MLLA petitions court for full $42 million

mammothtownofficesAccording to Town of Mammoth officials, on February 2nd Mammoth Lakes Land Acquisition filed a petition with the State Court to demand payment of the full $42 million legal judgment against Mammoth, after 10 months of negotiations.  Town officials revealed this startling turn of events after MLLA went to local media on Tuesday to accuse Mammoth of bad faith negotiating.

Jay Becker of MLLA emailed a letter to Sierra Wave and other local media which said that the Town had ceased settlement efforts and refused to respond to a December 14 proposal from MLLA. The letter said the Town’s conduct “smacks of bad faith.”  Mammoth Town Councilman Rick Wood called it “posturing” by MLLA.

A press release issued by the Town late Tuesday afternoon said that on December 1st the Town had made a multi-million settlement offer to MLLA. Then, the Town says, in light of “worsened fiscal conditions” Town officials decided they could not pay that December 1 offer.  They didn’t tell that to MLLA until January 19th.  Meanwhile, on December 14th, MLLA proposed an even larger payment amount. And, on February 1st a standstill agreement between the two sides expired.  That agreement had prevented MLLA’s collection of the millions from Mammoth.

Mammoth officials said they wrote to MLLA on January 19th to say that in light of “current fiscal realities” the Town has to re-examine its finances, including the settlement with MLLA.  The press release says that the Town has begun the development of a “global restructuring plan” to address fiscal issues impacting the Town.  But the Town’s press release said they told MLLA they would present another settlement offer after February 1st.  The Town Council is still meeting in closed sessions over that offer.  In fact, another closed session was scheduled for Wednesday morning.

In its press release, the Town blames MLLA for an abrupt halt to settlement talks and MLLA blames the Town for the same thing.  Mammoth officials said MLLA filed with the court and did not give Mammoth advance notice.  The press releases says, “Sadly but clearly, MLLA is the one acting in bad faith.”

Even after all of this, the Town says it will submit another offer to MLLA in the near future.  The press release never does explain the “worsened financial conditions” that led to this tangle of misunderstanding.   (See entire Town press release below.)

PRESS RELEASE Town of Mammoth Lakes Responds to Mis-Information by MLLA
Town of Mammoth Lakes, California – February 07, 2012 — Since April 2011, the Town of Mammoth Lakes has been negotiating with Mammoth Lakes Land Acquisition (MLLA) in an attempt to reach a settlement of the judgment MLLA obtained against the Town, arising out of the Hot Creek development project. As part of those negotiations, the Town has made full, complete and ongoing disclosures of all of its financial and operational information to MLLA. Frequent closed session discussions have taken place among Town Council members and staff to develop and present to MLLA payment proposals that the Town could afford, keeping in mind its obligation to provide essential municipal services to the community and visitors.
On December 1, 2011, the Town made a multi-million settlement offer to MLLA – an amount that the Town currently feels it cannot afford to pay, in light of the worsened fiscal conditions since early December. On December 14, 2011, MLLA requested an even larger payment.
On January 19, 2012, the Town withdrew its December 1 offer, writing to MLLA: “In light of current fiscal realities, the Town has determined that it needs to more closely analyze and assess pertinent issues with financial implications, including the ongoing efforts to reach a resolution with MLLA. The Town has begun the development of a global restructuring plan, which will address the various fiscal issues impacting the Town.” The Town’s January 19th letter further stated that another settlement offer would be presented to MLLA after February 1, 2012. Since then, the Town has continued to work on a sustainable plan to both pay MLLA and satisfy its other fiscal obligations. Frequent closed session discussions continued.
In the meantime, it is MLLA that decided to abruptly stop settlement discussions with the Town. To the Town’s surprise and dismay, MLLA filed a petition with the State Court on February 2, 2012 (and served the Town on February 6) to demand payment of the full $42 million legal judgment. MLLA then went to the local media and accused the Town of bad faith negotiations. All of this was done without an advance notice to the Town, or any indication that MLLA was about to cease the settlement process. Sadly but clearly, MLLA is the one acting in bad faith.
The Town will, after careful consideration of its obligations to the citizens, businesses and taxpayers of the Town, submit to MLLA in the near future another settlement proposal that the Town can afford consistent with its stewardship of the public’s funds.

, , , ,

30 Responses to MLLA petitions court for full $42 million

  1. Dave February 10, 2012 at 10:56 pm #

    I’ve read a lot of comments above suggesting MLLA would have “lost their shirts” etc had they actually gone through with their planned development at the airport.

    As I understand it… another sick twist to this whole mess is that MLLA is/was NOT THE ACTUAL DEVELOPER planning the project at the airport – RATHER MLLA is a parasitic team of lawyers from Santa Monica that purchased the F#$%&@# rights to the lawsuit from the original developer… the one the ToML refused to settle with out of court.

    What’s wrong w/ the State of CA is that a 3rd party can “purchase” the right to sue, even though they were not the original plaintiff.

    I think Neil McCarrol (an lawyer) was quoted in the local paper as saying, “Lawyers have ruined California”.

    I hope the people involved in MLLA never see one cent of $$ from this town. This debacle is a true travesty of Justice.

  2. Josh February 10, 2012 at 6:25 pm #

    The town should just not pay. Nothing will change. There are laws against stopping public services the town provides even when there is no money.


  3. Dingo February 9, 2012 at 3:41 pm #

    Dang, this whole thing just sucks.

    • Big AL February 9, 2012 at 9:57 pm #

      Pretty sad isn’t it Dingo .. no wonder everyone is going broke, except the few ultra rich millionaires.
      But it’s no wonder they are so rich, with schemes like this.

  4. Ken Warner February 9, 2012 at 10:47 am #

    Once again I recommend reading “Barrier Island” by John D. MacDonald.

    A scheming developer buys a barrier island off the Mississippi Gulf Coast knowing that the Feds would never approve developing there because it’s in the path of hurricanes. Then enters into a development agreement with the state — with the aid of some unscrupulous lawyers — for a huge development project with the intention of suing the state for not going through with their development deal when the Feds don’t grant the state the necessary permissions.

    Plug in the FAA and it’s restrictions and this fictional novel becomes (as they say) eerily similar to what’s happening now at the airport.

    • Ken Warner February 9, 2012 at 4:20 pm #

      Now that is funny. A hundred to 0 against reading. hahahahahah

      • Wilfred S. February 9, 2012 at 8:49 pm #

        The commenting system has been broken and is open to spamming. I alerted Benett to this a while ago.

        • Ken Warner February 9, 2012 at 10:37 pm #

          Oh yeah, so I see. But it’s funny that someone would actually take the time and spend the energy to do that….

    • Article 19 Supporter February 9, 2012 at 6:59 pm #

      How tweet it is!

  5. Nancy Tucker Baker February 8, 2012 at 4:28 pm #

    All the posters here have made excellent points. I know that many town employees really fear a municipal bankruptcy filing. I am NOT an expert on same, but most town employees believe they will lose many of their contract benefits under any form of municipal bankruptcy filing. I believe this to be the case, no matter who would wind up administering/running the Town under bankruptcy requirements.
    My other thought here is, I don’t think the town staff who were directly involved in any agreements with the entity which is now MLLA are still employed with the town.
    Now, some Town Councilmembers might still be around….oh, but that’s right, we keep electing them.

    • P&B February 9, 2012 at 3:59 pm #

      Municipal bankruptcy often focuses on employment contracts to negate their prior contractural obligations/promises.

      With Wilbrecht and the other “honest folks” at the helm of the Town you had better beleive that the only people that will benefit from the future negotiation will be them – rarely (in fact I don’t recall this ever occurring) do the politicians or their political lackies, the administrators, take part in monetary reductions of any type.

      Watch as they just keep smiling (especially Wilbrecht) funneling the money to their pockets and knifing the little people in the back…curious how these people are called public servants?!?

  6. Mammoth Resident February 8, 2012 at 1:28 pm #

    Scott I believe you have it a bit incorrect. The lawsuit was about an agreement between a developer and a political division. The developer sued because the political division felt it did not have to honor an agreement and therefore there were no consequences. This type of thing has been going on for years in the state. Virtually every other city in the state enjoined the fight because other cities enjoy bullying the developer or other persons involved in similar contracts wanted this scenario they enjoyed to continue. The appellate courts upheld the theory of the suit to the dismay of the town. The town did not really challenge the issue of lost revenue or profits so it was not an issue and the award is what it is. The town was so arrogant as to its position it did not do anything to reduce it’s exposure in terms of penalty. The town screwed up and now must pay. The folks who screwed up should be fired but are not. Hey the insurance company who insures the town will not pay because they do not cover deliberate actions that were not accidental.
    What many don’t realize is this case is problematic for the entire state as it opens the floodgates for future litigation as well as cities will be leary to enter into such development agreements in the future because of such potential consequences. It’s a lose lose situation except for MLLA.

    Scott did you grow up in the Valley?

    • P&B February 8, 2012 at 3:02 pm #

      In fact the Town staff damned themselves by keeping written documentation of their deliberate intentions to take advantage of this developer – one of the key reasons that the judicial system refused the appeals.

      • Mammoth Resident February 8, 2012 at 3:51 pm #

        That was normal practice of such Political divisions in the past. The feeling was that the PD could do whatever was in the best interest of itself or the constituents with no repercussions. This win by a developer showed that not to be the case.
        At a detriment to future such agreements within a Political Subdivision like Mammoth lakes all future contracts will have a clause similar to these words. ” we the town will do what is in the best interest of the town. We have the right to terminate this agreement at any time and for any reason. ” then there will be a clause that the other party cannot collect money for town not fulfilling the agreement.

        What I cannot understand is why is staff who committed the wrong doing still employed by the town.

        • 2rude February 8, 2012 at 5:07 pm #

          Well, in my view, TOML hired Dave Wilbrecht for three main reasons: 1) in reward for services rendered to the Town while he was CAO of Mono County (e.g., talking the County into participating in the airline subsidy (which really only benefits Mammoth)); 2) to ensure that no one (most especially DW’s biking buddy Manning) would take the fall for the MLLA catastrophe; and 3) to allow him spike his pay for PERS retirement purposes (my guess is he’s gone in a year). Reason number 2 is why the folks who caused this are still around. Thanks.

          • Reality Bites February 8, 2012 at 8:18 pm #

            2rude: Think big picture here. Over 90% of the accessed value of Mono County is in the Town of Mammoth Lakes. 90% of Mono County’s revenue comes from property taxes. Starting to get the picture yet? What is good for Mammoth is good for Mono County.

            Mammoth property tax bankrolls all the communities in Mono County. If Mammoth dies, Mono County dies.

          • 2rude February 9, 2012 at 10:32 am #

            Thanks Reality Bites; I understand your point, but please consider this:

            1) The airline subsidy has been in place for several years; and yet, according to County Assessor Jody Henning, assessed values in Mammoth are DOWN (even MMSA sought and received a significant reduction in its property-tax assessment); likewise, according to the TOML, TOT in Mammoth is DOWN (in fact, that is one of the reasons given by TOML for reneging on its settlement offer to MLLA); so it seems to me the subsidy has had little to no effect on assessed values in Mammoth; rather, assessed values in Mammoth have more to do with the over-all health of the economy (and the weather) than the price of ailrine tickets to Mammoth;

            2) I believe, as a philosphical matter, it is wrong for taxpayers to subsidize multi-million (billion?) $ corporations, whether it’s Wall Street, Exxon-Mobil, Archer-Daniels-Midland or, in this case, Barry Sternlicht, who could have used pocket change to pay the airlines to come to his “world-class” resort; why should the people in Benton and Coleville pay that subsidy for him?;

            It is noteworthy in this regard to recall that MMSA sits largely on public (USFS) land; so Barry/Rusty et al. are already making a ton of $ off of public resources; asking for the public to further subsidize their resort operation is, in my view, bad form, especially when public entities are already struggling to provide essential public services;

            3) Further, as long as we’re giving out public money to struggling corporations, why not spread the wealth to local businesses? I’m sure the A-Frame Liquor and DJ’s Snowmobiles could use a few bucks right now to see them though the hard times;

            4) I would agree that the subsidy helps Mono County as a whole if, upon “deplaning” at the airport, a passenger could get to somewhere other than Mammoth; as it is now, it seems that only guests of the Westin and MMSA are really taken care of; those public officials who approved the public subsidy of the airlines should have demanded better public transportation to other parts of Mono County in return;

            5) My point about Dave Wilbrecht is that the Board of Supervisors did not dispatch him to ask MMSA, TOML, Alaska Airlines et al. if the County could help subsidize the air service to Mammoth; rather, he instigated that discussion, and so to that extent I think his allegiance in that matter was more to the TOML (his former and future employer) than it was to the residents in the hinterlands of Mono County.

            But, as I said, I take your point. Thanks.

  7. Reality Bites February 8, 2012 at 10:51 am #

    Scott you nailed it. As I said before, MLLA should be paying TOML for preventing them from building an ill conceived project at a horrible location where few if any would buy.

  8. Scott Ehrlich February 8, 2012 at 10:26 am #

    It’s time to seriously consider filing for Chapter 9 bankruptcy. The town’s finances would be “reorganized” and past unsecured debts (such as the debt to MLLA) discharged. Bankruptcy would actually have a positive impact on the future of town finances by discharging un-repayable debts. I think we all realize that the town can’t pay a $42 million judgment (and the interest that is accruing on the judgment). I also think that we all realize that the judgment was unfair. MLLA had some very good lawyers that managed to convince a jury that the town was somehow responsible for their failed real estate project near the airport. We all know that the project was doomed by the economic recession as well as other factors (would a multi-use residential & commercial development succeed next to the airport?). It’s time to put this judgment to rest. If MLLA won’t accept a reasonable settlement offer, Mammoth Lakes should file bankruptcy and discharge the debt.

    • Hanes February 8, 2012 at 2:26 pm #

      The issue at hand has nothing to do with the jury verdict or what is fair or not regarding the amount of damages – that is past history as this point and a waste of our emotional energy. Also, I’m not sure what is meant by discharging the debt – but if you mean the Town won’t have to pay, I’m not sure thats correct. Municipal bankruptcy is not the same as a personal bankruptcy. With a municipal bankruptcy, the debt is owed but will be paid back over many years so as to not impact basic services such as police and snow removal. You cannot force a municipality to shut down like you can a personal business as there is an obligation to provide the basic community services. MLLA would have to wait say for a period of 15 to 20 years to collect through annual payments versus a negotiated settlement that would be paid immediately through a bond issuance. Another question if the Town files for a municipal bankruptcy is who would be administering the Town in bankruptcy – a court ordered bankruptcy firm/administrator or our Town Council. I’m not sure if our political leadership/staff should be admnistering the Town or making decisions on what services should be kept and those forfeited through bankruptcy given their track record. Bankruptcy may be the only way out or the Town’s only leverage at this point, but its not as cut and dried as many think. This issue needs to be approached factually and rationally without the emotion if possible. That is why there should be public discussion of the options before the community versus leaving the decisions up to Mr. Wood and the rest of the Town Council.

      • Rob February 8, 2012 at 3:59 pm #

        given their track record…………. they should all be replaced.

      • Josh February 10, 2012 at 6:31 pm #

        I am all for the Town Council to be replaced with a Bankruptcy administrator. The Town Council has no common sense. I cringe every time I watch/go to a city council meeting because they make so many bad decisions and spend so much money that we do not have. Why do we need a new welcome sign when there are at least 3 welcome to mammoth signs. If you don’t believe me, drive up from bishop and count the number of welcome to mammoth signs you see.

  9. P&B February 8, 2012 at 8:52 am #

    Let’s see – Wilbrecht $200K per month, 3M $4k per week (with no end in sight for her “valuable” consultation services) – very expensive for the Town taxpayers for nothing more than “front persons” to take the hit for the bad decisions of the politicians….And look what positive contributions to the negotiations process they’ve both made to date!!(heavy sarcasm), that was worth all the money paid!?!?

    • Harry February 8, 2012 at 11:36 am #

      $200K/month? Where did you get that from? I suggest you do some fact checking.

    • P&B February 8, 2012 at 3:04 pm #

      Ooops – my bad, should have typed annually… thanks for correcting Benett and Harry.

  10. 2rude February 8, 2012 at 8:34 am #

    TOML’s financial bankrutcywill go nicely with MMSA’s moral bankrutcy. Thanks.

  11. Jake February 8, 2012 at 7:31 am #

    MLLA = the biggest scam in Mammoth History… talk about bad faith .. These people are mobsters…

    • Reality Bites February 9, 2012 at 10:07 am #

      Jake, if anyone is at fault it is the former town attorney Peter Tracy, who gave the town bad advice from the very start to the very end, then quit. The council hired him to give accurate legal advice. He gets off the sinking ship after torpedoing the ship!

  12. Ken Warner February 8, 2012 at 3:33 am #

    “To the Town’s surprise and dismay…”

    The Town has been surprised by everything that has happened at the airport and with the settlement negotiation. Why? Maybe can’t understand that if you bury your head in the {sand, snow, pumice, whatever…} things don’t just go away.


Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.