OPEN LETTER TO RMA BOARD
Board of Directors
Rancho Murieta Association
I wish to clarify our view of the statutory duties of the Association with respect to the impending special meeting of the membership and Bylaws amendment vote and state once again the proponents' request that you obey the law and perform your mandatory statutory duties.
You have been presented with a petition signed by over 5% of the eligible voting membership requesting the convening of a special meeting of the membership to vote on this amendment. This triggers a number of NON-DISCRETIONARY statutory duties on your part in the election process which we once again call upon you to perform.
The one thing which IS discretionary on your part is whether the Association, or the proponents, authors the Notice of Meeting. You have explained that your counsel caution you that the Board should not itself "sanction" this amendment because in their view it complicates the collection terms governing the Association's right to payment under the development agreement, and that in your counsel's view the membership may not amend the Bylaws because the Board has the right to control business affairs of the corporation. We dispute that characterization, since Corporations Code section 7210 says the powers of the Board to make corporate decisions are "Subject to...any limitations in the articles or bylaws relating to action required to be approved by the members (Section 5034), or by a majority of all members (Section 5033)." We are placing before the members a proposed Bylaws amendment which will exercise that power of the membership. You cannot deny the membership their statutory right to vote on this amendment because of some imagined untested legal theory. The members have the unconditional right to hold a meeting and vote. You have the right to then contest whether the outcome is binding upon you. But you may not disenfranchise the members by illegally blocking an election from occurring. No law permits that, and your counsel has come up with none.
That said, we recognize the Board's desire to avoid "sanctioning" this amendment, as your counsel puts it. We have offered, and offer here once again, an explanation of how the Board can comply with its legal duties under the Corporations Code and Davis-Stirling Act with respect to an election while not "sanctioning" the amendment as a corporate decision made by the Board.
The Board announced in its July meeting that the Board will not be the author of the Notice Of Meeting for these reasons, and we accept that. By so doing the Board has made clear that it does not "sanction" the amendment. Both Codes and our own Bylaws provide that if the Board elects not to give the Notice it may be given by the proponents, so we will proceed under that model.
However, the law regarding membership meetings and bylaws amendment elections specifies actions which the Association must perform. Unlike the noticing of the meeting, these are NOT discretionary acts; the Code says they SHALL be performed. Those duties include the sending of a ballot to every member, the appointment of an Inspector of Elections, and the establishment of a record date and roster of eligible voters.
These are statutory duties which help to ensure that an orderly election can be had. They have nothing to do with "sanctioning" the outcome. The Board is clearly on record as not "sanctioning" the outcome, which is all but certain because the proponents already hold the affirmative proxies of well over the requisite half of all voting memberships.
We have explained to the Board that it is important to the best interests of the membership that all concerned be confident that we had a clean, fair election. If your counsel's intransigence persists we may have to litigate the legality of the substance of the amendment itself over counsel's objection that the members may not amend the Bylaws to take this business decision of how cable television will be sold out of the hands of the Board. But we all have a collective interest in that not becoming a lengthy and very costly lawsuit over the election process. If this ends up being a court-supervised recount - another "Florida" debacle such as our neighbors at The Ranch recently experienced - the Board will have squandered tens of thousands of the members' dues dollars on unnecessary legal fees litigating those collateral issues.
So we call upon you once again to perform your statutory duties and by doing so place yourselves in a position where you KNOW the ballots were properly sent to the right people because the ASSOCIATION sent the ballots, you KNOW the right membership list was used to validate voters because the ASSOCIATION generated that list, you KNOW the ballots and proxies were properly tallied because YOU appointed the Inspector of Elections. Because the Code requires you to either give us the membership list or agree to mail things for us as an alternative, we will ask you to mail the ballots and Notice of Meeting for us. The proponents, not the Board, will be the senders. You will merely be performing your statutory duty. If not, we will demand the entire list of eligible voting memberships and do the mailing ourselves through a commercial service. But all can have much more confidence in the integrity of the vote if the Association performs that function, a function required of it by law.
If you again refuse to perform these statutory duties of the Association, we will maintain in court that you have waived any right to object when the membership through their proxies performs those steps. And we will prevail, because in an injunctive action a court applies the "doctrine of unclean hands," simply put, that one who has done wrong can not benefit in the injunction action from that wrong. You have stonewalled this effort every step of the way, ostensibly out of fear of "sanctioning" the amendment's purpose. The advisory vote went down by a landslide 78-22% in favor of voluntary cable, and you ignored it. When we geared up for this BINDING vote and I submitted the form of proxy to the Secretary for filing, as required by the Bylaws, you refused to send me back any acknowledgment of its filing. When I submitted a memorandum to your Inspector of Elections seeking clarification of howhe wanted to approach the counting of proxies he refused to respond to me. Now you are apparently attempting to block the election by sitting on your hands. This is going to look very, very bad in court if you now refuse to perform your statutory duties to conduct and supervise an election and then have the audacity to turn around in court and complain that the members responded by conducting the election and performing those functions themselves as best they can.
And there is no way you can win, because even if you inflict upon the members the waste of tens of thousands of dollars in legal fees on a judicial recount, the fact will not change that well over the requisite half of total membership have already signed proxies directing a "yes" vote on the amendment. No technical flaw or loophole you assert will change the judge's determination that the requisite number of members have voted "yes."
So let's have a nice clean election where everybody can be confident the votes were counted right, and THEN litigate if we must your counsel's fantasies regarding the legal significance of the amendment and whether the Board is bound by it. Those narrow questions of law can be very economically litigated as compared to a judicially supervised recount or "do-over" of the election. The outcome must be taken into account in preparing next year's budget, so despite your stonewalling we have tried to move this process forward as expeditiously as possible.
We acknowledge your need to not "sanction" this outcome. We agree that we will not assert that by performing your statutory duties to mail the ballots, establish the voting list, or appoint an inspector of elections you have waived your objections to the legal effectiveness of such an amendment; that claim is preserved. So please, for the sake of the membership and the treasury, let's just have a nice clean election and then much more economically litigate afterwards if we must about whether the amendment is binding upon the Board.
Please respond by Tuesday, July 22, as we have immediate decisions which have to be made regarding the preparation and mailing of the Notice and Ballot.
Freedom Of Choice Committee