City of Fernley Prevails In Developer Lawsuit 

November 4, 2009
submitted

On November 3, 2009, a federal appellate court affirmed a lower court’s ruling in favor of  the City of Fernley in a lawsuit suit brought by developer Foothills of  Fernley.  A lower federal court previously granted summary judgment to the City of Fernley on all relevant issues, essentially dismissing the lawsuit brought by Foothills of Fernley.

Foothills of Fernley’s lawsuit was based on the developer’s claim that it was entitled to water service at an “in-lieu of fee” under an old city ordinance that would have forced the city to provide water service to the developer for a relatively small fee.  The current city ordinance, however, requires residential developers intending to connect to the city’s water system to dedicate water rights to the City, which is more expensive than paying the previously allowed in-lieu of fee.

The City of Fernley has maintained its position throughout the life of this lawsuit that Foothills of Fernley was never entitled to water service at an in-lieu of fee.  The federal district court agreed and summarily rejected Foothills’ numerous arguments based on federal law.  Additionally, the federal district court dismissed Foothills’ state law claims, in part because they were raised after the relevant statute of limitations had expired.

Despite the federal district court’s strong opinion in the City of Fernley’s favor, Foothills of Fernley appealed that decision, and an oral argument on the case was heard by a panel of federal appellate judges in San Francisco on October 8, 2009.  That panel issued its decision less than one month later, and essentially affirmed the district court’s order in all respects. 

As such, the City of Fernley has prevailed in the lawsuit brought by Foothills of Fernley, and does not have to provide water service to Foothills pursuant to the old in-lieu of fee.  If Foothills of Fernley proceeds with its development and requests to be connected to the city’s water system, it must dedicate the necessary amount of water rights to the city, just like any other residential developer operating under the currently existing ordinance.