Arbitration between Black Diamond, Oakpointe rejected

It appears Black Diamond Mayor Carol Benson and developer Oakpointe’s plan to quickly resolve some legal questions through binding arbitration has hit a snag.

On May 10, arbitrator Steve Scott with Justice Dispute Resolution sustained council members Pat Pepper, Erika Morgan and Brian Weber’s objection to binding arbitration on the grounds that Oakpointe and Benson, in their Arbitration Agreement contract, did not address issues of liability or relief for a breach of contract.

Oakpointe and Benson filed for binding arbitration with Scott April 24, asking the former King County Superior Judge to answer questions related to the city’s executive and legislative powers over the city’s Master Development Review Team, a group of city employees and outside traffic and engineering consultants that work together to review Oakpointe’s developments in the city.

Oakpointe and Benson allege the City Council — namely Pepper, Morgan and Weber as the council majority — do not have the power to unilaterally change up the MDRT consultants.

The two also agree Benson has the power to continue paying MDRT consultant contracts without council approval in order to maintain a functioning MDRT as required by the city’s 2011 Funding Agreement with Oakpointe.

In turn, Pepper, Morgan and Weber say the council does have the contracting authority to review and select MDRT consultants without Oakpointe or mayoral approval.

The council has repeatedly voted over the last year to allow other potential consultants to apply for MDRT positions, as well as attempted to amend the contracts for the current consultants without Oakpointe’s, or the consultant’s, approval.

These contracts have been repeatedly denied by Benson, who’s been using her executive powers to continue paying serial $15,000 contracts with the consultants, a move that’s been criticized by the council majority as an attempt to bypass their legislative authority in approving contracts.

While Pepper, Morgan and Weber have stated their efforts are an attempt to find consultants that could do better work for the city and the developer, Benson, Oakpointe and the council minority – Janie Edelman and Tamie Deady – all allege the council majority’s actions has negatively affected the MDRT’s ability to function, which is a breach of the binding contract the city signed with the developer.

Oakpointe also alleges that while Benson’s serial contracting is better than no contracting, consultants only working under multiple $15,000 contracts is not an efficient way to fund the MDRT.

To settle the matter, Oakpointe and Benson asked the council majority to participate in non-binding mediation in March.

However, Pepper, Morgan and Weber said they did not feel as if they had proper legal representation and did not attend the mediation.

Oakpointe and Benson then moved toward non-appealable binding arbitration — often cheaper and faster than court litigation — asking Scott to rule what powers the executive and legislative branches of Black Diamond’s government have in maintaining the MDRT and reviewing and selecting MDRT consultants.

But instead, Scott ruled that asking him to arbitrate these questions was “premature.”

“It would be improper for the arbitrator to address the issues set forth in the Arbitration Agreement, at least now,” Scott wrote in his May 10 brief.

In his ruling, Scott also denied Pepper, Morgan and Weber’s request to recuse himself, as well as rule that “there is nothing unusual” for any executive branch of government to manage the city’s legal defense and response to a party’s legal claims, including signing an arbitration agreement.

May 10 Arbitration Decision by Ray Still on Scribd

LIABILITY AND RELIEF

In his ruling, Scott appears to want Oakpointe and Black Diamond to ask him whether or not the city breached its Funding Agreement with the developer, city attorney David Linehan said in a May 24 interview.

“The problem here is that the parties in the Arbitration Agreement have skipped over issues of liability and relief, which are properly the focus of litigation whether by arbitration or in court,” Scott wrote in his brief. “Only if there were a failure on the City’s part to comply with an Arbitration Order could there conceivably be a basis for the arbitrator to address and resolve issues relating to the two branches of government.”

Scott added that Benson and Oakpointe can amend or modify their Arbitration Agreement “to submit the issues of the City’s liability for breach of contract and any appropriate relief to be awarded if liability is established or conceded, for resolution by binding arbitration.”

In their original April 24 brief to Scott, Oakpointe alleged that Black Diamond “is in breach of its contractual obligations and is liable for failure to satisfy its obligations to timely and fairly process the necessary implementing permits for build-outs of the MPDs (Master Plan Developments)” because of the MDRT’s inadequate funding, although this allegation was not the topic of the arbitration in the original Arbitration Agreement.

It is unclear whether Oakpointe and Black Diamond will revise their Arbitration Agreement, and if they did, what stances each party would take surrounding issues of liability.

Oakpointe declined to comment on future arbitration plans.

Linehan declined to speculate on what Oakpointe’s plans may be, as well as potential city responses, but did confirm that as of May 24, neither party had approached the other with the intention of drafting or signing another Arbitration Agreement.

It is also unclear what sort of relief Oakpointe may seek if the developer wants to continue with arbitration.

The original Arbitration Agreement did not allow Scott to award fees, costs or monetary damages of any kind.

OTHER NEWS: NEW LEGAL COUNSEL, RECALL APPEAL

• During the May 18 council meeting, Pepper, Morgan and Weber voted to approve two contracts for interim legal counsel services for the city while the city continues to advertise for a permanent city attorney position.

The contracts were with Jane Kohler of Land Use & Property Law and Daniel Glenn with Glenn & Associates.

“Jane Kohler has 31 years of experience with municipal law, land use law and real estate property issues. Dan Glenn has 45 years experience, at least, with civil law and municipal law, particularly with optional code cities like ours,” Morgan said. “These two are willing to come together to serve Black Diamond in partnership. We definitely, definitely need legal services who we can trust to vigorously advocate the positions of the city and her citizens.”

According to Kohler, who was present at the meeting, hiring her and Glenn wouldn’t mean replacing David Linehan of Kenyon Disend, who has been serving as the city attorney for close to a year.

“I’m not applying to be city attorney,” she said. “We’re not suggesting the displacement of anyone. We’re simply making application to provide legal services.”

Kohler said her and Glenn’s plan was to alternate who would attend council meetings, so the city would only pay for two attorneys per meeting, as opposed to three.

However, Benson made it clear the city would not pay for their services, however the council voted.

“Whatever you decide to do today, I’m going to consider invalid,” she said. “No attorney is going to come in here and work for this city if I tell them they’re not going to get paid. And that’s what I’m telling you right now.”

Edelman and Deady voiced their concerns with hiring Kohler and Glenn as supplemental legal counsel, starting with conflict of interests.

Kohler was the attorney Pepper, Morgan and Weber hired to represent them in arbitration with Scott.

Edelman also mentioned sanctions against Kohler in late 2013, when the American Bar Association suspended her license for six months.

“When I first got online and looked at Google, the first thing that comes up is this great big caution with an exclamation point that talks about her suspension,” she said.

Kohler, in turn, said that while she thought the suspension was a little heavy-handed, she “took her medicine” and got back to doing high-quality legal work after her suspension was over.

“I am not a sloppy attorney. And to my dying day, I will regret having been sloppy during that period I was in trial,” Kohler said. “I take a great deal of pride in my legal work… Because I do high-quality work, even though that’s all over the internet, I have a very successful practice because people like my legal work.”

• Pepper has filed an appeal of King County Superior Judge Beth Andrus’ approval of a recall petition to go to ballot.

According to Johna Thomson, member of Neighbor to Neighbor Black Diamond — the group responsible for filing the recall petition — Pepper appealed May 25, putting the group’s signature-gathering kick-off, originally scheduled for May 26, on hold.

According to Andrus, the appeal will go straight to the state Supreme Court, which has 30 days to hold a hearing.

“We know this is just a delay tactic,” Thomson said in a press release, “and (we)will be ready to resume signature gathering as soon as this is resolved.”

Thomson said the group expects to surpass the minimum of 370 signatures needed to put the recall measure on the ballot, if the state Supreme Court upholds Andrus’ decision.