Coyote Springs water rights trial underway in Las Vegas

The first phase of court proceedings in a lawsuit seeking more than $1.5 billion from the State of Nevada over the stalled Coyote Springs development near the Lincoln-Clark county line began in Las Vegas earlier this month, the Las Vegas Review-Journal and KTNV Las Vegas reported.

The case, filed in 2020 by Coyote Springs Investment LLC (CSI) alleges that actions by the state engineer prevented the proposed master-planned community from moving forward by restricting groundwater needed for the project. The State of Nevada disputes those claims, arguing it acted within its authority to manage and protect the state’s limited water resources.

Attorneys for both sides outlined the history of the dispute before Clark County District Judge Mark Denton, who is presiding over the first phase of the trial.

The origins of Coyote Springs date back decades. Originally envisioned by developer Harvey Whittemore, the community was planned near the Lincoln-Clark county line as a master-planned city with as many as 160,000 homes, schools, businesses and multiple golf courses. Although one golf course was completed and remains in operation, residential construction never materialized. Whittemore later sold the project to longtime partners Albert and Thomas Seeno.

According to CSI, the company spent years preparing the project for development between 2004 and 2018, obtaining permits, hiring engineers and consultants, and entering into agreements with local and state agencies in anticipation of beginning construction.

CSI contends the project changed course in May 2018 after the state engineer notified the company that its groundwater rights were considered junior rights and would not support the amount of water needed for the proposed development. The company further alleges it was informed that subdivision maps could not be approved without identifying an alternative water source.

The parties later entered into a settlement agreement in August 2018 that CSI believed would allow the project to continue while subdivision applications were processed. The state disputes CSI’s interpretation of that agreement.

According to testimony presented during opening statements, developers continued investing in the project following the agreement by completing a flood detention basin and advancing additional infrastructure planning. However, the state rejected the company’s large-lot subdivision map in 2020, a decision CSI argues effectively ended the project and led to the lawsuit.

Nevada attorneys argued that state law gives the state engineer the responsibility to regulate groundwater in the public interest and that water rights in the region have always been conditional and subject to regulation.

The state also relied on decades of groundwater studies, asserting the region’s aquifer system is complex and that careful management is necessary to protect current and future water users.

The dispute follows a 2024 Nevada Supreme Court decision upholding the state engineer’s determination that several groundwater basins in the region should be managed as a single interconnected system, reducing the amount of groundwater available to the proposed development.

The case is currently in the liability phase of what attorneys expect will be a months-long bench trial. During this phase, Judge Denton will determine whether the developers have established their claims against the State of Nevada. If the court finds in favor of CSI, the case will proceed to a second phase in which a jury will determine whether damages should be awarded and, if so, in what amount.

Although the lawsuit seeks more than $1.5 billion in damages, the opening phase of the trial has focused primarily on the legal issues surrounding groundwater regulation and the parties’ differing interpretations of the events that led to the project’s collapse. The proceedings have not addressed the cost of the litigation itself or how much the State of Nevada has spent defending the case.