Judge to decide who runs Seventh Mountain Resort

A Deschutes County judge will decide which of two dueling boards of directors will ultimately govern Bend’s feud-riven Seventh Mountain Resort.

But not until June.

Circuit Court Judge Alta Brady agreed Tuesday to set a June 17 trial to decide which of the rival condominium association boards was actually elected Dec. 31.

In the meantime, a temporary restraining order that Brady issued Jan. 25 dictated that the Association of Unit Owners’ “old” board, dominated by members of the controlling Papé family and its allies, will officially run the iconic resort until the legal dispute over the association’s leadership is untangled.

Still, the fog of war is having its effects, according to the resort’s general manager, Bill Friedman.

Some of the inn’s 140-or-so unit owners aren’t sending their monthly payments to the same old place, Friedman said, either because they’re confused by the double-board situation or because they’ve simply stopped paying.

Because of that, Friedman, a Bend city councilor who manages the association’s money through his bookkeeping business, Cascade Bookkeeping, said he is juggling the inn’s bills to stay ahead.

And the association is shelling out about $100,000 a year to fix the water damage that’s being caused by the problem that split the association wide open last fall, Friedman said.

Most of the 35-year-old complex’s aging siding and roofing needs to be replaced, but how much it will cost, who will pay and how fast they will pay is at the heart of an argument that could be tied up in court for years.

Meanwhile, the old inn, and its condo owners, may be caught in the lurch.

How long?

“The need (to fix the buildings) doesn’t go away just because we’re tied up in court,” the association’s lawyer, Tamara MacLeod, lamented.

That’s true, said Bruce Cahn, an attorney for the group of unit owners who sued late last year to block a $17.7 million assessment to fix the siding, then put its own slate of candidates up for election Dec. 31 — maybe successfully and maybe not — to unseat the old board. But the dissident owners are suffering as well.

“We have people who want to sell and can’t because their units have $70,000 in assessments sitting on them,” Cahn told Judge Brady, promising to get his side of the case ready as quickly as the judge can set a comprehensive trial.

But, given the case’s complexity — 32 pages and nine separate issues raised just in the unit owner’s suit against the Papés and INNspired, their management company — Brady said the case has “all the hallmarks” of a case that could take two years or more to reach trial, unless some kind of settlement is reached.

Dr. Peter Bours, a unit owner who leads the dissident “new” board that claims it was elected Dec. 31 to oust the Papé-dominated board, met with Jordan Papé and INNspired Vice President Danny Hollingshead earlier this month, according to a Feb. 14 posting on the “new” board’s Web site, www.innowners.com.

The meeting, which included several other members of the new board, was amicable, Bours wrote, but has not yet resulted in a settlement.

Whatever the case, Brady moved Tuesday to unravel the resort’s tangled management situation with a relatively quick June trial.

Dueling boards

The resort’s battles center around who will pay how much — and how fast — to fix its aging buildings.

The Papé family’s INNspired spent a so-far-unspecified amount four years ago to renovate the resort’s public areas, including its small retail strip, its swimming pool and skating rink, and its conference center and restaurant.

Estimates of their renovation costs run from $6 million to $7 million.

Much of the dispute centers around how fast the rest of the resort’s condo owners will compensate INNspired for its costs.

According to the company’s lease agreement, it would be entitled to a 35 percent credit against any repair assessments levied before Dec. 31, 2007 — in effect, getting its money back relatively quickly by getting a discount on its bill for replacing siding and roofs. After that date, its credit is slated to slide to around 11 percent — in effect, delaying full repayment indefinitely.

Based on cost estimates produced by a Vancouver, B.C., engineering consultant, Jordan and Mary “Susie” Papé pushed a vote for the $17.7 million assessment through the “old” board that they and their allies dominated in November — beating the Dec. 31 deadline by a month.

That move essentially created $11,000 to $108,000 bills for each of the condo’s individual owners, due within three years.

Dissident unit owners, incensed by their impression that the vote was rushed through to gain the maximum discount for INNspired, filed suit to block the assessments and launched their own campaign to recall the old board and replace it with their own members.

That movement came to a head Dec. 31.

After a contentious New Year’s Eve meeting, the Papés said that they won the vote, partly with proxy votes they obtained by buying additional units in December, and partly by concentrating all of their voting power on five of the nine board seats to maximize their leverage.

The dissident group, led by Bours, said those maneuvers were illegal, according to the resort’s bylaws.

Instead, saying that they had actually won the election, Bours and the new board convened an immediate meeting in which they negated the $17.7 million assessment and fired Friedman and MacLeod.

Those moves, in turn, were effectively reversed by Brady’s Jan. 25 order, which returned control of the resort’s day-to-day business to the Papé-run board until the court fights can be resolved.

Brady’s order also cemented Friedman in the general manager’s role, at least for now, and maintained MacLeod as the association’s legal counsel.

But business isn’t running as usual, MacLeod said.

“How willing are contractors going to be to even give us an estimate on the repairs if they don’t know whether we’ll have the authority to keep an agreement with them after June?” MacLeod asked in a courtroom hallway after Brady set the trial date.

“We are eminently confident that we are the duly elected board … but the situation isn’t settled.”