To:   Luther Parker and All Other Individual “Board” Members

Re:   Presentment Of Demands To All Individual Board Members On Behalf Of GGRC

Date:   November 10, 2011

On behalf of, and representing, Gatlinburg Golf and Racquet Club, aka GGRC, I hereby demand the following from all individual board members of GGRC and Ridge Management, Ltd. (“RML”).

• That RML be immediately shut down to stop the hemorrhage from massive cash flow losses that are jeopardizing GGRC’s financial future.
• That the 2012 budgets reflect no activity for RML.
• That Joe Thomas be fired for cause as a result of ongoing massive losses caused by his management of RML and the inability of GGRC to pay his excessive and above market compensation.
• That the 2012 budgets reflect that all HOA monthly fees be cut by 50% as a result of no longer losing money from operating RML and no longer paying the above market compensation of Joe Thomas.
• That an insurance escrow account be established and funded in full accordance with the GGRC Master Deed, Article X, entitled “Insurance”, that provides in Section 3 that all owners are to pay a separate check for their pro rata share of the Common Expense for insurance so that it can be deposited into a separate trust account.
• That all discrimination against resident owners cease immediately.

The above points are more fully described below.

However, the bottom line:  If these demands are not immediately and fully implemented, we intend on pursuing an emergency request for the Judge in our case to place a court appointed receiver in charge of all aspects of Deer Ridge Mountain Resort and remove this board and Joe Thomas from any and all decision making.

If these demands are not met, we intend on presenting motions for this and other actions, during the scheduled December 9, 2011 hearing on our motion for partial summary judgment.

Immediately Shut Down RML And Fire Joe Thomas

You admitted in the August 2011 board minutes that RML lost over $58,000 for the first six months of  2011.  You admitted you were arbitrarily shifting approximately $16,000 in RML expenses to GGRC in order to “cook” the books and misrepresent the real cost of operating RML.

This admitted loss extrapolates to a nearly $120,000 admitted loss for RML each year.  By my calculations, the real loss with honest cost accounting is over $150,000 a year.  This represents over HALF of all HOA fees collected each year from all Deer Ridge owners.

As a consequence, by shutting down RML, our HOA would no longer have to pay these monies out to support RML and could cut all HOA fees in half – which is the best thing for ALL owners.

As you know from prior correspondence, I have successfully negotiated a rental management deal with Cobbly Nob Rentals.  They are bigger, more experienced, generate better results for owners in gross collections and is significantly less expensive than RML.  RML is, in fact, charging all Deer Ridge owners a rental management fee that is 43% higher than the Cobbly Nob Rental deal.

As a consequence, all owners are better off using Cobbly Nob Rentals than RML for two reasons:

1. They get to deposit that extra 43% in their own bank accounts
2. All owners save half of their annual HOA fees that are currently being squandered on supporting RML’s huge negative cash flow.

RML has always lost owners a lot of money.  By my calculations, over $1.3 million.  By Joe Thomas’ own accounting, even with improper cost accounting, RML lost GGRC home owners over $359,000 over a ten year period from 1995-2004.

Again, these are numbers from Joe Thomas showing at LEAST a $359,000 loss that was paid for out of the pockets of every Deer Ridge owner during this 10 year period.

Irrespective of the fact that I believe that RML is totally illegitimate according to our Master Deed and Bylaws, the above numbers show how incredibly stupid it is for GGRC to be in the motel business.

There are only massive losses and no upside potential for Deer Ridge owners.  And, with the deal that I successfully negotiated with Cobbly Nob Rentals, all owners who want to rent their unit now have a much more cost effective solution by a better, more established and successful company that let’s them keep 43% more money in their pockets.

• How can you all, as individual board members, even recommend that any owner waste 43% more of their money by using RML when there is a better alternative available to all owners who want to rent their unit at no cost and no risk to GGRC?
• How can you all, as individual board members, even recommend that RML be continued when it is clearly NOT in the best interests of GGRC and all owners when HALF of all HOA fees are going to feed the huge RML negative cash flow?
• How can you all, as individual board members, even recommend that RML be continued when you are wrongly charging at least 20 owners who do not use RML services – and still get charged pro rata for the massive cash flow loss of past years and even the first six months of 2011?

As a consequence, prudent management requires that RML be shut down immediately and certainly before the end of calendar year 2011 so that GGRC and all owners do not continue to hemorrhage massive losses from the bank account of GGRC and the pockets of all owners.

Every month of delay is costing GGRC nearly $10,000 right out of our bank account – and those funds are lost forever.  And, each month that goes by where more and more Deer Ridge owners give RML their 60 Day Termination Notice so they don’t have to pay the 43% higher fee – the negative cash flow for RML will skyrocket.

For every two dozen owners who are smart enough to change from RML to Cobbly Nob Rentals, RML will lose another $120,000 a year or more.

This would DOUBLE the current $10,000 a month negative cash flow to $20,000 a month – or nearly $250,000 a year LOSS from RML! 

As a result, any budget projections shown by Joe Thomas for RML for 2012 will be based on smoke and mirrors since he has no way of knowing how many of the 63 owners that started the summer with RML will stay with RML.  As I understand it, Cobbly Nob already has signed contracts or indications of intention from a DOZEN owners.

Are you going to DOUBLE everyone’s current assessment to cover this huge negative cash flow and keep us all in the motel business, no matter what?

What happens if or when three dozen or even four dozen owners are smart enough to keep that extra 43% in their pockets?

How much will you lose us between now and the inevitable end when you will have no choice but to shut down RML?

It is past time to shut down RML.  Shut it down!

On behalf of GGRC, I hereby demand that the individual board members vote during the November 11-12, 2011 budget board meeting to shut down RML before the end of 2011.  This presentment is to officially put each and every board member on notice that you are considered to be guilty of gross negligence and gross mismanagement by continuing to squander GGRC assets through your ongoing operation of RML.

As such, you may not be afforded any protection under the indemnification clauses of our Master Deed and Bylaws and may be held personally accountable for the repayment of these squandered funds.

Part of this shut down also includes firing Joe Thomas who is directly responsible for the abysmal results of RML for the past two decades.

GGRC does not need his services nor his exorbitant pay package that is significantly above market.  On behalf of GGRC, I hereby put all individual board members on notice that you are guilty of gross negligence and gross mismanagement by continuing to squander GGRC assets through your ongoing employment of Joe Thomas.

Cut ALL HOA Fees In Half

As the arithmetic shows, without RML and without the huge salary package of Joe Thomas, over half of our annual HOA fees could be cut so that ALL owners benefited from these reduced costs.

On behalf of GGRC, I hereby put all individual board members on notice that you are guilty of gross negligence and gross mismanagement by continuing to squander GGRC assets by overcharging all owners for their monthly and annual HOA fees and demand that the 2012 budget for GGRC properly reflect HOA fees that are HALF of the current amounts charged to ALL owners.

Insurance Escrow

It is clear that you all, as individual board members, have not established and maintained the required insurance escrow account that is mandated by the GGRC Master Deed.

To protect all owners, the Master Deed (see below) requires that all premiums are escrowed in a separate escrow account to ensure that the funds are available when the annual premium becomes due…and that the full amount of the premium is required to be totally escrowed at least 60 days prior to the due date of the annual insurance premium.

I am highly concerned that there has never been any attempt of any kind by Joe Thomas and the “board” for any owner to abide by this requirement since my purchase in 2005.

I am further concerned that all owners at Deer Ridge are not being afforded the economic protection provided by Article X Section 3 of the Master Deed. I believe there may not be any separate escrow account established and properly funded in accordance with Section 3 of Article X.

Since the annual insurance premium is substantive at approximately $50,000, my calculations show that approximately $5,000 should be escrowed each month so the amount of the account balance should be sufficient to pay the annual $50,000 sixty days prior to the due date as required by the Master Deed.

On behalf of GGRC, I hereby demand that the individual board members vote during the November 11-12, 2011 budget board meeting to form and fully fund this required insurance escrow before the end of November 2011.

This presentment is to officially put each and every board member on notice that you are considered to be guilty of gross negligence and gross mismanagement by continuing to jeopardize GGRC assets through your ongoing violation of the above insurance article of our Master Deed.

Likewise, as required by the above section, I hereby demand on behalf of GGRC that the 2012 budget and payment schedule required of each owner reflect that a separate payment be made by all owners that is properly written for direct deposit into this separate and dedicated insurance escrow account.

Discrimination Against Resident Owners

We believe that Joe Thomas and some, or all, “board members” have conspired to discriminate in both overt and subtle ways against resident owners and others who do not use the motel services of RML.

These include:

• Instructing and rewarding certain “guests” to intentionally make as much noise as possible in units directly above a resident owner’s unit.  We know as a fact that this has happened numerous times and intend on requiring current employees to provide their depositions and/or sworn interrogatories with regard to their knowledge and participation in said harassment as well as having our attorney contact those “guests” who were present during those times of intentional noise harassment.  We believe that neither employees or past guests will risk the consequences of perjury to protect known instigators of this activity.
• Limiting the use and contents of owner’s balconies and landings in ways that are clearly aimed at resident owner’s use as differentiated from balcony and walkway landing use and needs of tourists who only stay a few days.
• Limiting the use of the common area parking lot in ways that are clearly aimed at resident owner’s use as differentiated from parking lot use and needs of tourists who only stay a few days.
• Interfering with, or delaying, mail delivery.
• Attempting to control property sales to only those new owners who indicate a willingness to use the motel services of RML.
• Requiring resident owners to notify the office if they are going to be absent from their own unit for even one night.
• Interfering with the use of common areas by resident owners and their guests.
• Etc.

On behalf of GGRC, I hereby demand that the individual board members immediately take whatever steps are necessary to stop the ongoing harassment and attempted intimidation of all resident owners and to ensure that it never happens again.

Court Appointed Receiver To Take Over All Operations And Decisions Regarding GGRC, RML and Deer Ridge Mountain Resort

If the above demands are not met during the November 11-12, 2011 board meeting, we intend to file emergency motions with the Court during our scheduled hearing on December 9, 2011.

• The first will be to require that all monies be paid to the Court by GGRC that are supposed to be in a separate escrow account for the property insurance that equals approximately $50,000 a year.  Our Master Deed requires this separate escrow account to protect all owners.  Our “board” has chosen to ignore this part, and so many other parts, of our GGRC documents, with the result that they have put all owners at significant risk.  By requiring the funds to be paid into the Court, these monies can be protected.

• An emergency motion for the Court to appoint a receiver to take over all management and control of GGRC.  The “board” continues to keep our HOA in the money losing motel business.  According to their own board meeting meetings in August 2011, they were forced to admit that they lost over $58,000 of OUR money during just the first six months of 2011.  This is money that is gone forever from our GGRC reserves.  This amounts to almost $120,000 a year.  On top of this, they are trying to fool all owners by wrongly allocating an additional $16,000 a year in RML expenses by showing them to be GGRC expenses.  If all cost accounting were done properly, RML would be shown to lose over $150,000 a year – or more than HALF of our HOA fees that all owners pay to GGRC each month.  I successfully found a better management company for all owners who want to rent their unit.  RML charges 43% more than Cobbly Nob Rentals – so there is no need for RML by any owner.  Since the “board” is unwilling to shut down RML, and continues to mismanage and negligently operate GGRC, we will immediately seek that a court appointed receiver take over all operations – and remove all decision making from Joe Thomas and every member of the “board.”  If we don’t do this, GGRC is at significant risk of being forced into bankruptcy.

These are just two of the additional motions we intend to aggressively pursue in court on December 9th.

Additionally, if the “board” tries to implement ANY changes to the rules and regulations that are deemed to be discriminatory against resident owners, including new limitations regarding balcony use or the like, we will also document this ongoing and flagrant pattern of discrimination before the Court.

It is our strong belief that the Court will take into account the many ways that the current “board” is both blatantly ignoring the governing documents of Deer Ridge and GGRC and creating the financial peril that has resulted from the board’s continued operation of its motel business through RML.

As a consequence, we are confident that the Judge will agree with our motion that a court appointed receiver immediately take over ALL decision making for GGRC – including shutting down RML and making all books and records required by the Tennessee Horizontal Property Act available to ALL owners who want to see exactly what has been happening on this property for the past decade.

Updated Derivative Action Lawsuit

In addition, this document is presentment of these issues on behalf of GGRC to all individual board members.  It is our intention to incorporate these demands, including the discrimination against resident owners, in our updated derivative action lawsuit against Joe Thomas and each individual board member.

We expect this updated derivative action, showing at least SEVEN Deer Ridge owners as co-plaintiffs, to be filed with the Court in the very near term.

You Have Been Warned

Individual board members, you have been warned.  Govern yourselves accordingly as an individual who can be held individually liable for both gross mismanagement and gross negligence.

On behalf of GGRC,

Robert Goodman, Owner
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Legalese On

GENERAL DISCLAIMER FOR ALL PAGES AND POSTS AND EVERYTHING ELSE I DO OR SAY REGARDING DEER RIDGE AND ANY AND ALL RELATED PARTIES:

Note: This email, and the information on any and all other posts and pages by me about General Manager Joe Thomas, GGRC, RML and /or the Board of Directors and its members, or any related topics, are my personal opinions based on my ongoing investigation into the actions and inactions of the GGRC and RML Board of Directors and / or Joe Thomas, General Manager.

While I believe these allegations to be true based on my objective analysis, these opinions remain as only allegations until I, or others, prove things in court.

My goal is to offer all owners all the information and evidence that I have available so that everyone can reach their own conclusions.

Please note the obvious:

Everything I ever say or write in person, via emails, or on my blog, about Deer Ridge or any and all related entities and organizations or any and all affiliated personnel or owners, is strictly my own personal opinion of course – based, in part, from my owning a unit at Deer Ridge for over five years – and on my own personal history.

That history includes earning a Presidential MBA degree, being awarded a Bachelor of Science, With Honors, in Engineering Physics from UT, working for NASA as a rocket scientist at Marshall Space Flight Center, 30 years of CEO experience directly employing and managing many hundreds of people at multiple companies I personally started and operated (including one that I took public), 15 years experience buying and selling over $100 million of property and managing more than 45,000 rental units – AND being able to read and do four-function arithmetic.

Legalese – And Powered Wig – Off