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Racketeering claim against airport authority board members dismissed

A judge from Maricopa County Superior Court on Oct. 25 dismissed a claim of racketeering and fiduciary breach of contract against board members of the Kingman Airport Authority. (Daily Miner file photo)

A judge from Maricopa County Superior Court on Oct. 25 dismissed a claim of racketeering and fiduciary breach of contract against board members of the Kingman Airport Authority. (Daily Miner file photo)

KINGMAN – Judge Timothy Thomason dismissed a motion brought by City of Kingman outside counsel claiming that Kingman Airport Authority board members engaged in “racketeering” activity and were “aiding and abetting” a breach of their fiduciary duties.

The Maricopa County Superior Court judge further ordered that the defendants, KAA, have 10 days from his Oct. 25 ruling to file a motion for sanctions on the racketeering claim.

“It appears that this racketeering claim is also frivolous and should not have been brought,” Thomason said in his order.

It does not seem plausible that KAA defendants engaged in some sort of organized criminal activity amounting to a “pattern of racketeering activity,” the judge determined.

The Phoenix law firm of Spencer Fane and lead attorney Andrew Federhar moved to dismiss the claims asserted by Kingman’s hired attorney, Daryl Williams.

The lawsuit started in December when Spencer Fane was hired by KAA to represent the entity in a condemnation filing on Kingman Airport and Industrial Park.

The City wants to be reimbursed for the legal fees charged by Spencer Fane to represent KAA in the condemnation case, which is estimated at $400,000 to $500,000.

Thomason took issue with Williams’ contention that the condemnation case was “irrelevant” to his motion.

“Indeed, that is a rather ridiculous proposition,” the judge said. “The condemnation suit is highly relevant. It is the very thing that led to this lawsuit.”

In July, Judge Steven Moss, handling the condemnation case through Mohave County Superior Court in Lake Havasu City, ruled that KAA could use its available financial resources to pay legal fees to defend the condemnation action.

Judge Thomason cited the 2007 case, Harris v. Cochise Health Systems, in dismissing the plaintiff’s damage claims against the KAA defendants, which included eight former board members. Plaintiffs failed to file a timely notice of claim against the defendants.

He also cited Kohl v. City of Phoenix (2007) in giving the KAA defendants absolute immunity from the claims. Arizona law provides that a “public entity” is immune for acts that constitute “exercise of an administrative function involving the determination of a fundamental governmental policy.”

Also, the new “aiding and abetting” claim is based on an alleged principal-agent relationship. To state such a claim, the plaintiff must establish that KAA breached a fiduciary duty owed to the city, and that Spencer Fane assisted or encouraged the breach of duty.

Email requests for comments from board member Vearl Haynes and attorneys Williams and Federhar were not returned by the Daily Miner’s deadline.

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