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1 North Carolina in the General Court of Justice

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1 North Carolina in the General Court of Justice NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE BRUNSWICK COUNTY SUPERIOR COURT DIVISION FILE NO.: 17-CVS-2243 TOWN OF LELAND, NORTH ) CAROLINA, and H2GO BRUNSWICK ) REGIONAL WATER & SEWER, ) ) Plaintiffs, ) ) vs. ) ) TOWN OF BELVILLE, NORTH ) CAROLINA ) ) Defendant. ) __ ) ) TOWN OF LELAND, NORTH ) CAROLINA, ) ) Plaintiff and Cross-Claim ) Plaintiff ) NOTICE OF SUBMISSION OF ) EXHIBITS IN BRIEF IN vs. ) OPPOSITION TO JOINT ) MOTION BY PLAINTIFF H2GO TOWN OF BELVILLE, NORTH ) AND DEFENDANT BELVILLE CAROLINA ) TO MODIFY JULY 12 ORDER ) Defendant ) ) and. ) ) H2GO BRUNSWICK REGIONAL WATER ) & SEWER, ) ) Cross-Claim Defendant. ) _______________________________________ ) ) INTERLOCAL RISK FINANCING FUND ) OF NORTH CAROLINA, Intervenor. NOW COMES Plaintiff Town of Leland, North Carolina (“Leland”), through counsel, and submits this Notice of Submission of Exhibits in Brief in Opposition to Joint Motion by Plaintiff H2GO and Defendant Belville to Modify July 12 Order. The List of Exhibits in Leland’s Brief are below as follows: 1 Exhibit A Permanent Injunction, Partial Final Judgment and Stay Pending Appeal (the July 12 Order) Exhibit B Preliminary Injunction Exhibit C Order on Summary Judgment Motions (the April 22 Order) Exhibit D Affidavit of Joseph S. Dowdy Exhibit E Affidavit of Debra Willis Exhibit F Affidavit of Mike James Exhibit G Steve Hosmer Deposition Excerpts Exhibit H Town of Belville’s Motion for Contempt Exhibit I Sept. 11, 2018 Letter from C. Baldwin to Judge Henry Exhibit J Aug. 29, 2018 E-mail from G. Warren to Judge Henry Exhibit K Aug. 16, 2018 E-mail from J. Eldridge to J. Dowdy Exhibit L Leland and H2GO’s Opposition to Belville’s Motion to Stay Exhibit M Port City Daily article “Did Belville violate state law by endorsing some H2GO candidates, accusing others of lying?” Exhibit N StarNews Online “OUR VIEW: Why H2GO should not kill the reverse-osmosis plant” Exhibit O Town of Belville Notices of Appeal Exhibit P Feb. 21, 2020 Letter from Leland to R. Jenkins Exhibit Q Aug. 13, 2019 Press Release Exhibit R Interlocal Agreement Exhibit S Port City Daily article “Still no H2GO vote on proposed settlement, Belville says it won’t sign latest version” Exhibit T “Belville declines proposal aimed to settle H2GO dispute” Exhibit U Jan. 24, 2020 Settlement Proposal from H2GO Exhibit V Feb. 19, 2020 Supplement to Settlement Proposal from H2GO Respectfully submitted this the 19th day of March, 2020. TOWN OF LELAND, NORTH CAROLINA, By Counsel, Joseph S. Dowdy Joseph S. Dowdy (NC Bar # 31941) Todd S. Roessler (NC Bar #28046) Phillip A. Harris, Jr. (NC Bar #39740) KILPATRICK TOWNSEND & STOCKTON LLP 4208 Six Forks Road, Suite 1400 Raleigh, NC 27609 Phone: (919) 420-1700 Fax: (919) 420-1800 [email protected] [email protected] [email protected] 2 CERTIFICATE OF SERVICE I, the undersigned attorney, hereby certify that on the date indicated below, I served a true copy of the foregoing NOTICE OF SUBMISSION OF EXHIBITS IN PLAINTIFF TOWN OF LELAND’S BRIEF IN OPPOSITION TO JOINT MOTION BY PLAINTIFF H2GO AND DEFENDANT BELVILLE TO MODIFY JULY 12 ORDER via electronic mail to the following: Charles S. Baldwin IV Andrew L. Rodenbough BROOKS, PIERCE, McLENDON HUMPHREY & LEONARD, LLP [email protected] [email protected] Counsel for the Town of Belville, North Carolina James E. Eldridge ELDRIDGE LAW FIRM, P.C. [email protected] Counsel for the Town of Belville, North Carolina Donalt J. Eglinton Edward J. “Trip” Coyne III WARD AND SMITH, P.A. [email protected] [email protected] Counsel for H2GO Brunswick Regional Water & Sewer Cathryn M. Little LITTLE & LITTLE, PLLC [email protected] Counsel for IRFFNC Respectfully submitted on March 19, 2020, Joseph S. Dowdy Joseph S. Dowdy (NC Bar # 31941) 3 EXHIBIT “A” NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE BRUNSWICK COUNTY SUPERIOR COURT DIVISION FILE NO.: 17-CVS-2243 ) TOWN OF LELAND, NORTH CAROLINA, and ) H2GO BRUNSWICK REGIONAL WATER & ) SEWER, ) ) Plaintiffs, ) ) VS. ) ) TOWN OF BELVILLE, NORTH CAROLINA ) ) Defendant. ) ) ) TOWN OF LELAND, NORTH CAROLINA, ) ) Plaintiff and Cross- ) PERMANENT Claim Plaintiff ) INJUNCTION, PARTIAL ) FINAL JUDGMENT AND vs. ) STAY PENDING APPEAL ) TOWN OF BELVILLE, NORTH CAROLINA, ) ) Defendant ) ) and ) ) H2GO BRUNSWICK REGIONAL WATER & ) SEWER, ) ) Cross-Claim'’ Defendant. ) ) ) INTERLOCAL RISK FINANCING FUND OF ) NORTH CAROLINA, ) ) Intervenor. ) This matter is before the undersigned Rule 2.1 judge following the entry of this court's interlocutory April 22, 2019 Order (the "April 22 Order") ruling on the parties' cross-motions for summary judgment. In that Order, the court indicated that it would enter a permanent mandatory injunction. Since the filing of the April 22 Order, Defendant Town of Belville ("Belville") filed a notice of appeal dated April 30, 2019 and a motion for stay pending appeal dated May 13, 2019. On May 16, 2019, Plaintiffs Town of Leland ("Leland") and H2GO Brunswick Regional Water & Sewer ("H2GO") served a motion for entry of permanent injunction or, in the alternative, motion for entry of injunction pending appeal. The court held a hearing in Brunswick County Superior Court to address these matters on May 17, 2019. After carefully considering the materials submitted and the presentations of counsel, the court hereby: (1) enters a permanent injunction, (2) certifies this Order, which incorporates the Court's April 22 Order, as an immediately appealable, partial final judgment, and (3) stays the permanent injunction pending the outcome of any appeals from the April 22 Order and this Order. I. ENTRY OF FINAL PERMANENT INJUNCTION The court makes the following findings of fact: 1. This action arises from November 28, 2017^ transactions involving the transfer of all of H2GO's assets and debts to Belville pursuant to the following documents: a. An Agreement to Convey Water Systems (the "Conveyance Agreement"), which is recorded at Book 3990, Pages 0144 to 0153, and which is attached hereto as Exhibit 1. ^ The transaction documents are dated November 28, 2017, but Belville's Board of Commissioners met and approved the transaction and Belville signed the transaction documents on November 29, 2017. As used herein, the November 28, 2017 transaction refers to the transactions set out in the documents signed by H2GO and Belville on November 28 and 29, 2017. -2- b. An Assignment and Bill of Sale (the "Assignment"), which is recorded at Book 3990, Pages 0154 to 0163, and which is attached hereto as Exhibit 2. c. A North Carolina Special Warranty Deed (the "Deed"), which is recorded at Book 3990, Pages 0404 to 0422, and which is attached hereto as Exhibit 3. 2. The property, including real property, assets and debts (hereinafter the Property"), subject to the transfer is described in the foregoing instruments. 3. As part of the November 28, 2017 transaction, Belville and H2GO's prior Board also entered into an Agreement for the Operation and Maintenance of Water and Sewer Systems (the "Operating Agreement"). 4. The April 22 Order determined that there is no genuine issue of material fact, and the Town of Leland, North Carolina ("Leiand") and H2GO are entitled to judgment as a matter of law on their first three of their causes of action asserting that the transfer to Belville violated North Carolina law. Applying that standard, the court determined that the transfer to Belville unlawfully disempowers H2GO as a body politic and corporate, unlawfully impairs H2GO's governmental discretionary functions, and is the result of a manifest abuse of discretion and disregard for the law. The April 22 Order granted summary judgment to Belville on the remaining causes of action in the First Amended Complaint, except Leland's Open Meetings Law claim against H2GO and Belville, and granted summary judgment in favor of H2GO on Belville's Counterclaims. 5. The April 22 Order stated: "A permanent mandatory injunction shall be entered by the court consistent with and in support of the rulings of the court which -3- will order that the public records state that H2GO is the lawful owner of all assets and debts described in the special warranty deed and the assignment and bill of sale. 6. As a result of the court's determination that the November 28, 2017 transactions are unlawfui, Belville is not entitled to possession of the Property. 7. The April 22 Order states: [The November 28, 2017 transactions] have produced or will produce these results: (1) the H2GO board of commissioners will lose all ability to exercise its statutory authority under N.C. Gen. Stat. §130A-55; (2) all real property and personal property owned by H2GO including its infrastructure, facilities, structures, vehicles, equipment, supplies, and funds, used to operate the water and sewer system, with a total value in excess of $57 million would be conveyed by the district to the Town of Belville; (3) included in that conveyance is approximately $16.5 million in capital improvement funds, debt service reserve funds, operating reserves, and customer deposits; (4) H2GO's debt associated with the sewer system of approximately $6 million would be transferred to the Town of Belville; (5) a public water distribution system and a public sanitary sewer collection system that served a population in excess of 25,000, with over 10,000 customer accounts, would be conveyed to the Town of Belville; (6) the Town of Belville would have the authority to charge those customers who did not live in Belville higher rates; (7) 29 H2GO employees would be terminated and the Town of Belville would be required to employ most, if not all of them, so they could operate the system; (8) major portions of the Town of Leland and those who reside in the unincorporated areas would be dependent on the Board of Commissioners of the Town of Belville for their economic planning and expansion requirements; (9) the elected H2GO Board of Commissioners have been locked out of their district office and meeting place except when entry is permitted by Town of Belville officials; (10) the Town of Belville, in order to manage and operate the systems, would have to exercise all of the power and authority set out in N.C.
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