Balser opts out of lawsuit challenging BIPCo purchase

Shorey resigns, then returns
Fri, 01/26/2018 - 9:15am
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Block Island Board of Utility Commissioners member Mary Jane Balser has had her name removed from a lawsuit challenging the Financial Town Meeting vote in September of 2016 that paved the way for the Town of New Shoreham to acquire two-thirds of the shares of the Block Island Power Company. The suit, whose lead plaintiff is former Town Councilor Chris Warfel, was rejected in its first go-round in court, but was appealed to Superior Court and awaits a hearing later this month. Balser announced her decision at the Commissioners’ meeting on Jan. 18, saying she had thought the lawsuit “had gone by.”

Ongoing and potential litigation have particularly been on the mind of Commissioner Everett Shorey. Shorey had obtained a quote for directors’ and officers’ insurance from the agent that is used by BIPCo. At a previous meeting, Balser and Commissioner Bill Penn had thought the quote high, and agreed to get further quotes. However, neither were able to get one, citing lack of both bylaws and financial information. Balser said that the application she was presented with was 20 pages long, and she didn’t know what to put down for several items.

Penn said his experience was the same as Balser’s, citing the lack of bylaws, income and assets. He thought obtaining D&O insurance may be “premature,” and that the application “requires financial information we don’t have.”

“We don’t have all the information,” said Balser.

“Well, we have a quote,” said Shorey. “I’m going to say this is not premature.” He went on to say that if the D&O insurance was not approved, he would resign. “My wife and I have an agreement that we will not be on boards and commissions where our net worth is at risk.”

When asked what financial information Shorey had used on the application, he said that since the agent was familiar with the financials of BIPCo, they had used that, a move that, for some reason, Penn took exception to – even calling it “illegal.”

“The insurance agent for BIPCo was willing to work with us,” said Shorey.

“We have three insurance companies that refused to underwrite us” because we have no financial information, said Penn.

“That doesn’t prevent someone from suing us,” said Chair Barbara MacMullan. 

“The fundamental question is, do we want to do this or not?” said Shorey.

“I think we should do it,” said MacMullan.

“I agree we need D&O insurance,” said Penn, although he again said:  “I think it’s premature.”

“We can either move forward with a higher premium, or you lose a commissioner,” said Shorey.

“I don’t like a threat,” said Penn.

When the matter came up for a vote, both Shorey and McMullan voted to accept the quote. Balser voted in the negative, and Penn abstained.

Commissioner Jack Savoie was absent from the meeting, so at first the two to one vote seemed to carry. However, Penn pointed out that the enabling legislation included language that any votes must me affirmed by a majority of the five commissioners, not a majority of those at a meeting.

“So the motion does not carry,” said MacMullan. 

“Unfortunately, I’m resigning,” said Shorey, who packed up his things and left the meeting.

By the next meeting, just five days later, on Jan. 23, Shorey rescinded his decision, which he had never actually put in writing. While he wasn’t present due to a sudden weather-related change in the boat schedule, the remaining commissioners did vote to accept the D&O insurance quote that had been obtained by Shorey. Balser also was unable to attend the meeting.

They had also gotten some feedback from Jim Hahn, of Partidge, Snow and Hahn, which the Commissioners have retained for legal and tax advice, on the wording in the legislation that calls for a majority of all the commissioners to vote affirmative on any actions, as opposed to a majority of those present, as long as those present constitute a quorum.

MacMullan said Hahn agreed that the legislation called for a majority of the commissioners to vote affirmative on any actions taken. “He thinks that’s an error” in the legislation, she said.  “I have a feeling it was an oversight.”

Savoie, who served on the Town Council for several years, said: “If that was in effect, on the Town Council, nothing would ever happen.” He gave the example of the annual renewal of liquor licenses, in which two of the five members of the Town Council regularly had to recuse themselves from the proceedings. 

“That’s what we’re stuck with for now,” said MacMullan, indicating that the legislation could be changed eventually.

The rest of both meetings were mainly focused on the crafting of the bylaws. In between meetings, MacMullan had Hahn review what they had crafted so far, and they incorporated some of his suggestions. 

BIPCo President Jeffery Wright suggested that the part of the bylaws that called for an annual meeting of the Utility District be on the second Saturday of August be changed so as to give more flexibility in the case that there was some sort of event that would preclude having the meeting on that day.

His suggestion was accepted, and the bylaws will instead call for an annual meeting “sometime in August.” 

The bylaws, which the commissioners feel are now complete, will be sent to the attorneys for a final review, and if there are any changes, they will be considered at a meeting on Sunday, Jan. 28. That meeting will be held at 9 a.m. at the Fire Barn/Police Station.