12/22 Court Hearing - Full Summary

**UPDATE - 12/29 COURT HEARING CONTINUED TO 1/8/2015**
***UPDATE - 12/22 TRANSCRIPT NOW AVAILABLE***
 
We hope everyone had a Happy Holiday, and we appreciate your patience in waiting for this more thorough summary of the court hearing on 12/22.  Click HERE to view the court transcript from 12/22.  Please do also note that as this blog is being posted (12/29), additional developments are taking place in court that may fill in some additional details that were not finalized on 12/22.  **UPDATE - CONTINUED TO 1/8/2015**

First, a brief background of what has occurred in the last few weeks:
(If you want to skip the background, scroll down to the headline 'So What Happened in Court?)

December 9th, 2014, Judge Garcia finally heard arguments from both sides over the question of elections for Cedar Run.  The Sher group's only defense or excuse for not holding elections in over two years was a controversial Bylaw document that they created in December of 2012 to replace Cedar Run's original Bylaws from 1972.  In nutshell, the Judge refused to acknowledge these bogus Bylaws as a binding governing document, and he expressed real concerns over the validity of a board that has operated under them for two years without elections.

Click HERE and HERE for two blog posts about that specific hearing or HERE for a transcript of the proceedings from 12/9.

At a brief hearing on December 17th, the Judge had asked both sides to work out an agreement over how to make up for the two consecutive election cycles that were skipped and how to govern Cedar Run until a proper election is held.  In the interim, the HOC (aka 'Master Board') was forbidden from making any payments to board members or their families, from making announcements or mailings to homeowners, or from entering any contracts.  No agreement was reached about how to handle the election and governance of Cedar Run, so both sides then had to argue their respective cases in front of Judge Garcia on December 22nd.

Using this blog, we had strongly encouraged homeowners to attend this December 22nd hearing to hear what Judge Garcia had to say. In response to this, the Sher group posted the following signs at the entrance/exit of Cedar Run and at the clubhouse.

Notice that the sign written in Spanish has a great deal more content than the sign written in English.  The Spanish sign translates to "HISPANICS, The future of Cedar Run is at risk! We need your support on Monday 22nd at 7:30am. We will reunite at the club house to go to court. It's very important that you accompany us! Your house could be at risk or even have a high and excessive payment."

In addition to posting these signs (which violated the court order that forbids announcements of any kind), the Sher group also spent the weekend making phone calls exclusively to Hispanic homeowners and urged them to either accompany them in court or head to to the clubhouse and sign a petition.  As reported by concerned Hispanic homeowners who received these calls, they were told that "ALMA is suing the [Cedar Run] Master Board, and you might lose your home if you don't sign a petition or show up in court" (Many things wrong with this claim, one being that ALMA has nothing to do with the lawsuit in question).  Other homeowners reported that they were told that the court transcript of the December 9th hearing that was posted on this blog was a FAKE.........Dirty politics and manipulation at their worst!

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So, What happened in Court?

Here are some highlights, followed by longer explanations on each point:

1. Contrary to the Sher group's signage, the future of Cedar Run was not decided on December 22nd, 2014, but it will be decided by the homeowners in May of 2015 (pending an official order confirming the election time-frame).
2. There will be a receiver appointed to manage Cedar Run (pending an official order).  The receiver's authority is likely to be finalized at the 12/29 hearing. **UPDATE - CONTINUED TO 1/8/2015**
3. Full financial audits/reviews will be conducted of the past three fiscal years, and results will be made available to all Cedar Run homeowners.
4. Temporary order restricting payments and forbidding announcements extended until election (possibly expanded).
5. The Judge stated quite clearly that nobody will lose their home as a result of the court's decisions on this case.
6. Caryn Shaw unsuccessfully tried to SILENCE THIS BLOG.  Judge would not agree.

1. Future of Cedar Run
The primary reason that the courts had to get involved is the fact that there has been no annual election for the Cedar Run Homeowners' Corporation (aka HOC, aka 'Master Board') for two consecutive election cycles.  The only elected (not appointed) director on the HOC board that is currently serving an unexpired term is Barbara Shaw.  Effectively, the entire board (except for one director) could have been turned over by a vote from Cedar Run homeowners by now.  We were deprived of that opportunity.

So here we are at the end of the year, awaiting a final order for an election.  If an 'immediate' election via a 'Special Meeting of the Members' were to be held, it likely wouldn't happen until sometime in mid to late February----proper notice, planning, nominations, arranging for auditors to supervise, etc.  Three months later (in May), the HOC (per the real bylaws) must then conduct an annual election, which should probably also be supervised to the same extent as the Special Meeting.

For these reasons (although it's not etched in stone yet), all parties seem to have agreed to a May election that will cover the ENTIRE HOC board of Directors.

2.  Receivership
Since it is quite clear that the bogus bylaws that the Sher/Shaw HOC board have followed for two years (which differ greatly from the real bylaws, serve the interests of Sher and his closest supporters, and contradict state law) are illegal, there are serious concerns about whether or not the current HOC board can be trusted to operate any longer.  That said, pending the judge's final order, a receiver will be appointed to manage Cedar Run.

The only question that leaves is......what authority (if any) should the current HOC have, in light of the above concerns?  This item is probably the central point of the court hearing today (12/29). **UPDATE - CONTINUED TO 1/8/2015**

3.  Financial Audits
With the legitimacy of the board questionable at best, concerns have also arisen regarding their handling of homeowner funds.  Co-mingling HOC funds with phase funds, back-door payments to employees/homeowners who don't want to report their income, board members forgiven on their assessment payments, delinquent owners allowed to 'work off' their assessment debt, shoddy bookkeeping, improper reporting of taxable vs. non-taxable revenue, fraud risks associated with the direct handling of assessment payments.......this list can go on forever, but these are just a few concerns that could be uncovered by a thorough audit.

Keep in mind that while Robert Sher was extremely critical of the previous HOC board for performing a annual  'Compilation Report' (a less rigorous financial review)  in lieu of a full audit, Sher's board has done NOTHING in terms of having a certified, independent party review the financial records and write up its findings.

4.  Order Restricting Board Activity
While the details of this order will be inextricably linked to above issues (i.e. receivership), The Judge made it fairly clear on 12/22 that the current board will not be allowed to represent itself as speaking on behalf of the association.  That means no more propaganda mailings or notices posted on garage doors that claim to be from the HOC, 'Master board', 'Oversight Committee'.  Pending a final order, it will likely be the receiver who will have exclusive authority to speak for the HOC.  What is clear (again pending a final order) is that Robert Sher and Jack Shaw will no longer be paid with Cedar Run homeowner funds!!

5.  Nobody Losing Their Home
In recognizing that there were many Cedar Run homeowners in the courtroom, Judge Garcia actually allowed a brief Q & A to clear up any confusion that homeowners may have about the court proceedings.  One homeowner asked the judge to directly address the assertion by the Sher group that our properties could be 'at risk' (presumably lost) as a result of the court's decision.  The Judge stated that the issue being decided will NOT result in anyone's home being taken from them.
(see transcript page 29, line 20 through page 30, line 9 AND Page 31, line 12-18)

6.  Caryn Shaw's Objection to This Blog
In response to comments made by opposing counsel about the Sher group's spread of misinformation (like signs telling Spanish speakers that their home is at risk), Ms. Shaw accused the authors of this blog of also spreading misinformation.  She accused us of misrepresenting the Judge Garcia's orders.  She was referring specifically to our blog post from 12/9, where we announced his decision regarding the election.

Caryn Shaw argued that we incorrectly stated that Judge Garcia had ordered an election when he hadn't.  She was partly right on this account:  Our initial blog post did state that an election had been ordered.  However, within a few hours time, we had corrected it to say that the Judge had thrown out the HOC's motion to dismiss them from an election order.  The Judge responded to Caryn's complaint by saying that although he hadn't ordered an election at that point, he had made it clear that he will order one as soon as other details are finalized.

Caryn also contended that we inaccurately stated that a T.R.O. (Temporary Restraining Order) was in place.  While we did initially say this (again corrected within hours), there was 'Stand Still' order in place, which although technically not a T.R.O., basically had the same effect as one.  The Judge dismissed this as a matter of semantics/jargon

In fact, the judge was much more concerned with the misinformation and scare tactics practiced by the Sher/Shaw group (such as telling unit owners that their homes are it risk) than he was about any of Caryn Shaw's objections to the blog content.

(see transcript page 30, line 14 through page 31, line 11 for the full conversation)

Judge Garcia alluded to blogs like this one as an avenue for people to exercise free speech and he noted that they are "encouraged, because they provide more information." (see transcript page 17, line 10 through page 18, line 10)

Closing Remark.....
We'll conclude this long-winded summary with one more response to something Caryn Shaw said in court.  After apologizing for a few of her misstatements and reminding the judge that she is a new attorney, Caryn wanted to make a point of saying that her and her family truly care about the people of Cedar Run. We'll leave that one for the homeowners to decide, but we'd like to point to the example she gave to support that statement.

Caryn Shaw stated that her sister, Anne Shaw, had worked for NO FEE (aka FREE) when she represented the Sher group in the summer of 2012 during their hostile takeover of the Cedar Run Board.  Caryn claimed that her sister's motivation was to help the unit owners of Cedar Run, and that's why she worked for no fee. (see transcript page 34, line 2-9)

Now take a look at the following check images for 'Legal Services from May through September [of 2012]' totaling $33,255.81.

NO FEE, YOU SAY???

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Please stay tuned for details on the 12/29 hearing.  **UPDATE - CONTINUED TO 1/8/2015** We'd love to hear from you with any questions or feedback.

restoreCR@gmail.com
VM/Text (224) 544-9058

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