Owners rightfully strongly object to your response to the petition for a special meeting submitted on September 27, 2005. Their objection is completely justified by law and reason. After all, their petition thoroughly conforms to both the letter and spirit of Harbour Square By-Laws concerning special meetings (see By-Laws 7, 8 and 9). Each and every purpose, object and action stated in their petition is completely lawful and reasonable and, as such, must be respected and complied with.
In contrast, the dismissive statements made in Harbour Square president Rebel’s letter to owners dated October 13, 2005 are completely baseless.
Mr. Rebel’s written assertions about the nature of petition items 3, 4 and 6 are badly advised and are patently false, as follows:
Re petition item 3: Contrary to Mr. Rebel’s allegation, this legitimate request for owners to have the opportunity to vote on proposed lobby redesign options – whenever lobby redesign is scheduled – is not “in the nature of By-Laws amendments.” The decision to refuse to include this item on the agenda of the October 26 special meeting because it addresses “the manner in which the Corporation shall be required to conduct its business” is an unlawful decision. Its alleged basis is absurd. Through the years, a plethora of suggestions to Harbour Square Owners, Inc., (on better communication and democratic process, for example) have addressed “the manner in which the Corporation shall be required to conduct its business,” and some of these suggestions have been accepted. In fact, each of the petition items, simply by providing for discussion and vote, themselves address how business will be conducted and three of these items have been accepted by the Harbour Square Board of Directors.
Re petition item 4: Again, as in the case of item 3, this request for a vote on giving owners the opportunity to influence, and vote on, all pending and future renovation work is eminently lawful, and, as shown in the discussion of item 3, above, the decision to refuse to include this item on the agenda of the aforementioned special meeting is unlawful. From contact with many owners, young and older, new and long-term, and from north and south buildings, my clients sense that an overwhelming majority of owners are dissatisfied with the way interior renovation was handled and are determined to exercise their right to vote on future lobby and other proposed significant renovation.
Re petition item 6: Mr. Rebel’s ill-advised refusal to include this item in the special meeting agenda is unlawful, and his allegation that this request to entertain any properly-made motion to preserve owners’ voting rights “is impermissibly vague,” is absurd. According to By-Law 7 a special meeting can be called for “any purpose or purposes” (unless specifically prohibited by statute or Certificate of Incorporation). Nothing in item 6 has been specifically prohibited – and it is obvious that a special meeting can be called to discuss voting rights or any other corporate issue.
Furthermore, as we have shown previously (you have seen our document titled PROOF OF OUR RIGHT TO CAST BINDING VOTES), and consistent with a D.C. Superior Court judge’s ruling, it is unlawful to prevent a proper quorum of owners from casting votes that are binding upon the board of directors. Therefore, the intent of the Harbour Square Board of Directors to do just that at the October 26 special meeting, expressed in the notice of that meeting, is an intent to violate the law.
In Mr. Rebel’s October 13 letter, he states “Members who believe themselves aggrieved by the Board’s decision may seek relief in the Delaware courts.” I respond to his gratuitous reference to legal action by informing you that, we consider legal action to be a last resort. But we also inform you that this message is to notify Harbour Square Owners, Inc. that, unless all of the items requested in their September 27 petition are included in the agenda of the special meeting of October 26 -- and on all notices of that meeting, mailed, otherwise delivered, or posted -- Harbour Square Owners, Inc. will be brought to court. Similarly, unless binding votes are permitted at the October 26 special meeting, Harbour Square Owners, Inc. will be brought to court.
We hope that this matter can be resolved out of court in an amicable manner. Unlike the Harbour Square Board of Directors, we have straightforwardly, openly and publicly stated, in writing, the legal basis of our position on this matter (see attachment below). We invite the board to meet with us, immediately, before October 26, to unearth and discuss the basis of the board’s position, and to settle this matter in accordance with law and for the benefit of the Harbour Square community.
PROOF OF OUR RIGHT TO CAST BINDING VOTES
Is a valid vote of the membership binding on the Board of Directors? This issue arose out of the board's decision to reject the membership's vote in 2004 to establish an Ombudsman Committee. Several of you were outraged that the board would have veto authority over a measure approved by membership, particularly when the measure was not unlawful in form, concept or execution. Upon reviewing Harbour Square’s organizing documents on this point, we see that the board cannot overrule a matter legitimately approved by the membership, and must execute and manage any measure adopted by membership, unless the measure is unlawful. Along with Robert’s Rules of Order, to which we are bound, here are the current provisions that support this position:
Certificate of Incorporation, Article FOURTH: b. – “A separate such ownership contract shall be issued for each unit in the project, shall constitute a single membership, and shall entitle the holder or holders thereof to one vote in the management of the affairs of the corporation.” So, it is crystal clear – it is not just members of the board, but it is the members of the overall corporation who are entitled to vote in the management of the corporation.
By-Law 11 -- When an appropriate quorum is present at any meeting, “the vote of a majority of the members present in person or represented by proxy shall decide any question brought before such meeting,” unless an “express provision” in law or our documents says otherwise. So, it is crystal clear that members have a right to vote to bind the corporation on any matter, not just on election of board members – and nowhere in law or our documents is there an “express provision” that takes away this right.
By-Law 13 – “Whenever the vote of members at a meeting is required or permitted by any provisions” of law or our documents “in connection with any corporate action,” the vote of members may be dispensed with, if all the members who would have been entitled to vote upon the action … shall consent in writing to such corporate action being taken.” So, again, it is made crystal clear that the members have a right to a binding vote on any corporate action. Unless each and every one of us owners, 100% of us – in writing – together overtly state otherwise, it is unlawful to take away from us our right to cast binding votes!
By-Law 18 – “The property and business of the corporation shall be managed by its board of directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not “ by law or our documents “directed or required to be exercised or done by the members.” So, it is crystal clear that the power of the board of directors is limited – the board may only take lawful actions, and it cannot infringe on the rights members have under the above article and By-Laws.
With regard to the references to “law” above, it is clear to us that not only Delaware law applies to Harbour Square, but that D.C. law applies as well. Article THIRD: h. of our Certificate of Incorporation states that our corporation operates under the laws of the State of Delaware or the laws of any other jurisdiction wherein the corporation does business. We have reviewed D.C. corporation law and the case law on D.C. housing cooperatives, and we find no law or decision that is contrary to the membership having the ability to direct the board on any issue. Further, we see no provision, rule or authority in either D.C. or Delaware law whereby the board of directors has the power to overrule the vote and authority of the membership to direct the affairs of the corporation, so long as the vote is done in accordance with the procedures established in the organizing documents. In a 1993 decision against the majority of Harbour Square board members, a D.C. Superior Court judge ruled in favor of the membership.
Through the years, we have been misled by those -- including our current corporation president, other members of our board, and current board-appointed committee chairpersons -- who have repeatedly claimed that our votes at meetings are only “advisory.” These people have been proven to be in error. It is crystal clear that membership votes have real meaning -- they are not empty “advisory” votes, they are binding.