The judge in the legal dispute between Paradise Canyon LLC and the Virgin Valley Water District issued a ruling on Sep. 26 that continues litigation between the two sides.
Paradise Canyon, which owns the Wolf Creek golf course in Mesquite, sued the water district in May over a 2011 lease agreement that provides the golf course with irrigation water. The lease is set to expire in 2019 at which time the district has said it will increase the rates the golf course pays for irrigation water from $250 per share to as much as $1,246 a share.
District Court Judge Timothy C. Williams wrote in his finding from an Aug. 29 hearing that “The Court finds that this matter is in its very early stages and the Court does not have the factual evidence necessary to reach a decision going to the merits of the case.”
Judge Williams, in denying the district’s motion to dismiss the case, wrote that “there are no set of facts under which Plaintiff [Paradise Canyon] could prevail as required for a dismissal of the case.”
The judge also denied Paradise Canyon’s legal request for partial summary judgment finding that “summary judgment requires an absence of genuinely disputed facts.”
Following up on the judge’s decision, the water district responded to Wolf Creek’s original claims and filed a counterclaim against the golf course.
The counterclaim alleges that Wolf Creek “has breached the lease” based upon the clause that “requires Wolf Creek to use the city’s available effluent water prior to utilizing the water associated with the District’s MIC shares.”
The district points out that the city of Mesquite provided an affidavit earlier in this process saying that the city “has made effluent water available to Wolf Creek; however, Wolf Creek has refused to take delivery of the effluent water” primarily because the city charges $600 for equivalent amounts versus $250 that the district charges.
The district’s Aug. 20 filing says that “The Effluent Agreement between Wolf Creek and the City requires Wolf Creek to accept ‘up to’ 1 million gallons of effluent per [day]. It does not require that the City be capable of satisfying 100 percent of Wolf Creek’s needs prior to Wolf Creek accepting any effluent at all.”
Paradise Canyon has long argued in other situations that the contract requires the city to provide at least one million gallons per day and that the contract is not enforceable at anything less than that.
The district’s counterclaim also alleges that Wolf Creek is violating the lease terms because it is not putting all 155 shares of water that it leases to “beneficial use.” Meter readings have shown that the golf course only uses about 110 shares of irrigation water from the Virgin River letting the rest of the water flow downstream without benefit to anyone.
Wolf Creek has refused to return the unused shares instead offering to sub-lease its unused shares directly to Southern Nevada Water District for $1,246 a share and return to VVWD any profits but only if the District agrees to a 20-year lease of the shares at $450 per share without any escalation over the life of the lease.
“The Lease also prohibits Wolf Creek from subleasing or assigning any shares to third parties; the District is informed and believes that Wolf Creek has subleased, assigned, or has sold water to third parties (or has attempted to do so) in violation of the Lease,” the district’s counterclaim says.
To prove the breach of contract allegations, the district’s latest court document filed Sept. 26 says, “The District leased the shares to Wolf Creek at low rates in good faith and Wolf Creek’s refusal to use the available effluent water, failure to either return the shares or otherwise comply with beneficial use requirements, and actions or efforts to circumvent or avoid the sublease/assignment restrictions are in material breach of the Lease and of Wolf Creek’s covenant to act in good faith and deal fairly with the District.”
Based on the difference between leasing 45 (unused) shares to Wolf Creek at $250 a piece versus leasing those same shares to Southern Nevada Water District at $1,246, the district claims it has “been harmed in an amount to be determined at trial but which exceeds the jurisdictional requirement of $15,000.”
The counterclaim alleging the breach of lease is asking the court to award the district money damages, attorney’s fees and costs, and “for such other relief the court determines just and equitable.”
For more background information access these articles on Mesquite Local News.com:
June 6: https://mesquitelocalnews.com/2018/06/wolf-creek-golf-course-sues-water-district/
June 20: https://mesquitelocalnews.com/2018/06/water-board-hears-about-golf-course-lawsuit/
July 11: https://mesquitelocalnews.com/2018/07/water-district-replies-to-wolf-creek-golf-course-lawsuit/
Aug. 14: https://mesquitelocalnews.com/2018/08/wolf-creek-files-opposition-to-water-district-dismissal-request/
Aug 22: https://mesquitelocalnews.com/2018/08/city-enters-water-fray-with-golf-course/