Law Suit Against Orchard Farms HOA Board of Directors

Our complaints are based on HOA Board violation of Orchard Farms Covenants, Bylaws, and Federal Copyright Law, South Carolina Nonprofit Corporation Act,

Issues:

1.    Adherence to copyright laws on showing movies in public spaces.

In the past the board showed movies under copyright without purchasing a license even though they were made aware of the law and resulting penalties. They stated at a recent board meeting that they have purchased such a license but made no comment about remediation for past violations.

We are asking for evidence of that purchase and if the board intends to continue the practice of showing movies, we request a detailed item be added to the upcoming year’s budget to continue legal showing of films.

2.    Income from facilities and non-dues income should be tracked in line-item detail

In the past, income from clubhouse rental and outside pool membership has been included in budget projections but not tracked on a line-item basis. Lack of tracking as a budget line item for maintenance of the clubhouse and pool has resulted in expenditures being treated as an “emergency” by individual board members without the full board’s knowledge or approval.

Detailed maintenance strategies should be included in the budget for all amenities and managed as other ongoing long-term maintenance projects.

3.    Lack of transparency on project expenditures and financial activities.

There are numerous examples of lack of attention to fiduciary best practices some of which are:

·       The bids for the beautification of the Batesville Road entrance were not presented to the board at the meeting when the board voted to move forward. Board member Carl Fisher stated that the board had been working on the project for month and it was time to do it. The contract was signed by Kim Anderson-Lee (President) with Cochran Landscaping 19 May 23 without it being presented to the board. Due to concern from the community, there was a meeting to discuss this project and it was stated by Fisher that the actual bids would not be shared with the community due to privacy issues. A summary of bids (2 full bids, one non-bid, and one remove-plants-only bid) was shared via excel spreadsheet. Additional contracts were given to Rain Bird to repair/reinstall the sprinkler system and Ben Harrison to purchase mulch and install it. The total of these two contracts was about $5000 bringing the cost of the project to approximately $23,000.

·       A request by a board member for the documentation on the action of C Dan Joiner’s transfer of money (in early 2023) after they had already transferred all money to Town and Country in Dec 2022 was refused.

Carl Fisher stated that as treasure he knew the information was fine and the board member didn’t need to know. In the next meeting the president state she had seen the paperwork and everything was good and that it was money C Dan Joyner found in other accounts that belonged to OF HOA.

·       A request for an annual independent audit by a board member was refused but the board agreed to let a homeowner who is a CPA review the accounting records.

The homeowner reviewed the documents given to her and requested time on the monthly agenda or in an executive session to present her findings. The board showed no interest in reviewing those findings.

·       At the June 2024 board meeting, Chris Donahue said she didn’t know how much had been spent out of the landscape budget. No committee member ever knows budget detail.

She was told there was no budget remaining for landscape projects. She suggested she let Harrison Landscaping do work on the Fortuna/Roper Mountain entrance in the amount of approximately $4,000 to make the entrance “in line” with the other entrances. She said she and Jim had been dealing with Harrison like this for 15 years. When a board member said he was uncomfortable with not paying a vender when the work was completed and that it might go against T&C accounting controls, Chris said “Gwen would never know.”

We are requesting:

A clear definition of “beautification” versus priority spending. It is our opinion and strong suggestion to the board that the entrance be refreshed rather than replaced. We based that decision on evaluations of horticultural experts as well as that of our own.

Full transparency and documentation on all projects to prevent future lawsuits that would endanger the non-profit status of the HOA.

We are also requesting that the Board be required to conduct an independent audit of all financial records and activities every two years.

Publishing accurate, up-to-date expenditures of what is budgeted and what is spent against that budget at the end of each month. It is apparent that even committee chairpersons don’t know how much remains in their budget.

To ensure that changes promised are changed enacted, we are requesting that an ombudsman be appointed by the court for a three-year engagement to oversee all practices of the board to ensure non-professional business practices are eliminated and detailed best-practice procedures be put in place and followed.

4.    Improper management of voting on HOA board candidates and Bylaw changes at 2024 Annual meeting.

Registration was held at the front entrance of the clubhouse via sign in sheets. The ballot was not handed out at that time as in previous years. Proxies were collected prior to the meeting and before the start of the meeting. Ballots to vote were handed out during the meeting by passing them down the row, no additional validation was made that there was only one ballot per property nor were they cross checked against proxies received. This would allow for multi-votes per property.  For example, if property was owned by two people and they turned in a proxy signed by them both and then both attended the meeting that has the potential to give 3 votes to that property.  If a renter attended the meeting and did not sign in, they could also vote. 

We were told by Town & Country that even the board members could not see these documents.

The agenda allowed people to speak for or against people running for the board and then ballots were passed out.  No such item can be found on any previous annual meeting agenda. This appears to have been intentional prejudice against Mark Balcer and Johnnie McKenzie who have spoken out against many of the board decisions and were candidates for board membership.

When it was time for candidates for the board to speak on why he or she was running for the board, most of the ballots had been picked up so nothing a candidate could have said would be allowed to sway a voter. Also, two homeowners voiced a demand that all candidates take an oath that they would support the Board’s decisions 100%. This exemplifies a Board dictatorship, not a diverse representation of the board based on its members.

We are requesting to review all documents and processes related to the 2024 annual meeting including proxies, ballots, and sign-in sheets. These documents can be subpoenaed in a lawsuit but it is our hope that our concerns can be resolved without that step.

5.  Misuse of “emergency” power to allow spending and avoid approved spending limit policy that does not require board approval.

The habit of several members of the board has been to deem an expense an “emergency” to bypass rules and regulations. For example, a new outdoor circuit installed for last year’s Octoberfest without the required permit and inspection and that put the community at risk.

The outlet was to provide power for a bounce house for a cost of $2500. The board was not told about it and found out about it when the invoice was paid to the electrician. There was no permit pulled for this work as required, and the electrician did not have a commercial license to do the work.

When Mark Balcer sent an e-mail stating a permit was required and to have it added to the agenda to discuss at the next meeting, the electrician changed what he had installed to include waterproof boxes and burying some of the conduit.  At the next meeting it was tabled and no discussion was allowed by the president. In an e-mail following that meeting, the Town and Country property manager stated she would not have a permit pulled without a majority vote from the board. 

When a meeting was held on 14 Nov 23 the board voted to pull a permit; it was still not pulled for over a month and the HOA was cited by Code Compliance but the full board was not informed. The permit was finally pulled on 29 Dec 23. This lack of following process cost the HOA an additional expense of approximately $700.

We are asking for strict adherence to all County, State and Federal laws and codes, and adherence to established best practices concerning vendor bids, RFPs, invoices, payments, and professional relationships.

6.    Three complaints were filed with SC Consumer Affairs.

The HOA board refused mediation or to interact with complainants in all three filings. This demonstrates the board’s lack of willingness to interact with members when they have concerns about inappropriate or illegal actions.

Immediate transparency of all issues raised by homeowners and face-to-face, respectful interaction with homeowners who file complaints. The Board and several homeowners who were angered by my (Johnnie McKenzie) flyers challenged me to voice my complaints at a Board meeting. I chose not to engage in shouting matches or unproductive, accusatory discussions that I deemed would come to no good.

7.    The HOA Board uses corporate email accounts, which obfuscates the ability for the HOA to “own” board communications and they use email voting, which does not allow HOA members to know how board members vote.

The board was advised about the SC Nonprofit Corporate Act rules for the control of e-mail votes. Unanimous approval is required to hold the vote by email but not required for the vote itself. If one person on the board objects to an e-mail vote it is not allowed.

A $2,000 repair of the sprinkler system at the Batesville entrance was approved by e-mail vote even though two board members objected to an e-mail vote so it was approved illegally. The repair was completed without the full board’s knowledge.

It is also required under SC Nonprofit Corporate Act to announce the vote in the next regularly scheduled meeting, which the board fails to do most of the time.

• Each board member should download all emails in their personal accounts for the term they have held office. These files should be stored on an HOA controlled site.
• All emails sent and received in a business email system should be downloaded for the term the board members have served and stored in an HOA controlled site.
• Voting by email should be restricted to emergency situations only.
• All such emails referenced in this item should be made available for Plaintiffs to review.
• Immediate cease and desist of using personal or business email systems for HOA business.
• All votes should be taken and recorded in the HOA Board’s monthly meeting for proper review by an ombudsman.

8.    Beautification Zones management processes are not documented

No clear maps on record with board.

No rules on management – inconsistent actions with homeowners whose property have a beautification zone. In the past, areas have been maintained by HOA but homeowners cannot get a straight answer as to future responsibility.

The owners next to the beautification zones at the Batesville entrance were not notified holly trees would be cut down. When one found out and questioned it, they were told they had no choice or control of that area.

No documentation of how beautification zones were modified by extended Batesville right of way.

Our request is that the board create, file, and communicate to affected homeowners clear guidelines on how beautification zones are managed and who is responsible for what.

9.    Not following SC Non-Profit Act rules that require two board members on every committee.

Committees are a tool used to solidify the power of a few members of the board. Two members of the board began working on establishing a formal landscape committee in 2023. The two members were told they, nor any homeowner participants, could speak directly to Chris Donahue and they assigned a third board member, Ricky Wallace, to be the go-between. This is an example of the inappropriate power structure of the HOA board, misguided volunteer management, and dysfunctional relationships and processes.

• Create clear mission statements, list of responsibilities, reporting rules, etc. for all committees.
• Prohibit volunteers who are not on the board from controlling projects, spending, and management of other volunteers.

10. Rules and Regulations for Vendor Management

Failure to file the RFP process approved by the board at the November monthly meeting and making significant changes before filing a document on 5/3, the details of which were not disclosed to homeowners in a monthly meeting. This document allows a non-board member to have the power to spend money without board approval or oversight.  No individual homeowner, HOA committee member, or non-board member should have spending power. The board should be responsible.

Our request: The remediation items listed below represent bad business standards, especially with a dysfunctional relationship between current and past members of the board and Harrison Landscaping.

·       The Sole Source Acquisition Qualifications should be amended to change I.a. $1,000 to $500.

·       Section I.b. should be eliminated.

·       Section I.c. should be eliminated.

·       Section II.e. should be amended to remove “or a designated member.”

·       Section III.k. should be amended to remove “or a designated member.”

·       Section IV. Should be eliminated.

·       Adoption – no Date of Adoption is provided.

11. Inconsistent application of rules on removing board members from the board and filling vacancies.

Board members who have disagreed with the long-established power control the Donahue-controlled clique have suffered public oral abuse and have been excluded from board communications intended to “push them out.” The president consistently refused to correct his or any board members’ false or abusive statements. The board can remove board members without cause with a vote of all board members. It appears to us that board members who do not agreed with the “power clique” suffer harassment and verbal abuse intended to get them resigned. Assignments of two members in 2023 to establish a landscape committee kept getting pushback and requirements for more and more and different documents. The candidates for the open positions for 2024 were pressured to take a “loyalty oath” at the annual meeting.

Homeowners with diverse backgrounds, interests, and expertise should be encouraged to serve on the board and treated with respect. If that were practiced it is our opinion that we would have more HOA members contributing to the well-being of our community and the difficult effort of protecting our property values.

12.  Undocumented Deals

In August 2017 the board or a member of the board agreed to allow sewer access to an adjoining homeowners group for a $10,000 donation to the playground project. Details of this is not in recorded minutes.

• Make all documents concerning these transactions accessible.
• Provide documentation of these decisions since they are not in the published minutes.
• Independent oversight of HOA by ombudsman or other entity and mandatory training for all current and future board members with an update of governing laws and documents on an annual basis.
• Elimination of practice of allowing non-elected, volunteers to control projects and influence meeting agendas.

13.   Non-professional, back-of-the envelope bids on HOA projects.

The current landscape vendor submitted a less-than-professional, no-detailed proposal or bid on maintaining our common properties. This type of deal provides no accountability for service and is subject to informal, non-documented performance of responsibilities. A board member of the board at the time of the Batesville Road entrance project told Mark Balcer on a phone call that landscape vendors had to get approval from Harrison Landscaping (Ben Harrison) before making their bids on the project. If this is true, it is bid-rigging in the purest sense. Few companies chose to submit a bid but those that did can be subpoenaed to address this claim.

·       It is our intent to confirm this information in our court proceedings and request that future contracts with vendors who have participated in non-professional accounting or business dealings with members of the board or committee members, in particular Harrison Landscaping, not be allowed to participate in services provided on Orchard Farms common properties.

·       Provide oversight by an independent ombudsman to oversee the remaining contract period of Harrison Landscaping and the creation of a new RFP to secure a new landscape company when the Harrison deal expires.

14.  Board member votes are not recorded individually, just the number voting yea or nay.

At the July 2018 monthly meeting a motion was passed to NOT include in the minutes who voted in favor of or against any actions Homeowners cannot make good decisions on board candidates if they do not know how they vote. The HOA president talks jokingly often about transparency. It’s time there was some.

In monthly minutes, publish voting records stating how each board member voted.

15.   Since any homeowner can sue to bring a violation into compliance, the board’s action to make a one-off exception to the CCRs restrictions puts the members of the HOA, all homeowners, at risk of paying court-granted damages.

The CCRs prohibit any fence in the neighborhood being over 6-feet tall. The board blatantly ignored this restriction.

In the August monthly meeting the board agreed to allow a homeowner to install an 8-foot privacy fence.

The Board did not act to ensure that a neighbor of the homeowner meet the building restrictions of our community; no cease and desist was issued to prevent construction in violation of ACC and controlling document rules. This homeowner said at the meeting that since the board did not meet its commitment, he wanted remediation, and the board agreed to violate the CCRs to give him that remediation. This opens the door for all homeowners to expect exceptions to the rules and displays favoritism to those close to the controlling clique.

No favoritism should be paid to homeowners based on personal relationships. All homeowners should be held to the rules and restrictions of our controlling documents.

16.   Unlawful use of a men’s shower puts the community at risk of SCDHEC closing the pool.

The Board closed the men’s shower room and turned it into a storeroom for the swim team. SCDHEC requires separate bath facilities for the pool per their response to Mark’s complaint. They did make an inspection visit but stated that they must observe the improper use of allowing one shower room to be used by both men and women, thus they could not act at that time.

Immediate reopening the men’s shower room for its proper use.

17.  Executive sessions prior to meeting are held in a small side room off the main clubhouse area and conversations can be heard in the clubhouse main area.

Move executive session meetings to a private space.

18. Tree removal

The text of the ACC form states that a licensed contractor is required for tree removal.

This should be rewritten to remove reference to a licensed contractor and replaced with a practical service provider such as a tree removal company, homeowner, or other general service provider.