After a lease agreement for 155 shares of irrigation water was signed between Wolf Creek golf course and the Virgin Valley Water District (VVWD) in June 2011, Cory Clemetson requested the district sign an estoppel agreement in November 2012. The estoppel allowed Clemetson to obtain a $2,125,000 loan for 20 years from the Nevada State Development Corporation.
Essentially, an estoppel clause in a contract states that certain facts are true as of the date the contract is signed. For example, the estoppel clause may state the collateral or amount of a loan. It is put in a contract to eliminate any ambiguity.
A clause in the estoppel agreement echoes the lease between Wolf Creek and VVWD and says, “On or after January 1, 2020, if Borrower [Wolf Creek] continues to hold a Right of First Refusal as to any of the irrigation shares, Borrower shall have the right to continue to lease the same irrigation shares on a perpetual basis so long as Borrower is not in breach of the Lease, and in such event, the rent amount for such irrigation shares shall be determined in the sole discretion of the District.”
The loan and lender
In his deposition taken as part of a lawsuit Wolf Creek filed against the water district in May 2018, VVWD attorney Bo Bingham asked Clemetson several questions about the loan and lender.
Clemetson testified that his loan is tied to the golf course’s 155 shares of irrigation water. Metering records show that the course is only using approximately 110 shares of water. Kelby Hughes, former Wolf Creek golf course superintendent, testified earlier that he estimates the course only needs 125 shares for adequate watering.
Bingham asked, “why have you not offered to return the remaining 30 shares to the water district?”
“Okay. I mean, very simply, number one, we have an agreement with the lender that says that they have these shares as part of collateral. So anything that we would do, any discussions, has to start with, you know, no guarantee that we can do that in the beginning because these are the commitments that we’ve made,” Clemetson answered.
“But wouldn’t the lender benefit by you guys actually returning shares that you’re paying for and not using?” Bingham asked.
“I don’t know,” Clemetson replied. “You know, the lender may look at it that they want more collateral, you know, for them. I can’t speculate to what the lender would do or say.”
Bingham asked, “If Wolf Creek defaults on its loan, then the lender essentially takes over the golf course; correct?”
“Correct,” Clemetson said.
“The lender wouldn’t need to have 30 additional shares that it would be paying for for no purpose; correct?” Bingham asked.
Clemetson said, “Again, I don’t know how the lender would view it. You know, if the lender thought there was a potential part of a drought and this was a concern, they might want to have the shares there for them. They have to look at why they’re lending the security that they need to have as part of their loan.”
Breaching the contract
“Have you ever talked to the lender since getting any notice from the Virgin Valley Water District that you guys were using fewer than 155 shares, that the Water District had asked that those unused shares be returned to the Water District?” Bingham asked.
“I have not talked to the lender regarding that specifically,” Clemetson said.
Note: Bingham sent Wolf Creek’s lender a letter in September 2018 which stated, “The purpose of this letter is to provide you with notice… the District considers Wolf Creek to be in breach of the VVWD Lease of Irrigation Shares between Wolf Creek and the District.” The MLN has no documents to show results or action from that letter.
Bingham asked, “Have you provided copies of any of the letters the Water District has sent to Wolf Creek about returning unused shares to the District? Have you provided any of those letters at any time to the lender?”
“I haven’t, but you have. You’ve contacted our lenders,” Clemetson replied.
“And has the lender taken any action against Wolf Creek based on receiving a copy of letters from my office?” Bingham said.
Clemetson said, “Not right now.”
“When the lenders got those letters from my office, did the lenders get in contact with you?” Bingham asked.
“Yes,” Clemetson said. He added that he referred the lender to his attorney.
The Estoppel agreement
Later in the deposition, Bingham asked Clemetson about the 2012 estoppel agreement.
“Cory, you recall that Wolf Creek asked the District to provide an estoppel after the 2011 lease was entered into?” Bingham said.
“Yes. Our lender provided the estoppel,” Clemetson responded.
Bingham asked for clarification saying, “When you say the lender provided the estoppel, are you saying that they’re the ones that drafted that document that you asked the Water District to sign?
“The letter requested the estoppel. They had their form,” Clemetson said.
“And it’s your testimony that your lender came to you and said, ‘We need an estoppel’?” Bingham said.
“As part of us being able to obtain financing. But yes,” Clemetson explained.
After some back and forth between the two men, Bingham asked, “And you don’t remember anybody specifically asking you for the estoppel, any particular individual?”
“No,” Clemetson said. “I think it was a requirement that they needed that.”
“But your testimony is that it wasn’t Wolf Creek that reached out to the lender and said, ‘Hey, we’re going to provide an estoppel,’ it was the lender who required the estoppel. Is that your testimony?” Bingham said.
Clemetson responded, “I don’t think that’s possible, that we would request an estoppel.”
After each part of this series is published, it is available online at www.MesquiteLocalNews.com
Part 1 of this series examined the origins and ownership of Wolf Creek golf course by Cory Clemetson and his brother Chad.
Part 2 discussed issues about the lease agreement between VVWD and Wolf Creek for 155 shares of irrigation water which is the heart of the lawsuit.
Part 3 discussed Clemetson’s efforts to monitor the amount of water the golf course uses and to reach agreements with VVWD prior to the lawsuit.
Part 5 will review Clemetson’s deposition in relation to setting the price of irrigation shares.
Part 6 will provide information about people Clemetson has hired like former VVWD Hydrologist Michael ‘Boomer’ Johnson after he left prison, former VVWD attorney George Benesch while he was serving as VVWD counsel, former water board members Sandra Ramaker and Robert ‘Bubba’ Smith.
Paradise Canyon, LLC, which owns the Wolf Creek golf course in Mesquite, sued VVWD in May 2018 in civil court over a 2011 lease agreement that provides the golf course with irrigation water. Wolf Creek leases its shares of non-potable irrigation water at $250 a piece for a total annual payment of $38,750. The lease comes up for renewal this year.
As part of Mesquite Local News’ mission to educate and inform the public, this series of articles will examine the genesis of a lawsuit Paradise Canyon, LLC, owner of Wolf Creek golf course, filed against the Virgin Valley Water District (VVWD) in May 2018.