BRUNSWICK COUNTY—The fate of H2GO’s $60 million in assets, sold for just $10 in a controversial move earlier this year, will remain in the hands of the court, for the time being.
Superior Court Judge Charles Henry, appointed by the state’s chief justice to oversee this complicated case, heard four hours of Belville’s motion to dismiss Leland and H2GO Brunswick Regional Water and Sewer’s case. In the end, Judge Herny held off from making a final ruling.
RELATED: Belville moves to throw out case brought against town by H2GO and Leland
Judge Henry told Belville, Leland and H2GO attorneys that he needed time to review arguments made in court and to re-read briefings he had been provided.
“This is not an area of law that a superior court judge finds him or herself dealing with,” Henry told the courtroom Friday. “What I’d like to do is start over again.”
Henry will grant or deny Belville’s attempt to have the case thrown out via email, conference call or through a representative in the coming weeks.
Ruled “exceptional” under Rule 2.1 of the General Rules of Practice, the case changed hands from Superior Court Judge Thomas Lock to Judge Henry in March. Friday, July 6, was the first time all parties appeared in person before the newly designated judge.
The case arose from a contested transfer of H2GO’s assets to the town of Belville, approved and voted on by members of Brunswick Regional Water and Sewer H2GO’s outgoing board in November 2017. Taking place after election results were learned, H2GO’s current board and the town of Leland’s legal representatives argued the transfer was illegal and subdued the public’s will.
“What we have here is a coup,” H2GO’s attorney, Brian Edes, told Judge Henry. “I’m not trying to be sensational but I don’t know what else to call it.”
In legal filings, H2GO and Leland allege that Belville and outgoing members of H2GO’s board colluded to illegally arrange the contested transfer of assets. Though H2GO was initially a defendant in the case, Judge Lock granted the sanitary district’s alignment with Leland as a plaintiff against Belville on March 9.
Last month, Belville responded to Leland and H2GO’s numerous allegations after months of delay by asking the new judge to throw out the case. Charles Baldwin, Belville’s attorney, told Judge Henry that there were no facts submitted in Leland’s filings that supported the municipality’s move to join forces with H2GO. Baldwin said it was unclear what standing Leland had to take part in the case.
“These agreements are solely between H2GO and the town of Belville,” Baldwin said. “There is no injury to Leland.”
A new judge
As Judge Henry listened to Belville’s opening argument to dismiss the case, he said he was uncomfortable being asked to overrule another judge’s decision.
“It’s troublesome that you’re asking me to overrule another superior court judge,” Henry told Belville’s attorneys. “The whole time I was looking at your arguments and the arguments against you in Leland, that’s in the back of my mind.”
That decision was made by Judge Lock in December when he released a preliminary injunction that kept H2GO’s assets under Belville’s control and acknowledged potential harm incurred by Leland caused by the contested transfer. If Judge Henry were to approve Belville’s motion to dismiss the case, it would overturn Lock’s initial preliminary injunction.
“So a superior court judge made that finding, what authority do I have to overrule it?” Judge Henry asked the court.
In court, Belville’s attorneys maintained that no laws were broken in the course of arranging the transfer, whereas Leland and H2GO argued that actions taken to prepare for the transfer were illegal and conspiratorial.
Mike McGill, Belville’s spokesperson, said the public’s will was upheld by the results of the election, in which more than half of the voters cast ballots for candidates in favor of the contested reverse osmosis plant at the root of the transfer.
“We argued, as we have from the beginning, that Belville and H2GO’s previous, duly-elected board joined together – in full accordance with the law – to assure that the 25,000 people would receive safe, clean drinking water as quickly as possible,” McGill wrote in an email.
An unprecedented case with no entirely applicable case law to reference, Edes said a ruling on the transaction could impact government decision-making across the state.
“If this transaction stands, close to 90 percent of the ratepayers will be paying rates and have no political say so in the people who are setting those rates and that is fundamentally wrong,” Edes said after court adjourned. “It’s the very fabric of our democracy.”
In the coming weeks, Judge Henry will choose to either grant or deny Belville’s motion to dismiss the case. Henry told the court his schedule does not open up until October, so future hearings of the case – if Belville’s motion is denied – would only happen later into the year.
“There’s a lot left on the table,” Edes said after court adjourned. “We’ve barely scratched the surface.”
To catch up with all details of this complicated case, read Port City Daily’s timeline on how reverse osmosis broke up a local water utility.
Author’s note: This article has been updated with Superior Court Judge Thomas Lock’s name correctly spelled.
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