FILED. faithfully perform the duties of the Kittitas County Treasurer' s Office. 16 MAY - 2 AM 10: 58 KITTITAST 3TAJ COU TY SUPERIOR COURT CLERK

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1 I IIII I II I VIII I I II I I IIII I I I VIII I I II I IIII II II III I IIII 1 FILED. MAY - AM : KITTITAST TAJ COU TY SUPERIOR COURT CLERK IN THE SUPERIOR COURT OF THE STATE OF WASHINGTON IN AND FOR KITTITAS COUNTY KITTITAS COUNTY, Plaintiff, NO: vs. AMENDED COMPLAINT FOR FORFEITURE OF OFFICAL BOND 1 o DEANNA JO PANATTONI, CNA OF A PUBLIC OFFICER FINANCIAL 11 CORPORATION, WESTERN SURETY COMPANY, CNA SURETY. 1 Defendants. 1 1 Plaintiff alleges as follows: I. NATURE OF ACTION 1. 1 This is an action for forfeiture of the official bond of a public officer, former elected Kittitas County Treasurer Deanna Jo Panattoni (" Ms. Panattoni"), for failure to well and faithfully perform the duties of the Kittitas County Treasurer' s Office. 1 II. JURISDICTION AND VENUE 0. 1 This Court has jurisdiction over this matter pursuant to RCW. 0.0; the WA Const. art IV ; and RCW Venue in this Court is proper pursuant to RCW ; RCW ; and RCW AMENDED COMPLAINT- I Ellensburg, WA 0) - 0

2 1 III. PARTIES. 1, Plaintiff Kittitas County (" the County") is a municipal corporation located in Washington State. The Kittitas County Treasurer is one of the County' s elected officers.. Defendant Ms. Panattoni was appointed Kittitas County Treasurer on or about September 0, 00. At the time of her appointment as Kittitas County Treasurer, Ms. Panattoni furnished a bond in the amount of one hundred fifty thousand dollars ($ 0,000), as a Principal, s to the County, as required by RCW The condition of this bond was that Ms. Panattoni was obligated to well and faithfully perform the duties of the Kittitas County Treasurer. Ms. Panattoni held the position of Kittitas County Treasurer until December 1, Defendant CNA Financial Corporation (" CNA") is an insurance holding company 1 incorporated in Delaware, headquartered in Chicago, Illinois, that provides insurance and surety 1 products through its multiple subsidiary companies, such as Western Surety Company.. Defendant Western Surety Company (" Western") is an insurance and surety company incorporated in South Dakota, headquartered in Sioux Falls, South Dakota, that 1 0 provides surety products in all 0 states. As stated above, Western is a subsidiary company of CNA. Western states it is a corporation duly licensed to do business in the State of Washington. Western is the specific surety company that issued the bond furnished by Ms. Panattoni to the County in 00 ( Bond # 0), as well as subsequent Continuation Certificates that extended the term of the bond until 0. The bond lists the County as the entity it is providing a security to.. Defendant CNA Surety (" CNA Surety") is a company that provides surety and fidelity bonds in all 0 states though its underwriting companies, one of which is the Western AMENDED COMPLAINT- Ellensburg, WA 0) - 0

3 1 Surety Company described in paragraph.. CNA Surety is headquartered in Chicago, Illinois, with claims offices in Chicago and Sioux Falls, South Dakota. CNA Surety administers claims made against Western. IV. STATEMENT OF THE CLAIMS A. Claim 1: Failure to Collect or Request Cancellation of Personal Property Taxes.. 1 Pursuant to RCW.. 00( 1) and RCW.., the county treasurer is responsible for receiving and collecting all taxes on the county tax roll, "whether levied for state, county, school, bridge, road, municipal or other purposes...". RCW..00 sets forth a detailed process the county treasurer must follow to 11 collect personal property taxes. This mandatory process requires the county treasurer distrain 1 seize) and sell personal property items to satisfy tax debts if the tax debts ( which includes taxes, 1 interest, costs, and fees) are not otherwise paid. 1. RCW authorizes the county treasurer to charge personal property tax 1 0 against real property owned by the debtor if the tax debts ( which includes taxes, interest, costs, and fees) are not otherwise paid. In other words, if the debtor fails to pay delinquent personal property taxes, the county treasurer can foreclose on real property owned by the debtor to satisfy the personal property tax debt.. If a personal property tax debt ( which includes taxes, interest, costs, and fees) is not paid, and the county treasurer cannot find any real or personal property to foreclose upon or distrain and sell, despite the county treasurer' s diligent efforts, each February, the county treasurer must request the county legislative authority to cancel the tax debt, pursuant to RCW.. 0. AMENDED COMPLAINT- Ellensburg, WA 0) -0

4 1. After first receiving the approval of the county legislative authority, the county treasurer must petition the superior court to cancel any personal property taxes that are more than four years delinquent and are beyond hope of collection, pursuant to RCW..0.. Pursuant to RCW..0, the county treasurer has a duty and responsibility to continue to try to collect any tax due until the tax is paid or until the tax is cancelled.. Pursuant to RCW.. 0, if the county treasurer" willfully refuses or neglects" to collect personal property taxes or request the county legislative authority cancel uncollectible personal property taxes, the county treasurer is personally liable for the " whole amount of such taxes uncollected." 11. Ms. Panattoni, when she was the Kittitas County Treasurer, failed to collect 1 personal property taxes and interest in an amount exceeding $ 0,000.00, associated with 1 numerous tax parcel numbers, even though the personal property taxes were due and owing, and 1 even though the personal property taxes could have been collected using the distraint process or by charging the personal property taxes against the debtors real property; or in the alternative, she failed to request the county legislative authority cancel the personal property taxes and interest in an amount exceeding $ 0, as uncollectible.. Pursuant to RCW.. 0, if the county treasurer" willfully refuses or neglects" 1 0 to collect personal property taxes or request the county legislative authority cancel uncollectible personal property taxes and interest, the county treasurer is personally liable for the " whole amount of such taxes uncollected.". Because Ms. Panattoni failed to collect personal property taxes in an amount exceeding $ 0,000.00, even though such taxes should have been collected, or request the county legislative authority cancel as uncollectible the personal property taxes and interest, Ms. AMENDED COMPLAINT- Ellensburg, WA 0) -0

5 1 Panattoni failed to well and faithfully perform the duties of Kittitas County Treasurer, as is the condition of her bond.. 11 For these reasons, Kittitas County seeks recovery of the personal property taxes and interest, in an amount exceeding $ 0,000.00, associated with numerous tax parcel numbers, Ms. Panattoni failed to collect or request the county legislative authority cancel as uncollectible. B. Claim : Ellensburg Telephone Company dba FairPoint Communications Bankruptcy. 1 The County re- alleges and incorporates by reference the allegations contained in paragraphs. 1 to. 11 of this Complaint.. 1 On October, 00, Ellensburg Telephone Company dba FairPoint 11 Communications (" FairPoint") filed for chapter 11 bankruptcy, Case No On February, 0, the bankruptcy court entered an order establishing April, 1 0 at : 00 p. m. ( ET) as the last date and time by which governmental units, such as the 1 County, could file claims against FairPoint for pre- petition claims.. On March, 0, the Kittitas County Treasurer' s Office submitted a claim in the amount of$,. ( claim # 0) against FairPoint for pre-petition personal property tax claims However, as of March 0, 0, FairPoint was actually liable for pre-petition personal property tax claims in the amount of$, Thus, the Kittitas County Treasurer failed to file a pre-petition personal property tax claims for $ 1,. ( the amount owed for personal property tax parcel( s) #, 1, and# 0), meaning the County did not receive a payment for that same amount.. On January, 011, the bankruptcy court confirmed FairPoint' s plan of reorganization. AMENDED COMPLAINT- Ellensburg, WA 0) - 0

6 1. 1 Pursuant to FairPoint' s plan of reorganization, the County' s claim of $,. was paid in full. All other claims the County might have had but did not submit a claim for were discharged..0 FairPoint' s plan revested all of FairPoint' s property back into FairPoint, free and clear of all liens. Thus, the County' s personal property tax liens for the $ 1,. the Kittitas County Treasurer did not submit a claim for were voided.. Moreover, even though FairPoint still owed $ 1,. in personal property taxes, on October, 011, the Kittitas County Treasurer inexplicably refunded to FairPoint,.0 of the $,. received as payment of the bankruptcy claim. 11. Due to the failures of the Kittitas County Treasurer' s Office, the County did not 1 receive $ 1,. in delinquent personal property taxes owed by FairPoint. 1. Pursuant to RCW.. 00, the Kittitas County Treasurer, a county officer, is 1 responsible for the acts of his or her deputy or employee upon his or her official bond.. For these reasons, the County seeks recovery of the amount of personal property 1 0 taxes and interest Ms. Panattoni failed to collect from FairPoint. C. Claim : Penalty for Nonperformance of Duty by the County Treasurer.. The County re- alleges and incorporates by reference the allegations contained in paragraphs. 1 to. of this Complaint.. Pursuant to RCW. 0.00, the Kittitas County Treasurer is subject to a penalty of" not less than two hundred nor more than one thousand dollars" for each and every instance of refusing or knowingly neglecting" to perform any duty enjoined on him or her..." AMENDED COMPLAINT- Ellensburg, WA 0) -0

7 1 V. PRAYER FOR RELIEF Based upon the foregoing, the County prays for the following relief- 1. Recovery of the personal property taxes and interest, in an amount exceeding 0, , associated with numerous tax parcel numbers, Ms. Panattoni failed to collect or request the county legislative authority to cancel as uncollectible.. Recovery of the amount of personal property taxes and interest Ms. Panattoni failed to collect from FairPoint.. Complete forfeiture of the $ 0, 000 bond the Defendants provided to the County.. Penalties as provided by RCW , in an amount to be determined by the Court.. For reasonable costs and attorney' s fees.. For such other and further relief the Court finds equitable and just. 1 DATED: this w day of May, 0. GREGORY L. EMPEL Ki tas County rosecuting Attorney A o eys for Pla ntiff Christopher E. Horner, WSBA# 1 Deputy Prosecuting Attorney 0 AMENDED COMPLAINT- Ellensburg, WA 0) - 0