A Colorado district court judge dismissed a class-action lawsuit filed by several La Plata County residents against La Plata Electric Association regarding the cooperative’s separation with Tri-State Generation and Transmission.
In September, plaintiffs David Peters, Audrey Sue McWilliams, J Paul Brown, Thomas and Lorene Bonds, Dale Ruggles, Heath Roa and Seana Lazar filed the class-action lawsuit against LPEA. They argued that LPEA’s board of directors violated the co-op’s bylaws when it voted to exit Tri-State.
Specifically, they said, the board’s decision included accepting a lump-sum payment for roughly $71 million in Tri-State’s excess profit margins, which the co-op owned at the end of 2024.
That, the plaintiffs said, amounted to a sale of more than 10% of LPEA’s total assets – valued at about $288 million in 2024. They cited Article IX of the co-op’s bylaws, which states that the board cannot authorize an asset sale that large without putting it up for a vote among LPEA’s members.
However, 21st Judicial District Chief Judge Brian Flynn said Thursday that the board had not actually sold any of LPEA’s assets and therefore had not violated Article IX.
“LPEA’s election to receive the ‘net present value’ of its patronage capital as a single discounted lump sum payment was not a ‘disposal’ of more than 10% of its assets,” Flynn said. “Instead, LPEA merely withdrew its patronage capital at its present value.”
Article IX entitles LPEA’s members to vote specifically on a sale of the co-op’s assets.
“All sales of such assets shall not, in any one year, exceed in value 10% of the value of all of the assets of the cooperative, unless a majority of the members voting thereon authorize annual sales exceeding that value level,” the bylaw said.
LPEA’s board of directors can approve any disposition of its property apart from specific sale valued at more than 10% of the co-op’s total assets, Flynn said. Because of that distinction, the plaintiffs’ claim did not actually hold up under Article IX.
“(The) claim that LPEA members are entitled to vote on a ‘disposition’ of more than 10% of LPEA's assets is contrary to the plain language of Article IX,” he said.
Flynn said the existing language of Article IX would need to be rewritten to grant LPEA members the right to vote on any disposition – not specifically a sale – of more than 10% of LPEA’s assets for the plaintiffs’ complaint to hold up.
Because of that, he dismissed the case with prejudice, meaning the plaintiffs are permanently barred from filing the same complaint against LPEA.
A news release from LPEA issued after the ruling said the dispute cost the co-op more than $100,000 in legal expenses. Those costs will ultimately be paid by all of LPEA’s members, the release said.
LPEA CEO Chris Hansen did not respond to request for comment on how those costs would be passed on to members and what could be learned from the lawsuit.
“We are pleased with this decision, and our focus remains on delivering affordable, reliable power,” Hansen said in the release. “We will continue to build a flexible, locally driven energy portfolio for our members.”
Peters and the plaintiffs’ attorney Benjamin Wegener also did not respond to requests for comment.
sedmondson@durangoherald.com
