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New TDL petition: "Developer should no longer have control as of 1992"

According to the newest petition filed on Monday by board member Mike Tilley's attorney, the developer should have had no control over the Terre Du Lac Association since 1992 when the 75 percent lots sold condition was met. 

Yet another motion was filed on Monday by Vonne Karraker in the ongoing legal battle in Terre Du Lac.

The first count of this newest motion alleges that the “developer,” now Cary Combs, should no longer had any say on amending the association’s bylaws as 75 percent of the original number of lots was sold as of July 17, 1992.

Karraker, attorney for board member Michael Tilley, filed this additional petition in conjunction with the previous petition that is pending before the court. The petition is against Garrett “Gary” Keithley, Cary Combs, the Terre Du Lac Property Owners Association, and Terre Du Lac, Inc.

In this petition, it is acknowledged that Big River Lakes Development Corporation (Big River) was re-organized as Terre Du Lac Association. The original articles of incorporation required Big River’s consent before any proposed amendment to the articles could be put to a vote of all association members.

According to the document filed, under Section 8.D. of the original articles, Big River was scheduled to automatically lose the right to pre-approve amendments to the bylaws at a certain point. As of Dec. 31, 1977 or after 75 percent of the lots in the development had been sold, consent to amend the articles was no longer to be required.

The association’s 1968 By-Laws, as amended in 1999, contain the same provision that all proposed amendments to these by-laws must be approved by the Board of Directors of Big River prior to sending out notice of a meeting. It states no such approval of the Board of Directors shall be required after Dec. 31, 1977 or after 75 percent of the lots in the development have been sold, whichever date occurs first.

The original Terre Du Lac subdivision contained 29 plats of 5,166 total lots, plus Plat 5A, containing “membership lots” (20 feet by 100 feet) for people who wanted boating and fishing rights in the community. These lots were too small for residential construction.

According to the petition, on July 17, 1992, then-Association President Donald Hanners sent written notice to the developer, James Kwon, advising him that sales records showed that the 75 percent rule had been met and that his consent was no longer needed to change the by-laws or articles of incorporation.

The petition states that on July 29, 1992, Hanners met with Kwon and in front of two witnesses, Kwon proceeded to hurl a stream of curses and personal insults at Hanners and also threw documents on the floor and stated that he would do as he chose.

About one month after this, Kwon recorded Plat 5B: a 3.65-acre lot subdivided into 624 membership lots with average dimensions of 10 feet by 20 feet. The creation of this plat, according to the petition, put Kwon back under the 75 percent sales threshold. In addition, since the creation of Plat 5B in 1992, none of the membership lots created have been sold.

In 2017, Kwon sold the title of developer to Cary Combs, who currently serves as the developer for the community.

On Dec. 12, 2018, Herman Reiser attended a general meeting of the membership and advised the board that the 75 percent sales threshold had been met, and that he was going to seek enforcement of the rule. Witnesses stated that at this time, Combs spouted a stream of curses and stormed out of the meeting.

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On Dec. 31, 2018, Combs recorded Plat 5D containing 1,193 membership lots averaging 10 by 10 feet. With the creation of nearly 1,200 additional, unsellable lots, Combs was again back under the 75-percent threshold, the petition alleges.

The petition states that the act of creating the additional, unsellable membership lots was done in "bad faith" for the purpose of avoiding the 75 percent rule and that the creation of these lots is patently unfair and represents a devious attempt by Combs to prevent the association their right to self-govern.

The petition asks the court to find that the creation of Plat 5B was only to avoid the 75 percent rule. In addition, the petition asks the court to order the creation of Plat 5B null and void as it breached the covenant of good faith with association members. The petition also asks the court to acknowledge that the creation of Plat 5D in 2018 was for the sole purpose of avoiding the 75 percent rule once again and that Plat 5D become null and void.

The petition further asks the court to order Combs to abide by the original Articles of Incorporation and By-Laws and order that the developer lost the right to pre-approve amendments on July 17, 1992 when written notice was given to the developer that the 75 percent rule had been met.

The second count of the petition states that Combs, or the developer, was involved in a conflict of interest by allowing himself to seek and obtain financial benefit from the association. The document alleges that over the course of the years, Combs obtained building permits without paying the associated fees for said permits.

The petition asks the court to make null and void any vote of the association since Combs acquired developer in 2017 that resulted in financial benefit or gain to Combs or the developer.

The third count of the petition asks the court to nullify a judgement entered to resolve a dispute between the association and the developer on Dec. 4, 1989. In this judgment, the developer was given a permanent seat on the board and allowed the lots obtained after Dec. 4, 1989, in the 75 percent rule.

The petition requests the court to nullify the judgment as it allowed for amendment of the Articles of Incorporation and By-Laws without a vote of the membership. The petition alleges that any agreement entered into by the board, even by a court judgment, is null and void unless it has been put to vote by association members.

The Daily Journal reached out to Combs for comment regarding the petition. Combs would not answer any specific questions but said that he and the other respondents look forward to having their day in court.

"I am confident that when the judge hears all of the information, we will prevail," Combs said Wednesday.

The matter is scheduled to appear before Associate Judge Timothy Inman for trial on July 26.

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Matt McFarland is a reporter for the Daily Journal. He can be reached at 573-518-3616.

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