Tuesday, January 18, 2022

Battle over who owns H2Go heading to state’s chief justice

Brunswick County Superior Court Judge Locke recommended the case involving Leland, H2GO and Belville be reviewed by the Chief Justice of the North Carolina Supreme Court. (Port City Daily photo /JOHANNA FEREBEE)
Brunswick County Superior Court Judge Lock recommended the case involving Leland, H2GO and Belville be reviewed by the chief justice of the North Carolina Supreme Court. (Port City Daily photo /JOHANNA FEREBEE)

BRUNSWICK COUNTY—A case involving three Brunswick County municipalities will soon be in the hands of the Chief Justice of the North Carolina Supreme Court.

Brunswick County Superior Court Judge Thomas Lock ruled Friday that the case involving Leland and H2GO Brunswick Regional Water and Sewer versus Belville be recommended as an “exceptional” case designation — an uncommon legal category reserved for complicated multi-party cases requiring a judge to have specialized background or knowledge.

RELATED: New legal filings allege Belville illegally subverted an election, H2GO heads back to court

The “exceptional” case

Leland and H2GO are seeking to regain assets sold to Belville as part of a contested transfer. Belville seeks to retain those assets.

In November, H2GO’s previous board sold its assets – approximately $65 million in infrastructure – to Belville. Members of H2GO’s previous board did so in order to secure the continued construction of a controversial reverse osmosis plant.

This move was made after the results of the Nov. 7 election were learned; those results favored candidates who had campaigned against the plant.

With the majority of the new board in opposition to the reverse osmosis plant, H2GO alleges its previous board made a last-ditch effort to save the plant and in doing so subverted the will of the voters.

H2GO wants its transferred assets back, along with the political authority it argues was lost during the move.

Related: A timeline of how reverse osmosis broke up a public utility

On to the Chief Justice

Now the case is being handed off to the state’s Chief Justice.

In his ruling, Judge Lock said, “I certainly do believe that this is a case that lends itself to a 2.1 designation.”

“I’m not aware of a wholesale liquidation and decapitation of assets in the state of North Carolina” —Brian Edes.

This complex case could be the first of its kind. An exceptional case designation is a rare legal move that grants the Chief Justice of the North Carolina Supreme Court the authority to reassign it to a specialized judge.

That judge would be proficient in “special areas of expertise” pertaining to the given case, according to Rule 2.1 of the General Rules of Practice.

So, what makes this case exceptional?

According to Leland’s motion to designate the case as exceptional, the matter “appears to involve the first attempt by municipalities to engage in such overreaching conduct.”

Joseph Dowdy, Leland’s attorney, argued this transfer violated various North Carolina laws and rendered H2GO an “empty shell of an entity.”

H2GO’s attorney Brian Edes expanded on the sanitary district’s impairments.

“Right now H2GO is essentially assetless,” Edes said. “They are being held hostage to what we believe are illegal transactions.”

Edes agreed with Leland’s request to have the case recommended as “exceptional.” He also said November’s political transfer may be the first of its kind.

“I’m not aware of a wholesale liquidation and decapitation of assets in the state of North Carolina,” Edes said.

Initially, Belville did not consent to this exceptional case designation. However, in court, Lock said both parties had privately agreed upon a list of judges to present to the Chief Justice, indicating that Belville won’t contest the move to Supreme Court.

Moving forward

Though Leland’s first amended complaint includes claims against H2GO’s previous board, the town is now re-aligned with H2GO’s current board on its side in this complex case.

Belville argued against the re-alignment.

“H2GO is perfectly capable of fighting its own fights,” Belville’s attorney Charles Baldwin said.

Despite Belville’s protest, Lock granted Leland’s request for it to be aligned with H2GO. Leland argued this alignment would allow the case to move forward with more ease and efficiency.


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

Related Articles


Stay Informed