New Board has duty to recover funds improperly disbursed

The new Board of Directors, given the facts provided at the Annual Meeting, now have the opportunity, and duty, to recover the funds improperly disbursed to Lynn Thompson and Julie Handley. Some suggestions follow:

1. Thompson and Handley should file a claim. Our examination of the Association’s books and records revealed that Thompson and Handley have not filed a claim. At the very least an invoice from them to the Association, together with an explanation of why the Association is liable, needs to be filed.

2. Examine the facts of their claim. The Association has nothing on the record stating what Thompson and Handley were doing on behalf of the Association for which they should be held harmless. There are several witnesses who contest Thompson’s and Handley’s version of the events of October 1, 2005. They should be heard. I understand that the Reddy’s have requested this.

3. Determine if Thompson and Handley were acting in their official capacity. The Reddy’s and another couple (neither of whom had anything to gain) have stated that Association Counsel, Mr. Mercer, in an informal conversation at the 2005 Annual Meeting said that this was a private matter. Apparently, Mr. Mercer has since reversed himself. How he is able to make any determination absent an examination of the facts is beyond us? Thompson’s and Handley’s guilt or innocence in a criminal trial is irrelevant. The Association is not liable for Thompson’s and Handley’s "own individual willful misconduct or bad faith."—Southampton Bylaws, Article VII, Section 1.

4. Vote on whether or not Thompson and Handley should be reimbursed. Prior decisions in this matter are not “effective”. Prior disbursement were without proper authorization (see Virginia Condominium Act § 55-79.75). Therefore, the Board must either vote to authorize payment, or recover the $8885 disbursed, plus amounts billed in this matter by Association Counsel.

The insurance carrier, St. Paul Travelers, has stated (June 30, 2006), "based upon the information provided to date, there is a question as to whether the conduct complained of stems from their capacity as members of the Board of Directors." Another letter states (August 15, 2007), "this matter never rose to meet the definition of a Claim".

Resolving this issue is of the utmost importance to the Association because (a) we could be held liable for defending Thompson and Handley in a civil suit, plus damages sought by the Reddys, and (b) St. Paul Traveler’s could view our claim as an attempt to defraud them.

Lastly, the Board needs to determine who authorized the improper payments to Thompson and Handley and who knew about them, and take appropriate action.

[Sent to the Board of Directors October 16, 2007 via fax to CMS— added sentence in bold to item 3, and sent on November 9, 2007 via fax to CMS]