By Mark Waite
A judge fined Jim Scott, owner of companies that have owned or operated Willow Creek golf course since 2009, $100,000 on Friday. Scott was handed down the personal fine in addition to his companies being hit with requirements to pay all costs and make improvements to Willow Creek golf course ponds.
Senior Judge Bob Rose set the costly penalties at the end of a contentious civil court battle between Willow Creek affiliated Ashland Capital LLC and former owner Jorei Enterprises and Utilities Inc. of Central Nevada.
The judge’s ruling in District Court followed an award Thursday of $516,162 in damages — mostly legal fees but also company costs — to Utilities Inc. in court actions over the golf course ponds.
Scott claimed he couldn’t get financing to remediate the ponds while litigation was pending, namely a lis pendens, a written notice litigation was pending on the property informing the public and financiers that potential for a claim existed. Rose said that was an insufficient reason to be excused from contempt of court charges.
Rose reminded Scott that all orders of the court are important, especially a preliminary injunction issued in September 2009 requiring Ashland Capital LLC to maintain the ponds, designed to prevent hazards and dangers to citizens of a community.
“It almost seems you have a shell game going on with the various companies and LLCs,” Rose told Scott. “The court finds no material efforts have been made to comply with the court’s preliminary injunction.”
“The violations continue to this day and present a dangerous and continuing violation to the residents on the golf course and the citizens of this state,” Rose said.
Utilities Inc. attorney Laura Granier presented evidence Scott obtained $500,000 in financing to purchase Willow Creek golf course last October, for his newest company Caldera P and G.
Scott’s attorney, Tim Post, said there was no evidence presented his client didn’t want to abide by the court order.
“There’s no evidence presented today Mr. Scott has the ability, namely the money in his pocket, to do these repairs. There is not one bit of evidence lenders will lend money to do the repairs when the lis pendens shows up,” Post said.
Gary Spackman, who met Scott when he was trying to obtain financing for previous owners Aram Maissian and Willow Creek Holdings, said lenders were contemplating a $6.5 million to $7 million loan to develop the golf course for Maissian but he couldn’t get the loan.
Spackman said he contacted no less than five lenders, but the preliminary title report showed the lis pendens.
“The whole idea was to get enough money to acquire the golf course, maintain it and bring it up to par,” he testified.
The plan was to acquire the nine-acre clubhouse property and build a recreational vehicle park and casino, Spackman said.
Spackman said if there had been a fixed amount on the lis pendens he might have been able to deal with it. But nobody would lend, except the one lender with the $500,000 financing.
Scott claimed he was trying to close on all encompassing financing that would include monetary damages and pond remediation, but it went away.
Scott testified: “The mere fact that there’s a lis pendens on the property, if you can show me someone who’s willing to lend the appropriate amount of money with the lis pendens, I would welcome that information. We have found none.”
Neither Scott nor Spackman could produce evidence they tried to expunge the lis pendens nor evidence they were refused loans for that reason.
Scott testified the purchase price of the golf course started out at $3.6 million with Jorei Enterprises, until that company was taken over in receivership in 2009. Gulf Union, one of Scott’s companies, submitted an offer and it was accepted by the receiver, for a purchase price of $1.8 million, he said.
Granier brought out emails in which Scott said he waited to comply with a December 2009 NDEP notice as he anticipated Gulf Union closing the sale in October 2010.
Granier also alleged Scott’s firm didn’t want to do necessary repairs because of the ongoing dispute with Utilities Inc.
Testimony showed golf course manager Curt Moen sent Scott an email stating that it would cost from $153,000 to $500,000 to remediate three ponds at the golf course. Moen said the company could construct three new ponds for less than $300,000, according to court testimony, but Scott said his environmental consultant didn’t recommend it.
Scott admitted to Granier he didn’t inform the court he was trying to comply with the order but couldn’t obtain financing. He also admitted nothing in the preliminary injunction said the obligation to maintain the ponds was dependent upon obtaining financing.
Money from the $500,000 loan went to pay off past bills, like one to Ninyo and Moore, which prepared a report to remediate the ponds, Scott said.
The consultant made a recommendation in 2010 how to remediate the ponds but Scott said he couldn’t obtain financing to do it.
UICN Regional Manager Wendy Barnett testified to different photos comparing the Willow Creek ponds to those at Mountain Falls golf course that receive effluent. Water in the Mountain Falls pond was clear, the pond was fenced, liner was in good shape with rip rap to protect it, signs noted it was effluent water and there wasn’t sediment and debris. Barnett testified her company photographs the Willow Creek ponds five days per week. She testified the main Willow Creek pond receiving the effluent had torn liners, low water levels, contained debris, the water was gray brown, in places the bank caved in and tree roots were encroaching.
In the evening when the sun goes down, decomposition and hydrogen sulfide gas comes up from the bottom of the ponds, she said.
Scott testified he didn’t install fencing, as recommended in a wastewater pond operations manual, in case children or animals got inside. He said signs were placed warning of the effluent water, but they had to be replaced.
“We circulate the water and pump it to the other ponds, so it’s aerated, or it goes over to Lakeview (golf course),” Scott said.
But Barnett said there was very little aeration as shown in the photos.
Ninyo and Moore’s report said the lining of the pond was ripped and water was in contact with the soil, Granier said. Scott testified circulating the water removes sludge, but sludge was not physically dug out of the bottom of the ponds.
Scott said a Nevada Department of Environmental Protection order in June 2009 only required a plan of action to remediate the ponds. Granier disagreed.
Scott testified he has crews making sure debris isn’t thrown in the ponds, the liners aren’t exposed so they deteriorate further and water levels are correct.
Barnett described the treatment process at the Willow Creek treatment plant, said the plant can’t discharge raw sewage and has never been issued a notice of violation.
“There’s a very great possible damage out there. If the pond continues to worsen as it has over the years, NDEP may not allow the effluent to go in the pond. So not only are there continuing legal fees, which take up time and legal expenses, there’s also a very real potential damage to Utilities Inc. to have to build a capital improvement project to find another way to send their effluent,” Barnett said.
An integrated resource plan prepared for UICN last year suggested building a sewer line to Lakeview Golf Course at a cost of $1.7 million.
After the ruling, Scott said a lis pendens was improperly applied in this case, which only is used for title issues, he said UICN has no title claim to the golf course.
“I’m just in shock and the judge even made the statement when he handed down the decision that it was excessive, but he was going to give it anyway,” Scott said.
Scott said his attorneys contacted Utilities Inc. attorneys in an attempt to remove the lis pendens.
Post said a judge fining Scott for not getting a loan was “like the kid standing in front of the judge for murdering his parents and telling the judge, go easy on me, I’m an orphan.”
Post said he will obviously appeal. He also complained Utilities Inc. had double recovery of damages both Thursday and Friday.