Summit Water Litigation Returns To Court For Arguments
A hearing held January 30th in Summit County’s Third District Court focused on one of the battle fronts in the legal war between the Summit Water Company, and its shareholders; and the original founders and managers of the company.
The defendants, including the Estate of the late company founder, Hy Saunders, are asking to dismiss the claims made against them by the business arm of the Church of Jesus Christ of Latter-Day Saints.
The judge did not make a ruling after hearing the arguments.
A lawsuit was filed nearly a year ago by the Corporation of the Presiding Bishop of the Church, and its real-estate arm, Property Reserve Inc. The suit was aimed at the Saunders Estate, represented by wife Debra and son Brody Saunders, and Trilogy Limited, which was headed up by another company founder,the late Larry Knowles, and now is represented by his son Stuart.
The Church entities said they put funding and water assets into Summit Water and haven’t been properly compensated in the form of Class A shares, which can be sold for development.
The Church lawsuit alleged that in 2010, Summit Water took 311 water shares, contributed by the Church’s firm, the Davis-Weber Canal Company, and sold them to the Weber Basin Water District. The proceeds then went to Saunders and Trilogy, rather than to the Summit Water Company. And water rights were not brought on to replace the Class A shares that the Church entities lost.
Secondly, the Church entities say water rights they held were the basis for construction of a water treatment plant near East Canyon Creek. Based on that, they held a little over 18 percent of the plant capacity.
But in 2013 the company sold the treatment plant to Weber Basin, with, again, the proceeds going to Saunders and Knowles.
The Church’s allegations are similar to an earlier lawsuit that was filed in 2018 by the current management of Summit Water. Subsequently, the court agreed to consolidate the two lawsuits.
At the recent hearing, attorneys for the Saunders/Knowles defendants argued the Church’s claims should be dismissed on summary judgment. They argued the statute of limitations has passed on the claims. In effect, the complaints aren’t timely since the sale of the water shares occurred ten years ago. And the 2013 sale of the treatment plant was known at the time, and approved by the shareholders.
Attorneys for the Church countered that their clients, even with reasonable care and diligence, could not have discovered the abuses before the statute of limitations ran out—given that the company was controlled by Saunders and Knowles.
They contend the mis-use of funds was only discovered when new management conducted an investigation in 2018.
Third District Court Judge Teresa Welch took the arguments under advisement.