A group of eight La Plata Electric Association customers have filed a class-action lawsuit against the energy supplier, alleging LPEA should have taken the separation from Tri-State Generation and Transmission Association to a vote of LPEA’s membership.
LPEA is seeking to have the suit dismissed, suggesting the plaintiffs misunderstand the organization’s bylaws.
The seven-page complaint was filed on Sept. 16 by eight members who reside in Durango, Ignacio and Bayfield, and adds that it is on behalf of the members of LPEA and all others similarly situated, with the plaintiffs represented by the Law Offices of Wegener Lane and Evans, P.C.
The complaint states, “Upon information and belief, the Member Class exceeds 36,600.”
The allegations
The complaint against LPEA alleges, “Upon information and belief, as a member of Tri-State, LPEA owns approximately $71 million in Tri-State patronage capital as of year-end 2024; this patronage capital represents LPEA’s ownership interest in Tri-State and is therefore an asset of LPEA.”
The complaint then notes that on or about March 26, the LPEA Board of Directors adopted a resolution calling for LPEA’s withdrawal from its membership and contract with Tri-State, with a withdrawal date of April 1, 2026.
It adds, “Pursuant to Tri-State’s Rate Schedule No. 281, as a withdrawing member, LPEA had two options: ‘a withdrawing member may either: (i) continue receiving patronage capital payments as Tri-State may from time to time distribute to all of its members; or (ii) take a discounted lump sum payment of its patronage capital balance as of the Designated Withdrawal Date as a credit to the Final Payment Amount.’”
It notes the exit charge is payable by LPEA and its members to Tri-State.
“According to Resolution 2025-04, the Board opted to take a discounted lump-sum payment of its patronage capital, which upon information and belief, amounts to a reduction in LPEA’s patronage capital value from approximately $76 million to approximately $47 million,” the complaint alleges.
The plaintiffs then state in the lawsuit that, per LPEA’s bylaws, “LPEA may not sell or otherwise dispose of LPEA assets, which sale exceeds ten percent (10%) of the value of all assets of the cooperative unless authorized by a vote of LPEA’s Members.”
It states that “the total value of LPEA’s assets at year-end 2024 was approximately $288 million; thus LPEA’s acceptance of a lump-sum payment of its TriState patronage capital represents a disposition of more than 10% of LPEA’s total assets, which requires that the Board bring the matter to a vote of the Members.”
The complaint adds, “Furthermore, in filing its IRS Form 990 Tax Return, LPEA specifically verified that ‘major decisions are subject to a majority vote of the cooperatives member-owners.’”
The suit adds that the plaintiffs and other members have “demanded” that LPEA “adhere to the requirements of the Bylaws” and bring the issue to a vote of the membership, but that no action has been taken.
The plaintiffs, according to the complaint, ask the court’s interpretation of the bylaws and request a “declaration of the rights, status, or legal relationships of the parties under the Bylaws on the following questions:
“a. Whether LPEA’s withdrawal from Tri-State and the acceptance of a discounted buyout of its ownership interests in Tri-State constitutes a sale or other disposition of more than ten percent (10%) of LPEA’s total assets; and
“b. If LPEA’s withdrawal from Tri-State and the acceptance of a discounted buyout of its ownership interests in Tri-State constitutes a sale or other disposition of more than ten percent (10%) of LPEA’s total assets, whether LPEA is required to bring the matter of withdrawal from Tri-State and/or acceptance of a discounted buyout to a vote of LPEA Members.”
The suit also alleges breach of contract.
“Plaintiffs have been damaged by LPEA’s breach of contract and seek specific performance of LPEA’s obligation to bring the issues referenced ... above, to a vote of the LPEA Members, as an award of monetary damages would be an inadequate remedy under the circumstances presented here for the reasons set forth hereinabove,” the complaint states.
The complaint also seeks a trial by jury on claims triable by a jury.
LPEA response
LPEA’s attorneys filed a motion to dismiss on Oct. 8, with the 18-page motion alleging that the plaintiffs’ “incorrect reading” of the bylaws.
“While Plaintiffs claim that LPEA members are entitled to vote on a ‘disposition’ of more than 10% of LPEA’s assets, that interpretation ignores the plain language of Article IX, which only entitles LPEA members to vote on a ‘sale’ of more than 10% of LPEA’s assets,” it states. “Moreover, to read Article IX in the way that Plaintiffs suggest would render the use of the word ‘sale’ wholly superfluous. Thus, because Plaintiffs are only entitled to a vote if LPEA engages in a ‘sale,’ and because Plaintiffs do not allege that LPEA’s election to receive its patronage capital as a single discounted lump sum payment constituted a ‘sale,’ both of Plaintiffs’ claims fail.”
The motion also alleges that the amount of the patronage capital value being more than 10 percent of LPEA’s assets “ignores economic reality and is implausible,” and that LPEA’s choice to receive a discounted lump sum payment did not constitute a sale or disposition of LPEA’s assets.
On the topic of breach of contract, the motion to dismiss states in part, “Plaintiffs’ interpretation of Article IX fails to abide by black letter principles of contract interpretation.”
“LPEA has received the complaint filed by eight members and has retained outside legal counsel, an unfortunate expense ultimately borne by our entire membership,” LPEA CEO states in an Oct. 14 statement to The SUN. “Our outside counsel believes these claims have no legal merit and filed a motion to dismiss. We believe this dispute could have been avoided if the members had reached out to us directly to seek understanding of the withdrawal agreement with Tri-State before taking this step. We remain hopeful that this dispute can be amicably resolved before more resources are wasted. While we are disappointed that this lawsuit takes away focus from our member priorities, we remain committed to affordable, safe, and reliable electric service. The withdrawal agreement with Tri-State has been signed and finalized as of last week, and we are on track for our April 1, 2026 membership departure, an important milestone in shaping LPEA’s independent energy future.”
randi@pagosasun.com
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