During a seven-day trial that ended Tuesday, developers argued against neighbors in a multi-million-dollar case about whether plans to build 69 homes on the Bar J Chuckwagon property were sabotaged through malicious intent or were just a pipe dream.
Shortly before lawyers gave closing arguments, plaintiffs’ attorney Richard R. Thomas told the court that the plaintiffs had settled with James Speyer, a member of the Alliance of Route 390 Neighbors who had been listed as an individual defendant. The terms of the settlement were not disclosed.
U.S. District of Wyoming Judge Scott W. Skavdahl will rule on the case, unless the parties come to a settlement before the ruling.
Before wrapping up Tuesday, Skavdahl told the court, “I will not take as long to render a decision as this case has been cooking in the oven.” The plaintiffs filed the case in June 2018.
During closing arguments, Thomas said the Alliance’s appeals to developers’ attempts to amend the Bar J Master Plan deprived HRH of a critical business opportunity.
“Opportunity is still important in this county,” Thomas said. “Opportunity and justice in this case are identical. HRH lost the opportunity it deserved to develop. These defendants deprived my clients of that opportunity. We ask the judge that the court award HRH the maximum damages justified under the facts of this case.”
An expert witness for the plaintiff estimated that damages were roughly $20 million.
Attorneys for the defense, in their closing arguments, countered that the developers’ plans were unrealistic at best.
“This was not a real thing,” attorney Leah Schwartz said. “At best, Mr. [Steve] Hancock and Mr. [Tom] Reynolds were engaged in wishful thinking. Babe Humphrey called it a dream they had. At worst, this was a con or a scam. It was a total gamble from the beginning, a lottery ticket that HRH bought with other people’s money.”
HRH alleges the Alliance used baseless appeals to willfully prevent their application from advancing through the Teton County approval process. Those appeals triggered stays, suspending HRH’s application to amend the Bar J Master Plan until the county analyzed each of the Alliance’s three appeals.
The Alliance — and some of its core members named as individual defendants — stated their appeals were a necessary measure to force HRH and Teton County to follow rules contained within the Teton County Land Development Regulations and Comprehensive Plan. A 2015 amendment to the LDRs prohibited new planned unit developments, eliminating what defendants state was HRH’s best chance of gaining approval to develop the Bar J property, which is zoned for one home for every 3 acres.
HRH first planned to develop the Bar J property by transferring unused development rights from Teton Pines to the Bar J. The county redirected HRH to amend the Bar J Master Plan, and in 2017 former planner at the Teton County Planning & Building Department Roby Hurley told HRH to apply for a planned use development permit, despite the amendment in the LDRs.
The Alliance also contends the appeals it made were based on the advice of its former attorney, Matthew Kim-Miller. Throughout the last week, lawyers for the defense stated HRH had neither the money to develop the project nor the time — even without the stays — to gain county approval before the expiration of its last exclusive option to buy the 21-acre property.
People called to the stand throughout the last week included Hancock and Reynolds of HRH; Babe Humphrey, who owned the Bar J until selling it earlier this year; members of the “core group” of the Alliance; and people HRH and the Alliance worked with throughout HRH’s three-year dispute to gain approval from the county to amend the Bar J Master Plan.
Throughout Thomas’ questioning of the Alliance’s intentions, its members held that their opposition was to what they saw as an illegal development of the Bar J Chuckwagon property — where the underlying zoning only permitted one home for every three acres — and not HRH in particular.
When Thomas asked Nelson Braddy, considered a leader of the Alliance, about the group’s purpose, Braddy responded, “Our intent was to stop 69 units from being developed on that property.”
Braddy said he didn’t appreciate the idea of a high-density project near him but said his main objection was that the project “didn’t even seem legal.”
James Speyer, the defendant who settled Tuesday, said: “If we had a legal basis, anything we could do to slow down the process at the planning department was a good thing.”
Gerald Kitchen, a defendant, former attorney and member of the Alliance, said the group’s intention was to force the county to acknowledge its rules, not to delay HRH’s application.
“We had no control over the stays,” Kitchen said. “Stalling was in the hands of the county. It was not our issue.”
Thomas presented exhibits showing the Alliance’s internal emails regarding the project, which the plaintiffs believe show malicious intent.
Among them was an email Braddy sent to Alliance members about an appeal they made, stating, in part: “I guess our ‘little actions’ are having the desired effect on the developers and [the Teton County Planning and Building Services Department]. That’s why we need to keep sustained pressure on Hancock. That creates the biggest delays and additional costs.”
Asked in court whether the Alliance’s intention was to cause delay to HRH’s plan to amend the Bar J Master Plan, Braddy replied, “Absolutely not.”
Thomas also pointed out an email in which Braddy stated, in discussions to make an appeal that a lawyer recommended against, that the attorney was probably right but it would be fun to “watch Hancock squirm.” Braddy confirmed he thought it was fun, and said he considered it a success to have stopped the “totally unacceptable and unapprovable and illegal proposition.”
During closing arguments, Schwartz said that celebrating hiccups slowing HRH’s development was not in itself illegal.
Throughout the last week, members of the Alliance said the decision to make appeals was based on the advice of their former counsel, Matthew Kim-Miller. Kitchen said he wouldn’t have filed the appeals had Kim-Miller advised against it, and other Alliance members echoed that thought.
His wife, Diana Kitchen, said, “We believed that the project was unlawful and, relying on Matt Kim-Miller, we objected to it and the procedure.”
Kitchen, who was directed by Kim-Miller to put her name on the third appeal, said she wouldn’t have filed that appeal separately had she known it would expose her to the risk of liability. Still, Thomas pointed out, she spoke of the dispute between HRH and the Alliance in internal emails using terms like “battle” and “war,” which HRH believes illustrate her goal of thwarting the development.
While Thomas focused on identifying the Alliance’s intention, attorneys for the defense questioned whether the county would have approved the zoning change in the first place, even without the Alliance’s appeals elongating the process.
Kim Cannon, attorney for Gerald and Diana Kitchen of the Alliance, said Tuesday the stays didn’t stop the developers from obtaining financing for their project and “reconfiguring the development that was so flawed.”
Reynolds said he didn’t know planned unit developments were prohibited under the LDRs until 2016, at least a year after the county amended the LDRs to prohibit them.
Over the past week the plaintiffs and other witnesses were presented exhibits showing emails HRH received stating the project was unlikely to succeed without being “50-50.” Witnesses interpreted 50-50 to mean either the proposed proportion of affordable homes to free-market homes or the proportion of bedrooms in affordable homes to the bedrooms in free-market homes. Despite knowledge of the 50-50 recommendation, HRH planned for the development to have 23 affordable homes and 46 free-market homes, which wouldn’t have met either interpretation of 50-50.
Last week the defense questioned Scott Pierson, former president of Pierson Land Works and senior planner emeritus at Y2 Consultants. HRH hired Pierson as a consultant to provide advice to go through the planning process.
Questioned by attorney Kim Cannon, Pierson couldn’t recall any example of a special project master plan achieving a tenfold increase of density over the underlying zoning. The 21-acre Bar J property is zoned for seven homes; HRH planned to build 69.
Pierson also acknowledged he knew the county dismissed the Alliance’s first appeal with the stipulation that PUDs were prohibited under 2015 LDRs.
The defense also called to the stand Bill Collins, former county planning director and current president of Collins Planning Associates Inc., whom the Alliance hired to orient the group to the county approval process.
In his witness statement, Collins said, “The proposed master plan amendment contradicts the plan in substantial ways that made it extremely unlikely that the county commissioners would have approved [the Bar J Master Plan].” He informed the Alliance about that contradiction throughout the dispute.
But, as Collins confirmed to Thomas on the stand Monday, nobody from the Planning Department ever formally or officially gave that opinion to HRH.
Beyond calling into question the likelihood that the county would have approved the master plan amendment, attorneys for the defense also focused on whether HRH could have secured the capital to buy and develop the Bar J. The Alliance argued HRH deserves no damages for a project that had a low likelihood of being approved and securing capital.
Frank Lyons of First Interstate Bank said he would not have loaned money to HRH to purchase the property — and said as much to Reynolds years ago — partially because Hancock owed money to the bank. Contrary to Reynolds’ recollection that the bank discussed loaning $8 million if HRH could come up with the other $8 million, Lyons said he didn’t recall that conversation and made no firm commitments to fund a loan to purchase the Bar J.
Schwartz then asked Lyons if he would have loaned HRH $75 million to develop the 69-home property had the LLC come up with the money to purchase it. Lyons, again, said no. The maximum he discussed was $20 million, he said, far less than HRH would have needed.
Reynolds and Hancock had no other proof of having the capital to buy or develop the property. Reynolds said now-deceased Teton Pines founder Clarke Nelson committed to the project, but HRH had no written commitment from Nelson — or anybody else — to fund the development. Reynolds said it would cost between $120 million and $125 million.
During closing arguments, Thomas said the lack of a commitment to invest in the property was typical for a development in its early stages.
Attorneys during the trial attempted to understand the origin of HRH’s development idea. Hancock said during his testimony the idea to develop the Bar J came after Humphrey approached him, saying his family was burnt out and needed a break.
“I really got into it just to help Babe and his family,” Hancock said. “I hated to see him leaving the music business, but I understood his motivations.”
Humphrey, however, told Schwartz that one or both HRH developers approached him with “a good idea of developing” the Bar J. During the exchange, Humphrey said, he cast doubt on the permissibility of building a development on the property, but told the developers he would consider selling the property if they got county approval and money to buy the land.
Still, Humphrey said his frustration with the Alliance’s efforts to hinder HRH from buying the property led to his decision not to extend the exclusive option with HRH.
“I wasn’t going to grant any more extensions,” Humphrey said. “I would be held up forever as far as I can see, and I didn’t want to be obligated to this offer.”
Crucial to HRH’s argument is that the Alliance of Route 390 Neighbors obstructed its ability to gain county approval, but HRH’s timeline only extends as far as the expiration of the third option on Sept. 30, 2017. Humphrey added, however, that HRH could have bought the property after the exclusive options expired. HRH withdrew its application in October 2017.
Instead of continuing to try to secure financing and develop the property, Schwartz said Tuesday, “HRH took out its own magic wand here to transform its failed application into a legal claim.”
— Billy Arnold contributed to this report
This article has been updated to correct an error. The estimate of $20 million in damages came from the plaintiff's expert. — Eds.