WHEN LOCAL GOVERNMENTS CLASH: $102,000 in legal fees paid by Town and a nonprofit

Saturday, January 18, 2025
by Jeff Noedel

SanJuans.Today wondered how much money was spent on lawyers involving two disputes between local governments and one affordable housing nonprofit.

So we asked.

In the Superior Court case styled SAN JUAN COUNTY v. TOWN OF FRIDAY HARBOR AND THE TOWN COUNCIL, on May 21, 2024, the County sued the Town over rights to use fresh water supplied by the Town at the County Fairgrounds.

In that case, plaintiff San Juan County used County lawyers to press the case. There were no legal fees paid by the County, but County lawyers used many hours of salaried time to represent the County.

The Town (defendants) used an outside law firm. The total amount billed to the Town at this time is $40,575.11, and that will go up at least once more for an expected line item not yet billed.

The County recently prevailed in that case when the Judge decided that a key town resolution was legally flawed.

In another case, the San Juan Community Home Trust, a 501c3 nonprofit on San Juan Island, appealed a requirement issued by the Town of Friday Harbor. Development of new housing complex called HolliWalk was nearly completed when the Town announced a new requirement for “frontage improvements” inconsistent with previously approved plans. The Town would not issue “Certificates of Occupancy” for the new units.

Instead of filing a lawsuit, the Home Trust appealed the Town’s requirements to an outside hearing examiner. The Town paid the hearing examiner fee.

In that case, the hearing examiner ruled in favor of the Home Trust. Certificates of occupancy have been issued.

The Home Trust was represented by the nonprofit’s General Counsel and an outside lawyer. With all the legal bills received now, the Home Trust has been billed $27,533.50. That total would have been higher, except for thousands of dollars worth of legal work that was done pro-bono by two attorneys.

The Town (defendants) were represented by outside attorneys. In this case, the Town was billed $33,970.33. Prior to the lawsuit, the town was billed $5,218.50 for a hearing examiner’s fee.

PROS of a lawsuit or hearing examiner:

• Disputes can arise as each organization feels a duty to advance its own mission. Governments have a sworn obligation to enforce their laws and ordinances. Nonprofits have a fiduciary responsibility to their constituents and donors. Often the cost of not trying to win in a dispute is unacceptably high.
• Some disputes seem to have no possible solution that would come from diplomacy or compromise. An impartial “referee” is the only way to resolve the dispute.
• Courts and hearing examiners can reconcile complex disputes based on a “wider aperture” and a breadth of legal knowledge.
• A ruling by a court or hearing examiner tends to create a finality to a dispute, but there are usually appeal options available.

CONS of a lawsuit or hearing examiner:

• It’s uncommon when arbiters split the difference; there is often a clear winner and a clear loser.
• Preparing for, and litigating, a dispute in court or in front of a hearing examiner can be incredibly time-consuming, and can take time away from other essential work.
• The process of fighting a dispute, especially in court, can create great and lasting acrimony with the other side.
• The legal process can be extremely slow, taking years to settle a dispute that could sometimes be settled quicker with diplomacy and compromise.
• The legal adjudication process is expensive. The hearing examiner process can be somewhat more affordable, but as the Home Trust dispute shows, even hearing examiner cases can be costly.

All told, these two disputes have cost Town taxpayers and Home Trust donors $102,078.94 in legal fees.