Co-op asks to delay payment to attorneys

The judge presiding over Socorro Electric Cooperative’s lawsuit against its member-owners will have something else to consider during a status hearing this Friday.

Attorneys for the co-op filed a motion to reconsider awarding attorney fees on Nov. 21. The co-op isn’t disputing the $13,000 the judge ordered the co-op to pay lawyers who defended the case. Instead, it’s asking the judge to consider options to withhold payment until the case is completely resolved. In a response to the motion filed on Monday, the Deschamps & Kortemeier law firm of Socorro suggests the co-op is using legal tactics to “deny and delay” the outcome. While District Court Judge Albert J. Mitchell Jr. ruled against the co-op in its bid to block new bylaws that require the member-owned non-profit corporation to operate with more transparency, a countersuit requesting class action certification is still pending. The status hearing was called by the judge on that aspect of the case, but now he will likely take up this latest motion, as well. The hearing is scheduled for 9 a.m. on Friday, Dec. 2, but will be held telephonically between Judge Mitchell; the Kennedy & Han law firm and attorney Dennis Francish, both of Albuquerque, and both representing the co-op; Deschamps & Kortemeier and the Ikard Wynne law firm of Austin, Texas, which represented member-owners; and possibly Socorro attorneys Thomas Fitch and Polly Tausch, who responded to the lawsuit pro se. Attorney Fitch was injured in an assault at his law office on Aug. 5, and it’s not known if he will be present for the conference call. Judge Mitchell ruled against the co-op on the original lawsuit in May and on June 24 allowed defense attorneys to file motions for attorney fees. On Nov. 3, he ordered the co-op to pay fees of $6,000 to Deschamps & Kortemeier, $5,000 to Ikard Wynne and $2,000 to Fitch and Tausch within 30 days. Citing previous cases in New Mexico, the co-op argues in its motion that fees can’t be awarded until the countersuit is settled. “Because claims remain to be adjudicated, neither the Court’s June 24th Order on Hearing on Partial Merits, nor the November 3rd Order Awarding Attorneys’ Fees can be deemed ‘final,’” according to the motion filed by attorney Darin Foster of Kennedy & Han. The co-op further argues that given the 30-day payment requirement, the co-op is faced with an order that is non-appealable. “Non-payment of this amount would invite a contempt motion and additional penalties, while present payment of the $13,000 award would invite complicated and costly litigation involving potential disgorgement and repayment at the conclusion of any future appeal,” according to the motion.
The co-op’s attorneys ask that the judge consider three options:
• Completely eliminate the 30-day requirement
• Make the payment due 30 days from the entry of a final judgment on the countersuit
• Make the payment due to the registry of the court, which will hold the funds until a final judgment is entered and all potential appeals have been resolved.
In the response to the motion from Deschamps & Kortemeier, it is argued that the co-op is making a “tactical decision” by bringing up the prospect of an appeal. “Since Plaintiff is not irrevocably committed to an appeal, this may be just another deny and delay tactic,” states the response signed by Stephen Kortemeier.
The countersuit was filed by Deschamps & Kortemeier, who are working in concert with Ikard Wynne, more than a year ago and alleges members of the co-op’s board of trustees breached their fiduciary duty and committed fraud by accepting payments and reimbursements they weren’t entitled to.
The countersuit names nine trustees and four former co-op officials as cross claim defendants and requests disgorgement as a means of relief. The response from the defense attorneys suggests that the latest motion by the co-op supports claims made in the countersuit. “Plaintiff’s conduct of this litigation raises substantial and real questions of whether the Board of Trustees is, in fact, fulfilling its fiduciary duties to the membership,” it reads. It goes on to say that the alleged tactics of the co-op attorneys have created complexity and added to the costs by waiting until “the bitter end” to seek appellate review. Finally, the response states that the defendants’ attorneys should be awarded additional fees for having to file a response to the latest motion. The countersuit proposes that the judge grant class action certification, meaning all of the approximately 10,000 member-owners of the co-op — who are made to pay for a lawsuit in which they were the prevailing party — would be represented in the countersuit. Trustee Charlie Wagner, a leader in the movement to reform the co-op and the only trustee not named as a cross claim defendant, is listed as representative of the class of member-owners. During a phone interview earlier this month, Judge Mitchell said the purpose of Friday’s hearing is to allow attorneys to update him on where they stand with the countersuit. The judge has already permitted attorneys on both sides to begin the discovery process, and he said he wanted to learn what progress had been made so far.   Contact T.S. Last