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A Rapid City developer has filed a second lawsuit against the city of Rapid City in as many weeks.

Hani Shafai of Dream Design International and his legal counsel, Edward Carpenter of Costello Porter LLP, filed the suit on Nov. 30 in the 7th Judicial Court in Pennington County. It claims a city waterline leak “significantly impacted the cost of the development” of the Orchard Meadows Subdivision.

The suit seeks an unspecified amount in damages due to the leak's impact on the subdivision, an approximately 100-acre lot southeast of the intersection of S.D. Highway 44 and Elk Vale Road that has residential and commercial development. It is owned by a Shafai-operated limited liability company, Yasmeen Dream LLC.

In the complaint, Shafai argues that a city waterline leak of “at least 500 to 600 gallons per minute” continued for years before being discovered and shut off by the city. The leak, the complaint claims, saturated the development’s soil, created a high water table and led to unnatural wetlands on the land. The wetlands — protected from development by federal law — caused Shafai to suffer “the loss of several acres of developable land.” The leak also interfered “with the property layout and platting of the property,” delaying development and greatly increasing the cost of site work and construction, the complaint claims.

The lawsuit comes on the heels of a similar suit filed by Shafai and Carpenter on Nov. 20, claiming that the same waterline leak created wetlands on another Shafai development, Johnson Ranch Subdivision, and delayed development of that site.

The suit also claims that the waterline is beneath Shafai’s property illegally, with no right of way or easement ever obtained by the city or the Rapid Valley Sanitary District, which installed the line in the 1970s before the city took over ownership. Shafai is seeking $152,000 in that suit for the loss of developable land due to the wetlands. He also wants the waterline removed.

Using Shafai’s estimate of 500 to 600 gallons per minute, up to 864,000 gallons of water could have been leaking daily from the waterline since 2012, when Public Works Director Dale Tech stated previously that the city believes the leak began. Should the suit go to trial, Shafai and Carpenter said they intend to present evidence showing that the “waterline had been leaking for several years prior to 2012,” according to the complaint.

Last week, Tech seemed to backtrack from previous statements when he said there was no way to estimate when the leak began, or how much water the leak constituted. 

“We don’t know how long it was leaking prior to the discovery of it,” Tech said. “We believe that number [500 to 600 gpm] is way over what was actually lost out of the line.”

Tech said 300 gallons per minute was a more reasonable estimate but even that was on the high end. Comparing records of water production on the day before the water main was shut off to the day after, Tech said records indicated “it was a very small leak.” At 300 gallons per minute, the leak would still represent an annual loss of about $650,000 using the city’s water rates from 2017 which have since been raised.

Last week, city attorney Joel Landeen indicated the state may become involved in the dispute. The waterline break may have occurred where the Department of Transportation rebuilt the intersection of Elk Vale Road and S.D. Highway 44, Landeen said.

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Contact Samuel Blackstone at and follow him on Twitter or Facebook @SDBlackstone.

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City Reporter

City reporter for the Rapid City Journal.