FAIRFIELD BAY — Beneath the placid surface of this picturesque lakeside town, a riptide of legal discord has split a prosperous property owners’ association and raised accusations of self-dealing by a former board president.
The former board leader, David Byard, in turn accuses his opponents of lying about him and has filed his own lawsuits, seeking millions of dollars in damages.
Byard is acting general manager of the Fairfield Bay Community Club Inc., a property owners’ association that generates more than $8 million in annual revenue. It owns land and operates a marina and other businesses in this town of 2,100 that straddles the Van Buren-Cleburne county line on the north bank of Greers Ferry Lake.
Byard, who is also vice president of the board, insists he joined the association board in 2019 to improve Fairfield Bay. But several property owners say he has hurt the POA through self-dealing and using inside information to buy properties at below market prices or acquire properties from the FBCC that weren’t available to the public. Other allegations include mismanagement and limiting access to financial data.
Byard is at the center of lawsuits over his time on the board and as acting general manager; in the most recent suit, FBCC members accuse him of breaching his fiduciary duty.
“To date, Byard realized net income in excess of $1.6 million from the sale of lots he purchased from Fairfield Bay Club for significantly less than fair market value using insider information gained through his position on the Board of Directors,” the suit alleges. The 36-page lawsuit was filed Dec. 30 by FBCC members Robbie Brown and Greg Duggan in Van Buren County Circuit Court.
The members have asked for the appointment of a receiver to “prevent waste of Fairfield Bay Club’s assets and common property.”
Brown and Duggan are represented by attorneys Judy Simmons Henry, Jaimie Moss and Taylor Ellis of Wright Lindsey & Jennings of Little Rock. The defendants also include the FBCC and five board members. Byard and the board deny those allegations.
“The facts in this case are fabricated, and Plaintiffs and their lawyers know it,” Byard’s attorney, Luther Sutter of Little Rock, said in an as-yet unfiled motion for sanctions against the plaintiffs and their lawyers, accusing them of filing a frivolous lawsuit.
Though he hasn’t submitted the motion in court, Sutter emailed it to Arkansas Business.
On Feb. 2, Byard filed a counterclaim against Duggan for defamation, alleging that Duggan and others orchestrated a “smear campaign on Facebook by calling Byard a liar and accusing him of a crime.” It’s in that suit that Byard is seeking $1 million and other relief.
Meanwhile, Byard and the FBCC are facing a wrongful termination lawsuit from Fairfield Bay Community Club’s former marina manager, John Conry. Conry said in his suit, filed in July in Van Buren County Circuit Court, that he was fired for reporting to the FBCC’s human resource manager and the Fairfield Police Department an alleged threat that he said Byard made during a meeting with employees and managers on June 7, 2022.
Byard was charged with the misdemeanors terroristic threatening and assault, but the terroristic threatening count was dismissed and he was acquitted of the assault charge at a trial in September.
Byard and the board have denied the allegations in Conry’s case. And Byard filed a separate lawsuit in October against Conry and others for malicious prosecution and abuse of process. Byard also named as a defendant William “Bill” Fisher, who was a board member at the time Byard was accused of making the threat.
Byard, who is also represented by Sutter in that case, said he has “suffered mental and emotional distress” and is seeking at least $5 million in damages, according to that lawsuit, filed in Cleburne County Circuit Court.
Those cases are pending.
“Unfortunate,” Fairfield Bay Mayor Jackie Sikes said about the lawsuits involving the FBCC. “That’s really all I can say about that.”
The lawsuits, though, provide a window into a dispute that has sundered Fairfield Bay.
Enter Byard
Byard, 60, who lives in the Memphis suburb of Germantown and lists himself on LinkedIn as the owner of BCH Vending Service, has owned a vacation home in Fairfield Bay for years. As he neared retirement, Byard turned his attention to his part-time home.
Founded in 1967 as a nonprofit, Fairfield Bay Community Club was formed to own and maintain property in Fairfield Bay for social and recreational purposes for members.
A seven-member board manages the FBCC, which has more than 3,700 dues-paying members, each allowed to vote annually for directors, who serve three-year terms.
Property owners have one vote per parcel of land owned. Because he owns more than 80 lots, Byard has more than 80 votes in board elections.
Byard said he decided to run for the board in 2019 “after he witnessed incompetence and personal agendas on the board,” according to Byard’s counterclaim against Duggan.
He won a board seat and took steps to improve Fairfield Bay, according to the Cleburne County suit Sutter filed against Conry, the former marina manager, in October. But Byard said in a filing that some people in the community didn’t like his methods and accused him of “unethical conduct.”
‘Insider Knowledge’ Alleged
In 2018, before Byard was on the board, he entered into an deal with the board that allowed him to buy 13 lots for $100 each from the FBCC.
“This sales price was considerably below market value for each parcel,” the FBCC members said in their lawsuit, resulting in a loss of revenue for the FBCC. The land was to be used for the “Forgotten Peninsula,” Byard’s personal real estate project.
The plaintiffs also accused him of using other improper methods to acquire land. One example concerned property adjacent to his Forgotten Peninsula development. He sent a letter in January 2020 asking the elderly owner, Faye Hoffmann of Milwaukee, if she would be interested in selling her property to him. Byard told her that the county appraised the lot at $100, and “most of the lots near this lot have been let go back to the state for back taxes and can be purchased from the state for $66-$75.”
David Byard wanted to buy this lot with a view of Greers Ferry Lake. The lot is in his Forgotten Peninsula development. (Mark Friedman)
The letter didn’t say how much money he was willing to pay for the property. “If the dues are caught up, I could offer more money, if they are way behind I would have to negotiate with the Community Club on the back dues before I could make an offer,” Byard wrote in the letter, which is an exhibit in a suit involving the FBCC, Byard and Hoffmann in Cleburne County Circuit Court. “Some people have not paid the dues in years, and the Community Club hasn’t foreclosed on the property because the land is not worth the amount of back dues owed.”
The lawsuit filed by the FBCC members said Byard was attempting to “leverage” information on the status of Hoffmann’s dues that could only have come from his position on the board.
Hoffmann declined to sell. Byard became president of the FBCC board in July 2020, and five months later he initiated foreclosure against Hoffmann in the name of the FBCC. Hoffmann, in turn, filed a counterclaim against the club and Byard, with allegations that included breach of fiduciary duty, civil conspiracy and abuse of process.
“Byard’s actions [toward Hoffmann] have caused Fairfield Bay Club to incur legal expenses,” the FBCC members said in their lawsuit.
The parties recently reached a confidential settlement, according to the FBCC members’ lawsuit. The members said they don’t know if the FBCC will have to pay damages to Hoffmann or incur other expenses related to Byard’s alleged conduct.
When Byard became the president of the board, he appointed himself to the new position of “vacant lot liaison,” according to the lawsuit. He gave himself authority to decide who could buy property owned by the FBCC and he set the price, the suit said.
Byard allegedly used this authority “to direct land sales to himself and others close to him using his insider knowledge,” the lawsuit said.
As a member of the board, he had access to the list of the owners who were behind on their dues — information unavailable to the public.
Within his first year and a half on the board, the lawsuit said, he generated more than $600,000 in property sales in Fairfield Bay, and he had acquired most of the properties for $50-$100 per parcel using information he received through his position on the board. The suit doesn’t say how many properties Byard bought and sold.
Financial Picture
Meanwhile, the FBCC members said they were concerned about debt taken on by the FBCC for a five-year plan that included investments in the Little Red Restaurant, the marina and the sewer system. The improvements to be made by 2025 were expected to cost $15.7 million, so in October 2020 the board borrowed $16.5 million from Citizens Bank of Batesville to consolidate existing debts and fund the plan.
“To date, the infrastructure improvements have been minimal, the critical repairs and updates to the sewer infrastructure have not been addressed, and while some of the marina boat slips have been added, the marina store and the balance of the slips have yet to be addressed,” the lawsuit said.
The members also said that a $350,000 line item in the plan, construction of a “Beer Barn” to capitalize on Van Buren County’s 2020 vote to become “wet,” had ended up costing many times more. The lawsuit estimated the cost of the project, since renamed the Resort Convenience Store, at $3 million to $4 million. A preliminary draft of FBCC’s audit for 2021 said the board entered into construction contracts totaling $1.45 million.
The members’ lawsuit said CFO Mike Penrod confirmed in April 2022 that the FBCC had violated its bylaws by using proceeds from the bank loan for operating expenses. The FBCC was also out of compliance with the debt-service coverage and cash reserves required for the loan, according to the draft audit for 2021, dated Jan. 30, 2023. However, the audit said, “the lender provided the Club with a waiver for the noncompliance and did not accelerate the maturity of the line.”
The members said in their lawsuit that starting in July 2020 the board began limiting member involvement in board meetings and access to financial information. The lawsuit said an unaudited 2021 financial statement showed the FBCC “to be in dire financial straits” and alleges that more than more than $800,000 in members’ equity is unaccounted for.
Members quizzed Penrod during meetings about the discrepancy. “He continued to respond to questions with ‘I am not at liberty to discuss this,’” the lawsuit said. The members’ lawsuit asked that a receiver be appointed immediately. As of last week, no action has been taken on that motion or on Byard’s or the FBCC’s motion to dismiss the suit.
Byard, who served as president until July 2022, has a completely different view of FBCC’s financial picture and touted the board’s accomplishments in a 2021 annual report. “Fairfield Bay is making the biggest comeback in history,” he wrote.
He said 194 new boat slips at the marina will generate about $700,000 annually. “We are no longer a dying ghost town, we are an upgraded town on the move,” Byard wrote.
The draft audit for 2021 showed total revenue of $8.6 million, up from $8 million the previous year. It also showed a loss of $466,183, including an expense of $606,127 for depreciation and amortization.
Byard, as board vice president and acting general manager, said in a Jan. 3 FBCC meeting that 2022 would shatter revenue records. In the first 11 months of 2022, the FBCC generated $9.96 million in revenue, and its operating income was $929,000 after depreciation, he said.
