County must repay trust account interest

A District Court clerk improperly diverted interest money from a trust account to the county's general fund, and the county must repay the man whose property was seized under eminent domain, the state Supreme Court ruled Thursday.

Paul Moldon, 67, whose legal scuffles began in 1995 when the city of Las Vegas declared eminent domain on a half-acre lot he owned near the Stratosphere, won the latest court battle by a unanimous decision.

But Moldon, who now lives in Washington state, hardly seemed in the mood to celebrate Thursday.

While he welcomed the high court's ruling, he expects to spend at least a year wrangling with the county over how much interest he should receive in what he describes as a grinding feud.

"It's not like it's over. They're going to try to pay me as little as they can," Moldon said. "I've got to tell you, I'm tired of it."

The county will probably peg the interest due him in the $200,000 to $300,000 range, while his estimate will be closer to $1.5 million, he said.

Officials in the district attorney's office who were familiar with the case couldn't be reached for comment.

The dispute began almost 13 years ago when the city's redevelopment agency condemned Moldon's property on behalf of the Stratosphere owners, who wanted to expand the casino site.

Through eminent domain, a government entity can compel a landowner to sell the property at a fair market price so it can be used for a public purpose, be it a road, railway or economic development. If the two sides disagree about the price, the dispute can be settled in court.

Moldon challenged the seizure. The city deposited $725,000 in a county trust account for him, and the interest grew to about $200,000 over 10 years.

In 2004, a jury found the land should have been valued at $1.5 million. Using the threat of appeal and other legal leverage, Moldon got $3.2 million from the Stratosphere for a parcel he bought several decades ago for $150,000.

Although that was a tidy profit, Moldon said, it's just a fraction of what the Stratosphere's owner, Carl Icahn, flipped it for later: $18 million.

Moldon said he knew he could hold out only so long against a man as wealthy and powerful as Icahn. But if he could've gotten $6 million for the land, that probably would've been enough, Moldon said.

Later, the court clerk funneled the interest from the original $725,000 deposit to the county's general fund.

Chuck Gardner, Moldon's attorney, argued that this action was tantamount to raiding a person's bank account.

"We fought the taking of the real estate for 10 years, and now we've had to fight the taking of the interest for three years," Gardner said. "In any event, the court did the right thing."

In a succinct opinion, the justices stated that the clerk improperly applied a finance law in diverting the interest money.

"The Moldons are entitled to the interest earned on the condemnation deposit because they had a property interest in the condemnation deposit," the justices wrote. "The district court clerk's act of placing interest earned from the condemnation deposit into Clark County's general fund caused a taking in violation of the Fifth and Fourteenth Amendments."

With this ruling, Nevada has caught up with the rest of the states in limiting the government's ability to confiscate interest accrued in a private litigant's account, Gardner said.

Last year, the Legislature amended the law so that counties no longer can use interest earned in cases like these. Gardner credited his client's case as being the catalyst.

Since the legal tussling began, Moldon has been stricken with multiple sclerosis, and his $2 million house was destroyed in a Christmas blaze in 2005.

Still, he feels he is a fortunate man. He and his wife are rebuilding their house, and he is immersed in ground-breaking physical therapy to combat his disease.

Moldon said he looks forward to finishing the final round in a 13-year fight.

A fight, he noted, that flared up over a parcel that sits vacant to this day.

Contact reporter Scott Wyland at swyland@reviewjournal.com or 702-455-4519.