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Update: Beware of Water Board Bearing Gifts (Part 2 of 2)

Carson City, NV, April 5. “Rehearing denied.”   With those two words, the Nevada Supreme Court again rejected an attempt by attorneys for the Virgin Valley Water Board to usurp traditional legal processes. Attorneys for the water board have lost virtually every effort to avoid a jury trial in the civil case filed by the owners of Paradise Canyon (DBA the Wolf Creek Golf Club), contesting the water board’s process by which they set water rates.  

On February 18, the High Court rejected a petition by attorneys for the Water Board to jump over the legal process and confirm the water board’s right to set water rates however and whenever it wants. Once rejected, the attorneys went back to the Court for a rehearing. And on April 5, the Court denied that request.

Read more about this case below.  

Mesquite, NV, March 17, 2022. On February 2, three members of the Nevada High Court unanimously dismissed a petition by attorney Mark Hutchison for the Virgin Valley Water District Board (VVWDB) to usurp the judicial process regarding the setting of water rates. [[i]]

Mark Hutchison

In May 2018, owners of Paradise Canyon (DBA as the Wolf Creek Golf Course) filed a civil suit (A-18-774539-B) against the VVWDB as they sought to increase their irrigation water rates by 500 %.

And for three years and 11 months, VVWDB attorney Jedidiah (Bo) Bingham’s, at public expense, attempted and failed to defend their rate-setting practice before Las Vegas District Court Judge Timothy Williams.

Then on Monday, September 13, Bingham introduced Mark Hutchison (i) to Judge Williams to plead for a redo of various Bingham motions that the Judge previously overturned. (See table 3 in Appendix for results)

Bo Bingham

After losing so many times, Bingham told Hutchison to petition the Nevada Supreme Court and tell the Justices that Judge Williams had no business overruling him. And instruct the Supreme Court that The Water District had the unrestricted right to set rates as they like.

On February 2, Justices Ron D. Parraguirre and James W. Hardesty and Appeals Justice Michael P. Gibbons told Hutchison [and by default Bingham and the VVWDB] that supporting documentation did not persuade them to challenge [lower Court] orders. Petition denied.

So again, at ratepayer expense, Hutchison, for Bingham and the Water Board on March 4, went back to the higher Court. He claims that Justices Parraguirre, Hardesty, and Gibbons, overlooked arguments claiming that Judge Williams lacked the subject matter expertise and jurisdiction to challenge the VVWDB ubiquitous right to set rates. Therefore, he wants a do-over by the high Court.

Claiming the Water Board can do whatever it wants, whenever it wants, and however, it wants when setting rates is the issue under scrutiny. On August 29, 2018, a little more than a month after the owners of Paradise Canyon filed the case, Bingham asked Judge Williams to dismiss the litigation. Bingham argued that the VVWDB had sole discretion in setting water rates.

Bingham claimed that the Board acted in good faith by charging Paradise Canyon the Southern Nevada Water Authority (SNWA) rate for irrigation water in his legal judgment. He ignored reporting that Virgin River water shareholders sitting on the VVWDB used public funds to establish the market rate that SNWA carried forward in its governing practices. And Bingham never told the Court about the millions of public dollars paid to shareholders of public water no longer needed by Virgin River stock shareholders.

Jeffrey R. Sylvester, Attorney for Paradise Canyon (Wolf Creek), argued that rate-setting activities by the VVWD board violate the convenient and good faith and fair dealing provisions required by Nevada contract law. He argued that setting a market rate required the Board to act reasonably and are matters of fact for a court and jury to decide.

Judge Williams also questioned Bingham’s legal conclusions that day in August 2018. The Judge pointed out that the water district is a political subdivision of Nevada and had to act both in good faith and without being arbitrary and capricious. The Judge said they [VVWDB] do not have a right to do whatever they want. He denied the motion to dismiss.

It’s improbable the Justices will overturn what Justices Parraguirre, Hardesty, and Gibbons have already done in denying the Hutchison for Bingham and the Water Board petition.

So far, Judge Williams at the District level and three superior Judges have said that the legitimacy of the Water Boards rate-setting behavior is for a jury to decide.

Nonetheless, the VVWDB plans to continue spending public funds to support Bingham’s case because, arguably, politics is a business opportunity to benefit those with the same social, economic, and spiritual beliefs.

The cost of litigation

Judge Williams, potentially wishing to hurry the issue along, set the latest jury trial date on August 1.

Nonetheless, when the VVWDB met on March 2 to consider the 2023 budget, they committed an additional $1.1 million of public funds to support Bingham’s approach to litigation in this case.

If $1.1 is the annual price of legal failure, then the VVWDB has spent about $4.4 million over the nearly four years of fruitless litigation. That amount would cover an entire year of operating expenses for the VVWD as reported by them in Table 1. ([ii])

Table 1 Water Board budget

Water Board budget

Regardless, during the March budget meeting, board member Richard Bowler asked Bingham if $1.1 million for 2023 was realistic to cover the needs in the [Paradise Canyon] case. “One thing I don’t want to do is handcuff anybody on it,” Bowler said. “I think we have got to go to the bone on this [rate setting], to be honest.”

Bowler is undoubtedly interested in using public funds to protect the VVWDB’s ability to set water rates. His father, Joe Bowler, now deceased, was a founding member of the VVWDB when he, along with John Lee, Cresent Hardy, Todd Leavitt, and Reber, all river water shareholders, established a base price for such water at $1,825.00 per share. And as of August 2019, the SNWA paid the Bowler family $8,023,518.65 [iii] in public funds to lease or acquire stock shares they hold in the Mesquite Irrigation Company (MIC), the Bunkerville Irrigation Company, and the Muddy River Irrigation Company, as reported in Table 2.

Table 2 Bowler income

SNWA payments to Bowler Family
Years Payee Holdings in: Muddy River Virgin River
2009-2016 Bowler, Joseph Mesquite Irrigation Co.   $55,226.68
2009-2016 Bowler, Joseph Mesquite Irrigation Co.   $1,312,382.62
2017-2019 Joe Bowler and Dixie Bowler Family Trust Bunkerville Irrigation Co.   $3,096,466.89
2017-2019 Joe Bowler and Dixie Bowler Family Trust Mesquite Irrigation Co.   $3,545,062.84
2009-2016 Bowler, Jr., Joseph Muddy Valley Irrigation Co., Inc. $11,690.54  
2018-2019 Joe Bowler and Dixie Bowler Family Trust Muddy Valley Irrigation Co., Inc. $2,689.08  
Sub totals $14,379.62 $8,009,139.03
Grand total $8,023,518.65

Bingham said that a [potential jury] makes it difficult to project how much will be needed to fight the case. “These are big numbers,” Bingham acknowledged. “It does impact and has already impacted rates and ratepayers and everybody in the Community across the Board. But I think that staff feels, and I feel, that (the budgeted money) needs to be there in case it is needed; because of what is at stake here.”

Board member John Burros said, “I wish that we had a lot of the public here to understand that the Wolf Creek [Paradise Canyon] litigation has hugely impacted their rates.” “And we are only talking about it because of the action of that one company that wants preferential rates against everybody else paying for water.”

Burros is pointing the cost to the public in the wrong direction. The owners of Paradise Canyon have legitimately sought to raise the rate-setting issue to the public attention, thereby potentially reducing rates to all concerned. And those owners sought to keep the litigation in line with the problem and quickly go to a jury.

Burros and the entire Board bear responsibility for the litigation costs. When the VVWDB hired Bingham in June 2009, he admitted that his law firm (Bingham, Snow, and Caldwell) lacked water law experience.

Informed sources suggest that Plaintiff’s costs are about half of the cost to the owners of Paradise canyon. Only three attorneys staff the winning team for the owners of Paradise Canyon. They include:

  1. Jeffrey R. Sylvester, lead
  2. Matthew. Kneeland
  3. Kelly L. Schmitt

But Bingham needs an expensive crew of seven to support his losing approach to litigation. They are:

  1. Robert D. Sweetin, City of mesquite
  2. D. R. Waite, Mesquite Irrigation Company
  3. Erik J. Foley, Mesquite Irrigation Company
  4. Mark A. Hutchison, for VVWD
  5. Clifford D., Gravett, for VVWD
  6. Travis Dunsmoor, for VVWD
  7. Stewart C. Fitts, for VWD

And Burrows, Bowler, and the other board members ignore the cost of losing motions. After Bingham lost his dismissal appeal to Judge Williams, his profit-motivated legal team spent three years and 11 months attempting to sidestep the rate issue. They claimed wrongly that the Plaintiffs, not the VVWDB, violated the good faith argument when dealing in contracts with the righteous VVWDB.

In one claim, Bingham brought in then politically motivated Mesquite City Attorney Robert Sweetin to claim that the owners of Paradise Canyon had to use effluent (wastewater) before using irrigation water provided by the Water Board. That argument failed. Sweetin later ran for Mayor of Mesquite. He lost.

Bingham brought attorneys for the Mesquite Irrigation Company (MIC) into the fray to convince the Judge that the owners of Paradise Canyon failed to show beneficial use in their use of irrigation water. That failed.

On and on it went, round and round it goes, for three years and 11 months, Bingham spun tales before Judge Williams while putting public funds into the pocks of those holding shared beliefs in profiteering at public expense.

While a judge seldom awards attorney fees to argue substantive issues, they may assign a cost against attorneys engaging in legal frivolity. The owners of Paradise Canyon could collect fees attributed to the costs required to counter Bingham’s losing motions. Therefore, if the case, as the Board seems to want, draws on for another year, the public prices could rise from 4.4 to 5.5 plus a portion of Plaintiffs costs, say 1.1 million to a total public expense of 6.6 million.

The way Bingham-Hutchison and others are proceeding makes it highly probable that the VVWDB will provide irrigation water free to the owners of Paradise Canyon for many years to come.

Appendix

Table 3 Judicial rulings in Paradise Canyon Vs. Virgin Valley Water District

A-18-774539-B Paradise Canyon LLC (Plaintiff(s) vs. Virgin Valley Water District (Defendants(s) motions and decisions
Jedidiah (Bo) Bingham Judge Timothy Williams
Dismiss case (Water Board has absolute authority to set rates) This is a case for the jury to decide, the Judge said
Must involve City in this suit Judge Williams reminded Mesquigen City Attorney Robert Sweetin that had the Plaintiff (Paradise Canyon) wanted the City involved, they would have included them.
Must prove the beneficial use “It is not a breach of the lease by failing to establish beneficial use or refusing to amend the Lease to divest itself of all or portions of leased irrigations shares.”
Must use effluent  The Lease did require the Golf Course owners to use available effluent water. However, the Judge noted that the “conduct” of Water Board officials ” has resulted in a waiver of such condition. Therefore, the failure to use available recycled or effluent water was an immaterial provision under the Lease.”
Must not sublease The Lease does address and prohibits the sub-leasing of Irrigation Shares. However, the Judge pointed to “uncontroverted evidence” that the Virgin Valley Water District (VVWD) had noticed, was aware of, and accepted the water use arrangements in 2011, 2012, and 2014. Judge Williams noted that the VVWD inaction resulted in a waiver even if the sub-lease applied.
Have complied with Covenant and Good Faith by holding meetings Must comply with Nevada’s Covenant and Good Faith law. This is an issue for the jury to decide
Perpetuity does not apply Judge Williams granted Plaintiff a perpetual right of renewal.
Dismiss Paradise Canyon appraiser The Judge denied Bingham’s motion to exclude the appraiser. Judge Williams said the Court would permit Paradise Canyon attorneys to directly examine him at trial and lay the foundation for Anderson’s expert opinions and evaluations.
Exclude deposition testimony of Karl Gustaveson Granted December 02, 2021
Perpetuity redo Re-set to Set for 9:00 a.m. April 20, 2022
Effluent redo Denied December 6, 2021
sub-lease redo Denied December 6, 2021
Absolute authority to set rate to Supreme Court Denied without hearing by 3 Justices. Appealed to full Court
Jury Trial 9:30 a.m. August 1, 2022
Paradise Canyon Case review

Endnotes:

[i] In the Supreme Court of the State of Nevada, Virgin Valley Warter Distict, petitioner, vs. the Eights Judicial District Court of the State of Nevada,in and for the County of Clark; and the Honorable Timothy C. Williams, District Judge, Resondents, and Paradise Canyon, LLC, Real Party of Inrerst, No.83947, 22-05446.pdf

[ii] Bowen and Collins and Associates, “Water Master plan, June 2020 athttps://vvh2o.com/wp-content/uploads/2020/07/VVWD-Water-Master-Plan-June-2020.pdf P. 8-3

[iii] Payments by SNWA to August 2019 the last month of a records request. Payments continue to this day.


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Michael McGreer Mesquite, Nevada
Dr. Michael Manford McGreer is managing editor of Nevada-today.com and writes on issues that impact public policy.

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