Trash Study Was Mired In Court Battle Over Bills Kelly’s Former Company Left Subcontractors Unpaid

Spokane’s incinerator study got tangled in a court battle over unpaid bills in 1995.

The problems started after the lead consultant hired for the study sold her firm, Environmental Toxicology International Inc. (ETI) of Seattle to Environmental Resources Management (ERM), a global environmental consulting firm, in 1994.

Scientist Kathryn Kelly briefly joined ERM, but the union didn’t take, and she left the company, said Dan Sevick, ERM’s chief financial officer in Exton, Pa.

“We had to write off our whole investment in ETI, the company we had invested in,”’ Sevick said.

Two Seattle landlords filed suit to collect $262,185 from ETI and Kelly, King County Superior Court records show. They won a judgment that gave them a priority position to collect on ETI’s remaining assets, leaving some other creditors hanging.

Spokane Assistant City Attorney Mike Piccolo handled the negotiations with the Spokane subcontractors working on the incinerator study. The subcontractors said Spokane should pay if ETI and ERM couldn’t because Spokane had contracted with ETI for the incinerator study.

One of the subcontractors was Kristin Sheets of Soil Technology Inc. on Bainbridge Island.

Sheets’ company had done $2,400 worth of business collecting soil samples from around Spokane’s trash incinerator for the environmental risk study. The company got back only $2,000, Sheets said..

“We settled out of court and had to write some of it off as a bad debt,” Sheets said.

“I was long gone from the company when these subcontractors were engaged,” Kelly said, noting that ERM “still owes me a great deal of money as well.”

“I eventually paid the amount in dispute to settle the claim, although ERM still has not paid me,” Kelly added.

Some of the bills for the Spokane study were still outstanding this year. The city settled with SCS Engineers of Bellevue in March, paying $6,962 for unpaid soil sampling work for the Spokane project.

“It took a long time to get this resolved,” said David Roberson, SCS vice president. The company accepted 50 cents on the dollar as a settlement, records show.

The legal disputes delayed work on the incinerator study, which was supposed to be finished by the end of 1995.

In March 1996, the City Council approved a final $45,000 payment for Kelly from the original $300,000 project budget. But it couldn’t be given to ETI, which had discontinued operations the previous June.

The council was told a new contract was necessary because Kelly had moved to another Seattle company, Delta Toxicology Inc.

However, Kelly was associated with Delta only briefly. She later informed Spokane officials that she’d moved to Nevada.

In his Aug. 15, 1996 letter to Damon Taam, Spokane’s solid waste project director, Delta’s Richard Pleus offered to “take the lead” and finish the study. But Spokane officials chose to stick with Kelly.

Meanwhile, the Seattle firm’s owners remain unhappy that Kelly is using the Delta name in Crystal Bay, Nev.

The Seattle company obtained its trademark under “false pretenses,” Kelly said. She insists she created the name, and a “federal legal review” of the dispute is under way.

, DataTimes