Castle Pines North Homeowners Association Number One

Election Review - Page 4-6

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both blank write-in spaces and checked both spaces. Nickless had no question that he had the ability and authority to cast the votes since he was the chief operating officer of Writer, and the casting of votes in homeowners’ association elections was, at best, an insignificant task in the operation of Writer’s business. Writer never had any corporate policy requiring a corporate resolution to cast the votes and one was not needed.

After completing the proxy, Nickless gave it to Derback with instructions that Wendy LeRolland or someone on her behalf would pick it up. When Derback was advised of this, she informed Nickless that she had already sent over the Horan proxy casting the Writer votes. Nickless informed her that he had promised these votes to LeRolland, and instructed her to inform Young that the first proxy was no good and that his proxy would be the one that counted. Being Chief Operating Officer, he had no doubt about his authority to do this. Derback then called Young and told Young that Horan’s proxy was being superseded by a proxy signed by Nickless casting Writer’s ballots for LeRolland, which would be delivered that night at the election. She also specifically advised Young to tear up and throw away the Horan proxy. Young is familiar with Derback’s voice, having worked with her on numerous occasions since she is the president of HOA No.2, knew of her position with Writer, and had no doubt in his mind of the authenticity of the instructions that he received. After receiving that phone call, Young made a notation on the Horan ballot “Superseded by the one signed by Dan Nickless of Writer Corp. per phone call Linda Derback”. However, he did not tear up the proxy as instructed. Young was under the good faith mistaken impression that he needed Writer’s votes to constitute a quorum of class B votes at the annual meeting. He was concerned that if he ripped up the first proxy and the second proxy did not show up at the meeting, the meeting would have to be postponed. Thus, he intended to take it to the meeting and replace it with the Nickless proxy when and if it showed up.

Late in the afternoon of the 23rd, Wendy LeRolland stopped by Writer and picked up the Nickless proxy. She took the proxy home and made a notation on it “26 = all Writer votes”. No other changes or alterations or additions were made to the proxy. Since she could not attend the election herself, having to take care of her two young children, she then gave the proxy to Shively. Shively took the Nickless proxy for the 13 Writer votes, together with 51 other proxies which he had obtained and went to the annual election. However, when he got to the election, he left 7 of the proxies in the glove compartment of his car and only took 44 individual proxies, together with the Writer proxy, to the meeting.

Prior to the start of the meeting, Young arrived at approximately the same time as Valiga. Walking up the pathway to the clubhouse, Young advised Valiga of the existence of the Nickless proxy and the fact that Writer would be voting for LeRolland. This was the first that any of the Board members became aware that there would be another candidate in the election. It is unclear as to whether any of the other Board members were also informed of this fact prior to the commencement of the meeting. Certain attendees recall Young saying something to the other Board members about the Nickless proxy. However, Young and the other board members cannot recall any such statements. In any event, whether the other Board members were informed or not has no relevance to what transpired.

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At the commencement of the annual meeting, Young gave all of the proxies which he had received, including the Horan proxy, to Sullivan, the head of the counting committee. At the time he gave the Horan proxy to Sullivan, he specifically told him he anticipated another Writer proxy, the Nickless one, appearing at the meeting and that if it did show up it was to supersede and be counted instead of the Horan proxy. Sullivan acknowledges that he clearly understood these instructions. After the commencement of the meeting, Valiga, who was presiding over the meeting as President, called for additional nominations from the floor as provided for in the By-laws of HOA #1. Shively rose and nominated LeRolland. This nomination was then seconded by Jackson. Shively then delivered to Sullivan the Nickless-Writer proxy, together with all the other proxies that had been collected for LeRolland, with the exception of the 7 which he had left in his car. Upon receipt of the Nickless-Writer proxy, Sullivan never considered counting the Horan proxy and he did not do so. He understood it was no longer valid. After receiving all of the proxies, the counting committee retired downstairs to tabulate the results.

During the tabulation process, two questions arose which required Sullivan to confer with either or both Butler and Young. The first issue involved a household that had cast two ballots in the election. Since both ballots were cast for the same nominees, it was determined to tabulate the vote just once. The second issue related to the Nickless proxy. Since Nickless had filled in LeRolland’s name in both of the blank write-in spaces, the question arose as to whether LeRolland should receive 26 or 13 votes per the Writer ballot. Young made the proper determination that only 13 votes should be tabulated and that was done. Aside from the foregoing, there was absolutely no confusion or misunderstanding with respect to the voting process or how Writer intended to vote or how its votes should be tabulated. After finishing tabulating the votes, Sullivan returned upstairs and announced the results of the election. They were: Barrow received 58 votes, LeRolland received 57 votes, and Valiga received 51 votes. Therefore Barrow and LeRolland were announced as the winners. There is an almost unanimous consensus by all interviewed that the Board was shocked by the outcome of the election.

After the results of the election were announced, it appears that Mike Frederick took over the running of the meeting. Barrow then made a short statement thanking Valiga for his efforts on behalf of the Association. The meeting subsequently adjourned. Prior to the adjournment of the meeting there was no protest or any other questioning of the election results. At the conclusion of the meeting, Valiga said goodbye and immediately left. Additionally, all other attendees at the meeting slowly filtered out with the exception of Young, and Board members Jeffery Maidenberg, Sondra Willis, Barrow, Fredericks and Butler. These individuals remained for a short discussion.
The mind set of certain participants in this discussion was, as set forth above, a state of shock. Many of the participants believed that Mullen, Schaap, Shively and Tkach (collectively “MSST”) were behind the whole matter and had been orchestrating the event for months. Certain of them believed that it was a concerted effort to get Valiga off of the Board. They were upset at the manner in which it had occurred.

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During the course of the discussion, Young advised the people present of the manner in which Writer had voted and the fact that there were two Writer proxies. However, that night Young did not show either of the proxies to any individuals present with the possible exception of Frederick. All Young did was tell them how he first received the Horan proxy and then was advised that the Nickless proxy would show up the night of the election and should be counted instead of the Horan one. It does not appear that any of the Board members present that night, except possibly Frederick, were aware of Young’s handwritten notation on the Horan proxy indicating it was no good because no one asked. More importantly, no one was aware of the oral instruction he had received from an individual whom he knew to be affiliated with Writer to destroy the Horan proxy prior to its being voted.

Upon learning of the existence of the two Writer proxies, the Board members present decided that they needed to do something about it. The decision was made to have someone contact the Association’s attorneys for purposes of determining the true intentions of Writer with respect to the election. The decision was then made to have either Maidenberg or Barrow contact the attorneys the next day. These were Board decisions, which all present agreed on. At least one Board member present at this discussion candidly admits that part of the motivation in looking into the vote was because of the belief that MSST were behind getting LeRolland elected. After this decision was made discussion ceased and all participants left. A day or two later Willis left on vacation and was not involved any further with any of the events that transpired.

The morning following the election, a number of events occurred. It is impossible to put them in their exact sequence. Maidenberg contacted Rich Johnston, one of the Association’s attorneys. Their discussion concerned the results of the annual election, questions involving cumulative voting and determination of who was authorized to cast ballots. Frederick contacted Horan at Writer. Frederick advised Horan that he could expect a request from the Association’s attorneys to clarify things. Additionally, Valiga called Geoie Writer. In the conversation, Valiga advised Geoie what had occurred the night before at the election and that he was no longer director. He thanked Geoie for Writer’s past efforts on behalf of the community and also wished him the best in the future. He also told Geoie that the Board was unhappy with the manner in which Writer had voted and that the “sentiment of the Board was against Writer”. In this conversation Geoie professed not to know anything about what had occurred and informed Valiga that he would find out what happened and call him back. Geoie then got in touch with Nickless and approximately one-half hour later, called Valiga back jointly on a conference call. In this call, Valiga expressed some dissatisfaction in the manner in which Writer chose to cast its vote and generally expressed his displeasure. However, there were no requests or other statements by Valiga asking Writer to do anything about the election. During this conversation Nickless explained to Valiga the reason why he cast Writer’s votes for LeRolland, specifically, he thought LeRolland was a good individual and a valued employee and wanted to show his support for him by giving him the votes, and at the same time believed that there was absolutely no possibility that he would ever win the election. He also expressed that it was not his intention to control the outcome of the election by the Writer votes.