The state Supreme Court on Tuesday signed off on a young city's even younger water system by dismissing claims that a group of shareholders in a historic water company should have been consulted and reimbursed.
The ruling was on appeal from several shareholders in the Herriman Pipeline and Development Co., the first provider of culinary water for the town in the Salt Lake Valley's extreme southwest. The company was created in the early 1900s, decades before Herriman became an incorporated city in 1999.
Shortly after its incorporation, Herriman commissioned a study to look into the best way to provide water to residents. Historically, water was provided either by Herriman Pipeline and Development, the Jordan Valley Water Conservancy District, a handful of smaller water suppliers or residents' own privately held wells and water rights.
The study recommended a single, municipally run water system for the new city.
Herriman then began the process of picking up water business from the water district and the company. But an agreement with the company for the city to take over the water-delivery assets, property and liabilities led the shareholders to file a lawsuit in 2002.
"They were unhappy that the city took it over without paying them what they deserved," said Las Vegas attorney Michael M. Later, who represented the shareholders in the case. "The assets of the company had value to them beyond simply getting the water service."
But the city contended the shareholders' stake in the company merely bought them the right to get water service from the company — a right they retained after the city's water system was created.
The district court agreed with the city, and that decision was upheld in Tuesday's high court ruling.
"This is an issue that we're certainly glad has been decided and that it's over," Herriman Mayor Lynn Crane said Tuesday. "We're pleased that the Supreme Court vindicated the city and its actions. I think that we acted properly and in the interest of the city in this matter. I believe history is verifying that even as we speak."
Attorney Later said Tuesday that he had not yet seen the ruling, so he declined to comment on it.
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