Free Reply to Response to Motion - District Court of Colorado - Colorado

Case 1:04-cv-01099-JLK-DW

Document 269

Filed 02/07/2008

Page 1 of 9

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-cv-1099-JLK-DLW WOLF CREEK SKI CORP., INC., Plaintiff, v. LEAVELL-McCOMBS JOINT VENTURE, d/b/a THE VILLAGE AT WOLF CREEK, Defendant. DEFENDANT'S REPLY IN SUPPORT OF MOTION FOR BIFURCATION

Leavell-McCombs Joint Venture (the "Joint Venture"), through its undersigned counsel, hereby respectfully submits this Reply in Support of Motion for Bifurcation and in support thereof states as follows: A. Wolf Creek Has Admitted That the Joint Venture's Chief Damages are Now Unknown The key issue raised in the Joint Venture's Motion for Bifurcation, is that due to new developments, most of the Joint Ventures' damages are now unknown. The new U.S. Forest Service approval process will require the development of various alternatives, each of which may contain drastically varied logistics, requirements and costs. It is unknown which of those alternatives, if any, will be ultimately accepted and built. As a result, neither the Joint Venture, nor any party knows what the ultimate cost of the road(s) will be. Furthermore, it is unknown how long the new Mineral County approval 1

Case 1:04-cv-01099-JLK-DW

Document 269

Filed 02/07/2008

Page 2 of 9

process will take, what its outcome will be, or what other litigation may ensue before the access road is finally completed. In its Response to the Joint Venture's motion, Wolf Creek entirely ignores this key argument. Therefore, Wolf Creek has conceded this point, admitting that the Joint Venture's chief damages are now unknown. In fact, Wolf Creek makes several affirmative statements, supporting the fact that the Joint Venture's damages are now unknown. Specifically, Wolf Creek states: There is no doubt that a second trial some five years down the road will require the parties to restart the clock on damages discovery with new experts, new reports, and new document discovery. (Wolf Creek's Response, ¶ 8) ... The Joint Venture's damages case, in the event of bifurcation and stay, also apparently will include the cost of the "DEIS Alterntives", Motion to Bifurcate at 5, such as any additional access roads that the Forest Service may require in any new ROD. (Wolf Creek's Response, ¶ 10) ... Finally, prejudice to Wolf Creek is all the more acute in this case because of the indeterminate length of the stay the Joint Venture seeks . . . . (Wolf Creek's Response, ¶ 15). ... As the Joint Venture acknowledges, the EIS process is long and involved and there is no guarantee of a particular outcome. Motion at 9-11. The new EIS application has not even been filed. Any future EIS may not be successful at the proposed density levels, and any "DEIS Alternatives" are speculative. In these circumstances, a lengthy stay is unjustified as damages admittedly are uncertain and the process to determine those damages is of indeterminate length. (Wolf Creek's Response, ¶ 21) Thus, Wolf Creek agrees with the central premise and basis for the Joint Venture's Motion for Bifurcation.

2

Case 1:04-cv-01099-JLK-DW

Document 269

Filed 02/07/2008

Page 3 of 9

B.

The New Developments Were Not Foreseeable Wolf Creek argues that there is no prejudice to the Joint Venture because the new

developments, affecting the certainty of the Joint Venture's damages, were foreseeable and the Joint Venture should have expected environmental and other challenges to the access road. This is an inaccurate and irrelevant point for several reasons. First, while the Joint Venture certainly expected environmental and bureaucratic hurdles, it never could not have foreseen abject betrayal and fraud on the part of Wolf Creek, its original partner in this deal. Wolf Creek violated its own contractual promises to use its "best efforts" to "diligently pursue" U.S. Forest Service approval for a complete access road, when it reached a secret deal with the Forest Service on August 31, 1999 to eliminate the last 250 feet of the access road to the Village. Wolf Creek continued with this obstructive conduct when it filed suit in Mineral County District Court to block the exact development plan that it had already approved. In fact, Wolf Creek's argument is particularly hypocritical in light of Kingsbury Pitcher's written assertion: The Joint Venture should be aware of opposition to the village from environmentalists. It may slow down progress on the village, but Wolf Creek feels that we will eventually prevail, though it may take time. (Kinsbury Pitcher May 26, 1999 correspondence, attached as Exhibit A) Wolf Creek theatrically cites to a 32 year-old article written by Joint Venture member Robert Honts, to prove the point that environmental challenges to development projects should be expected. This is entirely irrelevant to the key issue of whether the Joint Venture's damages are currently unknown. Furthermore, regardless of whether environmental challenges in general can be foreseen, the Joint Venture has done

3

Case 1:04-cv-01099-JLK-DW

Document 269

Filed 02/07/2008

Page 4 of 9

everything possible to move the project forward. Therefore, it should not be penalized as the result of judicial rulings, third-party lawsuits, and breaches and interference by Wolf Creek itself. Wolf Creek states that the Joint Venture's damages "have been foreseeable since this case began." (Plaintiff's Response, ¶ 18). If this is true, then which access road is going to be approved by the U.S. Forest Service? How much will the road cost? How long will it take to build it? Who will file lawsuits to stop the road? Who will win those lawsuits? No one, including Wolf Creek, knows the answers to these questions.

Therefore, Wolf Creek's theory of general foreseeability is irrelevant. Further, as Wolf Creek correctly concedes, the two factors used to determine whether to bifurcate a trial are prejudice and efficiency. (Wolf Creek's Response, ¶ 4). "Foreseeability" is simply not a factor.1 And as argued in the Motion for Bifurcation, both the prejudice and efficiency factors favor bifurcation. C. The New Developments Were Not the Result of the Joint Venture's Litigation Strategies and Choices Wolf Creek argues that, even if the new developments are significant, bifurcation should not be allowed because the new developments were the result of the Joint Venture's own litigation strategies and choices. conclusion. In pursuing a large development project, as in a chess match, every decision has an ultimate effect and result. Some of these results are favorable, and some are not. However, that does not mean that the negative results were intended. Here, it is patently obvious that the Joint Venture has been entirely committed to complete construction of
1

This is an illogical and irrelevant

Foreseeability is not even mentioned in the ten additional sub-factors identified in Wolf Creek's Response, Paragraph 4, footnote 2.

4

Case 1:04-cv-01099-JLK-DW

Document 269

Filed 02/07/2008

Page 5 of 9

the access road as soon as possible. Thus, it makes no sense for Wolf Creek to argue that the reason the access road is in limbo is due to the Joint Venture's conduct. Specifically, the Joint Venture withdrew its application to the U.S. Forest Service based in part upon Judge Kane's October 4, 2007 order. Clearly, the Joint Venture would have preferred that Judge Kane deny the preliminary injunction, so it is illogical for Wolf Creek to argue that his order was one of the Joint Venture's "litigation strategies and choices." The second new development that affected the certainty of the Joint Venture's damages was the September 20, 2007, Colorado Court of Appeals denial of the Joint Venture's appeal of the Mineral County District Court decision, which voided the approval of the Joint Venture's Planned Unit Development ("PUD") for The Village. Again, this was a decision that went against the Joint Venture, so it is illogical for Wolf Creek to argue that this ruling was one of the Joint Venture's "litigation strategies and choices." Wolf Creek's argument is even more hypocritical in light of the fact that its own lawsuits, breaches and interference directly prevented completion of the access road. D. This is an Exceptional Case, Justifying Bifurcation As Wolf Creek correctly notes, bifurcation should be reserved for exceptional cases. (Wolf Creek's Response, p. 2). Clearly, this is an exceptional case. It is not every day that a $100 million development project generates three separate lawsuits, involving a county Board, the United States Government, a Colorado District Court, the U.S. District Court for the District of Colorado, two third-party environmental groups, dozens of newspaper and media reports and four years of litigation. This project will have a

5

Case 1:04-cv-01099-JLK-DW

Document 269

Filed 02/07/2008

Page 6 of 9

significant positive impact on this region, which explains why the project and the litigation has involved so many parties and has been in the news for several years. E. The Joint Venture Has Not Requested an Indefinite Stay Wolf Creek states that the Joint Venture is seeking not only to bifurcate the trial, but also to indefinitely stay a trial on damages. (Wolf Creek's Response, ¶ 21). This is false. The Joint Venture's Motion for Bifurcation does not ask for a stay. In fact, the Joint Venture explicitly agreed to move forward on all issues in this matter, except for its own damages. This would allow Wolf Creek to proceed on its own liability and damage claims, as well as the Joint Venture's liability claims. Wolf Creek may argue that by putting off the issue of the Joint Venture's damages, a stay is inherent. Under that logic, every motion for bifurcation includes an implicit stay. Furthermore, by arguing that the Joint Venture is seeking an "indefinite" stay, Wolf Creek is admitting that the Joint Venture's damages are now "indefinite," which is the central premise of the Joint Venture's Motion for Bifurcation. Nonetheless, even assuming for argument's sake, that a stay is inherent, the Joint Venture has met its burden, because it would create a hardship and inequity if the Joint Venture was required to give up potentially millions of dollars of damages in the face of Wolf Creek's tortious conduct. See Ben Ezra, Weinstein, & Co. v. America Online, Inc., 206 F.3d 980, 987 (10th Cir. 2000). F. Bifurcation Will Not Result in Inefficient Discovery Wolf Creek argues that bifurcation will result in inefficient discovery because expert depositions have already been completed and damages discovery will have to be

6

Case 1:04-cv-01099-JLK-DW

Document 269

Filed 02/07/2008

Page 7 of 9

re-opened. (Plaintiff's Response, ¶ 8). However, Wolf Creek does not provide a basis for this broad conclusion and only identifies four people by name (Lisa Meer, Randy Schroeder, John Montgomery and Mitchell Hoffman) who would have to be re-deposed. The cost of re-deposing four people is minimal in relation to the Joint Venture's potential damages of over $16 million for construction of the access road. In addition, by claiming that the Joint Venture's damages discovery will have to be re-opened, Wolf Creek is agreeing that there is something new and unknown on the horizon in regards to the Joint Venture's damages. Otherwise, why else would Wolf Creek need to re-open discovery? Regardless of additional discovery expenses, the paramount consideration when determining whether to bifurcate a trial is a fair and impartial trial to all litigants; considerations of economy of time, money and convenience of witnesses must yield thereto. See Hines v. Joy Mfg. Co., 850 F.2d 1146, 1152 (6th Cir. 1988)(citing Frasier v. Twentieth Century-Fox Film Corp., 119 F. Supp. 495, 497 (D. Neb. 1954)(emphasis added). G. The Joint Venture's Strategy Has Always Been to Cooperate with and Enrich Wolf Creek, Not to Wear It Down Wolf Creek states, "Wolf Creek is a small, family-owned business with limited resources, while the Joint Venture is funded by a billionaire whose strategy is to wear Wolf Creek down to force a sale and trigger the Joint Venture's right of first refusal on the Ski Area." (Plaintiff's Response, ¶ 14) This is a gross mischaracterization for several reasons. These two parties

maintain a symbiotic commercial relationship. Wolf Creek voluntarily entered into a

7

Case 1:04-cv-01099-JLK-DW

Document 269

Filed 02/07/2008

Page 8 of 9

binding contract with the Joint Venture, and it has already received its easements, installed new ski lifts, expanded its operations and has profited. Further, once completed, the Village will significantly increase Wolf Creek's resources. As a result, the Joint Venture's quest to complete the access road that will profit both Wolf Creek and the Village can hardly be described as "wearing them down." Further, it is Wolf Creek that is the Plaintiff and the aggressor in this lawsuit and the Mineral County lawsuit. Thus it is illogical to claim that the Joint Venture is somehow taking advantage of Wolf Creek. Clearly, Wolf Creek cannot rationally expect the Village to simply give up on building an access road and abandon a $100 million project, that Wolf Creek fully endorsed. H. Conclusion Wolf Creek has conceded all of the key issues surrounding the Motion for Bifurcation and has offered no relevant and substantive reasons for its denial. Therefore, the Joint Venture respectfully requests this Honorable Court to grant its Motion for Bifurcation. Respectfully submitted this 7th day of February 2008. s/ David W. Krivit David W. Krivit MORIARTY LEYENDECKER ERBEN PC 1123 Spruce Street, Suite 200 Boulder, CO 80302 (303) 495-2658 Tel (713) 528-1390 Fax Attorney for Defendant

8

Case 1:04-cv-01099-JLK-DW

Document 269

Filed 02/07/2008

Page 9 of 9

CERTIFICATE OF SERVICE I hereby certify that on this 7th day of February 2008, I electronically filed the foregoing REPLY IN SUPPORT OF MOTION FOR BIFURCATION with the Clerk of the Court using the CM/ECF system and served the following named persons by email notification: Andrew Ryan Shoemaker Hogan & Hartson, LLP-Boulder 1470 Walnut Street, #200 Boulder, CO 80302 Email: [email protected] Cynthia A. Mitchell Hogan & Hartson, LLP-Boulder 1470 Walnut Street, #200 Boulder, CO 80302 Email: [email protected] Denise D. Riley Hogan & Hartson, LLP-Denver 1200 Seventeenth Street, #1500 Denver, CO 80202 Email: [email protected] Jacqueline S. Cooper Hogan & Hartson, LLP-Denver 1200 Seventeenth Street, #1500 Denver, CO 80202 Email: [email protected] Kim Arquette Tomey Berg Hill Greenleaf & Ruscitti, LLP 1712 Pearl Street Boulder, CO 80302 Email: [email protected] Melissa M. Heidman Berg Hill Greenleaf & Ruscitti, LLP 1712 Pearl Street Boulder, CO 80302 Email: [email protected] Attorney for Plaintiff

Attorney for Plaintiff

Attorney for Plaintiff

Attorney for Plaintiff

Attorney for Defendant

Attorney for Defendant

s/ Christina J. Kim Christina J. Kim, Paralegal MORIARTY LEYENDECKER ERBEN PC

9