Walloon water owner Dennis Hass to drop some defendants from conspiracy suit; prosecutor threatens contempt of court filing

Benjamin J. Gohs, News Editor

Water system owner Dennis Hass will “stay” proceedings against at least four defendants named in a June 26 federal court filing—but there is a catch.
Hass’ attorney Hugh “Buck” Davis made the offer in a letter dated Aug. 24, and addressed to defendants and Walloon Lake Water System customers Bunny Marquardt, Gale Charbonneau, Lena Carlisle, and Maud Bray.

“After consultation with (Charlevoix County Prosecuting Attorney) Allen Telgenhof, I am proposing to stay the proceedings against you (defendants) in exchange for a tolling agreement,” Davis stated.

 

“Mr. Telgenhof takes the position that the Assurance of Discontinuance signed by him and my client, Dennis Hass, in September 2013, prevents me from bringing this lawsuit against you because of the provision in that agreement that Mr. Hass and/or the Walloon Lake Water System (WLWS) would not retaliate against you for the various charges and other hostile acts which you undertook in an effort to force Hass to sell WLWS and/or have it taken from him by virtue of a forfeiture under the racketeering statutes.”

Davis added, “I disagree with Mr. Telgenhof and believe that, fairly read, the Assurance of Discontinuance refers only to matters relating to the provision of water to you (defendants).”

The case, filed by Hass and his wife against Melrose Township, its attorney Peter Wendling, former Charlevoix County Chief-Assistant Prosecuting Attorney Shaynee Fanara, Charlevoix County Sheriff Deputies Todd Reeves, William Church, and Robert Scholey, as well as the aforementioned Walloon Lake Water System customers, makes claims of a conspiracy to force the Hasses into selling their water system.

“I disagree with Mr. Davis’s assertion that Hass and WLWS couldn’t waive their right to sue the customers in their agreement with me,” Telgenhof told the Boyne City Gazette on Friday Aug. 28. “The agreement arose under the Michigan Consumer Protection Act. The customers were clearly intended as third party beneficiaries of the agreement. Parties waive their rights to sue every day.”

The issue began when Hass and his wife were accused of racketeering and extortion only to later have the charges dropped.
According to a statement by Telgenhof in September 2013, for years, a number of residents of Walloon Lake complained about various unfair business practices that were allegedly utilized by Dennis Hass and his business Walloon Lake Water System Inc. Some of those practices led to the filing of criminal charges and

some residents contemplated civil actions as well.

As a result of the charges, Hass signed an Assurance of Discontinuance agreeing not to engage in the alleged practices, including requiring customers to pay water bills incurred by prior property owners, placing liens upon customers’ properties for fees owed by prior property owners, threatening to shut off water supply to customers for reasons other than non-payment of monies legally owed, and requiring customers to purchase replacement parts directly through him.

At one point during the case, both Hass and his wife were charged with felony racketeering that could have carried a maximum sentence of 20 years in prison and up to $100,000 in fines.

They had also been charged with use of false liens, which were also felonies and could have carried sentences of three years in prison and up to $5,000 in fines.

Some of the early charges in the case had alleged that Hass and his wife had directly or indirectly participated in a “pattern of racketeering activity” between Jan. 1, 2000 and June 11, 2012 in Walloon Lake and Melrose Township.

Per the agreement, Hass had agreed to pay restitution of $7,500 to citizens aggrieved by his actions, and he promised not to take any retaliatory actions against the complainants.

Violation of the agreement could subject Hass to a civil fine of up to $5,000 per occurrence.

Also, criminal charges pending against Hass in Charlevoix County were dismissed without prejudice, so that they may be re-filed if Hass violates the agreement.

Later, in 2013 and 2014, a group of customers worked toward a deal wherein Melrose Township would buy the water system from Hass for an estimated $1.3 million.

The plan—which seemed to be moving toward completion as recently as this January—was to finance the purchase of the water system, that serves an estimated 240 customers, through payments that would have been made by customers if the deal had gone through.

“The day that I received notice of the suit, I contacted Mr. Davis and informed him of my belief that the suit violates the assurance of discontinuance that his clients entered into with this office,” Telgenhof told the Gazette. “As such, if the case was not dismissed, I would file the appropriate paperwork to ask the circuit court to have his clients held in contempt.”

According to Hass’ recent suit, filed in the Southern Division of the United States District Court’s Western District of Michigan, “Defendants … engaged in concerted action through letters, communications, demands, offers and prosecutions to force plaintiffs to sell their property to the (Melrose) Township. The fairness or not of any offer or purchase is irrelevant. Plaintiffs did not want to sell.”

Hass’ lawsuit further states, “These concerted and extra-legal (illegal) attempts by defendants, and each of them, constituted concerted action and conspiracy to violate plaintiffs’ Fifth and Fourteenth Amendment rights.”

No dollar amount for damages was disclosed in the filing.

“I do not believe that any private agreement between a state prosecutor and an individual citizen in a civil action in state court can forfeiture federal constitutional and civil rights, particularly including the First Amendment right to petition for redress of grievance and of access to the courts,” stated Davis.

Davis added, “But rather than engage in a needless ancillary fight, Mr. Hass is willing to take a voluntary dismissal without prejudice and without costs against you if you are willing to agree that the matter be tolled. The implication is that you could be brought back into the case at some future time, depending on the development of the facts and the law. On the other hand, if I can obtain satisfaction for my clients without reinstating you as official party defendants, then there would be no need.”

According to Telgenhof, he cannot represent the customers personally.

So, they should speak with their own attorneys and decide how best to proceed.

“In my opinion, with the proposal, they can save the time and expense associated with defending a lawsuit at this time,” Telgenhof told the Gazette. “If, in the future, the action is refiled, they would be in no worse position than they are today.”

He added, “It is highly likely that, if the other defendants in the case were successful in obtaining a dismissal, that result would also preclude rejoining these defendants. It may be, however, that the customers would prefer to have this matter resolved in federal court at this time and that is certainly their right.”

According to Davis, even if the four defendants sign the tolling agreement, they would still be witnesses in the case and subject to deposition and other discovery; and, they will still be non-party co-conspirators from the Hasses’ point of view, and the complaint will not be amended.

“Until the issue has been decided, you do not need to be concerned about filing an answer to the complaint,” Davis wrote. “We will forbear until then. But, if the voluntary dismissal/tolling provision is put into place, we will want you to acknowledge the service of the summons and complaint without us being required to undertake any further efforts.”

According to Telgenhof, the Hasses want the tolling agreement from the customers because of a concern that, if discovery in the case reveals facts that would prompt them to refile against the defendants in the future, they would be prohibited by the statute of limitations.

The Hass’ Walloon Lake Water System, which has been in Hass’ family for nearly 100 years, is the only privately-owned municipal water system in the state.

Though rare, this type of private water utility service is allowed since the State of Michigan deregulated water utilities in 1996.
The deregulation allows for rules, regulations, rates and fees to be imposed by the water provider at its sole discretion.

 

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