The city of Craig has lost ownership of the Estey-Simpson reservoir site for good.
After more than two years of facing mistakes resulting from the sale of the property resident outcry, a recall election and federal court litigation the city fight to retain the property is over.
"We're shocked, surprised and obviously very dissappointed," City Attorney Sherman Romney said. "It's very unusual for a cause like this to be overturned on appeal."
The U.S. Tenth Circuit Court of Appeals ruled Christmas Eve to overturn a Federal Court ruling favoring the city. The result is Georgia attorney Glen Stinson has been declared the victor in a lawsuit that lasted more than two years.
"We're pretty happy," Stinson's attorney Jim Kilroy said. "We thought we'd win. We were pretty confident in our case."
In 1981, the City of Craig purchased a 500-acre site north of Hayden for $500,000. The property was to be used to build a reservoir to ensure future water storage for the city. Officials later learned regulatory changes made building a reservoir financially unfeasible. City Council began to discuss selling the property. In the meantime, the land was opened to public use for grazing and hunting.
In July 1997, the city opened bids to sell the property. The sale was awarded to Stinson for $176,000 more than a $300,000 loss to the city. Former mayor Bob Quillen signed a contract for the sale of the property and City Council passed an ordinance on its first reading that approved the sale. On its second reading, several Craig residents protested the sale and Council voted against the ordinance.
Stinson sued the city Nov. 6, 1997, for breach of contract contending that, according to the city charter, Council did not need to pass an ordinance to sell the property. Attorneys for the city argued the sale was only valid if an ordinance was passed or by a vote of the people.
On Aug. 13, 1998, Federal Court Judge Richard Matsch ruled in favor of a city motion to dismiss the case concluding the contract was void because the City Council was required by state law to pass an ordinance approving the sale, which it did not do.
Stinson appealed the ruling to the Tenth Circuit Court of Appeals and was notified Monday the Court of Appeals overturned the Federal Court decision. Because Craig is a home rule city, the Tenth Circuit Court of Appeals ruled its charter supersedes state statutes.
"When a home rule ordinance or charter provision and a state statute conflict with respect to a local matter, the home rule provision supersedes the conflicting state provision," the ruling states.
According to the ruling, the city may pass an ordinance to sell property, but does not need to according to its charter.
"Having concluded that the statute does not require the city to sell real property by ordinance only, we conclude the contract between Stinson and the city is not void for lack of an ordinance approving it," the ruling states. "Therefore, we conclude the district court erred in ruling the contract void and unenforceable."
The case has been sent back to Judge Matsch to determine what Stinson may be entitled to as a result of the ruling.
Kilroy said he has not formulated what the damage request will be, but is certain it will include a return of the property, attorney's fees and additional damages for Stinson because he couldn't use the property during this dispute. Kilroy believes Judge Matsch will rule on the damages fairly quickly.
According to Kilroy, the city may have the opportunity to appeal to the Supreme Court, but he doesn't believe so.
"I think this is the end of the road," he said.
City officials learned of the ruling this morning. Romney said they would need time to review their options, which include an appeal to the Supreme Court or a motion to the Tenth Circuit Court of Appeals to reconsider the ruling.
"We need to review our options and let the Council decide where we go from here," he said.