Why Are Board “Legal Opinions” Secret?

June 18, 2010 by bobfrank.

On his blog pages, Anthem Blogger Dick Arendt asked (in part) former SCA Director (2008-2010) Carl Weinstein the following:

“Does a resident have the right to find out from the Board president if he received a verbal or written opinion, the date the opinion was requested and received, and if written, a copy of the attorney’s legal opinion on this matter?  If you never saw such an opinion, was there any reason as to why you didn’t make a request to see it with your own eyes in order to verify the president’s statements?  If verbal, wouldn’t ANY BOARD MEMBER have the opportunity of calling the attorney to verify the fact that one was made?  Is there a “checks and balance” system in effect in any way, or is the president’s verbal statement automatically taken as fact?”

Carl Weinstein replied (in part):

“Over the past TWO years, Board presidents have provided verbal information to Board members without always showing “proof” for that information. It was reasonable for the Board members, at those times, to accept that information as accurate. In all honesty, after all that has happened that is questionable during the past two years,I would think that a Board member dedicated to the service of his community would now figuratively move to Missouri which is the “SHOW ME STATE” and demand to see backup information proclaimed by a Board President!”

My response:

Initiated by the developers in the beginning of SCA, and protected by its chosen/preferred attorney for the past decade, ONLY the SCA board president can ask (and/or authorize) the ordering of a legal opinion.  And, the board  president is coached by the association attorney that he/she has the exclusive right to refuse to share the details (or report/interpret as needed) the verbal opinions received. 

Exceptions can include the CAM or a director who has been specifically allowed to request guidance and/or a written opinion concerning CC&R compliance matters. 

In theory, this policy is to protect the association from wasting money on multiple/unnecessary legal opinions, but it really is intended to keep directors under control.  The association attorney refuses to accept any request from other directors–unless the president has specifically authorized it.  In the end, the association attorney’s opinion rules.

The board president has the exclusive authority to release anything written by the association attorney.  But, I have observed the association attorney is rarely required to put important policy matters into writing; and, when he does, he usually includes comments that can  not be released to the members.  Such restricted legal opinions should be re-written to remove or separate the sensitive information into a separate letter.  That would allow the essence of the legal opinions to be released to the membership.

The president is supposed to be required by statute to take a formal vote to decide such important association business decisions and to publish the board vote results in the minutes of an executive or public meeting.   But, that almost never happens, and it needs to be challenged through the Ombudsman channel.

Since only one SCA attorney is allowed, and only the board president can ask for and interpret legal opinions, any divergent director opinions and behavior can cause that director to be threatened with being (wrongly) accused of “violating their fiduciary duty”.  And, if a director should be ever challenge such absolute authority, they will suffer the kind of unfair, massive personal attacks and legal expenses I incurred in 2007 and 2008.  The message has been perfectly clear–thou shalt not challenge the business agreement or legal opinions of the association attorney and board president.

The above helps to explain why there have been so many secrets over the apparent financial mismanagement of millions of dollars owed to SCA by the developers in the past 5 years.  If a director wanted to disclose something that the attorney opposed, he/she would be unwise to try to do so.  

All of my many board conflicts started during the very first month of duty in May-June 2007 when I refused to hold secret the fact that the “Villas Settlement Agreement” was illegal.  As I had promised during the previous board campaign, I told the SCA membership the truth. 

While I was proven over a year later to be 100% legally correct in all of my board actions, I was made to pay dearly in terms of time, public harassment, and money for daring to challenge the association attorney’s/board president’s dictatorial powers.

Nagging Questions: 

1. Who has benefited from such secret developer/attorney/board president business relationships?
   
2. Have the developers and association attorneys not been handsomely rewarded for what appears to be serious conflicts of interests?
   
3. Has there been even one financial decision since 2002 involving the developers that has been settled to SCA’s advantage?
   
4. Would SCA be doing much better if we had an association attorney and elected directors with no conflicts of interest with our developers and/or the CAI?

Bob Frank, SCA Director (2007-2009)

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