Thursday, May 26, 2022

Judge orders Belville to retain H2GO’s assets, all parties to cease reverse osmosis construction

Brunswick County Superior Court Judge Thomas Locke ordered Belville to remain ownership of H2GO's assets and for all parties to restrain from constructing the reverse osmosis plant at this time. (Port City Daily photo / JOHANNA FEREBEE)
Brunswick County Superior Court Judge Thomas Lock ordered Belville to remain ownership of H2GO’s assets and for all parties to restrain from constructing the reverse osmosis plant at this time. (Port City Daily photo / JOHANNA FEREBEE)

BRUNSWICK COUNTY — Questions over which public entity will maintain ownership of Brunswick Regional Water and Sewer H2GO assets were finally presented to Brunswick County Superior Court and, for the time being at least, have been answered.

Today, Superior Court Judge Thomas Lock ordered H2GO’s assets to remain in the town of Belville’s ownership.

H2GO’s board, with two members about to be replaced by newly-elected members, had voted to sell those assets to Belville on Nov. 28. On Dec. 1, Leland filed a restraining order seeking an injunction to begin the process of reversing the sale. At the conclusion of that hearing, Lock ordered H2GO and its individual commissioners to restrain from taking “any action which would have the effect of rescinding or voiding” the asset transfer that was initiated on Nov. 28.

(Catch up on what brought us to this point, read our timeline)

Lock’s order directly addresses actions taken just days later by H2GO’s Board of  Commissioners that included its new members. After the Nov. 28 transfer, H2GO commissioners Jeff Gerken, Trudy Trombley and the newly sworn-in Bill Beer passed a resolution in an emergency meeting to render the transfer null and void.

Wednesday’s hearing addressed Leland’s restraining order and the new H2GO board’s attempted reversal of the sale. Lock heard arguments from legal representation for the town of Leland, the town of Belville and H2GO in front of a packed courtroom in Brunswick County. Ultimately, the judge ordered all parties to “freeze things as they are.”

Leland’s Case

Through its attorney Joseph Dowdy, Leland argued that the Nov. 28 decision to transfer H2GO’s assets to Belville — effectively eliminating the utility — was made by a lame duck board and undermined the will of the public.

That argument was in reference to the recent Nov. 7 election, in which Beer, an anti-reverse osmosis candidate, was elected. That election saw a change in membership that now saw a majority of the board opposed to building a reverse osmosis plant.

“There isn’t any doubt that this transfer was rushed, there isn’t any doubt that this transfer was secretive,” Dowdy said. “They immediately got to work behind the scenes.

“It was a coup,” he said.

He argued that the transfer caused irreparable harm to Leland and to the public.

“They no longer have representation,” Dowdy said, adding that, since the public utility assets belong to Belville, the town had “no obligation” to honor complaints or desires made by Leland residents.

In regard to population of the sanitary district, Dowdy told Lock Leland is in the majority. He stated 18,000 to 20,000 residents live in Leland, as opposed to Belville’s 2,600 to 3,000 residents. Unincorporated residents of Brunswick County are also served by H2GO, he noted.

Belville’s Defense

Belville’s legal representation said the decision to transfer H2GO’s assets started before the November election.

“Belville had looked into this transfer long before the 2017 election,” said Jim Phillips, an attorney representing Belville.

In regards to the accusations of a “coup” Phillips presented that the North Carolina Supreme Court makes clear that until an official’s full term is over, that official has full authority to act.

“An election doesn’t change that,” he said.

Phillips argued that in Leland’s temporary restraining order, filed on Dec. 1 and signed by Lock, Leland did not actually seek to unwind the transaction of assets.

“The relief they requested is to stop the transaction in its tracks,” Phillips said. Therefore, he argued, it would be inappropriate for the judge to honor a temporary or permanent injunction to restrain Belville’s ownership of H2GO’s assets.

“What is affirmatively not here is a request to unwind this transaction,” Phillips said. “Unwinding a transaction like this is a drastic remedy.”

Regarding H2GO’s decision to sell its assets to the town of Belville on Nov. 28, Phillips described it as merely a policy choice. “It’s not a conflict of interest, nothing personal drove them to that,” he said. He added it was not an act of wanton disregard “given the uncertainty of the water in the Cape Fear.”

Conclusion

While Lock’s decision on Wednesday freezes things as they were on Nov. 28, it was made clear by the judge and the attorneys representing both parties that this would not be the last time they would meet about the sale of H2GO.

Both Dowdy and Phillips agreed they would review judge Lock’s orders and attempt to mediate before being heard before the superior court again.

“This is not the sort of case that crosses the judge’s bench every day,” Lock said.

While the respective parties prepare for potentially another round of legal action, Lock extended the standing operating agreement: for now, Belville will remain the legal owner of H2GO’s assets, while H2GO will continue to manage the utility in the interim until the transfer of operations is complete and Belville takes over.

“The present operating agreement shall remain in effect beyond Jan. 30, 2018,” he said.


Johanna Ferebee can be reached at johanna@localvoicemedia.com or @j__ferebee on Twitter

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