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Re: [IRVinforms] Zuniga and Rossmoor

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  • Jack Archer
    Dick, I have not tried to find anyone who lived at Rossmoor during this more than 20-year period to ask about the 1978 GRF ByLaw at issue. I assume that the
    Message 1 of 6 , Jan 12, 2013
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      Dick, I have not tried to find anyone who lived at Rossmoor during this more than 20-year period to ask about the 1978 GRF ByLaw at issue.  I assume that the amendment in 2002 changed only the amt., from $250K to $750K, and nothing else.  Perhaps GRF has copies of the earlier Bylaws?

      I see that Lou Ann recalls that there was a vote on the acquisition of the Acalanes site, which failed, so that tells us that the Bylaw was followed, and that at the time, the assumption must have been that it was a valid exercise of residents' authority, accepted by the GRF, its Board and presumably the mutuals.

      Why this long period of more than 20 years, when evidently everyone acted as if the Bylaw was an appropriate provision under the 1964 TA, demonstrating that the parties to the TA had accepted it as valid under the TA, etc., was not an issue in the Zuniga decision, I can't imagine.

      What is very likely the case is that proponents of projects rejected by residents realized that the only way for such projects to be funded and carried out would be to oust the residents from their control over policymaking, and over specific projects as well.  So, a legal "coup" was planned, eventually, and carried out.

      I am not certain of the timing of the Gateway project, so have no idea whether the project planning and approval came before or after the Zuniga dec., but this may be easily determined.

      All I meant to do in my post was call attention to a long period in Rossmoor's history when residents actually played a dominant oversight role in its governance.  We act today as if that is a far-fetched and completely unimaginable idea.  It wasn't and isn't.

      On Sat, Jan 12, 2013 at 3:45 PM, Dick Locke <dick@...> wrote:
      That's interesting Jack about there being a membership vote required for projects greater than $250K from 1978 to 2002. There's reference to such a requirement in the GRF Bylaws, but I've never seen the actual wording.

      Can anyone who was here in the late 90s or so tell me if that Bylaw was being followed? If it was, there would have to have been a member vote for the Gateway remodeling...was there?

      Dick Locke
      Rockledge Lane
      On 1/9/2013 11:22 AM, Jack Archer wrote:
       

      Zuniga and Rossmoor

       

      The 2003 decision by the Contra Costa Superior Court (Judge Barbara Zuniga) held that Rossmoor residents could not amend GRF’s Bylaws to set limits on capital projects (such as the event center) costing more than $750K.  The 2002 amendment to the Bylaws required the GRF to first obtain the majority vote of members before approving such projects.

       

      There had been an earlier amendment to the Bylaws, in 1978, similar to the 2002 amendment (with a limit of $250K instead of $750K).  Thus, for 25 years, before the Zuniga decision in 2003, Rossmoor residents/members had effectively imposed a limit on the discretion of the GRF to do whatever it pleased to do, by amending its Bylaws.  That’s a considerable stretch of time and experience for Rossmoor residents, all summarily undone by the Zuniga decision.

       

      Why is this relevant today?  Well, if the 1978 or 2002 GRF Bylaw amendments were effective today, then expensive projects and huge debts would not be taken on without the approval of a majority of residents/members.

       

      The Zuniga decision has been criticized over the years both for its reasoning and ruling.  It’s worthwhile briefly to review Zuniga’s decision (the Statement of Decision and the Judgment) and then to consider how it might affect the current effort to re-write the 1964 Trust Agreement.

       

      Zuniga’s “Statement of Decision” applied contract principles to interpret the 1964 Trust Agreement (reading the document in full, carrying out the intentions of the original parties, etc.), from which I quote (in italics):

       

      “In 2002, resident members voted to amend the Foundation’s bylaws. This amendment requires the Trustee to obtain member approval before it can expend more than $750,000 on “Capital Projects”. (footnotes omitted)  GRF contends this amendment is invalid to the extent it purports to limit the Trustee’s ability to manage the Trust’s assets.

       

      A modification of the Trustee’s power necessarily includes a modification of the Trust which can only be accomplished by a vote of the Trustee and all of the beneficiaries. Trust agreement, section VI. As used in the trust instruments “Trustee” means a board of directors and not resident members.

       

      Respondents [Rossmoor residents/members] contend resident members are trustees and as such their actions in modifying the bylaws is consistent with the terms of the Trust.  The Court disagrees.

       

      First, using basic principles of contract interpretation, the trust documents must be viewed as a whole. (citations omitted) The documents are to be interpreted so that the original intent of the contracting parties is carried out.

       

      With these principles in mind, it is apparent the term “Trustee” as used in the trust documents is referring to a board of directors. The Trust’s definition of the trustee’s duties and powers such as acquiring property, receiving funds from the cooperatives or providing an accounting are duties usually performed by a board of directors. It is inconceivable that the Trust envisioned each new resident member being responsible for

      one or more of these duties.

       

      Additionally, when the trust was formed there were no residents members. However, under the Respondent’s interpretation of the Trust, these non-existent members were, nevertheless, responsible for carrying out the terms of the Trust. This is illogical and inconsistent with the intent of the trust.

       

      The above factors evidence the Trust contemplated acting through a Board of Directors not resident members.  Furthermore, the trust agreement is clear only the Trustee (the Foundation’s Board of Directors) and the Mutuals can modify the Trust. It is undisputed the 2002 amendment to the bylaws was not approved by the Trustee and the Mutuals. The 2002 bylaw amendment is therefore invalid.”

       

      Certainly the 1964 TA should be read in its entirety and the intention of the parties carried out.  The trustee (GRF), however, does not “vote” on modifications to the TA, or “approve” them, neither under the TA nor under California trust law.  Instead, the beneficiaries of the TA, the mutuals, may unanimously agree upon changes to the document, and the GRF may accept the modifications, or not.  Yes, a dispute concerning a change that all the mutuals agree to, between the mutuals and the GRF, may end up in court, an outcome that would auger ill for relations between the mutuals and the GRF.  Or, the GRF may resign as trustee, admittedly not something to be done or threatened lightly.  It does not, however, possess a “vote” on modifications nor “approve” them, such that its veto of a change adopted by the mutuals ends the matter.

       

      I am struck by the relatively long period (more than 20 years, from 1978 to 2003) in which an amendment to the GRF Bylaws, adopted by a majority vote of its members, limited the Board’s discretion to approve capital projects (in 1978, to projects costing less than $250K and in 2002, less than $750K).  This was a lengthy period during which the GRF operated in accordance with the Bylaws, with the knowledge and acquiescence of the mutuals.  Was it assumed during this period of more than two decades that the parties to the TA had given their consent/approval to the modification and, therefore, that the modification was valid?

       

      Probably so, but, as is often the case in legal disputes, form triumphs over other, more practical considerations.

       

      The Judgment in Zuniga is stated in terms of California trust law, not contract law.  It says:

       

      “Without the approval of all beneficiaries of the Trust Agreement and the Foundation as required by the Trust Agreement, Foundation members may not, by vote or amendment to the Foundation’s Articles of Incorporation or Bylaws, enlarge, reduce or modify either the power or discretion of the Foundation or its board of directors under . . .  the Trust Agreement.”

       

      And there the matter rests.

       

      Whether one agrees or not with the Zuniga ruling, it does point the way to the resolution of one of the major issues at Rossmoor – the failure of the 1964 TA to allow the full participation of residents/members in its governance.  Yes, residents/members may periodically vote for GRF directors, but they have no way, except by means of an ineffective GRF Bylaw to remove directors, to object to or prohibit specific decisions.  More importantly, they have no way to establish policy guidance for decisionmaking, as they clearly did during more than a 20-year period in Rossmoor’s history, from 1978 to 2003.

       

      Consistent with the Zuniga decision, the TA may be amended to provide a way for residents/members to set policy guidelines according to which the GRF board of directors may act.  If so amended, residents/members may participate in governing Rossmoor again, as they did for more than two decades.   Such an amendment to the TA would be relatively easy to write, and if the mutuals and the GRF wished to do so, readily adopted.

       

      Why may such an amendment to the TA not be adopted?

       

      It is difficult to see why mutuals would object – after all, GRF residents/members are mutuals’ residents/members.  Aren’t they to be trusted?  Further, for more than 40 years, the mutuals have exercised no effective control over the GRF.  Why would they object to their residents/members doing so now?

       

      Why would the trustee object?  That’s less difficult to understand.  Because the trustee has come to operate at Rossmoor with little or no effective oversight.  The mutuals were deprived of their “voting rights” and control over the trustee by an amendment to the GRF Bylaws, in the early 1970s.  The residents/members who voted the mutuals out at that time no doubt did so thinking that they were voting themselves in.  25 years later the Zuniga decision told them that they were out too.

       

      The GRF believes that it may prevent the mutuals or residents from setting policy guidance for Rossmoor’s governance by means of its claimed authority to “veto” modifications to the TA.  For reasons I have argued above and in an earlier post, I believe that position to be incorrect.

       

       

       

       

       

       

       



    • Dick Locke
      Construction was being wrapped up when I moved here in early 2002, so it preceded the GRF vs Solloway decision by Judge Zuniga. Dick Locke Rockledge Lane
      Message 2 of 6 , Jan 12, 2013
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        Construction was being wrapped up when I moved here in early 2002, so it
        preceded the GRF vs Solloway decision by Judge Zuniga.

        Dick Locke
        Rockledge Lane
        On 1/12/2013 4:26 PM, Jack Archer wrote:
        > I am not certain of the timing of the Gateway project,
      • Rose Michaels
        I believe that they declared the bylaw requiring a vote null before they started Gateway, as they knew the residents would never have voted for the
        Message 3 of 6 , Jan 12, 2013
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          I believe that they declared the bylaw requiring a vote null before they started Gateway, as they knew the residents would never have voted for the construction.There were many objections that the bylaw was being ignored, hence they brought out their legal advisors, and   that is why CORG decided to try to reformulate a new by-law, this time increasing it to any building over $750,000.  Rose

          On Sat, Jan 12, 2013 at 5:47 PM, Dick Locke <dick@...> wrote:
          Construction was being wrapped up when I moved here in early 2002, so it
          preceded the GRF vs Solloway decision by Judge Zuniga.

          Dick Locke
          Rockledge Lane
          On 1/12/2013 4:26 PM, Jack Archer wrote:
          > I am not certain of the timing of the Gateway project,



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        • CarlBrown
          Please get the word out. I just checked the paper and somehow the meeting announcement never got into the Rossmoor News. Please let people know about our
          Message 4 of 6 , Jan 12, 2013
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            Please get the word out. I just checked the paper and somehow the meeting announcement never got into the Rossmoor News. Please let people know about our meeting next Saturday. Tell your friends and neighbors about the club and next week’s meeting.
            Thanks,
            Carl

            Massage and Bodywork Club Meeting.

            The Club brings in different therapists each month to give free sample sessions to Club members and guests. The purpose of the Club is to help Rossmoor residents find the right therapist. There is no better way to find the right therapist than to actually experience their work. If you find a person you like then you can schedule directly with them for more sessions.

            The Massage and Bodywork Club will be meeting on Saturday, January 19 at 1:30 in the Shasta Room, upstairs at Del Valle Clubhouse. This month we have 4 therapists coming.

            After a short annual membership meeting (very short) each therapist will briefly explain what he or she does. Then members can sign up for a sample session in the order that they check in. Most times people will be able to have more than one session to try different practitioners and compare their work.

            The sessions will start about 2:00 p.m. Once attendees have had a session, they can sign up for another. All sessions are done fully clothed so dress appropriately.

            For information, visit the website at www.rossmoorbodywork.com or contact Carl Brown at 287-9993.

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