Delta County OKs hiring outside counsel after insurer declines to represent in surplus-of-proceeds lawsuits

The Delta County Board of Commissioners voted May 15 to authorize county administration to seek outside legal counsel after the county’s insurer declined to represent the county in two lawsuits that seek surplus proceeds from tax foreclosures.

County administration told commissioners the county had received two lawsuits alleging entitlement to surplus proceeds from tax foreclosures and that the county’s risk pool, referenced in the meeting as MMRMA, had declined to represent the county. Administrator Young said she also contacted the county’s prosecuting attorney, who told the board her office could not take the matter on because of caseload. "I just wanna say thank you all for adjusting your schedule so it's last minute. We received two lawsuits that need addressing," Administrator Young said. "I have reached out to MMRMA. It is not in their wheelhouse because it's an alleged lawsuit. And then I also reached out to our prosecuting attorney."

The board approved a motion to seek third-party representation outside the county; the motion passed with all members voting in favor. No individual mover or seconder was recorded in the minutes for the motion. The board did not record individual roll-call votes during the motion; minutes reflect the outcome as approved.

During discussion commissioners and staff questioned whether the county had been formally served and noted a federal court timeline. Administrator Young said county staff had asked departments about signed certified-mail service but had not confirmed whether the county had been served. A county official reminded the board that in federal court a defendant generally has 21 days to respond after being served. "In federal court, the defendant has 21 days to respond to an allegation after they've been served," a speaker identified in the record said.

Staff described the legal issue as related to prior cases, including references during the meeting to Rafaeli v. Oakland County and to a state form used to request surplus proceeds, described in the meeting as "Form 5743," which staff said usually carries a six-month filing window. Administrator Young said the complaints allege that a claimant should be entitled to surplus proceeds despite not having filed during the usual statutory window. "They did not submit form 5743. However, these are still in the surplus," Administrator Young said.

Commissioners asked whether the county might be a precedent-setting defendant and whether the county should seek additional funding support from the Colorado Counties, Inc./MAC or another source should defense costs be substantial. Administrator Young said she planned to contact a law firm previously recommended by MMRMA to see if that firm would accept the matter. "My plan is to reach out to a firm that MMRMA has recommended in the past and see if they would take the service for us," she said.

The board’s motion did not commit a specific budget amount or identify a particular outside firm; staff said the county’s existing contract for general civil counsel did not cover specialized defense for the specific claims. The board voted to move forward to secure special counsel if needed.

The board convened the special meeting pursuant to a call dated May 14, 2025, sent by Nancy Pasaraki, Delta County Clerk, and held the meeting May 15 at 1 p.m. in the Service Center conference room.