Overlake developer claims judgment is down to anti-development policies; city officials say verdict won’t stand

It was a verdict heard around the state. In June, after listening to attorneys and testimony for six days, eight jurors in the 3rd District Court in Salt Lake City decided the Tooele City vs. Tooele Associates case in favor of the Overlake developer to the tune of $20.7 million — a record judgment against a municipality in Utah.

The jury awarded the developer $22.5 million in damages — an amount that was reduced to $20.7 million because Tooele Associates was ordered to pay the city $1.8 million for its own failure to honor agreements.

The decision came after seven years of legal battles in a dispute that dates all the way back to 1997. That was the year Tooele Associates and its managing partner, Drew Hall, entered into an annexation and development agreement with Tooele City to create the Overlake subdivision. In 2002, Hall filed a lawsuit against the city, claiming it had violated the terms of the agreement and effectively stopped Tooele Associates from developing the subdivision through anti-growth policies.

The jury found that Tooele City had slowed or refused final inspections, misapplied the city’s own public improvement ordinances, refused to accept completed improvements, required standards not found in the original 1997development agreement, refused applications for new subdivisions, refused to renew the development agreement, and refused to approve assignments of the development agreement to Perry Homes, a company that wanted to partner with Tooele Associates to build homes in Overlake.

The city was awarded $1.8 million for Tooele Associates failure to complete public improvements in Overlake and $70,000 for Tooele Associates failure to pay for water used to irrigate the Overlake Golf Course.

Tooele City Mayor Patrick Dunlavy said he inherited the lawsuit when he became mayor and tried to settle the matter out of court. However, Dunlavy said direct talks with Hall broke down over the expiration date of the renewed agreement.

Hall responded to the jury verdict by taking out several full-page ads in the Transcript-Bulletin to explain his position to the citizens of Tooele.

“I have nothing against the people of Tooele,” said Hall, who added the verdict simply allows him to do what he wanted to do all along: complete Overlake according to the intent of the original agreement.

Judge Randall Skanchy, the 3rd District Court judge who presided over the case, has not entered a final judgment in the case.

“This judgment will not stand up,” said Mike Johnson, a member of the Tooele City Council and an attorney. “There is a good chance that Judge Skanchy or an appellate court will toss out or reduce the award.”

Bruce Baird, an attorney who worked on the case on behalf of Tooele Associates, said the jury reached a logical conclusion given the arguments they heard.

“Their verdict is very clear,” Baird said. “Cities are not above the law. They must honor their agreements, and treat developers fairly.”

Tim Gillie: tgillie@tooeletranscript.com