Wednesday, June 19, 2024

Belville to withdraw appeal, ending bulk of yearslong H2GO lawsuit

Belville informally voted to appeal the H2GO case Monday evening in a 3-2 vote it isn't legally required to break down. (Port City Daily/File photo)
Belville will withdraw its appeal of the court ruling that concludes the town’s 2017 utility transfer accepting all of H2GO’s assets was illegal. (Port City Daily/File photo)

BRUNSWICK COUNTY — The Town of Belville has voted to withdraw the town’s appeal of a superior court judge’s ruling last spring, bringing an end to the main part of the expensive and contentious legal utility battle in northern Brunswick County.

There are still issues to resolve in the case: legal fees and a provision in a previous injunction order that blocks work on H2GO’s partially-constructed reverse osmosis plant remain unlitigated.

Related: Settlement offer expiration date: Leland wants to resurrect old proposal, finger-pointing ensues

H2GO spokesperson Tyler Wittkofsky said, conservatively, it will take an estimated four to six weeks for the court to grant Belville’s and H2GO’s motions to withdraw the appeal. Both H2GO and Belville Commissioners approved a settlement agreement between the two parties Monday, which includes steps that lay out how the withdrawal process will take place (read the entire agreement at the bottom of this article).

Asked why the parties (aligned politically but not legally since December 2019) had not already motioned to withdraw the appeal, Wittkofsky explained it was to give Leland a chance to participate.

“Because it was the right thing to do we wanted to make sure we had all parties the opportunity to join in on the resolution of the lawsuit,” Wittkofsky said.

In a statement announcing the motions to withdraw, Wittkofsky explained H2GO “seeks the quickest path to quickly resume construction of the aquifer-sourced RO water plant and to provide clean, safe water to its customers.”

H2GO extended a settlement offer Jan. 24 that expired Friday, which Leland rejected on “expiration day.” The offer divorced local negotiations from legal matters. H2GO would have paid $800,000 in Leland’s legal fees prior to the appeal and the deal would have removed a court provision that still freezes work on the RO plant.

Leland rejected H2GO’s settlement offer for several reasons. This includes how H2GO’s legal fee offer was not enough to cover costs incurred responding to the appeal the town did not initiate and general sentiments regarding an inability to trust H2GO. At its core, the town’s letter to H2GO focused on an effort to reignite failed local negotiations from fall 2019 — the very local negotiations H2GO asked the town to separate from settlement discussions.

Hilary Snow, Leland’s spokesperson, said the town could not immediately comment on whether it intended to also file a motion to withdraw its appeal. In a statement, Snow said the town still believes in the previously-considered regional compromise plan.

“The Town of Leland continues to believe that a regional compromise plan is the right approach to providing aquifer-based reverse osmosis water to area residents. Our hope was to take a collaborative and cooperative approach that would benefit all parties involved, and we remain hopeful that such an approach could still be pursued in the future,” Snow provided in a statement.

The case

In April 2019, Superior Court Judge Charles Henry ruled Belville and outgoing Brunswick Regional Water and Sewer H2GO Commissioners broke the law while orchestrating a secretive utility transfer. Commissioners who participated in transferring all of H2GO’s $60 million assets to the small town of Belville also broke state ethic’s law in the process, the ruling asserted.

Judge Henry ruled the November 28, 2017 transfer null and void. In a July 2019 provisional ruling, the judge sided with Leland’s request for a permanent injunction but also granted a stay to accommodate Belville’s pending appeal. To date, a preliminary injunction put in place in December 2017 that essentially freezes things as they were after the transfer and prohibits work on the RO plant, remains in effect.

After initially being named as a defendant in Leland’s suit against Belville, H2GO was later realigned as co-plaintiff with Leland in March 2018. This came after H2GO’s new board took office in December 2017, with a 3-2 majority vehemently opposed to the transfer that took place. With this board in place, the utility’s former legal counsel Brian Edes drafted the appeal; now that H2GO has a 4-1 majority in favor of the RO plant, the appeal is being withdrawn.

After the new 4-1 board took their seats, Edes resigned from H2GO. Edes also serves as Leland’s town attorney but does not assist the town in H2GO ligation matters because of conflict of interest concerns.

Overlapping meetings

It may have been difficult for some residents and utility customers to track the meetings of H2GO and Belville over the last week.

H2GO called a regular meeting Feb. 18 in order for a majority of Commissioners to attend the “Dark Waters” film screening. Generally, social gatherings attended by a majority of an elected board do not constitute official public meetings.

The utility did so in split agenda that acknowledged the social event, with regular business set to reconvene Monday, Feb. 24 at 10 a.m.

While the meeting was still recessed, a majority of the board (Ron Jenkins, Steve Hosmer, Barry Laub, and Rodney McCoy) attended the Town of Leland’s regular meeting Thursday, Feb. 24. None spoke during the public comment period, but Mayor Brenda Bozeman asked all elected officials to stand and announce themselves.

North Carolina Open Meetings Law and case law outlines that the more formal a gathering, the more likely it is that a quorum, or majority, of board members has convened, triggering an official meeting. Acknowledging the possibility of a quorum of H2GO Commissioners attending the Leland meeting, Wittkofsky explained board members individually decided to attend and did not interact or sit together as a group.

At the 10 a.m. H2GO meeting Monday, the board met briefly, recessed the meeting, and announced it would reconvene at 8 p.m. that evening.

Meanwhile, Belville Commissioners recessed its Thursday, Feb. 20 meeting and reconvened at 6 p.m. Monday. Both Belville and H2GO Commissioners approved the settlement agreement at their respective Monday evening meetings.

Next steps

If Leland does not withdraw its appeal, H2GO and Belville will file a joint motion to modify the preliminary injunction that freezes work on the RO plant.

If Leland files a motion for attorneys’ fees, H2GO and Belville will “cooperate in defending against any such award,” according to the agreement.

Belville and H2GO’s settlement agreement, approved Feb. 25 below:

Settlement Agreement and Release of All Claims – Fully Executed by Johanna Ferebee Still on Scribd

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