The Summit Water Company filed a multi-million-dollar lawsuit against some of the people hwo founded and once ran the company.
A Third District Court filing has named the Estate of the late Hy Saunders, a major shareholder, Stuart Knowles, and John Flitton, who was the firm’s long-time attorney.
The lawsuit is asking for nearly $18 million in damages, alleging the defendants misappropriated funds from Summit Water.
The filing alleges that when the defendants sold water rights belonging to the company eight years ago, and when they sold Summit’s water treatment plant five years ago, they diverted the proceeds to themselves, rather than to Summit Water.
The lawsuit names the Estate of Hy Saunders, who died July 13th. Saunders founded the company in 1979 and was the firm’s President and a member of the Board of Directors until 2015. He was succeeded on the Board by his son Brody, who is also named in the suit.
The suit says that for years Saunders dominated the affairs of the company, along with Stuart Knowles, whose firm, Trilogy Limited is also named as a defendant. The filing says Saunders and Knowles were the two biggest owners of Class A development shares in the company.
Together, the two men held just under 52 percent of all the shares in the company.
Early in Summit Walter’s existence, it received shares of stock from the Davis and Weber Canal Company.
In 2010, the defendants agreed to sell 311 shares of the stock to the Weber Basin Water Conservancy District, for a little under $5 million. However, it’s alleged that the proceeds were not distributed to Summit Water, but were diverted to, among others, Hy Saunders and Trilogy, at the direction of attorney Flitton.
The sale was not reflected in the company’s financial records, said the suit, nor was it known to the Board of Directors.
In 2013, Summit Water sold its water treatment plant near East Canyon Creek to Weber Basin, as part of a Master Agreement with the county and Park City that regionalized water delivery in the Snyderville Basin.
The plant was sold for $13 million, but allegedly, the funds were divided 50-50 between Hy Saunders and Trilogy.
The lawsuit alleges that Flitton represented Summit Water but didn’t disclose he also represented Saunders and Trilogy. The suit also claims his firm submitted billings to Summit Water that were grossly inflated, including fees for personal services rendered to the defendants.
The lawsuit says that starting in 2015, new officers and management were put in place. They ultimately discovered the misuse of funds last year and this July.
The lawsuit is asking for $17,980,860 in damages. The suit also claims Conversion, a Breach of Fiduciary Duty and Legal Malpractice against the defendants.
KPCW has been unable to contact the defendants at this time.
