🎄 The Christmas Party and ⚖️ Legal Update XI

🎄 The Club’s Christmas Party

Before we relate substantial news about the remaining lawsuits, we feel now would be most timely to follow up on a portion of our prior report about the Club’s November meeting. In part of that November 25, 2020 newsletter, we covered the Club leadership’s commitment to hold a Christmas party in the face of well-founded guidance against having such gatherings at this time. In spite of this guidance from both the State of Florida and the CDC, the Club’s President spent $250 to reserve a venue and then signed a contract that financially guaranteed that at least 25 members would pay $35 to attend (committing up to $875 of the Club’s treasury). The President seemed oblivious to the notion that some members, if not a majority, might forego this kind of close-quarters social gathering, and also didn’t connect the dots that only six members had signed up to attend. In the end, only 17 people attended, eight short of the 25 Gilhooly guaranteed, a predictable outcome. There was ample reason to anticipate very low participation, which makes the decision to forge ahead even more painful. We think the membership would have understood if the Christmas party wasn’t going to work this year. Maybe the restaurant let the Club off the financial hook. But if not, there’s another $280 of membership dues money spent with nothing to show for it, just the latest in a long line of bad business decisions.

⚖️ Legal Update XI: One Lawsuit Closed, One Just Beginning, One Having No End in Sight

As we mentioned in our last newsletter, the Membership Fee refund lawsuit filed on July 16, 2020 by Lloyd and Graham Hill was nearing conclusion, and now does seem to be over as of December 9, 2020. At the same time, another Membership Fee refund lawsuit is underway, filed on October 19, 2020 by Steven and Michael Borer. Of course, the lawsuit brought by the Club against former Treasurer Carl Kennedy, filed eight months ago on April 7, 2020, continues to bounce along with over 100 individual documents filed in the case. This newsletter is our best effort to keep recipients appraised of these issues with the most current information we have.

Hills vs Pompano Senior Squadron Flying Club, Inc.

On Wednesday, December 9, 2020, the Clerk of the Court filed the Agreed Order of Dismissal With Prejudice, an order signed by Broward County Court Judge Louis H. Schiff on December 7, 2020. As we previously explained, once signed, this Order would codify the Settlement Agreement found on pages 4-5 of the Hills’ Motion to Dismiss With Prejudice, thus putting an end to this case.

The Settlement Agreement incorporates, by reference, a “Confidential Statement.” The Hills received permission from the Judge to file the Confidential Statement under seal. With that permission of the Court, the Hills did file the Confidential Statement under seal, and so the Confidential Statement is not available to the public.

Borers vs. Pompano Senior Squadron Flying Club, Inc.

We introduced this case in our last newsletter. As previously mentioned, on Monday, December 7, 2020, the Borers filed a Motion to Amend a few administrative details that appear to be aimed at improving case efficiency. The Borers want to remove both Michael Borer (father of former Club member Steven Borer) and Gregory Gilhooly (Club President) as named parties, as well as use the proper legal name for the Club in future filings. Again, we have a hard time believing the Club has legitimate cause to object. Still… you just never know…

There have been two new additions to the docket since then.

  • A “Mediation Report” filed at 11:10:00 AM on December 8, 2020: This is a form reporting the fact that mediation occurred during the Pretrial Conference on December 4, 2020, but that no agreement was reached. We have seen no explanation as to why it took four days for the Clerk to make this Report available in the docket.
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  • A “Disposition Order on Pretrial Conference” posted at 4:48:00 PM on December 10, 2020: This is another document from the Court that was inexplicably inserted into the case docket as if it had been filed according to the “time stamp” on the document (3:01:00 PM on December 4, 2020). The only “new information” in this document is the hand-written notation “Set for trial.” However, there is nothing in the document that establishes the Judge’s Order for key details such as trial date, time and duration, Zoom address, evidence disclosure, witness identification and subpoena requirements, or the rights and obligations of parties and counsel to each other and the Court. We presume more information from the Court is forthcoming.

Pompano Senior Squadron Flying Club, Inc. vs. Carl L. Kennedy, II

In our last newsletter, we provided an update on the two December 7th filings from Mr. Kennedy we could see in the public docket. Unfortunately, the Broward County Court docket system has not been very timely lately, so two other filings from Mr. Kennedy were not made public until the next day, December 8th, even though they were apparently submitted by Mr. Kennedy several minutes before the other two filings. We see little need to restate our summary of the two timely filings in this newsletter, but we will provide a summary of the unreported two filings: Kennedy’s Amended Answer and Affirmative Defenses to Plaintiff’s Complaint and Kennedy’s Amended Counter-Complaint. Additionally, on December 10, 2020, the Club filed two documents related to a previously-scheduled (for December 9, 2020) deposition they are seeking from Wendy Hausmann, a lawyer friend of Mr. Kennedy’s, postponing that deposition until January 13, 2021. Finally, on December 11, 2020, Mr. Kennedy filed a Motion for Contempt against the Club for failing to meet a discovery deadline.

In Mr. Kennedy’s Amended Answers and Affirmative Defenses to Plaintiff’s Complaint, he gave “Answers” to 29 statements or allegations made by the Club in their Complaint, filed April 7, 2020. Mr. Kennedy’s filing also included a series of ten “Affirmative Defenses,” summarizing the themes Mr. Kennedy’s reserved to use during defense at trial. An “Answers” filing is a formality required that is typically very short of substance, but is still a requirement for normal case administration under Florida Rules.

Kennedy’s Amended Answers

Below is a summary of Mr. Kennedy’s Answers. Mr. Kennedy’s filing only gives the answer to the numbered allegation, not the substance of the allegation itself. For ease of comprehension, we have paraphrased the Club’s allegation and Kennedy’s answer. Mr. Kennedy:

  1. Admitted the Club is a Florida corporation in Broward County, that he is over the age of 18, a prior director and officer of the Club from April 1, 2014, until the beginning of 2020, and at all times relevant to the complaint, was Club Treasurer, but that he is a resident of Palm Beach County (not Broward, as the Club claimed).
     
  2. Admitted he made payments from the Club’s bank account to pay for Club expenses and financial obligations that had been charged to his personal American Express credit card.
     
  3. Denied, and demanded strict proof of the allegations that, (1) just prior to when he was “replaced” as Club Treasurer, he issued Club checks to Wendy Hausmann, Esq., and others, and (2) that there are no records “evidencing authorization for these payments made by Kennedy to himself, Attorney Hausmann and others.”
     
  4. Admitted that, on or about March 23, 2020, he received the March 19, 2020 “Record Demand” letter, that the letter spoke for itself, but denied the Club’s characterization of the letter’s contents.
     
  5. Denied that (1) he failed/refused to deliver Club records to the Club, denied that (2) the Club agreed, for “a reasonable fee” to retain services of Edward F. Holodak, P.A, and denied that (3) all conditions precedent to initiating the lawsuit had been satisfied or waived, demanding strict proof supporting these allegations.
     
  6. Incorporated the preceding answers in response to the Club’s re-allegation of its preceding allegations.
     
  7. Admitted the Court has jurisdiction over the parties and the subject matter herein.
     
  8. Denied that (1) as a prior director and officer, he had been in a fiduciary relationship to the Club, denied that (2) “scarcity of records left behind by” Kennedy prevented the Club from “accurately [reconstructing] its financial status and records,” denied that (3) the Club could not “reasonably ascertain” whether various payments were for valid expenses, denied that (4) the Club had “no adequate remedy at law, and denied that (5) he breached his duty to the Club by (a) “failing to keep proper records,” (b) failing to give his records to the Club after he left office, (c) misappropriated Club funds, and (d) used Club funds to make payments on his personal American Express card. Kennedy demanded “strict proof” of the Club’s allegations.
     
  9. Again incorporated the preceding answers in response to the Club’s re-allegation of its preceding allegations.
     
  10. Admitted the Court has jurisdiction and that Kennedy, as prior Treasurer, had control of some Club financial records.
     
  11. Denied that (1) Kennedy failed/refused to return Club records, (2) after leaving office, Kennedy had no legal right to retain Club records, (3) the Club needs the records to “legally and effectively continue its operations,” (4) the Club is “suffering irreparable harm” because it cannot adequately operate, account for past transactions, and “know the actions of the prior Board of Directors,” and (5) the Club has no adequate remedy at law.”
     
  12. Stated that the Club’s statements with regard to Florida law were legal conclusions that did not require admission or denial.
     
  13. Denied that the law requires the Club is to maintain records in Kennedy’s possession but belong to the Club.

Kennedy’s Affirmative Defenses

Much like an “Answers” filing, the filing of “Affirmative Defenses” described within Florida Rules and presumably represents the universe of defensive themes upon which Kennedy may want to rely upon during trial. In Mr. Kennedy’s Amended Answers and Affirmative Defenses to Plaintiff’s Complaint, he included a series of ten “Affirmative Defenses” which are summarized as follows:

  1. Failure to state a cause of action or claim for which relief can be granted: Kennedy said the Club failed to identify a period of time for requested accounting and that the Club should be required to state a time and a “more definite statement” and articulation of the accounting the Club seeks. Finally, Kennedy said the Club failed to plead damages or specific harm in connection with the allegations.
     
  2. Statute of Limitations: Any claims falling outside the Statute of Limitations should be barred.
     
  3. Unjust Enrichment: The Club directly benefitted from actions Kennedy took (or did not take) because bills would not have been paid and airplanes would not have been able to fly. After Kennedy’s term, the Club continued to pay other expenses, but has refused to reimburse him for expenses he paid. Kennedy said the Club should not enjoy the benefit of continued operations while not paying for the expenses of that operation. Kennedy claimed the Club’s income and assets “significantly increased as a direct result” of his tenure as Club Treasurer and that the Club and its shareholders continue to enjoy the benefits of the results of his service in spite of the fact the Club’s Board of Directors complains otherwise.
     
  4. Waiver: The Club waived any claim regarding Kennedy’s actions as Treasurer because the Club’s Board of Directors never complained or voiced concerns about the allegations in the Club’s Complaint.
     
  5. Frustration of Purpose: The Club failed/refused to provide Kennedy with information he had repeatedly requested in order to provide the accounting the Club seeks.
     
  6. Equitable Estoppel: The Club’s allegations regarding Kennedy’s performance as Treasurer are directly contradictory to the Club’s benefit and prior approval of his actions or inactions. In performing hisduties, Kennedy relied upon such prior approval, so the Club should be barred from changing its position after such reliance by Kennedy.
     
  7. Ratification: The Club’s Board of Directors implicitly approved or consented to actions taken by Kennedy as Treasurer since all “conduct and actions not taken” had occurred with the Board’s full knowledge, and Kennedy justifiably relied upon their ratification of his actions or inactions. The Club should therefore be barred from its attempt to renege on such prior ratification.
     
  8. Failure to Mitigate Damages: The Club was satisfied with Kennedy’s performance as Treasurer. The Club had an affirmative obligation to mitigate, avoid, or reduce any condition it perceived to exist upon election the entire new slate of Board of Directors was in February, 2020. The Club actually continued to engage in the conduct it now complains about, including paying some expenses, but accumulating debt and interest due to Kennedy which has not been reimbursed.
     
  9. Unclean Hands: Since February 2020, the Club continues to engage in improper actions constituting corporate waste, mismanagement of shareholder funds, violations of the Club’s By-Laws and other governing documents, and violations of Florida Statutory laws, all of which require the Court to apply the doctrine of “unclean hands” (this defense doctrine would bar relief to the Club because they have engaged in “inequitable behavior” related to the same subject matter of the Club’s Complaint against Kennedy).
     
  10. Business Judgment Rule: Kennedy’s actions are protected by the Business Judgment Rule because they were taken (or not taken) in good faith, in the best interests of the Club and in accordance with Article III, Section 3 of the Club’s By-Laws, which state that the Treasurer “shall do and perform all duties appertaining to the office of Treasurer.”

Kennedy’s Amended Counter-Complaint

Kennedy’s Amended Counter-Complaint against the Club contains thirteen (13) numbered paragraphs of statements and/or allegations and five specific requests for remedy from the Court. The statements and requests for action are paraphrased below. Mr. Kennedy begins by saying that he is a current member/shareholder of the Club and represented that:

  1. He resides in Palm Beach County and is the former Treasurer/former member of the Board of Directors of the Club.
     
  2. The Club is and has been – at all relevant times – a not-for-profit social club under Florida Statutes §617, operating in Pompano Beach, Broward County, Florida. (Note: In paragraph 28 of the Club’s April 7, 2020 Complaint, the Club implicitly claimed that it was a for-profit corporation regulated by Florida Statutes §607, but this claim is not substantiated by any documentary evidence we have seen. Further, in paragraph 4 of an August 13, 2020 filing by Kennedy, he challenged this misrepresentation.).
     
  3. Kennedy remains a member of the Club and is current with all obligations.
     
  4. The Club’s new Board of Directors have taken inappropriate and illegal actions without authority, contrary to Florida law as well as the Club governing documents.
     
  5. The Club owes Kennedy $2,512.52 as reimbursement for Club expenses and financial obligations he paid with his personal American Express credit card per past practice. On August 15, 2020, Kennedy again requested such reimbursement including providing all relevant documentation to the Club’s Treasurer
     
  6. As a member and shareholder, the current Officers and Board of Directors have a fiduciary relationship toward Kennedy.
     
  7. The Club’s current Board of Directors is mismanaging funds, wasting corporate assets, and otherwise causing irreparable harm to the Club.
     
  8. The Club’s complaint against Kennedy is a “fishing expedition” based solely on a personal vendetta and is a waste of corporate funds in pursuing such frivolous Complaint. In fact, the members of the current Board of Directors, each initially provided (loaned to the Club) their own personal funds solely for the purpose of hiring a lawyer to sue Kennedy.
     
  9. In addition to pursuing Kennedy, the Club is also Defendant in two Small Claims lawsuits brought by former members for a total value of about $4,000 (Hills vs. Pompano Senior Squadron Flying Club and Borers vs. Pompano Beach Flying Club) and hired the same attorney to defend the Club as they hired to prosecute Kennedy. The legal fees being paid by the Club to defend these lawsuits most likely exceeds the total value of the amounts sought in the lawsuits. Therefore, the Club is mismanaging the Club’s funds by wasting corporate assets on excessive legal bills.
     
  10. Kennedy believes that prior to the election of the new slate of Board of Directors and Officers in February, 2020, the Club has never, in its fifty-year history, been a party to any lawsuit. (Note: Although it may be true there is no record the Club had ever sued a current member, or that former members had ever been forced to sue the club to recoup their Membership Fee, we found two cases in which the Club was a Defendant in the aftermath of a fatal crash of a Club aircraft in 2004). Now the Club is involved in three lawsuits and that is likely to increase with additional Small Claims lawsuits. The current management of the Club is running the Club into the ground financially.
     
  11. The Club has also neglected to make payments on loans Kennedy arranged for, or made to, the Club to purchase aircraft and increase Club assets now enjoyed and provided to all members. Kennedy personally paid on such loans to decrease the Club’s liability, since default on the loans could jeopardize the Club’s possession of these aircraft, irreparably harming the Club.
     
  12. The Club has vexatious litigation is contrary to the best interests of the Club.
     
  13. Kennedy’s reasonable fees and costs should be taxed against the Club.

RELIEF REQUESTED

  1. Reimbursement from the Club in the amount of $2,512.52 within ten (10) days of the Court’s final judgment.
     
  2. The Club Officers and Board of Directors should be enjoined from committing corporate waste by frivolously filing, pursuing or defending against lawsuits in connection with the Club.
     
  3. Reimbursement for Kennedy’s Club dues from March 2020 until the trial.
     
  4. Order the Club to bring current and honor all debts and other financial obligations, including any and all outstanding loans made to the Club.
     
  5. An award of Kennedy’s reasonable fees and costs in this matter.
     
  6. Order such other and further relief that this Court deems just and proper.

The Hausmann Deposition

Our last newsletter was sent the same day the Club had subpoenaed Kennedy’s lawyer friend to be deposed. We noted that the Club’s pursuit of Ms. Hausmann in this manner was troubling. It is certainly contrary to the bread crumbs the Judge repeatedly dropped in the Club’s officers’ laps during the motions hearing on November 17, 2020 where he acknowledged the Club could pursue their campaign against Ms. Hausmann, but it would be more expensive and time consuming than if they just rolled up their sleeves.

As it turned out, the deposition did not happen on December 4th. It is not clear when it was cancelled or why, but it has now been rescheduled for a month from now. The Club filed two documents related to the new date for the deposition, a subpoena to Ms. Hausmann to attend, and and a notice to the Court that the deposition has been re-scheduled.

We are concerned that this deposition is more of a political stunt and abuse of the judicial process to interfere with and intimidate those who might offer Mr. Kennedy legal advice than it is a legitimate attempt to pursue its case against Mr. Kennedy. Both Mr. Kennedy and Ms. Hausmann have already acknowledged all details of the loan from Ms. Hausmann to pay for Club expenses charged to Mr. Kennedy’s American Express card. As irregular as it may appear, it seems the issue has been fully explored and disclosed already, and we do not see what benefit the Club could possibly derive by continuing to mercilessly beat this issue into the ground.

Kennedy’s Motion for Contempt

On Friday, December 11, 2020, Kennedy filed a Motion for Contempt, to Compel, and for Sanctions against the Club. Kennedy accused the Club of failing to provide him with answers and documents in discovery as required by a Court Order issued on December 1, 2020 establishing December 10, 2020 as the new deadline. In the Motion, Kennedy recalled the history on the issue, including his prior agreement on deadline extension. Kennedy also argued that the Club has effectively waived objection to his requests because they deliberately failed to comply with the Order, that the Club is interfering with Kennedy’s ability to defend himself, impeding the truth, and withholding evidence that would exonerate him. Kennedy asked for an order of contempt, sanctions, and warning directed to the Club.

As you can see, one of these cases shows no sign of winding down, and all of them represent more of the same… dues money out the door to prosecute or defend against lawsuits precipitated by bad Club officer decisions or personal vendetta. Above all, these Club officer decisions reflect great discredit upon themselves and dishonor the Club as a whole, to include its members. The members are in ultimate control and need only to exercise their authority to put an immediate stop to all of this.

We will continue to update the litigation pages on this web site as we learn more, but please continue to let us hear from you at newsletter-feedback@pompanobeachflyingclub.info.