A local farm family with roots in Pocatello since the 1920s has filed lawsuits in state and federal court against the city and two private companies involved in the Northgate development project alleging fraud, breach of contract and false advertising resulting in economic losses of at least $21 million.

The Herold L. Rupp Sr. Trust and Veda J. Rupp Revocable Living Trust — which currently have a total of over 100 living beneficiaries — filed the suits on Feb. 4 through Idaho Falls attorney Nathan Olsen, who previously won a multimillion dollar lawsuit against Pocatello in regards to illegally collected water, sewer and sanitation fees from 2005 to 2014. 

“While the minimum amount of economic losses for the Rupp family trusts is $21 million, these two suits could result in over $50 million in losses,” Olsen said. “The reason we filed two suits is because we want to include all the potential claims to hold the parties responsible. Secondly, we want to have maximum flexibility in terms of relief. The Rupps here are not necessarily looking for the highest monetary damage award, but are putting these claims and requests for relief before the court to try and free up the use and development of their own property.”

The suits were filed about five months after Pocatello received from Olsen on the Rupps' behalf a notice of a tort claim, a legal document filed as a precursor to a civil lawsuit against an Idaho governmental entity.

In addition to the city of Pocatello, the suits were filed against Pocatello Mayor Brian Blad as well as two private developers involved with the Northgate development project, Buck Swaney and Ken Pape, and their respective limited liability companies, Millennial Development Partners of Utah and Portneuf Development of Pocatello. The suits also list 10 unnamed individuals as defendants. 

Nearly five years ago, the Northgate development project east of Chubbuck and north of Pocatello was heralded as a unique partnership of private developers, municipalities and state governmental entities that Blad said could double Pocatello’s population once completed. The entirety of the Northgate development project, which provided a new Interstate 15 interchange for access to the Northgate development area, represented an investment of roughly $31 million, including the $13.1 million interchange as well as connecting roads such as the main arterial street, Northgate Parkway, and its associated utility infrastructure.

Although there has been some commercial and residential construction at Northgate since the Interstate 15 interchange was completed there in late 2019, Northgate has not yet resulted in the significant boost to Pocatello's economy and population that Blad and others predicted.   

The Rupps' lawsuits allege that Pocatello illegally annexed land and added unlawful “control strips” to both sides of Northgate Parkway, the main arterial road constructed through the Northgate development project area. The control strips, areas of property extending along both sides of Northgate Parkway, have been deeded to a joint partnership between Millennial and Portneuf Development, preventing the Rupps from being able to access their nearby land, the lawsuits state.

Land that is inaccessible via roads is worth much less than land that have throughways, meaning that the Rupps' lack of road access to their land from Northgate Parkway hurts its value. 

The Rupps' suits also say that Millennial Development and Portneuf Development have worked together to prevent the Rupps from being able to develop their own land within the Northgate project area by refusing to give the family access to Northgate Parkway.

The 10-foot control strips of land owned by the Millennial-Portneuf Development partnership on either side of Northgate Parkway are blocking the Rupps from connecting a road to Northgate Parkway, or in other words provide any development built on the Rupp land with a way to exit that land, the Rupps contend.

The reason the city and developers have targeted the Rupps is because the family chose to annex their land into Chubbuck instead of Pocatello, the lawsuits state. The move prompted what the Rupps call the Northgate partnership — the city of Pocatello, Millennial and Portneuf Development — to annex Northgate Parkway into Pocatello and create the control strips all in the name of punishing the Rupps for choosing Chubbuck over Pocatello, according to the lawsuits.

In response to a request for comment on the Rupps’ lawsuits, the city of Pocatello via city attorney Jared Johnson said the city is aware of the accusations Rupp family spokesman Lavelle Rupp of Pocatello has made toward the city and the developers regarding the Northgate Parkway dedication and annexation, adding that the dedication of the right-of-way was accepted and the application for annexation was granted in compliance with Idaho law and Pocatello municipal code. Additionally, Johnson said the city wants to see the Northgate area thrive as the development will lead to increased amenities, more housing and an expanded tax base, but he declined to comment on the specifics of the suits, citing a city policy not to comment on pending litigation. 

Pocatello attorney Patrick Davis is representing Millennial Development and provided the Journal with the following statement:

“There is no merit to any of these claims in this lawsuit. We look forward to being able to have our day in court. Millennial Development takes its obligations under any contract very seriously and will continue to meet all of its obligations under any of our contracts as we always have. It’s disappointing that this is the way that (Lavelle) Rupp has decided to address whatever issues he has. In every instance, we have learned of his concerns and what he is dissatisfied with from the media, rather than just being contacted by him to try and work out a deal.”

Pape did not respond to several Idaho State Journal requests for comment regarding this article and Blad, when asked for comment, said, “The city of Pocatello does not comment on pending litigation, nor will I.”

ALLEGATIONS ASSOCIATED WITH STATE AND FEDERAL CLAIMS

The Rupp family owns 930 acres of agricultural land located east of the Interstate 15 Northgate interchange. The land is also located south of the Fort Hall Reservation, north of Pocatello and east of Chubbuck. 

The Rupp property's origins date back to 1923 when Henry Jensen and his family arrived in the area and developed it as a farm. Since then, the farm has been passed down through generations of Rupps, most of whom reside in East Idaho, according to the family's suits.

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In addition to one large irrigation well, the property contains other large water sources, the lawsuits said.

The suits state that Pocatello has an interest in acquiring and developing additional water sources for city use and for some time has discussed and explored obtaining access to the large water resources associated with the Rupp property.

Initially, the Rupp family trusts in 2017 intended to annex about 300 acres of their land into Pocatello. After negotiations, the Rupp family trusts entered into an agreement with Millennial Development to sell a separate 40-acre parcel of Rupp land so that the interchange and Northgate Parkway could be built.

The agreement stated Millennial would provide “at no expense to seller, sewer and water utility line stubs at three locations on the north side of the right-of-way on the Rupp Property,” according to the lawsuits.

Further, the agreement stated that Millennial “acknowledges that a separate agreement is being developed between the Rupp family trusts and Portneuf Development, the city of Pocatello and/or Bannock County for placement of an additional intersection with water and sewer line stubs” that would be located approximately 1,400 feet east of the Interstate 15 Northgate interchange, the lawsuits stated.

Pursuant to the agreement, the Rupp family trusts deeded approximately 40 acres of land specified for the construction of the interchange and Northgate Parkway to Millennial, according to the suits.

After the sale of the land for an undisclosed sum, Millennial transferred the 40 acres of Rupp property to Town Center JV, a general partnership of Millennial and Portneuf Development, through a warranty recorded on Oct. 12, 2017, the suits state.

After executing the purchase agreement, however, the Rupp family trusts discovered that by annexing the 300 acres of their land into Pocatello, they would be required to pay approximately $4 million to $5 million to construct a sewer lift station and other supporting infrastructure in order to use Pocatello utility services, the suits state.

Conversely, Chubbuck offered to annex the Rupp family land and provide utility access for less than $500,000, according to the suits. The Rupps then annexed the 300 acres of their land into Chubbuck on Dec. 19, 2018. This meant the 300 acres of Rupp land aside from the 40 acres specifically used for the construction of the interchange and Northgate Parkway — which Millennial retained — was now within Chubbuck city limits instead of Pocatello.

“After the Rupp trust property was annexed by Chubbuck, Blad and other Pocatello employees expressed their displeasure and hostility towards the (Rupps) both publicly and privately,” the suits state. “Sometime shortly after Chubbuck’s annexation of the Rupp property, Blad, defendants Pape, Swaney, and other John and Jane Does, individually and through their entities hatched and executed a scheme to isolate the Rupp trusts from economic benefits related to the Northgate Interchange, with a joint purpose of severely devaluing the Rupp property and to effectively extort the Rupp trusts into selling the property, including its highly sought after water rights for a fraction of the property’s value.”

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Immediately after the Rupp family annexed their land into Chubbuck, the Rupps were cut out of all discussions, decisions and communications regarding the Northgate development project; were told directly and indirectly their land and water rights would be brought into Pocatello regardless of whether they wanted that to happen or not; and had misinformation spread about their intentions, rights and agreements pertaining to developing their own property, according to the suits.

Additionally, the suits state Blad and other Pocatello officials conducted numerous meetings and engaged in conversations outside the public purview and in violation of public open meetings laws, the suits state. 

On Nov. 13, 2019, Town Center JV was dissolved with the Idaho Secretary of State’s Office, the suits state. Despite being dissolved, Town Center JV requested Northgate Parkway be annexed into Pocatello on Nov. 19, 2019, the suits state.

The Pocatello City Council approved the acceptance of the Northgate Parkway annexation in late 2019 and then on Dec. 6, 2019, Pocatello was deeded the center 130 feet of the road, leaving 10 feet on either side that Town Center JV retained, despite being dissolved, according to the lawsuits. In May 2020, Town Center JV deeded these 10-foot sections, called control strips, to Millennial Development, according to the suits.

The lawsuits allege that none of the Northgate Parkway annexation documents presented to the Pocatello Planning and Zoning Commission, Pocatello City Council or Idaho Transportation Department showed these 10-foot control strips.

ALLEGED REGULATORY TAKING AND BREACH OF CONTRACT

The nearly 100-page federal suit alleges that Pocatello illegally annexed Northgate Parkway because all of the land that surrounds the arterial street was annexed into Chubbuck and Idaho code prevents a city from annexing “land, lots or blocks…if they will be connected to such city only by a shoestring or strip of land which comprises a railroad or highway right-of-way.” 

Additionally, the federal suit alleges Pocatello violated its own city code when annexing just 130 feet of Northgate Parkway's width and allowing Millennial to retain the 10-foot control strips on either side of the road, effectively preventing the Rupp family from constructing a connecting intersection of their own that would provide access to their land.

Olsen, when the tort claim was filed, requested Pocatello conduct a regulatory takings analysis and Pocatello responded, denying that a regulatory taking had occurred.

The nearly 70-page state suit alleges that Pocatello, Millennial and Portneuf Development breached the sale agreement contract “by failing to provide the Rupp trusts with connections to the Northgate Parkway and failing to stub in utilities.”

The state suit says, “The managers and members of Millennial Development and Portneuf Development have engaged in illegal or fraudulent acts, were not acting within the bounds of their duties or obligations as a member of the LLCs but in their own self interest, or used the companies as their alter ego or to shield their illicit activities."

FALSE ADVERTISING CLAIM

Both the federal and state suits allege the Millennial-owned website used to promote the Northgate development project, northgatedistrict.com, uses images of the Rupp property. 

The suits state these images are inherently misleading in that the property portrayed is neither owned by or available to either Millennial Development or Portneuf Development.

“The clear – and false – implication is that the Rupp trust property is available for sale by Millennial Development and/or Portneuf Development," the suits state. “In addition to the deceptive marketing steering prospective buyers away from Rupp trusts, the parties of the Northgate partnership also engaged in direct efforts to interfere with several known bona fide purchasers.”

ALLEGED CIVIL CONSPIRACY AND FRAUD

The federal suit also alleges Pocatello, Millennial Development, Portneuf Development and other individuals committed civil conspiracy by working “in concert and in secret to deny the Rupp trust properties access to Northgate Parkway, and in violation of public disclosure laws.” 

In Idaho, a civil conspiracy exists if there is an agreement between two or more entities to accomplish an unlawful objective or to accomplish a lawful objective in an unlawful manner, according to the Idaho Supreme Court case of McPheters v. Maile.

In the Rupps' case, Pocatello committed civil conspiracy by annexing property in defiance of Pocatello code, while Millennial and Portneuf Development sought to and succeeded in having the Northgate Parkway annexed into Pocatello through a dissolved entity, Town Center JV, that was no longer authorized to engage in such actions, the suits state.

The state suit alleges the parties involved with the Northgate partnership committed fraud by misleading both the Rupp trusts and ITD into entering and approving the sale agreement contract by failing to disclose that they had no intention of granting the Rupp trusts access to their property for developmental purposes.

“The Northgate partnership attempted to cover up its true intentions through continual misrepresentations to the Rupp trusts, other parties such as ITD, and the public in general,” the state suit states. “Particularly egregious, is that Pocatello destroyed public records, failed to make disclosures and keep records as required by law and engaged in public meetings without proper notice, all in violation of law and for the purpose of fraudulently advancing the interests of the Northgate partnership.”

Olsen said the watershed moment that ultimately led to the Rupp family trusts filing suit was the continued silence from Pocatello and the private partners over the last four years. 

“I believe the Rupp family first started trying to contact the city via numerous letters as early as 2018,” Olsen said. “They have tried for the better part of four years to resolve this and unfortunately this is their last resort.” 

Olsen added that it is not the intention of the Rupp trusts to stick it to Pocatello and obtain development rights to their land for next to nothing, but rather to satisfy their obligation to the family's many beneficiaries and simply get what was initially promised to them. Both the federal and state suits provide injunctive and declaratory avenues for the city of Pocatello to reverse course and provide access to Northgate Parkway to the Rupp family without taking a massive hit to city coffers, Olsen said.

“(The Rupps) have a duty to fulfill their fiduciary responsibility to the beneficiaries and protect the heritage of their family,” Olsen said. “But in terms of patience, the Rupps have been some of the most patient clients I have ever had. We spent the better part of five months investigating this. We have thoroughly vetted this issue and have provided every possible claim and type of relief out there to resolve the issues.”

Olsen said the lawsuits have been filed, but have not yet been served to all of the listed defendants. Once that happens, the city and the private developers have 21 days to respond.