As a result of the homeowners deep lack of trust in the Board of Directors of Casa Blanca Condominium Complex, I am a named defendant in a civil lawsuit filed by the owners not serving on the Board of Directors of the Homeowners Association.  I was working at the direction of Board of Directors in this matter.  Below is my response the petition.  This is an insured claim.  The court has ordered mediation by September 4, 2010.

June 17, 2009


Gary Fitzsimmons
Clerk of the District Courts of Dallas
600 Commerce Street
Dallas, Texas 75202

RE: Answer to Cause No. DC-09-05288
162nd District Court

Mr. Fitzsimmons:

I am in receipt of the above referenced suit filed in 162nd District Court. I am writing to respectfully request dismissal of any liability against me or my company, Watershed Group, LLC.

On March 10, 2009, I was hired by the Board of Directors of Casa Blanca Condominium Association, Inc. as a turnaround professional/consultant to help the Board with certain financial matters it was facing. My retention was governed by the agreement attached (see Exhibit 1). I did not know Scott Streit, Brian Streit, Marc Berman, Equistar Management, Larry Wiley, Deborah Uradzionek, or Park Place Management, LLC, prior to my retention by Casa Blanca Condominium Association, Inc. I was referred to Scott Streit by an attorney, Stephanie Curtis. Prior to accepting the assignment, I was interviewed by Scott Streit. I decided to accept the assignment after Scott told me was buying up units to convert the condominium project to a Senior Living/Retirement Center. He said his intentions had not been disclosed to the existing owners of the units at the complex. He believed he needed professional assistance at the project because his intentions were recently challenged by the media, there was an attempt to appoint a Receiver to manage the Association, and the Association may be required to file Bankruptcy. As a condition to my retention, I requested and was granted control of the cash accounts held by the Association.

On March 16, 2008 the complex failed a City of Dallas Code Compliance Inspection. As a result, the association was required to make certain improvements to the property to avoid penalties and fines, putting additional financial stress on the Association. After much discussion, it was determined that the Association could not repay its existing creditors and meet the demands of the City of Dallas Code Compliance requirements. On March 19, 2009 my retention agreement was amended to include a residence at the complex as well as additional compensation incentives (see Exhibit 2). In order to devote all resources to compliance with City of Dallas construction codes, the Association filed for protection under Chapter 11 of the U.S. Bankruptcy Code on March 19, 2009.

During my tenure as Managing Agent for the complex, I did not charge fees for late payment, regularly communicated with the owners concerning the status of the bankruptcy and City of Dallas code compliance issues, shared all information in my possession with federal and state authorities and only paid what was absolutely necessary to keep the complex operating properly.

My duties as Managing Agent were terminated effective June 1, 2009. All information regarding Casa Blanca Condominium Association has been turned over to Bryan Wendt, attorney for Ed Wright.



William F. Herzog
Both Individually and
As President of Watershed Group, LLC