Peaceful Valley residents and developers Mick and Shelly McDowell met at City Hall last Wednesday to talk about what public amenities the developers could offer to offset the height of the condo tower they just got city approval to build. The talks were a requirement of the settlement between the city and the McDowells, finalized April 9. Spokane City Councilmember Mary Verner, sensing the bitterness between the two camps, had made the motion for a mediated conversation -- to open up some much-needed dialogue.

But there was little dialogue at Wednesday's meeting, according to sources on both sides. The reason? Two big legal elephants in the middle of the room.

As threatened, neighborhood activists from Peaceful Valley filed a counter-suit against the city last Monday (two days before the meeting), alleging that the city's settlement with the McDowells was illegal. Should the suit succeed in court, it would reverse the settlement, but McDowell would still have the option to simply sue the city again.

The mitigation meeting petered out in half the time scheduled, according to Lori Aluna, one of the residents who filed the counter-suit. The suit alleges -- among other things -- that the city illegally overrode the hearing examiner's decision, that the settlement didn't jibe with the city's comprehensive plan, that it constituted "illegal spot zoning" and that the settlement "provided McDowell a gift of public funds and is arbitrary and capricious and contrary to law."

The petition states, "Rather than defend the Hearing Examiner's decision, the City Council folded" and "made its decision via legislative fiat."

"Besides intending to protect our own little neighborhood, our broader intention is to remind the city that there is a democratic process designed to ensure the integrity of all our neighborhoods and protect us from irresponsible development," says Aluna. "We mean to make the city adhere to the rules."

A preliminary hearing is set for June 8, at which point the Superior Court will decide jurisdiction and whether to advance the case. City Attorney James Craven, who hadn't yet reviewed the residents' petition, said only that the city was still evaluating it.

Mick McDowell was also mum on Monday, noting that it's difficult to comment with litigation up in the air, and that the new suit has stalled talks between him and the Peaceful Valley residents.

McDowell's case goes back to 2003, when a minor revision of the city code changed building height restrictions along the border of Riverside Avenue and Peaceful Valley. The code change affected McDowell's property, but he claims he was never informed of the revision. At least not until he applied to build a 17-story tower there and was told earlier this year by city Hearing Examiner Greg Smith that the revision disallowed it. McDowell sued the city, claiming that the city illegally down-zoned him without notification. The city settled the suit in April with no exchange of money -- just a green light for McDowell's project, an unconnected property lease, and the requirement that McDowell sit down with Peaceful Valley residents.

To make sure he was properly notified this time, the petitioners -- in the "Identification of Each Person to be Made a Party" section of their petition -- identified McDowell six different ways -- at two different addresses, under three different names. But that's the extent of the dialogue for now.