Circle C Neighbors

FIRST SUPPLEMENTAL PETITION Part II

Apr 28, 2003

not altogether void. He seeks a declaration that any party to any of those contracts or agreements is entitled to relief from any further obligations to perform under them (except to the extent that such obligations remaining under those contracts are only for the payment of money by one party to the other in consideration for services rendered or property transferred). He seeks specific relief, inter alia, from the alleged contract with the City of Austin that resulted in the amendment to the Annexation Services Agreement and allegedly required the City of Austin to spend $2.3 million to extend Escarpment Boulevard from its current end point to connect with State Highway 45.
7. CONFLICTS BETWEEN GOVERNING DOCUMENTS AND TEXAS LAW ?–
Plaintiff says that Tex. Rev. Civ. Stat. Art. 13.96-2.10(3) allows a special meeting to be called ?“by members having not less than one-tenth ( 1/10 ) of the votes entitled to be cast at such meeting.?” The bylaws of the CCHOA provide in Article III, Section 2 that special meetings may be called ?“upon written request of the members entitled to vote one-fourth (?¼) of all the votes of the class A membership.?” Plaintiff says that this conflict must be resolved by adherence to the statute. He says that corporations are statutory entities and that only such provisions of the governing documents of a corporation as are not in conflict with the enabling statute are valid. Further, he points to Tex. Rev. Civ. Stat. art. 1396-10.02.?  Reservation of Power ? ? ? A. The Legislature shall at all times have power to prescribe such regulations, provisions, and limitations as it may deem advisable, which regulations, provisions, and limitations shall be binding upon any and all corporations subject to the provisions of this Act, and the Legislature shall have power to amend, repeal, or modify this Act. He therefore seeks a declaration that a special meeting may be called ?“by members having not less than one-tenth ( 1/10 ) of the votes entitled to be cast at such meeting.?”
8. CONDUCT OF THE MEETINGS OF MEMBERS -
Plaintiff says that following the issuance of the temporary restraining order in this case by Judge Livingston, the Defendants hijacked the proceedings of the annual meeting of the members on March 26, 2003. After calling the meeting to order Jim O?’Reilly apparently unilaterally (but with the approval of the other Defendants and their attorney) appointed himself chairman of it. Plaintiff says that the designation of the chairman of the meeting should not take place without first putting the matter to a vote of the members. Defendants also refused to allow speakers to put motions and resolutions to a vote of the membership although such speakers had requested to be, and had been, recognized, had made motions and had received seconds to them. Defendants repeatedly told members that they were ?“out of order?” and could not offer motions for vote by the membership. They declared motions by members to amend the bylaws to increase the number of seats on the board of directors ?“unauthorized,?” ?“out of order?” and ?“illegal.?” Plaintiff says that unless the ?“board members?” are prevented from attempting to resume their obstructionist behavior at the continuation of the meeting, there will be conflicts about the proper conduct of the meeting. He therefore seeks a declaration that the members of the board of directors do not have any more authority at meetings of the members than any other member and that members may offer motions and resolutions for discussion, consideration by other members, and adoption by vote of the members present at the meeting (provided there is a quorum present for voting purposes). He seeks a further declaration that amendment of the bylaws requires only a motion by a member at the annual meeting that receives a second by another member and is adopted by a vote of the majority of the members constituting a quorum.
9. CONTINUED BLATANT MISUSE OF CCHOA RESOURCES BY THE BOARD
Defendants maintain that the e-mail list is ?“used by the CCHOA for dissemination of information to the members.?” The following example illustrates what they mean: Dear Circle C Homeowners,

As most of you know, on Tuesday, April 8th, the Court heard arguments concerning several matters in the lawsuit filed by William B. Gammon in Cause No. GN 300975, against the Circle C Homeowners Association.?  The Honorable Judge Jeanne Meurer, Judge of the 98th Judicial District Court, allowed the parties to present evidence and arguments concerning the following issues: (1) the procedure for nominating candidates for election of directors for the board of directors; (2) the method for counting votes in elections for directors; (3) the use of proxies promulgated by the CCHOA versus use of other types of proxies; and (4) the right of members to inspect and copy? records of the CCHOA, including the e-mail list used by the CCHOA for dissemination of information to the members.

At the conclusion of the hearing, the Court requested written submissions from the parties. Mr. Gammon was ordered to provide his legal arguments no later than Friday, April 11th, and Richard E. Gray, III, the attorney for the CCHOA, was ordered to provide legal arguments on behalf of the CCHOA no later than Wednesday, April 16th. Mr. Gammon will then have until Friday, April 18th, to present any rebuttal arguments. Mr. Gray informed the Court that the CCHOA would like a ruling so that it could conduct the election for the director position that was originally scheduled for March 26, 2003. Judge Muerer indicated that she planned to issue a ruling soon after the attorneys submit their briefs.

We have had a number of requests from residents regarding the actual costs of litigation and related expenses over the last two months. Although final bills have not been calculated, the approximate cost for responding to Mr. Gammon?’s litigation and related matters thus far is:

Attorney?’s Fees ? ? ?  ? ? ?  ? ? ?  ? ? ?  ? ? ?  ? ? ?  $28,776.25
Non-Budgeted Staff Time $11,925.00
Total $40,701.25
? 
At the beginning of this fiscal year, the CCHOA had set aside approximately $60,000 in hopes of being able to install playscapes in several areas throughout Clricle C to enhance some of our pocket parks. With this litigation, this fund will most likely have to be redirected to pay for costs associated with the above lawsuit. We find this to be very unfortunate for the residents of Circle C Ranch.
? 
Sincerely,
? 
? 
Board of Directors
Circle C Homeowners Association

The single attachment to this Supplemental Petition is a copy of the 2003 CCHOA budget.
WHEREFORE, PREMISES CONSIDERED, Plaintiff asks that the Court:
1. issue the Temporary Injunction against Defendant CCHOA which was prayed for by Plaintiff in his Original Petition and for which a hearing was conducted on April 8, 2003, to remain in place until final judgment is entered in this case or until otherwise ordered by the Court, which:
a. Enjoins the CCHOA from conducting any election for a director to the board until a valid voting list has been compiled and published as required by law;
b. Requires the CCHOA to use the Travis County assessed ad valorem tax value to compute the homeowner assessments and votes allowed its members;
c. Requires the CCHOA to count all votes cast by its members as calculated per sub-paragraph b, above, and eliminates any caps on member votes not specified in the governing documents;
d. Disallows the nominating committee actions which resulted in only two nominations for director, and requires the nomination process to be started anew and to allow all qualified candidates equal opportunity to be placed on the ballot;
e. Requires the CCHOA to refrain from using association resources to send out partisan campaign literature;
f. Requires the CCHOA to accept any and all voting proxies (in addition to those which it develops) that clearly indicate a desire on the part of a member to convey a voting right to another and that otherwise conform to Texas law;
g. Requires the CCHOA to allow Plaintiff and all CCHOA members access to all the books, records, and papers of the association, including those kept in computers (including, without limitation, all the voting proxies and the e-mail list), excepting only attorney-client privileged documents, and to copy those records in any non-destructive manner they choose;
h. Revokes any authority, real or apparent, of the current ?“board?” to make, or attempt to make, any decisions which are intended to be binding upon the CCHOA and/or its members, and;
i. Requires the CCHOA to conduct an election for all three board positions at the continuation of the members meeting which began on March 26, 2003.
2. Plaintiff further requests that upon final hearing he have judgment against Defendants and that the court grant the following relief in addition to that requested in his Original Petition:
a. A declaration that that Rigsbee and O?’Reilly are, and have not been, legally elected members of the Board and are not able to bind the Board or the CCHOA with their actions;
b. A declaration that the upcoming election for the seat on the Board now held by Bartlett shall be an election for all three seats on the Board;
c. A declaration that actions undertaken by the Defendants are not legal Board actions and not binding on the CCHOA;
d. A declaration that contracts and other agreements entered into by the Defendants, allegedly on behalf of the CCHOA, are voidable, if not altogether void;
e. A declaration that any party to any of those contracts or agreements referenced in sub-paragraph p, above, is entitled to relief from any further obligations to perform under them (except to the extent that such obligations remaining under those contracts are only for the payment of money by one party to the other in consideration for services rendered or property transferred);
f. A declaration that the alleged contract with the City of Austin that resulted in the amendment to the Annexation Services Agreement and allegedly required the City of Austin to spend $2.3 million to extend Escarpment Boulevard from its current end point to connect with State Highway 45 is voidable and not binding on the CCHOA or the City of Austin;
g. A declaration that a special meeting may be called ?“by members having not less than one-tenth ( 1/10 ) of the votes entitled to be cast at such meeting;
h. A declaration that a member of the board of directors does not have any more authority at meetings of the members than any other member and that any member may offer such motions and resolutions for consideration by other members, discussion and adoption by vote of the members present at the meeting as s/he deems proper (provided there is a quorum present for voting purposes);
i. A declaration that amendment of the bylaws requires only a motion by a member at the annual meeting that receives a second by another member and is adopted by a vote of the majority of the members constituting a quorum.

Plaintiff also asks to recover his costs of court, and such other and further relief, general and special, legal and equitable, to which Plaintiff may show himself justly entitled by this or any other live pleading or any amendment or supplement thereto.

Respectfully submitted,
LAW OFFICE OF WILLIAM B. GAMMON
1119 West Ninth Street
Austin, Texas 78703
Telephone (512) 472-8909
Facsimile (512) 472-8993

___________________________
WILLIAM B. GAMMON
State Bar No. 07611280