County to pay $38 million to settle case on air rights near McCarran

Faced with an expensive dilemma, the county will write two checks totaling $38 million to settle a 5-year-old inverse condemnation case involving height restrictions on land south of McCarran International Airport.

At a Clark County District Court hearing on Tuesday, attorneys for the county lost an attempt to place the money into a blocked account while they explore allegations that representatives of the former property owner, 70 Limited Partnership, improperly manipulated evidence. Several logistical hurdles arose about which banks might want to hold such a large deposit while the case is hashed out, on what terms and how to get deposit insurance.

Because the settlement approved by the Clark County Commission on Oct. 15 required payment by Dec. 2 to avoid getting stuck with a 5.25 percent penalty, attorney Tamara Beatty Peterson said the county was left with a “Hobson’s choice.” Withholding the check would cost the county about $5,500 a day in interest, but it could be difficult to claw back the money if it were paid and the litigation fraud charges turn out to be true, she said.

In the end, Clark County District Judge Elizabeth Gonzalez ordered the county to pay $23.8 million to 70 Limited Partnership. The remaining $14.2 million will go into a separate account, possibly held by the county, as security for fee claims by the partnership’s former attorneys.

The case involved 191 acres in nine parcels owned by the late Thomas T. Beam, a major benefactor of UNLV whose name is on the engineering school building. His estate deeded the land to the partnership for liquidation — the last parcel was sold in 2002 — but the partner­ship still filed suit six years later for the value of lost air rights due to county-imposed height restrictions. The land lies under the approach path to McCarran’s Runway 1.

At one point, the partnership claimed damages of $2.7 billion but eventually backed off. For the $38 million, the county now owns the air rights through condemnation but not the land.

Gonzalez tossed out the case in 2010 after determining that no one had tried to obtain a variance to the limit within the 15 years allowed by county ordinance.

The Nevada Supreme Court, however, reversed her in January based on a 2006 precedent set by a similar case by County Commissioner Steve Sisolak that deemed variances irrelevant, leaving open for trial only the question of how much the county should pay.

Although it’s paying the settlement, the county still questions the partnership’s claim.

“Just as the television sitcom ‘Seinfeld’ was often called a ‘show about nothing,’ the case began as a ‘case about nothing;’ 70LP lost no air space, suffered no damages” because of the county’s actions, wrote county attorney Kirk Lenhard in court papers filed last week.

“Frankly, the ‘Seinfeld’ analogy is insulting, not just to 70 LP and its attorneys but to this court and the Nevada Supreme Court,” partnership attorney Robert Eisenberg said.

The potential fraud raised by the county involves two witnesses it contends were shielded from giving out-of-court testimony for what it now contends were contrived excuses and medical assessments. Both witnesses, including Beam’s widow Jimma Lee Beam, died during the appeal.

Eisenberg wrote in court papers that what they might have said had no bearing on the only issue left open by the state Supreme Court — how much was owed to the partnership.

But Lenhard wrote that the information about the witnesses, which came to light recently in a related case, opened the possibility of other misdeeds.

“Given the magnitude of the payout …, the county has an obligation to investigate further whether 70 LP misrepresented additional evidence on which the settlement agreement is predicated,” Lenhard wrote.

The dispute with the partnership’s former attorneys, John Peter Lee and Paul Ray, revolves around whether they were forced out of the case or voluntarily walked away.

The former attorneys contend they should collect a percentage of the award, amounting to $14.2 million. The partnership, however, said they only deserved $1 million for the time they put in at their standard hourly rates.

Contact reporter Tim O’Reiley at toreiley@reviewjournal.com or at 702-387-5290.