Bay Creek Lawsuit Settlement Terms Questioned

Click above to read the Notice of Settlement sent to Bay Creek property owners.

Click above to read the Notice of Settlement sent to Bay Creek property owners.

Cape Charles Wave

January 7, 2014

Bay Creek property owners were sent a letter (click to read) last month from the Bay Creek Community Association informing them that a mediated settlement agreement has been reached to the lawsuit brought against the Community Association management and Bay Creek companies by Paul and Robert Galloway and their companies.

No property or homeowner should accept this settlement based on blind faith . . . . JOHN C. BOYTOS (Click to read full statement)

The terms of the settlement agreement were only partially revealed in the letter. The Class “A” Unit owners were told that they could object to the settlement and dismissal of the derivative counts by contacting the attorney for the Association.

The lawsuit raises derivative counts concerning the management of the Bay Creek Community Association including the constitution of its Board, its organization, breaches of the declaration and by-laws, breaches of fiduciary duties and loyalty, breach of Declarant Assessments, failure to complete and to maintain common areas, failure to exercise good judgment, violation of Fair Debt Collection Practice Act, and Violation of the Interstate Land Sales Full Disclosure Act.


The derivative action was brought on behalf of the Community Association against the directors and management of the Community Association for failure to exercise their authority for the benefit of the Association.

Plaintiff Paul Galloway told the Wave that he is not at liberty to comment on the agreement at this time.

The Association’s letter says that the Galloway Complaint “asserts several counts derivatively on behalf of the members of the Association . . . The parties to the case have settled all matters raised in the dispute and recommend approval of the settlement, including the dismissal with prejudice.”

The letter advises that unless 50 percent of Bay Creek “A” Unit owners object, the settlement will be deemed accepted by the owners and the Galloways’ Complaint will be dismissed with prejudice. “Dismissal with Prejudice” means that no further lawsuits may be brought on the matters related to those settled. Telephone calls from the Wave to the Association’s Attorney, asking if the derivative counts would be settled for all Bay Creek property owners, were not returned as of press time.

The letter ended by noting, “Any objections will be provided to the Court prior to entry of the final order dismissing the Complaint.”

Bay Creek property owner and local contractor John C. Boytos told the Wave that he intends to object to the settlement agreement. He said he cannot agree to the settlement if he does not know the terms and what it would mean for his rights as a property owner in Bay Creek. He is also concerned that not all property owners may have received the letter or understand the lawsuit. Click here to read the full Boytos statement.

Asked if the settlement would be sealed upon conclusion of the agreement, Galloway said he thought not. Sealing makes settlement terms confidential and, therefore, not in the public record. When a settlement is finalized by a judge, it is usually not sealed. If it were sealed, Bay Creek property owners would never know the full terms of the agreement.

Click here to read the Galloways’ 27-page lawsuit.



6 Responses to “Bay Creek Lawsuit Settlement Terms Questioned”

  1. Peter Allinson, M.D. on January 7th, 2014 10:07 am

    As an owner of property (House and lot) in Bay Creek, I was surprised to learn about this proposed settlement from an email sent to me by a friend. I have not received a copy of the proposed settlement and can’t help but wonder how many other owners have also not received notice.

  2. Barbara Murray on January 7th, 2014 11:16 am

    My sister and I own two properties (house and lot) in Bay Creek, and this is the first we have heard of this! I think we are certainly entitled to FULL disclosure of the terms as all property owners will be affected, and likely, not in a good way!

  3. Steve Downs on January 7th, 2014 2:47 pm

    As usual, the devious members of the board of directors of the Bay Creek Homeowners Association have left the residents of the community in the dark. A confusing letter containing no facts or details of the settlement is typical. I hope that every property owner in the development will object to the settlement. I certainly will.

  4. Ron Wrucke on January 9th, 2014 10:32 am

    It is strange that the Wave is missing (or failed to publish) a bit of history re. this Settlement. Because of a significant increase in HOA delinquencies, Bay Creek took legal action to collect unpaid HOA dues back in 2012 from Galloway, Iberville Properties and other delinquents. In October 2012, Bay Creek obtained a favorable verdict on all cases. Defendants were allowed to appeal, but in order to do so, they were required to post an appeal bond – the only party to do so was Galloway and the Galloway entities. As part of their appeal, they filed the referenced lawsuit (countersuit?) against the Bay Creek HOA and the other identified parties. After a year of discovery, dispositions and legal wrangling, mediation instead of court action led to the settlement in which Galloway agreed to forfeit the appeal bond and be liable for all “assessments as and when they become due”. That’s a big win for the Bay Creek HOA, and I can’t understand why any Bay Creek property owner paying HOA dues isn’t overjoyed with the Settlement. If there was any merit to any aspect of the Galloway lawsuit, you can bet your bottom dollar it would have proceeded to court. The lawsuit against the HOA is dead; the HOA doesn’t have to incur additional legal fees defending itself and trying to collect overdue monies, and the Bay Creek homeowners have one big thorn no longer sticking them in the side. As an aside, the HOA sent out notices to any and all home and property owners … that they have contact information for. If an individual owns property in Bay Creek, and aren’t getting HOA information, that’s your problem – contact the HOA and/or The Community Group and provide current contact information …

  5. Lisa Guzzardo on January 9th, 2014 2:55 pm

    Though I am not a lawyer and am nowhere near an expert on this topic, I do agree with Ron. When I received the letter I read it as a positive. It appears to benefit both the HOA and the property owners (we are a lot owner in The Colony). I am surprised by the opposition. What am I missing?

  6. John Boytos on January 9th, 2014 8:37 pm

    Ron — read the case, allegations, and exhibits and you will see the concerns. The HOA is to serve and speak for the homeowners, not the parties the suit was against. Just because a secret settlement is in the works does not mean the issues have been resolved. It simply means they are being covered up.