Ed, Jude and Sophie Leroux For BSU Board
BARTLETT LEGAL, PLLC
201 South Biscayne Boulevard
Miami, FL 33131
February 15, 2019 Bonita Springs Utilities, Inc. 11900 East Terry Street Bonita Springs, FL 34135
This law firm has been retained to represent Edward Fitzgerald and Jude Richvale, members of Bonita Springs Utilities, Inc., in a member derivative action against the board. They are prepared to represent the interests of the corporation to challenge mismanagement and breaches of your fiduciary duty. This is a demand for immediate termination of various breaches of fiduciary duty, good faith, and loyalty to the members of Bonita Springs Utilities, Inc. (also known as "BSU"). These fiduciary breaches include:
1. Failing to perform your obligations under the current franchise agreement with the City of Bonita Springs and the Board of County Commissioners of Lee County Florida. This includes the sale of reclaimed water to a separate private organization known as Resource Conservation Systems. This private for-profit corporation is not permitted to resell the water pursuant to the terms of the franchise agreement, and this alteration of your duties was never approved by the City or County. Further, this private for-profit corporation has been laying piping and other infrastructure, a right that exclusively belongs to BSU. As a result of your breach of duty, you have substantially reduced the revenues to BSU that would otherwise have been earned, and you have also failed to fulfill your obligation to the resident members of your company to provide quality reclaimed water at reduced prices to all residents of Bonita Springs and unincorporated Lee County, Florida. Instead, by selling the reclaimed water to a for-profit corporation, you have damaged the finances of your members by forcing them to pay an added surcharge for the reclaimed water from Resource Conservation Systems. Specifically, you have breached the following provisions of the Franchise Agreement enacted by ordinance 16-21 of the City of Bonita Springs:
The city grants utility the exclusive right, privilege , and franchise to construct, maintain, and operate in, under, upon, over and across the present and future streets, roads, terraces, alleys, bridges , easements, and other public places located anywhere within the City of Bonita Springs, and as its boundaries may be amended ... in accordance with established practice with respect to sewerage and water service or serv ices , construction, operation and maintenance of sewerage collection facilit ies. County hereby grants the utility the exclusive right, privilege, and franchise to construct, maintain, and operate in, under, upon, over and across the present and future streets, roads, terraces, alleys, bridges, easements, and other public places located anywhere within the unincorporated area in accordance with established practice with respect to sewerage and water service or services, const ruction, operation and maintenance of sewerage collection facilities. Further; your attention is directed to the articles of incorporation, stating specifically that the purpose of your corporation is to: Construct, maintain, and operate a water system for the supplying of water for domestic, commercial, agricultural, industrial, and other purposes to its members and for the sale of any surplus water remaining after the needs of its members have been satisfied and to engage in any activity related thereto.
This demand letter puts you on notice that the needs of your members are not being satisfied, and that reclaimed water that is needed by the members are instead being furnished to a separate private for-profit corporation. You have allowed BSU to act in a manner that is ultra vires and outside of the scope of the articles of incorporation. But even more importantly, you appear to have allowed BSU to violate its franchise agreement, which grants it an exclusive right, privilege, and franchise from the county and the city, no matter what added privileges you may seek to grant it via the articles.
2. Further BSU has failed to conduct fair elections pursuant to the corporate bylaws. This includes manipulating election results by failing to include the full number of ballots received, as reflected in records from the United States Postal Service. By failing to perform your most basic obligations as corporate directors and officers to ensure a just and fair election process, you have breached your duty to all members of corporation.
3. Finally, by allowing BSU to sell large quantities of reclaimed water to a private corporation, the City of Bonita Springs and Lee County are put on notice of the violation of the equal protection clause of the Fourteenth Amendment. This violation includes treating separate classes of people within the county in a disparate manner, rather than providing uniform services to all members. Specifically, by allowing you to sell these vast quantities of reclaimed water to Resource Conservation Systems, the County and City have acted to prefer-the needs of Resource Conservation Systems and a few clients and customers ahead of the common needs of some residents of Lee County and all residents of Bonita Springs.ยท This is a violation of the equal protection of the laws of the Fourteenth Amendment of the United States Constitution, and my clients are prepared to enforce the provisions against the BSU board, city, and county if you fail to diligently investigate and correct your relationship with Resource Conservation Systems.
We further call your attention to the strange relationship behind the formation of Resource Conservation Systems as it relates to the Bonita Bay development community. There appears to be a history of transactions stemming from 1984 that indicate a prior intention to create Resource Conservation Systems to the private profit and private benefit of the Bonita Bay development community members at the expense of the City and County. As one example, there is a suspicious transaction involving Mr. Shakarian, a member of Bonita Bay, who bought the reclaimed water storage pond once owned by Bonita Springs Utilities in advance and for $100, and then resold it for millions of dollars to fund Resource Conservation Systems: This appears to have been a preplanned enterprise that was intended not to benefit Bonita Springs, but a private group of profiteers.
You are demanded and instructed, and put on notice, of the intent to institute proceedings against you in the Circuit Court of Lee County, Florida if you fail to amend and alter your activities in regard to the above, to bring them in line with your fiduciary obligations and duties to all members of the corporation. If this demand is ignored or refused by the board of directors of BSU, proceedings shall be instituted after ninety days have expired. I remain available on behalf of my clients to work with the board in any capacity to correct the deficiencies outlined above, for the betterment of all members of BSU. Please do not hesitate to contact me or my clients as we allow you to investigate and resolve these serious matters.
Philip Bartlett, Esq. For the Firm
Please Vote for ED FITZGERALD, and JUDE RICHVALE Candidates for BSU Board
Posted by JUDE RICHVALE, Former Chairman Bonita Springs Communications Advisory Board and BSU Board Candidate