Grantsville City’s nine-year-old breach of contract lawsuit against Tooele City may go to a jury trial after all following a decision by the Utah Supreme Court to return the case to 3rd District Court.

In a unanimous opinion issued Friday, the Supreme Court granted legal standing to Grantsville and returned several issues in the lawsuit to the district court, while also upholding a portion of the district court’s dismissals in the case.

Overall, the decision represents a small victory for Grantsville in the costly and long-running legal battle between Tooele County’s two largest municipalities. Tooele City officials had hoped the case would end with the Supreme Court. The lawsuit stems from Tooele’s sale of 1,700 acres of former Tooele Army Depot property for $15 million in 1999 and centers on questions of what Tooele promised to do in a written agreement the city signed with the Tooele County Council of Governments, the Tooele County Economic Development Corporation, and Tooele County before taking possession of the property.

In the Supreme Court opinion, authored by Justice Jill Parrish, the court states that the 3rd District Court erred in 2007 when Judge Mark Kouris dismissed Grantsville’s claims for breach of contract. The opinion also said the district court erred in limiting Grantsville’s contractual claim to Tooele’s failure to share the proceeds of the property sale.

Parrish wrote, “However, Grantsville argues that its breach of contract claim was based on the broader premise that Tooele City and the [Tooele] redevelopment agency breached the interlocal agreement by failing to conduct any development on the base property and by improperly retaining the proceeds from its sale. The district court refused to consider these claims because it concluded that Grantsville did not allege them in its complaint. We disagree.”

Both cities are awaiting a briefing by their legal counsel at their city council meetings on Wednesday before determining their next course of action.

“It would be premature to comment,” said Tooele City Mayor Patrick Dunlavy on Monday afternoon. “I have not had time to review the opinion.”

Dunlavy said the city’s outside counsel — Gainer Walldbillig of the Salt Lake City-based firm of Dyer Walldbillig — would review the opinion with the city council in a closed meeting on Wednesday.

The Utah Open Meeting Act allows for closed meetings for strategy sessions to discuss pending or reasonably imminent litigation.

Ron Elton, Grantsville City attorney, said Grantsville would also have its legal counsel — Scott Lilja of the Salt Lake City-based firm of VanCott, Bagley, Cornwall, and McCarthy — brief the city council at its Wednesday meeting.

The case dates back to 1994 when Tooele City, the Tooele County Economic Development Corporation, Tooele County, and the Tooele County Council of Governments entered into an interlocal agreement governing the development of property that was part of the Tooele Army Depot before the 1993 Base Realignment and Closure Commission downsized the base by removing its maintenance and general supply missions.

Grantsville signed the agreement as part of the council of governments — an organization composed of the Tooele County Commissioners and representatives of the Tooele County School District, Tooele City, Grantsville, Stockton, Ophir, Rush Valley, Vernon and Wendover.

In 1999, the Tooele RDA obtained title to the property from the Army. The RDA then sold 1,700 acres of the property to a commercial developer for $15 million and paid the proceeds to Tooele City.

Grantsville City opposed Tooele City’s use of the property and filed suit in 2001 for breach of contract in 3rd District Court. Grantsville claimed Tooele had failed to create a broad base of industrial jobs to replace the 1,900 jobs lost in the county when the Tooele Army Depot was realigned. Grantsville also alleged Tooele spent the proceeds from the sale of the UID only on projects in Tooele City, rather than on valleywide economic development.

The lawsuit was scheduled for a jury trial in March 2008. However, in November 2007, Kouris dismissed the case, stating that Grantsville had failed to provide sufficient evidence of breach of contract. Grantsville appealed the decision and the Utah Supreme Court agreed to hear the case. Oral arguments were held on September 2009.

During those arguments, Tooele countered that it had spent money to attract new businesses to the Utah Industrial Depot, with over 50 companies locating there, and that the building of a new city hall, library and animal control facility, as well as improvements to the clubhouse at Oquirrh Hills Golf Course, were all part of the city’s economic development plan.

Tooele also said it paid substantially for infrastructure upgrades at the UID, including roads, water, and sewer, plus the expenses of providing police and fire protection.

The Supreme Court decision opens the way for Grantsville to push the lawsuit to a jury trial in 3rd District Court.

In 2007, Tooele City Attorney Roger Baker described the lawsuit as “frivolous and baseless,” and said attempts to settle it out of court had been fruitless.

The lawsuit has been costly for both cities, which are now in the process of developing budgets for the new fiscal year that starts in July. As of January 2009, Tooele City reported spending $1.5 million and Grantsville City $1 million in legal fees on the case.

Tim Gillie: tgillie@tooeletranscript.com