Opinion: Winery Lawsuit is The Blob That Ate Peninsula Township

Editor’s Note: OMP resident Todd Anson likens the winery lawsuit to Steve McQueen’s 1958 movie, “The Blob.” Read on for his thoughts. -jb

OMP neighbors, it is not my desire to be a critic of local government. I am optimistic by nature. The situation on the Old Mission Peninsula compels me to share my views because of my experiences in law and as a business owner.

Playing out before our eyes in the WOMP lawsuit, as evidenced by our township supervisor’s recent weekly note, which I appreciate, is the predictable, inevitable disaster that defines litigation unless you are a professional litigant. If you’ve read my previous opinion pieces shared on the Gazette, you will appreciate this. One doesn’t control litigation. It controls you. And it eats its own.

The Litigation Blob

It is starting to eat us here on the OMP. The number of involved lawyers is now multiplying. Those of us who have successfully leveraged litigation (always a last resort) come with an understanding of its toxicity.

As a side note, but highly relevant, my business partner and I once prevailed in a suit using brilliant lawyers who delivered us a very substantial $35.7 million verdict. With interest, it reached $45 million. It proved to be the most toxic experience of my career, despite the epic victory.

I learned an important lesson: It is a horror show. In an instant, it consumes you like “The Blob” in Steve McQueen’s 1958 movie of that same title. Absent uncharacteristic sophistication, litigation guarantees you little more than misery and financial devastation.

Why I’m Devoting Time and Energy to This; the Hidden Interest Cost

I am very concerned. Time is the enemy now, and the Township is not in control of it. We should all be concerned. Supervisor Sanders accurately shared that our mess just got messier with a routine, totally expected (by those of us familiar with the evils of litigation) WOMP challenge to Protect the Peninsula’s (PTP) intervention, adding “an additional three to six months” to the timeline.

This, similar to the lawsuit, only happens because of PTP’s intervention, which it seems obvious our township trustees at least tacitly support. (Read PTP’s response to WOMP’s Motion to Dismiss here. -jb)

The Post Judgment Interest Monster

The cost of PTP’s intervention is rising, resulting in mounting legal fees and the prolonged extension of our collective division and misery on the OMP. But with each procedural delay, I urge Supervisor Sanders to be mindful that we also incur an additional hidden $1.224 million in post judgment interest for six months at $6800/day that nobody is mentioning. That’s the bill for this one procedural challenge alone. Thanks to PTP’s intervention.

Expect many more unanticipated challenges and delays. That’s how lawsuits are won and lost. Professionals use this dynamic to their advantage. Needless to say, our Township Board is not comprised of savvy litigation professionals.

At a time of great strife in our world, litigation should not be compared to the horrors of war, but it is a “war” against our wallets and psyches. It traps you like a rat in a maze until it breaks your economic will through the sheer weight of the burden of legal fees that it imposes.

Expect further fights among neighbors when someone decides how and in what amounts the judgment will be borne. Per capita by property owners? By number of voters? By number of people residing at each property? By the ad valorem property taxable valuations?

I Support the Hiring of Insurance Coverage Experts

I have advocated for and support the Township’s filing of its appeal (contrary to my outspoken critic’s opinion piece suggesting I did not), as well as the hiring of expert insurance coverage talent. I caution Supervisor Sanders, however, that she is mistaken to believe they have been hired to “truly figure out what the dollars and cents are.” Litigation doesn’t work this way. It is advocacy, it is adversarial, and it is uncertain until final judgment. It is an all-consuming slog. You only “know” where you stand when you get to the end of the process.

We need Supervisor Sanders, our trustees, and the wineries to “truly figure out” what the “dollars and cents are” by finding a way to bring the wineries to the table to settle this mess. That’s the job! In Steve McQueen’s oldies horror movie cited above, “The Blob” was a gooey blob that arrived via meteorite on earth and swallowed whole everything in its pathway. This litigation is our own “blob,” consuming peninsula culture and finances while destroying our community fabric.

So, please, no more whining by our trustees or their designees. We need them to find a way to initiate these important discussions, no matter what it takes. As a credit to them both, because of the tone of my early opinion pieces, representatives of PTP and the wineries discreetly reached out to me some time ago. There is a will to “get this right,” whatever that looks like. Interestingly, no trustee has been curious enough to reach out to me.

I Also Support Starting With a New Ordinance or “Outline of Rights” Applicable to the Wineries

In true Solomon’s Choice fashion, the wise court gave each side half of what it wanted. The wineries got nearly $50 million and no improved operating terms; the Township got a nearly $50 million bill, but did not grant the wineries improved operating terms, despite the illegality of our ordinance.

The message, “Go work it out yourselves,” could not be clearer. Pay attention to what lawyer laden PTP is not communicating: that there is no liability on our parts. What it hopes to establish (and with this I agree) is that the damage award is out of line. But the Township’s “First Amendment and Commerce Clause” arguments are losers. The wineries have been damaged. I don’t believe anyone at PTP can argue otherwise. The question for appeal is “By how much?”

By now both the wineries and the Township should have been exchanging draft ordinances they each could live with. That has not happened. With flexibility on both sides that can be handled.

By toning down the inflammatory rhetoric, even my calls for “common sense,” “reason” and “a community working together” to “write an inspiring last chapter” to this mess have elicited, we should be able to engage the wineries on at least the ordinance piece of this complex puzzle. It will mean compromise by the most ardent standing in opposition against the wineries, but it will positively signal the majority of us who want this to be rapidly, reasonably and fairly resolved.

We are at a time when the wine business is rapidly declining because consumer demands have shifted towards hard sodas and seltzer drinks. Grape sales are decreasing. (Read a recent story in the Wall Street Journal here). This will soften the future impact, but it also signals future uncertainty over “What comes next?” if our wineries fail. We know the answer: more housing.

Expect More Law Firms – Legal Malpractice, Bond Counsel to Float Bonds, etc.

We should expect additional law firms to be added to our “growing” legal ecosystem before resolution. We will need bond counsel to float any bonds that become necessary to pay the judgment.

There are three insurances, I understand. Two have rejected coverage. More litigation. We must not confuse our lawsuit against former attorneys Greg Meihn and Matthew Wise for legal malpractice with the Township’s insurance policies. Meihn and Wise likely have some coverage, but it is not available to us by simply submitting “a claim.”

The Township will have yet another lawsuit to win once the damages to the wineries are finally determined, and that could take a long time. Expect months and years more of litigation starting at that point. Also expect there to be legitimate defenses, and for settlement to occur well below the damages suffered by the Township. Litigation takes a piece out of every participant, even the parties that prevail.

The Damages

I have given considerable thought to the damages issue. I’ve studied the relevant trial transcripts and WOMP’s expert’s damages report. I remind our neighbors that the Township dropped the ball by not hiring its own damages expert, an unforgivable oversight on our board’s watch. Blame shifting to their lawyer Meihn comes right back to them, as any experienced litigant would have questioned that misstep.

The damages report has obvious flaws. It overstates “net profits” which should, by testimony, be either 1/20 (5 percent), 1/13 (7.7 percent) or 1/12 (8.3 percent) of gross receipts. It is a report of “Lost Profits” (which does not take into account expenses and other factors), not “Net Profits,” “Net Income” or EBITDA, the traditional measures of business profitability.

Our Township essentially defaulted as to the damages alleged. We did not even show up with a brief. Is it 5 to 8 percent of nearly $50 million or $135 million? Will the appellate court agree? I am not a betting man, but think I am right with my analysis. I urge the Township to find a way to settle before much more time passes at $6,800 per day.  

A “win” on appeal by the Township and PTP still leaves us with something like 8 percent of either nearly $50 million ($4.07 million) or $135 million ($11.2 million) plus, now approaching $3 million in legal fees. Figure our “best case” is $7 million and perhaps $14 million. That’s if we prevail on the appeal. A big “if.”

We Have a Choice

The choice we have is to prioritize working this through by parking our differences and initiating discussions. It is up to the township trustees to make this happen. Nobody said it’s easy. But that is the job we elected them to do.

The wineries have a choice to listen, if not initiate those discussions. Let’s stop throwing rocks at the businesses who have been aggrieved. Let’s get the wineries to the table. The first order of business should be to work towards an acceptable ordinance. I encourage the wineries to take the first stab and to submit it.  

Then we can focus on the money. The “third party” money, the insurance money will never be on the table until millions of carried interest at $6,800 per day has eaten us alive because, whether liability coverage or malpractice recoveries, all third party money requires ever more litigation. If smart, we will stop the post judgment interest clock immediately.

Let’s get busy working to resolve our mess with the goal of having an ordinance agreed to by Halloween. Things will come together quickly if we can accomplish this important task together.

Thank you.

-Todd Anson, Old Mission Peninsula resident

Also Read…

Supervisor’s Weekly Note: Winery Lawsuit Update, Fire Department Open House & More

Opinion: Peninsula Township, Protect the Peninsula, and the Wineries Should Strategically Align