How much is Spearfish vs. firefighter association lawsuit costing?

December 12, 2018

SPEARFISH — The first question most people ask after hearing that the city of Spearfish and Spearfish Volunteer Firefighters’ Association are entangled in civil lawsuits is, “How much is this costing?”

To that end, the Pioneer reached out to both parties, as well as the South Dakota Community Foundation, also a party in the lawsuits, to find out how much as been expended. The city, which publishes bill lists in its city council minutes, responded with totals; the association responded that it was not able to disclose totals at this time; and the foundation’s legal representation responded with “no comment.”

According to the city finance office and city council minutes, the city has paid $20,487.14 to Lynn, Jackson, Shultz, and Lebrun, the law firm representing the city in the lawsuits, for legal services related to the lawsuits rendered through September 2018, the last invoice the city has received by press time.

“ … we do anticipate recouping some if not all of these expenses from our liability insurance carrier,” City Finance Officer Dave Dutton said.

The city also paid an invoice to the law firm in November 2017 for $735, and additional lawsuit-related expenses on city council minutes bill lists include a $55 charge from the Hughes County Sheriff’s Office to serve papers to the South Dakota Community Foundation, Feb. 5 council minutes; $1,638.75 for document subpoena fees to Ketel Thorstenson, LLP, May 21 council minutes; and $293.25 to Let ’er Buck, LLC for fire department negotiations meetings, June 18 council minutes.

The city of Spearfish engaged the law firm Lynn, Jackson, Shultz, and Lebrun to represent the city in the lawsuit, with the city council approving an agreement in January that states that the city agrees to pay for the services of their attorneys based on hourly rates in effect at the time the services are rendered. It was anticipated that Thomas Brady and Kassie Shiffermiller would be lawyers from the firm primarily providing services to the city during the lawsuit, and in the agreement, Brady is listed at a $250 per hour rate, Shiffermiller, $190 per hour.

“Its lawyers may request the assistance of other attorneys in their office with rates varying from $90 to $250 per hour and law clerks or paralegals with rates varying from $45 to $75 per hour. Its lawyers’ rates are subject to adjustment upon prior written notice …” the agreement states. The city agrees to pay the firm for all time chargeable to the lawsuit’s file, “including but not limited to, time spent on the telephone, writing or reviewing letters or other communications, legal research, preparation of documents, appearances, attendance at hearings, conferences, travel time, and all other time expended on its behalf.”

The city agreed to pay for all costs and expenses incurred and would be billed on a monthly basis, and the city is exempt from state and city taxes on lawyers’ fees and expenses.

These totals do not include city staff time related to the lawsuit.

The association did not disclose the totals they have spent on the lawsuit. The law firms of Nies and Karras, of Spearfish, and Nooney & Solay, of Rapid City, are representing the association in the lawsuits.

“ … as a private entity that information is not public and cannot be disclosed without additional conversations with our counsel and possibly even a vote of the membership,” Glen Lewis, president of the association, said. “I can say the volunteers have incurred significant legal expenses in defending the city’s lawsuit against us.”

When pressed whether the association would take a vote to determine whether to disclose the information, Lewis responded, “Right now we aren’t able to disclose any specifics, but the membership could choose to disclose information in the future.”

Brett Koenecke, of May, Adam, Gerdes & Thompson, representing the South Dakota Community Foundation, responded with “no comment.”

The lawsuits involve funds acquired over the decades for the purposes of fire protection services in the Spearfish Fire District and the question of who legally can determine how those funds, formerly and currently in the association’s possession, should be used.

The city asked the court in January to provide a determination of the legal relationship between the parties, as well as the rights as to the assets involved, after the association created two endowments totaling $1,050,000 through the South Dakota Community Foundation. The city contends that it has a duty to ensure the funds are used in a manner permitted by law, and to prevent the association from making any other transfers before the court decided the legal rights of the parties, the city also filed a temporary restraining order and injunction, which were granted. However, the order does allow the association to pay legal fees.

The association denied the claims and cause of action in the city’s suit, describing that the association is a separate, legally-recognized entity from the city, compliant with state law, with its own property and the freedom to make decisions on how to manage its assets.

The South Dakota Community Foundation asked the court to dismiss the suit in regards to the foundation, as it should not be subject to the litigation since it doesn’t involve the foundation.

The city argues that the endowments created through the foundation by the association could include funds unlawfully transferred, so therefore, the foundation is a party to the declaratory action sought by the city.

The association countersued the city in February, claiming that assets currently in possession of the Spearfish Fire Department were taken without just compensation or due process, arguing that the city has deprived the association of its interest in the property, and it is seeking damages.

The city contends that said assets, including fire trucks and equipment, were paid for jointly by the city and association through funds provided by the public, and that the apparatus are being used for the same purpose, housed in the same places, and used by the same volunteer firefighters. The city is asking the court to rule that the association has no basis for the countersuit, arguing that the association reports itself as a tax-exempt organization so is either an affiliate or supporting organization of the city and that the money donated must be used for the specific purposes for which the donations were sought.

In turn, the association filed a similar motion asking the court to rule that the funds that have always been held by the association are private funds and that the city has no claim to them.

The parties canceled a motions hearing in May for discussions but failed to reach any resolutions. Following a motions hearing in November, 4th Circuit Judge Eric Strawn took the motions, responses, objections, and other court documents filed accordingly under advisement, describing he couldn’t say how long it might take him to come to decisions about the pending motions.

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