Summary of request for Internal Dispute Resolution (IDR)
with Lake Forest Owners Association
(Lake Forest Master Association, LFMA)

Top-level major points:

• LFMA under the current board has conducted almost all business secretly, in violation of Civil Code §1363.05(b);
  That provision of California law requires conduct of business in open session, with very limited exceptions.
   
• There is no evidence that LFMA has followed appropriate business procedures for major business, such as termination and formation of contracts for service covering almost all LFMA operations and budget. Such procedures include competitive bidding and open discussion of requirements.
   
• Through the end of 2010 the current board has done nothing to implement the prior board's plan for major landscape renovation and enhancement at the Sheffield Drive entrance to Waterford and along Waterford's frontage on Francisco Drive, with that work formerly planned for completion in 2010.

Clear and possible violations of California law include these sections in law:

• Civil Code §1363.05(b):  General business not requiring confidentiality must be conducted in open meetings.
• Civil Code §1363.03(5):  Inspectors of election shall be independent third parties.

Details:

• The current board has conducted almost no business in open session. In contrast, business conducted confidentially in executive session has included, by the board's own statement, "Either replaced or modified every contract for services".  I have reason to believe this is involves about 6 to 8 condracts.
  
  California law (Civil Code §1363.05(b), in the Common Interest Development Open Meeting Act) requires all business to be conducted in open session, with enumerated and limited exceptions for specific types of business which require confidentiality. One of these is formation of contracts; however, this does not include termination or modification of contracts. Provision for formation of contracts is to maintain confidentiality in negotiations, especially when this involves competing bidders. Prudent business practice has always been for HOA boards to discuss at least requirements and major details of proposed new contracts in open session, prior to seeking multiple bids for large contract awards. The most common case in my experience has been conduct of all contract-related business in open session.
   
• LFMA may have awarded all new contracts to single-source bidders. Reasons for contract awards are totally unknown, though it it reasonable to infer that this board's overriding concern is to cut expenses.
   
  The largest probable example is for Francisco Drive landscape maintenance services, awarded to the same company that is contracted by The Summit Owners Association. (Note the LFMA/Summit connections listed in the table at the end of this web page.) The general business issue most likely to be at stake is whether this board's focus on reducing expenses compromises quality of service. Prudent HOA business practices should allow for discussion of such issues in open session board meetings, if necessary formally designating the agenda items as public hearings.
   
• A related concern is that this LFMA board's use of executive session could be concealing violations of ethics. A prior case in point was Ray Myers' request during the term of the prior board to be given a copy of a contractor's bid for the Francisco Drive landscape maintenance contract in order to give that information to the contractor of his choice. 
   
• An additional point of concern is the exceptionally high level of abandonment of contractors who had previously been considered to have performed well in service to LFMA. An unconfirmed report indicated that over somewhat more than 1 year the current board had terminated every contract that had been in place before they took office. If this can be confirmed it is likely to stand as evidence that the current board has exercised ad hominem bias in consideration of contracts. The history of opposition to the prior board by Ray Myers and some of those from The Summit at a minimum is consistent with ad hominem bias.
   
• LFMA attempted in 2010 to redefine "Member" through a CC&R amendment. This change would have also altered the definition of Member not only for purposes of the Civil Code but also for the Corporations Code because LFMA's Bylaws incorporate the CC&R definition by reference.
  
  This redefinition of "Member" would have eliminated Membership for individual homeowners who are represented by a homeowners' association. Most of those who are now LFMA members would have lost all rights and privileges of membership granted in the California Civil Code, the Corporations Code, and the LFMA governing documents.
  
  This is legally much more drastic than it seems on casual inspection.
   
• LFMA appointed Tom Austin and Helen Austin as independent inspectors of election in 2010. Tom Austin was the author of the election's proposed  amendments to CC&Rs and Bylaws. Helen Austin was his wife and chair of the Finance Committee, which operated in lieu of appointment of a CFO. This appears to be a violation of the Civil Code §1363.03(c)(2), which requires inspectors of election to be independent.
   
  §1363.03(c)(2) defines criteria for recognizing independence of inspectors of election. The relevant portion states "An independent third party may be a member of the association, but may not be a member of the board of directors or a candidate for the board of directors or related to a member of the board of directors or a candidate for the board of directers." This provision's language covers independence in the context of election of directors. It neglects to state explicitly a similar requirement for elections for amendment of governing documents, and this is one of many flaws in the Battin bill (SB 61 in 2005) and its fixup trailer bill (SB 1560 in 2006), which expanded on the previously relevant law in Corporations Code §7614. That section requires that "The inspectors of election shall perform their duties impartially, in good faith...".
   
• Conduct of the 2010 election is questionable, given that elections are to be conducted as secret ballots and Ray Myers subsequently asked the Waterford Board why they had voted against both the CC&R and Bylaws amendments.
   
• Under the current LFMA board maintenance was neglected on Waterford frontage on Francisco Drive between Sheffield and Hampshire.
   
• LFMA failed to adequately maintain ground cover, or its irrigation, in the median on Francisco Drive.
   
• This LFMA board failed to follow through with the prior board's plans to replace and enhance landscaping of the Francisco corridor in the area of Waterford, and especially at the Sheffield Drive Entrance.  The prior plan would have finished this project in 2010; instead, it has not yet been started at the beginning of 2011. This may impact property values in Waterford.
   
  

Appendix:  Personal relationships shared between LFMA and other HOAs:  All involve The Summit, ezcept for Directors Art Greenwood from Marina Woods and Ray Myers from Waterford.

Person	Position in LFMA	Position in The Summit HOA as reported on The Summit web site, December 2010
Gene Harris	Vice President	Elected Representative of The Summit to LFMA
Will Overholtzer	Chairman of Landscaping Committee	Secretary The Summit Board Representative to LFMA
Helen Austin	Chairman of Finance Committee Inspector of Elections (2010)	Chief Financial Officer
Tom Austin	Author of CC&R and Bylaws Amendments (2010) Inspector of Elections (2010)	Chair, Architectural Control Committee
John Poimiroo	Webmaster of www.lakeforestmaster.org, registered owner of LFMA Internet domain name	President, ACC member, Chair of Landscaping Committee, Member of Website Committee (Webmaster)
Wally Richardson*	No formal position;  previously active in advocacy for LFMA business and replacement of the prior LFMA Board	Chair of Social Committee [not noted on web site:  Also a past President]
	LFMA Directors and committee members documented in minutes from CIDs other than The Summit:
Ray Myers* (Waterford)	President
Art Greenwood* (Marina Woods)	Secretary

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