Loveland to stick with outside counsel on McWhinney lawsuit for now

LOVELAND — The Loveland City Council, facing a lawsuit from developer McWhinney Real Estate Services Inc. over the decision to rescind approval of the Centerra South urban renewal area, will stick with its outside attorney for now instead of bringing a municipal defense entity into the action. 

It will reconsider that decision, however, on Jan. 2 after gathering additional information.

The council at a special meeting in late November, seeing the urgency of engaging an attorney when it didn’t know whether the Colorado Intergovernmental Risk Sharing Agency would represent the city, engaged Lewis Roca Rothgerber Christie LLP. Attorney Michael Plachy from that firm prepared the opening responses to McWhinney’s requests for a temporary restraining order and preliminary injunction.

Now, CIRSA has said that it will represent the city, but it will do so either as the city’s sole attorney or with Lewis Roca as co-counsel, but would insist on being the lead counsel.

City Attorney Moses Garcia said the City Council would have three choices: continuing with Lewis Roca alone, setting up a co-counsel arrangement between Lewis Roca and CIRSA with CIRSA in the lead, or changing to CIRSA’s sole representation.

He said that the city’s intergovernmental agreement with CIRSA requires the city to engage CIRSA or risk not having CIRSA coverage in the future. 

The advantage of CIRSA is that it would cover, after a $250,000 deductible, attorney fees and potential damages if the city were to lose. Lewis Roca would charge its own legal fees if the city continued to engage with it, and the city would be on the hook for any damages if it were to lose the case.

Mayor Jacki Marsh proposed that Garcia ask CIRSA if it “would give the city some grace” to continue with Lewis Roca through the scheduled Feb. 29-March 1 trial dates, and then permit the city to re-engage with CIRSA at that point. Her motion directed Garcia to get that answer by the council’s Jan. 2 meeting when the topic will be raised again. Her motion ultimately passed 6-3 after lengthy discussion.

Marsh hopes that the court will render a decision on whether the original URA approved for Centerra South was legal. If it wasn’t legal, then she said there is no breach of contract and no damages. 

Council member Andrea Samson raised concerns about how Lewis Roca has handled things so far; she said she and most members of the council have been kept in the dark until Monday, and she expected better communication. She also was not aware how much Lewis Roca is charging for its services. Plachy said he would get a litigation budget to the city but didn’t have it Tuesday night. “It should be less than what would be paid under the CIRSA policy,” he said.

He also said he had been in communication with Garcia, who asked him Monday to provide all members of the council with an update, which he did.

Councilmember Patrick McFall said he also was concerned about the lack of communication, noting two news stories in the newspaper about the case without any communication to the council from the attorney. 

“I’m concerned about that. It left me with some distrust. I felt that your firm was ramrodded on us. It’s the council that directs, not one individual,” McFall said.

Councilmember Troy Krenning, who had recommended Lewis Roca, said that Plachy’s update was sufficient for him, and he was pleased with what Plachy told the council in that confidential memo. He said the case has been narrowed to specific matters of law on which he believes the city will prevail. Krenning advised against changing representation now. “To suggest we should change horses midstream would almost be malpractice on our part,” he said.

Councilmember Dana Foley said that “all of this all could have been avoided if people were permitted to seek the information that they needed,” referring to the council meeting after the November elections at which the council voted 5-4 to dismantle the Centerra South URA. That decision was made in a 10-minute segment of the meeting at which only the mayor and one council member were permitted to speak, and questions directed to the city attorney were not permitted. “That’s why I walked out of that meeting,” Foley said. He said that even with CIRSA’s representation, if “it’s determined we broke a contract, then those damages wouldn’t be covered.”