LAS VEGAS — A federal bankruptcy judge blasted attorneys involved in the Chapter 11 case of Caldera P&G Wednesday after a plan confirmed in June over how to divide the defunct Willow Creek Golf Course nearly unraveled due to disagreements between Nye County and Utilities Inc. of Central Nevada.
The judge heard opposition arguments from District Attorney Brian Kunzi on behalf of the county and an attorney for another stakeholder, Michael Zucaro, over a modified plan presented by the trustee’s attorney that would strip the county of a plan to divide up the property.
The modified plan would strike the original agreement to provide park easements on six of the 15 parcels UICN will get in the bankruptcy, but at the same time also potentially devalue the 9.1-acre clubhouse parcel Zucaro was set to receive, which came with county assurances of valuable zoning changes.
UICN and the trustee’s attorney presented the judge with reasons for moving forward with this new modified plan, set out in a July 26 motion in the case, that would have the water utility pay the bankruptcy estate $110,000 and separate Nye County altogether.
After hearing arguments from all sides, an exasperated Judge Linda B. Riegle ordered the parties into an impromptu settlement conference, giving them one hour to come up with a plan or face the potential for a dismissal and possible order to liquidate all of Willow Creek in a Chapter 7 bankruptcy sale.
“Look, if you guys want me to dismiss this case now, I will. I don’t think any of you do, but I’m tired of this nonsense. You guys get together and talk about this and work it out,” the judge scolded the lawyers. “It’s obvious with this plan we’re not in the condition (to move forward). I don’t know what you guys are doing. I guess you’re playing chicken with each other. I suggest you guys talk now instead of playing chicken.”
Earlier, Kunzi and UICN attorney Laura Granier traded accusations of bad faith bargaining and delaying tactics deployed to sabotage the settlement.
“On a couple of occasions, Mr. Kunzi has said to me that this is it, if you don’t agree to this we might as well not go any further. And we have said that we think this was not part of the deal on March 1, but okay, we want to get this deal done. It came to a point at the end of July that we had heard nothing and the county had been unresponsive to UICN and the trustee for a matter of weeks, we finally said we must move forward. At that point, Mr. Kunzi finally said we have been negotiating in bad faith,” Granier told the judge.
“So the issue that came up at the eleventh hour by Nye County was that suddenly they wanted the unfettered right to make use of those water rights (on the six easements), either to serve themselves in our service territory or to somehow force us to provide them with free water. We are simply at an impasse. Mr. Kunzi has confirmed that with me through emails, where he is suggesting I am a liar or a crafty lawyer. Unfortunately we can’t get any further.”
Kunzi shot back by presenting emails to the court that suggested that indeed at the very beginning of negotiations the county stipulated that it wanted access to water on the easements if it was going to participate in the bankruptcy plan.
“In two different emails, the last one referenced it on June 9. It specifically says that the use of the water rights that are appurtenant to this property, which we believed with the negotiations we had was part of the deal in the easement agreement, I specifically said on June 9 ‘you still are not addressing the issue of water rights, this is a deal breaker, please do not waste our time if this is not going forward.’” Kunzi told the court. “Not once has UICN ever said that our concerns over the right to use the water rights was not part of the deal until July 28 in an email I received from Ms. Granier. That was the first time throughout this entire process that they told us that the right to use the water rights was never intended to be part of that deal, even though on June 9 from me saying basically please don’t waste our time if we can’t continue this.”
The district attorney later said that the negotiations were done in such bad faith that he didn’t trust anything UICN said it was going to do.
“I think there are significant problems here. I think Nye County can not be expected to drive forward some type of zoning, because quite frankly we’re in a position here where we can not trust UICN and what they may be trying to do with this property.”
Robert Atkinson, attorney for the bankruptcy trustee, Joseph Atkins, was anxious to move on without the county. He said that even after Tuesday’s commission vote to approve — conditionally — the plan to take easements on six Willow Creek parcels in exchange for $100,000, that UICN has made more of an effort beneficial to the estate.
“Nye County did move forward and yesterday had a Nye County Commission meeting and conditionally approved the plan. Furthermore, there was $100,000 deposited into our trust fund. I believe that Mr. Kunzi will argue that that is a good faith step torward consummation of the plan. However, upon reviewing the actual record of the Nye County commissioner meeting, it wasn’t a blanket approval. It was conditional. All that got approved was the plan, so long as the easement language looks like this,” he said. “In subsequent conversion with UICN, it’s the exact same gap that still exists. We believe that the conditional approval is essentially no change to what it was two weeks ago, which is there’s a gap, it can’t be closed and we need to move forward with this plan.”
Under the modified plan, UICN agreed to pay the county’s $100,000 payment and even agreed to ante up an additional $10,000 if the plan were approved at the hearing. However, the modified plan left Zucaro dangling.
His lawyer, Jeanette McPherson, got to air her concerns, too, before they were all sent to a nearby conference room.
“This has been the standard in this case. This plan was filed without input from Mr. Zucaro. This is a dirt for debt plan and unconfirmable without his consent. When we saw the plan, we decided to work with the trustee but we had to do a substantial amount of work to get information,” she said, before being asked to address her concerns now. “The point is the zoning issue was a significant part and it’s a significant part of the value that Mr. Zucaro was getting for his exchange, the dirt for debt. It’s a key component of getting this plan confirmed. If that goes away, that was what we relied on.”
After hearing from McPherson, the exasperated judge ordered the hour-long conference.
“Look you are the guys who brought this on shortened time and you didn’t have all your ducks in a row by letting Mr. Zucaro know. So you come on in here now, you don’t have your ducks in a row. I understand the immediacy of it, but get your ducks in a row,” she ordered.
An hour and 15 minutes later, the attorneys were back in court. And this time they had reached an agreement that seemed to suit all parties. Nye County got most of what it wanted in its original understanding; UICN kept its property from being liquidated and potentially purchased by the county outright, which Kunzi told the court the county was prepared to do immediately; and, Zucaro kept his zoning assurances.
After reading some of the negotiated easement language into the record, the hearing was done.
County commissioners will be presented with the agreement for their approval to spend the $100,000 on the six easements during its Aug. 20 meeting and all the parties should be back in court on Aug. 21 for the judge to sign off.
“Us working together cooperatively is going to be better for the public than us being bounced out of this,” Kunzi said 24 hours after the hearing.
The district attorney said instead of allowing the agreement to be hung up over the water issue, he agreed to allow it to be nixed altogether — but only for now.
“The big fight is are we going to be provided water by them. Nye County was never going to pay them for water and it was clear that they were never going to provide us water. Quite frankly, we felt the easiest way to resolve this was to take the reference about water out of it and just leave us to our own devices. We don’t even necessarily know whether there needs to be water. My whole position on this is that if Nye County at some point needs water to maintain conditions on the golf course, we have every right to use our own water rights to supply our own water. I know UICN doesn’t want to agree to that, but that’s okay. If we have to fight that fight in the future, we can.”
The only problem now is whether UICN’s internal legal counsel will okay the plan, which isn’t certain. Kunzi said he believes commissioners will okay it; if they don’t, Nye County will simply be out of the settlement.
“Their counsel (UICN’s) is going to write up all the changes that were put on the record. They are supposed to get that done by Monday. If their board decides not to accept this proposal, but, as the judge indicated, then basically the fight’s on and Nye County will be allowed to pursue whatever remedies, particularly, what we’d want to do is liquidate this thing and have the county buy the golf course.”