NOTICE: On June 29, 2008, the Defendants through their attorney alleged that some of the content of the following article originally published on BaywindsLife on June 27, 2008 may be in violation of the terms of the settlement agreement. While every effort was made to ensure that this article fully complied with the terms of the settlement agreement, the article was removed from the web site immediately to give the Defendants the opportunity to specify what information they believed violated the settlement agreement. As of July 18, 2008, the Defendants have failed to specify what information violated the settlement agreement. Given this fact, it has been concluded that the objections were more about keeping the inconvenient truth secret rather than about any alleged violation of the settlement agreement. Accordingly, the original article has been returned to the web site (see below). Please be assured that should the Defendants identify valid violations of the settlement agreement, the violations will be removed immediately from BaywindsLife.

The current and original members of the Baywinds Board of Directors have reached a settlement agreement with the Baywinds homeowners who filed a lawsuit against the Association and the 11 original Board members more than two years ago for fraud, breach of fiduciary duty, breach of good faith and fair dealing plus various violations of Florida Statutes. The homeowners have accepted a $27,500 offer from the Association and these 11 original Board members in return for withdrawing all but one of the counts in the lawsuit. [click here to view the signed settlement agreement]

HISTORY

For more than two years, the homeowners who brought this lawsuit against the Association and it's original Board members continuously sought to settle the case WITHOUT any monetary compensation. The latest homeowner offer, made on January 7th of this year, was a sincere comprehensive settlement offer that would have resolved all issues and ended the lawsuit completely with no payment of any monies to the homeowners. This good-faith homeowner offer was formally rejected by the current and original Board members on February 22, 2008. [click here to view this settlement offer]

OBSERVATIONS

It is unclear why the current and original Board members decided to reach a settlement agreement in this lawsuit now, after more than two years and the expenditure of substantial monies and other resources to "aggressively defend the case" that they believed had "no legal merit" (click here to view these words in context). By doing so, the Association and the original Board members have given up the opportunity to a) demonstrate their innocence and b) recover the Association and insurance company monies spent in defending against the allegations contained in this lawsuit.

The only recent event that may have motivated the current and original Board members to accept this settlement agreement is the four-hour April 17th deposition of Al Tsacnaris [click here to see the official 200+ page transcript of his deposition]. Al gave sworn testimony that

• he "inadvertently" was left off the deed of his Baywinds house despite being listed as a co-applicant "**SPOUSE NON OWNER**" on his 2002 application for a homestead real estate tax exemption that included both the statement that he was "NOT ON DEED LIVES ON PROPERTY" and a supporting affidavit [click here to view Al's sworn testimony in context and click here to view contradictory documentation],
• he was "not sure that there was ever technically a Presidents' Council" and he didn't "recall if it was called the Presidents' Council" [click here to view Al's sworn testimony in context and click here to view contradictory documentation],
• he couldn't recall if the "Presidents group" discussed amending the Association documents prior to turnover [click here to view Al's sworn testimony in context and click here to view contradictory documentation],
• the meetings of the "Presidents group" were open to the homeowners despite the fact that some homeowners were explicitly excluded (e.g., George Singer, Max Harper , etc.) [click here to view Al's sworn testimony in context],
• the Board "did not believe that (mediation) was a necessary tool" to resolve the Amendments validity issues [click here to read Al's sworn testimony in context],
• he was advised by Mr. Krivok that the Board members should "continue operating" as a Board during the same period Mr. Krivok was claiming that the Lennar Board was in control (i.e., If Al's statement is accurate then the Association's attorney sanctioned two separate, concurrently functioning Baywinds Boards) [click here to view Al's sworn testimony in context],
• etc.

On April 23, 2008, only four business days after Al made the above statements during his deposition, the current and original Board members suddenly and unexpectedly submitted a partial settlement proposal to the homeowners who filed the lawsuit. Within a few days, the terms of the settlement agreement had been finalized and the process began to obtain the signatures of all parties.

WINNERS

Can you guess who are the biggest winners in this lawsuit?

You guessed it, the lawyers.

It is estimated that the law firm of Mr. Quattlebaum, the attorney representing the Association and the original Board members in this lawsuit, has billed between $50,000 and $100,000.

Association records show that the law firm of Mr. Krivok, the Association's general counsel, has billed the Association upwards of $20,000 for services associated with the claims of this lawsuit.

CONSEQUENCES

Prior to this lawsuit, the deductible on the Association's Directors and Officers insurance policy was $5,000. During the period that this lawsuit has been pending, the insurance company has raised the deductible on this policy to $35,000.

QUESTIONS

Many people will not be happy with this settlement agreement (click here to view an email from Baywinds resident Ron Pollack). These people are owed an explanation by the current and original Board members beyond "it was a business decision by the insurance company."

Many valid questions need to be answered such as

• Why did the insurance company agree to settle and not try to recover its substantial legal fees?
• Why did the current Board members agree to settle and not try to recover the Association's significant legal fees?
• Why did the original Board members agree to settle and not fight to be vindicated in court?

Now that there is a settlement agreement, current and original Board members can and should respond to questions from homeowners. Do not let them hide behind the self-serving claim that they "can't comment until the lawsuit is completely settled." All damages claims have been settled and they are free to comment on any and all of these now settled damages claims.

Homeowners will have to decide for themselves whether or not they care enough to demand answers to these and other important questions. Everyone should take into account the old adage "Those who do not learn from history are destined to repeat it." Getting the answers to these and other questions could minimize the chances of future homeowner lawsuits.

KEY LEARNINGS AND SUGGESTIONS

Maybe Board members need to read and familiarize themselves with the Association's governing documents. A new provision of the Florida HOA law that is scheduled to go into effect on July 1, 2008 will require newly elected board members to certify in writing within thirty (30) days of their election that they have read the association's governing documents and will "work to uphold such documents and policies to the best of his or her ability, and he or she will faithfully discharge his or her fiduciary responsibility to the association's members." Failure to timely file the statement AUTOMATICALLY DISQUALIFIES the director from service. (Note: The Governor vetoed the new provision of the Florida HOA law that was to go into effect on July 1, 2008 so board members do NOT have to certify that they have read the association's governing documents and cannot be disqualified from service for failing to do so).

Maybe Board members need to attend courses on the Florida HOA Statutes, how to manage an HOA and how to conduct BOD meetings. It is my understanding that Castle Management has suggested this.

Maybe there needs to be a Homeowner Grievance/Conflict Resolution Committee established.