EVMWD brings in new attorneys for Lake Lease litigation

By Sharon Rice, Editor, The Friday Flyer


This image is from the Lake Lease website, www.canyonlakepoa.com.

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The Association has created a comprehensive website for those who want to follow the Lake Lease dispute between the Canyon Lake Property Owners Association and the Elsinore Valley Municipal Water District.

Yesterday, November 5, Superior Court of Riverside County was scheduled to hear a motion by Canyon Lake attorneys Silldorf & Levine to disqualify EVMWD's legal counsel, Best Best & Krieger LLP, from representing the water district in all matters related to the current Lake Lease litigation due to a conflict of interest.

However, it appears EVMWD preempted that action by announcing last week that they were replacing Best, Best & Krieger, turning the Lake Lease litigation over to attorneys James Sandler and Jeffrey Byer of the San Diego-based law firm, Sandler, Lasry, Laube, Byer and Valdez.

At Tuesday's Regular Session Board meeting, Legal Counsel Scott Levine noted, "It should be clear that BBK has zero intention of stepping aside until the court tells them to."

Sources said on Wednesday, November 4, a judge agreed with EVMWD's position that Best Best and Krieger had withdrawn from the case so the legal motion to disqualify them was now moot and Thursday's hearing was no longer necessary. The POA had not confirmed or denied this information as of publication deadline.

All legal documents related to the Lake Lease litigation can be read on the website website (linked to www.canyonlakepoa.com).

In the case that was scheduled to be heard Thursday, the reasons Canyon Lake's legal counsel wanted BB&K disqualified from the case is explained in their legal analysis: Best Best & Krieger LLP represented the CLPOA in negotiations with the developer during the beginning of the Canyon Lake development when the developer was still constructing lakefront improvements and amenities and transferring lakefront property to the Association and its members.

Best Best and Krieger also negotiated an amendment to the Lake Lease that is the subject of the current litigation.

The legal motion states, "BB&K LLP now represents Elsinore Valley Municipal Water District in legal action against Canyon Lake Property Owners Association as to that same Lake Lease, and the exact amendment that BB&K negotiated, and to determine the same rights of the parties as to the same lakefront improvements, amenities and property interests. The only difference between the past and the present is that BB&K has simply switched sides in the legal dispute. The law does not allow this."

After a bit more explanation, the motion states, "As such, BB&K has an irreconcilable conflict of interest between its former and current clients, and must be disqualified from representing EVMWD."

Following this introduction, the motion provides several pages of “Facts” under this outline:

A. Relevant history of the Canyon Lake development

B. BB&K represented CLPA as to the follow issues:

  1. Negotiation of the Second Amendment to the Lake Lease

  2. Request to the California Real Estate Commissioner

  3. CLPOA's withholding of Lake Lease Payment

  4. Dispute Regarding Property Rights of CLPOA/Lakefront Homeowners

  5. Dispute as to Construction and Maintenance of Property Improvements on the Lake

C. Current litigation.

One point of interest is under B3, "withholding of Lake Lease payment." It states, "During CLPOA's negotiations with the developer entities, BB&K advised CLPOA to withhold the Lake Lease payment. The CLPOA's Board meeting minutes reflect, '(CLPOA GM) stated that he had a call from the Temescal Water Company requesting the lease payment due in April (1970) of $34,000. Mr. Amschel (of BB&K) felt that payment should be delayed until he has time to examine several documents that he has not received from the California Real Estate Commission and from Riverside County . . . We have recently employed Best Best and Krieger as attorneys who are in the process of examining all legal documents as to legal obligations of the POA, and that payment will be delayed until such time as the attorneys have had time to examine these documents.'"

Fast forward to this past March when the CLPOA Board informed members that it had withheld the quarterly Lake Lease payment, ostensibly to force EVMWD to the negotiating table. The circumstances are different, and the Board received a great deal of criticism for its action, but as history shows, withholding a Lake Lease payment is not without precedent.