The Nevada Supreme Court ruled on December 17 on the ongoing lawsuit. We are not attorneys but will be getting advice from the attorneys on the case but a couple things are clear:
1. The Supreme court said that the lawsuit brought by the Vogels was not frivolous and therefore has vacated the order for the Vogels to pay everyones' legal fees. This means we are all on our own to pay the ongoing legal fees, and we will not be reimbursed any fees that we’ve already paid.
2. The Supreme Court sent this back to the District Court to continue litigation to figure out the facts that are still in dispute. This will likely be very costly.
Currently the MBPA still owes $22,995 in legal fees and we do not know if that includes the fees associated with the Supreme Court preparation. Reminder total costs that we know of for MBPA are between 125-130K.
We will meet with the lawyers ASAP to get more information.Once we understand exactly where MBPA stands we will communicate to the community. The ruling is attached for your reading pleasure.
This is Pat Splinter and Jeff Mains, the new co-presidents of the Marla Bay Protective Association. As promised when we joined the board of the MBPA, we are reaching out with updates and news of importance to the entire Marla Bay community. We appreciate your time as there is quite a bit to cover, and we feel we need to go into as much detail as possible.
As you may know, we have taken on the leadership of your association at a particularly hectic and confusing time as smoke and wildfires disrupted our community, resignations of the previous MBPA Board, and lack of access to important information and functions hindered our ability to evaluate the current status and activities of the Association. Sadly, we discovered an organization has some potential issues in regards to taxes, the lawsuit and funding, so it has taken some time to sort through all the loose ends.
The good news is we are now as of October 1st, a fully functioning Board and working diligently to resolve open issues. We have met twice, once prior to Ed Wheelbarger’s departure and again a second time on Oct 7th.
Your new interim board held its first telephonic meeting on Oct 7th. During that call officers were elected as follows:
Co-Presidents: Pat Splinter and Jeff Mains
Vice President: Scott Willard
Treasurer: Barbara Proulx
Secretary: Andy Firestone
With these positions being filled, we are now in full compliance of the requirements listed in the MBPA by-laws, and as of October 15th have gained access to, and taken over responsibility for, all bank accounts maintained by the MBPA, the MBPA website, the buoy fields, understanding of the ongoing lawsuits facing our Association, and all other matters deemed the responsibility of the MBPA.
A big Thank you to Liz Nelson Ledin, who has agreed to continue in her position handling finance for the Association, and who will provide important transition insights and information as the new Board quickly gets up to speed in order to serve the community responsibly.
As always, the minutes of Board meetings, once approved (typically at the following Board meeting), will be posted to the MBPA website and accessible to all MBPA members in good standing.
As a Board we agree that our first priority is to ensure that all issues of importance to the Marla Bay community be communicated directly to homeowners and residents. In our quest to become as informed as possible, we have been delving into issues ranging from routine buoy maintenance to critical tax reporting and the status of both active lawsuits. We can now report on a number of those issues.
First, we need to once again reiterate the differences between the Marla Bay Protection Association (MBPA) and the Marla Bay General Improvement District (GID). Though we continue to research and investigate the finer details of the MBPA structure in regard to legal issues raised by two pending lawsuits and confusion over tax-filing status, we can generally say that the MBPA is a voluntary organization with an elected or appointed Board of Directors which has responsibility for common community expenses and needs not typically thought of as municipal infrastructure. These include security details during busy holidays, seasonal beach cleanup and mutt-mitts/garbage service, operation of the MBPA community website, administration of insurance, tax and legal services, and other community-based needs. With the transfer of littoral land from Zephyr Cove Properties in 2006 we also manage the buoy field. We receive our funding from voluntary dues paid by Marla Bay homeowners, and buoy fees.
The GID, on the other hand, provides municipal-like services to improve and maintain certain common infrastructures such as streets and pathways, curbs and gutters, gates to beach, storm drainage, street lighting, beach access gates, fire prevention, pest abatement, etc. Funding for the GID is provided by the State of Nevada General Tax Fund. As a reminder, THE GID – nor MBPA, are law-enforcement agencies – those services are provided by the Douglas County Sheriff’s office and the Douglas County Code Enforcement office.
In talking with some community members, it is clear there remains confusion regarding why the MBPA is facing a lawsuit, vs the Intervenor’s lawsuit, what they mean for members and non-members of the Association, and what the current and future legal and financial responsibilities of the MBPA involve. We will attempt to shed some light on these questions as we continue to gain knowledge and seek legal clarifications as necessary.
Below is a summary and status of the two lawsuits facing the MBPA, and an update on the key functions we are working our way to complete. The two lawsuits, which address property ownership and resident access to specific areas of the beach are now pending an appeals decision by the Nevada Supreme Court.
Vogel vs MBPA Lawsuit:
The Vogel vs MBPA lawsuit is one of ownership, specifically of who owns the sand beach between the low water mark and the high watermark of the beach. A Supreme Court of Nevada hearing took place on Oct 15th with attorneys presenting oral arguments on behalf of the Vogel Family Trust, the “Intervenors” (see case below) and the MBPA. The Supreme Court should be handing down their opinion within the next 60-90 days.
Though no action will be necessary until after the Supreme Court’s ruling, there are several issues we need to consider:
To date the legal fees for this case have been in excess of $100-110K. Of this, between $45-50K were paid from community donations and the rest from MBPA dues and general funds. We estimate that another $15-25K will be billed by our legal counsel. If the initial verdict is overturned, or if the Supreme Court decides that attorney fees will not be borne by the Vogels, full financial burden will fall on MBPA members to pay the remainder of what is owed. We are seeking thoughts on how we can get creative in this worse-case scenario.
Additionally, if the lawsuit is not upheld on appeal, we will have to revisit our management of the buoy field and the wider role that the MBPA plays in the community.
This lawsuit is about “recreational easement access to the sand beach”, not ownership – “the right to use.” If this lawsuit, which was brought by 66 Marla Bay residents, is upheld, it is important to understand what exactly that means to those that joined in the lawsuit and to the rest of the community that did not.
Tom Hall, the attorney for the Intervenors, addressed the Board recently and articulated what he sees the lawsuit being about, and what the District Court found in its decision (which is now under appeal at the Nevada Supreme Court, combined with the Vogel lawsuit). Hall maintains that each Intervenor has an implied right or access to a recreational easement over the sand beach that is currently titled to MBPA, and that the strip of beach is unbroken and continuous from the North to South end of the beach. Hall made it clear that the implied recreational easement is only for ACCESS to the Sand Beach and to the water, not for storage of boats, jet skis, paddle boards, kayaks, or other personal items.
This “Sand Beach” is an actual lot defined on the development map that was transferred from Zephyr Cove Properties (the original developers of the Marla Bay tract) in 2006. This Sand Beach lot is in front of the lakefront homeowners lots which measure 130’ from the lake side of Lake Shore Blvd. In many cases, when the lake is high, the “Sand Beach lot” is under water and the remaining sand from roughly Vogel’s to the north of the boat ramp is the private property of the lakefront owner. None of the lawsuits are giving the right to this private property to the non-lakefront homeowners of Marla Bay. We all use this property with the explicit agreement and neighborliness of those lakefront homeowners.
The District Court found that the Intervenor’s (those 66 who sued), have a “perfected” right (blessed by a court) over the recreational easement. This perfected right means those homeowners can state this right through a recorded document attached to their deed. This is important for everyone to understand. The non-66 (those that did not join the lawsuit but own homes) still have a right to an implied recreational easement, however, it is “non-perfected,” meaning they will not have the ability to a recorded document.
If the non-66 wish to perfect their right, it would require further lawsuits, or, if the MPBA lawsuit is upheld on appeal, the MBPA has an option to sell easements to the rest of the community in order to make those a perfected right, thereby ensuring every owner has a right to record the easement to their deed. As we want to make sure we are not embroiled in more lawsuits against each other, we are looking at all options and will, of course, know much more when the Supreme Court’s ruling is recorded.
While every Marla Bay homeowner has an implied right to the use of the beach, that does not make it a perfected right. The only way to do that is through a recorded document of easement with each lot.
As the Board, we are seeking to make sure everyone has a right to have their beach access perfected. If the District-Court ruling is upheld by the Supreme Court, we will have to address this complicated issue in order to give all residents equal status in terms of documented easements. We eagerly await the court’s opinion, and understand some of you have questions, which we will endeavor to sort out after the ruling is issued.
Unfortunately, we have discovered that it has been some time since the MBPA filed any Federal or State tax returns and there remain questions as to what status the MBPA is operating under. Going through the history we found only one tax filing. In searching through documents there has been limited and conflicting correspondence regarding the Association’s filing status. The one tax return we discovered suggests that the MBPA filed as a Homeowners Association (HOA). However, the original incorporation documents state that the Association is a “nonprofit cooperative corporation.” When the Association’s articles were restated/revised in 1994 it continued to use Section 82 which is technically a non profit but also states we are not nor can we operate as an HOA. The MBPA is on file with the Nevada Secretary of State as a nonprofit corporation.
We have consulted with a licensed tax consultant and he has stated that regardless of exact filing status the Association is obligated to submit annual tax returns. We are in consultation with an attorney to understand the correct filing status as it reads in the articles of incorporations and Nevada code.
There is also duplication and conflict between the MBPA articles and those of the GID in areas of street maintenance and other issues, so for many reasons it is time for legal clarification of roles, responsibilities and status. Your board is actively working this item as a key priority.
Nevada Secretary of State corporate filing:
We were able to file this as soon as we found out it had not been filed on the due date of August 31st. Fortunately there was no penalty, but now it is complete and up-to-date. It was during this process that we discovered the MBPA is registered with the State of Nevada as a nonprofit corporation (once again, we still have an annual filing requirement for taxes).
Current cash position:
Since the lawsuits, the cash position of the Association has been severely compromised, which led to the elimination of some services in past years such as pine needle pickup and others. As we mentioned earlier, over the past 2 years over $60k has been spent in legal fees alone an additional $45-50K from donations. Our expenses that we can identify so far include insurance for the buoy field, dropping and pickup of buoy field, maintenance, 4th of July private patrols, umbrella insurance and legal fees. We do not have a complete accounting of outgoing expenses but hope to have a handle on that within the next 45 days.
Current cash position in each account are as follows: $4685.13 in the general account and $6393.18 in the buoy account. The monies in the buoy account are to be used for TRPA field permits for 2022, raising and lifting the buoy field, and insurance and Nevada State Lands fees. Of course, this amount will not cover all buoy expenses, but 2022 buoy fees should make up the difference. We are working on a formula to determine what the cost of rental buoys needs to be to cover all costs. When we have determined total costs, we will let everyone know. As to the general fund, if during the current appeal we lose the court’s awarding of attorney fees to the MBPA, we may have up to $25k that will be owed for legal counsel. When we request membership fees, therefore, it would be greatly appreciated if we could get all of the homeowners to contribute.
QuickBooks accounting software:
Currently we use QuickBooks and we have not invested in any online accounting resources. Barbara Proulx will look into how we can upgrade current software and make it more user friendly, compliant, and available for all Board members to view at any given time.
Bank account signatures updated:
All previous Board members were removed from all banking accounts. There were still members who have not served on the Board for years with signatory privileges. This has now been corrected and updated. In addition to two current Board members, we have authorized Liz Nelson Ledin to also have signatory rights, with several checks and balances in place.
The Board signed an agreement with Barbara Proulx prior to her attending her first meeting as a Board member, to remove the potential litigation placed on former Board members. This agreement alleviates/removes the need for legal action and settles the dispute owners may have and that violate TRPA rules. Barbara had made several (actually 45 written emails over two years) attempts to work with the prior Board to remove the trampoline which was permanently placed in the buoy field in front of her house. With no success and resistance by the Board to address her concerns, she began to pursue legal action against them. Since TRPA rules clearly state that all floats and or trampolines and other similar items must be removed nightly, we agreed that no trampolines or floats will be permitted within the line of sight to her home.
Buoy field/mutt mitts and garbage cans:
Thanks to Barbara Sourikoff for taking care of the mutt-mitts. As this task has now been transitioned, if anyone from the community is interested let us know.
Ron and Carol also finished out the season taking care of the dog mitt cans and beach trash cans. They ensured the clean-out of the bear boxes and mitt cans and locked them in the bear boxes. We sincerely appreciate all the efforts they have put in over the years. This task has also been transitioned over, and if anyone has interest in helping out, please let us know.
The buoy field was raised, and buoys washed of debris on Oct 18th. All are locked away and ready for next season. This year we employed a crew at a nominal cost and had it done in a few hours. Thanks, Scott, for organizing and completing that task.
General Improvement District:
The gates to the beach are now locked open for the off-season and all-weather access. These will return to closed around May 1, 2022.
Also, the GID has now published its own website (www.marlabaygid.com) and its responsibilities are as follows (it’s important to note that the GID revenue comes from Douglas County and not the homeowners of MBPA):
The general purposes for which the Marla Bay GID was formed under NRS Chapter 318 are for the making of certain improvements and maintenance of the:
A. Streets (crack sealing, utility maintenance, snow removal, street sweeping).
B. Storm drainage.
C. Lighting of streets.
E. Property maintenance of the three access points to the community beach.
F. Maintenance of the entrance island.
G. Maintenance of the two common areas on the east side of Pharris Lane.
H. Any other items deemed necessary for the common good of the property owners of Marla Bay.
Jeff Mains has assumed responsibility for the MBPA website and is in the process of going through the various tabs, community rosters and members. We want to make sure we have everyone listed so that in the event of timely communiques we are not leaving anyone out. Jeff is also ensuring material on the website be accurate and up-to-date. If anyone in the community would like to volunteer in any capacity to help Jeff, please let us know. We are only as strong as the members we have!
Future Board meetings:
As stated earlier, we have had two telephonic Board meetings since the previous Board resigned, but only one with the full complement of new board members. We want everyone to understand that we are following the articles of incorporation for how we conduct business, and for the Annual Meeting we are looking to send out proxies for Board votes as required by those articles. We wish to eliminate any confusion over quorums and ensure every member has a vote, whether they are present or not. We do not have another board meeting planned at this time as the Supreme Court ruling will very much direct the next business at hand.
We apologize for the length of this communication and appreciate your patience as we navigate under some difficult circumstances. We felt it was important to cover as many of the key topics as we could in this update and expect to send more communications soon.