The following is the email sent to the LPCA Treasurer reagrding the unauthorized legal contract and billing by three board members:
Sent: 1/19/2009
Notice of Unauthorized Contract and Charges
To: Ms. Caroline Peck, Treasurer
Land Park Community Association
Dear Caroline:
It has come to my attention that certain board members have incurred expenses in the name of the LPCA that they have no authority whatsoever to incur. Specifically, I discovered during our records inspection at 3:00 p.m. today that Ms. Luree Stetson, Ms. Nikki Rueppel and Ms. Elyse Metune have caused the LPCA to unlawfully enter into a contract to obtain legal services from the Sacramento law firm of Goldsberry, Freeman & Guzman.
We further discovered a billing from that firm to the LPCA dated January 7, 2009 in the amount of $2190 for legal services rendered in the last three days of December 2008.
Under LPCA Bylaws Sections 8.5(d) and 10.2 (as well as long-standing board guidelines and practices), the president (Elyse Metune) is not authorized to enter into a contract without the approval of the board or the members. The contract for legal services with the Goldsberry firm has never been disclosed, let alone approved by the board. As an unauthorized transaction, the directors who incurred this liability are personally responsible for paying for it.
Since the board has never approved the engagement of the Goldsberry firm, you have no authoritywhatsoever to pay any invoice from the Goldsberry firm, including, without limitation, the January 7, 2009 invoice. You are now on notice of this unauthorized transaction. Any payment you make to the Goldsberry firm after your receipt of this e-mail would be beyond your authority and a violation of your duties as LPCA Treasurer under the LPCA bylaws.
Further, the three directors engaged the Goldsberry firm in the name and at the expense of the corporation for two explicit purposes, as revealed in e-mails we discovered today. Those purposes were: (1) to stave off or delay a membership meeting sought by LPCA members who are seeking to adopt reforms which will remove the three of them from control of the LPCA; and (2) to find ways of punishing me for my role in "organizing the petitioners," as described in their very candid and damning e-mail to the Goldsberry firm.
Whenever a director of a corporation misuses corporate assets in an effort or for the purpose of holding on to personal control over that corporation, they breach their fiduciary duties to the corporation, rendering them liable to the corporation for all resulting cost and damages. Consequently, the three named directors have breached their fiduciary duties to the LPCA and should and must be held legally and financially responsible for: (1) reimbursing the LPCA for any legal fees previously paid to the Goldsberry firm; and (2) indemnifying, defending and holding the LPCA free and harmless from any future liability to that firm.
Please also be advised that the Goldsberry firm has no legal claim against the LPCA because that firm was on constructive notice that the three named directors lacked any legal authority to enter into a contract for legal services on behalf of the LPCA. The firm was provided a copy of the LPCA bylaws, including sections 8.5(d) and 10.2, which placed the attorneys in that firm on notice that the three named directors had no authority to engage their firm without board approval.
Finally, the Goldsberry firm has not performed legal services that merit or justify payment of the billed fees. The legal opinion that the firm delivered is utterly lacking in any supporting legal authority and patently misconstrues the clear language of the applicable statutes, as I outlined in the legal memorandum I e-mailed to the board on January 10, 2009. In short, it is not worth the paper it is printed on. The attorney rendering the opinion clearly performed no substantive research and came to a conclusion that is directly contrary to readily available and easily accessible established legal authority. The opinion is also colored by "client bias." It gives precisely the legal opinion that their de facto clients - the three named directors - were seeking. In short, the Goldsberry firm has not earned a legal fee. .
Consequently, all billings from that firm should be returned to it, marked "Unauthorized," and copies of all of its billings forwarded to the three named directors with a demand for them to immediately reimburse the LPCA for any previously paid fees, to pay all future fees or otherwise indemnify the LPCA for any liability for the unauthorized charges. Further, If you have already remitted payment on the January 7, 2009 invoice from that firm, you need to issue a demand for return of the unauthorized and unearned payment. I will assist you in this if you need help.
Caroline, this is a very, very serious matter. The unauthorized expenditure is substantial and the conduct of those involved is wrongful and reprehensible. The $2190 in legal charges the named directors have wrongfully tried to impose on the LPCA is the equivalent of the annual dues of 145 LPCA members, well over 50% of our current total membership. It also represents almost 1/3 of the profits from the only fundraiser we held this year, the "Taste of Land Park" event. And we do not yet know what additional legal fees they have run up in the LPCA's name in the current month of January.
In the next few days, we will be reviewing appropriate responses to their misconduct, including possible referral of the matter to the California Attorney General's office for possible intervention and initiating a director removal action in Superior Court or seeking protective orders from the Court enjoining the three named directors from further raids on the LPCA treasury in furtherance of their illegitimate efforts to protect their entrenched positions in the LPCA.
I caution you to be alert for any other suspicious or questionable expenditures that they may try to run through the LPCA in the coming weeks. Thank you for your vigilance in this matter.
Very truly yours,
Craig K. Powell
cc: LPCA Board of Directors
