LISECC ANNUAL MEETING PLEASE COME:

Your Board would like to encourage all our members to attend this meeting so we can understand your feelings and wishes. It is important that everyone has an opportunity to make their opinions known. The Board represents all the members and wishes to be fair to all but if we do not hear from you we can only act in the way we believe to be best for the community as a whole. If you can not attend please send your proxy to a member you trust. Your vote does count. Everyone should be heard, so whether you have constructive criticism or support our efforts please plan to attend. We look forward to seeing you all.

Scheduled for April 13, 2002 at 10 a.m. at the Clubhouse.
Registration at 9:30 a.m. Plan to attend or send in your proxy.

March 30, 2002

Board of Directors
Lummi Island Scenic Estates Community Club, Inc.
Attn: Bob Bowman, President

Re: Appointment of General Manager
Correspondence from Ms. Louise Weber

Dear Mr. Bowman: I have been asked to respond to the letter of March 17, 2002, from Ms. Louise Weber. The substance of that letter appears to be an assertion by Ms. Weber that the creation of the position of general manager and/or the appointment of Jackie Granger to fill that position is contrary to the Club's governing documents or Washington law.

Preliminarily, I would note that there are certain germane provisions of Chapter 24.03 RCW, the Washington Non-Profit Corporation Act, which controls the Club.

Among the general powers of a non-profit corporation is the right to conduct its affairs and to carry on its operations and in doing so it can elect or appoint officers or agents, and define their duties and fix their compensation (RCW 24.03.035).

While the Board of Directors is responsible for management of a non-profit corporation (RCW 24.03.095), by tradition and common understanding that role is a policy setting duty, rather than a management duty. The law contemplates that non-profit corporations will have employees and there are numerous references to employees in the Non-Profit Corporation Act. In particular, in defining the duties of a director, RCW 24.03.127, provides that a director shall be entitled to rely on information, opinions, reports and other matters provided to the directors by reliable and competent employees.

The Articles of Incorporation of the Club are generic. The Bylaws of the Club provide more specific information on the issues addressed by Ms. Weber.

Section 4.4.2.1 provides that the Club is to be controlled by the Board of Directors and goes on to say, without prejudice to such general powers, that the directors have additional specific powers.

Among those additional specific powers is the right to have employees, and proscribe powers and duties for them (4.4.2.2).

I would now like to address Ms. Weber's specific concerns. However, in doing so, it must be borne in mind that a specific provision of the Bylaws, or a part of a bylaw, cannot be taken out of context, but must be considered in the context of all of the governing documents, Washington statutes, and Washington common law.

Ms. Weber cites 3.2.3.1 for the proposition that the Club is to be managed by a Board of Trustees. Actually, what that section recites is that the "property in possession" of the Club shall be managed by the Board of Trustees. Disregarding Ms. Weber's misstatement, I have already stated above that the Club is, indeed, to be managed by the Board of Directors (Trustees). Section 3.2.3.1 does not mention a general manager, nor do I see other reference to general manager. However, I do not see that as significant, since the Club has and retains all authority not negated by the governing documents or prohibited by law. There is no such restriction.

Ms. Weber cites 4.4.1.1 as being violated. That is not true. As stated above, there is a difference between managing the affairs, and carrying out the management policies established by the board. No officer, nor any agent or employee of the corporation, may undertake any act or assume any power or responsibility beyond that granted by the Board of Directors, either inferentially through the office granted, or by specific delegation. The concept of a general manager is not inconsistent with management by the Board of Directors.

Ms. Weber cites violation of 4.4.1.3. That provision requires each director to be a member. As I understand it, Ms. Granger is not a director.

Ms. Weber next cites 4.4.1.4, with the same rationale for violation. I do not see how there is a violation of this provision since Ms. Granger is not a director.

Ms. Weber next cites 4.4.1.5 which names certain specific officers that are to be appointed or may be appointed. Neither the secretary nor the treasurer are required to be directors according to that bylaw. State law does not require that officers be either directors or members of the corporation. Additionally, that bylaw has nothing to do with the appointment of a general manager. The position of general manager is not an officer by definition. Accordingly, the failure to name an officer who is called the "general manager" in 4.4.1.5 does not detract from the Club's authority to appoint such an employee.

Ms. Weber next cites 4.4.1.9 with regard to the appointment of officers. Whether or not this provision of the Bylaws was strictly complied with by the board is not germane to the issue of the appointment of an employee designated as general manager.

Ms. Weber next cites 4.4.2.1. That provision does state that all powers are to be exercised by the board. However, as explained above, the exercise of power can be delegated to officers, agents and employees. Certainly, Ms. Weber would not suggest that all responsibilities of the Club be performed by members of the Board of Directors. First of all, it would be unusual if members of the Board of Directors had all of the necessary qualifications for the various responsibilities to be carried out. Secondly, it would not be reasonable to expect certain routine administrative tasks to be carried out by the directors. That has never been the way that the Club has conducted its affairs, having always had employees, and the designation of a general manager is not inconsistent with either the governing documents of the Club, Washington law, nor the past custom of the Club.

Ms. Weber next cites 4.4.2.3, which again states that the board is to "conduct, manage and control the affairs and business" of the Club. This provision is consistent with the foregoing comments, as is the rationale for allowing the board to appoint employees.

Ms. Weber next cites the duties of the president, Section 4.4.3.1, as being violated. That is not true. That provision requires the president to have "general supervision of the affairs" of the Club. Supervision of a duty is a far different proposition than actually performing the duty.

Ms. Weber next cites 4.4.3.4 as being violated because there is no Club treasurer. I do not understand this comment since it is my understanding that the Club does have a treasurer. However, whether or not the Club has a treasurer does not seem to be germane to the issues raised by Ms. Weber. Her expressed concern is that of the employment of the general manager. The logic of how a treasurer fits into this issue is not clear to me.

Ms. Weber addresses some other issues. The registered agent of the Club, or for any corporation, has no discretionary duties. The role of the registered agent is to be available for service of process, and to receive correspondence from the state. Being registered agent carries no power or authority. There is no provision of law that requires a corporation's secretary to be the registered agent. In fact, it is typical that the registered agent is a person who can be found in a specific office or location during normal business hours. I cannot think of a person more logical to act as registered agent for the Club.

As to the corporate seal, this has no significance. Corporations have not been required to have seals for many years. I do not even know whether the Club has a seal, nor do I think it's of any significance as to who may have custody of the seal.

The appointment of employees, and the delegation of duties is within the proper discretion of the Board of Directors acting in a representative capacity for the members of the Club. Whether Ms. Weber agrees with the decision of the board, or whether any other member agrees or disagrees with Ms. Weber, is best left to their own opinion. However, I can state as my unequivocal legal position that the appointment of a general manager, as such, to perform the duties delegated to it by the board, and under the supervision of the board, does not violate Section 4.4.2.8 and certainly does not constitute "bad faith, dishonesty or fraud."

Very truly yours,
Timothy W. Carpenter

TWC:jb