California developers Albert and Thomas Seeno sat in a Las Vegas courtroom this week as their attorney argued why taxpayers should be on the hook for what has become the worst business deal of their careers.

To attorney and former Nevada Lt. Gov. Mark Hutchison, a decision by state regulators to block the development of Coyote Springs — a proposed mini-city near the springs that feed the Muddy River — is blatant, unjust government overreach.

“Judge, what happened here is just wrong. It hits you in the gut,” Hutchison said. “At the end of this evidence, we’re going to ask the court to right this wrong.”

A blockbuster trial between the Seenos’ company, Coyote Springs Investment LLC and the state of Nevada began this week. Lawyers delivered opening statements on Wednesday that nearly took up an eight-hour trial day.

According to court documents, the Seenos are seeking at least $1.5 billion, plus interest and attorneys’ fees.

Experts say the first-of-its-kind case could rewire the state’s water law, opening the door for any water user to sue the government if they believe their property has been rendered unusable — or “taken” in legal terms — due to an unfavorable water rights decision. It could have ripple effects for the Nevada state engineer, the top water regulator in the nation’s driest state.

Jeffrey Sylvester, a private attorney representing the state, argued on Wednesday that everything the state engineer did to hamper the development was backed by science — and done in the interest of the public.

“They are asking this court to find and hold as a matter of law, at the end of the day, that the regulatory authority exercised by our fiduciary for our benefit is an unconstitutional thing,” Sylvester said. “That would set Nevada water law on its ear.”

The first phase of the trial involves only a judge and no jury and will last months, according to attorneys. If Clark County District Judge Mark Denton finds merit in Hutchison’s claims, a jury will be asked to decide how much the Seenos should receive in a payout in the trial’s second phase.

A doomed investment

On Friday, Denton traveled to the Coyote Springs site for a tour that was closed to the press. There isn’t much to see.

Along with the original owner, Reno lobbyist and developer Harvey Whittemore, the Seenos planned to build at least 150,000 homes, golf courses and commercial amenities. The relationship between Whittemore, Pardee Homes and the Seenos fell apart and became litigious by 2012, when the Seenos became the sole owners.

The Seenos don’t have much to show for what Hutchison says is hundreds of millions invested since they got involved in the project in the early 2000s. The property features an irrigated golf course, a detention basin, a clubhouse and treatment plants for water they would never get to use to build a house.

Hutchison said the Seenos’ dreams came crashing down in 2018, when the state engineer issued a letter and subsequent orders that determined regulators would not approve subdivision maps. Internal emails uncovered in discovery, according to Hutchison, prove the state engineer did not intend to evaluate the maps in good faith, as was required by a legal settlement.

“You’re not going to hear evidence from CSI that the state engineer lacks the authority to do what he did,” Hutchison said. “You can’t take it and not pay for it. That’s a taking that the Constitution does not allow.”

Sylvester said that since the 1960s, scientists have acknowledged that groundwater pumping has broad impacts in this arid area — a fact that was upheld in a 2024 Nevada Supreme Court decision. The state’s high court ruled the state engineer lawfully decided to merge seven groundwater basins into one for the purposes of water rights management.

“The state engineer has been a good steward, and that’s what the evidence is going to demonstrate,” he said.

The witness list for the trial includes Whittemore, the original architect for Coyote Springs, who attorneys said will testify between July 23 and July 29. Whittemore went to prison in 2014 for funneling campaign donations to then-U.S. Sen. Harry Reid’s campaign.

Albert Seeno and his longtime lawyer Emilia Cargill will testify, too, as will several past Nevada state engineers and Colby Pellegrino, deputy general manager of the Southern Nevada Water Authority.

Contact Alan Halaly at ahalaly@reviewjournal.com. Follow @AlanHalaly on X.