Date: 01-19-2016

Case Style: Lionel Andre v. Willow Creek I Neighborhood Association, Inc., Bud Proffitt, et al.

Case Number: CJ-2010-4384

Judge: Jefferson D. Sellers

Court: District Court, Tulsa County, Oklahoma

Plaintiff's Attorney: Mike Taubman

Defendant's Attorney: Tony Miller for Bud Proffitt

Curtis Kaiser and Mark Smiling for Willow Creek I

Description: Tulsa, OK - Lionel Andre v. Willow Creek I Neighborhood Association, Inc., Bud Proffitt, et al. on breach of fiduciary duty theories claiming:


I. JURISDICTION AND VENUE

1. Plaintiff Lionel Andre is a resident of Tulsa County, Oklahoma.

2. Defendant Willow Creek I Neighborhood Association, Inc. is an Oklap_ fha noj,rofit
corporation with its principal place of business in Tulsa, Tulsa County, Oklaha. Thfs1
Honorable Court therefore has jurisdiction and venue over the party litigants'ed h;iin.

II. FACTUAL ALLEGATIONS

3. That Plaintiff Lionel Andre ("Plaintiff ') is the record owner of property of unit ownership estate that is the subject matter ofthis action, to wit: Unit Number 136, Willow Creek Condominium I.
4. That Defendant, Willow Creek I Neighborhood Association, Inc. ("WCI"), is the homeowners association of the unit owners of Willow Creek Condominium I.

5. That pursuant to the Bylaws of Willow Creek I Neighborhood Association, Inc. (the "Bylaws") the Defendant, WCI, is administered and managed by a board of administrators (the "Board") to be duly elected by the unit owners of WCI.
6. That the Bylaws of Defendant, WCI, establish requirements for the calling of meetings, conduct of elections, the management of finances and the Board's maintenance and oversight of the general and limited common areas of the WCI property, among other things.
7. That the Bylaws require a majority of unit owners to be present in person or represented by proxy to constitute a quorum at a meeting.
8. That the Bylaws require the Board to maintain the financial books and records of WCI and conduct a complete certified annual audit of the finances at least annually.
9. That the Bylaws require the Board to perform maintenance, repair and surveillance of the general and limited common elements of the WCI property.
10. Further, that pursuant to the Bylaws, no additions in excess of $1,000.00 to the general common elements may be made unless by a approval vote of 80% of the members at its annual or special meeting.
11. That pursuant to the Bylaws, any improvements other than ordinary maintenance made to existing common elements requiring capital expenditures must be authorized in the same manner.
12. That on or about March 2007 the then Board voted to encumber WCI in excess of
$1,000.00 for the addition and/or improvement of common elements without a quorum present and with a vote of less than the required 80% of its membership represented in person or by proxy.
13. That on or about March 2007 the Board voted to pass a special assessment that required WCI unit owners to pay for these additions and/or improvements of common elements without a quorum present and with a vote of less than the required 80% of its membership represented in person or by proxy.
14. That unit owners of WCI have paid and continue to pay special assessment dues for such encumbrance.
15. That Mariann Spencer ("Spencer") has been and is a member of the Board, among others, and Spencer has served as its president and treasurer, among other offices, over periods of several years.
16. That, prior to his death, the Board contracted with Board member Bud Proffitt and/or hired his company, Proffitt Enterprises, Inc. to provide on-site management, maintenance and other services for WCI.
17. That, since the death of Board member Bud Proffitt, the Board hired Randy Proffitt, Bud Proffitt's son, to continue provide on-site management, maintenance and other services for WCI, which he previously performed under his father's company.

III. CAUSE OF ACTION -BREACH OF BYLAWS

18. Plaintiff adopts and incorporates by reference all the foregoing allegations contained above in paragraphs 1-17.
19. That the Board breached the Bylaws by encumbering the members of the association in the amounts in excess of $10,000.00 on or about March 2007 when they failed to establish a quorum or to receive the required 80% approval of the unit owners of WCI.
20. That the Board continues to harm the Plaintiff and other unit owners by collecting special assessments for the encumbrance made in March 2007.
21. That the Plaintiff has been economically harmed by paying special assessments implemented in violation of the Bylaws.

IV. CAUSE OF ACTION -BREACH OF FIDUCIARY DUTY

22. Plaintiff adopts and incorporates by reference all the foregoing allegations contained above in paragraphs 1-21.
23. That the Board has a fiduciary duty to act in the best interest of the members of WCI to keep the association solvent and in good operational standing.
24. That the Board has breached this fiduciary duty by encumbering WCI and its members in amounts in excess of $10,000.00 in violation of the Bylaws.
25. That the Board has breached its fiduciary duty by allowing the misappropriation of funds and/or funds unaccounted for in excess of $100,000.00, and the Board failed to disclose and give a full accounting of the books of WCI to its members.
26. That as a result of this breach the Plaintiff and other unit owners of WCI have been harmed economically.

V. CAUSE OF ACTION -BREACH OF FIDUCIARY DUTY

27. Plaintiff adopts and incorporates by reference all the foregoing allegations contained above in paragraphs 1-26.
28. That the Board has a fiduciary duty to act in the best interest of the members of WCI with regard to the selection, employment, and performance of any person or organization chosen for the maintenance, repair, and surveillance of common elements.
29. That the Board hired Proffitt Enterprises, Inc., a corporation owned and/or controlled by board member, Bud Proffitt, to manage, provide services and maintenance to WCI.
30. That the Board has breached its fiduciary duty by allowing Bud Proffitt and Proffitt Enterprises, Inc. to contract for labor and materials utilized in the making of such repairs and maintenance in violation of the Bylaws, and the Board has allowed Proffitt Enterprises, Inc. to operate his business for the benefit of his own rental properties and other third party clients out of offices located on the premises of the Willow Creek rent-free.
31. That the Plaintiff and other unit owners are harmed by the Board breaching its fiduciary duty and failing to act in the best interest of the WCI unit owners.
VI. CAUSE OF ACTION -BREACH OF CONTRACT, AUDIT REQUIREMENT

32. Plaintiff adopts and incorporates by reference all the foregoing allegations contained above in paragraphs 1-31.
33. The Plaintiff and other unit owners formed a contract with WCI at the time of acquiring their unit interest, and the terms of such contract are contained in the Bylaws.
34. The Board has failed to conduct a complete certified annual audit of the finances at least annually in accordance with the Bylaws, which is a breach of the contract with the Plaintiff and other unit owners.
35. That the Board's failure to perform the contractually required audit has failed to properly account for the funds of WCI, such as the $100,000.00 embezzlement of funds, and caused economic harm for the Plaintiff and other unit owners of WCI.

VII. CAUSE OF ACTION -BREACH OF CONTRACT, COMMON ELEMENTS MAINTENANCE

36. Plaintiff adopts and incorporates by reference all the foregoing allegations contained above in paragraphs 1-35.
37. That the Board has a contractual obligation in the Bylaws to maintain the general and limited common elements of WCI property for the Plaintiff and other unit owners.
38. That the Bylaws obligate the Board to conduct the maintain and make repairs to the common elements of the units of WCI, which such common elements include, but are not limited to, installations of all equipment and materials making up the air, power, and water systems, including all conduits, pipes and wires, and the outside doors, brick veneer, wood and wood shingles of the walls, door and roofs.
39. That the Board breached its contractual obligation to properly maintain the common elements in, adjacent to and around Plaintiff s unit, causing significant damage.
40. That the Board's failure to properly perform the contractually required maintenance and repairs to the exterior walls and shingles of Plaintiff s unit caused him economic harm, estimated in excess of Ten Thousand Dollars ($10,000.00) to repair.

VIII. CAUSE OF ACTION -DAMAGES

41. Plaintiff adopts and incorporates by reference all the foregoing allegations contained above in paragraphs 1-40.
42. That, as stated above, WCI's Bylaws impose on the Board a duty to act in a fiduciary capacity for all the unit owners, including Plaintiff, by procuring insurance coverage, overseeing repairs and maintenance to the roof and other common areas, assuring repairs and maintenance are done according to good and workmanlike standards and commenced and completed in a timely fashion.
43. That WCI was negligent in failing to timely commence and complete necessary maintenance and repairs to the roof and other common area elements, such as support beams and external walls, following discovery of and notice to WCI of such damage to Plaintiff s Unit 136, that occurred prior to and has continued during this litigation.
44. As a direct result of WCl's breach of its fiduciary duty to assure the timely repair and replacement of the roof and other common area elements to Plaintiff s Unit 136, Plaintiff's property suffered damage to the ceiling, walls, cabinets and carpeting, resulting in Plaintiff s Unit 136 becoming uninhabitable until both external and internal repairs are completed, which such repairs to Plaintiff s Unit 136 estimated in excess of Ten Thousand Dollars ($10,000.00) to repair.
45. As a result of WCI's failure to timely repair to the roof and common area elements to Plaintiff s Unit 136 and its becoming uninhabitable, Plaintiff has been forced to relocate out of his unit and place his belongings in storage for approximately twenty-seven (27) months, at an additional cost of approximately $1,700.00 to Plaintiff.

IX. CAUSE OF ACTION -ACCOUNTING

46. Plaintiff adopts and incorporates by reference all the foregoing allegations contained above in paragraphs 1-45.
47. That per Article VII of the WCI Bylaws, the WCI Board shall keep correct and complete books and records of accounts and shall also keep minutes of the proceedings of its members, Board, committees having and exercising any of the authority of the Board, and shall keep at the principal office records giving the names and address of the members entitled to vote; further, all books and records of the corporation may be inspected by any member, or his agent or attorney.
48. That the Board has failed to keep and provide a complete accounting of its books and records to Plaintiff and other members in violation of the Bylaws.










49. That the Court should enter ajudgment decreeing that WCI Board shall submit a full, complete and detailed accounting of all minutes of meetings, and funds under the care, custody, control and supervision of WCI from 2006, to the present.
X. CAUSE OF ACTION -APPOINTMENT OF RECEIVER

50. Plaintiff adopts and incorporates by reference all the foregoing allegations contained above in paragraphs 1-49.
51. That receivers may be appointed "[i]n an action..., between partners or others jointly owning or interested in any fund, on the application of the plaintiff, or of any party whose right to or interest in the property or fund, or the proceeds thereof, is probable, and where it is shown that the property or fund is in danger of being lost, removed or materially injured." See 12 O.S. § 1551.
52. That a neither a certified financial audit nor a full, complete and detailed accounting of all funds under the care, custody, control and supervision of the WCI Board has been provided to Plaintiff or any other members by the WCI Board.
53. That by reason of the facts alleged herein, Plaintiff has a right to or interest in the subject property or fund, or the proceeds thereof, and the property and/or funds under the care, custody, control and supervision of the WCI Board are in danger of being lost, removed or materially injured.
54. That to protect WCI or perform such duties as are essential to preserve the interest Plaintiff and/or its other members until a final resolution of all pending matters is achieved, the Court should appoint a receiver.

WHEREFORE, Plaintiff prays for a judgment in favor of Plaintiff and against the Defendant for a sum in excess of Ten Thousand Dollars ($10,000.00) actual damages in this case, together with the awarding of attorney fees, costs, a certified, independent audit per the requirement of the Bylaws for each year since 2006, and injunctive relief to the appoint a receiver to manage the affairs of Willow Creek I Neighborhood Association and/or prevent this Board from further breach of its duties and for such other and further relief to which this Court deems Plaintiff entitled under the circumstances.

Outcome: Settled on undisclosed terms and dismissed with prejudice.

Plaintiff's Experts:

Defendant's Experts:

Comments: