KENNEWICK — The $3 million jury verdict against Kennewick in a lawsuit involving the Columbia Park Golf Course has been upheld by the state Court of Appeals.
In a 2-1 decision, the court rejected the city's attempt to overturn the outcome of a June 2009 Benton County Superior Court trial. The appeals court also refused the city's request to reduce the jury award to $1 million.
"This is certainly disappointing," Mayor Steve Young said. "Now we have to decide to go to the Supreme Court or go into our capital projects to see what has to fall by the wayside so we can pay this."
The decision means Gary Long Jr., operator of the golf course which he managed on land controlled by the city through a lease with the Army Corps of Engineers, stands to collect almost $3,660,000, which includes accrued interest since the verdict.
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Long claimed the city reneged on an agreement allowing him to do major improvements. Replacing the driving range with a 67-space RV park was a contentious part of Long's proposal, which also included a new clubhouse, parking lot and boat launch.
The events that led to the breach of contract lawsuit occurred in 2005 and 2006 when Bob Hammond was city manager and Jim Beaver was mayor. They, and two other council members are gone, and sentiment in city hall about continuing the legal battle might have changed.
"We're going to consider all our options," said City Attorney Lisa Beaton.
"The 2-1 decision demonstrates there is merit to our case, but there's (additional financial) risk in appealing," Beaton said.
Kennewick's insurance does not cover a breach of contract claim, and almost $1,000 a day in interest has accrued while the case was on appeal.
Spokane attorney Nicholas Kovarik said the Court of Appeals decision is very good news, but if the city petitions the Supreme Court there could be another 18 to 30 months of wrangling.
"Is there more fight left? The question is, will the new city council do as the old city council did and not be accountable?" Kovarik said.
Judges Laurel H. Siddoway and Dennis J. Sweeney decided for Long, and Judge Kevin M. Korsmo ruled for the city, saying the damages were wrongly determined.
The Court of Appeals majority opinion noted, "It would be hard to conceive of a talented developer who would agree to invest meaningful capital and effort into an 18-month or longer project knowing that the local government had a right to breach with impunity at any time and compensate the developer with nothing more than reliance damages."
A developer willing to accept those terms probably is "not a development partner worth having," wrote Judge Siddoway.
The crux of the lawsuit was that city officials entered into an agreement with another developer to build recreation facilities and an RV project in the park while continuing to let Long believe he had an exclusive agreement for the same purposes.
Long's proposal had the support of the Kennewick Parks and Recreation Commission, was rejected by the city Planning Commission on a 6-1 vote, but won city council approval on a 5-2 vote in May 2006.
Young, who was on the planning commission at the time, was the only commissioner supporting Long's proposal.
"I thought it would be a good thing because it was close to the boat races area, and they have RVs there during Water Follies," he said.
Six months before, Kennewick officials were talking with Aaron Beasley of Tri-River Sports about his plans for a multimillion dollar recreation project in Columbia Park.
Enticed by Beasley's projection that his project could hit $25 million in revenue by 2008, the council signed a development agreement with him in February 2006.
The Court of Appeals ruling noted that trial evidence revealed that Kennewick officials recognized as early as November 2005 that the two competing agreements "were or might be inconsistent" with each other.
Long had the council vote of support in May 2006, but in June, he learned from Kennewick officials, including Hammond and Beaver, that the city was pulling back.
Court records said Long then asked city officials if Beasley's proposal had anything to do with the city's second thoughts.
The Court of Appeals opinion noted that Hammond "deflected" the query and that Hammond told Long, "We're pretty good at solving problems."
But according to evidence reviewed by the Court of Appeals, the city soon found itself between two developers each claiming exclusive development rights.
John Ziobro, who was then the city attorney, advised in an October 2006 memo to city staff that while Long's agreement appeared to be stronger than Beasley's, Beasley appeared to pose a greater legal threat.
By January, Kennewick was ready to not extend the development agreement with Long, only eight months after voting to approve his shoreline permit.
Long struck first by withdrawing his request for an extension, and then sued in February 2007.
Kovarik said Long still wants to end the litigation and is willing to consider settling.
Beaton said any talk of settlement will be a council decision.
* John Trumbo: 509-582-1529; email@example.com