that declarant’s torts in connection with any part of the common-interest community which that declarant has the responsibility to maintain. Otherwise, an action alleging a wrong done by the association must be brought against the association and not against any unit’s owner. If the wrong occurred during any period of declarant’s control and the association gives the declarant reasonable notice of and an opportunity to defend against the action, the declarant who then controlled the association is liable to the association or to any unit’s owner for all tort losses not covered by insurance suffered by the association or that unit’s owner, and all costs that the association would not have incurred but for a breach of contract or other wrongful act or omission. Whenever the declarant is liable to the association under this section, the declarant is also liable for all expenses of litigation, including reasonable attorney’s fees, incurred by the association. Any statute of limitation affecting the association’s right of action under this section is tolled until the period of declarant’s control terminates. A unit’s owner is not precluded from maintaining an action contemplated by this section because he is a unit’s owner or a member or officer of the association.]
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[3. RESTAURANT LEASE NEGOTIATIONS.]
Initial meetings for restaurant lease negotiations have been held with Boulevard Bar and Grille.
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[4. RESIDENT COMPLAINT RE STATUS OF TRUMPETS RESTAURANT.]
A resident complaint stating that the Trumpets Restaurant is a private facility, no Corporation or other Business Enterprise can lease it, and the Board cannot approve a lease for it, was responded to in an email blast on June 05. The email blast [reproduced below] detailed why such conclusions are inaccurate. If you have not signed up for email blasts and would like a copy of the report, you can request a copy from Caren Carrero, Assistant CAM.
[President's Message June 5, 2008 - Trumpets
An Owner has circulated correspondence throughout the community stating that Trumpets Restaurant is for use by SCA members and their guests only. This owner further contends that there is no public access in the Rec Center for casual dining or catered events. These conclusions are inaccurate. They are not consistent with the Association’s governing documents or relevant provisions of Nevada Revised Statutes Chapter 116.
First, Nevada law provides that “[t]he declarant or his transferee . . . is liable under [Nevada law] for any false or misleading statement set forth [in the Public Offering Statement] which he prepared.” NRS 116.4102 (3). Thus, to the extent that there are any misrepresentations in the Public Offering Statement issued by Del Webb regarding the use of the recreational facilities, then owners may initiate a claim against Del Webb.
Second, the Declaration provides that the Owner’s nonexclusive easement rights with respect to the Common Areas are subject to the Board’s right to permit use of any recreational facilities situated on the Common Area by persons other than Owners, their families, lessees, and guests upon payment of use fees established by the Board. Declaration Section 11.1 (c). This provision clearly allows the Association to allow non-owners and non-members to use the Association’s recreational facilities. Thus, the Owner’s conclusion that no public access for casual dining or catered events is permitted is incorrect.
Third, the Declaration expressly provides that the Owner’s nonexclusive easement rights with respect to the Common Areas are subject to the Association’s right “to rent or lease any portion of any clubhouse or other recreational facilities within the Common Area on a short-term basis to any Person approved by the Association for the exclusive use of such Person and such Person’s family and guests.” Declaration Section 11.1 (d). The Declaration defines a Person as “a natural person, a corporation, a partnership, a trustee or any other legal entity.” Declaration, Article II. Thus, the Association has the right to lease portions of the Common Areas to entities other than individuals. There are also other provisions of the governing documents and NRS 116 that support this conclusion. Declaration Section 7.5, Bylaws Section 3.17, and NRS 116.3102 (1) (e), (i), (r), and (t).
Fourth, admittedly the Board’s ability to lease portions of the recreational facilities or Common Area is limited to a “short-term basis.” Unfortunately, the phrase “short-term basis” is not defined anywhere in the governing documents. Thus, the Board intends to use good business judgment in determining how to interpret this provision. NRS 116.3103 (1). The Board will consider the length of previous and current leases and the nature of the occupancy under consideration, as well as market standards, when determining how to define and implement leases on a “short term basis.” The Board is committed to doing everything it can to protect, maintain and enhance the values of the units in the community and to implement a funding plan (including revenues) that is in the best interest of the Community.
In summary, virtually all of the statements and conclusions being circulated on the restaurant lease are incorrect. The Association is authorized to enter leases with third parties, including corporations or other legal entities, and intends to do so. The Association is not restricted to leasing only to individuals or owners/members. If the restriction on leasing was intended to be limited only to owners/members, then the Declaration would have been written in another manner. More importantly, it is evident from past history that it was the Declarant’s intent to have the restaurant available to the public since its inception.
Roz Berman
Board President]
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[5. STATUS OF RECREATION CENTER 3.]
I have started to receive a monthly status report, regarding Recreation Center 3, direct from Jeremy Fritz, the Pulte Vice President of Planning and Development.
Pulte, the Architect and Consultants met to review documents since the project hiatus or interruption.
Pulte and the General Contractor met to discuss re-bid strategy, trades and bid schedule, and are working to minimize requirements for certain material components of the building which have increased since last year. They are also reviewing alternate options without changing building design or programming.
Pulte is working with the City of Henderson Building and Fire Safety on permit and plan issues.
Document packages are being updated for an early-July trade contractor re-bid. Bid review in conjunction with current documents will occur the end of July with anticipated release to order select long lead materials.
Jeremy assures us that Pulte is back in full swing and we will see a lot of action before the end of this year.
Per comments made at the Town Hall meeting last week, I contacted Jeremy and he responded that Pulte planned to water down the site on Tuesday this week and to have it scheduled on a regular basis.
Per the preliminary schedule provided by Jeremy, the 2009 Budget Development Guidance being presented for approval to the Board today, by the Finance Committee, has a guideline #8 that states: “Assume Recreation Center 3 start-up will be October 1, 2009.” That means the plan assumes that the building will be open by October 1, 2009, and that is when we should assume we will start to incur expenses for supporting it.
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[6. RESERVE STUDY UPDATE.]
The initial Reserve Study update reports for 2008 were received from DFS, the Reserve Specialists. This month the SCA Reserves task group started reviewing the reports.
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[7. NOTICE OF PRESENTATION BY ATTORNEY CHARLES LITT RE CONSTRUCTION DEFECT OF COMMON ELEMENT PROPERTIES.]
Attorney Charles Litt, the managing partner of the law firm, Feinberg Grant Mayfield Kaneda & Litt, will be present at the Board meeting today to introduce what SCA will be doing to prepare for the end of Nevada’s construction defect warranty period. The firm has had an architect and civil engineer do an initial review of some of our common properties. At the June 12 Executive Session, the Board discussed the Preliminary Expert Reports and passed a motion to retain the firm to continue construction-defect work for the common elements of the association.
[8. NOTICE OF A PROPOSED MEETING OF HOMEOWNERS RE CONSTRUCTION DEFECTS IN SINGLE-FAMILY HOMES.]
A special educational Town Hall meeting with residents will be setup with various lawyers who are or could be involved with construction defects in your single-family homes. Bob Frank and Barry Friedman are coordinating the setup for this event.
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[9. GOLF LIAISON ADVISORY COMMITTEE.]
Barry Friedman is the Board representative assigned to the Golf Liaison Advisory Committee. Their charter was approved at the May Board meeting.
[10. REFURBISHMENT PROJECT MANAGEMENT TEAM.]
I am the Board Representative assigned to the Refurbishment Project Management Team. Their charter was approved at the May Board meeting.
[11. CC&Rs AND BYLAWS AD HOC WORK GROUP.]
Based on the Board’s request for volunteers at the May Board meeting, I am very pleased to say that we have received 10 volunteer names for the ad-hoc residents work group that will review the CC&Rs and Bylaws and make recommendations, based on residents' desires, for appropriate changes to these governing documents. Carl Weinstein is the Board Representative assigned to this work group. An introductory meeting will be held with the volunteers in early July.
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[12. ACTION ON FINES.]
In addition, at the May 22 Executive Session, motions were passed to: waive fines for an appeal, based on extenuating circumstances; deny a waiver of fines for an appeal; and allow a waiver of age occupancy restriction, for an appeal, for a period of 6 months.
[13. RED ROCK FINANCIAL SERVICES REPORT ON FORECLOSURE REPORTS.]
Reports, provided by Red Rock Financial Services, our collection agency, noting details of potential and actual lender foreclosure liability amounts, as of the month of April, were reviewed
[14. EXECUTIVE SESSION ACTION TO REPLACE TRUMPETS INOPERATIVE ICE MACHINES.]
At the June 12 Executive Session, a motion was passed to spend $14K from reserves to replace two ice machines that can no longer be repaired and this expense will be included in the S&D lawsuit claims;
[15. EXECUTIVE SESSION DECISION TO REVIEW ARC ISSUE.]
an ARC issue was reviewed, but no action was recommended;
[16. EXECUTIVE SESSION INTERVIEW WITH ATTORNEY RE CONSTRUCTION DEFECT CLAIMS.]
and an interview with an attorney from the firm of Angius and Terry was held regarding construction defect claims.
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Finally, to quote from a most enjoyable production, Association-Ville, put on recently by the SCA Performing Arts Club, “Don’t grumble, be happy,” with all that you do have to be happy about.
Roz Berman
Board President