On September 6, Las Vegas District Court Judge Timothy Williams again ruled against Virgin Valley Water District Board (VVWDB) attorney Jedidiah (Bo) Bingham of Bingham, Snow, and Caldwell. This four-year, five-month-long Civil Case (A-18-774539-B) tests the Water Boards’ authority to set water rates in any manner they choose.
In the latest of several motions, the owners of Paradise Canyon (dba Wolf Creek Golf Club) asked Judge Williams to declare their irrigation water lease contract with the VVWDB that Bingham wrote enforceable. Bingham argued that his contract was unenforceable because it contained the term “perpetual.”
On the surface, the Case is simple enough. The owners of Paradise Canyon in Mesquite, NV. want a Jury to decide if the Water Board followed the doctrine of covenant of good faith and fair dealing in contract law when setting their irrigation rates. Specifically, they question raising their irrigation rates from $250-$300 per share to $1,115.00 per share, not determined by the Mesquite Water Board but by the Southern Nevada Water Authority (SNWA) of Las Vegas, NV.[i]
The lower rate represents the historical lease amount irrigators paid the Virgin River Water District to lease Virgin River water stock shares the District acquired from the Mesquite Irrigation Company (MIC) and Bunkerville Irrigation Company (BIC). [ii] The higher amount is the rate the SNWA pays for unused MIC and BIC water shares.
For the Water Board, Bingham argues that the VVWDB has sole and absolute discretion to set water rates.
Early in the Case, Judge Williams reminded Bingham that the water district is a political subdivision of the State of Nevada and told him they had to act in good faith and without being arbitrary and capricious. “They do not have a right to do whatever they want,” the Judge has said. The Case is for the Jury to decide, Judge Williams told Bingham.
The “perpetual use ” issue dates back to May 28, 2020. Then attorneys for Paradise  Canyon filed a Motion requesting Judge Williams to declare the unambiguous irrigation water Lease between the Water Board and the owners of Paradise Canyon [iii] enforceable under NRS 30 et seq.
On July 2, 2020, Bingham filed his Opposition to the Motion. He argued that the perpetual use option in his contract for the Water Board was void as a matter of law.” In a peculiar argument, Bingham said that Paradise Canyon’s interpretation of the Lease amounts to “theft of a public asset by a private business.”
In their reply, Jeffery Sylvester, the Attorney for Paradise Canyon, criticized Binghams attempt to change its legal position on the rules governing the Court’s interpretation of the contract during oral arguments on the subject on May 24, June 14, and June 24, 2021.
In June 2021, Sylvester argued that the language in the Bingham drafted Lease grants the owners of the Paradise Canyon rights to use the irrigation water in perpetuity as long as they pay a rate set by the water board during their annual budget meeting. And Sylvester told the Judge that Less than 24 hours after opening following the COVID-19 PandemicPandemic, the Wolf Creek golf course manager delivered the lease payment to the water district.
During that hearing, Sylvester alleged that Bingham lied to the Judge 150 times during motion hearings and added 25 new cases and new arguments during oral presentations, thus denying them an opportunity to respond. The Paradise Canyon attorney suggested that when attorneys present demonstrably false information, a Judge is no longer bound to accept the veracity of those statements.
“We are not seeking to set that rate in perpetuity,” Sylvester said. He noted that it is not an option for the Board to determine a rate in perpetuity. Parties only intended what they wrote to lease the shares annually.
On August 23, 2021, Judge Williams addressed the issue, declaring the Lease enforceable, as requested by the club owners. He said the “unambiguous terms of the Lease explicitly provide Paradise Canyon with a right to renew on a perpetual basis.” He said the owners of Paradise Canyon were not in breach since they paid the annual rental amount. Therefore, Paradise Canyon did not forfeit this right to renew the Lease in perpetuity.
Bingham did not like Judge Williams’s ruling. So on September 29, 2021, he filed a motion to reconsider but allegedly offered no new evidence as required by law.
During the perpetual use reconsideration hearing on August 2, 2022, Joseph C. Reynolds, a partner in Hutchison and Stefen, Las Vegas, for Bingham, goes before Judge Williams, alleging that the golf course owners had a perpetual right to renew a contract with the VVWDB was wrong. The discussion between the Judge and Reynolds took approximately an hour during the half-day motion hearing. After hearing Reynolds, Judge Williams again ruled in favor of the owners of Paradise Canyon, declaring the contract enforceable as a matter of law
But then Judge Williams allowed Bingham to speak to the issue to get him “on the record.” Bingham spent the remaining 2 hours on August 2 and another three hours on August 22, a public expense attempting to reargue his previously overruled motions.
The Judge tried to convince Bingham that the Case was simple: did the use of a rate established by SNWA comply with the covenant of good faith and fair dealing contract law doctrine? But, adding to his billable hours, Bingham continued aguing by repeating and debating the same issues heard in previous motion hearings over four years of litigation.
Judge Williams told Bingham that if they won, the Case in front of a jury would be over, and the VVWDB could charge their “market rate,” with no need to appeal. Not so, Bingham said. “We will appeal even if we win,” because the District would lose all its future water because the Judge allowed Wolf Creek a perpetual right to water.
The Judge found fault in Bingham’s argument. “Hypothetically,” the Judge said if the VVWDB needed to convert river water to domestic use, that changed the situation, adding that such a situation is not part of the Case. The Judge said, “We can talk about this and that, but all we can talk about now is the contract issue, the Lease by the VVWDB.
Judge Williams continued, “Maybe no water becomes available for many different reasons; that is a different issue. This Case is about irrigation [stock] shares. And my interpretation of the contract [between the VVWDB and the owners of Wolf Creek]. “He added, “I have already ruled. I don’t want to continue to replow that ground.” “Why is this pertinent to this Case? We are considering the Lease [perpetuity] language that you prepared,” Judge Williams asked.
Here Bingham introduces his newest theory not previously under consideration in this Case. In his opinion, the Public Trust Doctrine rules. “Because this is public trust doctrine water, which prohibits you [Judge Williams] from violating the public trust,” he added. Bingham pushed his public trust idea, saying it includes all water and tells Judge Williams that he [the Judge] failed to consider that issue during the numerous motion hearings.
Judge Williams reminded him that the Public Trust Doctrine was not part of the Motion under consideration. “Why didn’t you put the public trust doctrine in the contract between the two parties,” the Judge asked. And the Judge reminded Bingham that if it becomes an issue, Plaintiff has a right to oppose it.
Bingham accused the owners of Paradise canyon of not wanting to pay the VVWDB version of the market rate. “That is the issue. It is not a lack of water,” Bingham says.
“Isn’t that what I said, Judge Williams responded, adding this is an “evaluation of the lease rate of water?” He said it’s not the question of not wanting to pay the rate; it is an issue of not wanting to pay the rate set by the SNWA.
“That is not what we are dealing with,” Bingham lectured the Judge. “That is false. Locals pay the same rate, between $1,000 and $1,200 per share,” he said.
“Here is the thing, I am not saying you are right or wrong; I am not making that decision, the Judge said.”
But Bingham wasn’t listening. “Wolf Creek wanted cheap water, $300 per share, and the VVWDB has sole and absolute discretion in setting that rate,” Bingham again argued.
Judge Williams told Bingham, “I want to get to the substance of the issue,” to which Bingham responded that “everybody” knows that the Court does not have the authority to usurp the enabling act [power to set the rate] by the legislature.” The Judge again reminded Bingham that he was not making that decision.
Sylvester, for the owners of Paradise Canyon, pointed out that Bingham’s argument was not part of the Motion reminding those in attendance that the Nevada Supreme Court dismissed the same argument Bingham had tried to make. “You, the Judge, have already made the decision,” Sylvester said.
The Judge told Bingham that his rate-setting argument was not under consideration in this Case. The issue is the application of the covenant of good faith and fair dealing, the Judge Said. If I am right or wrong, it goes to the Jury. This Case is straightforward, the Judge said.
Bingham told the Judge that he would raise any of his issues at any time. “No,” the Judge said. “We cannot just allow that.” [Today’s] Motion is limited to this one issue.
Nonetheless, Bingham continued accusing the Judge of errors by not agreeing with him that the VVWDB board had absolute discretion to set rates. Judge Williams shot back. “I want to focus on this Motion. At this point, Bingham criticized the Judge for how he heard the motions.
The Judge reminded Bingham that he takes motions as they come to him, as was agreed upon by the attorneys early in the Case.
Judge Williams responded to Bingham’s argument that the Board could set the rate as a public entity at whatever they desired.
“I understand potentially your regulatory scenario. I know what you are saying,” Judge Williams said. “How does that change the dynamics of the Case, he asked. “The contract is in place, Judge Williams continued. What impact does that have on the application of covenant of good faith and fair dealing in this contract, he asked. “Are you saying, notwithstanding the contract, that the district can still do whatever they want,” he queried. “Yes,” Bingham responded.
“We are dealing with water in the driest state in the country,” Bingham told the Judge. He referred to the Mineral County Case, [iv] saying that the Nevada Supreme Court, in that Case, confirmed that a public body is authorized explicitly under the legislation and has the discretion to set that rate. Bingham claimed that the ruling confirms that a public body cannot effectively contract away its control in the public’s best interest. He went further, telling the Judge that he [the Judge] could not usurp the power of the VVWDB.
According to Bingham, the Justices in the Mineral County case support his contention that the VVWDB can do whatever it wants when setting rates. But he contended that the contract he wrote, including the perpetual use phrase, allows the owners of Paradise Canyon to take water forever.
Judge Williams disagreed, telling Bingham, “You [the VVWDB] can do a condemnation case. That would result in chaos, Bingham says. It would ensure. No, we cannot. “Everybody agrees with me,” Bingham argues. We [The VVWDB] have absolute authority, and the Board has total discretion in determining the public interest [as outlined in the Public Trust Doctrine]
This Case is a different issue, the Judge says. “This is what I want to point out; those facts have not yet happened. We have condemnation as it applies to a property right. They [the water board] can do that. They [the attorneys for the owners of Paradise Canyon] are not saying that you cannot take the irrigation shares back. Maybe everyone by law has to abolish grass or swimming pools; that could happen; all the owners of Paradise Canyon say is that until something like that happens, they are contesting the rates.
Again Bingham tells the Judge his view of what the owners of Paradise Canyon say. “That is not what they are saying. They want water forever under the perpetual terms in the Lease.
Again the Judge corrects Bingham. “No, under the conditions of the Lease. It does not say that forever under the requirements of the Lease. It is just a right to renew.
But Bingham disagrees. “No, they are saying that they have a right in perpetuity to renew the Lease and pay the rate.”, he says. If a public entity enters into a contract, it has some significance to the public body that cannot enter into a contract of unreasonable direction, Bingham said.
“I get that,” Judge Williams says, adding, “It cannot enter for 100 years”, adding: This is a lease for renewal. I still think there could be some form of condemnation, a yearly renewal”.
But Bingham says the rates must be without preference. To that, Judge Williams inquires: “How is this without preference? The VVWDB wants the golf course to pay the same as SNWA. That is not a preference issue. The Golf course [owners] say the rate is not an actual market rate. That is the bone of contention. That is what the Case is about, the Judge responds.
“No, it is not,” Bingham argues, telling the Judge that he does not understand the issues correctly, adding that the enabling act protects the District, claiming that a perpetual right and lower cost have a net effect on the community.
But Judge Williams said that no net effect exists if the water district has overcharged for water, and others would also seek a lower rate. The Judge reminds Bingham that the public owns the water “owned” by the irrigation companies.
Although the Judge said he understood that the public owned the water, Bingham said, “I need to clarify to you that any water is publically owned water.”
Finally, the Judge told Bingham to work on wrapping up this [the Case]. And on September 6, 2022, he signed the official hearing motions saying:
“VVWD is rearguing Court’s contract interpretation and declaratory judgment without citing any newly discovered evidence or change in controlling law, let alone demonstrating any “clear error,” which provides no basis for relief. The Motion for Reconsideration on Order for Wolf Creek’s Perpetuity Claim” is denied in its entirety.”
Bingham wants another shot to dismiss the Judge for lack of subject matter jurisdiction partially. The Judge set that hearing for 1:30 p.m. September 9, 2022
With a trial date set to start at 9:30 October 10, 2022, the attorneys for the owners of Paradise Canyon have issued subpoenas for:
- Kenyon Leavitt, former water board member, Mesquite
- Kraig Hafen, former water board member, Mesquite
- Kelby Hughes, President of The Mesquite Irrigation Company, Mesquite
- Colby Pellegrino, Southern Nevada Water Authority, Las Vegas
- Ken Rock, former manager of the Virgin Valley Water District.
Before trial at 1:30 on October 5, 2022, the Judge will hear several motions in limine. [v]
From the owners of Paradise Canyon (The Plaintiffs):
- A motion to exclude and preclude re-liting adjudicated claims and VVWD entirely adjudicated counterclaims.
- A motion to preclude all evidence and arguments regarding the defendant’s claim that potable water ratepayers subsidize irrigation of the Wolf Creek golf course. 1:30 p.m.
- A motion to preclude evidence and arguments concerning the defendant’s alleged government function arguments.
- A motion to admit VVWDB meetings minutes into evidence in advance of trial.
From the Virgin Valley Water District (The Defendants) :
- Â A motion to exclude any claim that SNWA was unwilling to lease from the District.
- A motion to exclude terminated agreements which the owners of Paradise Canyon wolf claims requires the District to exclude consideration of SNWA’s leasing activities and justify a local rate discount
- A motion to exclude an alleged district policy prohibiting the District from leasing to SNWA or that the District was constrained by such a policy in setting its lease rates.
- A motion to exclude the former board member Karl Gustaveson’s phone call and exclude July 9, 2018 settlement letter from counsel
[i] The covenant of good faith and fair dealing is an implied promise in contract law that any parties to a contract will interact in an honest and fair manner as well as exhibit good faith in their dealings with one another.
[ii] Publically owned Virgin River Water was appropriated to 113 claimants under the 1927 Virgin River Decree, modified in 2016) to irrigate 1,962.76 Acre feet with 17,782.71 acre feet of river water
[iii] “[t]he original draft of the Lease was for 8 years with no perpetual language. However, during the Board’s public meeting to consider the Lease, Wolf Creek requested the “perpetual” language, which the District intentionally tempered by reserving “sole and absolute discretion” to set the rate in 2020″ (id., at 5, fn 21).
[iv] MINERAL COUNTY, et al., Appellants. vs. LYON COUNTY; CENTENNIAL LIVESTOCK; BRIDGEPORT RANCHERS; SCHROEDER GROUP; WALKER RIVER IRRIGATION DISTRICT; STATE OF NEVADA DEPARTMENT OF WILDLIFE; AND COUNTY OF MONO, CALIFORNIA.
[v] A motion is a motion, discussed outside the presence of the jury, to request that certain testimony be excluded. It can also be used to get a ruling to allow for the inclusion of evidence.
