Partial summary judgement denied in TCT case

LANDER - Ninth Judicial District Court Judge Norman E. Young has denied a motion for partial summary judgement filed on behalf of the plaintiff, in the case Campbell versus Tri-County Telephone Association.

The lawsuit, filed in December 2016 by a former board member of TCT, claims that the original, 2014 sale of the telecommunications company was undervalued and defrauded approximately 825 members of the Tri-County Telephone Cooperative.

On Jan. 29, attorneys for the plaintiff argued that the sale of TCT violated Wyoming Statute 17-20-1106, which states that for a non-profit entity to convert to a for-profit corporation, “the corporation is not a cooperative utility pursuant to the Wyoming Cooperative Utilities Act” and that the transaction was illegal. The plaintiff’s attorney, Drake Hill of Cheyenne, further argued that all assets of TCT should have been sold off before purchase, and the company reformed.

Judge Young denied the partial summary judgement on June 18, stating, “The Court finds there is a legal, statutory framework by which the transaction as structured could occur, therefore, the agreements are not void in their inception.

“Specifically, and quite simply, the court finds that [Wyoming Statute] 17-20-1106 provides the statutory authority for the merger of a cooperative utility with an entity other than a cooperative utility, provided certain conditions have been met and/or complied with.”

The judge also ruled that the procedure utilized the TCT board of directors regarding the sale (the use of mail-in ballots) did not violate the statutory authority or bylaws.

The suit, filed by attorneys Robert DiLorenzo of Emblem and Hill on behalf of former board member Joe Campbell and his wife Barbara, of Hamilton Dome, alleges fraud and violation of Wyoming statute concerning the sale or disposition of assets of a cooperative utility, and also alleges civil conspiracy to defraud and breach of fiduciary duties.

The suit names TCT CEO Chris Davidson, CFO Steve Harper, former board members Dalin Winters, Clifford Alexander, J.O. Sutherland, Daniel Greet and John K. Johnson as defendants. Also included is purchaser Neil Schlenker of Meteetse.

The suit alleges that TCT held hard assets of over $90 million when TCT was sold for $51 million in 2014, less $12 million to retire debt and $10 million held back for “unseen liabilities”, leaving $29 million paid to Tri-County Telephone cooperative members.

According to the complaint, the “total transaction was not $51 million” and therefore the owners were “bilked out of tens of millions of dollars of value that they owned” in TCT.

In Cody on Jan. 29, Hill had requested that the court overturn the sale of the telecommunications company, and that the court appoint an interim board of directors, with a standing board to be elected as quickly as possible. Hill also recommended the return of all pre-takeover assets, including Verizon, Best of the West, Eleutian and all TCT stock.

Representing the defense team, Robert Jarosh countered that 12 professional corporation attorneys were involved in the sale of TCT, and surely they couldn’t be compared to “a single disgruntled former employee and his lawyers” when it came to Wyoming laws involving corporations.