Recovery of unauthorized expenditures by CMS

Association records show that CMS Services has spent about $9000 of Association funds (checks #1711, #1771, #1818) without Board authorization. The options before this Board are to either authorize this expense, or to recover the funds from CMS Services.

1 - The Board needs to act on this issue because the prior vote is not “effective” under Virginia law (at the Annual Meeting, Association Counsel Mercer agreed).

§ 55-79.75.C states: "The executive organ or any subcommittee or other committee thereof may convene in executive session . . . upon the affirmative vote in an open meeting to assemble in executive session. The motion shall state specifically the purpose for the executive session. Reference to the motion and the stated purpose for the executive session shall be included in the minutes. The executive organ shall restrict the consideration of matters during such portions of meetings to only those purposes specifically exempted and stated in the motion. No contract, motion or other action adopted, passed or agreed to in executive session shall become effective unless the executive organ or subcommittee or other committee thereof, following the executive session, reconvenes in open meeting and takes a vote on such contract, motion or other action which shall have its substance reasonably identified in the open meeting."

2 - The Board also needs a “claim” before it may satisfy a claim. There is no invoice to the Association in the record, and there is no justification from the claimants in the record. The Board needs to ask Thompson and Handley to file their claim with the Association.

3 - Prior to voting the Board needs to ascertain the facts. At least five witnesses (Nora Collins, Ron Graham, Christine Kitchens, Enver Masud, Evelyn Troy) dispute Thompson and Handley’s version. Only then can the Board properly determine whether or not the issue arose from Thompson and Handley's “own individual willful misconduct or bad faith” for which the Association is not liable—Southampton Bylaws, Article VII, Section 1.

4 - There are witnesses that claim that Mr. Mercer, in a conversation with the Reddys at the October 13, 2005 Annual Meeting stated that “the incident was not a Board matter”. Mr. Mercer has since reversed himself. Resolution of this issue also requires steps 2 and 3 above.

For more on this issue see Enver Masud’s letter .