The “Northgate Neighbors” Verdict Is In!

In a court hearing on March 12th, the Washoe County District Court issued their final ruling on the lawsuit (i.e. Case No. CV16-00220) between Herbert and Linda James (also co-claimants Allen and Sandra McCulloch) and the Somersett Owners Association (SOA). The result being that the Court ruled in favor of the Jameses and McCullochs over the SOA. In its ruling, the Court found that former Northgate Golf Course property purchased by the Jameses and McCullochs (adjacent to their Somersett property) was not subject to the Somersett CC&R’s and that the SOA could not prevent access based on such.

A complete transcript of the ruling may be accessed via the following link: Findings of Fact, Conclusions of Law, and Judgment

This litigation has roots going back to 2011, and has been very costly to the SOA in legal expenses. For the referenced case, SOA legal fees from 2015 through 2018 totaled approximately $283K. This does not include 2019 YTD fees, legal fees prior to 2015, or related ancillary fees. Therefore, the total cost to Somersett owners pertaining to this issue will be far in excess of $300K. So what was this litigation all about? Perhaps a little history is in order:

In 1985, RJB Development Company (RJB) deeded property to Washoe County to develop the Northgate Golf Course, which was operated by the Reno-Sparks Convention and Visitors Authority (RSCVA). RSCVA operated the course until 2009 when it became more of a liability than an asset. When RSCVA subsequently closed the golf course, a property deed restriction required that the land revert back to RJB. For the next three years, the Reno City Council and a group of surrounding residential property owners (spearheaded by Somersett “Northgate Neighbor” owners) worked to persuade RJB to allow time to raise the funds to purchase the property for use as a park and open space (i.e., to preclude sale for residential or commercial development). After months of negotiations, the City reached a deal to purchase the property from RJB.. To fund the project, the City formed a Special Assessment District (after a successful petition by more than two-thirds of the adjacent property owners) which would generate $1.2 million. Washoe County and the City of Reno came up with another $1.2 million. However, this still left a shortfall in funding to purchase the entire Northgate property. To make up this shortfall, several Somersett owners along Whisper Rock (i.e., the “Northgate Neighbors”) entered into an agreement with RJB to purchase some of the Northgate property adjacent to their existing Somersett lots. Thus facilitating purchase of the remaining land by the City of Reno, which now comprises the Sierra Vista Park. (click here for park link)

Although they had the opportunity, the Somersett Development Company (SDC), under Blake Smith, who controlled the SOA Board at the time of the acquisitions, did not participate in the Special Assessment District, did not attempt to purchase any of the Northgate property, nor object to such purchase by the “Northgate Neighbors”. However, subsequent to their purchases, the SOA notified the Northgate owners that they were in violation of the SOA’s CC&R’s by accessing their adjacent Northgate property from their Somersett property (i.e., backyards) and therefore, were subject to fines. They also opined that the acquired Northgate property required annexation into Somersett proper and that the combined property was subject to the SOA CC&R’s. Ostensibly to protect Somersett home values due to potential improper use of the land. This in spite of the Northgate owners having adopted their own set of CC&R’s to protect against improper use.  A series of negotiations between the parties went nowhere. Hence, the necessary hiring of attorneys to resolve the issue.

One can perhaps understand SDC wanting to annex the property into the SOA and possibly extending their control of the SOA Board, which ended in November 2012. However, it is difficult to reason why in the following six years, subsequent SOA Boards felt it necessary to take up the cause and continue it to the present day.

What nonsense! It was this same homeowner group that championed the cause and provided funding for the defunct Northgate Golf Course property being purchased by the City for open space and a public park. Bottom line, the SOA BOD’s should have been grateful to the homeowners who spent time and money to convert this land to a park rather than harassing them about violating the Somersett CC&R’s and subjecting them to fines. A lack of proper judgement and common sense perhaps?
For additional background, a rolling chronology of litigation events, is contained in the SOA Attorney’s monthly “Legal Disclosure” letters to the SOA Board. The latest of which is dated February 19th 2019, and may be accessed via the following link:  February 19, 2019 legal Disclosure.

Per the Legal Disclosure letters , by the end of 2017, the SOA had entered into settlement agreements with most of the “Northgate Neighbors”, leaving only two owners (James and McCullough) as outstanding litigants. For those interested, an example of the settlement agreement, may be accessed via the following link:  SOA Lot Expansion and Easement Agreement.

Under the Lot Expansion and Easement Agreement, the affected owners agreed to the application of the SOA CC&R’s and other Association Governing Documents to their acquired Northgate property. This in exchange for some CC&R variances and Aesthetics Guideline Committee (AGC) concessions. However, none of this applies in the James/McCulloch case, wherein the Court has ruled that the SOA has no jurisdiction over their acquired Northgate properties.

Hopefully, the March 12 Court ruling finally brings closure to this multi-year saga and the expenditure of SOA funds, or will the SOA still be liable for the James’s and McCulloch’s legal fees?