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TDL: Judgment for sanctions granted, amended petition filed

Litigation continues in a civil case involving three members of the Terre Du Lac Board of Directors. 

The court has granted a motion for sanctions and an amended petition has been filed in the civil injunction case of Terre Du Lac Association Board Member Michael Tilley against fellow board members Gary Keithley and Cary Combs.

This case has been ongoing since April when Association Member Herman Reiser was granted a Temporary Restraining Order (TRO) temporarily barring Keithley and Combs from serving on the association board based on allegations of possible misconduct. Since the initial filings, it’s been determined by the court that Reiser didn’t meet the legal criteria to petition the injunction and Tilley, a member of the board who has legal standing to bring the petition, was added as the petitioning party in the case.

A hearing was held on Oct. 3, wherein the attorneys for both parties went back and forth asking questions of witnesses and making arguments for motions. A motion for sanctions entered on May 14, by Attorney Scott Reid, on behalf of Combs and Keithley was taken under advisement by Associate Circuit Judge Timothy Inman. The motion asked for the court to order that Combs and Keithley be compensated for costs and fees incurred in litigating what Reid described as a “fake scandal.”

Attorney Vonne Karraker, representing Tilley, argued that a motion for sanctions was premature as the case was still in procedural phase and has not yet been adjudicated, or ruled on.

On Oct. 15, a judgment for sanctions was granted by Judge Inman and states that on May 3, Tilley submitted an affidavit in order to obtain a Temporary Restraining Order (TRO) without prior notice.

In his sworn affidavit, Tilley stated that Combs and a third party appeared at the Terre Du Lac Association business office on or about April 29, and “locked themselves inside the room where financial records are kept.” Tilley further stated that Combs and the third party, while locked inside the room, refused to allow access to any other board member, association member, and a police officer.

The judgment states that Tilley admitted in a deposition that these statements were false.

Additionally stated in Tilley’s affidavit is that Combs and Keithley “may have been acting in concert to benefit themselves and/or the country club.” However, in his deposition, Tilley stated that the only benefit Combs or Keithley received was being allowed to continue to serve as uncompensated directors for the association.

Tilley stated that “upon information and belief,” [Association Board Members] Bob Brown, David Ruble, Keithley, and Combs, — referred to as “the Bloc” in the petitioner’s filings — used association money and resources, ahead of a March recall election, to draft and issue a letter to 3,000 voting members of the Terre Du Lac Association, urging them to keep Ruble, Brown, and Keithley in office. In his deposition, Tilley admitted he had no information that this in fact occurred, according to the judgment.

Also stated in the judgment is that, in an effort to create the appearance that other board members had resigned in disgrace, Tilley stated in his affidavit that “in the wake of increasingly hostile confrontations between association members and the Board of Directors concerning allegations of misconduct leveled primarily against the Bloc, Bob Brown resigned on or about March 2019; Ruble did the same on or about April 25, 2019.”

According to the judgment, Tilley failed to disclose that Brown resigned only after receiving a serious medical diagnosis. He also didn’t disclose that Ruble resigned only after his ex-wife received a serious medical diagnosis that severely limited her ability to care for her autistic daughter who requires extensive daily supervision and care and, as a result, prevents Ruble from having sufficient time to attend to the association’s business.

Reiser’s petition, filed on April 29, contained allegations similar to those set forth in Tilley’s petition. Judge Inman’s judgment for sanctions states that Reiser’s allegations are likewise untrue and misleading and that both petitioners intentionally misled and made false statements to the court in order to obtain a TRO without notice.

The judgment states that under Missouri Supreme Court Rule 92.02(b)(6), this case’s petitioners are presumed to have acted in bad faith and violated Rule 55.03(c), which in essence requires that a claim, defense, request, demand, objection, contention, or argument brought up in court is not presented or maintained for any improper purpose, is warranted by existing law, and the allegations and other factual contentions are supported by evidence.

Under Rule 92.02(b)(6), “If the Court finds that a party obtaining a temporary restraining order without notice did not have a reasonable basis to proceed without notice, the party shall be presumed to have acted in bad faith and to have violated Rule 55.03(c).”

The court’s judgment for sanctions awards the respondents $150 from the bond posted by the petitioners for issuance of the TROs issued on May 1, and on May 3.

An amended petition was filed on behalf of Tilley five days after the court entered its judgment for sanctions.

On Oct. 21, an amended petition was filed on behalf of Tilley against Keithley, Combs, the Terre Du Lac Property Owners’ Association Inc., and Terre Du Lac Inc. This amended petition was filed as a Nunc Pro Tunc petition meaning that the petition is filed to correct a past written error and ensure a proper ruling or judgment can be made by the court.

The new petition is similar to the original petition but includes greater detail and additional claims. Among the actions that the amended petition is seeking from the court is an order to remove Keithley and Combs from the association board, prohibit them from entering the association business office, and to restrain them from accessing association financial records. The 27-page petition outlines the basis for why the petitioners believe the court should grant the requested orders.

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The grounds for the requested judgment stated in the amended petition first include alleged impropriety in the recall election held on March 16.

A member-initiated recall election of Ruble, Brown, and Keithley was held in March and the petition claims that the election was marked by accusations of impropriety in violation of the association rules and regulations regarding ballot inspectors.

Also stated in the petition are claims of ill intentions regarding the termination of Association General Manager Lori Pope, alleged restriction of access to association financial records, as well as concerns of self-dealing among the named board members.

Stated in the petition is that Tilley reasonably believes that Brown, Ruble, Keithley, and Combs, may have been acting in concert to benefit themselves and/or the Terre Du Lac Country Club. Grounds for this belief is that all four men simultaneously held ownership interests and key leadership positions in the country club.

Ruble was association board president and the country club treasurer; Keithley is association treasurer and country club owner/member; Brown was association vice president and country club board member; and Combs is association secretary and country club president, owner/member.

Upon Tilley’s information and belief, according to the petition, the country club’s financial situation was “dire.”

The club had recently terminated employees to save money and was making interest-only payments on an outstanding million-dollar loan, according to the petition. Once Brown, Ruble, Keithley, and Combs gained the majority vote on the association board, an anonymous donation of $95,000 was made to the financially-distressed country club, which the club used to pay Combs to build a sky bar and lounge.

Questions surrounding the $95,000 donation were brought up in the Oct. 3 hearing. While on the witness stand, Reiser said that he had questioned where the $95,000 came from because association financial records were being withheld.

The petition also claims that Keithley breached his duty as board treasurer when he accepted the responsibility to act as treasurer of the association despite not owning a computer, not knowing how to use any software program related to association business, and knowing only the cash method of accounting, while having no experience whatsoever with the accrual system on which all association accounting is based.

It further states that upon his appointment to the position, Keithley immediately turned over his responsibilities to Ruble, thus creating an inherent conflict of interest that both Ruble and Keithley should have known to avoid.

It’s claimed that Keithley deliberately refused to learn how to use the association’s accounting software and accrual system in order to understand and perform the most basic and essential duties of treasurer and voted to fire Pope – the one person who was then responsible for, and wholly capable of, maintaining the association’s financial records that Keithley himself did not know how to maintain.

A conflict of interest is alleged to exist in regards to Combs, as owner of Terre Du Lac Inc., and his participation in board discussions and votes that directly affected his business.

The claim in the petition is that on April 18, 2018, Combs failed to immediately announce the existence of a conflict of interest, remained in the meeting, and actively participated in the board discussion that resulted in a majority vote, including a “yes” vote by Keithley, to forever exempt Combs from the association’s requirement to obtain a permit for future construction on real estate governed by the association.

Additional claims made in the petition state that Combs purchased unsellable lots in order to retain approval authority over amendments to association by-laws.

The Articles of Incorporation of Terre Du Lac Owners’ Association, Inc. state that all proposed amendments to association bylaws must be approved by the board of directors of the Big River Lakes Development Corporation, now Terre Du Lac Inc., prior to sending out a notice of a meeting. However, no such approval shall be required after 75% of all the lots in the land development have been sold.

On Dec. 12, 2018, Reiser attended a general membership meeting and advised the board that the 75% sales threshold had been met and that he sought enforcement of the 75% rule, according to the petition. Combs, allegedly spouting a stream of curses heard by Reiser and members of the audience, left the meeting before it was adjourned and on Dec. 31, 2018, and his company recorded “Plat 5D” containing 1,193 membership lots averaging 10 by 10 feet or less.

The petition seeks a judgment from the court declaring that the creation of additional, unsellable membership lots to put the developer below the 75% threshold is patently unfair and represents a devious attempt by Combs to deprive the association of its right to self-governance under the 75% rule.

The next court hearing in this case is a trial setting which is scheduled for Dec. 16 at 9 a.m.

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