REBUTTAL TO BOARD’S NOVEMBER 21 EMAIL TO OWNERS

Let’s break down the ridiculously misleading email to owners piece by piece.

NOTE: Non-Bolded is Board’s email content. Bolded is rebuttal.

Dear RTC Owners,

As referenced in previous emails to Owners/Members of the Association, a petition was circulated seeking the removal of the Board. Despite the Board’s position on the validity of the petition, the Board voluntarily scheduled two special meetings for Owners/Members to vote on the removal of Directors on November 28 and November 30.

Let’s be clear on what actually has or has not been scheduled. At no point were two special meetings for Owners/Members to vote on removal of Directors on November 28 and November30 scheduled. What the board has actually announced, on September 26th, via an email to all owners with the subject “Response to Petition for Special Meeting of the Members” was the following: (excerpt and bolded for emphasis)

“…Though the petition is invalid on its face, the underlying emotions are worthy of respect. We believe civility, honesty, and trust are essential to the longevity of our community. The Board is voluntarily setting two (2) special meetings as an opportunity for the entire community to engage in meaningful dialogue about the place we all call home. The first special meeting will be Tuesday, November 28, 2023 and the second special meeting will occur on Thursday, November 30, 2023….”

At no point between September 26th and November 14th have any communications that even mention November 28th/30th or Special Meetings of the Association been mentioned via email, community announcements, nor board meetings. Certainly other meetings have been scheduled and announced, such as the November 21st Special Meeting of the Board, not to mention numerous routine committee meetings, social events and other announcements unrelated to the petition.

Let’s think about for a second and for the sake of argument and side with the Board in that 26th actually did clearly convey its intent and was to be used as a meeting to vote on removal of Directors by Members. Then where were the mailed notifications and proxy ballots? Where were the follow-up communications regarding a voting Special Meeting of the Members just as we would see with the voting Annual Meeting of the Members? There’s no distinction a Special Meeting of the Association and the Annual Meeting of the Association on how voting administration should be handled differently in our bylaws - so even for the sake of argument their previous announcement on September 26th constituted such an announcement then where was the lead up logistics and administration of a membership vote just as we do every year?

And to remove the need for the sake of argument and explain why their statement is in fact completely misleading: The email sent on September 26th does not satisfy our Bylaws. Special Meetings of the Association require specific actions by the Secretary, as described by Section 6.5, which states the requirements pertaining to Notice of Special Meetings which includes notification requirements that include that they be sent among other things via US Mail and sent between 10 to 60 days before the meeting (Section 6.3). None of these actions took place even before the eventual suit was filed on October 9th to compel the meeting.

After these special meetings were announced, circumstances emerged that prevented the Directors from moving forward with these scheduled meetings while simultaneously fulfilling their fiduciary duties according to the Governing Documents and Texas laws.

Again, no such meetings were announced and at no point through legal counsel would the Association through its attorneys so much as provide confirmed or amended dates for the meeting even after the lawsuit was filed to compel such a response.

As referenced in the November 14 communication to Owners/Members, Alla Popkova and Tim Doyle announced their resignations as Directors and Officers which are effective on November 22, 2023. Their departures leave three remaining Directors on the Board to conduct Association business. Most importantly, Section 22.213 of the Texas Business Organizations Code and Section 7.12 of the Association’s bylaws require three Directors to constitute a quorum and transact Association business, and Section 22.204 of the Texas Business Organizations Code requires the Association to have no less than threeDirectors at all times.

Correct - this is not news to us, the Board, nor mutual legal representatives either then or now. Further, in previous communication between lawyers, it was spelled out the reasoning to have two special meetings in order to prevent a full ‘decapitation’ of the Board by a single meeting.The idea of having two meetings was agreeable to all parties since it satisfied the ultimate intentof the Petition which was to have Members vote on removal of Directors - having it split in two meetings to provide reasonable opportunity, for any surviving/Director(s) up for removal on the following date, to appoint new Director(s) to fill any vacated seats in the first round, was only beneficial to the Association and still in spirit and letter of the Petition.

Furthermore, two owners filed a lawsuit on October 8 against the Association and the five current Directors. Among other things, the allegations of this lawsuit take issue with the previously scheduled dates for the special meetings of Members and seek a court order to set a date for one special meeting.

This is demonstrably false. In fact the lawsuit has been on our website since its filing, or searchable via Dallas County case no. DC-23-17273, states we had issues with having two meetings and thereby sought a consolidated meeting.

Because Section 82.103(a) of the Texas Property Code requires all acts of the Association to be by and through the Board and designates Directors as fiduciaries of the Owners, and Section 22.221 of the Texas Business Organizations Code requires each Director to discharge his or her duties in good faith and in a manner each Director believes to be in the best interest of the Association, the Board is unable to engage in any activity that, either leaves the Association without a Board capable of conducting Association business, or which appears to undermine the authority of the Court assigned for the lawsuit.

This is truly bizarre and either intentionally misleading or completely misinformed on how litigation and courts seek remedy prior to actual trial. In civil suits, the court in fact will want to see that both sides attempted some sort of dispute settlement between both sides prior to taking the courts time to settle it. This phase prior to the court date is called the discovery phase, which is the phase we are currently in. During this time both parties gather evidence, take depositions and exchange information pertinent to the case. During this period, settlement discussions or alternative dispute resolution processes, such as mediation or arbitration, are explored. The aim here is to reach an agreeable resolution without going to trial and thereby saving time and resources for both the parties and before taking the court’s time. Only if settlement is not reached then the case proceeds to the court date set for trial.

Look, you don’t have to take our word for it: It’s such a foundational process of jurisprudence that it doesn’t require you to have lawyer or legal professional to validate what we’re saying is true with this process is true or not (although if one’s available to you then so much the better). In reality, a layman could easily validate the process as we describe above since it’s such a basic ingrained principle in how civil suits work at any level, that one can very easily confirm through some basic online searches, which will clearly lay it this universal principle in the US civil court systems of jurisprudence.

In regards to settlement - we’ve made the position clear that the heart of the suit is getting the Special Meeting set as the Petition duly prescribes. Logistical details such as meeting dates, places and administration would be ironed out between the two parties. So far, the Board through its Attorneys have come back with no response when pressed on the meeting. In the many weeks since the lawsuit has been filed, we have made multiple attempts to get the other side to set dates which have not been directly responded to. In fact even after the response to the multiple attempts from our lawyers to get this nailed down, the one response provided by the Board was this message sent to all owners saying they can’t because of their flawed reasonings.

For these reasons, the special meetings scheduled for November 28 and November 30 must be deferred. If held, a successful vote to remove any of the three remaining Directors would prevent the Board and Association from operating in compliance with the Governing Documents and Texas law. Only Directors possess the authority to fill vacancies on the Board per Section 7.5 of the Association’s bylaws and Section 22.212 of the Texas Business Organizations Code.

So, the Board saying that it cannot proceed with the meetings because in part it would appear to undermine the authority of the Court assigned to the lawsuit is, implying that negotiated settlement could not be reached, or that the concerns of a full Board removal could not be appropriately addressed is dumbfounding. As our attorney that is leading the litigation put it “is one of the most ridiculous emails he has ever read.”

As many of you know, finding Owners/Members who are qualified, interested, ready, and willing to serve on the Board has historically been an uphill climb, and efforts to find appointees to fill Director vacancies have been adversely impacted by recent events. The Board remains committed to serving the best interests of the Association and will continue seeking qualified Owners/Members to appoint as Directors.

We wonder why it is difficult to find owners willing to serve with this Board! However, contrary to the statement that “it has historically been an uphill climb” to find owners “willing to serve on the Board”, there has been interest in serving. In 2022 there were 3 open positions and 6 candidates and in 2023 there were 2 open positions and 4 candidates.

_____________________________________________________________________

THE LAWSUIT

Now it’s come to this.. unfortunately.

The Board has chosen to dig in to cling to power rather than call the Special Meeting within a reasonable time frame, not a full 3 and a half months (a full 76 business days) after the duly executed Petition was submitted.

Their lack of an expedient or meaningful responses, all while not taking the matter seriously enough to explain to all Owners the true nature behind of the two Special Meetings, as described in a separate written response by the Association’s legal counsel on September 26th (link here).

To note, on the same day, and within hours of the Association’s General Counsel's demand response receipt, they chose to send an unnecessary defamatory update to all Owners, within an hour of a scheduled Board meeting, to have two meetings “as an opportunity for the entire community to engage in meaningful dialogue about the place we all call home.”

The dates they specified in their response on September 26th, without even an attempt to negotiate date(s) by the those representing the Petitioners, were set more than two months out on November 28th and 30th to respect the “underlying emotions” behind the Petition all while calling the Petition itself “invalid on its face” without even bothering to provide the specificity as to why they believe that to be the case. This in fact is not the case, as the Petition is fully valid, however that argument was almost moot since with their legal counsel, the Association’s own attorney, agreed to and detailed the two future Special Meetings of the Association for the purposes of Removal of Directors without cause (which was the stated intention of the Petition to begin with) as a voluntary but not compelled response the demand.

These two highly discordant responses and with different Special Meeting posturing, as contrasted by the lawyer to lawyer response and the other Board response to all Owners, both containing various degrees of unfounded statements and clear bad-faith, but with the Board’s confounding tactic in their public response to include unnecessary defamatory statements on how and why the Petitions were gathered. The defamatory nature of their response is so outrageous that we are choosing not to publish it here.

This continued gamesmanship conducted by the Board, through purposely ambiguous messaging and defamatory statements, made it clear to us and our attorneys they will try to thwart this by any means they feel they can get away with so long as it seems they are simply ‘going through the motions’ by responding to slow roll this until near the end of the year.

Their numerous actions to date, including the initiating Poston Property acquisition matter, are such egregious dereliction of their duties to serve the greater good of Association that they themselves are no longer operating as our Governing documents, and Texas State Law, prescribe or protect. Thus, the lawsuit that has been filed is taking an additional and necessary step beyond naming the Association as the sole defendant.

In addition the Board as a collective being a named defendant party, all five (5) individual Directors are named as Defendants with punitive causes for action. This additional step is based on the most recent flagrant and damaging actions they have chosen to take instead of handling this in a straight-forward and expedient manner after the Petition was submitted on August 15th. An explanation as to why our counsel has advised us to take this unfortunate need of action are explained in the eight (8) counts described in suit notice below.

We sincerely hope that by filing this otherwise avoidable lawsuit, as unfortunate as those consequences may be, that the greater good can still be achieved by hopefully engaging with additional and perhaps better equipped opposing counsel to bring the matter to a rapid and equitable solution for all involved.

We want this to go away too, it’s an awful situation, but that needs to happen in a manner that is faithful to the tenants of our Governing documents, the law, but also in the spirit and letter of the collective Members of the Association which demand the Special Meeting of the Association to Remove Director(s) with or without cause.