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2007-08-23 Impact of Judge Halsey's OrderCIVERSON REUVERS ATTORNEYS AT LAW August 23, 2007 VIA FAX AND U.S. MAIL The Honorable Kathleen Mottl Wright County Government Center Ten Second Street N.W. Buffalo, MN 55313 RE: Gold Key Development, Inc. v. City of Albertville v. SEH, Inc. Court File No. CV-06-2998 Dear Judge Mottl: Pursuant to the August 14, 2007, letter from your law clerk, this letter is submitted on behalf of the City of Albertville to discuss the impact of Judge Halsey's August 7, 2007, Order and a response to the letter submitted by Gold Key Development, T/C Homes, Majestic Homes, Legacy Homes and Hedlund Engineering. 1. Majestic and Legacy's Motions to Intervene It is the City's understanding, based upon T/C Homes' August 16, 2007, correspondence, the Motion to Intervene is limited to Legacy. Because Legacy had agreed to stand in the same position as T/C Homes, their Motion to Intervene against the City should be denied because Judge Halsey, on page 12 of his Memorandum, determined the City is immune from T/C Homes' negligence and negligent misrepresentation claims. Therefore, the City would also be immune from Legacy's claims. Additionally, Legacy's mandamus claim against the City should be dismissed because it is now moot. The underlying mandamus action requests the City shall be ordered by the Court to immediately issue Certificates of Occupancy and building permits. Judge Halsey, however, on pages 11 and 12 of his Order, determined the City was estopped from not issuing building permits and Certificates of Occupancy. Accordingly, the City has begun issuing building permits and Certificates of Occupancy for Prairie Run. Therefore, Legacy is not entitled to any remedy from the Court and its Motion to Intervene should be denied.1 1 The City also believes T/C Homes and Legacy Homes' claims against Gold Key should also be barred because the option agreements between the developer and the builder prohibit breach of contract claims. Gold Key surprisingly, however, has agreed to allow the builders to proceed on these claims without disputing them. JASON J. KUBOUSHEK DIRECT 952.548.7206 I K U EOUSH EK@ IVERSON LAW.COM ION K. IVERSON PAUI. D. REUVERS JEFF M. ZALASKY JASON J. KUBOUSHEK PAMELA J.F. WHITMORE JASON M. HIVELEY SUSAN M. TINDAL JEFFREY A. EGGE AMBER S. LEE IVERSON REUVERS, LLC 19321 ENSIGN AVENUE SOUTH I BLOOMINGTON, MN 55438 1952.548.7200 1 FAX: 952.548.7210 1 WWW.IVERSONLAW.COM August 23, 2007 Page 2 City's Motion to Extend Discovery Deadlines Based Upon Intervention of Majestic and Legacy The City maintains its request for an extension of 90 days to conduct discovery into Legacy's damage claims. Moreover, even if Legacy's claims against the City are not allowed, but its claims against Gold Key are, the City would be entitled to conduct discovery to learn the scope of Legacy's damages and the intent of the indemnification and option agreements between the parties. Regardless of whether there are claims against Gold Key or the City, the City must retain an expert. This expert would need adequate time to review financial documents, marketing trends and projected profits to analyze Legacy's damage claims. Therefore, the City needs an additional 90 days to conduct written discovery, deposition testimony and expert disclosures. Finally, Gold Key and the builders' claims they would be prejudiced by having the trial moved into 2008 are now without merit. Under Judge Halsey's Order, the City must immediately issue building permits and certificates of occupancy. Therefore, there are no further accruing damages and the builders are allowed to build at will. Accordingly, they will not be damaged by having the trial continued into 2008. They can still market their homes in the spring Parade of Homes sale, and can have them ready for peak construction season. Therefore, the City respectfully requests the trial date be moved into 2008. 3. City's Motion to Amend the Counterclaim to Allege MPCA Violations Judge Halsey's Order does not preclude the Court from allowing the City to add claims regarding the MPCA violations. Rather, he noted in his Order "the development agreement, paragraph 10, requires the developer (here, Gold Key) comply with all federal, state, county or city drainage requirements." He then determined there were no alleged drainage breaches supported by facts. However, subsequent to the Summary Judgment hearing, the City did receive a formal Notice of Violation from the MPCA. Therefore, there are facts supporting drainage breaches. Moreover, if the City is not allowed to intervene in this suit, it still has the option of bringing a civil enforcement action against the developer. It would, however, have it included in these proceedings. Accordingly, the City believes Judge Halsey's Order does not prohibit the City from amending its Counterclaim to allege an MPCA violation which was brought to the City's attention following the Summary Judgment hearing. Thank you for the opportunity to present an argument in response to plaintiffs' letter. August 23, 2007 Page 3 Yours truly, IV(/ERSQ REUVE/R/SS `I Ja n J uboushek JJK:be cc: Cindi Matt Stephen Yoch Robert Kettering, Jr. John A. Markert MINNEAPOLIS 220 South Sixth Street I Suite 2200 Minneapolis, MN 55402-4504 612 339 6321 I Fax 612 338 0535 The Honorable Kathleen Mottl Wright County Government Center 10 Northwest Second Street Buffalo, MN 55313 Felhaber Larson Fenlon & Vogt A Professional Association — Attorneys at Law Stephen E. Yoch (651) 312-6040 syoch®felhaber.com Reply to St. Paul August 16, 2007 Re: Gold Key Development vs. City of Albertville, et. al. Court File Nos. 86-CV-06-2998 and 86-CV-064997 Dear Judge Mold: Sr. PAUL 444 Cedar Street 1 Suite 2100 St. Paul, MN 55101-2136 651 222 6321 I Fax 651 222 8905 This responds to the August 14, 2007 letter from your law clerk and Ms. Matt's August 16, 2007 letter. 1. Majestic and Legacy's Motion to Intervene. In light of Judge Halsey's August 7, 2007 Order, Majestic Homes has informed me that it no longer wishes to participate in the litigation and, therefore, the Motion to Intervene is limited to Legacy. This does not materially change our argument, but will require some minor modifications to the proposed pleading to remove Majestic from the Intervention Complaint, along with the claims against the City impacted by the Order. 2. City's Motion to Extend Discovery Deadlines Based Upon Intervention of Majestic and Legacy. I join in Ms. Matt's comments regarding that discovery need only be extended 45 days as only one party(Legacy) is now seeking intervention. 3. City's Motion defer to Ms. Matt's arguments. cc: A. van der Merwe (via facsimile and e-mail) J. Kuboushek (via facsimile and e-mail) J. Markert (via facsimile and e-mail) B. Tutt (via facsimile and e-mail) D. Olson (via facsimile and e-mail) STPL-Word:108311.1 wwwfelhaber.cotn AUG-16-2007 09:39AM FROM-JOHNSON LARSON PETERSON $ MATT PA +7636B24465 T-409 P.002/003 F-104 JOHNSON, LARSON, PETERSON & MATT, P.A. ATTORNEYS AT LAW 908 COMMERCrAL DRIVE BUFFALO, MMESOTA SS313 =EPHOvE: (763) 6824550 -- PAa: (763) 6824465 — TOLL ME: (866) (824550 WEB: WWW.ilomlaW.eom JAN C. LARSONT OF COUNSEL JOHN T. PETERSONq THOMAS W. RICHARDS CINDI S. MATT* THOMAS W. SPENCE MICHAEL G. HALVORSON wAVERLvK)ECF By Appointment Only t Real Property Lop Speclallst Cenijred by Minnesota State Bar Association W ALTER S. JOHNSON ' Qual(fled Neutral 1912-2002 August 16, 2007 Honorable Kathleen Mottl Wright County Court Administration Wright County Government Center 10 N.W. 2nd Street Buffalo, MN 55313 IU.ND DELIVERED RE: Gold Key Development vs. City of Albertville, et al Court File Nos. 86-CV-06-2998 and 86-CV-06-4997 Dear Judge Mottl: Pursuant to the August 14, 2007 letter from your law clerk, Wade Jensen, this letter is submitted on behalf of the Gold Key Development, Inc. to discuss the impact of Judge Halsey's August 7, 2007 Order on the Motions which you currently have under advisement. I. Majestic and Legacy's Motion to Intervene Majestic and Legacy have agreed to stand in the same position as TC Homes and to be bound by Judge Halsey's decision in that regard. Judge Halsey granted summary judgment to the City and to SEH, as to the claims made against them by TC. TC's claim against Gold Key still remains. Judge Halsey's ruling should have no impact upon this Court's decision whether to grant Majestic and Legacy's motion for intervention, since they will have a claim against Gold Key in any event, and since they may decide to appeal the summary judgment decision as to the City and SEH. 2. City's motion to extend discovery deadlines based upon intervention of Majestic and Legacy. The City wanted the discovery deadlines extended 90 days so it could conduct extensive discovery as to Majestic and Legacy's claims against it. Gold Key thought a 45 day extension was sufficient, as the parties could informally and promptly exchange any documents. Since Judge Halsey's decision essentially removed Majestic and Legacy's direct claims against the AUG-16-2007 09:39AM FROM-JOHNSON LARSON PETERSON & MATT PA +7636824465 T-409 P-003/003 F-104 August 16, 2007 Page 2 City, only a 45 day extension for discovery as to the claims of Majestic and Legacy (but not an extension of the trial date) is warranted. 3. City's motion to amend counterclaim regarding alleged MPCA violation Judge Halsey's Order granted Gold Key's motion for summary judgment, essentially finding that the City had breached the development agreement by wrongfully declaring Gold Key in default of the development agreement and declaring a moratorium in Prairie Run. The essence of Judge Halsey's Order is that once the plat of Prairie Run was approved, and Gold Key had spent millions of dollars in developing the property and in binding itself to obligations related thereto, the City cannot go back and declare Gold Key in default of the development agreement based upon information it uncovers years later. Judge Halsey's reasoning would also apply to the City's newest allegation regarding the alleged default in the development agreement based upon the alleged MPCA violation (the basis of its Motion to Amend its Counterclaim). The City cannot use this alleged violation as a basis for default in the development agreement, when the plans were approved years ago, and the ponds were constructed in accordance with, and in reliance upon, those approved plans. Therefore, for the reasoning set forth by Judge I3alsey in his 8/7/07 Order, as well as all of the reasons previously set forth in the arguments made by me at the hearing and in Gold Key's brief, Gold Key respectfully requests that the Court deny the City's Motion to amend its counterclaim regarding the alleged MPCA violation. Thank you. Sincerely, I Cindi�S Matt CSM/jal ee Steve Yoch, Esq. (via fax and U.S. Mail) Anton van der Merwe, Esq. (via fax and U.S. Mail) Jason J. Kuboushek, Esq. (via fax and U.S. Mail) John Markert, Esq. (via fax and U.S. Mail) Dean Johnson (via fax and U.S. Mail)