Berkeley co-op names committee to handle lawsuit

Two years after some of its directors were sued, the board of a Berkeley senior housing cooperative has delegated its conduct of the case to a litigation committee and has also terminated the services of its corporate attorney.

Berkeley, California, 13 March 2014

The board of directors of a Berkeley senior housing cooperative voted unanimously yesterday to create a litigation committee and entrust it with the management of the co-op’s position in a two-year-old lawsuit. The suit asks the court to award the co-op more than $200,000 in damages for wasted assets, to order that warnings of seismic risks be heeded, and to issue injunctions against alleged financial and procedural misconduct.

At a sparsely attended special meeting and with one director (a defendant in the suit) absent, directors of Berkeley Town House explained that, because two of the five directors are defendants and a third is married to a defendant, the board cannot act for the co-op with regard to the suit without suffering from conflicts of interest. The board named the other two directors to the committee and added one non-director, a new co-op member who had voiced ideas at a prior meeting about the budgetary implications of the litigation and had assumed leadership of one of the co-op’s social programs, a weekly video screening series. One director suggested it was healthy to have somebody with a fresh perspective join the committee.

Directors explained that the litigation committee would act for the co-op in its dealings with its attorneys about the suit, would give reports to the board of directors, would also report directly to the co-op membership, and would examine all of the billing records involving legal services to the co-op related to the litigation. Two members attending the meeting complained about the paucity of information shared by the co-op with its members about the suit and asked whether this would change. One director appointed to the committee said he hoped the flow of information would indeed improve, noting that when there is no prompt and detailed information inaccurate rumors tend to fill the void.

At the meeting president Almalee Henderson also announced that the board had terminated the services of corporate counsel Stephanie J. Hayes. At the previous board meeting, the co-op treasurer had estimated that the co-op had paid Hayes about $120,000 for services related to the litigation. Papers filed in the suit claim that Hayes knowingly billed the co-op for unauthorized work and refused to try settling the claims in the case by mediation before the suit was filed in court. In a related dispute, Hayes threatened visitors with arrest if they tried to attend a meeting on civil liberties at the co-op. Hayes’s termination was disclosed only a few days after the co-op announced that another person figuring prominently in the litigation, community manager Christopher Stanley, was being replaced.

Henderson said that the board had entered into a contract with Walnut Creek attorney Zer Iyer. One attendee proposed that to address the members’ information deficit on legal matters the co-op invite Iyer to attend the annual membership meeting scheduled for late May, and this proposal seemed to meet with approval from the directors.

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