Judge orders attorney to pay $10k to Low Income Housing Institute

LIHI asked for fees under a law allowing penalizing of plaintiffs for bringing frivolous lawsuits.

A judge ordered an attorney representing a Freeland-based group to pay a $10,000 sanction for violating a civil court rule by claiming that an affordable housing organization was accountable for a man’s death.

Attorneys for the Low Income Housing Institute, or LIHI, had asked for nearly $100,000 in attorneys’ fees from Freeland Concerned Citizens LLC and its attorney, Randall Thiel of Bellevue, under a state law that allows the penalizing of plaintiffs for bringing frivolous lawsuits as well as a civil rule that authorizes sanctions for violations.

Island County Superior Court Judge Carolyn Cliff filed her decision Thursday, ruling that the factual misrepresentations in Freeland Concerned Citizens’ lawsuit fall short of being “egregious conduct,” noting that Thiel had a short time to inquire into the facts surrounding a complex transaction and that the case was voluntarily dismissed little more than a month after it was filed.

The exception, Cliff wrote, was the unfounded assertion that LIHI was responsible for the death of a guest at the Freeland motel that LIHI purchased.

On July 15, the Freeland group filed a lawsuit in Island County Superior Court challenging the county commissioners’ award of a $1.5 million grant to LIHI to aid in the purchase of Harbor Inn in Freeland, which the nonprofit plans to convert into a shelter and affordable housing project. The complaint named LIHI, the former owner of the motel and Island County as plaintiffs.

Soon afterward, Freeland Concerned Citizens also filed a preliminary injunction to prevent the sale of the motel or to cancel the transaction.

Cliff ruled against the group in a hearing on the preliminary injunction request. Not long afterward, on Aug. 23, Freeland Concerned Citizens voluntarily dismissed its lawsuit.

LIHI argued that the lawsuit was frivolous and asked for nearly $100,000 in attorneys’ fees and sanctions. The nonprofit pointed out that the money would have otherwise been used to help the most vulnerable people in the community.

In court papers, LIHI asserts that Thiel chose to cynically exploit a man’s death in an effort to smear the nonprofit.

The comments in question were written in a memorandum arguing against delaying a hearing. In it, the attorney highlighted the death of a man at the motel.

“The unfortunate death at the Harbor Inn is real and LIHI is accountable,” Thiel wrote. “LIHI talks about a Code of Conduct, which it does not execute or enforce.”

According to the Island County Sheriff’s Office, the death was discovered by first responders after the victim’s brother called in a welfare check; the man was 64 years old and had a history of heart problems.

LIHI identified the man as Konrad Kennelly. He was one of six guests of the motel who was allowed to stay after the sale closed. An online obituary stated that Kennelly was a long-time captain in the Alaska fishing industry who reluctantly retired following physical disability.

During a hearing, Thiel argued that he hadn’t accused LIHI of being responsible for the death and he apologized.

Yet Cliff ruled that Thiel’s comments in the memorandum constituted egregious conduct, pointing out that there is no evidence in the record to support the statement.

“The court finds as fact that the attribution of responsibility for the death to defendant LIHI was made without adequate inquiry or investigation and, further, that it was made for the improper purpose of vilifying plaintiff FCC’s opponent,” Cliff wrote.

Cliff sanctioned Thiel under Civil Rule 11. The rule states, in part, that attorneys should not present pleadings for an improper purpose, such as to harass or drive up the cost of litigation, and that the factual content should have evidentiary support.

Cliff ruled that Thiel has 30 days to pay the $10,000 sanction to LIHI.