Rebel Commc'ns LLC v. Virgin Valley Water Dist.
| Decision Date | 15 February 2011 |
| Docket Number | Case No. 2:10-cv-00513-LRH-GWF |
| Parties | REBEL COMMUNICATIONS, LLC, a Nevada Limited Liability Company, Plaintiff, v. VIRGIN VALLEY WATER DISTRICT, et.al., Defendants. |
| Court | U.S. District Court — District of Nevada |
This matter is before the Court on Defendant Virgin Valley Water District's Motion to Disqualify Plaintiff's Counsel (#90), filed on December 22, 2010; Defendants Smith and Gustaveson's Joinder and Supplement to the Motion to Disqualify Plaintiffs Counsel (#91), filed on January 5, 2011; Plaintiffs Opposition to the Motion to Disqualify Plaintiffs Counsel (#92), filed on January 10, 2011; Defendant Virgin Valley Water District's Reply in Support of its Motion to Disqualify Plaintiffs Counsel (#94), filed on January 20, 2011; and Defendants Smith and Gustaveson's Reply in Support of Motion to Disqualify Plaintiffs Counsel (#95), filed on January 20, 2011. The Court conducted a hearing in this matter on February 3, 2011.
Plaintiff Rebel Communications, LLC filed this action against the Virgin Valley Water District ('Water District"), the City of Mesquite, and Robert 'Bubba" Smith on April 9, 2010.1Plaintiff alleges that it entered into a twenty year lease with the Water District in April 2007 under which Plaintiff was granted the right to construct and operate a telecommunications tower andother improvements on real property commonly known as the White Rock Property. The telecommunications tower was intended to provide service to local police, fire department and other governmental agencies in the Virgin Valley-Mesquite area. The Water District expressly represented and warranted that it had the authority to execute the lease agreement and that the White Rock Property was "not subject to any administrative order or any judgment or decree, including any order concerning wetlands or endangered or threatened species." Complaint (#1), ¶ 17. Plaintiff also alleges that the Water District expressly represented and warranted that it would not enter into "any leases or agreements affecting the leasing or management of the Improvements without Lessee's consent." ¶ 18.
Plaintiff alleges that contrary to the Water District's representations, a portion of the White Rock Property is located on Federal Bureau of Land Management ("BLM") land. The BLM cited Plaintiff for trespass after it constructed the telecommunications tower. Plaintiff alleges that the Water District thereafter entered into a settlement agreement with the BLM on or about February 22, 2010 pursuant to which it accepted responsibility for the construction of the tower and agreed to pay all fees resulting from the BLM's investigation of the alleged trespass. On February 25, 2010, however, the Water District notified the BLM that Plaintiff had breached its lease and the Water District Board had voted to end its relationship with Plaintiff. Plaintiff alleges that the Water District's conduct exposed Plaintiff to a further charge of trespass. Plaintiff also alleges that the Water District breached the lease by determining that Plaintiff was in default and immediately terminating the lease without affording Plaintiff the opportunity to cure the default. Complaint, ¶¶ 24-32.
Plaintiff also alleges that the Water District breached the lease by permitting the Defendant City of Mesquite to build a competing telecommunications tower on another parcel of real property owned or controlled by the Water District and that the City of Mesquite intentionally interfered with Plaintiff's contractual relations and prospective business advantage. In support of this claim, Plaintiff alleges that Defendant Smith was the City of Mesquite's representative on the Water District's Board of Directors and had prior knowledge of the Rebel lease agreement. Complaint, ¶¶ 33-37.
Defendants move to disqualify Plaintiff's counsel Bret Whipple based on his alleged improper ex parte communication with the Water District's former general counsel George Benesch and his legal representation of the the Water District's former general manager, Michael Winters. The facts relating to these matters are as follows:
On June 14, 2010, Plaintiff filed a Motion for Preliminary Injunction to enjoin the City of Mesquite and the Water District from allowing any public safety agencies to use the competing telecommunications tower until the Court determines Plaintiff's rights under the lease. See Motion for Preliminary Injunction (#17). The Water District filed a supplemental opposition brief on July 13, 2010 in which it argued that Plaintiff was relying on vague and ambiguous provisions in the lease which it drafted and which must therefore be construed in favor of the Water District. In support of this argument the Water District attached an affidavit by its general counsel S. Eric Wilbanks. See Supplemental Brief (#47), page 4, note 2 and Exhibit A, Wilbanks' Affidavit. Mr. Wilbanks stated in his affidavit that he had spoken to the Water District's former general counsel, George Benesch, regarding the drafting and preparation of the lease between the Water District and Rebel Communications. According to Mr. Wilbanks, Mr. Benesch indicated that he negotiated a few provisions of the lease, but stated that the lease was principally drafted by Blu Whipple, who is a brother of Cody Whipple, the CEO of Rebel.2
In response to the supplemental opposition and Mr. Wilbanks' affidavit, Plaintiff filed its Motion for Leave to File Reply (#54) on July 21, 2010. In support of this motion, Plaintiff's counsel, Bret Whipple, submitted an affidavit stating that Mr. Benesch contacted him during the second week of July and told Mr. Whipple that he was concerned that the information he had provided to Mr. Wilbanks was being misrepresented to the Court. Motion for Leave to File Reply (#54), Affidavit of Bret O. Whipple, ¶¶ 11-12. Plaintiff also attached an affidavit by Mr. Benesch who stated that he served as general counsel for the Water District for 17 years until late 2009. Mr. Benesch stated that he negotiated and drafted contracts with various entities and individuals on behalf of the Water District. Motion (#54), Benesch Affidavit, ¶¶ 1-2. Mr. Benesch further statedthat he negotiated the terms of the Rebel Communications lease with its legal counsel, Kurt "Blu" Whipple. Mr. Benesch stated that Blu Whipple drafted the initial version and that he reviewed that version and requested changes. Drafts were exchanged back and forth. Mr. Benesch attached to his affidavit a draft of the lease which showed the redlned version that he returned to Blu Whipple. Benesch Affidavit, ¶5.
Mr. Benesch also stated that he exchanged emails with the Water District's current general counsel Bo Bingham and Eric Wilbanks regarding their inquiry to him about the lease negotiations with Rebel Communications and whether he would be willing to provide an affidavit. (A copy of the emails was also attached to the Plaintiff's Motion (#54)). Mr. Benesch stated that he spoke by telephone with Mr. Wilbanks on July 13th and informed him that to the best of his recollection, Blu Whipple drafted the lease and that he responded to some of the provisions. Mr. Wilbanks asked Mr. Benesch if he would be willing to sign an affidavit. Mr. Benesch stated that he wanted to think about it and was willing to look over a draft affidavit. The following morning, July 14th, Mr. Benesch sent an email to Mr. Bingham and Mr. Wilbanks stating that he would be willing to sign an affidavit. Benesch Affidavit, ¶7-9. Shortly after sending that email, Mr. Benesch learned that Mr. Wilbanks had filed his own affidavit which Mr. Benesch did not consider to be accurate. Specifically, Mr. Benesch did not recall referring to "a few provisions" as stated in paragraph 4 of Mr. Wilbanks' affidavit, and he did not state that the lease was 'principally" drafted by Blu Whipple as stated in paragraph 5 of Mr. Wilbanks' affidavit. ¶ 11.
The Water District objected to Plaintiff counsel's allegedly improper ex parte communication with Mr. Benesch during the preliminary inunction hearing on July 22, 2010. The District Judge stated that he would not consider Mr. Benesch's statements in deciding the motion, which he thereupon denied. July 22, 2010 Minutes of Proceedings (#62). In his subsequent written order, the District Judge stated that while Plaintiff had shown a likelihood of success on the merits, it had not shown that it would suffer irreparable injury if injunctive relief was not granted. The District Judge also held that an injunction was not in the public interest. Order (#63).
Defendants also move to disqualify Plaintiff's counsel based on his representation of Michael Winters, the Water District's former general manager. Mr. Winters executed the Rebel Communications lease agreement on behalf of the Water District on April 17, 2007. See Complaint (#1), Exhibit 1. Bret Whipple represented Mr. Winters at the meeting of the Water District's Board of Directors on February 2, 2010 during which Mr. Winters' employment was terminated by majority vote of the board. According to the minutes, Board member Karl Gustaveson recited a number of concerns about Mr. Winters' job performance, including his handling of a water purifying process plant that was to be built on the Oasis Golf Course, a well that was drilled without BLM approval, and an arsenic plant that was built on land owned by the City of Mesquite, but which was previously owned by the BLM. Mr. Gustaveson also expressed concern about the communications tower that was built without BLM approval, the fees the District would now have to pay to the BLM "and possible repercussions with the agreement between the District and Rebel Communications." Defendants' Joinder (#91), Exhibit 1, Minutes, pages 2-3. Other members of the board discussed and debated Mr. Winters' job performance. Minutes, pages 3-4.
The minutes state that Mr. Whipple asked to address the board...
To continue reading
Request your trial