WAPS, SOS court drama continues


(7/8/2019)

by NATHANIEL NELSON

The court drama between Winona Area Public Schools (WAPS) and the Save Our Schools (SOS) Committee continued last week, as the two groups clashed over the district’s recent naming of Gretchen Michlitsch –– one of many members of SOS –– as liable for more than $10,000 in WAPS’ legal fees in the district’s suit against the community group. On June 26, SOS filed an official objection to the district’s attempt to make Michlitsch pay its legal fees, citing the lack of an official motion, failure to discuss the change with members of the School Board, and the alleged lack of legality in seeking damages from an individual member of such an organization. The district responded on Monday, doubling down on its request and asking for the group’s objection to be stricken from the record.

“It’s surreal. I feel like I’m in a Van Gogh painting,” Michlitsch told the Post on Friday. “I’d like to see our school district succeed and do well and value its community, and respect its community.”

Last year, SOS challenged the closure of former Madison and Rollingstone schools in the Minnesota Court of Appeals, and while the court considered the matter, SOS placed a notice of lis pendens –– or pending litigation –– on the titles of the two buildings.

Later, WAPS sold the schools to private owners and, citing a desire to offer the new owners clean titles, voted in a split vote to sue SOS over the notices –– just before four new WAPS Board members took their seats.

The Court of Appeals ruled in favor of WAPS earlier this year, resulting in the removal of the Madison lis pendens title notice –– the Rollingstone notice was removed in February after its sale to the city of Rollingstone. However, despite the removal of the notices, the district’s attorneys have continued litigation against SOS over placing the notices in the first place, calling it a “slander of title” case, and the School Board has remained in the dark.

Board chair Nancy Denzer explained that since the new board took office in January, no information about the lawsuit has been shared with the board –– in fact, the only closed session involving the case was abruptly cancelled the morning of, over the objections of new board member Karl Sonneman, who was previously the attorney for SOS.

“I’ve never been there at a closed meeting. The new board members do not have information [on the progress of the suit]. That’s just how it’s been,” Denzer said.

While the district’s insurance covered the legal fees in SOS’ appeal of the closures, it does not cover WAPS’ lawsuit against SOS –– the cost of which continues to pile up. According to superintendent Rich Dahman, as of May 15, the district had spent $10,600 on legal fees in litigating on behalf of the new owners. MC Properties –– the company that purchased Rollingstone from the district for $80,000 last June –– is listed as a co-plaintiff on the lawsuit, and is seeking an unknown amount of damages for an alleged delay in the sale of the property to the city of Rollingstone earlier this year.

Objection vs. objection

Last week, SOS filed a formal objection to the district’s amended complaint that added Michlitsch as an individual co-defendant in the case. The objection claims that the district, in naming Michlitsch personally, conflated her role in the group beyond being an agent and instead as an individual, and that the district cannot make a member of a nonprofit unincorporated organization personally liable for its attorney fees.

Additionally, the objection noted that the WAPS Board was out-of-the-loop in the goings on of the case, and board members were not aware of the decision to name Michlitsch individually.

Denzer noted that the district’s attorneys had not mentioned that they would be naming Michlitsch individually, and the change in the district’s most recent filing came as a surprise.

“They did not talk about an individual person, [they] talked about the group as a whole,” Denzer told the Post. “I did not know that was going to happen.”

The district responded to SOS’ objections on Monday, arguing against several of the community group’s points. The response noted that WAPS did not move to amend the complaint, but argued that the courts have the discretion to order a complaint amended to add individual defendants and that under Minnesota law, unincorporated entities do not have greater protections than corporations.

“The name [SOS] is a placeholder for the individuals who comprise it, not a shield from liability,” the district’s response reads. “Whether incorporated or not, the district can pierce the corporate veil and impose individual liability for damages as if every member had been named as a defendant.”

The district’s response also states that Michlitsch’s role in the group is irrelevant, and that as the only member of the group who had been properly served notice of WAPS’ lawsuit against SOS, her individual property may be at stake in any judgment in WAPS’ favor.

In an email to the Post on Friday, SOS member Doug Salzmann stated that the formal objection is a way for SOS to focus the court’s attention on WAPS’ alleged improper filing, noting that the development is “extraordinary.”

“As for the district’s ‘objection to the objection,’ it appears to us to be nothing more than an effort to distract the court from its own misbehavior.  We hope and expect that the court will see it for what it is,” he added.

The story so far

The two new filings are the most recent developments in the year-long fallout from the board’s vote to close the Rollingstone and Madison schools as part of $1.7 million in budget cuts. The closure has had a lasting impact on the district, outside the ongoing legal battles. In total, the district has more than 200 students less than its projected 2018-2019 enrollment, and when the district surveyed outgoing families about why they left, roughly 50 percent cited school closure as the reason.

The controversial closure decision was met with an appeal from SOS, and while the Minnesota Court of Appeals declined to delay the sale of the schools, it agreed to hear the case.

As a result of the appeal, SOS placed a notice of lis pendens on both property titles, which signified that there was potential litigation involving the properties. In November, following requests from the buyers of Rollingstone and Madison –– MC Properties and Andrew Brenner, respectively –– WAPS attorney Joseph Langel sent a letter to SOS threatening legal action over the group’s court notice attached to the Madison title.

In December, the WAPS Board in a split vote voted to sue SOS over the title notices.

 

At that time, the district had already sold the buildings.

The meeting prior to that split vote was the last –– and only –– time that the WAPS Board has discussed the lawsuit against SOS, and the decision was made by an entirely different board.

At that time, four of the current board members –– Denzer, Sonneman, Jim Schul, and Michael Hanratty –– had not yet been sworn in. The new board had planned to meet in March to discuss the lawsuit, as well as the then-ongoing Court of Appeals case, but the meeting was abruptly cancelled the morning of due to the alleged inability of the board to “have a privileged attorney-client conversation.”

At the following board meeting, Sonneman decried the board’s alleged apprehension over speaking about the lawsuit publicly and claimed that he had received a threatening letter from WAPS’ own attorney.

Prior to running for a seat on the WAPS Board, Sonneman was the attorney for SOS.

 

The next time the lawsuit was discussed publicly in any form was in court. In May, Judge Matthew J. Opat heard WAPS’ lawsuit against SOS for the first time, after the district filed a request for summary judgment –– or judgment without a trial. After hearing arguments from the two groups, Opat told them to write orders for or against summary judgment, which were filed on June 15. Opat then had 90 days to decide whether the case will need to face a trial, which could push it into September –– more than a year after the title notices were initially filed and months after they were removed.

If the court rules in favor of the district, Michlitsch could be liable for more than $10,000 in legal fees, as well as an unknown amount of damages being sought by MC Properties, which joined the lawsuit earlier this year. However, if the court rules for SOS, WAPS would be liable for the group’s own court expenses.

education@winonapost.com

 

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