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Mammoth Lakes, CA
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Thursday, July 3, 2008
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Verdict not the end of Hot Creek case |
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Thursday, 24 April 2008 |
Town to file appeal on notion that judge's instructions botched outcome
By Lara Kirkner
Mammoth Times Staff Writer
As the Town of Mammoth Lakes moves forward after a harrowing verdict from the jury regarding the litigation case from Mammoth Lakes Land Acquisition, aka Hot Creek Aviation, (the Town lost and the jury found they owed Hot Creek $30 million in damages) they have three options to consider and may even decide to take part in all three to some extent, according to Councilman John Eastman.
The first, and most obvious course of action will be to file an appeal. Councilmembers Eastman and Kirk Stapp believe the Town has strong grounds to do this and win.
“The issue here is with the Judge's instructions to the jury,” Stapp said. “The things he told the jury to ignore are important pieces to the case.”
Judge Rodger Randall told the jurors before they went into deliberation on Thursday, April 17, that they were not to consider the part of the Development Agreement (DA) between Hot Creek and the Town that stated Hot Creek was required to follow the Federal Aviation Administration's rules and regulations.
“The Judge said that was a separate issue,” Eastman said. The jury was led to believe that Hot Creek did not have to adhere to the rules even though it was in the DA.
Another issue that Randall instructed the jury not to consider, according to Stapp, was that Town employees, such as Town Manager at the time Charlie Long, or Airport Director Bill Manning do not have the authority to commit Town Council to anything. Any agreements between these men and Hot Creek were null and void until the Town Council voted.
“With all these instructions, the jury made the best decision that they could,” Stapp said. “The case may not be the same before the Appellate Court, which will not have these instructions to consider.”
Judge Randall had not been reached at press time as to why he had issued the instructions.
The two other options before the Town are settlement discussions and insurance coverage. All three options were expected to be discussed at a Special Town Council meeting Wednesday night, April 23.
“We are following several tracks right now,” Town Manager Rob Clark said on Monday. “One is the appeal, which we plan to bring in an outside law firm for a second opinion. The second is a settlement discussion between Hot Creek, the Town, the FAA and Mammoth Mountain, which is facing a separate lawsuit. The appeal is risky for both parties so we want to bring in a skilled mediator who will help us all understand each other. The third approach is the Town's insurance policy that can be used to cover cases like this.”
The Town is part of the California Joint Powers Risk Management Authority, which is a pooled self insurance program. Several cities are part of the pool, and whenever one of them files a claim and it is approved, the pooled money pays it off.
The first step is to send the claim to an adjuster, which the Town has done. The adjuster denied the claim. The second step is for the Town to appeal the adjuster's decision and send the claim to the executive director. Since the Town considers the adjuster wrong, it will be taking the second step, according to Clark.
If that fails, the next three steps in trying to get the insurance to cover the $30 million are: Going before the Claims Committee; going before the Board, on which the Town holds a seat; or going to arbitration.
“There is an exclusion in the policy for a certain kind of breach where a party says you owe them money and you do, but this is not one of those cases,” Clark said. “We owe damages, but not money from a contract.”
Verdict delivery
Jay Becker, one of the plaintiffs in the litigation case, sat calmly, hands clasped in his lap, as he waited for the jurors to enter the room at approximately 4:30 p.m. on Friday, April 18. Terry Ballas, the other plaintiff in the case could not attend the verdict reading because of a death in the family, according to Hot Creek employee Pat Foster.
The jury found that Hot Creek Aviation had been harmed by the Town’s failure to adhere to agreements made in a contract between the two parties regarding development of land near the Mammoth Yosemite Airport. The total of these damages, according to the jury, was $30 million.
The jury had been asked to deliberate upon six questions.
1. Was there a contract in place between the Town and Hot Creek? Answer: YES
2. Did Hot Creek do all that was required of them in the contract? Answer: YES
3. Did the Town fail to do all things required of them by the contract and add things to the original document? Answer: YES
4. Was there a waiver from Hot Creek for the Town’s failure to perform? Answer: NO
5. Was Hot Creek harmed? Answer: YES
6. Damage amount: $30 million (Hot Creek was seeking $37 million-$48 million)
Judge Rodger Randall released the jurors and then explained to the plaintiff that there would be a briefing on the equitable issues in three weeks. It was the Judge’s suggestion that the two parties try to negotiate what their future relationship would be. Since the Town of Mammoth Lakes does not have $30 million, the plaintiff could decide to desist with the equitable issues, meaning they would give up the money, but keep the property. They will not, however, be able to keep both.
During the trial Hot Creek's request to swap their parcel of land with the Town's Bell-Shaped Parcel came up. Town Manager Rob Clark stated firmly, however, that the Town had denied this request.
Council member Neil McCarroll, after laughing uproariously when asked the question of whether or not the Town would give up the parcel in this situation, agreed with Clark that it would not.
“What would we call it, Ballas Park?” he asked.
“There are a lot of outcomes to explore right now,” said Bob Feldman, one of Hot Creek’s attorneys. “I really don’t want to be nasty, so I am just going to say that we are grateful to the jury, and we hope we are close to an end of this long saga.”
Becker was anxious to get to the bar to celebrate and could not comment after the verdict was read.
Appeals may be filed within the next 60 days, and according to Feldman would take 18 months to complete.
In 1997, Hot Creek entered into a Development Agreement with the Town, which gave Hot Creek the opportunity to build residential units, lodging and retail developments, and also gave it an opportunity to purchase the airport land in the future if it chose. The DA included the clause that Hot Creek had to abide by the FAA's rules and regulations. The DA was signed without anyone on the Town level ever having read the fine print of the agreement.
“We were in the middle of changing Town Managers at the time and no one that was still in town had read the details of the agreement,” said Kathy Cage, who was the lone vote on the Town Council against the agreement.
Problems arose when Hot Creek decided to build units for permanent residents instead of the allowable transient units, according to Eastman.
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Last Updated ( Thursday, 01 May 2008 )
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