By Robert Holloway
- Abraham Lincoln
In my several differences of opinion with the board of my homeowners association, the part played by their two attorneys turned out to be highly important. Although the two attorneys, William Paul Wright and John Leach, were not grossly dishonest, I suspect that Abraham Lincoln would not have admired their behavior.
William Paul Wright, of the law firm of Angius and Terry, defended and apparently crafted the CC&Rs that were defeated by a vote of the residents of Escondido Estates. I argued against those CC&Rs because one of the major flaws in the documents was the inclusion of the device of "Special Individual Assessments" that included language allowing the board to foreclose based on trivial violations of the governing documents. This type of foreclosure is specifically prohibited by Chapter 116 in the Nevada Revised Statutes. When my lawyer pointed out, in a letter to the residents, that the proposed new documents were in conflict with state law, Mr. Wright indignantly denied that his motive was to circumvent state law. However, Mr. Wright has offered no other explanation for his wording that redefined fines and penalties as assessments. If there was some other explanation, other than an attempt to circumvent state law, he could have given it but he did not. The device of "Special Individual Assessments" is discussed in more detail elsewhere on this site. To briefly summarize it here, the proposed new CC&Rs, defended by both John Leach and William Paul Wright, contained a clause that redefined fines and penalties as "Special Individual Assessments", enforceable by foreclosure and sale. This is contrary to the mandate of state law which protects homeowners from foreclosure based on fines and penalties. What Wright and Leach were trying to do is the equivalent of trying to avoid payment of income tax by redefining one's paycheck as something other than income.
On the night of the vote, the device of "Special Individual Assessments" was defended in person by John Leach and by letter by Mr. Wright. Mr. Leach has a long history of defending boards and associations. Mr. Leach specifically defended the device of "Special Individual Assessments". He claimed that this type of assessment was already in the governing documents of some Nevada Associations. When I challenged him to give the names of those associations, he refused to do so. He did say that if I would come to his office, he would show me the names of the associations. A few days after the meeting, I contacted Mr. Leach and said that I wanted to accept his offer of a visit to his office so that he could provide the information about the associations that had adopted "Special Individual Assessments". Mr. Leach refused to make good on his pledge. I believe that Mr. Leach is the sort of attorney who would argue that the world is flat if a client wanted it.
On the night of the vote, both Mr. Leach and I made short talks about the new CC&Rs. Mr. Leach presented a polished talk, as might be expected from an attorney and I suspect that he was more persuasive in his 20 minutes than I was in my 5 minutes. He was brought in by the management company especially to counter the letter to the residents from my attorney which criticized the device of "Special Individual Assessments". Understanding the illegality of "Special Individual Assessments" required a careful study of state law and of the proposed new governing documents. I suspect that most residents had a difficult time understanding the issues involved. Because of the difficulty of understanding fine points of state law, a few weeks after the meeting I followed up with a newsletter and a more careful and detailed explanation of the problem. After this newsletter, I noticed a change in attitude by several in the community. Some who had been hostile went out of their way to show some appreciation of my efforts. I have reproduced that newsletter on this website.
However, the fact that a two-thirds majority was needed to approve the changes made it an uphill battle for management and Mr. Leach. The new CC&Rs failed by a small margin.
I was disappointed that both Mr. Leach and Mr. Wright promoted a document that conflicts with state law. I am especially interested in information about other instances in which either Mr. Wright or Mr. Leach have been involved with "Special Individual Assessments". Both of these attorneys deserve monitoring by those interested in stopping abuses by associations. Mr. Wright suggested recently that I must believe in some conspiracy involving attorneys and management companies. No, Mr. Wright, I am not a fan of conspiracy theories and I don't believe a conspiracy is at work in this case. Stupidity is usually a better explanation of unusual events rather than conspiracy. I think stupidity is the operative word in this case. It takes an unusually stupid attorney to insert into a document wording that attempts to negate state law. In this case, it would have been a time bomb just waiting to explode the first time foreclosure would have been attempted, had the new CC&Rs been approved. Stupidity, Mr. Wright, stupidity.
It is worth nothing that my attorney's letter about the conflict between the proposed documents and state law was circulated several days prior to the vote. There was plenty of time for attorney Wright to have withdrawn the documents, rather than allowing a vote on flawed documents. But he chose to claim that the flaw did not exist, rather than to correct the flaw. The Board of Directors and the Community Manager, Laury Phelps, also denied that there was anything wrong with the documents. Of course the directors and the Community Manager probably genuinely believed that nothing was wrong. I say that because it takes a fairly high degree of reading skill to understand state law and there are indications that most of the directors and Laury Phelps simply did not understand or did not want to understand the problem. But the two attorneys, John Leach and William Paul Wright, certainly understood that their claim was not valid, and that there was a conflict with state law. Why did they claim the contrary? Why did they intentionally mislead their clients? I think because they thought they could get aaway with it. They were counting on the association members not being able to understand state law and the rather complex logic involving both the new documents and state law. They knew from long experience that most laymen are not able to understand and interpret the meaning of legal documents. And they were mostly correct in that assumption. The documents were approved by a slight majority of the residents although it fell short of the needed two-thirds majority. Had the residents fully understand the illegality of the documents, I am sure that the vote for the new documents would have been much smaller. In denying that the documents conflicted with state law, the two attorneys were misleading their clients and in doing so damaged the interests of their clients. The behavior of the two attorneys is an example of the type of behavior that has tarnished the reputation of lawyers since the time of Lincoln. I think Lincoln would advise them to correct their behavior.
[Update on December 1, 2007]
It has been over a year now, since attorneys Leach and Wright tried to get CC&Rs passed that would have circumvented state law with "Special Individual Assessments". Because of my vigorous opposition to these ridiculous CC&Rs, the new rules were not approved. During the year since the defeat of the rules, I have heard of no other instances in which there have been attempts to pass anything similar to "Special Individual Assessments". It seems very likely that this device has been abandoned by the management industry and the attorneys that serve them. But it is remarkable and unfortunate that these two attorneys would write and defend a document that attempted to remove the protection afforded to homeowners by state law. The following link gives more information on John Leach