Complaint: AV Water did not pay legal fees

Santa Fe firm says $660,000 debt remains unpaid

Hannah Grover
Farmington Daily Times

FARMINGTON — The law firm that represented the AV Water Co. from September 2011 until November 2017 has filed a lawsuit in district court alleging that the company owes more than $660,000 for legal fees.

AV Water Co. attorney Germaine Chappelle, left, and Megan Marsee, community services coordinator for the New Mexico Environment Department's Drinking Water Bureau, address residents of the Harvest Gold subdivision during a meeting on Feb. 21, 2017. A Santa Fe law firm is suing the company for not paying its legal bills.

According to the complaint, AV Water defaulted on paying its hourly rate and reimbursing out-of-pocket costs. The complaint states AV Water agreed to continue paying after it defaulted and also agreed to provide the Santa Fe-based law firm Gallagher & Kennedy with a security interest in its property. However, Gallagher & Kennedy alleges AV Water failed to pay or provide a security interest.

A total of $660,150 currently remains unpaid, according to the complaint.

The complaint alleges that the company also owes more than $100,000 in interest and that the interest continues to accrue at a rate of $217.03 each day.

Read:PRC chairman says statutory change needed

PRC denies rehearing for AV Water Co. fines

The Gallagher & Kennedy attorney who represented AV Water has since left the firm and started her own law firm.

Gallagher & Kennedy declined to comment. Gallagher & Kennedy is one of several companies alleging AV Water failed to pay its bills.

Earlier this year, the Andrea Corporation filed to foreclose on water rights for the Morningstar water system. The Morningstar water system, which is owned by AV Water, serves Crouch Mesa and surrounding areas. According to the Andrea Corporation’s complaint, AV Water owes $2.9 million for the water rights.

AV Water’s failure to make payments on a loan resulted in a court-appointed receiver taking over the Morningstar water system last year.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at