County agrees to accept $1.2 million settlement in legal malpractice lawsuit

The board approved the amount subject to the law firm’s approval of the amount, with specific settlement agreement terms to be approved by the county’s legal counsel in the case and by the county attorney.

The settlement stems from a lawsuit concerning an alleged procedural error tied to a proposed 2015 bond issue.

In March of 2015, the City of Harris within Osceola County contacted the county and requested funding assistance for sanitary sewer system and wastewater treatment facilities.

The county agreed to obtain funding to complete the project and also sought to obtain funding to improve a county road known as White Avenue. Attorneys John Danos and Amy Bjork at the Dorsey & Whitney law firm allegedly agreed to prepare all the necessary documentation and proceedings so the county could issue specialized tax increment financing bonds for the project.

On Sept. 21, 2015, Bjork allegedly sent an email to Osceola County that included a proposed resolution setting a date for a public hearing on the creation of an Urban Renewal Area that would be established in connection with the TIF bonds.

Because the area encompassed land in both the county’s and the city’s tax jurisdictions, Iowa law required that a joint agreement be signed and adopted by both the city and the county before final approval of the Urban Renewal Area.

On Sept. 22, 2015, the Osceola County Board of Supervisors adopted the resolution and set the final public hearing date for the formation of the Urban Renewal Area, to be held on Oct. 20, 2015.

The resolution allegedly stated a joint agreement had been presented to the county board and it directed the county auditor to forward that agreement to the City of Harris. In fact, the lawsuit claims, Dorsey never provided Osceola County with any such agreement

On Nov. 3, 2015, the county and city were sued by several taxpayers claiming the new Urban Renewal Area was illegal. The attorney for Osceola County’s insurance carrier allegedly inquired about the lack of the legally required joint agreement, which led to Danos sending county officials an email on Nov. 24, 2015. In that email, Danos allegedly wrote, “Here is the agreement, just have Osceola execute it. The board has already approved it, and it is still timely.” Attached to the email was a copy of an agreement that had never been approved, lawyers for the county later alleged, and the deadline for its approval had already passed.

Danos allegedly followed that email with one that included an “updated” version of the joint agreement indicating it was merely memorializing an August 2015 verbal agreement between the county and the city.

There was no factual basis to support the claim of a prior “verbal agreement,” the county would later assert. “The purpose of Danos’ second joint agreement was an attempt to cover-up Dorsey’s error in failing to send a joint agreement before Oct. 20, 2015,” the lawsuit claimed.

The lawsuit between the county and Dorsey & Whiteney remains active at this point, with no court record indicating the final settlement agreement has been approved by all of the parties.

Calls to the Dorsey & Whitney offices in Des Moines and Minneapolis were not returned Monday and Tuesday.