PUD lawyers disqualified in Crescent Bar lawsuit

CRESCENT BAR - The attorneys representing the Grant County PUD have been disqualified in a lawsuit brought by Crescent Bar Island residents.

Jeffers Danielson Sonn and Aylward Law Firm, of Wenatchee, began representing the utility when the lawsuit began at the start of the year.

A federal judge agreed with the residents finding the 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.

"The law firm of Jeffers Danielson shall be disqualified from participation in defense of the claims of the (Crescent Bar Condominium Master Association) or (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 to complete a substitution of counsel.

Dale Foreman, attorney for the Crescent Bar Condominium Master Association, 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.

Foreman became counsel for the Crescent Bar Condominium Master Association and discovered the group's representative Heather Trautmann initiated a series of contacts about representation with attorney Patrick Aylward, of Jeffers Danielson, on July 28, 2008. It was the basis for Foreman's claim of conflict of interest.

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

A conflict arose when Aylward told Trautmann that one of his partners had performed legal work for the PUD.

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

Trautmann detailed her conversations with Aylward in emails. In one dated Aug. 10, 2008, she noted Aylward suggested the condo residents should separate themselves from the north park and south park residents.

On Aug. 19, 2008, Foreman noted the Crescent Bar Condominium Master Association board voted to hire Aylward, but it 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 email 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.

"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," Aylward wrote.

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

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 (Crescent Bar Condominium Master Association) on matters related to Crescent Bar Island and the promise Mr. Aylward gave the (Crescent Bar Condominium Master Association) 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 want the residents to leave.

The residents are asking for an injunction against any eviction action by the PUD.

Quackenbush reportedly 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.

In another matter relevant to Crescent Bar residents, the Federal Energy Regulatory Commission (FERC) is backing away from an order to remove homes on properties within its Lake of the Ozarks project in Missouri.

In reaction to the FERC order, the Missouri congressional delegation introduced legislation in Congress and the Senate to curb the FERC's authority.

FERC officials are saying their July 26 order was misinterpreted. They are saying property rights were never in jeopardy.

"Property rights owners have in lands within the boundaries, whether conferred by deed, lease, easement or other conveyance, have not been and will not be altered by FERC's actions," the FERC wrote.