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'Racketeering' claimed over sewer dispute

The city of Oak Harbor recently hired independent legal counsel to defend against a lawsuit accusing the city and several officials of racketeering, fraud, tortious interference and violation of the Consumer Protection Act.

Tuesday, city council members authorized the use of $30,000 from the general government reserve fund to hire the firm Keating, Beckling and McCormick.

City Administrator Thom Myers said the firm will defend both the city and staff members who have been named in the lawsuit. He said the lawsuit has caused “a lot of heartburn” among the named staff members.

Brent and Denise Morrow filed the complaint for damages and lawsuit against the city, Mayor Patty Cohen and three staff members early last year.

The complicated complaint has to do with the couple’s mini-storage business, Island Mini Storage on Highway 20, and the hurdles they had to go through to get permits from the city.

The complaint was written by the Morrows’ attorneys, William Willard and David Anderson of the Seattle firm, the Coe Law Group.

According to the lawsuit, the Morrows’ project was delayed by 10 months over an issue of whether they needed to pay for an upgrade to the city sewer system. The city argued that the Morrows were required to upgrade a sewer lift station when they hooked into it.

A sewer lift station allows sewage to flow against gravity. Under the city code, a developer has to pay for a project’s impact on city services or facilities. That can mean, for example, paying for a left-turn lane on a road if added traffic is generated.

It turned out, however, that the city had a 1989 letter stating that the Morrows’ property was entitled to hook into the sewer lift station as it existed. The city didn‘t share this letter for 10 months.

The lawsuit states that the Morrows contacted the city about the feasibility of building the mini-storage before buying the property. It wasn’t until after they purchased the land that city staff told them that they needed to pay for the sewer upgrades, according to the lawsuit.

The lawsuit also claims that staff was evasive about what an upgrade would entail. “While the city continually demanded, in letter and meetings, that the Morrows upgrade the sewer lift station, it did not define what it meant by upgrade,” the complaint states.

It wasn’t until eight months later, the lawsuit claims, that the city finally explained what the Morrows would have to do in order to hook into the lift station. The city demanded that the Morrows pay for a $250,000 upgrade, the lawsuit states.

But then the city attorney sent the Morrows a copy of the 1989 letter regarding who should be able to use the current lift station. The Morrows took the letter to the city council. Afterward, the city dropped the demand for a lift station.

The Morrows are asking for damages from the city. The lawsuit claims that the city, Mayor Cohen and the staff members committed fraud, negligent misrepresentation, violated the Morrows’ constitutional due process rights, committed tortious interference with a business expectancy, violated the Consumer Protection Act and “acted arbitrarily, capriciously, and unlawfully and exceeded their lawful authority.”

In addition, the lawsuit alleges that the city and staff violated the federal Racketeer Influenced Corrupt Organization Act, a law usually used against mobsters. The lawsuit states that Mayor Cohen and the named staff members “fraudulently used the mail to further their scheme to extort funds from the plaintiff. The series of mail frauds and attempted extortion constituted a pattern of racketeering activity.”

Moreover, the complaint states that the city council violated the Open Meetings Act by having closed-door, executive sessions to discuss the Morrows’ situation before there was a lawsuit. The law allows government bodies to have closed-door meetings, but only if there is actual litigation to discuss, according to the Washington Newspaper Publishers Association legal guide.

Since the lawsuit involves federal issues, Myers said the lawsuit will go through both the Superior Court and federal court out of Seattle.

Myers said the city does have insurance coverage, but he said “there is some debate over what items are covered.”

You can reach News-Times reporter Jessie Stensland at jstensland@whidbeynewstimes.com or call 675-1166.

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