“We’ve been done wrong.” That was the flat comment of Mammoth Town Manager Rob Clark on the Hot Creek Development court decision, which found Mammoth guilty of breaching a development agreement with Hot Creek and awarded the company $30 million in damages. Manager Clark said the Town will appeal and believes the judge in the case gave jurors bad instructions.
“We lost at the judge level,” said Clark, who explained that visiting Judge George Randall decided that FAA rules tied to grant money given to the Town should not have impacted the separate development agreement between Hot Creek and the Town. Mammoth officials strongly disagree.
The grant rules, among other things, said that Mammoth could not sell airport land to Hot Creek down the line, but that was part of the earlier development agreement. Manager Clark said the Judge’s position, and the way he instructed the jury, was that the grant rules were Mammoth’s problem and should not have caused a delay in Hot Creek’s development plans, leaving the jury little choice but to find the Town guilty.
Manager Clark points to the development agreement which says both parties must follow FAA regulations. He said Judge Randall concluded that rules attached to grants are not the same thing as federal regulations. Hot Creek presented an expert witness who also made that claim.
The Town of Mammoth was truly caught between a rock and a hard place, bound to obey FAA grant rules on one hand and Hot Creek denying the significance of those rules on the other.
The Town offered to come up with additional Forest Service land at the airport to smooth the way to sell land to Hot Creek. Manager Clark said the process was too slow for Hot Creek and a lawsuit was filed.
The Town hired the prestigious law firm of Morrison and Forrester to represent Mammoth in this case. Town officials stand by their actions in relation to Hot Creek as “legal, ethical and proper.”
News of the verdict and the enormous damage award shook up town employees, who wondered about the future of their jobs. Manager Clark said a Town Council meeting has been scheduled for Wednesday with an open session explanation of what has happened and then a closed session. “People are very concerned about this,” said Clark.
Manager Clark said the possibility for settlement does exist. He hopes to engage a 4-way settlement discussion with the Town, Hot Creek, the FAA, and MMSA. “There is some indication that Hot Creek is willing.” The Town will also pursue an insurance claim to pay damages.
If the guilty verdict and $30 million award sticks,the Town could pay it out over 10 years or at the very worst declare bankruptcy.