Cooperative files more motions
On the heels of filing four motions to dismiss a countersuit against it, Socorro Electric Cooperative is now asking that discovery be stopped and a protective order be issued to prevent information from being released to one of the parties in the case.
Attorney Darin Foster of the Kennedy & Han law firm of Albuquerque, representing Socorro Electric, filed the motions in 13th Judicial District Court in Los Lunas on Feb. 1. The motions center around co-op trustee Charlie Wagner, who is named as representative of the class of member-owners in the countersuit which requests class action certification.
Socorro Electric took the unusual step of suing all of its approximately 10,000 member-owners in June 2010 in an effort to block new bylaws that called for the co-op to operate with greater transparency. It lost that case, a judge ruling in May of last year that bylaws requiring the co-op to follow open meetings and inspection of public records rules were valid and properly adopted by members at the 2010 annual meeting.
The countersuit names Wagner’s nine colleagues on the board of trustees, four former trustees and the co-op’s former general manager as cross claim defendants, charging breach of fiduciary duty and fraud.
On Jan. 25, the co-op submitted motions to dismiss the countersuit, citing immunity for the defendants, lack of standing, failure to meet pleading requirements and absence of an indispensable defendant, that being Wagner himself.
Stephen Kortemeier of the Deschamps & Kortemeier law firm of Socorro, one of the attorneys who brought the countersuit on behalf of the member-owners, said the flurry of motions was perplexing.
“It raises questions as to why they are just getting around to raising these issues, particularly in light of the conferences we’ve had since the judge decided the (preliminary) case,” he said. “We’ve talked about discovery, and we’ve talked about moving this case forward. The judge has said he’s interested in moving it forward. This could have been raised a year ago, but wasn’t.”
Foster did not return phone messages from El Defensor Chieftain.
Stop Before it Starts
Tenth Judicial District Judge Albert J. Mitchell Jr., appointed to the case by the New Mexico Supreme Court chief justice, has yet to rule on the class action aspect but allowed discovery to begin. But, according to the filings, the discovery process hasn’t started yet.
“A stay in this matter will create no undue harm or prejudice to the plaintiff (Wagner), who, as of January 30, 2012 has made no effort to conduct any written discovery, request the production of any documents or evidence, or scheduled any depositions in this matter,” reads the co-op’s motion to stay discovery.
The document states that at least until the pending motions have been addressed, discovery would be unnecessarily costly and repetitive.
In December, Judge Mitchell set dates for three more status hearings on matters of discovery, the first is March 21.
Seeking a Shield
In the motion for a protective order, Socorro Electric suggests Wagner is trying to sidestep rules of civil procedure that apply to litigation.
“Plaintiff is now attempting (and apparently has been attempting for some time) to use the Inspection of Public Records Act to make requests for privileged information, and information which would otherwise be subject to objection by defendants and their council in the course of regular discovery,” the motion states.
One of the new bylaws affirmed by the court was for the co-op to abide by the Inspection of Public Records Act.
The motion goes on to say, “Rather than pursue legitimate discovery, (Wagner) has sought to use the Cooperative’s Bylaws to request documents which would be wholly and self-evidently objectionable and/or privileged under the rules of discovery.”
The motion includes two exhibits of which Wagner is the source. One is an email to co-op General Manager Joseph Herrera on Jan. 18 requesting records showing fees and expenses paid to former co-op attorney Dennis Francish since June 10, 2010.
“It is the duty of the board of trustees to safeguard corporate assets against risk for the benefit of the cooperative (membership),” Wagner wrote. “Considering the extraordinary income derived by attorney Fransich (sic) in advising the board to sue all the members/owners when he was retained to represent the cooperative’s best interest (to benefit members) seems to be an action opposed to the best interest of the cooperative.”
Wagner goes on to say that the co-op’s new attorneys, Wiggins, Williams & Wiggins, should be interested in the records, as well. He suggests that Francish may have had a selfish motive to bring the lawsuit and the new attorneys could recognize an opportunity to recover wasted assets.
As El Defensor Chieftain reported last year, the co-op paid Francish $68,282.00 in 2010, more than triple the amount it paid to the co-op’s general counsel the previous year.
A records request made last month revealed that the co-op paid Francish another $45,495.74 in 2011, the final year of his two-year contract.
Privileged or Not
The second exhibit is a request by Wagner for a copy of the invoice for $30,795.29 Kennedy & Han submitted at the end of last year. He also asks for a copy of the contract or letter of engagement with Kennedy & Han and minutes of the meeting when the board approved the agreement.
Wagner hand delivered the request to attorney Lorna Wiggins during the board of trustees meeting on Jan. 25.
Socorro Electric maintains in its motion that Wagner is intentionally attempting to bypass Kennedy & Han, which is handling the countersuit, to obtain information established under rules of discovery. It points out that rules of law supersede what corporate bylaws might say.
The motion also argues that the information Wagner requests is protected from disclosure by attorney-client privilege. It states that Wagner ignores the fact that he initiated the countersuit against the co-op “to whom he owes a fiduciary duty of care.”
“By the very nature of adversarial civil litigation, plaintiff Wagner’s current interests are inherently opposed to the interests of defendant Socorro Electric,” the motion states. “Any information provided by the Cooperative to plaintiff Wagner is necessarily potential evidence to be used in the ongoing litigation.”
In a phone interview on Monday, Wagner said that as a member of the board of trustees he’s entitled to the information.
“All I’m asking for is information I need in my role as trustee,” he said. “My request was strictly from the standpoint of being a trustee, not as a lawyer, which I’m not, nor as a party to the lawsuit. But they’re treating me as if I’m an attorney.”
Wagner said he had been provided with information pertaining to fees paid to attorneys in the past and was accommodated. It wasn’t until after the co-op filed its lawsuit against the members that his requests started to be denied, he said.
“If I, as a trustee, ask for something regarding how the co-op is spending money, that’s one of my duties as a trustee,” he said. “I don’t think there’s anything I’m asking for that’s controversial or secretive in nature. If it’s something paid for by members, I feel it’s important to know and I have a right and duty to know.”
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