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COMMENTARY Time to pay the piper for ‘bad faith’
Bad faith refers to dishonesty or fraud in a transaction. Depending on the exact setting, bad faith may mean a dishonest belief or purpose, untrustworthy performance of duties, neglect of fair dealing standards, or a fraudulent intent. It is often related to a breach of the obligation inherent in all contracts to deal with the other parties in good faith and with fair dealing. ~ Legal Information Institute, Cornell University
Let’s not sugarcoat it: The fi ve individual defendants in the Janasek litigation got their collective butts kicked in the recent decision granting former director Tom Janasek a temporary injunction against enforcement of a suspension of rights to access OPA bar and restaurant amenities.
It was hardly surprising, this outcome. Only the hopelessly myopic or delusional, or those infected with the disease of confi rmation bias, predicted a different result, one favoring the OPA.
By now, OPA members understandably might be tired of the whole case. After all, Janasek regained access rights to the amenities through a temporary restraining order obtained shortly he fi led suit against the OPA. Nothing really changes with the granting of the temporary injunction: He still has the right to use the amenities just like any other OPA member in good standing.
This case really isn’t as much about Janasek at this stage in the legal saga as it is a sad commentary on the performance of their duties by certain current and former members of the Board of Directors. Judge Beau Oglesby dispassionately but with precision rendered his verdict on that job performance, and in the manner in which the Janasek matter was handled, his verdict was harsh: Bad Faith.
This is the second judge in the space of a year who has applied the term “bad faith” to describe certain actions by certain directors, two of whom are current members of the Board. They were also members when they and the OPA lost the Rick Farr case, complicit in actions that resulted in Farr’s temporary disqualifi cation as a Board candidate.
These two directors, former OPA President Colette Horn and former Vice President Frank Daly, owe the OPA membership an apology for dragging the community through this unnecessary and costly litigation. That applies also to the Farr litigation. Resignation should be considered, as should action to remove them as directors.
The judge identifi ed one specifi c example of bad faith: After the much publicized verbal altercation involving Janasek and then sitting director Josette Wheatley, she asked for advice from her colleagues about how to proceed. They advised her to fi le a police report. Only after Janasek was identifi ed as the one who had verbally accosted her did a Board majority decide it needed to get involved.
The judge also demolished a key argument made by the defendants: That they had the right to suspend Janasek because of broad language in the OPA charter giving the Board authority to act to promote the general welfare of the association.
According to the judge, they don’t have that authority when specifi c language in the governing documents limit the occasions in which a suspension of amenity privileges is permitted, non-payment of assessments and declared violations of the OPA’s restrictive covenants.
Should a future Board be tempted to overreach its authority by citing a “general welfare” provision in the governing documents, this part of the judge’s decision should serve as a wake-up call: Don’t.
While the entire decision is a point-by-point refutation of the OPA’s arguments, another one stands out. The OPA had argued that Janasek’s presence at three amenities constituted a public safety risk. The judge effectively blew a hole in that argument by noting that Janasek was not banned at other public amenities. Some safety risk, according to the judge.
It should be noted that the temperate and rational judgments of directors Doug Parks and Rick Farr, then in the Board minority, had their views on the Janasek suspension vindicated by the judge’s decision.
The next phase in this litigation presumably will involve settlement discussions, a process that will not bode well for the defendants because all of their arguments were demolished by the Court, including the business judgment rule which normally insulates HOA directors from litigation. The exception to that general rule is Bad Faith, and the judge, as noted, rendered his judgment on that.
In settlement talks, Janasek holds all the cards, and the fi ve defendants should expect to pay the piper for their various errors of judgment and misdeeds in settlement discussions.
Among the options Janasek should consider pursuing: reimbursement of legal fees, with contributions from the individual defendants. As the insurance company may not be inclined to cover settlement costs related to legal fees -- the fi ne print of the OPA’s liability coverages needs to be examined here -- the question becomes: Why should OPA members foot the bill resulting from overreach and poor choices of certain directors?
Janasek might also ask for a statement of apology from the defendants and even resignation by the two sitting directors who acted in bad faith as determined by the Court. And then the current Board majority could consider appointing him to the Board to fi ll one of the vacancies.
Too much to ask? Probably, but as an opening gambit, justifi ed.
Let the negotiations begin. -- Tom Stauss
Rick Menard
November 2022 Ocean Pines PROGRESS 43
Election committee can handle election review
It’s no secret that this summer’s Board of Directors election was an embarrassment.
Despite a Board majority believing that it was so bad that an independent audit is needed to review what went wrong, a Board majority has confi dence in the newly appointed Elections Committee to conduct it.
It’s really not that complicated.
About 500 or so owners of multiple properties were disenfranchised to a certain extent because they only received one paper ballot, rather than ballots matching the number of properties owned.
This can be easily remedied in future elections.
The scanning software performed poorly, crashing several times and producing results at odds with a hand recount conducted on Sept. 30. There has been speculation by one member of the old committee that test ballots were not purged from the scanning software and were therefore counted in the August tally. Another possibility is that some groups of ballots were sent through the system more than once.
Or this particular scanner is a lemon that needs to be replaced.
Alternatively, paper ballots in future ballots could be counted by hand.
The original charging document prepared by the committee’s Board liaison, Rick Farr, asked the right questions and laid out a prudent investigation that the committee should have no problem in completing by a Dec. 1 deadline.
An addendum to the initial document seems to be compilation of comments and concerns and questions by certain Board members. The committee should be able to deal with this, too, although some of the bullet points seem to plow through already thoroughly plowed material.
The fi rst objective laid out in the addendum was “to determine if the number votes cast exceeds the maximum number of votes expected based on the number of lots that participated in the election.”
This has already been looked into. The August count was fl awed by a mismatch, but the Sept. 30 hand recount more or less reconciled the mismatch.
Another bullet point directs the committee “to examine the return envelopes, determining how many multiple lot owners voted by paper, and determining the maximum number of multiple owner lots that could have voted via email.”
Actually no one voted by email. No doubt the author of this particular bullet point meant electronically, by accessing a Website with an access code.
Having a more detailed dive into the number of owners of multiple lots who voted by paper and electronically, and the number of ballots and votes each category produced, could be useful information if it details the extent that disenfranchisement occurred.
The addendum seems to envision yet another recount when it says that “if an audit determines a different hand count that was reported on Sept. 30, the actual vote count, and the reason for the discrepancy.”
There’s already been one hand recount, and it’s not clear why another one needs to be done.
“To determine as accurately as possible the real vote count,” seems to be the explanation, but that implies that the Sept. 30 results are suspect and that we need to sow doubts as to it accuracy.
The authors of the addendum also want the committee “to provide a level of confi dence to all homeowners that are (sic) -- here the word is supposed to be our -- voting procedures, when followed, can provide accurate and verifi able tabulations [for - this word was omitted, too] each candidate and that every vote is properly counted and tabulated.”
And fi nally “to have recommendations and/or suggestions for changes in equipment, software, systems and procedures ... if any are needed.”
The was more or less covered in the original charging document, with more brevity and clarity.
Farr wrote it up this way: Investigate and provide fi ndings to the glitches in the voting scan system, tabulation of the votes, and make recommendations so this issue will not arise again and that we have accurate voting tabulation in the next election cycle and provide correct results.
The addendum asks the review to determine if the governing documents were followed as written.
That’s already been established. Governing documents require one ballot per lot, and this was not provided by the former committee. One reason why it needed to be replaced.
Again, easily remedied in future elections.
The Board voted to set a Dec. 1 deadline to conclude the investigation and report back its fi ndings to the Board. Or else the Board will send out bids for an independent audit. What a waste of time and money, if that happens.
It won’t. OPA President Doug Parks has already reached out to the company that conducted a fi nancial audit a few years ago, only to discover it doesn’t do election audits of HOAs. The company is bearish on fi nding any company that does. Just as well. Let the committee do its job.
Vote against Question A
Imagine just for a moment that We the People of the United States had the ability to reign in out-ofcontrol spending by our federal government. I suspect that we would quickly jump at that opportunity. Likewise, it would be great to be able to curb exorbitant spending in the State government as well. Unfortunately, our only option is to elect fi scally responsible candidates who will do it for us. Historically however, that does not happen with much success.
While we cannot change some things in Washington and Annapolis, we can make a difference at the local level. Thanks to the power of the Petition to Referendum, we can stop overspending by County elected offi cials.
During this election season, the voters of Worcester County will have the opportunity to send a strong message to our County Commissioners. Question A on the ballot pertains to the Bond Bill to construct the proposed Sports Complex next to Stephen Decatur High School.
The Bill obligates our Commissioners by providing “...an irrevocable pledge of the full faith and credit and unimited taxing power of the County to the payment of the maturing principal of and interest and premium (if any) on the Bonds as and when they become due and payable.”
A vote Against Question A is a vote against an ill-conceived and poorly planned multi-million dollar sports complex which never appeared on a County Capital Improvement Plan until less than a year ago. It is a project with no business plan in place. The cost of the land alone, which we later learned is not part of the bond bill, should provide enough cause for concern.
A slim majority of Commissioners voted to pay nearly $75,000 per acre, while land is available throughout the county from $10,000 to $19,000 per acre.
We the People have the opportunity to curb the Commissioners’ overspending by voting Against this Question A.
I urge all Worcester County voters to vote against Questions A. T
Vincent dePaul Gisriel, Jr.
Ocean City
LIFE IN THE PINES
An excursion through the curious by-ways and cul-de-sacs of Worcester County’s most densely populated community By TOM STAUSS/Publisher
LETTER
The Ocean Pines Progress is a journal of news and commentary published monthly throughout the year. It is circulated in Ocean Pines and Captain’s Cove, Va. 127 Nottingham Lane
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