Comments and Criticisms - Gov Doc changes

Many are not aware of or have not read the many documents in what is referred to as "the O'Connell's Lawsuits. I have read everything. I agree the current proposed for 12.01 and Master Plan will give the Board unlimited power, until they use their discretion improperly. My guess is in 2-5 years.

So far, the Board has illegally exerted power under 12.01 only to Covenant 11.06 for late payment assessments. If not challenged and corrected, there is nothing stopping them from granting waivers or variances for any Covenant. There will no longer be a need to have Members vote to change any Covenant because the Board can do it, so they think. Here is my take on why the Board is illegally using 12.01 to do as they please.

Recently President Mizzi made it clear she believed the O’Connell’s lawsuit confirmed the Board had authority to waive or change interest rates under Covenant 12.01. Dan stated that since the 18% interest required by Covenant 11.06 is considered usurious, GLA should not proceed until the Board established a new policy. He also stated the new interest rate would have to be applied retroactively, which if set at Prime +3% would be a loss of over $193,000.

There is a belief by some Board members that they are the Corporation or Association, or are allowed to grant waivers or variances, as part of doing business under Covenant 12.01. This has been used to justify freezing the interest rates when debtors enter into payment plan agreements. If this is truly legal, can the Board establish Senior Citizen discounts, or Survivors of Major Medical Incidents waivers, without Member approval? If changes can be made here in 11.06, they can be made to any covenant, making the baseline Covenant 2.05 requirement for 51% affirmative Member unnecessary.

Some may assert the Board may use 12.01 based on a interpretation of Bylaw Article VI (B). It states “The business and affairs of the Association shall be managed by the Board of Directors. Such Directors shall in all cases act as a Board which shall have the powers and duties necessary for the administration of the affairs of the Association and may do all such acts or things as are not by law or by the Covenants, Bylaws or Articles of Incorporation directed to be exercised and done by the Members.” Applying this to justify the issue waivers or grant variances ignores the fact 12.01 specifically says “The Association reserves the right to waive or grant variances to any of the provisions of this Declaration” The Association is defined in the covenants at 3.01 as “Glastonbury Landowners Association, Inc., a Montana nonprofit corporation, its successors and assigns.” and the members (i.e. physical bodies) of Glastonbury Landowners Association is defined by the Articles of Incorporation in Article V Membership. “Members of the Association shall be certain owners of property in the Community of Glastonbury located in Park County, Montana.” The specific language reserving, and thereby limiting the authority of 12.01 to the Association prevents any interpretation that the Board can be doing the business of the Association in this specific covenant.

The requirement that Members vote on any changes to the Covenants is further described by Covenant 2.05 stating “The covenants in this Declaration may be altered, amended, modified, waived, abandoned, or terminate in whole or in part at any time by the affirmative vote of at least fifty-one percent (51%) of the Membership Interests of the Association.” Judges will rely on the separation and independence between the Board and Association as specifically referenced by Covenant 2.03 stating “Upon authorization of the Association’s Board of Directors in each instance, the Association shall have the right of ingress, egress and inspection upon each parcel,” An additional legal doctrine that applies is that by specifically referencing the Board of Directors in Covenant 2.03, the writers had the knowledge of and obligation to cite the Board of Directors in 12.01 had they intended that power be given to the Board. However, they cited the Association, not the Board.

Charlotte’s, and likely many Board members, reliance on the O’Connell lawsuit does not look at the facts the Judge presents.

In a Judge’s decision, an issue is only decided upon and usable as a reference if recorded as a decision point, which requires; 1) the issue or question is specifically asked of the judge, i.e. a specific line item shown as a specific challenge or complaint; 2) it is argued between the parties; and 3) the judge clearly presents a decision addressing that item. The O’Connell’s challenged the process and decisions made, not the authority to make those decisions, and GLA attorneys defended the process, not the authority of the Board. Thus, any reliance on those court documents to suggest Judge Gilbert agreed to or supports the concept of the Board acting as the Association or doing the business of the Association under 12.01 is not valid.

Some are misled by Judge Gilbert’s statement, “The Covenants, at Section 12.01, provide that “the Association reserves the right to wave or grant variances to any of the provisions in this Declaration, where, in its discretion, it believes the same to be necessary and where the same will not be injurious to the rest of the Community.” She included, “The GLA Board approved the variance under Section 4.2 of the Master Plan. The Board has discretion to approve or deny variance requests in accordance with Section 12.01 of the Covenants.”

However, she did not present a ruling on whether the Board could act “as” the Association under 12.01 or would be doing the business of the Association since that was not a question before her. She only referenced information that both the plaintiff and defendant had presented as true. In addition, she relied on and cited that the variance as being approved under Section 4 of the Master plan and she concluded her decision with the statement, “In any event, for the purposes of the pending summary judgment motion, the facts underlying the variance decision are not in dispute.” I believe she made the “in any event” statement to highlight she was not making any finding or determination about the Board authority . I understand the tendency, when reading, to see items you want to use to support a specific position, and grasp them. But I see no way that the O’Connell’s lawsuits confirmed the Board is the Association/Corporation, or is properly doing business for the Association under 12.01. Again, as required in the Bylaws, in Covenant 2.05 and clearly stated in 12.01itself, ability to grant waivers or variances is reserved for the Members.

I fear some Board members have been told that the Montana law 35-2-414 statement, “all corporate powers are exercised by or under the authority of the board” gives the Broad a lot of, or possibly unlimited, corporate power. The only corporate powers GLA holds are those listed in the GLA Articles of Incorporation, Article IV POWERS items A-E. It should be noted that in addressing amending or changing our governing documents, the only power the Board holds by the Articles of Incorporation is to “adopt, alter, amend or repeal such Bylaws as may be necessary” and no power to change the Covenants is even suggested.

The discussion of placing liens on properties with late assessments showed again that the Board is not following the requirements of Covenant 11.06 which states “If any assessment is not paid by midnight on the date when due, then such assessment shall become delinquent and shall, together with any interest thereon become a continuing lien on the parcel.” The current Assessment Policy, which was not voted on by Members, tells Members no lien will be placed on the land for one year. This policy changes Covenant 11.06 and is an open and direct violation of Covenant 2.02 which states “each provision in this Declaration shall also be interpreted in the light of its express language, context and intent.” Again, “shall” is definitive and not up for interpretation.

Many of the late assessments have not been pursued for decades and there is no current financial crisis pushing the Board to collect any of them now. Yes liens should be placed on parcels as called for in Covenant 11.06 and payment of those liens accepted if offered. But I see no reason to negotiate or pursue any collection until the Members have approved the actions the Board may take.

I am sure that everyone knows that I am not an attorney and do not intend to present myself as one. However, I have had extensive experience in dealing with legal issues as the 20+ year former Real Estate Specialist of U.S. Forest Service dealing Federal law and legal issues from the local level to the National level, including the writing of laws. I sometimes joke that my worst day in the office was when the head attorney for the entire U.S.F.S. told me he appreciated exchanging ideas with me and he had put my name on his speed dial, which did happen.

I believe most Board members could develop similar interpretations and fears for how the Board is conducting business if they only spent the time to read and understand our governing documents.
 
Thank you for your time in reading this.

Leo Keeler