Sibley East School District Loses $2.9 Million Lawsuit Against Farmer Nathan Kranz

1

lady justice

In a victory for Minnesota government watchdogs and activists, First Judicial District Judge Kevin Eide ruled against Sibley East School District’s lawsuit demanding farmer and school district referendum opponent Nathan Kranz pay $2.9 million in “damages” to the district after a protracted court battle over a $43 million bond referendum. (Sibley East Settlement)

On Nov. 4, 2014, Sibley East School District passed a $43 million bond referendum.  Represented by attorney, Erick Kaardal, Mr. Kranz filed an election contest based on “procedural irregularities” occurring before the election against Sibley East.  After months of appeals that included the Court ordering Mr. Kranz to pay a $295,000 surety bond (additional to the $5000 bond filed with the election contest), the Court ruled in favor of the school district affirming the passage of the $43 million bond referendum.  Sibley East sold the bonds on June 10, 2015.  However, claiming the bond sales delay caused increased interest over the life of the bonds, the school district filed a motion requesting the court hold Mr. Kranz in contempt for failing to pay the $295,000 surety bond and for damages resulting from additional interest accrued over the life of the bonds totaling $2.9 million.

On January 21, 2016, First Judicial District Judge Kevin Eide denied Sibley East’s motion for the $2.9 million, citing that Minn Stat. §209.07, Subd. 4 does not include a provision for a school district’s claim for damages.  In his ruling, Judge Eide states:

“The Court reiterates its concern that if contestants faced potential liability for all possible damages associated with a contest, they may be less likely to assert what may be a valid election contest for fear of the financial consequences of a loss…Furthermore, the Court will not read Minn. Stat.§209.07 to include a claim for damages where such a specific provision was not made.” (Emphasis added.)

The Mankato Free Press reported:  (Erick Kaardal said )”the decision (was) ‘just right.’ Kaardal said this phase ended up being more important overall than the original case, as it pertained to how those who challenge election results will be treated…’Our concern in bringing the Rule 11 motion was that other people who have election contest issues not be discouraged,’ Kaardal said…And for challengers, the threat of damages can discourage bringing election concerns to court. Other referendum challengers or potential challengers have asked Kaardal about that risk…’Mr. Kranz had a legitimate concern that he was going to lose his possessions,’ Kaardal said, calling the decision “fantastic for Mr. Kranz.’”

In an email Mr. Kranz said:

“Our family and I are absolutely elated to finally get word this afternoon that Judge Eide has ruled in our favor! On all counts!

It showed the school districts frivolous nature and outright contempt for the process with this lawsuit. The school board should be ashamed for what they tried to do to us and all people who dare hold governments accountable. This is the third time they sued us. twice for attorneys fees in district and appeals court and now this. We pray they will not appeal this decision now. I highly doubt it.

We owe Mr. Kaardal and his team a debt of gratitude for defending us and showing us all how it’s done!” (Click here for a KEYC interview of Mr. Kranz)

In a similar case reported by Alpha News, last fall members of the referendum opposition group, South Washington Citizens for Progress committee, also represented by attorney Erick Kaardal, filed a similar lawsuit  in the Tenth Judicial Court against South Washington County ISD 833 contesting the election of a $96 million bond referendum.  ISD 833, represented by the same law firm that represented Sibley East, Mendota Heights based Knutson, Flynn and Deans, PA, also requested the court to require the Plaintiffs, Susan Richardson, et al, to file a $9.3 million surety bond in the case of an appeal, citing the Sibley East case as evidence for the need of the additional surety bond.  Ultimately, Judge Kathleen Gearin ruled in favor of ISD 833, passing the $96 million bond by five votes.  In the Settlement Agreement concluding the case, the Plaintiffs agreed “to waive and give up any and all rights they have to file an appeal in this action and hereby dismiss any and all known or unknown claims with prejudice.  Contestants also agree that they will not bring any other claims or charges against the School District in any forum with regard to the November 3, 2015 School District bond referendum question.”

In an email at the conclusion of the case, Susan Richardson said “…the $9.3 million surety bond requested by the school district played a role in our decision not to appeal…” and in an op ed piece published in the St. Paul Pioneer Press, the Plaintiffs stated, “…the plaintiffs could have faced a civil suit had they lost the Supreme Court challenge. The school district claimed the “holding up of bonds” would cause additional costs with respect to increased interest rates and construction costs even though the issuance of bonds would not occur until Feb. 4, 2016, at the earliest.  The lack of financial means coupled with the possibility of a civil action were so egregious that an appeal could not filed and this historic case could not reach its proper judicial review at the Supreme Court.”  In response to Alpha News when questioned about the Sibley East/Kranz decision, Susan Richardson replied, “If the Kranz decision had been made prior to the conclusion of our election contest case, we may have decided to pursue an appeal.  The fact is that the fear of being held liable for $9.3 million if we lost our case, played a huge part in our decision not to appeal. As Judge Eide said in his ruling, fear of the financial consequences of filing an appeal of what we felt was a valid election contest prevented us from moving forward with our case.”

Updated 6:13 Jan. 28, 2016

Comments

comments