Escolar Documentos
Profissional Documentos
Cultura Documentos
SIERRA COUNry NM
FILED IN MY OFFICE
/s/ Lindsey
Huston
Y.
No. D-721-CV-2014-00073
COMES NOW Defendant, the City of Truth or Consequences ("the City"), through
undersigned counsel, and hereby moves
NMRA on Counts I and tr of Plaintiffs' Complaint for Damages. The grounds for this motion
are that the Option Agreement
I and II
terminated by its own terms, and Plaintiff Hot Springs Motorplex Development, LLC ("Hot
Springs") failed
to
exercise
of
contract
occurred.
Plaintiff Hot Springs Land Development, LLC is not a party to the agreement.
I.INTRODUCTION
The Option Agreementwhich is the subject of these claims related to a grant of sole and
exclusive option by the City to Hot Springs Motorplex Development,LLC to purchase water and
sewer capacity at set prices for a set duration. Plaintiff paid two hundred thousand dollars
10/1/2015
($200,000) under the Agreement, and the City held the water and sewer capacity for the benefit
of Hot Springs for the entire period of the Agreement. Plaintiff never exercised any option
pursuant to the agreement. The Option Agreement expired under its durational terms, and each
party received the benefit of its bargain. The Option Agreement for Purchase and Sale of Rights
is attached as Exhibit
to this motion. The Option Agreement was amended once to extend the
duration of the option to purchase for ninety (90) days from February 73,2011 until August 13,
2011. The First Amendment to Option Agreement for Purchase and Sale of Rights is attached as
Exhibit 2.
Count
money damages. Complaint, p. 12. Count tr alleges Breach of Option Agreement and asks for
the equitable relief of rescission. Complaint, pp. l4-15. Neither remedy is available to Plaintiff
because the City was in
the durational term of the Agreement. Additionally, Plaintiff irrevocably waived any right to
damages in the event of a default by the City, absent strict compliance
agreement, which procedures were not
followed. Ex.
1, fl9.
Hot Springs Motorplex Development, LLC notified the City on or about August 9, 2011
that
it wanted to exercise a partial option under the Agreement. However, for numerous
g,
reasons
2Ol1 letter was not effective to exercise any option under the
terms of the Agreement; and, therefore, the options to purchase sewer and water capacity expired
on August 13,2011.
as
Exhibit
3.
The
City's response to this letter from the City Attorney denying the purported exercise of an option
is attached as Exhibit 4.
The Affidavit of the City Manager and the Affidavit of the City Water/lVastewater
Director in support of this motion are attached as Exhibits 5 and 6, respectively.
Other claims in the Complaint have been dismissed based upon the expiration of the
statute of limitations. The instant motion only addresses the two counts which are not barred by
the three year statute of limitations.
"A party
as
supporting
"Summary judgment is appropriate where there are no genuine issues of material fact and
the movant is entitled to judgment as a matter of law. Where reasonable minds will not
differ as to an issue of material fact, the courl may properly gmnt summary judgment.
All reasonable inferences are construed in favor of the non-moving party."
Montsomery v. Lomos Altos. Inc., 2007-NMSC-2, fl8, 141 N.M 21, 150 P.3d 97 I.
Hot Springs Motorplex Development, LLC ("Hot Springs") and the City of Truth or
Consequences entered into an Option Agreement for Purchase or Sale of Rights ("Option
77
,2007
Complaint,
The Option Agreement granted an option to Hot Springs to purchase available sewer
capacity, a right of first refusal to purchase future sewer capacity and available water
capacity, and a right of refusal to purchase future water capacity from the City for prices
set in the agreement, paragraph 3, and more specifically delineated in Ex.
Agreement. Ex.
l,
B to the Option
As consideration for the Option Agreement, the City agreed to hold the current sewer and
water capacity and future capacities off the market for the period of the agreement, unless
,:
Hot Springs gave written permission to release any portion of the capacities covered by
the Option Agreement. Ex.
4.
I, ll l.
As consideration for the Option Agreement, Hot Springs paid two hundred thousand
dollars ($200,000) to the City. Ex.
5.
fl2; Ex. 5,
Fx.l,
n3.A.
The Option Agreement set the purchase price for available water capacity at four million
l, Recital A;
and B to the
1.
The right to purchase water capacity granted under the Option Agreement is the right to
purchase eighty percent (80%)
utility
9.
Er. I, n3.8.
8.
7.
fl7 ,
The Option Agreement set the purchase price for available sewer capacity at two million
seven hundred
6.
l,
system.
fu. A.13
to Ex.
l.
The water capacity reserved under the Option Agreement amounted to six hundred eighty
(680) acre feet per year at a price of six thousand dollars ($6,000.00) per acre foot per
year. Ex. B to
fu. l.
Hot Springs fails to exercise its option, or any part thereof, on or before February
2011
."
Ex.
l,
13,
Jl5.
\Lb
12. The First Amendment to the Option Agreement states "Any failure by either Party at any
point in time during the term of the Option Agreement, as amended, to insist upon strict
and timely compliance with the terms and provisions
be
respective rights under any such document nor shall the same excuse the other Parly's
obligation to strictly and timely perform its obligation hereunder and therein."
13. The contract states that
b.
2, n4.
representations, negotiations and agreements, written and oral, including any letters
of
intent which pre-date the Effective Date hereof, with respect to Rights or any portion
This
Agreement may be amended and modified only by instrument, in writing, executed by all
parties hereto." Ex.
l, \16.
agreement
in
paragraph
Agreement,2)by U.S. Mail, facsimile, or hand delivery 3) to the City Manager 4) with a
copy to Jay Rubin, EsO, 5) specifying the number and nature of rights to which the
option is being exercised, 6) indicatin g
notice. Ex.
l,
n14, 24.
15. The "closing" of a purchase of rights requires payment of "good funds" to the City
Utilities Departinent, which are defined as "immediately availa.ble U.S. federal funds."
Ex. t,!T.]T3.C and
6.
August 9,2011 that "Hot Springs wishes to purchase $200,000 worth of non-adjudicated
transferable water" "pursuant to Section 4 of the Option Agreement .- Ex.
17. This letter did not contain the information required to be specified
3.
in a notice of exercise
of option: specifically the number and nature of the rights being exercised, and a date for
closing. Er.
18.
3.
This leuer indicated that Hot Springs wished to purchase $200,000 worth of nonadjudicated water. The Option Agreement was for eighty percent (80%) of the City's
available water capacity, and has no reference to "non-adjudicated" water. Ex. 3; Ex. A to
Fx. l.
19. The Option Agreement states that
Purchase Price, and shall be equally divided between the Sewer Purchase Price and the
Water Purchase Price at the exercise of the Seventh Option (as these terms are defined
below;."E Ex.
I,12.D.
(if
20. The Option Agreement indicates that the "Purchase Price" is the sum of the purchase
prices for water and sewer capacities, or six million eight-hundred thirty-five thousand
seven hundred twenty-eight dollars ($6,835,728.00). Ex.
1,l3.A;
See also
Ex. C to Fx.
l.
capacity and/or sewer capacity in order for any deposit to be credited against a "purchase
price,' and the deposits "are nonrefundable to Hot Springs unless the City defaults
The Option Agreement does not contain any definition or reference to the "seventh Option"
hereunder or cannot deliver any or all of the Rights pursuant to the fOption Agreement]."
Ex. t, 12.D.
agree
then being purchased, in certified United States funds...." as required by the contract.
Ex.
23.Hot Springs never extended any water or sewer transmission lines from its property to
connect to City water or sewer lines as required by the contract to receive City services.
n1^3,
24.The Option Agreement expires and is deemed terminated if Hot Springs fails to exercise
20 I
l,
25.The contract requires Hot Springs to give the City "a reasonably detailed notice
specifying...breach," and a thirty day period to cure. Ex.
l, \9.
26. The City did not receive a notice of a breach of the Option Agreement or an opporfunity
The contract provides that the City has thirty (30) days to cure a breach.
If the City
does
not do so, Hot Springs must give the City notice of its election of remedies, either
specific performance or return of the "deposit" within thirfy (30) days of the City's
default. If Hot Springs does not give notice of its election of remedies to the City, it
cannot demand specific performance and
any right to damages." Ex.
l,
fl9.
"Hot Springs
agrees that
it irrevocably
waives
28.
At all times of the duration of the Option Agreement, the City possessed the water
sewer capacity indicated in Exhibits
same to the benefit of
and
and
29. The Option Agreement provides that the prevailing party in litigation regarding the
enforcement of the Agreement shall be awarded attorney's fees and costs
of suit. Ex. l,
12s.
III. MEMORANDUM
A.
whereby one party agrees to keep an offer open for a stated period of time upon specified terms
and conditions, and may become binding upon both parties, depending on whether the optionee
exercises his
2I8,220,
435 P. 2d
"An option is
698 (1996).
'a continuing and irrevocable offer which the optionor cannot withdraw during a stated period. It
vests the optionee
with a power of acceptance, and when the optionee accepts the offer in the
prescribed manner, the option is deemed to have been exercised as to create a binding bilateral
Cir
1998)
'lT
9, 121 N.M.
"be either a detriment incurred by promise or a benefit to the promisor." Fru-Con Construction
Corp.,
ll58
(citations omitted).
In order to exercise an option granted pursuant to an option contract, the optionee must
it.''
and
Northcutt v. McPherson,
B.
option." Id.
Hot Sprinss Did Not Exercise its Ontion Under the Contract and so the Option
Agreement Expired Under its Own Terms.
Hot Springs required the assurance of certain utility services in order to proceed with
development plans for real property
obtained the sole and exclusive rights to connect to City water and sewer services
equal
and
in an amount
to a portion of the available supply. The full and complete agreement for these option
rights is contained in the Option Agreement for Purchase and Sale of Rights, Exhibit 1. Fact 13.
As consideration for the contract, the City agreed to hold the agreed upon cuffent
and
future sewer and water capacities off the market for the four (4) years of the agreement, for the
sole and exclusive benefit of
l;
Agreement for Purchase and Sale of Rights extended the option contract for an additional ninety
Hot Springs paid the City two hundred thousand dollars. Fact 4. This payment is referenced in
the contract as "Deposits." Ex.
Ir12.
available sewer connections and available water capacity in U.S. federal funds. Fact
15.
The
contract allows for Hot Springs to exercise purchase options in increments, or portions. Ex.
l,
nn4,
5;Fact24. If Hot
Springs fails to exercise its options by the termination date of the option
contract, the contract expires and is deemed terminated. Ffr. 1, fl5; Fact 24.
1.
Hot Sprinss' letter of August 9" 2011 is invalid to exercise anv option under
the contract.
Although Plaintiffs allege that Hot Springs attempted to exercise its options under the
contract on August 9,2071 (Complaint,
Ellen Lindsey on that date, (Ey. 3) does not comply with the terms for exercise of an option to
purchase water under the contract. Although the leuer specifically references Section 4 of the
Option Agreement, Mr. Neal failed to comply with that paragraph in several respects. The letter
refers to "non-adjudicated, transferable water." The water rights capacity refers to increments
l.
"AFY'
of
water. F'act 18. The only manner in which water is sold under the contract is through water
transmission lines, which lines are the responsibility of Hot Springs to construct. Fx. 1,110 C;
23.
"nature of rights" required under the notice provision of the contract. Ex. I , 14; Fact 14.
The letter failed to specify "the number" of the rights sought.to be exercised, but merely
statedthe desire to "purchase $200,000 worth" of water. Fact 16. The letterfailed to specify a
"closing" date for the purported purchase as required by the contract. Ex.
I, \4;
Fact 17. A
"closing" is required for the purchase of rights, which requires payment of "good funds" to the
City's Utilify Department, on a date stipulated in the notice of exercise of an option . Ex.
l, J1J13-
7; Facts 14 and 15. The August 9, 2011 letter did not reference any payment of funds to the
City for
a "purchase
2l and22.
10
The Option Agreement expressly grants the parties the right to insist upon strict and
timely compliance with the contract terms. Ex. 2, 14; Fact 12. The City is entitled to the
affirmative performance of the expressed method of the exercise of an option by Hot Springs.
Northcutt v. McPherson. Hot Springs failed to timely comply with the notice requirements of
the contract in order to exercise an option to purchase water under the agreement.
contract terminates or expires on the agreed upon date, August 13,2011. Ex.
Agreement terminated by its own terms, both parties received the benefit of their bargain, and
neither party has liability to the other party.
C.
Even if the August 9, 2011 Letter Were a Valid Exercise of a Partial Option Under
the Contract. Hot Sprines is l{ot Entitled to Anv Damases From the Citv Pursuant
to the Express Contract Terms.
The City Attorney, Jaime F. Rubin, responded to the Hot Springs letter on or about
August 29,2077. Ex.
4.
as to
comply with the Option Agreement terms, and an implied attempt to convert the "deposif' to a
purchase price was invalid.
Plaintiffs' Complaint alleges that the City breached the Option Agreement by rejecting
Hot Springs attempt to exercise its options. Complaint, llBB. However, the Complaint fails to
allege that Plaintiff provided the City with a reasonably detailed notice
of a breach of the
contract, nor the opportunity to cure a breach, as required under the agreem ent. Ex.
l,
119;
Facts
25-26. No such notice was received, and this contract provision works to prohibit any claim for
damages, or specific perlormance under the contract. Facts 26-27.
11
D.
and
not have ability or authority to provide Plaintiffs with eighty percent of the City's current excess
water and sewer capacity and ninety-five percent of the City's future water and sewer capacity.
Complaint,'ulT 100, 107. The Complaint fails to specify the source of this information or belief,
and Defendant is unaware of any basis for
it.
sewer connection availability for Hot Springs during the period of the Agreement, its forbearance
the
contract. Plaintiffs are, therefore, not entitled to the remedy of rescission as requested in Count
E.
The Option Agreement provides that the prevailing parly in litigation to enforce the
contract shall be awarded reasonable attorneys' fees. Ex. 1,
grant this Motion for Summary Judgment on Counts I and tr relating to disputed claims under the
Option Agreement, Defendant asks for an award of its reasonable attorneys' fees and expenses
the
prevailing party, the failure to enforce it is an abuse of discretion. Dennison v. Marlowe, 1989NMSC-041, flfl6, 8, 108 N.M. 524,755 p.2d726.
IV. CONCLUSION
Count
based upon
I of the Complaint
Plaintiffs' claim that the City falsely warranted that it could provide the option for
an
attempted exercise of its option. There is no factual basis for the allegation that the City did not
L2
of
the
Agreement. Therefore, the City provided good and sufficient consideration under the Option
Agreement and no breach is stated.
Fufiher, Hot Springs did not strictly comply with the requirements to exercise any option
for water service, and because the parties and the case law require strict compliance with contract
terms to exercise an option, this claim for breach against the City also
were in breach, the Option Agreement has strict notice provisions, requiring an opportunity to
cure, and timely election of a remedy against the City in event of default. These provisions were
not followed by Hot Springs, and so the very terms of the contract prohibit any award of
damages or return of its deposit to Hot Springs.
Hot Springs claims this remedy of rescission on the basis of alleged failure of
consideration. However, this remedy is based upon an allegation that the City did not have the
ability to deliver the available excess sewer and water capacity referenced in the contract. Hot
Springs has provided no factual support for this allegation, made "upon information and belief."
Hot Springs has the burden to demonstrate specific evidentiary facts to require a trial on this
claim, and cannot merely rest on the Complaint allegations. Romero v. Philip Monis Inc..
2010-NMSC- 035, fll0, 148 N.M 713, 242P.3d280. (Citations omitted).
Therefore, on the basis of undisputed facts, the City is entitled to summary judgment in
its favor on Counts I and tr of the Complaint.
WHEREFORE Defendant respectfully requests that this Court grant its Motion for
Summary Judgment on Counts
and
in connection with
this motion, and for such other and further relief that the Court deems just and proper.
13
Resp
By.
ectfully
sub
mitted,
AND
James P. Sullivan, Esq.
BRENNAN &
SIILryAN,
P.A.
for Defendant
CERTIFICATE OB SBRVICE
The undersigned hereby certifies that on this 1't day of October, 2015, the foregoing was
served electronically through the Seventh Judicial District Court's electronic file and serve
system to the following:
505-938-7781 FAX
idrEstelzner.com
Attorneysfor Plaintffi
By:
Robyn Hoffman
't4
tti,
RECITAI-S
The City is the orvher of certain right$ putainTg lo fr: Cityt municipal utility systeus'
rSlghts't
flr defmed and more particularly described an Exhibit A,
lhese
A.
Tte Cigy is desirous of:granting to Hat Springs, and Hot Sl"try is desirous of purchasing
*a oUhj"i*g ilom the City, the exc.lusive optior to Flrrchase the Right* from the City as set
forth below.
B.
AffREEI\.ENI
NOW TIIEREFOE{E,
1,
OmION, Ihe
witfrU
2,
.OP'IIOND.ryOsrr:
A,
Rights,
B,
Seco,nd DeEsit. Hot Spritrgs shall pay the City the tum. of One Hundred
pottars
($1S0;000-00) on or before (i) Fchntqy ,ry, 2l#8 oJ (1) fi've (5)
Eighty Thousaurd
tulines* days after rhe clo_$ing dare:cf, Hot Spriugs's caotempllted gi$ticlf$v$e land exchange
hetrxeen Uot Spr;ag$ and tne Nelv lvlexico State Land Offit+ ('l$ecpud l.and Exqhaq$e"),
w.hicheqer occurr
firtt.
C,,
@),
:'
EXHIB]T
(ii
(ir)
(iii)
FirstExtension:
$2,000.00
ThirdExtensioul
$2,000-00
date of the
Any such extension period shall last either (i) ninely (90] days or {ii) uutil the closing
D,
*r*i*r
3,
in
PURCTIASE PRICE
A,
p"tfirn*
Erige").
price for such Ccnnections'kp or hoakup fees (the "Future Sewff Euchage
B.
capacity shall be
$+,@
lVuerPurp,b$ePrice").
C,
,,purchase
4.
E)CER.CISE
5.
6"
CLOSINS. Closing
that is
*y
7.
shatl
Springs.
iI
g.
g.
Cilfs
'
auromatically by extended to allorv the City to effect the abov+ referenced cures,
(30) day$
City's
After ths expiration of the cure period provided above, atd within thirry
!J the
of
the
one
of
Spryq1s
Hot
of
flotice
gtecti.on
defaulr, HoiSprings shall givc iU" Ci* rvritten
(ii)
or
hereunder'
obligations
of
thecitt's
folto.xdng ,"miai# (il to ieek specific perfomrance
to termirlate this Agreement and thereupon receive aretum of theDeposit'
if Hot
10.
aucl ruauant
B.
The City's.'Wmrailty. The City r#arrailt$ that it is fhe owner of the Rights
that it has
identified in Exhibit B wldch-"vrflership is unencumbered. The Ciry flrrfher .wanatrt!
1aw or
*ny
viulation
of
any
Rights,
Bor
such
of
condition
no knowledge of any material defestive
regulation affecting such Righis
C,
D.
11.
9**t
CONFmENTIALITY. The City and Hot Springs hereby agree to treat (and shall
lL.
**
SURRENDEts. IIot Springs may surrender all or part of the Rights to the City at
Springs shallhave
any time p,io, to[Gffioo *och Rights.-For any Riglris so su:=Endered, Hot
,o Clo**in *och surieadered Rights nor to p|{ the respective Sewer Purchase
Price shall
"o'ouiisutioo
Frice or"Water Furchase pricB relating to such surrendered Rights, and the Purehase
ffiinimum
the
from
amounts
leduced
deduct
such
be teduced accordingly. Hoi Springs may
discretion.
sole
Hot
Springs's
Closing requirements of subsequelrt siheddea Closings at
13.
RELEASE Upon written reque$t of the City, providing +vidence to Hot Springs
City of
of the need of futur* out*. capacrty or future sewer capacity for developments within-the
shall release to
Truth or Consequences that me unrelated to Hot Springs s_ptoporty, IIot Springs
ot amounts of
respect
the
aEouflt
to
refusal
with
the City, at no cost to the City, its right of flrst
ihe CitS at
re_quested
by
total Future Sewer Capacity anO/or the total Future Watm Capaciry
14.
the
u
reductioo-io *oy Hrhue Sewer Purchase Price or Future Wate{ Pruchase Price.
"oo**pording
15. gAPTION$. The captions contained herein are for coRvetience only and are not
16,
ll,
lg.
19,
20.
Agreemeut
ir
te
consEued
by and eontrolleil
Zl.
22.
If to the CitY:
Mr. Jaime Aguilera
City Managor
City of Truttr or Consequences
NM
87901
TeL 505-894-3031
Fax 505-894'3282
ff tc Hot
sPrffii"
Tampa,
FL
33618
Te1: 813-961-8400
-'
Wiih
Fax:813'96i'8410
a eopy
Suite 1700
Albuquerque,
NM
87L42
Tel; 505-244'0??0
Fax:505-24+9266
25.
26.
7|7.
E*r"pt
as
"d*,"
as used
FORCE B,IAJEURE. In &e event that either party is rendered whotly or in parE by
forc+ majeue unable to caffy out its obligations under this Agreemen! it is ageed that on such
party's Siri"g rictics and fu]l particulars of such force majeure to the other parfy as soofl as
such
occlrrrence of the causes relied ol, ihen the obligations of thp prytq
io**iUf*-rtt*.*tf.*
'"oir*, so far as they are a.ffected by such force majerua shall be suspended rying
during the
cantinuance of any inatitity sc caused, but for ao longer perlod, and such cause shall, so far as
possiblg be rernedied with atl reasonable dispatch. Tle te_1n "force ruaj.qlfg" as used hereln
it utt 111"* acts of God, strikes. lockouts or other industrial disturbarrces, acts of the public
enemy, rvars, blockades, insurrections, riot$, epidemics, landslides,liglrtning, earthquakes, fires,
stonns, floods, vrashouts, arrest and.resilaint of mltrs aad peoples, eivil disturbaaces, enplosion$,
Ur*aUlu or aicident to m.achinery, failwe to obtain materials and supplies due to governmeatal
regutatlom and causes of Like or similat kind, whether herein eflumerated orrot, and not within
such party
thJ connol of the party claiming suspension, and why by the exercise of due diligence
28.
is unable to ovsrco.Ee.
29.
L7,20W.
of the Effective
CITY:
crrY
OF TRUTIT OR CONSEQUENCES
By:
Date:
IIOT SPRING$:
HOT SPRINGS MOTORPLH(
DEVELOPIyIENT,LLC,
a New Mexico limited liability company
Eshi-bitA
nRi#s"
7.
City's.'Wastewaier
ee&Agiry," rneans eighty perceot (S0%) of the existing daily capacity of the
friitmj"t Plmt ("Efug["). As descrihed on Exhibit B, the Available Sewer Capacity is 918.57
sewf, Connectian uuits. A "epurEgl&g" meaxs a billing unit (whether residerttial, commercial,
or othenvise) for which the City comrnits to provide sewer servics fiom the Plant. Connections
n$errice agreelnests,"
also are cororrronly called "tap$" or
2.
3.
Portfolio- The City's "H$ter, Rishts Portfolio" is the collectiou of all water rigfrts owned or
leased by ihe City for rnunicipal purposes that are distributed througfu a water utility system. As
dascribed ou Exhibit B, the Available Water Capacity is approximately 850 acre feet per year. If
the City determines that thp Available Water Capacity was greater than or less than the estimated
850 acre feet per year ar of the Effective Date of this Agreement, the Riglits identified herein
sha]I include (a) the right to purcLase 809o of the actual Avaiiable Watr Capacity at the price
the Water Putchase
Fer affe foot of capacity established in Exhibit B, and O) the right to adjust
Price accordingly.
4.
Exhibit.B.
The below-described
"eggggb
Truth or Consequences
fnwsr Connections that rhe Plant can procsss it a ?4 hour period. The Plant is rated as a
1,000,000 gallon per day Plant, The curtenr number of active Connections use appraximateiy
?50,000 galions per day of the rated capacity. The remaining 250,0il0 gallons per day that the
Flant can proce$s equate approximately to 1,148.22 Cormections.
100?oofcurrerfsewerConnectionCapacity-....
80fo of crurent sewer
$3,000 per
ConnectionCapaciry.....
tap,.......
price.......,
.,,.7,148,22
.,,...,..918.576
.....x $.3.000.00
.......,"...$2,755,?28.0O
Total purchase
The "lVaierlRil#E Be$erse C3qap.ily" reiate.s to the amount of ressrye capacity of water that the
Seller cunentiy owns. The is presently unused Water Right$ Reserve Capacity is approximateiy
850 acre feet per year (AFY).
100% of cuffent Watff Rights Reserve Capacity..................850 AFY
80flo of current Water Rights Reserve Capacity......,,...........680 AFy
..............x $6.000.00
Price per acre foot of
.$4,080,000.00
Total purchase
capacity..
price........
)
10
Exhibit C
Summery of Key Dates fJ$der this Aqrm.en[
tlhis Sunwery
is
for
o! thi* Agreemenr,)
OptionDerosit
Agreerneot.,
ff2)
Deposiil
..,.-.....
$20,0S0...
Initial
..
...,....,........August 22, 2007
SecondDepe$it
.......+$180.000. ................February 13,2008
Total Deposit (wir&out extensions].".........$200,000
Purchase
Bics (qt3]
..
Paylne+t of
)
'
Pur&aselti* ft[5)
Closingr
puymeetatFinal
PIus TotalDeposits ......-............ ...
Total
Paid..
$6.635.728.
...S200S00
.,......
$dS35JZe
11
...........February 13,2011
*r.r**u
(Ihis Sammary
1.
2.
3.
4,
is
for
or**,ffi*
oriu
ou***:
a fee
of
thls Agreement.)
Before the option expires. Hot $prings must decide whether to forfeit the option or
5,
6.
7.
If IIot Springs
the option,
exercises the option, it must pay more in order to receive the "rights.',
The 'tights" are come*tiors to the Citt's water and $ewer system, also calied "laps,,
agf gelheflts. "
01.
"sefyice
B,
)
Hot Spriugs !S payfig up ftont to raserve capacity in the City's water and sewer sy$terr
for IIot Springo'future use in its project.
?.
10.
Hot Sptings is not buying atl of the capacity rn the City'e water and sewer systern. ft is
buytng oniy patt of the capacity. The City can do whatever it wants with the reuaining capacity,
11.
If the City expands its capacity, Hot Springs would have a reseryation for a share of
expruded capacity udess the CitynqIls ir.
tle
12.
ac.re
Hot Spriags is paying fair market value for these taps: $3000 per seuror tap and $d000 per
foot of water connecticns.
y.
For the optioned $Fu* of &e City's current capacity, Hot Springs.would pay a total of
74.
The purchase price can be paid over a three-year period. Hot Springs cao use only the
anrount of tap#cannectiors that ithas paid for.
15.
Hot Sprinp must pay its finai payment of the full purch*se priceby February 13, 20L1.
T2
rlfi$T
ltis
FIR$T
g,
The City and liat Spriugs believc it is in eqsh nf$cir tuts(estn:ta mmrd &e
Agrwtrrert 6s Bd fo$h iu &is First fuutnilmeml
C.
furc*enl
rFffi
frtion
Spfinest ftas ihe ridrt but uot fte ot{igdioc ts 0{Hde6 its fli{Er
E. I}ts Citf
a{d Hot SpriEgs dssft& tff astBnd ttreoptim.dErffiffirt to eGtend ihe final date sa
or before which Hat Spriugs has the light buE not the &ligation lo emcscire its qtion"
All
*aH
harre rhe
OptiorAgreemeen
AGREBI\,IBTT
NOW TIIEREF'O*E, iu eonsideratior of the muffil oovurrnre hge$na&s sEt ft,rtt, tho parties
fullcws:
ragrce as
#
.Ae-**qfr, a-q
& ftr{,9-,ffi14
HOT SPRIf\dGS,OOOOOI
'pa'-*w
:@
EXHIBIT
Op,tiun
Agre* t ffit
fio
Agrecrr:reilt
aB
arffid*d
Stim
aild dpptlctlhl+vr,
Tti* Hret i-{rydrnent rnay bc cxo+utod ia any mrm}er of conntqqpu'tq caet sf *hieh sihall
bt deqled- ffi. ffigjrral sud dl tfwhi* *hdl tosettfr effstitute +ne md {he asne agretffiit
STGHATLIRB PAf'E TO
FOLI,0\{I
C[IY:
IXITSP.RIITIGS:
DSVEr-Op[ffiIqT,IJ,e
a,Ne:tr Mnicolfuaitd liahfiit1trsmptrU,
HOT SFRINGS,O00002
:l-tot$pljrqs
Augr.lst9;2.011
tuls" Ellen Lindsey
SiroeStrest
Truth orCorrseqrreflsrs, t{M
5G5
tfsnf
[& Liridsey,
As pu arc aware, the fity
Seaf
of
We are awart, bastd on our rec*rtt mrrver,sttons that there may be ost$de legal issues
regprding *rE partial option exercise and the surendering of fie reiltairringoptfons-
We are eager to conclude this transaction and ewsit your respoflse" Thank you for laur
ronsideraliou,
H-
l.?to
r#hibheadr
unds*ed'8erd$rE
-d
J.
Ifornlils4tl
R,
arretson
&@86$J0i0{lrl;5x5.E?rL7t08{lrspcreahtryr$tEitde.ni
EXHIBTT 3
,il"tf''g**gu.
5?58*4EBE
Iarfi5?{{4*41
P,E/3
A,rgrul29,tflll
I,ew Ofliee *{
trffir,p t, Whilehed
Ber
*il1+H$Ltr,CI$tiee&g$uent
-$rulds, Whit*hEndl
0n ,hehqlf of thc Clty +f T',f.urh +r ftosequtrre+r, [.a{r r,eapox*iug rn lt$t Ftr
purportd atlnnryt t* r,ueraim it+ u3l,itrn es rxpr*rrxd ia tts turei of Arrypst 9,
?01i.
dq nnt r:ursidct the A.uplrt 9. ?Sl I Isttsf Io hs e vatrid exarcise uf m trptiu*r,
Ttri* is drrt U xurnsr, u$'r*t6o46, imludiag [1[rt norn$**s*ril liEif*d t+ tha
Ifu'e
frIoxring:
T+ ths sxtnt th# the sonirsci d*es all*w fur o $2$ft,6llfi.0S *xercise, thr Augusc
&r
toi ths
ftil*wirtg
HOT.SPR]51s5'8fffl1,42
EXHIBIT
trity
5:?5S?sgBE
To15,f5'?s4q44i
mf Yrnsth mr
#sms#qusft*ss
Sfi5:$ims ${rmt
Truth or Cor*sequsflees, filew fulexics 8trS0{
f;ity (5?s) 8$4sS?3 Fax t575i SS44*#3
ffi
Prrg'e.n
fl
:Farxgraptr
t+:
{.1ity r<*m*y
ffi;sps1,
*ri
ftraft Fuerti*r
HST $PRING$
OSG143
P,;.j/S.
HS?
$PRENGS
Flninttrffs,
Y.
${*" $-72I-CV-3CII4-{}{}S?3
clTY sF
&IflFEBAVIT
*F JtjAN
rq. TUEHTES
-[UAN A. FUEF{TES, being first duly swsrn upon aath, deposes a*d
L
:.
3.
sa-vs;
have held the positiom of City h'lanager f+r the City of Truth
*r
C*nseqr.leners sinor
August 17,3S11.
4"
Pri*r to tfurt, tr was enrpluyed as the Fi*ance DirectCIr cf the City of Truth or
5.
t*
In e*nn*ctian witli my duties as City Manager. I have read snd farnilinrized rnyseif with
the rlaims msde in the sh*ve referencsd lawsuit against ttre City of Trutir or Consequeltees.
6.
A.lth*ugh I
r,vas
far
cf Riglrts wff$ entersd intc. I have resear*hed tlre claims of the Conrplaini.
EXHIB]T
?.
I have venfied tl'l*t th* trv* <iep*sits totaling twcr hundrrd tircus;*d dc+llars
.a-B
ret-*r*nrr in
City +ieenunt*.
S.
c,f the
Ne*i in ra'liich h* attempted t* exercise un cpii*n i'*r u'ater u*der ttre fipti*n Ag:reernent.
S.
Exhibit.i ts thi$ nr+ticn is a tri.r* and cons*i e*py *f tl:e ietmr sent by the City's attsfilfly
1tl.
*ptirn Agreer*e*i.
Althaugh the *ptian Ap'e*ment requires it, #r*g Neal di<i not cffer or agree tii
tr]ay.,
an].
fficrn*y f'or tire purcltase of any nghts under tlre &grr*me*t rvh*n he *tternpteri t+ exerrise a
I.
Umtil ihe filing ot-the lawsuil against the City by thes* Plaintiffs, neither l-il:t Sprrngs
entii-v advjsed rr'le, nrlr u,n*s I nrirde &war* hy **yi;ne, t]r*r tirerc was ar! allegeiJ
iirabililr tt:
pr*virtre the water and sei,l,'er rights *nd servic*$ ilptiilned ferr umd*r ttre Agrrement.
i:"
I knaw c,f
Springs Fursuant
13.
t*
r*r Hat
l*8?-lill l.
T+ dat*, neit!:er ct'the Hot Spings Entities which are Plaintiffs ilt tilis case has
c*nstru*tcd watr or selver iines f*r any deveiopment upt:n the renl prspefry $wned by th*m.
14.
I have per.s*n*,| kn*ivlerlge *f th* fl*regoing, and arfi comp*teilt ti] tssfit3" iilereto.
STATE
*F
NEW IdEXTCS
l
]
fl*u},tTt" *F
siER&4
$uH'$cRgEfrfi
AH*
ss.
$Er*s"*tr
It$* S, iteqq{,s
N*TARY PUBI-T*
x.
by
I{OT
SIJR.TNGS
Plainti[Ts,
Y.
Nc. D-721-CV-2S14-00073
cITl:
JESLIS
1
?,,
cl.iri1,
I arn tlro Water,{rv aster&'ater f)'irei:.tor ft>r the City of Trutlt ar Cnnseqrtence"\. i have helri
l.
!1"ate:'AArai;tervaterr
4.
3500 a*iive $ewe{ cortlestions airri can !r'toijess aplxorimateiy 1,060,000 (one
5.
Il
ltillion sixty
riaS'.
.suplxxi 1,i48.22 additional con.irectiuns b;rsed upon,apprcx.imately 250,0i)0 galions per riay
excers ciipacitl, at drilt tir;re.
EXH]B]T
6,.
liundre,l eightl,-five lioinr 9l ) acre feet per. year of unused water c&pacity.
i.
trn Augusr
200?, rite Citl' o{ Trut}i or Consequerlce,* o$/r}ed more than 850 acre feer per
8,
'i'he water and/or $et!'ei connecticns designateri in tlre Option Agreement were available
9.
rcr
testify therera.
alal,andia
IERI{.q
t(Ii
'
L{ @[irt] t
dr')