May 12--With a pair of court cases looming over who will govern Bend's Seventh Mountain Resort and how its owners will pay for much-needed improvements, two judges met with the resort's new and old boards of directors last week to try and work out a solution to avoid going to trial.

Results of the closed mediation hearing Wednesday in Eugene were not shared. All parties were given gag orders by federal Judge Michael Hogan and Judge Lyle Velure, a retired Lane County Circuit Court judge, according to Bruce Cahn, a Portland-based Ball Janik LLP attorney representing a group of unit owners who filed suit over a special assessment levied on owners last year.

Another mediation session is scheduled for Friday in Eugene.

"Some progress was made on a variety of issues," Cahn wrote in a court-approved e-mail statement following the hearing. "However, we ran out of time after a long day, and discussions are still continuing."

At least three parties are involved, including INNspired, the resort's management company that is controlled by the Eugene-based Pape family; the board of directors for the Association of Unit Owners, which is controlled by the Pape family through INNspired; and a dissenting group of unit owners. That group sued in late November, disagreeing with how a $17.7 million special assessment was arrived at to pay for new siding and roofs, and to fix leaky pipes at the 30-year-old resort, and with how charges were arrived at for improvements already made to the resort's common areas by INNspired.

The $17.7 million assessment, which would be paid by all unit owners within three years, was passed Nov. 25 by members of the Association of Unit Owners' board of directors.

Two minority board members, including Dr. Peter Bours, of Forest Grove, protested the assessment at the time, saying the charge and its timing were based more on the Pape family's desire to gain the maximum financial break for INNspired than on an attempt to affix a rational cost for the work that needs to be done, according to earlier reports in The Bulletin and a lawsuit filed by the group of dissenting unit owners in November.

The majority of the board approved the assessment based on cost estimates produced by a Vancouver, B.C., engineering consultant, according to earlier reports.

Bours and other dissenting unit owners voted Dec. 31 to create a new board and block the $17.7 million assessment, but the results of the vote remain in dispute.

The Association of Unit Owners filed suit earlier this year after the special election, challenging the validity of the election and its results.

In January, Circuit Court Judge Alta Brady set a June 17 trial to decide which of the rival condominium association boards was actually elected Dec. 31.

Meanwhile, a temporary restraining order Brady issued Jan. 25 maintains that the old Pape-controlled board will officially run the resort until the dispute is untangled.

The much larger case, involving the $17.7 million special assessment, is scheduled for trial Nov. 12-14 and Nov. 18-21, also in Deschutes County Circuit Court.

That is, if mediation doesn't work, according to Bours, who said both sides agree that improvements are desperately needed at the aging resort.

The dissenting group alleges that the board gave INNspired a larger credit for its earlier work to the resort's common areas and transferred a larger share onto owners, according to the lawsuit filed in November.

"Private owners owe the Papes money for improvements to the common areas," Bours said. "Determining what that amount is, is the battle. The exact figure is in dispute."

The two trials, and any appeals made thereafter, would be unnecessary if all sides can reach an agreement, said Bill Friedman, a Bend city councilor and the resort's general manager, who manages the Association of Unit Owners' money through his bookkeeping business, Cascade Bookkeeping.

Friedman, who did not attend last week's mediation hearing, sees the possibility of resolution at this week's hearing.

"The judges could either get impatient or believe there's a solution, so that the case doesn't have to go to trial," Friedman said. "I believe the latter is true. That's my observation from 150 miles away."

Meanwhile, bills ranging from $40,000 to $75,000 were sent to each of the resort's 230 individual unit owners that were due March 1, he said.

Some owners made the payments on time, and others didn't, Friedman said.

"We're proceeding cautiously because we would like to work this out," Friedman said. "At this point, those are the marching orders given by the board [to collect the payments]."

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