Supreme Court reopens $21 million Pocatello land dispute lawsuit

POCATELLO — The Idaho Supreme Court recently issued a decision that reopens a $21 million lawsuit against the city of Pocatello and the private developers involved in the Northgate project.

The ruling vacated District Judge Robert C. Naftz’s previous 2023 decision, in which he dismissed the case in favor of the city.

The Idaho Supreme Court decided that the case would be allowed a new review of the Rupp family’s claims that city officials and private business partners conspired to block their access to land and cheaper water prices.

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According to the new ruling, the Supreme Court found that Naftz had failed to analyze the city of Pocatello’s motions and did not allow the family an opportunity to argue against multiple motions.

“The Court concluded that the district court failed to analyze Respondents’ motions for summary judgment, did not permit the Trusts the opportunity to argue in opposition to the summary judgment motions,” according to the ruling.

The Supreme Court also stated that Naftz’s failure to effectively analyze the evidence in the case could have been used to punish Nathan Olsen, the family’s attorney, for filing late.

“The district court never held a hearing on the merits of the motion for summary judgment,” states the Supreme Court. “Instead, at the scheduled hearing on the motions, the district court did not allow argument on the motions for summary judgment because it believed further proceedings on the summary judgment motions were contingent on its decision regarding the second motion to continue and the motions to strike.”

The court then reversed the dismissal, vacated the attorney fee award to defendants, and sent the case back to the district court.

“For these reasons, we reverse the district court’s grant of summary judgment, vacate its judgment dismissing the amended complaint, and remand this case for further proceedings consistent with this opinion,” writes the Supreme Court.

The lawsuit allegations

The newly reinstated lawsuit mainly alleges conspiracy by the city, Pocatello Mayor Brian Blad, real estate developers Ken Pape and Arvil Swaney, and their companies, Portneuf Development LLC and Millennial Development Partners LLC.

The Rupp Family Trust (also known as Trusts in court documents) manages a 930-acre parcel of agricultural land east of the Northgate Interchange off Interstate 15, primarily part of Bannock County, that the family has owned for nearly 100 years.

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In 2017, the trust entered into a purchase and sales agreement with Millennial Development Partners LLC to sell a 150-foot-wide strip of land to construct the Northgate Parkway, which would connect the Northgate Interchange with Olympus Drive in Pocatello.

According to the lawsuit, the trust says that the agreement required Millennial to construct an intersection on Northgate Parkway to provide vehicle access to the trust’s property, water, sewer stubs, and sewer line.

Millennial also promised the trust that its property would have additional access points along the Northgate Parkway, including access to an intersection at Olympus Drive, according to the lawsuit.

Millennial and Portneuf Development LLC then reportedly entered into a partnership called Town Center to construct Northgate Parkway.

Millennial also entered into a construction cooperative agreement with the city of Pocatello and others to determine the design and construction of the Northgate Exchange and Northgate Parkway.

The agreement reportedly stated that when construction of Northgate Parkway was complete, the city would accept full control and jurisdiction over Northgate Parkway between the Northgate Exchange and Olympus Drive.

According to the trust, Town Center entered into a partnership with the city, called “the Northgate Partnership.”

The lawsuit says this partnership needed the water rights associated with the trust’s property to develop its property, and had “a unified purpose of devaluing the Rupp Trust property” so it could buy it for less than market value, and sell it to other developers for a profit, according to the lawsuit.

In December 2018, the trust signed an agreement with the city of Chubbuck to annex 300 acres of its property into Chubbuck after learning that Chubbuck could offer access to water at a lower price than Pocatello.

The trust says that following this annexation, the Northgate Partnership “executed their plan to achieve their respective aims.” The trust alleges that Millennial never constructed the promised access points and infrastructure, effectively land-locking the property.

The trust says the Northgate Partnership “interfered with their ability to access their property from Northgate Parkway, engaged in efforts to steer prospective purchasers away from the Trust’s property, and interfered with prospective purchase agreements and offers to purchase the property.”

In November 2019, after construction of Northgate Parkway was complete, Town Center reportedly filed an application with the city of Pocatello concerning the road.

The 97-page lawsuit states that Northgate Parkway was constructed as a boulevard-style road with 10-foot-wide strips on both sides. The application aimed to give the city ownership of the roadway, but did not address the 10-foot-wide strips on either side.

When the City Council considered the application in January 2020, Harold Lavelle Rupp Jr., the trust’s trustee, appeared at the meeting and reportedly indicated that he was “neutral.”

The city approved the application and accepted the dedication of Northgate Parkway. Town Center later conveyed the 10-foot strips on both sides of the road to Millennial and Portneuf Development.

The Trusts say that Millennial and Portneuf’s ownership of the strips blocked the Trust’s property from having direct access to Northgate Parkway.

On February 4, 2022, the trust filed an official complaint against Millennial and one of its members, Arvil Swaney, Portneuf Development and Portneuf Builders LLC, one of their members, Ken Pape, and the city, alleging a breach of contract, intentional interference with prospective economic advantage, and fraud.

Attorney comments

EastIdahoNews.com made multiple requests in 2022 for comment from Pocatello city attorney Jared Johnson about the suit, but never received a response.

We also reached out to the Rupp family’s attorney, who provided the following statement:

“All the Rupps were asking for in the appeal was to have their day in court, which the Idaho Supreme Court granted. The Court’s decision is therefore a total victory for the Rupp family and justice in general. This is a case that I believe can be resolved at no cost to the City and the other defendants fairly quickly and with great benefit to not only the Rupps, but the greater Pocatello area economically. The undisputed facts in this case ultimately support the Rupps, which is why great lengths have been made to prevent this case from being tried on the merits. This decision by the Supreme Court, however, has ensured that the case will. At the end of the day, the Rupps simply want full access to Northgate Parkway, which just seems reasonable and sensible. The Rupps are evaluating the steps moving forward. Rupps are prepared to aggressively proceed with civilly resolving their claims and protect their property rights.”

Mayor’s response

EastIdahoNews.com reached out to Blad for a comment, and he provided the following statement:

“The Idaho Supreme Court’s ruling returns the Rupp case to District Court for a hearing on the merits. This gives the city of Pocatello the opportunity to present the facts openly and demonstrate that the City acted appropriately. I remain confident in our position,” said the mayor.

Further court hearings for the lawsuit have not yet been scheduled.