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City To Settle Klen Suit
For $495,000 Plus....
A Valentine For 'Mom'
City of Loveland, Colorado
MEDIA RELEASE

Contact:​
Bill Cahill, 962-2306, bill.cahill@cityofloveland.org

Department:
CMO

Release Date:
2/14/2013

FOR IMMEDIATE RELEASE


City Council to consider lawsuit settlement agreement

​As part of their meeting agenda next Tuesday evening, Loveland City Council will review and possibly approve a mediated settlement of a long-
contested lawsuit.  The suit was brought against the City in 2007 by Edward and Stephen Klen, the owners of a local construction firm.

The lawsuit deals with issues surrounding the construction of the Klens’ commercial building at 697 North Denver Avenue beginning in 2004
and related to alleged delays in obtaining a building permit from the City for that construction. The Klens’ original complaint involved
numerous claims against the City and also named several City employees as defendants.

​If City Council approves the settlement agreement, Edward and Stephen Klen and their companies will receive a settlement payment of
$495,000 in return for their release of all their claims against the City and its employees and the dismissal of the lawsuit.  The settlement will be
paid by the City’s insurance carrier, the Colorado Intergovernmental Risk Sharing Agency (CIRSA), with no monies coming from any City
accounts.

​In 2010, Federal District Court Judge Matsch dismissed all of the Klens’ claims against all of the City defendants. The Klens appealed that
dismissal to the U.S. Tenth Circuit Court of Appeals. While the Court of Appeals upheld Judge Matsch’s dismissal of most of the Klens’ claims,
some of the claims were returned to the trial court.
Recently, Chief District Court Judge Marcia Krieger ordered the parties to participate in a settlement conference to be mediated by Magistrate
Judge Michael Hegarty. The proposed settlement is the result of that conference.

​“After years of legal action and expense, we believe that this settlement offers the best resolution to the problem,” said Loveland City Manager
Bill Cahill. “If approved, it will end the dispute and put an end to any continuing effort, expense and risk of additional costs.”

​Without an agreement, the dispute would be set for a jury trial.  “The unpredictability and risk of increased expenses related to a jury trial led
to the settlement,”   Cahill said. “CIRSA, the City’s insurance carrier, as well as the City, determined that this settlement is the best course of
action.”
​The City’s policy with CIRSA includes a deductible of $150,000.  That deductible was met years ago with the initial legal fees and expenses,
Cahill explained.

​The settlement recommends that the Klens can move forward with the proposed expansion of the commercial pistol range they currently
operate in their building into an unfinished portion of the building.  It also recommends that the Loveland Police Department resume its lease
for part-time use of the pistol range for officer training.

​If City Council approves the settlement, a final settlement agreement detailing the specific terms and conditions of the settlement will be
drafted and entered into by the parties and the lawsuit will then be dismissed.
# # #
Klen Story Archive
Ed Klen addresses
Loveland's City Council
Loveland - February 17, 2013

Steve and Ed Klen have been in the news since a $495,000 settlement of their lawsuit with the City of Loveland
(among other concessions) were announced on Valentine's day by the city.  However, the brothers have a third
partner in their business ventures who has so far eluded public notice or even a mention by local news outlets
that have been reporting on this controversy for years.

Referred to by the brothers only as "Mom," she is said to be the reason they have remained partners through
some very trying times that would have shattered even the strongest of sibling business partnerships.  As
principal and equal 1/3 partner of Holstein Self-Storage LLC (the entity that owns Anasazi Village), with her
two sons, Marjorie has not only stood by her sons but encouraged them throughout.

Marjorie Klen is reported to have asked the brothers to remain partners while supporting their decade long
struggle with the City of Loveland, always believing her sons would prevail in the end.  Perhaps, it is their
mother's influence that also caused the two aging contractors to keep fighting for their own almost Pollyanish
views about justice instead of resigning themselves to the more cynical cliché
"you can't fight city hall."

At their low-point in 2006, Ed Klen was facing both jail and the loss of his contracting license for 1-year when he
appeared before Judge Stark in Loveland's Municipal Court.  Ed avoided jail only by agreeing to pay the city's
largest penalty for building without a permit in Loveland's history of $20,000 and by pleading no contest to 20
counts of building without a permit.

While building the 48,000 square foot addition in 2005 to the Anasazi Business Park on North Denver Avenue
(south of the Wal-Mart Supercenter in Loveland), Ed and his brother Steve's construction company, Diverse
Construction,(which contracted with the company they own with their mother) ran into trouble with the city.  
After building the foundation (which was permitted) the city began questioning the uses in the industrial zone
by delaying construction nearly a year.  Finally, the brother were fed-up and continued building without the
city's final approval to avoid financial ruin as milestones in their contract had to be met for payment.

As a member of Loveland's Construction Advisory Board, Ed Klen knew this practice was common in a town
where city building inspectors could be emasculated by an authoritarian, pro-developer city manager with only
a phone call.  Ed felt he had done the city a favor when reporting a city inspector was drunk on the job a year
prior, especially since the employee was inspecting dangerous constructions sites.  What Ed apparently didn't
know is Loveland City Manager Don Williams had already taken sides in that dispute, and it wasn't in the Klen's
favor (
see sidebar right).

A curious connection is that Loveland Councilwoman Joan Shaffer's then husband Mark Shaffer, represented the
city inspector the Klens accused of arriving at their construction site drunk, Richard Hoskinson, apparently
while defending DUI charges in county court.  In addition, Hoskinson sought advice from Shaffer in the Klen
matter since he was personally named as a defendant.  Joan Shaffer worked with her husband in his small
Loveland practice at the time but has not recused herself from participating in the city's case.

Complicated for A Reason / Source of 1st Amendment Complaint

What makes the story complicated is City Manager Don Williams punished the Klens using his official capacity
by extending the reach of his own anger through building inspectors, city planners, the police department and
even the city attorney and city council.  Williams' retaliatory actions were reported to begin following a meeting
between Williams and the Klens in 2005.

On March 21, 2005, the Klens met Williams in his office to plead their case.  According to filings and depositions
in the lawsuit, Ed Klen complained about city building official Tom Hawkinson in a way Williams disapproved
by saying,

"Hawkinson is incompetent, untrustworthy and an asshole and (City Attorney John) Duval is an
obstructionist boob."

Ed Klen continued by questioning Williams' integrity for apparently covering for Hawkinson by not approving
the permits necessary for the Klens to continue construction on the 48,000 square foot addition.  At that point,
several participants in the meeting report an intimidating Williams leaning over the Klens and threatening,  
“you’re big boys, do you know what you are getting into?”  One observer in that meeting later reported to
LovelandPolitics,
"it was like a scene from the Godfather."

The next day, while the Klens were visiting the building department, they encountered Hawkinson, who
greeted them, according to the Klen's affidavit, “
so I’m an asshole, huh? We’ll see about that.” Subsequently,
the city continued a punitive posture against the Klens who filed suit in federal court against the city and a
number of staff for a violation of the Klen's civil rights.

Loveland's elected officials on the City Council largely ignored the Klens and kept their opinions inside the
closed doors of consultations with Loveland's City Attorney.  Upon being elected Mayor, Gutierrez did make
some overtures about trying to resolve the matter but later retreated to a "no comment" mode allowing former
city manager Don Williams to take the lead in the closed sessions.  At one point in 2009, Gutierrez indicated he
believed the city would prevail easily in the lawsuit in a private email he sent to LovelandPolitics explaining
why he thought continuing to battle the case in court was advantageous.


Settlement

The City of Loveland has now spent over $300,000 fighting the Klen's civil rights lawsuit in Federal Court.  The
Klens essentially have claimed their 1st Amendment rights were violated when City of Loveland officials began
taking capricious actions using their official capacities against the Klens.  

Among the more obvious examples was the abrupt disruption of the city's contract to use the Front Range Gun
Club's shooting range at approximately the same time the Klens took ownership of the business.  While it was
developed for another owner by the Klens, a series of financial and health issues by the original business owner
resulted in the Klens taking over the business.  They informed the city the police use of the range which was
closed every Monday for the exclusive purpose of police training, would continue as normal.

Williams ordered the police department to withdraw from the range forcing numerous officers to pay private
memberships to continue training in the facility.   According to the city's press release, the city's contract to use
the Front Range Gun Club for training will commence again for a sum of nearly $300,000 for 5 years.  During
previous negotiations on renewing the city's contract, the Klens had offered the exclusive use of the range each
Monday by police for a price between $2-3,000 per month.  It appears the current settlement by the city of
almost $5,000 per month shows the council may have bumped the range lease payments to artificially lower
the total settlement amount ($495,000) that would become the headline.

Another concession by the city will be approval of a longstanding request by the Klens to finish the second story
of their building to expand the gun range.  This expansion will increase the number of available shooting ranges
from 15 to 25 but only smaller caliber weapons will be allowed on the second level.

Another contentious issue in the law suit was the early collection of over $100,000 in CEF's (Capital Expansion
Fees) from the Klens before they were allowed to finish the building where their gun range is now located.  The
CEF's were charged before the contemplated uses of the building were declared and before the time they are
due according to city code.  No word yet if there will be a settlement on the illegal CEF payments collected by
city officials.
The Beginning

"On December 28, 2004,
Hawkinson issued a Stop
Work Order (SWO) which
was delivered to the site
in the middle of a large
concrete pour. The SWO
was delivered to the
Klens on that date by
Inspector Richard
Hoskinson, who had been
previously barred (and
notice given to the City
that he was so barred)
from any and all of the
Klens’ job sites after he
arrived intoxicated in his
official capacity during the
Phase 1 construction.
The Klens also were
aware that Hoskinson had
been arrested for DUI
twice from 1999 to 2005,
and told Hawkinson that
they could not be
responsible for having
him on the property.
Exhibit 11, Colorado
Courts Database."

Reference, Civil Action
No. 07-CV-00347-RPM-MEH