Street abandonment battle pits city and casinos

District Judge Samuel Wright isn't around anymore to explain who owns the streets in downtown Carson City. He died in 1904.

Without Wright's knowledge, Carson City faces a multi-million dollar battle with three casino and motel owners who don't think they should have paid for the former streets on which their buildings now stand.

City Hall believes it correctly charged the Carson Nugget and Carson Station owners for abandoning portions of Ninth, Plaza and Spear streets. The city now also wants the Plaza Motel owners to pay for the Plaza Street section that the city abandoned in 1997 without charging them.

The property owners, however, believe they should not have been charged for the street abandonments.

In 1866, the federal government granted the 320 acres that were the Carson City township to Wright as trustee of people who lived on property. He then transferred clear title to them for a fee.

But did these sales involve just the land, or did they also include half the street fronting the land?

Wright obviously would know the answer. Michael Fondi, today's district court judge, thought he knew the answer. He ruled last year that "the people who bought the lots bought to the center line of the street."

City Hall didn't like what Fondi had to say and petitioned the Nevada Supreme Court to reverse his ruling.

The Supreme Court, always eager to have the litigants work the case out themselves, referred the case to a mediator for a series of three settlement conferences.

Two conferences ended with no settlement.

"The mediation process is not going well," said Clark Russell, owner of Carson Station. "We've had two mediation conferences that have led nowhere."

Plaza Motel owner Dwight Millard said the parties are discussing "what ifs," but the city has made no acceptable settlement offers.

"Really, nothing's happening," Millard said.

Carson City Chief Deputy District Attorney Mark Forsberg denies the city is trying to draw out the litigation.

"We're participating in the settlement conference in good faith," Forsberg said. "After all, it was the city that initiated the court action, not Clark Russell or Dwight Millard. They did not sue us."

The street abandonment saga emerged in March 1997 when Millard and Hank Thomas asked the city to abandon one block of Plaza Street between Eight and Ninth streets to allow for expansion of the Plaza Motel.

Millard and Thomas presented information that the street had been granted to the city in 1866 and therefore no payment was required for the abandonment.

The city did not charge Millard and Thomas, which caught the attention of Russell across the street. Russell in 1989 had paid $125,000 for one block of Ninth Street for expansion of Carson Station.

"Why should I be charged for something others are not charged for?" Russell said. "I'm just saying there has to be a level playing field."

Russell wanted his $125,000 back and the city then determined it should charge Millard and Thomas $128,000. Millard and Thomas, naturally, protested.

Forsberg then presented the city's case to district court for a judicial determination of the status of the streets. Russell and Millard joined the action on the opposing side.

Fondi in September 1999 ruled that property owners in the 1860s paid for the streets when they bought their land from Wright.

"They shouldn't have to be paid for again to the municipality ... No payment for the abandonment of the street is due ... I think that this ruling has to be applicable to all of the downtown area that was affected by this Township act ... I'm not satisfied that Mr. Russell should have paid $125,000 to the city when the city did not require Mr. Millard to pay anything."

The city appealed to the Supreme Court.

"The underlying problem is not so much any individual case at this time," Forsberg said. "The ruling changes the way the city can do business from now on."

Forsberg said if Fondi's ruling stands the city would no longer be able to charge for the abandonments of streets in the original township. Reimbursing the Carson Station and Carson Nugget could cost City Hall more than a million dollars.

Right now, Russell is only asking for his original $125,000 and $15,000 in attorney fees.

"That's a decision we made," Russell said. "We wanted to put this behind us. We figured they would want to settle rather than go to the Supreme Court."

But he promises to charge interest if the Supreme Court rules against the city. He figures from 1989 to today, interest would amount to at least $345,000.

Russell said he's willing to talk about how to reimburse him.

"We've got sewer and water connection fees (at the Pinon Plaza) that we can apply that to," Russell said. "We want satisfaction. I said if you want to pursue this then you're going to face huge interest costs if this doesn't go your way."

Millard simply wants the city to stand by its original decision to not charge him for the Plaza abandonment.

"Our stand hasn't changed," Millard said. "They made a deal with us."

The Nugget, in a separate lawsuit filed March 14, asked to be reimbursed $222,000 paid for two sections of Spear Street in 1978 and one section of Plaza Street in 1974.

"Of course, we seek interest from the day of payment and attorney fees," said Joan Wright, an attorney at the Allison, MacKenzie law firm representing the Nugget. "It's a lot of money (the Nugget owners) have been out that didn't need to be paid. It's just not good business to walk away from it."

She said she hasn't calculated the compounded interest, but Forsberg said it would easily exceed the principal.

The Nugget is not part of the Supreme Court mediation. Forsberg expects to file a response to the Nugget lawsuit next week.

"Our response (to the Nugget) is the same as to Clark Russell; that is, we deny that we owe them this money," Forsberg said. "We believe they were properly required to pay that money."