Judge grants temporary restraining order in dispute between SCC, shareholders

A district court judge on Wednesday granted the Shell Canal Company's request for a temporary restraining order against a group of shareholders the board blamed for planning and carrying out a special meeting earlier this week in Greybull.

Judge Bill Simpson did not rule on the merits of the SCC's case, which Korry Lewis filed on the board's behalf on March 20 and listed s defendants Timothy and Cynthia Johnson, Sam Donahue (Donahue Family Trust), Wendy Thulander (Greybull Cattle and Hay Company), Robert C. West and Anna Brown (Shell Creek Ranch).

Simpson essentially called for a cooling-off period in the long-running dispute over the direction of the corporation, which has approximately 140 shareholders.

"Continuity and stability are essential to any canal company, especially on the eve of the beginning of the irrigation season and plaintiff will suffer immediate and irreparable harm if this temporary restraining order (TRO) is not granted," Simpson wrote in his ruling.

"The pre-existing board of directors of Shell Canal Company (made up of Kenneth Rempel, Boyd VanFleet, Barbara Burbridge, Rodney Galusha and Thomas Loewen) shall remain in full force and effect and shall carry out the board's duties and responsibilities without interference from members of Shell Canal Company."

Simpson continued, "The parties shall work with one another and be respective to one another.  The defendants and their respective agents and all other persons who are in active concert or participation with the defendants are hereby restrained and enjoined from interfering with and/or hindering the ongoing operations of Shell Canal Company, and the pre-existing board of directors.  Shell Canal Company, acting by and through said board and/or its attorney, shall respond to concerns and issues raised by the defendants."

The judge's ruling shall be in effect until further order of the court.

The plaintiff was directed to request an evidentiary hearing and to "notify the defendants and the court of the proper defendants to remain in this case and ... to voluntarily dismiss the other defendants" by no later than Friday, April 3.

Several defendants asked to be removed from the suit, with Timothy Johnson presenting the most compelling case.  He said he's never attended a SCC meeting, had nothing to do with the planning of the special meeting and does not even have access to SCC water.

Others who weren't listed in the original suit were identified as being the organizers of the special meeting during Wednesday morning's testimony.

The judge's ruling sets aside, at least for now, the outcome of Monday night's special shareholder meeting, which was called to order with 1,726 shares present either in person or by proxy.

By overwhelming margins, shareholders voted to remove Rempel, VanFleet, Burbridge, Loewen and Galusha and to install in their place Marc Treurniet, Bob West, Roger Hall, Brown and Donahue.

In court documents, Lewis argued that the shareholders are attempting "a hostile takeover" that would result in irreparable harm to the corporation and challenged the legality of Monday's special meeting, citing Wyo. Statute 17-19-702 which states "the only person authorized to call is special meeting is the president." 

In response to the suit, Cynthia Johnson argued, "Members acted under WY Statute 17-19-702(a)(i), not WY Statute 17-19-702(a)(ii). Under the 2024 bylaws, one-fourth of shareholders are authorized to call a special meeting. Shareholders did not send a written demand and did not invoke (a)(ii). Therefore, the 5% requirement and the 30-day waiting period do not apply."

Thompson Lateral project

An eventful Wednesday ended with a special meeting of the South Big Horn Conservation District called to discuss the SCC's Thompson Lateral project.

Board members contend it's needed to address erosion concerns and are seeking grants to pay for much of it, but shareholders argue it primarily benefits Rempel and VanFleet and should be shelved until more pressing maintenance needs are addressed.

The SBHCD and SCC boards have yet to sign a contract for the first phase of improvements but appear closer to doing so after Wednesday's meeting.

A Federal Clean Water Act Section 319 grant has been secured for the first phase.  George Kelso, chairman of the SBHCD, said the grant portion is $209,000.  The SCC's 40% match comes to $140,000; that money does not have to come in the form of cash from members, Kelso said, and can came from a state grant, non-governmental source or in-kind contribution.

Kelso said the federal money is originating from two different EPA grants and that roughly $37,000 is set to expire April 15; the remainder expires Nov. 30.

Kelso said a sticking point with the state has been VanFleet's request for a pipeline that would directly benefit him to be placed in the same trench as the one being installed as part of the Thompson Lateral project.

Kelso said the SBHCD's position softened when VanFleet agreed to remove his pipeline from the trench with the understanding that he would continue to press State Lands officials for its inclusion.

"We approved it as one pipeline only in the trench, but if he does get approval from State Lands, he can put his in that trench too. We don't have a problem with it," Kelso said.