Trick or Treat

Trumpets—a continuing saga

Prior article on Trumpets

The Endgame Plan

The Board Meeting, 4/28

Interesting Speculation by Ron Johnson

Preface 

            Before we can have some understanding of what the secrecy surrounding Trumpets potential litigation is all about, there is a need to revisit the almost forgotten indebtedness issue. It is my opinion that the "resolution" of that indebtedness issue lies at the heart of why the Association now finds itself bogged down in a legal, most likely no-win quagmire.

          Finally, a word of caution. The judgments and conclusions that follow are mine alone and represent an attempt to shine some light on a very troubling matter about which the Board has been silent. At some point in the near future, we can expect to hear a final resolution and an open discussion of the issues surrounding this current matter.         

Historical Perspective 

Some say charity begins at home, a lesson we all learned when the Board sought to downgrade Trumpets indebtedness from $100,000 to a more politically acceptable figure—after all, transition and Board election season was fast approaching and some "acceptable" resolution had to be achieved. That indebtedness figure was subsequently reduced and was later written off as uncollectible since the lessee of Trumpets was not about to pay a penny on any indebtedness, no matter how the amount was calculated.

As far as the old Board was concerned, it would be easier to swallow (and especially to sell to the members) if a smaller rather than a much larger amount was to be written off as uncollectible. This was all an embarrassment that needed taken care of following the disclosure of the indebtedness problem by Linda Lee Peterson, our former controller, and whose only declared fault in this matter, according to Dea McDonald’s announcement at a Board Workshop on Trumpets, was that she had “let the [indebtedness] cat out of the bag.”

This was not the position taken by Jack Silas, however, who had been tasked by Board member Favil West to revisit the indebtedness issue. While adopting an alternative accounting method, Jack was intent on, to his discredit in finding fault with Linda Lee, attributing undeserved blame to DW’s controller for adopting what he alleged was an incorrect method for calculating the indebtedness. While he knew otherwise, it was not his mission at that time to provide members with a fair and balanced accounting presentation. Jack, Favil and the then old Board were looking to point the blame elsewhere. Conveniently, a scapegoat had been found and was marked for blame.  

Forgotten in all of this maneuvering to derive a politically acceptable resolution to the indebtedness fiasco was the unanswered question, “What event gave the lessee of Trumpets the idea that late fee penalties would not be due?” In rejecting the unambiguous terms of the lease calling for the imposition of late fee penalties, was the lessee of Trumpets merely acting in a  dilatory manner in their fiduciary obligations, or was the lessee just being obstinate in their refusal to pay, or, perhaps, was there some other more reasonable explanation? Given our more recent history with the lessee, one may wonder, if not assume, that the lessee had some informal, unwritten basis for disregarding the terms of the lease insofar as late fee penalties were concerned. Given the apparent desire of the lessee to literally color the growing penalty assessments gone, one is tempted to imagine that the signatories to the lease, among others, had more than one conversation on this issue back in the 2002-03 period. For example, in inquiring about the then ongoing assessment of late fee penalties, it now seems entirely reasonable to conclude that the lessee was told by someone who had such authority, in effect, “not to worry” about the late fee penalty provisions of the lease?

And, mind you, just who might have had the authority to make that “not to worry” suggestion to the lessee? Who then would have thought that the indebtedness cat would later have gotten out of that accounting bag to become an embarrassment that would have to be politically “resolved” by a quiet burial in the desert. And then there was the left-hand, right-hand problem. We’ve been told in the past that ALL such problems relating to Trumpet stemmed from Bill Diveley in his tenure as our former Executive Director and that our Board members were kept in the dark about what was going on. Bill, no longer here to defend himself, has become another of the Board's convenient scapegoats.

But since Favil West was the only resident Board member who was a signatory to the lease and neither Diveley nor the controller were signatories, its extremely difficult, if not impossible, to imagine that highly involved, hands-on Favil West would have been kept in the dark about something as high profile as Trumpets and their accounting difficulties. Perhaps I am being too generous in attributing to Favil an all-knowing quality on matters pertaining to Trumpets. On the other hand, it’s not unreasonable to conclude that the left hand (DW’s controller who was adhering to the terms of the lease) and the right hand (Favil West) were not in sync in their respective Trumpets “understandings.”

While "the who" may be of some passing interest, as well as having certain legal implications, the key factor in this historical perspective section was the subsequent decision by the Board to color that late fee penalty indebtedness gone. As much as any oral understanding (that may or may not have existed) was responsible, it is my belief that the Board's subsequent act in zeroing out the indebtedness set the stage for what was to come next. This, I suggest, was one of those, "where it not for" situations.        

How to Avoid Objectionable Lease Obligations Without Really Trying

         Those who are in the business of giving will frequently encourage us to give until it hurts. Apparent we have yet to meet our financial obligations to the lessee of our Trumpets partner, S & D Café, as the Association again has been found wanting on the giving end. Incredibly, it seems that our other than naïve Trumpets partner had found not only other objectionable and costly provisions of the lease to avoid, but seemingly had found a means to do just that. Remember that hypothetical “not to worry” conversation the lessee had above, well it seems that our not so naïve lessee most likely had another of those “not to worry” conversations—one that, if it was not designed, nevertheless had the affect of relieving the lessee from having to comply with certain obligations mandated under the terms of the lease. 

What’s especially unusual and unique about these alleged conversations affecting the terms of the lease is that they were NOT put to writing, or so I understand. Why is that important? I suggest that that omission becomes uniquely significant in this instance. As an unwritten, non-binding statement, an oral agreement has the capacity to assume far greater power than if the parties had attempted to codify their oral understanding. Had efforts been undertaken to codify their agreement, those efforts would have clearly failed in the face of scrutiny and the need for approval by others. Both parties were only too aware that any such an hoc, oral agreements were null and void, actually legally meaningless under the specific terms of the lease in the absence of such agreements having been committed to in writing and signed.    

So, you might ask, if the lease prohibits amendments that are not written and signed, how is it that we are now stuck by what appears to be a non-binding oral agreement. While not privy to the facts of the case, I’ll venture a qualified stab at what I believe has happened. It seems that the Association, having already given away the store once on that indebtedness matter ($100,000 to zero), created what might be called in the legal community an adverse precedent against the interests of the Association. What the Association did was to act on an otherwise non-binding agreement outside the terms of the lease. In so doing, the Association set itself up for a cause of action on other alleged oral agreements. As a result, that adverse precedent most likely had its intended affect of precluding the Association from enforcing other noxious terms of the lease where the lessee can assert a claim they are not subject to this or that provision based on some other prior oral understanding. Some might argue that the lessee had the Association by the proverbial b . . . . .   

In deciding to walk completely away from that late fee penalty matter as an enforceable debt, the Association would seem to have given up certain rights under the lease in matters pertaining to other alleged oral agreements, or so the lessee would likely argue. Those given-up rights, if indeed they are lost, are assumed to have a direct and negative impact of unknown magnitude on the amount of the lessee’s payments to the Association. If this theory is correct, the Association will have fewer enforceable rights, with the result that it will potentially derive less income than called for under the terms of the lease.

While having the appearance of a win-win-win strategy accruing only to the benefit of the lessee, alas, we must await the outcome of ongoing negotiations to learn what really happened. 

Ron Johnson

24 October 2005