Depositions of MJ, Bookkeeper, Plaintiffs

A few intervenors have shared their notes with us, beginning with the most recent developments. We are all tied to Homestead golf course in one way or another, therefore, we should stay informed about events that can impact our Homestead community.

These notes include: Last Friday’s hearing, status of Homestead golf course, and depositions of MJ, their Accountant, and our Plaintiff Representatives. 
Although most of us have not had an opportunity to meet, let alone question, our plaintiff representatives’ about where they stand on various issues, their depositions provide insightful answers for us to consider. 

Status of Homestead

During June and July, Mr. O’Bryan continued to run the golf course, stating he would leave once new management team was hired.

A legal writ from the court was obtained and served to Mr. O’Bryan regarding his vacating the premises by July 31, 2023, 11:59 pm.
Mick invited people to a party at the pro-shop, from 5:00 – 11:59 pm. Many attended but by 9:30 pm, most had dispersed. 

August 1, 2023, the golf course officially closed. Golfing, bicycles, motorized/electric vehicles are prohibited so repairs and restoration can begin. 
Remember this is private property, just like our own yards, and we need to respect it as such.  We wouldn’t want trespassers tearing up our lawns.
Send checks for maintenance fees, as many of you are already doing, to: 18 Paradise, P O Box 329, Lynden WA 98264

Water has been turned back on (turned off July 29 by Mick) but sprinklers remain manually operated.  

After Mick O’Bryan returned keys to 18 Paradise, he was granted use of the maintenance shed by the court until Sept. 15th. Unfortunately, equipment is kept there that is needed by the team keeping our Common Spaces green, but this dynamic duo are creative and determined.  When you see Jim and Sharon, let them know how much they are appreciated!

Court Hearing

Friday, Aug. 11, 2023 – A hearing was held regarding 3 motions in our case: 
Dismiss CPA (Consumer Protection Act) lawsuit filed in 2020
Postpone trial date for Mick O’Bryan’s new lawyer to prepare for trial
Address intervenors’ opposition to changing trial date

Five lawyers were present: 
Ben Vandenberghe for 18 Paradise
David Andersson and Matthew Davis for plaintiffs
Jeff Possinger for Mick O’Bryan
Mary Reiten for intervenors (via zoom).

Each lawyer argued on behalf of their clients position:
Possinger/Mick – for postponing trial date by 6 months to prepare for trial
VandenBerghe/18 Paradise – for postponing trial date to prevent negative impact
Andersson and Davis/Plaintiffs – against postponing trial date for homeowners so they can have resolution
Reiten/Intervenors – against postponing trial date for homeowners to have an end to lawsuit (irony of plaintiffs and intervenors on same side did not escape us)

Judge Freeman expressed concern for homeowners now that golf course has closed but acknowledged he legally had to allow Mr. Possinger time to prepare.       Mr. Possinger originally requested 6 months but the judge wanted a shorter timeline and Mr. Possinger said he could possibly be ready in 3 months. He would confirm with Judge Freeman once time determined. The judge said our case would be a priority in getting re-scheduled once timeline known. 

Ms. Reiten requested 18 Paradise be asked to commit to maintaining the grounds while golf course closed, the judge said he was unable to grant that request.  

When 18 Paradise saw trial date would be changed, they withdrew motion to dismiss the CPA suit.

Sitting in courtroom were two intervenors, one plaintiff, and former manager Mick O’Bryan. Approximately 12-15 watched via zoom.

Depositions of MJ and Accountant

July 20, 2023 – Depositions taken of Mick O’Bryan, Josh Williams (formerly MJ Management), and Cynthia Polley, Birch Bay Accounting.
Deposing attorney was plaintiffs’ attorney, Matthew Davis, with fellow attorney David Andersson and Intervenors’ attorney Mary Reiten also present.

Cynthia Polley

• Worked with Kemper Sports in 2017, remained when MJ began managing
• Accounts were commingled prior to 2020
• Creation of “departments” for homeowners done in 2020, prior to 2019, there were no “departments” in QuickBooks
• Reviewed transactions and expenses with Mick O’Bryan, and his recording matched point-of-sale and bank deposits
• Cynthia explained profit & loss documents as “work in process” as there was ongoing interaction between client and accountants verifying and reporting.
• Completed documents would be in folder labeled “Final”
• Cynthia never saw what she would consider a “scandal” in their financials

Mick O’Bryan:
– Worked at Homestead for 22 – 23 years
– When lease terminated (May 31), refused to leave until new management in place
– Understood he could not cash maintenance fee checks as of June 1 but also said July 1 during his deposition
– Maintenance fee checks have been dropped off at the pro-shop, are being kept in a folder, awaiting someone to pick them up.
* Personal note: We heard Mick packed everything into containers and carried them to maintenance shed, but those checks do not belong to Mick.

Josh Williams:
– Josh and Mick began partnership in 2017
– Josh’s role was to run golf operations, Mick was superintendent of grounds
– Homestead was unique due to its Canadian clients and maintenance fees

• Understood COS fees went to golf course crew to maintain both golf course and COS, but golf course operated from profits, not fees
• Oct. 2018, Josh accepted general manager position at Loomis Trail golf club, no longer able to work at Homestead.

–  Dec. 2019, increase of fees approved by their attorney.
–  MJ asked the City of Lynden for a bond to purchase golf course
–  Golf course struggled under MJ as they tried to increase number of golfers 

• Josh questioned why he was a defendant in lawsuit since legal partnership and involvement with Homestead were prior to 2020. Neither attorney answered.

Depositions of Plaintiffs

June 21 and 22, 2023 – Depositions taken of 11 plaintiff representatives by Henry Ross, attorney for 18 Paradise. Mary Reiten, attorney for the Intervenors, was also present, as were David Andersson and Matt Davis for the plaintiffs.

Lead Plaintiff Scott Hillius: Lives in Bellingham, owns condo in Homestead

• When shown 3rd Amended Complaint that dismissed MJ, Mr. Hillius did not recall why MJ was dismissed.
• Shown 5th Amended Complaint, line 88, which lists allegations against 18 Paradise. Mr. Hillius agreed with allegations, that MJ was an employee, at fault, and plaintiffs were “forced to sue”.
• Shown Profit & Loss document with significant loss of income. Mr. Hillius said document was “cooked”.
• Believes homeowners whose property borders COS should pay for maintenance of that COS, otherwise, no one else should pay.

Tom Staehr: Lives in Richland, no longer owns property in Homestead

• Reason for being in lawsuit was due to fee increase. His goal is for fair ruling, accountability, representation for homeowners.
• Believes homeowners should pay some amount
• When shown list of allegations in 5th Amended Complaint, he was asked how 18 Paradise collected maintenance fees and not MJ? How did he (Tom) know fees were commingled by 18 Paradise? Mr. Staehr believed the answers were in deposition of 18 Paradise.
• Asked how ownership of COS was unfair and deceptive by 18 Paradise, Mr. Staehr said per city ordinance. When shown CCR 3.1 regarding declarant can own COS, Mr. Staehr disagreed with CCR 3.1, claiming it was irrelevant. 
• When shown Profit & Loss document with loss of income, Mr. Staehr said it was inaccurate.
• When asked if he encouraged homeowners to give to legal fund, he replied,“No, it’s voluntary”.
• Believes a fair outcome would be accounting of fees and COS defined.
• When asked why he refused mediation, Mr. Staehr said “It was more time and money”.

Angelique Scarlett: Lives in Homestead

• Angelique’s goal is to shed light on practices and fees spent wisely, accountability, and having people treated properly. She cited street lights not being fixed for years as example of not treating people properly.
• Regarding a fair fee for COS, she believes $36 is too high. Thinks HOA should collect money from homeowners to care for COS, as everyone benefits from COS in Homestead.
• Her expertise is in finance, when shown P&L financial document (all plaintiffs shown same documents) she could not explain or see how MJ used/misused funds to buy golf course but knew intuitively wrongs had been committed.
• She advised Mick to sell golf course to owner of Bellingham Towers.

Doug Scarlett: Lives in Homestead

• Believes $36 is a fair amount for fees
• Does not benefit from paying fees except for the “hanging flowers”
• When asked about P&L, he said his wife combed through those documents and he trusts her completely.
• Thought 2018 storm assessments “suspicious” and mishandled by 18 Paradise. Did not believe MJ was receiving fees, just 18 Paradise.
• Asked what would be a fair resolution, his reply: “Tree assessments”.

Daniel Lyons: Lives in Homestead

• Goal of lawsuit: control COS and change CCRs, sees current situation as “taxation without representation”.
  Options: Turn COS over to city of Lynden or have homeowners own it, as all of Lynden enjoys the gazebo.
• Homeowners should pay fees but control the COS
• Believes property values would not be impacted if COS gone, he doesn’t use any COS, including street lights.
• Beliefs based on looking at COS and knowing amount is too high.
• Did not know 18 Paradise wanted to mediate

Sonja Lyons – Lives in Homestead

• Became involved when “18 Paradise’s agents” held meeting on 12/2019. She became a HOAG member, was also on Board of Directors at their condo.
• Her issue: exorbitant fee increase of $670,000 per year.
• Met with Mick who insisted he be recorded, but they were unable to separate COS costs from golf course expenses. 
• Shown 5th Amended Complaint, line 88, which lists “unfair practices”. Attorney Henry Ross referred Sonja to CCR 3.1 about owner possessing COS as that is listed under “unfair practices”.  Sonja replied city says something else.
• Has not paid fees since 1/1/20, does not see this as unfair to homeowners who pay their fees because $25 to $36 was $11 increase over 28 years.
• Her goal: Owner obeys city ordinances for HOA to manage COS.
• Recalled emails about mediation but because Scholten “won’t move off revenue stream, why bother”.

Ron Saran – Lives in Sedro-Woolley, no longer owns property in Homestead

• Invited “my good friend” David Andersson to Dec. 2019 meeting.
• Angry about 7th Amendment as it can potentially lead to other amendments.
• Believes fair analysis of COS should have been done.
• Knows increased fee of $93 was unfair based on his brother’s 10 acres in Texas. Brother cuts grass for hay which provided a comparison of cost.
• Does not need a professional to calculate cost of maintaining COS, “It’s simple math.”
• Called himself a “bad witness” but remains class member because “You owe me money”(to attorney Ross). Admitted he has not kept in touch with other plaintiffs for 1.5 years.
• City of Lynden should control and maintain storm ponds
• Shown P&L with income loss, believed it showed “They were terrible business owners.”
• If people stopped paying, 18 Paradise would have negotiated, wished everyone was not paying
• While president of condo board, had reserve fund study done. Ms. Reiten asked if it would be good idea for plaintiffs to order reserve fund study, Mr. Saran did not think so due to low replacement value of COS. 
• Against mediation because neither side could agree on definition of “authorize” in the past.

When deposition of Mr. Saran ended, his lawyer Matt Davis questioned him, these were his answers:
1. Regarding 6th amendment, Mr. Saran heard storm damage for trees was assessed to homeowners because 18 Paradise failed to get insurance.

2. Asked if he had scrutinized P&L’s or relied on his lawyers to do it, Mr. Saran said he had relied on lawyers (Andersson and Davis) to investigate on his behalf.

Steve Zehm – Lives in Homestead

• Career was director of IT, now retired
• HOA president at Village@ Garden Green condo, fees are $245/month.
• At 12/2019 meeting, Mr. Zehm told Mr. Andersson he wanted to be a representative. He saw MJ as agents speaking on behalf of 18 Paradise.
• $36 is an unreasonably high amount for COS fee, believes 18 Paradise profited from fees.
• One bid for COS maintenance was from Augusta lawn care, but he did not recall seeing it
• Believes 18 Paradise and MJ Management are one entity, not two
• If no fees paid, work could be done by homeowner volunteers. For street lights near his home, he would “work it out” with the city.
• Reserve fund study is pointless because COS is just mowing grass and gazebo.
• Would mediate if 18 Paradise conveyed COS and HOA to homeowners, and provided accountability.
• Knowing 18 Paradise wants to mediate does not change his mind, still refuses to mediate

Lisa Zehm – Lives in Homestead

• Career in customer service for real estate insurance
• She and husband Steve own 2 condos, HOA fees are $245/month
• Joined lawsuit when HOAG and neighbors could not negotiate with MJ or 18 Paradise.
• No opinion if $36 too high/low, hasn’t paid since 2020, does not see this as unfair to other homeowners who are paying fees
• Goals: Accountability, control fees, determine what’s needed for COS
• Asked why sue MJ, she replied they were not suing MJ, but 18 Paradise. Mr. Ross showed 5th Amended Complaint listing MJ Management as defendant, she admitted her error. Sees MJ and 18 Paradise as one entity.
• Did not know what MJ or 18 Paradise did regarding COS, believed fees went to golf course
• Did not know who increased fees to $93 but believes owner profiting from fees
• Fees too high for COS based on quotes from lawn care companies. Damaged light poles and neglected park showed funds not going to maintenance of COS.
• When shown P&L document, she said she has seen several P&L’s, did not know which was correct
• Ms. Reiten asked Lisa if she thought a reserve study (after explaining what it provides) would be a good idea for Homestead’s COS, Lisa thought it could be.

Randy Drubek – Lives in Homestead

• HOA President at Fairway@Garden Green condo, HOA fees are $375/month
• Career was in IT, now retired
• Joined plaintiffs due to fees used for profit, when negotiations with 18 Paradise “hit a brick wall” and gazebo park not maintained.
• Aug. 2022, saw broken pipe and 2 streetlights always on, near gazebo.
• Would like independent person to do reserve fund study
• Agrees homeowners should pay fees for upkeep
• Compared with past, when there were less people and more land, fees were also less and it was ok. Attorney Ross pointed out there was also less infrastructure back then which meant less maintenance and lower fees.
• Mr. Drubek believes 18 Paradise profits, not MJ, and 18 Paradise did not let MJ manage
• When asked why MJ was dismissed, Attorney Andersson objected, said it was privileged information, not for plaintiffs to know
• Ms. Reiten pointed out Mr. Drubek’s comment of streetlights and broken pipe in COS proved COS was more than just grass. She asked if he knew there were 2 detention ponds in the park to which Mr. Andersson objected, stating there were no detention ponds in the COS park.

Mark Mediema – Lives in California since Oct. 2020, owns rental in Homestead

• Dec. 2019, saw letter regarding meeting about increased fees. Joined HOAG with 18 people to resolve problem.
• Wants correct fees for COS, representation for changes, COS owned by HOA
• HOAG met with Josh Williams who informed them 18 Paradise increased fees. 
• $36 is reasonable, but not $93, because nothing has changed since 1992 and there were no problems with $25 fee. He has not paid maintenance fees.
• Believes P&L financial document showing a net loss, is a lie.
• Understood reserve study is estimate by 3rd party for replacement costs of assets, including maintenance costs. Thinks reserve study for Homestead would be “silly” but did a reserve study within their own group for lawn care and lights. Could not recall who provided the study.
• Mediation is appropriate in Family Law but not with 18 Paradise. Mr. Mediema is interested only if Morris Chen is present at mediation. Ms. Reiten reminded him that 18 Paradise is the defendant, not Mr. Chen.