Incline Village General Improvement District board OKs additional $10K to fight lawsuit
A divided Board of Trustees authorized up to $10,000 in additional spending on a lawsuit that legal counsel argued could set a costly precedent if the district didn’t take action.
The dissenting trustees in the minority called the case absurd and lambasted their peers for authorizing additional dollars on the suit.
The back and forth lasted for hours Wednesday, with occasional interjections from outraged community members who remained in attendance despite the fact the meeting dragged beyond 11 p.m.
Ultimately, trustees voted 3-2 to allow up to an additional $10,000 to continue fighting a lawsuit filed by Mark Smith, a local resident, over the disclosure of public records. The $10,000 would be in addition to the $50,000 spending limit allowed by the general manager.
To date most of the general manager’s spending authority — $45,608.62 — on the lawsuit has been exhausted, which is why the board was asked to consider approving additional money.
Smith filed his lawsuit against the district in 2018, more than nine months after he first submitted a public records request for all communications between IVGID general counsel Jason Guinasso and both General Manager Steve Pinkerton and Susan Herron, IVGID’s records officer. Guinasso and Board Chair Kendra Wong also were identified as defendants in the suit.
In the months leading up to the litigation, Smith and Guinasso went back and forth on his request. Eventually Guinasso informed Smith that 304 of more than 13,000 pages of emails were responsive to his request. The rest were deemed protected from disclosure by Guinasso, who cited attorney-client privilege.
He then informed Smith it would cost $1 per page after the first five pages for a total charge of $299.
Smith argued he wanted to inspect the electronic records, not printed records, which should have been possible at no charge. He also requested to see a log with details pertaining to all the emails withheld — a document known as a privilege log.
Smith filed his lawsuit shortly after, and in May Judge Lynne Simons issued a judgment in favor of Smith.
She ordered IVGID to provide 304 hard copies at a rate of 50 cents per page, while stating that Smith was not entitled to the electronic version of documents.
She also ordered IVGID to provide a privilege log including the date, author, recipient, whether an outside party was involved and a one word identifier for the outside party involved.
Smith has since paid for and received the available records at 50 center per page. He also received the privilege log, according to Thomas Beko, an outside attorney retained by IVGID to argue the case.
Contesting the ruling
While the judge ruled in favor of Smith, Beko argues many of the outcomes actually favor IVGID and the position the district took leading up to the lawsuit.
Really the only partial victor, Beko told the trustees, was the reduction in the fee from $1 to 50 cents.
IVGID has filed motions asking the judge to reconsider her judgement recognizing Smith as the prevailing party and seeking clarity on the issue of the privilege log.
Since Smith is the prevailing party, he is entitled to try to recoup attorney’s fees. In May he filed a motion requesting the district pay him $23,065.95 to cover his legal costs. In his motion, Smith reserves the right to increase his request should he incur more cost.
IVGID hopes to have the judge reverse her ruling Smith was the prevailing party, as Beko explained, because most of the outcomes favor the district, not Smith.
The district also hopes to receive clarity on whether the privilege log was required pre-litigation or post-litigation. While the court ultimately required it post-litigation, the fact that Smith was ruled to be the prevailing party could pose some uncertainty.
Beko told the board a requirement for a pre-litigation privilege log could pose an enormous financial burden on the district.
In the Smith case, he said Guinasso spent about 120 hours creating the privilege log. That does not include time by other IVDIG staff members. Beko suggested a scenario where a vindictive community member could make a significantly large records request which could require hundreds of hours going through privileged documents and creating the log.
“I believe the sky’s the limit, to be honest with you,” Beko said regarding the cost for future litigation if the judge determines the privilege log should have been turned over before trial.
Deep divide on IVGID board
That fear seemed to be enough to sway trustees Wong, Phil Horan and Peter Morris in favor of approving the additional $10,000 to continue fighting the case.
Alluding to litigious members in the community, Morris said he did not want to see IVGID inundated with requests that would consume staff and cost the district thousands and thousands of dollars.
That argument, however, did not sway trustees Tim Callicrate and Matthew Dent, who questioned how the case was able to move forward in the first place.
The decision to hire outside counsel was never made by the board, Callicrate said, adding the board never discussed the litigation early on.
Pinkerton noted he did include notice of the litigation and intent to hire outside counsel in one of his staff reports presented shortly after the lawsuit was filed.
Both Callicrate and Dent said Pinkerton lacked the authority to retain outside counsel, and argued that the process was in violation of state law.
“To me this is absolutely ludicrous that we’re at this point … ” Callicrate said.
Those members of the community who remained late into the evening and chose to speak during public comment voiced similar concerns.
Citing the specific section, Guinasso stated board policy requires the district to indemnify trustees and officers when they’re sued, meaning Pinkerton’s decision to defend the district from the lawsuit was more an obligation and less a free decision, he added.
The explanation did not appear to satisfy Callicrate and Dent, who both separately state their frustration with the topic and their continued status in the voting minority.
“We have a dysfunctional board,” Callicrate said. “The majority has run tyranny over the minority.”
As for next steps, the judge will have to weigh in on a series of motions before her from both parties in the lawsuit. Depending on those decisions, further actions could be taken by either side.