This is the original (now gone) web site:
If you are considering buying property in Ocean Shores, Washington, read this first.
It could save you a lot of heartache.
Extortion is a crime in which one person forces another person to do something against his will, generally to give up money or other property, by threat of violence, property damage, damage to the person’s reputation, or extreme financial hardship. Extortion involves the victim’s consent to the crime, but that consent is obtained illegally.
Under Creative Commons License: Attribution
This is how the club excludes anyone who entertains the thought of voluntary membership from seeking a position of the Board of Trustees. Because it is a “requirement”, it is, therefore, a qualification of office. Qualifications for office are described in the By-Laws and Articles of Incorporation. There is no mention of any oath.
My name is Robert Stermer-Cox and I want to explain and warn people interested in purchasing real estate in Ocean Shores, Washington. Be careful! Many of the lots in Ocean Shores are part of a extortion scheme called the Ocean Shores Community Club.
I call this club a extortion scheme because not all members are permitted to exercise their property rights as club members or be part of the governing process. The members who wish to change the membership in the club to voluntary are denied representation on the Board of Trustees and the right to elect someone who would represent them. This is not a club run by the members, but by the club’s attorney and a very small number of people. By denying members their rights and interfering with the election process, the Club is no longer a legal operation and is now nothing more than an extortion scheme to take money from members who don’t need, want, or use the club’s facilities.
This club, the product of the club’s attorney, Michael Valdez, is simply a social club (and cash cow for Mr. Valdez), offering no other services at all, and yet it has liens on member’s home to insure dues payments. This is a private club in an incorporated town that is not part of a homeowners or condominium association and because of that, is illegal under Washington State law. Only a questionable bankruptcy court proceeding insures it’s continuance. This club, via it’s attorney, can, will, and have foreclosed on some 200 properties for failure to pay dues.
I also blame the greedy real estate industry. We, like a great many others, were never told about the club having liens, in fact, our agent told us the property was “free and clear”. Our bank, USAA, also failed us. Their policy was not to make loans on properties with liens. Yet, they gave us a loan. Buying our first home we relied on and trusted the “professionals”. Big mistake.
How this situation can exist in a city in America is beyond belief. The extremes the club will go to protect itself is astounding. My writings on an other web site, saved three people from making the mistake of buying in Ocean Shores. I hope this site does as well.
Note: Unless otherwise credited, italics indicate quotes from the Ocean Shores Community Club, Inc.’s Second Amended Disclosure Statement; Second Amended Plan; Exhibits and Notices. I selected to display items from the Decree side by side with notes about the item. Reader comments will be made at the end of the article.
I also include articles and comments from other members that I have accumulated and a couple of new ones from the web.
The bankruptcy is where things get interesting and weird. In bankruptcies, finances are put back in shape, the company allowed to reorganize and move on. To start with, the club was not in financial stress when it filed; quite the opposite. So, this wasn’t about the club’s financial situation, it was about protecting the club’s income: it’s membership dues. Since the club is a private club, it has no other way of generating income, so the club’s objective with this court is find a way to keep the forced membership and get around Washington law. The club assumed that open membership would not provide the income it needed to maintain the club’s properties and that it would need to keep liens on members properties to insure survivability. That faulty assumption runs today.
I start below with a history of the clubs taken from the decree, then the benefits of the club.
V. DESCRIPTION AND HISTORY OF THE COMMUNITY CLUB, AND EVENTS LEADING TO THE BANKRUPTCY REORGANIZATION FILING
The Community Club is a private, Washington nonprofit corporation providing primarily recreational services and facilities to its members, who are owners of property at Ocean Shores. Although there are other entities serving the tourist industry within the confines of the City of Ocean Shores, the Community Club has no competitors(1). The Community Club depends upon payment of dues and assessments by its members, but is not dependent upon any customer or industry for its continued success.
The Community Club was organized as a Washington nonprofit corporation in April of 1960. Since that time, the Community Club has performed what it believes to be its only obligation to its members under its Articles of Incorporation and its Bylaws, as amended: it provided recreational services and facilities. According to the Articles of Incorporation and Bylaws and Membership Certificates, the Community Club is only obligated to provide recreational services and facilities to its members (2).
It should be noted, however, that at the time of incorporation, the City of Ocean Shores had not yet been incorporated. In addition, the original Articles of Incorporation empowered the Community Club to build and maintain roads and bridges, collect and dispose of garbage, to prevent and suppress fires, to provide police protection, to provide street lighting, provide weed and animal control, to regulate signs and billboards, to acquire and maintain water generation and distribution facilities, to acquire and maintain parks, playgrounds and a wide variety of other recreational facilities, and to do anything else necessary and incidental to the peace, health, comfort, safety, and/or general welfare of its members.
It is clear that pursuant to its original Articles of Incorporation, the Community Club had the power to perform all of the preceding functions. But, its Bylaws have since been amended to provide that the Community Club is only obligated to provide recreational facilities and services which brings its duties into conformance with its Membership Certificates. The original sales contracts and Membership Certificates provided that the Community Club was to provide recreational facilities and services, but did not provide that the Community Club was obligated to perform any of its other enumerated powers. (The Plan proposes Amended and Restated Articles of Incorporation and Bylaws, which make it clear that the primary obligation and purpose of the Community Club in the future will be to provide recreational facilities and services.)
In the late 1970s, a few property owners stopped paying dues. They believed that the Community Club was required to, and had failed to, provide certain of the services and functions set forth in its Articles of Incorporation and Bylaws. The primary desire of these persons has always been that they no longer wish to be members of the Community Club and they want the lien removed. As noted, the original Articles of Incorporation provide that an owner of property cannot withdraw from membership in the Community Club unless the owner sells the land, in which case the new buyer becomes the member.
In 1981, the Cottons filed a lawsuit in Grays Harbor Superior Court, which alleged, among other things, that the Cottons should no longer be obligated to pay the Community Club’s then $40.00 per year dues and that the Community Club should quiet title in the two lots owned by the Cottons. The Cottons made no claim for damages under any legal theory, nor did they seek payment of their fees and costs. In 1984, the Grays Harbor Superior Court held for the Cottons, quieted title in them and ruled that the Cottons were no longer required to pay dues(3).
Because this decision carried serious implications for the future of the Community Club beyond the small amount of dues the Cottons would no longer be required to pay, the Community Club appealed the decision to the Washington State Court of Appeals. Oral argument was not heard until December 1986 and a decision was not reached until December 1987 when the Court of Appeals, in an unpublished 2-1 decision, upheld the Grays Harbor County Superior Court decision. Judge Brown filed a vigorous 56-page dissent(4).
In January of 1988, on the strength of Judge Brown’s dissent, the Community Club moved for reconsideration of the Court of Appeals’ decision, in July of 1988, after the bankruptcy case was filed, the Court of Appeals ordered the Cottons to respond to the Community Club’s motion. On October 24,1988, the Court of Appeals denied the motion affirming its decision. This lawsuit has been stayed by the bankruptcy reorganization filing and no further action including an appeal to the Washington State Supreme Court can take place without further order of the Bankruptcy Court.
In 1984, a second lawsuit was filed in Grays Harbor County Superior Court by Martin Cunningham, and others as a class action. This lawsuit lay dormant while the plaintiffs waited for a decision in the Cotton case. Not long after the Court of Appeals affirmed the Cotton decision in December 1987, the named plaintiffs in the Cunningham case succeeded in certifying a class consisting of the current members of the Ocean Shores Lot Owner’s Association (“OSLOA”). There are between 297 and 313 members(5), approximately 22 of whom do not even own property at Ocean Shores. Three members of the class are Lifetime Members of the Community Club; eight members are covenanted members who have entered into legally binding covenants with the Community Club; an unknown number have been voluntarily paying dues to the Community Club, but joined the OSLOA because they seek to redress rights they believe have been infringed by the City of Ocean Shores; at least two are deceased and their personal representatives are not members of the class action. In addition, at least ten no longer own property in Ocean Shores. One has specifically requested he and his wife not be counted as members of the class action or the OSLOA.
In April of 1988, the Cunningham class action members moved to certify its class action to include all owners of property at Ocean Shores. Before the motion was to be heard in May 1988, the Community Club filed its petition for reorganization under Chapter 11 on May 13,1988.
The original Articles of Incorporation and the Bylaws provide that the only persons who are and can be members of the Community Club are the owners of lots in Ocean Shores. They further provide that no member may withdraw from membership except upon transfer of title to the real property to which the membership is appurtenant; a member need not be given a Certificate of Membership. In the Cotton case, however, the court found that membership In the Community Club and payment of dues were not a covenant running with the land or an equitable servitude for Carl and Medora Cotton, and that the Cottons were no longer obligated to pay dues to the Community Club and that the Community Club had to quiet title in their favor.
The counsel for the Ocean Shores Lot Owner’s Association (“OSLOA”), an entity that is not affiliated with the Community Club, believe that its members have a right to a legal determination of the validity of their membership in the Community Club. After the decision in the Cotton case, they began the Cunningham class action to determine the validity of their membership in the Community Club. (This action was stayed by the filing of the Community Club’s reorganization case.) They have sought to return to state court to have the current class of plaintiffs in the Cunningham class action determined as a final class or to have it expanded to include persons other than their membership. Counsel for the OSLOA believed the state court was the best place to make this determination. The Community Club believes that a return to state court, however, would mean that the validity of each and every owner’s membership claim would have to be individually tried. This would be expensive and time consuming(6).
The ultimate Issue is membership in the Community Club. The Community Club’s Plan affords all members and owners of property at Ocean Shores the right to make their own decision as to their membership in the Community Club. The Community Club has never sought to enforce the collection of dues through the actual foreclosure of its lien on any piece of property In Ocean Shores(7). The Community Club has insisted upon pay merit out of closing when a member transfers title to a lot or through letters from its attorneys advising that a foreclosure or collection action would be commenced If dues were not paid(8).(In the Cotton and Cunningham cases, one of the Community Club’s counterclaims was, however, to foreclose its lien.)
Prior to the bankruptcy filing, the Community Club’s Board of Trustees determined that the future of the Community Club should be left in the hands of Its members and that the best method to do so would be through a Plan of Reorganization to be submitted for the approval of its members(9).
If the Community Club Is able to confirm its Plan with at least 6,000(10) members, the people who remain members of the Community Club will have property that should be more readily saleable than the property of those owners who do not(11). While current owners of property may not want to use the Community Club’s facilities, their successors- in-interest very well might. Therefore, the Community Club’s plan will give owners of property and their successors-in-interest who wish to withdraw from the Community Club the ability to rejoin the Community Club. Any owner of property or successor-in-interest who rejoins the Community Club will be bound by the Community Club’s Amended and Restated Articles of Incorporation and its Amended and Restated Bylaws(12).
Observations on History
- At the time when the club filed for bankruptcy, there was probably no competition, except the Elks club for social. There were no city swimming pools or recreational facilities. All of these, however, were available 20 miles away in Aberdeen and Hoquiam. Additionally, Ocean Shores is a tourist town and the businesses are geared to tourism and not local residents. Residents must shop in Aberdeen 20 miles away for even some of the basic – like men’s underwear or shoes and much more. The local grocery store is expensive – both because of the location and clientele. The point is: people drive 20 miles to purchase just about everything, so why not recreation as well? Why forced people to pay for a local facility if they don’t want one?
- The club was obligated in the beginning, as described in the next paragraph. The club pretty much acted like a city government. That all stopped when Ocean Shores incorporated. Once the city incorporated, the club only provided recreational services and nothing more. Property owners now felt like they were paying for something no longer provided by the club, so the law suits to remove liens began with the Cottons.
- This sounds like the Cottons won because the club was no longer providing services. Partial true, but it also opened a can of worms for the club because under Washington law, the only organizations that can have membership enforced by lien are home OWNERS and condominium owners associations, but NOT PROPERTY associations. The Cotton case basically gutted the club’s ability to force membership and it’s sole source of income. More cases were filed and, eventually, the club filed for bankruptcy and once that started, ALL other cases on the state level came to a halt.
- The wording here, “vigorous 56-page”, is interesting, as if to make it more important than the other opinions. What’s more astounding is the club’s use of the dissenting opinion to as a reason to open a bankruptcy case. Don’t you just love the way lawyers create messes that only OTHER lawyers can get you out of? A cousin/lawyer of my wife’s remarked that 200 lawyers at the bottom of the ocean is a good start.
- This is one of the frustrating things about all this: it was all decided by the 300 property owners in Ocean Shores at the time this all started and since the bankruptcy, there has been no way for any member to change the forced membership policy. Because the club is controlled by a very few and they don’t do ANYTHING without making sure it’s ok with their attorney, it has become impossible for anyone who would like to change the way the club collects to seek or hold an elected position.
- The club has lost two cases and three appeals concerning membership and dues, of course they didn’t want it to go back to state court. Aside the expense and time, the club was well aware that under state law, they could not exist by forcing members to pay dues.
- This hasn’t been true ever since the bankruptcy and probably not before then. If the bank had purchased first position on the mortgage, then the banks would step in before foreclosure by the club and the club wouldn’t show as the one foreclosing. But after the bankruptcy, the court records tell a different story. There are over 200 foreclosure cases filed by the club since 1991. There is no arbitration or reduction. The club turns the delinquent member over to, guess who!, the club’s attorney, who then tacks on somewhere between three and 12 thousand dollars in fees – depending on the time line of history.
- There is no record that I could find of the club ever using this option.
- How magnanimous of them! Allowing the members to exercise their property rights! It turns out that the members could only exercise those rights ONCE, even though they are supposed to be able to change the club as described in the By-Laws, Articles of Incorporation, and Covenants at any time.
- Since property owners only get one vote (another control scheme), regardless of how many properties they own, this means that 6,000 property owners or half of the lots had to approve the scheme. That didn’t happen. And the club knew it wasn’t going to happen, so they came up with a scheme to insure their continuance: tacit approval.
- This is the first appearance of THE BIG LIE: membership in the club increases the value of the property. That was the first question the club’s attorney asked me during our first and last meeting: “Don’t you want to increase the value of your property?” To tell you the truth, I was a bit flustered because, logically, it doesn’t make sense to appose increasing the value of your property. After a brief moment, I responded with a negative answer. Why? A basic tenet about a piece of property is that an encumbered property is not as valuable as a similar unencumbered property, unless the purchaser perceives the encumbrance as a benefit. I’m sure there are those that consider the club a benefit, but to allow a recreational club to encumber your property with NO WAY to release it, doesn’t make sense to me at all. And, it seems, real estate appraisers feel the same: it isn’t even a factor, so it can’t possibly add value to ones property. All it does is to force one to sell his property to someone who understands the club and it’s ramifications. Agents admit, that if they are honest (and there are few of those in Ocean Shores) they lose about 1/3 of clients because of the club. That’s a big incentive not to mention or just lie about the club.
- Anyone who joins the club, CAN’T GET OUT. I can’t emphasize this enough: you can not resign at you’re will from the club without risking the loss of your home through foreclosure. Under this dubious extortion scheme, anyone who’s property is not in the club and joins the club, obligates that property forever (with this scheme).
ARTICLE III - Benefits of the Club
The purposes for which this corporation is formed are, and the powers of the corporation are as follows:
(a) To promote the collective and individual property and civic interests and rights of all persons, firms, and corporations owning property in Ocean Shores Estates as said property is shown on that certain map entitled Ocean, in all divisions and subdivisions, in the City of Ocean Shores, as per plats recorded, in Vols. 8 and 9 of Plats in the office of the Recorder of the County of Grays Harbor, State of Washington, and who are members of the corporation.
(b) To purchase or otherwise acquire, construct, improve, develop, repair, maintain, operate, care for, and dispose of public easements, parking areas, playgrounds, open spaces and recreational areas, tennis courts, beaches, boat landings, floats, piers, clubhouses, swimming pools and swimming areas, bathhouses, places of amusement, community buildings and in general, community facilities and ornamental features appropriate for the use, benefit, recreation and pleasure of its members and for the improvement and development of the Ocean Shores Estates.
(c) To cooperate with the owners of all vacant and unimproved lots and plots now existing or that hereafter shall exist in the Ocean Shores Estates in keeping them in good order and condition, and preventing them from becoming a nuisance and a detriment to the beauty of the Ocean Shores Estates and to the value of the improved property therein, and to take any action with reference to such vacant and unimproved lots and plots as may be necessary or desirable to keep them from becoming such a nuisance and detriment.
(d) To aid and cooperate with members of this corporation and all property owners in the Ocean Shores Estates in the enforcement of such conditions, covenants and restrictions on and appurtenant to their property as are now in existence, as well as any other conditions, covenants and restrictions as shall hereafter be approved by a majority vote of the members of the corporation, and to counsel with the Planning Commission and City Council of Ocean Shores having jurisdiction in relation to any zoning that may affect any portion of the subject property.
(e) In general, but in connection with the foregoing, to do any and all things necessary to promote the general welfare of the residents and owners of any portions of Ocean Shores Estates and their property interests therein, including the regulating and prohibiting of the erection, posting, pasting or displaying of billboards or signs on the property.
(f) To arrange social and recreational functions for its members.
(g) To fix. establish, levy and collect annually such charges and/ or assessments, as may be necessary, in the judgment of the board of trustees, to carry out any or all of the purposes for which this corporation is formed; to enforce liens, charges, restrictions, conditions and covenants existing upon and/or created for the benefit of any lots or tracts in Ocean Shores Estates and to which said lots or tracts may be subject, to the extent that the corporation has a legal right to enforce the same, and to pay all expenses incidental thereto; and to expend the moneys collected from assessments and charges and other sums received for the payment and discharge of costs, expenses and obligations incurred by the corporation in carrying out any or all of the purposes for which it is formed or operated.
(h) Generally, to do and perform any and all acts which may be either necessary or proper for or incidental to the exercise of any of the foregoing powers and such powers granted pursuant to the provisions ofCh. 24.03, Revised Code of Washington, and other laws of the State of Washington relating to nonprofit corporations.
(i) This corporation is organized and operated exclusively for the above-stated purposes, and for other nonprofit purposes, and no part of any net earnings shall inure to the benefit of any member, trustee or officer of the corporation.
[Note: In 1991, paragraph (c) was removed from the Articles of Incorporation and with it, the clubs obligation to keep up properties. In the end, the club is only obligated to maintain its properties and nothing more.]
The benefits of the club are described in Article III of the Articles of Incorporation from Exhibit 1, Page 94.
In order to provide value, the club had to have benefit to the members and that benefit had to be spelled out to the court.
Section labeled (a):
For my wife and me, this whole paragraph is a joke. If the club is so interested in my rights as a property owner, then why did they prevent me (and others) from seeking a position of the Board of Trustees, as is my right? Why did they fail to provide requested information about the operation of the club, as is my right? Why did they enjoin my wife and I from exercising my freedom of speech, my right to use the courts for redress, let alone prevent me from seeking office? At our first and only meeting with the club’s attorney, Mr. Valdez told us the club would “…fight to the death…” to protect the club. When we got home we found we both had the same thought: “Wow, that’s a bit extreme for a social club.” Turns out it’s not much of an understatement. For example, we found out the club had a dossier on us! Really? Hell of a way to promote my rights.
Section labeled (b):
This section give the club the right to buy property, supposedly for the benefit of the members.
Section labeled (c):
I don’t believe the club ever had any intention of following this obligation. The key is the word “cooperate”. It appears that the club is obligated to help property owners keep their lots up to standards. It could be interpreted that the club would then make sure lots where owners are vacant are “in good order and condition” in the absence of the owner to insure them from becoming “…a nuisance and detriment…” After all, is that what associations do? I believe this was included just to show some tangible asset to the court because within a three years it was taken out of the Articles of Incorporation, thus relieving the club of something that, if adhered to, would cost the club a fortune to execute. The club simply ignored this.
Section labeled (d):
This section is another farce. In it, the club has the right to enforce current conditions and any future conditions “…approved by the majority vote…” of the members. This also is stating the members have the right to change any covenant or restrictions. Members of the club are being denied the right to open elections by excluding segments of the membership from the election process. The author of this web site, for example.
Section labeled (e):
Yet another obligation that, in all the years we were there, was never enforced.
Section labeled (f):
This is the sole function of the club today.
Section labeled (g):
Most members don’t realize it, but the Board can change the rates anytime they feel like it and members can’t do anything about it except vote people out of office. But, again, there’s a catch, you have to be APPROVED by the Board, not the members before you can seek election. The Board can not only reject you for improper submission – like not signing an unauthorized loyalty oath – but if they even think you even think about changing the dues collection method, you will not be approved. That power to exclude someone from the Board for thinking something is not covered in the By-Laws or anywhere else.
Section labeled (h):
This section is a hoot. The club goes to federal court to avoid Washington state laws and then has the audacity claim the corporate power under state law! How ironic is that?
Section labeled (i):
This is common in non-profit corporations. However, Mr. Valdez’s firm benefits directly since they get ALL the club’s legal work AND they are on retainer AND they wouldn’t tell me how much the club paid in legal fees – even though I have a right to the information. If fact, any request I made for information about the operation of the club was forwarded to Mr. Valdez and I never got an answer to a single request. This is how they respect the rights of property owners who disagree with them.
If you place the cursor over the image below, you will be given some selections below.Ballot
Observations on the Ballot
If you remember from above, the club magnanimously decided to let the members determine the future of the club – a right they already had. So, they decided to hold a vote of the membership to determine how many wanted the club to continue the way it is. Fine. Just your standard, one owner, one vote election. So, 12,000 ballots were sent out.
Some 6,500 ballots were returned. By counting the number of properties in the club at the end of foreclosure, some 3,100 ballots were returned in favor of the club. That means 3,500 members of the club choose to resign – the majority. Well, that should have been the end of it; the members had spoken and the majority, said “no”. Except that’s not what happened.
If you have ever gotten a class action notice in the mail, describing some wrong some company had done, and that you will be part of that suit because you had some dealing with the company. You didn’t agree or disagree to anything, but because you didn’t return anything, they will just assume you are in the suit. You are NEVER obligated to anyone for anything at the end of the suit, financially or otherwise. This is called “tacit approval” when you don’t respond.
Now let me propose something: a mail-in election for the President of the United States where all votes not mailed back are counted for one party or the other. That way, in a close election, the outcome can easily be change by counting those ballots not returned of one or the other parties. One can not image the outrage that would sweep the country.
But that was exactly the situation in this case. Knowing that the election would be close and knowing that if they could count the ballots not returned for the club, the club would win. And that’s just what happened. As with the average Joe’s voting habits, almost half of the ballots were never returned, the club counted them on the win side, easily insuring a victory for the club. The club’s tacit approval counted all the ballots not returned for the club, thus destroying the “one man, one vote”. Just because you assume the owners of ballots not returned wanted to stay in the club, does not make your assumption the true.
In essence, then, as today, there was no valid election or vote.
What is unbelievable in all this is that the Honorable Robert W. Skidmore allowed this to happen. More than likely, he had his clerks deal with this and he just signed the papers. I have a hard time believing an intelligent juror would allow any business to encumber peoples’ homes for dues in a recreational club. It would be like Elks getting liens on their members homes for dues just because they’ve been around a long time. Evidently, no one from the court bothered to verify any of information present by the club, like the premise that membership in the club add value to property. NO WHERE does the club show any documentation to back up this claim.
On of the major points to the court was the right of property owners to encumber their property if they wished. If the members have the right to place liens on their properties, then isn’t the converse also true and the members have the right to remove those same liens?
The club is governed by three important documents: the Articles of Incorporation, the By-Laws, and the Covenants. All three documents contain procedures describing how they may be modified, by whom, and how many. If the club deliberately interferes with that process by preventing the ability of all club members to change those documents, the club is no longer operating legally. By excluding members from the election process for their thoughts and preventing them from exercising their rights under those documents, the club is using a power not defined in any of the documents. By denying the owners their rights and not allowing them any redress and to forcing those owners to continue paying dues is extortion: pay your dues or we take your house.
If the club is such a great deal, why do they have to have liens on owner’s properties to force them to pay dues?
If the club is such a great deal, why do they have to spend so much money on defending the club “…to the death…”?
If the club is such a great deal, why do they have to control the elections?
If the club is such a great deal, why do they have to silence the majority of members?
And who determines what is “…in the best interest of the corporation…”?
All these questions and many more began to plague us in 2001 when our first dues payment invoice arrived.
War on Freedom
From Alice, a club member:
Is a community club a nice addition to our city? Yes, and overwhelmingly we can all agree on that, with that out of the way, lets examine it’s principles, philosophy and the little gray cloud that hangs over the club and just won’t go away.
In the late 1980’s the club was sued and lost, the club claimed bankruptcy and went under bankruptcy reorganization and subsequently was allowed to adopt forced, i.e., mandatory membership in the club for all properties with the exception of those who were granted a one time opt out or life time memberships. With some skillfully written rules and By-Laws governing the bankruptcy re-organization the club could now force all property owners to join the club. Age, gender, disabilities, financial ability etc. do not enter into the equation, YOU ARE IN…To further insure that you are locked in to the club a 1st position lien, supported by a subrogation fee is placed on your property. Okay, the club says $10.00 to $15.00 dollars a month isn’t going to hurt anybody and besides a lot of people move here just because of the club, not for the ocean, lakes, canals. The club can now with full control of membership fees and without intervention build a so called non-profit organization with paid employees (no volunteers), own properties, additional swimming pools (out-door), hire a full time activities director, an attorney and maintain a board of trustees who are pledged to abide by the rules and philosophy for the protection of the club. This brief synopsis only gives you a peek at what the club principals say is necessary to keep the club afloat.
Now a small grass roots group of members that grew overnight came to question why the club could not be operated with voluntary membership, why liens against properties were necessary instead of conventional means of collection. Why couldn’t the club divest itself of costly outdoor swimming pools and parks and center it’s operations out of it’s main facility where over 99% of usage and activities take place. Why can’t volunteers be used when we have such a large base of very talented and knowledgeable people eager to volunteer, be used? Why can’t the club Café, be put out to bid to the local restaurant owners to operate? The club has kept their Café open when they have operated in the red for years. Why can’t a more equitable format be put in place to insure a fair election of board members regardless of opposing view points?
With these questions directed to the club came a response unlike anything resembling good judgment, common decency or the right of debate or respect for judicial process. The group of concerned citizens i.e., The C.A.F.E. Society (Citizens Against Forced Enrollment) with over 500 supporters to date were painted with a broad brush by the forced enrollment advocates as enemies of the club, as less than good people, dis-honorable in every aspect, with a “if you don’t like it move” approach. This attitude towards us and our questions and concerns goes to the very roots of the community club’s board of directors, employees and attorney and they are not reluctant about letting everyone know it.
Here’s is a brief picture of the community club meeting held on Saturday the 27th of March 2004. The gymnasium was packed with members, unlike last months meeting where the majority was made of C.A.F.E. advocates. This time the club had done it’s homework and the majority this time fell on the side of forced enrollment supporters. Before officially opening the meeting, Board President, Bill Heinlein, jokingly apologized for his conduct in the last months meeting in response to criticisms he had received as being rude and arrogant. (Several times throughout the meeting he joked at himself being described in this manner). He then proceeded to inform everyone that he had called the police department to have them on standby in the event of any outbreak. He also said any disruptions would not be tolerated and responsible persons would be escorted off the premises.
Following the call to order, normal business was conducted in accordance with the meeting agenda, with one exception. Before the agenda was allowed to be followed, Mr. Heinlein stood up and stated he was stopping the agenda from proceeding to ask the club attorney, Mr. Mike Valdez to take the podium. Mr. Valdez, rather than welcome both groups and set the stage for friendly exchanges, immediately developed an adversarial relationship with the two groups. He opened his remarks stating that the C.A.F.E. Society was a group whose sole purpose was to undermine the by-laws of the club and to bring the club down by advocating voluntary membership. He went on further to say that the C.A.F.E. Society has decided not to take us to court because they know they will lose. This was in response to one members article in the paper. He also stated that in lieu of going to court the C.A.F.E. Society was attempting to get members sympathetic to their cause, elected to the board so they could institute changes that “would not be in the best interest of the club”.
Therefore he proposed an amendment (loyalty oath) that requires that all applicants for positions on the board of trustees to sign and states that they will be required to support and abide by all by-laws, and for what the CLUB deemed is their best interest. In essence the club slammed the door on any candidate with opposing viewpoints to even be considered for a position on the board. He then submitted the amendment to the board of trustees for approval, which they did. One member asked, “isn’t this supposed to be open for discussion?” Board President said “no” its over. Not one member was allowed to speak. The motion was then made and approved without further discussion.
The meeting was then put back on track and the rest of the agenda was followed. The floor was then opened up for questions. The club had completed their mission in setting the stage for a heated and very adversarial exchange of views within the entire audience. To cover the rest of the meeting would take up pages, but here are a few highlights I asked Mr. Heinline and Mr. Valdez who owned the community club and who they answered to. Mr. Valdez said “no one” owns the club, it is simply a non-profit corporation. Mr. Heinline stated “I answer to my wife”. I then asked “aren’t you responsible to the membership, the dues paying members whose money supports the club? There was no response from either Mr. Heinlein or Mr. Valdez. Mr. Valdez at a later time told the audience there is nothing any one of us can do and they “the board” will not or cannot be held accountable for how they spend our money. In essence, “whatever the club wants, the club gets” the board votes (in closed meetings) on All decisions about how they spend our money. We as members are only allowed to vote for appointees to the board and even that is now controlled by the board. The club alone has the power to accept or deny applications by anyone wishing to run for the board. What ever happened to the democratic process?
Dick Mallon, a club member and C.A.F.E. supporter and prospective candidate for the board stated he had asked for the membership listing to mail out his campaign platform, and that under law he had a legal right to it. Mr. Heinlein responded by stating that Mr. Mallon did not have that right, but could not quote exactly what by-law or what section he was referring to. Mr. Mallon’s request quoted RCW 24.03.135, which the State of Washington has enacted to govern all non-profit organization or incorporations. Mr. Mallon was also told that he could not be accepted as a candidate because of his adversarial and opposing viewpoints that are not in the “best interest of the club”. Mr. Mallon then read his platform to the board. He endorsed surveying the membership, orderly meetings, no increase in dues, reduce expenditures in attorney fees, club newspaper, etc., He also supports needed capital improvements of the main clubhouse. He asked for improved administrative management of the club. How can items in his platform be adversarial to any of us who are paying for the club?
The C.A.F.E Mission Statement, does not call for the abolishment of the club. We are not out to destroy the club, but to make it more responsible and accountable to the members. I as a very patriotic person, Marine Corp veteran and civic minded person must repeat what I said to the board and those attending, that I was ashamed of the entire proceeding and actions that had taken place this day. To leave this community clubs actions, unchallenged, is giving them a free ticket to operate as usual and as they (the board) sees fit with less than a democratic agenda without a “majority rules” or any accounting to a fair judicial process.
I am so proud of the C.A.F.E. Society supporters who had the courage without malice or forethought to come forward and express their views and stand up for all that’s right. The C.A.F.E Society spent hundreds of hours into getting viewpoints from “both sides” Won’t you do your part and speak out? It’s your right!
In 2001, my wife’s retirement from the US Army was imminent and we decided to start looking for a home to purchase. Between the two of us, I was the only one who had “bought” a home. My agent was my father (working for Tommy Laird in Ashland, Oregon), so there was never any doubt about his honesty or that of the agency he worked for. I didn’t do anything; my father literally did everything except sign the papers for me and my wife at the time. My wife when this all started had never purchased a home. We trusted that our bank and our real estate agent would be honest. Between the bank’s policy of not making loans on encumbered properties and the assurances of a real estate agent that our selection was unencumbered, we purchased a home in Ocean Shores.
We had learned a few things about real estate, primarily that unencumbered properties are of greater value than encumbered properties – that’s why banks insist that liens be paid off before they make loans and why we don’t understand why they made a loan to us for an encumbered property. We also had learned that there are instances where you may have to pay for extras – like condo or home owners dues, so we avoided looking at places like that and, as I said, our agent in Ocean Shores said the property was “free and clear” – which it wasn’t. He did, however mention the club, but having no interest in anything like the club, we figured we could just drop out.
When the title insurance came, the only thing about the club was:
“Liability to assessments by Ocean Shores Community Club, as provided in instrument recorded October 30, 1989, under Auditor’s File No. 891030041.”
This innocuous statement says nothing about a lien and since we were in an incorporated city, it didn’t even dawn on us that a private club could have a lien on property for dues to a recreational club. We purchased our home in April of 2001 thinking the dues for the club would expire in a year and that would be the end of it.
Before I go any further, there are a lot of people that were mislead or lied to by real estate agents in Ocean Shores. The agents loose a third (according to our agent) of sales because of the club, many realtors simply wouldn’t mention or out and out lie about obligations to the club. Thus, many people like ourselves end up in the same situation. The majority of those have to “grin and bear it” because the expense of an individual lawsuit over a $144/year dues simply isn’t worth the trouble, but there were a many who tried to fight.
In April of 2002, we received our bill for the dues and we promptly filed it in the trash can. A few weeks later, we get this threatening letter informing us that if we don’t pay our dues, they can begin foreclosure and then they tacked on late fees and interest. No warning what so ever; they went directly to threats. So, we asked them to explain this and they club sent us to Mr. Michael Valdez.
Both Mr. Valdez and I served in Vietnam and using that fact, he immediately tried to schmooze with me. As someone who had just been threatened to have his home taken away from him for a recreational club bill, I was not in the mood. It was at that moment I knew we were dealing with a pettifogger (Originally: “ ) for this was not the time or place to reminisce about our war experiences. I cut him short and asked why we had to pay dues to a club that we didn’t want?
His response (beware of those who answer a question with a question) was: “Don’t you want to add value to your house?” The conversation went downhill from there – if it was ever up to start – and included the declaration that the club would “fight to the death” to keep the dues collection enforced with liens.
The first thing I did was to verify with three local real estate appraiser that the club does not add value and found it isn’t even considered. So much for that argument.
The next thing I did was to begin writing letters to the editor of the local newspaper and the one in Aberdeen, the nearest city of greater population. I soon found there were many like myself and by 2004 a bunch of us got together to try to do something about the club. The Citizens Against Forced Enrollment (or the Café Society) formed and someone who favored moving the club to a voluntary enrollment organization was found to run for the Board.
By this time, there was an adversarial attitude against the Café Society for its desire to change to voluntary membership. The folks that wanted to keep forced enrollment threw out all the excuses: that’s the way it is and you can’t change it; the dues are cheap; adds value to property; and the biggest excuse of them all: it would destroy the club. It might. But, isn’t that the prerogative of the members to decided and not the club’s attorney and a few members by themselves?
To the left is a report by Alice, one of the Society members, about the club meeting on March 27th, 2004 and shows the animosity towards the Society and the arrogance of the club’s attorney. It was at this meeting the “loyalty oath” was initiated without discussion or the approval of the members – a violation of the Articles of Incorporation and By-Laws.
Another thing to notice is the Society was not advocating disbanding the club, but the according to the club, we were and they would not allow someone to serve whom THEY believe would destroy the club (and the attorney’s ability to make money and force those who actually use the club to pay their own way instead of on the backs of other members). It is, however, easy to show this simply was not the case.
The club managed to make sure anyone favoring voluntary membership didn’t get elected and with the loyalty oath, that no one would.
2004, for me, was a turning point. Up until that time it had been a fight trying to change the club; after that time is was a battle for my property rights. I had been sold property encumbered by a corporation whose only purpose was to provide recreational activities and for which I was forced to pay – against Washington state laws. With the loyalty oath, that corporation had just taken away my right to seek office on the Board and told me to “get over it”. Coming from a military family, there was no way I was going to get over giving up the rights I (eight years service, including Vietnam), my wife (a career Army officer and Desert Storm Vet), and my father (a career Air Force officer and P-51 pilot in WWII) put our lives on the line to ensure for our fellow countrymen. This is how we’re repaid? So some sort of oligarchy led by some pettifogger can force others to pay dues without representation? Isn’t that why we had a revolution in this country: taxation without representation?
February 9, 2005
LETTER TO THE EDITOR
Subject: OCEAN SHORES COMMUNITY CLUB
Two significant events occurred in recent days with very little similarities between the two. The first event was the January 05 meeting of the Ocean Shores Community Club’s Board of Directors. The second event was the fledgling Democracy of Iraqi having their first election where voters could choose candidates of their own choice (and have their votes counted) so unlike OSCC’S June election when approximately 1000 votes were disqualified on the basis of some questionable legal advice of the Club’s Attorney. But getting back to the recent OSCC meeting, it was apparent the President of the Board was not going to allow any dissidents (malcontents) to formerly present their views. Then she made a startling announcement. Mr Valdez would no longer be in attendance at the Board Meetings. He would be only available for legal issues. What a come down for the once ubiquitous attorney now relegated as a voyeur in the OSCC cloak room. As the proceedings continued, Madam President suddenly asked for an adjournment thereby avoiding the Question and Answer which would have been part of their minutes. Obviously, they had learned from their previous experiences when the former President had been in command and things had got out of hand. The word now is mum’s the word – keep your mouth shut and do not incite the masses who are unaware of the ongoing lawsuit. OSCC is pulling in the sidewalks and pulling up the draw bridges. They are deathly afraid the bankruptcy bubble will burst and the OSCC membership will be liberated.Remember, a besieged fortress eventually falls.
In the meantime, it is the duty of the CAFE (Citizens Against Forced Enrollment) Society to keep everyone informed and this will happen by mass mailings in the near future to the 5000 dues paying members who have had very little representation under the present regime. The Ocean Observer, the official publication for the OSCC has made scant mention of the pending law suit. I wonder why? Instead we might see an announcement of a planned trip to the flea market at Copalis Beach. In all fairness to the OSCC, there are certain elements in the new Iraqi Democracy who are also attempting to disrupt the democratic movements as they progress forward whereas the OSCC seems to be going backwards with their ruthless disregard of the by-laws in eliminating the Question and Answer portion of the legal proceedings and suppressing any constructive criticism. These (the Board Members) are very frightened people who have been imbedded in their impregnable fortress so long with the thought it would never fall. But Falstaff and their fortress will collapse. It is inevitable. Justice will prevail regardless of the frivolous legal roadblocks created by their legal counsel…It is with fond hopes that the OSCC and Iraq will observe the niceties of democratic representation and all votes will be counted. At this point, I would have to give Iraq the edge even though there have been some difficulties. Fair and balanced, I still have high hopes for the Ocean Shores Community Club.
February 23, 2005
LETTER TO THE EDITOR
Subject: OCEAN SHORES COMMUNITY CLUB
I would like to add to Art M.’s article posted recently. The OSCC has done the unthinkable to it’s members. In the OSCC By-laws there are only two ways for a member to voice their opinion where that concern will be recorded in the OSCC minutes of the Board of Trustee meetings. One reference is to the annual June meeting and the other is order of business of the monthly board meetings. In both places the By-laws allow for discussion and questions during the meetings.
In early 2004, members were restricted to questions only and questions were restricted to 5 minutes. Later on this was changed to 2 minutes. Then at the clubs December 2004 meeting, no formal questions were allowed at all. We as members would be allowed to ask informal questions after the board meeting adjourned. This may not seem too bad, but what has happened now is that no discussions or questions would be a part of their legal minutes and there would be no formal recognition to member concerns.
Minutes of the OSCC board meetings have intentionally left out some member’s questions during their formal time almost every meeting in the year 2004 making their minutes inaccurate every time this was done. The board then approves the minutes as posted in the Ocean Observer. In the July 2004 meeting, there was a threatened suit against the OSCC because of the election process. In September 2004 that suit was officially filed and served on the club. One member, during the formal time, asked about the suit he had heard about and again the Ocean Observer failed to mention it; therefore, it did not get into their minutes, why? Are they hiding things from the membership?
The OSCC’s official newspaper, The Ocean Observer, does not print articles, which have an opposing viewpoint to what the Board of Trustees want you to hear. I thought we lived in America. Freedom of speech and expression is our first amendment. Art M. said something like “are they afraid their bubble is going to burst”? Why are they hiding or keeping so much from the membership? If they ever print the news of the suit, see if both viewpoints are printed.
Their last Ocean Observer paper said the trustees are supposed to represent the membership. Is this all (approx 7,700) members or just the few (approx 700) that use the club? How can the board serve the entire membership when they do not ask them what they like or want the club to do. What are the goals of the OSCC trustees? They serve us, but they do not answer to anyone. Weird!
Now the OSCC is going around town convincing our local merchants that this NON-PROFIT organization (which competes with local restaurants, 3 local newspapers and the city parks department) should give a 10% discount as long as the buyer shows the merchant an active OSCC membership card. About a year ago the manager of the OSCC threatened that they (the club) would boycott any merchant that posted a CAFÉ Society poster in their store. What’s next?
(Note: This is a guest opinion I wrote to the North Coast News.)
I recently met with the Ocean Shores Community Club’s manager and attorney to discuss the community club’s stranglehold of mandatory membership in the form of covenants, conditions, and restrictions (CCR’s) on more than half of the properties in Ocean Shores (brought about by the club’s 1989 bankruptcy).
I also spoke with real estate agents from two of the largest agencies in town. One agent declared that the CCR’s in Ocean Shores were “not important anymore”; the other said they “don’t mean anything”. Real estate agents will remain part of the problem until all of them start practicing FULL disclosure by not only touting the benefits of the club but also informing buyers that if they don’t pay club dues, the club can, will, and has foreclosed on lots/homes.
The other part is the club itself and the obfuscation of the truth and outright lies told by the club in order to keep the status quo. For example, both the manager and the attorney claimed that having to pay for the community club is tantamount to having to pay for the city library. The absurdity of this statement is mind-boggling. Our taxes which support the library, fire, police and all other government agencies are for the common good of the community – not just half of it. We also have the right to vote not to fund them (although no one in their right mind would do so). The key is the right to vote and the concept of the common good. With the community club, we don’t have the right to vote for voluntary membership (no dissent is allowed since dissent is not for the good of the club) nor is the club good for the whole community – it only effects some of the property owners in Ocean Shores.
In Section VIII of the 1989 bankruptcy decree, it takes the first three paragraphs to declare the club’s primary benefit is that the “…Club’s facilities and property enhances the value of a member’s property” (even the club’s attorney used this justification). Doubting the veracity of that statement, I called three property appraisers experienced in Ocean Shores. Not one of them stated that membership in the community club enhances or has any effect in their decision when determining the value of a piece of property. It’s not even a consideration. Somehow the club got the court to believe this lie and the club continues to foment this falsehood to justify its existence.
In 1989 the club mailed out ballots (that almost require an attorney to decipher) to all 12,000 property owners, of which only 6,500 were returned. Failure to return the ballot was deemed tacit approval – the propriety of which I questioned. The club’s attorney said that this was common practice and gave as an example the formation of class action lawsuits – no response meant you were part of the lawsuit. The problem with that (and other examples they gave) is that non-response in those cases do not obligate the non-respondent financially nor did the lack of a response expose them to possible financial loss (from foreclosure).
The club’s attorney claims that allowing voluntary membership would destroy the club. No, it only means that those who use the club would have to pay their fair share and he would lose his foreclosure cash cow. Suppose the club went to voluntary membership and 50% of the current members dropped out. Raising the remaining member’s fees by 100% you would offset the loss of revenue and the fees would still be $14 per month less than the adult member fees charged by the Grays Harbor YMCA! Saying the club can’t survive with voluntary membership is ridiculous.
There are only two ways to get out of this mess. First, the club allows dissent. However, to run for a board position one now has to sign a “loyalty oath” (McCarthyism at its best), thus voluntary membership will never be on any ballot nor brought to a vote. The only other way is for those who do use the club to come to their senses and realize how un-American, embarrassingly pathetic it is to expect others to subsidize their recreation and then take their property when they don’t.
March 27th, 2004 a date that will live in infamy. At least for the property owners of Ocean Shores. That’s the date when the club initiated its “loyalty oath” that prevented a majority of members from seeking a position on the Board of Trustees and negated their rights as property owners. All members are eligible for the Board and there is no qualification that excludes anyone for harboring thoughts considered contrary to the “best interests” of the club. It’s also the date when I started a more vigorous campaign to end this Ocean Shores nightmare.
I began a letter campaign to anyone and everyone I thought might be able to help. The first group I contacted was the ACLU and they told me the case wasn’t important enough to warrant any expense. I wrote the bankruptcy court and never heard anything back. I wrote state officials from the governor, to the Attorney General, and the Secretary of State. I wrote federal officials that might have some way of helping. All to no avail.
The State of Washington, like all other states, has laws governing the operations of corporations – which the club didn’t seem to mind violating. One would think that if our legislature passes laws, they would also provide some way for enforcing those laws. With the individual, a violation of the law means you go to court and/or jail. But, outside of expensive lawsuits, there is NO agency whatsoever that has any authority to enforce those laws for corporations. It takes a civil suit to get them to behave and civil suits aren’t cheap for folks on fixed or limited incomes. To fight the club in court would cost upward of $250,000 and all lawsuits filed so far have failed. The club knows this and uses it to its full advantage, as you will see, in June of 2012.
From 2004 to 2010, I continued to write articles, put up web sites and seek someway out. Because my wife and I travel a lot, I hadn’t considered running for the board. I changed that in 2010. I was disqualified because I wouldn’t sign the “loyalty oath”. Next year, we were on the road, but I tried again in 2012. And that’s were the really obnoxious part starts. Within a few days of my submission of my candidacy and BEFORE I was officially rejected again, my wife and I were served with the injunction at the left.
RCW 24.03.135 states that each corporation shall keep “A list of members, including names, addresses… The corporate records shall be open at any reasonable time to inspection by any member of more than three months standing…” The very first enjoinment goes against state law!
Since every agency I spoke with told me the ONLY way to fight the club is through a lawsuit, item two prevents me from doing just that!
Item three takes away my right of free speech and this is the one that irritates me the most. I didn’t willing serve our country for eight years, including a combat zone, just to give up my right to speak. This goes against my First Amendment rights and everything this country is about.
All documents governing the club can be amended; it’s written into state law, the club’s Articles of Incorporation, By-laws, and covenants. It is my right to do so.
All members in good standing are eligible for the Board. There are no other qualifications.
Then, to add insult to injury, Mr. Valdez threatens us with jail! Because I disagree with they way the run the club? Now “…to the death…” is a whole lot more believable. And of course, the last little jab about finding peace. What a bunch of insincere garbage.
THIS is how the club maintains control; the cost to fight this injunction would be upwards of $20,000! We are retired and living on a fixed income; there is no way we could afford $20,000 to fight this bogus injunction. Bogus because NO ONE INDIVIDUAL can change anything – even on the Board. So to deny me my right to seek office because I object to something the club is doing IS bogus. They basically stripped me of all my membership rights and more because I disagree with them.
At that point in time, my wife and I packed up, abandoned our home, and left Ocean Shores. By obligating me to pay for and then deny me my rights as a property owner is nothing less than extortion and we no longer felt obligated to invest a single penny more into that property; nor have we. Little did we realized that three years later, we’d STILL be hassling with this but from a completely different point of view.
In Washington, it’s less than a year after the first defaulted payment that all the waiting periods and restrictions of foreclosing a property are met and the bank (or in this case Ocwen loan servicing who took over from GMAC) can foreclose on the property. After the first year and GMAC hadn’t foreclosed and the real nightmare started.
After three years of uncountable agents (and explaining the situation to each and ever one), outright lies, rude employees and ineptness, we hope we have finally found someone who will help us (she also admitted that we had “…been run around in circles…”). It seems that neither GMAC or Ocwen had filed the mortgage papers for the last loan (yes, they kept making loans knowing of the lien) and this last agent said they may want us to sign the loan papers again. To which I responded: “Fat chance that will ever happen.” She also said it may take a year to get the paperwork done! It actually took more than two years. But, hey, it’s over and done with.
We do have one thing that makes this all worth it. When you stop and think about it, why would a recreational club go so far as to sue us, get a court issue a injunction against us, and try to silence us? There is only one answer:
They know we are right.