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N.H. Supreme Court says trial warranted in fight over expansion on Mount Sunapee

The operator of the Mount Sunapee Resort has won a partial victory in its long-running battle with state officials who blocked plans to expand on the ski mountain’s western slope.

The New Hampshire Supreme Court, in a 5-0 decision handed down yesterday, ruled a “genuine issue of material fact” exists in the case: Did the Department of Resources and Economic Development knowingly mislead the operator when its lease was signed in 1998?

A Merrimack County Superior Court judge had granted summary judgement to the state, but that ruling was partially reversed and the case is now headed back to superior court for trial.

“My client is delighted to be getting a trial,” said Jim Higgins, attorney for The Sunapee Difference LLC.

Associate Attorney General Richard Head said the state is confident it will win in the end.

“The court’s order simply says this should go to trial, and we anticipate it will go to trial,” Head said. “And ultimately, we believe the facts will result in a favorable verdict for the state.”

The state did win on a key point in yesterday’s 20-page ruling. Former governor John Lynch, a Democrat, was a strong opponent of the proposed expansion. After he was elected in 2004, he blocked it by refusing to bring a related contract before the five-member Executive Council for approval.

The high court found that was within Lynch’s power as governor and didn’t constitute a breach of contract. State law, wrote Associate Justice Gary Hicks, “would not require the governor to put before the Executive Council a proposed lease of state lands that the governor does not approve.”

Gov. Maggie Hassan, a Democrat who succeeded Lynch this year, has indicated she, too, is wary of Mount Sunapee’s expansion plans.

“The governor has concerns about leasing additional state parkland to increase the value of a private condominium project,” spokesman Marc Goldberg said in a statement. “The attorney general’s office is thoroughly reviewing today’s decision in order to determine the best course of action moving forward.”

Head and Higgins both declined to comment on any potential for an out-of-court settlement to the case.

Expansion blocked

In 1998, the state leased the ski area in Mount Sunapee State Park to a private operator. The lease has gone through ownership changes but the original owners, Tim and Diane Mueller, still operate the resort.

Under the deal, the resort pays the state $150,000 a year, adjusted for inflation, plus 3 percent of its gross ski-area revenue. It also pays property taxes to the towns of Newbury and Goshen and the state rooms and meals and business taxes.

Plans for expansion have been on the table for more than a decade. In 2000, expansion to the east was ruled out due to old-growth forest in the area, and a conservation easement blocks expansion to the south. With lakes to the north, the resort has said its only option is to go west.

In the early 2000s, the resort proposed a new lift and trail network, plus up to 250 condominiums, in the West Bowl area. The resort’s most recent five-year master development plan, prepared in 2009, envisions a 5,100-foot-long high-speed chairlift, 75 acres of new terrain including four full-length ski trails, a new “base area facility with limited guest services,” parking lots and related utilities.

The problem, however, is that the lease granted in 1998 didn’t include all the land needed for the expansion.

When the state issued its request for bids to run the resort in 1998, it included a map depicting a shaded area available for lease. That map didn’t show the actual boundaries of the state park, and the operators have said they were led to believe they would be leasing land that extended to the northern and western boundaries of the park.

The contract was signed and approved that year, but it wasn’t until two years later that resort officials say they discovered the lease didn’t include land on the northern and western edges of the park. Discussions with state officials about expansion at the mountain followed, and in 2005 the Department of Resources and Economic Development was prepared to modify the lease and grant the resort that land.

But Lynch refused to bring the contract before the Executive Council, which must approve state contracts. That effectively blocked the expansion.

Affirmed and reversed

In 2007, The Sunapee Difference LLC sued the state. The Merrimack County Superior Court initially ruled for the state, a decision that was appealed. But the Supreme Court sent the case back to the trial court to resolve a question about whether the LLC had standing to bring the lawsuit. (While it continues to operate the resort, in 2008 it had sold the lease to Florida-based CNL Lifestyle Properties.)

The case then went back to the high court, which heard oral arguments last September and issued a complicated ruling yesterday.

The court affirmed the lower court’s ruling that Lynch had discretion not to bring the 2005 contract before the Executive Council for a vote. That, Head said, affirms “that the governor ultimately controls the agenda that is presented at governor and council meetings.”

And the court found that the 1998 lease contained “no express or implied right or guarantee of expansion.”

But on other points, the high court reversed the lower court’s decision to grant summary judgment to the state.

For instance, the court said there is a dispute as to whether state officials knowingly misled the operator in 1998 with the map that didn’t distinguish between the lease area and the park itself.

“We conclude, therefore, that Sunapee raised a genuine issue of material fact as to whether (then-DRED Commissioner Robb) Thomson knowingly made a false representation or concealed a material fact relating to the leasehold’s northern and western boundaries,” Hicks wrote.

The high court also found the lower court shouldn’t have ruled for the state on related issues of whether the lease should be reformed and whether the state improperly blocked the resort’s right to use land.

Higgins said he expects a bench trial in Merrimack County Superior Court on those issues.

“Hopefully the court will be able to accommodate us and get us on the docket as soon as is reasonable, given their other caseload, and we’ll be able to get a trial, which is what we’ve wanted for a long time,” Higgins said.

Chiming in

The expansion plans on Mount Sunapee were controversial a decade ago, and have long been opposed by groups such as the Society for the Protection of New Hampshire Forests.

Tom Elliott, director and treasurer of the Friends of Mount Sunapee, called yesterday’s ruling a “major victory” that “re-affirmed Gov. John Lynch’s principled decision to deny Okemo’s self-interested real estate expansion proposal.”

(Okemo is the original name of the company awarded the lease in 1998.)

In his statement, Elliott also called on Hassan “to relentlessly defend our mountain park and the public trust it protects, until the case is finally resolved.”

A spokesman for Mount Sunapee Resort said they were “pleased” at “a number of favorable decisions” in yesterday’s ruling.

“We look forward to further consideration of these issues at trial, but we unfortunately need to refrain at this time from further comment due to the pending litigation,” spokesman Bruce McCloy said in the statement.

(Ben Leubsdorf can be reached at 369-3307 or bleubsdorf@cmonitor.com or on Twitter @BenLeubsdorf.)

Legacy Comments2

For anyone interested in what the trial will discuss, and how likely Okemo is to lose, be sure to focus on page 13 of the NHSUPCO decision. The court laid out a "test of four" that Okemo will need to prove at the trial. Quoting from the decision (page 13: "A party making such a claim must prove four elements: First, a representation or concealment of material facts made with knowledge of those facts; Second, the party to whom the representation was made must have been ignorant of the truth of the matter; Third, the representation must have been made with the intention of inducing the other party to rely upon it; and Fourth, the other party must have been induced to rely upon the representation to his or her injury." Proving all four will be very, very hard, and will come down to a lot of "he said, he said" between Thomson and the Okemo guys who negotiated with him in April 1998. No matter the outcome of the trial, the primacy of a Governor's right to say no to any expansion is now affirmed without question. For as long as we have governors who oppose the expansion, Mount Sunapee will remain protected, public, and fundamentally for the public interest, not Okemo's private profit. Tom Elliott Friends of Mount Sunapee

Mt Sunapee scares the democrats as it is a perfect example of how private industry does everything better than the government run boondoggles

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