CCOC Complaint filed against Leisure World BOD and LW of Md.
CCOC complaint and class action law suit filed by residents
A Montgomery County CCOC complaint has been filed against the unlawfully seated Leisure World Community Corporation Board of Directors and its wholly owned subsidiary Leisure World of Maryland.
CCOC issued an automatic stay, which if violated - calls for a $500 a day fine. On 8/28/18 the LWCC BOD violated the stay 3 times by approving 3 contract expenditures, resulting in the necessity of filing a "Motion to Enforce Stay" with CCOC.
Click on the link below to watch the videos of the August 28, 2018 board meeting:
The background leading to the class action lawsuit filed against LWCC, the CCOC complaint, the complainants "desired actions" and the CCOC notice stating the stay is effective immediately", are seen below:
From: "Anders, Mark" <Mark.Anders@montgomerycountymd.gov>Date: August 28, 2018 8:58:34 AM EDTTo: "email@example.com" <firstname.lastname@example.org>, "email@example.com" <firstname.lastname@example.org>Cc: "email@example.com" <firstname.lastname@example.org>Subject: 2019-012 Sheryl Katzman v. Leisure World Notice of Complaint.pdf
Dear Sir or Madam:
Please see attached.
Do note that there is now a stay effective immediately.
Sincerely,Mark H. Andersemail: email@example.com(240) 777-3662Department of Housing and Community AffairsCommon Ownership Communities1401 Rockville Pike, 4th floorRockville, Maryland 20852Website: www.montgomerycountymd.gov/ccoc
Count #1: Failure to hold an election
1. expedited CCOC hearing
2. CCOC finding of violations, fine and full enforcement of law for HOA Act and §10B violations to include:
• enjoin and stay Leisure World Community Corporation, Inc., from:
• meeting and/or taking any actions to include but not limited to:
• further use of member/unit owner funds for other than daily administrative operating expenses,
• further pursuit of Montgomery County Planning Board Site Plan #820170120 approval for "new" administration building construction,
• entering into any new contracts on behalf of LWCC while this dispute remains unresolved
• approving 2019 annual budget
3. establish an oversight monitor that must be approved by CCOC to oversee spending of funds while this dispute remains unresolved
4. Appointment of CCOC monitor to coordinate with resident advocacy organization "JustUs" representatives to ensure:
• election in compliance with HOA Act §11B-106.1, thereby excluding representation by "selection"
• dissolution of unlawfully seated LWCC BOD and LWCC Executive Committee
• LWCC bylaws/governing document revisions, to include but not limited to:
• providing for (1) vote per eligible unit
• 29 Mutuals to be divided into 5 Districts for purposes of decreasing the current unwieldy 34 to a more viable group of 9 representatives. Properly constituted LWCC BOD to consist of (5) District and (4) At-Large elected representatives,
• due to their ongoing and knowing non-compliance with State and County laws, current and past LW BOD representatives, with the possibility of few approved exceptions, will not be eligible to run as a candidate or be elected as a LW BOD representative
Here's the background on the CCOC complaint Count 1:
Violation of HOA Act - "members shall elect the governing body" :
The Board of Directors of the Leisure World Community Corporation, a homeowners association, enforces unlawful bylaws, holds illegitimate annual selections in lieu of elections for the Leisure World Board of Directors, thus permitting that BOD to meet, take action and instruct expenditure of member/unit owner funds annually equating to approximately $25 Million Dollars, despite the fact that is without any lawful authority to do so.
Consisting of representatives selected from 29 individual Leisure World housing corporations,(known as "Mutuals") the LW BOD is improperly constituted because it does not permit homeowner/members from the 29 housing corporations (aka:mutuals) to directly elect their LW BOD representatives. LW BOD bylaws Article III governs the selection process - failing to permit members/unit owners to directly elect representatives to the LW BOD. As a result, member/unit owners have been denied their statutory rights under the HOA Act.
The LWCC has been a registered homeowners association in the State of Maryland since 1988. Though having been on notice regarding their noncompliance with the HOA Act as far back as 2012, the Leisure World Community Corporation and its wholly owned subsidiary management corporation, Leisure World of Maryland Corporation, continue to violate the rights of the member/unit owners by ignoring all notices and refusing to amend the governing documents, continue holding illegitimate annual LWCC Executive Committee elections, and permitting the BOD to meet and take actions, including authorizing the expenditures of funds derived primarily from fees charged and paid by LW member/unit owners. The unlawfully constituted LW Board of Directors cast votes to allow the wholly owned management corporation use of the resident funded $25 Million annual budget.
The LW BOD selection/appointment process is in direct conflict with the Maryland Homeowners Association Act - Section 11B-106-1a which expressly states " A meeting of the members of the homeowners association to elect a governing body of the homeowners association shall be held..."
On June 7, 2016 Sandra Brantley, Counsel to the General Assembly, Office of the Attorney General wrote to Delegate Ben Kramer: RP§ 11B-106.1 requires the assocation to "elect" a governing body, which suggests that a vote should occur,---". "--because the language of the statute says "elect" the better read of the current statute is that each member of the mutual itself would be entitled to vote as to who the governing body would be. Thus, no change in legislation is needed to require a vote."
On December 17, 2016 I sent this notice to the LW BOD:
To: Leisure World Community Corporation Attn: David Frager, ChairSubject: Illegally constituted LWCC BOD must immediately come into compliance with Maryland Homeowners Association Act and other laws
During the 12/9/16 LW Executive Committee work session discussion, General Manager Kevin Flannery said, "if legally you're identified as a homeowners association then you don't have any opportunity through policy of the board to set what you wanna do. You have to conform to what the law says."
Statements declaring non-HOA status uttered in this session clearly identify tacit agreement to obfuscate LWCC obligations under law.
As a matter of fact, LWCC has long been registered as an HOA as required by Statute. Furthermore, Leisure World Community Corporation HOA status has been affirmed by the State of Maryland Office of Attorney General:
1. "LWCC is subject to the HOA Act."
2. "RP § 11B-106.1 requires the association to “elect” a governing body."
3. "According to the OAG's Consumer Protection Division, because the language of the statue says "elect" the better read of the current statute is that each member of the mutual itself would be entitled to vote as to who the governing body would be"
By law, in each case, the mutual LWCC BOD representatives must be elected by and from the entire mutual membership. In permitting representation by selection rather than election, LWCC is acting in defiance of State of Maryland statue. As such, they are not legally empowered to conduct business on behalf of the owners and Cooperative members. The continued pattern and practice of selecting/appointing rather than electing mutual representatives including alternates to the LW BOD, violates the State of Maryland Homeowners Act.
Section 11B-106-1a of the MD HOA Act which states the following:
“A meeting of the members of the homeowners association to elect a governing body of the homeowners association shall be held…”
In direct opposition to the legal requirements, LWCC Bylaws - Article III. The Board of Directors Bylaws read: http://lwmc.com/docs/Trust_Documents/LWCC_Bylaws_Revised_01-29-2013.pdf
Revised 1/29/13Bylaws of the Leisure World Community Corporation ARTICLE III. THE BOARD OF DIRECTORSSection 1. Directors and Alternates. Each Mutual is entitled to select Directors,qualified under the provisions of Section 2 of this Article, to cast its votes and otherwiserepresent it on the Board of Directors. Each Mutual may also select Alternate Directorswho, in accordance with Section 5 of this Article, may represent the Mutual when itsDirector is absent. Such selections shall be made in accordance with proceduresestablished by the Mutual. A Mutual may select more than one alternate for eachDirector; if it does so, it shall specify in writing any conditions governing the service ofthe alternates, including their order of precedence.
In order to become legally compliant:
It is incumbent upon the LWCC BOD Executive Committee to notify the President of each "underlying association" (mutual) that a special election be conducted, in which unit owners/shareholders will directly elect their "underlying association" (mutual) LWCC BOD representative(s) and alternate(s). Thereafter, the annual election ballots of each "underlying association" (mutual) are to include nominees for the specific positions of LWCC BOD representative(s) and alternate(s).
Each mutual annual election ballot must include the names of those unit owners/members choosing to run specifically as the LWCC BOD representative(s) and/or alternate(s). The nomination and vote is to be inclusive of every association member, i.e. election is not to be confined only to mutual BOD members.
As currently constituted, the LWCC BOD is in violation of the above referenced statute, thereby rendering invalid all actions taken by the LWCC BOD. Notably included in the actions subject to being adjudicated are: all votes to authorize/approve overall LW budget appropriations, contracts, plans of action and funding (including FEP).
The selected BOD participants have historically relied upon the master policy indemnification clause. Now being made aware that all are seated in violation of the statute, the issue of personal liability comes into question. Travelers will assuredly review this matter and potentially revoke individual indemnification coverage.
This body has the ethical and fiduciary responsibility to immediately rectify this long standing state of HOA non-compliance. If convened, the scheduled January 6, 2017 LWCC BOD/Executive Committee meeting, should not be for the purpose of conducting elections. Such elections should not be held until special elections are conducted in each "underlying association" (mutual), at which time duly elected representatives will be seated and legally enabled to vote for Executive Committee members.
Failure to initiate compliance efforts by 1/2/17, including postponement of the 1/6/17 meeting elections, renders this as an official request for an LWCC Dispute Resolution Hearing, which is to be open to all LW owners/shareholders. This notice is considered exhaustion of remedy as required by CCOC regulations.
Awaiting your prompt reply, we anticipate your willingness to resolve this matter which is of great significance to all Leisure World residents.
slkatzmanPresident,"JustUs" advocates to enhance the quality of life for all Leisure World residents