Judge finds Douglass in breach of contract

Spokane developer Harley Douglass was found in breach of contract Friday for not paying $800,000 owed in a land deal.

Spokane Superior Court Judge Maryann Moreno ordered Douglass to pay developer Tod Lasley of T.J. Landco Co. the remaining amount on what had been a $3.6 million deal – plus attorney fees.

Moreno rejected Douglass’ claim that the preliminary plat he purchased in 2006 had so many problems that he wouldn’t be able to develop the 371 lots that were initially surveyed for the housing development in the Eagle Ridge area of southwest Spokane.

Douglass declined to comment.

Friday’s case comes after Douglass was investigated for submitting false claims against Spokane County in another development north of Spokane.

In that case, Douglass was accused of altering invoices to boost a claim that the county planning staff caused him to lose money by delaying approval for a final plat at Hunter’s Pointe near Mead in 2008. Douglass sued and collected $685,000 from the county, partly from an insurance policy.

The case was referred to the state Attorney General’s Office, which declined to recommend that Douglass be charged for submitting altered invoices.

One of the altered invoices submitted in the case against the county originated from engineering work done on the preliminary plat at Eagle Ridge, according to Lasley’s attorney, Tim Fennessy.

Following Friday’s ruling, Fennessy said his client is now prepared to file liens against assets of Harley C. Douglass Inc.

“We hope he will honor the judge’s opinion,” Fennessy said.

Moreno said Douglass’ 20-plus years of residential development experience should have given him plenty of understanding of the risks of bringing a preliminary plat to its final stage.

Douglass said the steep slope of the land, along with access and traffic issues, diminished the value of the 94-acre project.

An engineer testifying for Douglass said the final plat could lose as many as 59 lots. A city engineer, however, said many preliminary plats need adjusting before final approval.

The judge noted Douglass became the key investor in the original deal but had owed Lasley $1.14 million at the time that the property was transferred.

Douglass paid Lasley $340,000 of the remaining amount in two payments in 2006 and 2007, Fennessy said.

In 2008, Douglass transferred ownership to his parents, Harlan and Maxine Douglass, for $500,000, Fennessy said.