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Court rules lawsuit to stop marijuana growing company frivolous

PHOENIX -- A Phoenix law firm known for its political involvement and lawsuits will have to pay nearly $150,000 in legal fees over what a court concluded was unfounded litigation to try to stop what has become the largest medical marijuana cultivation facility in the state.

Without comment, the Arizona Supreme Court has refused to review a ruling of the Court of Appeals which found not only that the penalty was appropriate but also took a slap at the attorneys from Statecraft LLC, the firm that filed the lawsuit against the Town of Snowflake and Copperstate Farms. In essence, that appellate ruling upheld a trial court decision which found the whole challenge to be not only without legal merit but frivolous.

But Kory Langhofer, one of the attorneys at Statecraft involved in the case, insisted that the trial judge “simply got it wrong.’’

He warned of implications of the Supreme Court decision to leave the lower court rulings intact, saying it will inevitably chill thoughtful cases of first impression in Arizona courts.’’ Langhofer said that is why some nonprofit organizations filed legal briefs urging the Supreme Court to review the issue.

That arguments about chilling litigation, however, already was rejected by the Court of Appeals.

“There is no public interest in a frivolous lawsuit, and discouraging groundless litigation is what the legislature intended,’’ the appellate court concluded. In fact, the appellate judges said the law on legal fees “was enacted with the express purpose of reducing frivolous claims by increasing the threat of sanctions.’’

At the heart of the fight is the 2016 decision by the town to issue a special use permit to Copperstate a limited liability company, to grow marijuana in an existing greenhouse the firm had purchased from a company that previously had grown tomatoes and cucumbers.

Several residents represented by Statecraft filed suit, charging violations of open meeting laws, setback requirements and what they called “illegal contract zoning.’’

Navajo County Judge Donna Grimsley eventually dismissed the case. More to the point in this case, she said Statecraft had to pay the legal fees of both the town -- about $40,000 as computed by an appellate court -- and $109,000 to Copperstate in fighting the case.

Statecraft appealed.

But in a unanimous ruling last year -- the one the Supreme Court refused this week to review -- the Court of Appeals said there was more than enough evidence for Grimsley to conclude that the lawsuit never should have been filed in the first place.

For example, take the claim that the agreement between the town and Copperstate constituted “contract zoning.’’

The appellate judges said they agreed with Grimsley that there is no such claim under Arizona law. And even if there were, the facts “clearly demonstrated that the town did not bargain away its zoning powers.’’

As to claims by a neighbor that the operation violated setback requirements, the court noted that the resident actually lived in an area zoned for light industrial use and therefore had no basis to make that argument.

And then there’s Grimsley’s conclusion that Statecraft was acting improperly to impede Copperstate from its lawful business.

Part of that was based on an article from the White Mountain Independent about a recall effort launched against council members who had approved the special use permit.

Kenneth Krieger, a retired chiropractor from Peoria, told a reporter he had been recruited to head the recall committee by Kory Langhofer, one of the attorneys for Statecraft in the lawsuit to stop the facility.

That news article became part of the trial court’s conclusion that “Statecraft attorneys knew their actions were not made in good faith.’’ And the appellate judges court rejected arguments that the news article should not have been considered in the fight over the legal fees, pointing out that the law firm itself had introduced the article into evidence.

“We do not allow litigants to benefit on appeal from errors they introduced,’’ the appellate court said.

Statecraft has represented business interests and the Arizona Republican Party in multiple lawsuit, several involving successful efforts to knock initiatives off the ballot. That most recently included a proposal for an increase in income taxes on the most wealthy to fund education as well as a plan to ban anonymous contributions to political campaigns.

Copperstate currently owns 80 acres, with 40 of those under glass. A company representative said it employs more than 200 people. Fife Symington IV, son of former Gov. Fife Symington III, is the managing director.

On Twitter: @azcapmedia

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