Judge disqualifies PUD lawyers from Crescent Bar case

CRESCENT BAR - Attorneys of the Jeffers Danielson Sonn & Aylward Law Firm of Wenatchee have been disqualified from representing the Grant County PUD in the lawsuit brought by Crescent Bar island residents against the PUD at the start of the year.

Agreeing with the islanders that these attorneys had a conflict of interest, Senior United States District Judge Justin L. Quackenbush for the Eastern District of the State of Washington signed the "order granting motion to disqualify defense counsel for Grant County PUD" on Wednesday, Nov. 15.

"The law firm of Jeffers Danielson shall be disqualified from participation in defense of the claims of the CBCMA (Crescent Bar Condominium Master Association) or those (other island residents) aligned therewith," Quackenbush wrote in his order.

Quackenbush ordered Jeffers Danielson to "diligently assist" the PUD in finding new counsel. He allowed until Dec. 15 for pleadings "appropriate to complete a substitution of counsel."

Dale Foreman, attorney for the CBCMA, submitted the motion for  disqualification on July 12. Quackenbush held a telephone hearing on the matter on Sept. 9. He directed the attorneys involved to file supplemental briefs arguing the motion.

Some time after Foreman became counsel for the CBCMA, he discovered that Crescent Bar Condominiums resident and representative Heather Trautmann initiated a series of contacts about representation with attorney Patrick Aylward of Jeffers Danielson on July 28, 2008. That was the basis for Foreman's claim of conflict of interest.

Foreman discovered that, on July 31, 2008, Trautmann spoke with Aylward on the phone discussing "the scope of work" and "any potential conflicts."

Eventually a conflict arose when Aylward told Trautmann that one of his partners at Jeffers Danielson had done some legal work for the PUD.

In his argument, Foreman wrote that, on Aug. 5, 2008, Trautmann documented her conversation with Aylward in an email to Crescent Bar Lease Committee members. She wrote that she and Aylward "spoke this morning at length about the issues we are facing."

Foreman wrote that in other lengthy e-mails Trautmann wrote to the committee, she detailed her conversations with Aylward about process. In one dated Aug. 10, 2008, she noted that Aylward suggested the condo residents should separate themselves from the North Park and South Park residents.

On Aug. 19, 2008, Foreman noted, the CBCMA board voted to hire Aylward. That fell through when Aylward failed to get a waiver of conflict of interest from PUD general counsel Ray Foianini.

On Oct. 7, 2008, Trautmann wrote in another e-mail to the CBCMA that Aylward emailed her saying he had come to the conclusion she would probably be "better served" with other counsel. Aylward lamented the decision and offered to help find new counsel.

Aylward wrote: "And this will confirm you will not see me on the other side of the table. Now that we have spoken multiple times about the issue, we would be conflicted out of representing the PUD in this matter."

In his argument, Foreman wrote that Aylward later wrote to Trautmann that the PUD had hired one of his partners, Don Dimmit, and an associate, Michelle Green, in February of 2010 to work on Crescent Bar issues.

Foreman argued that all Jeffers Danielson attorneys should be disqualified because they were "tainted" through their association with Aylward. Quackenbush agreed.

"The contacts Mr. Aylward had over the course of three months with Ms. Trautmann on behalf of the CBCMA on matters related to Crescent Bar Island and the promise Mr. Aylward gave the CBCMA they would not be found on 'other side of the table' require disqualification," Quackenbush wrote.

The Crescent Bar islanders' suit against the PUD was filed on Jan. 19, 2011. Their leases expire in the spring of 2012, and the PUD board of commissioners wants the residents out.

Among other things, the residents are asking for an injunction against any eviction action by the PUD. Quackenbush has said he believes more time, possibly until 2023, would be appropriate for resolution of this matter.

The next step in this proceeding is determining the PUD's new attorneys. It's anybody's guess when arguments on the merits of the case will resume.

In another matter that could affect Crescent Bar residents, the Federal Energy Regulatory Commission (FERC) is backing off an order for removal of homes on properties within its Lake of the Ozarks project in Missouri.

In reaction to that order, the entire Missouri congressional delegation introduced legislation in the U.S. House and Senate that would curb the FERC's authority.