MICHELLE MONROE, Photo
“We were trying to make a good faith effort …”
ST. ALBANS — Testimony in the St. Albans Town lawsuit against St. Albans City concluded on Wednesday with three former aldermen and Christine Murphy, the town’s former manager, taking the stand.
The town is suing the city over an alleged breach of contract stemming from a 2009 agreement between the communities for water and sewer services.
Both sides agree that as originally envisioned the agreement enabled the town to purchase a bulk allocation of 100,000 gallons per day of water and wastewater service. An allocation is a share in the capacity of the facilities. Once an allocation is purchased the owner may then use the allocated number of gallons of water per day and send that amount of wastewater to the treatment plant per day.
On the morning of the day it was signed, the words “up to” were added to the agreement, changing the description of the amount the city was granting the town to “up to 100,000” gallons of water and sewer allocations per day.
The town’s attorney John Bergeron has characterized this as a “sea change” in the agreement, allowing the town to purchase the allocations in small amounts over time until it had reached 100,000 gallons per day.
The city maintains the town was still required to make a single bulk purchase of allocations that it would then re-sell within its borders. The ‘up to’ was simply intended to allow the town to determine how big that bulk purchase needed to be.
Judge Dennis Pearson has been focused on what the aldermen and selectboard members who approved the agreement understood it to mean.
Former town selectman the city’s attorneys called James Gallagher to the stand. Gallagher, said he did not recall any discussion of the meaning of the words “up to.” Gallagher also testified he had not discussed the agreement at any time with any representatives from the city.
Under cross-examination from the town’s attorneys, Gallagher was asked for his understanding of the contract. “That we could buy any amount at any given time,” Gallagher answered.
Asked if the town could make multiple purchases, he answered, “That was my opinion.”
Former city alderman Scott Corrigan, who also voted for the agreement on Feb. 23, 2009, had a different understanding of the contract.
“My interpretation of the contract was that the town would have to purchase a large sum of water and wastewater up to 100,000 gallons,” said Corrigan. After the town had purchased the allocation, the city would then equalize rates between town and city users of the water and wastewater system.
Once 40,000 gallons per day remained the town and city would begin negotiations for another purchase, Corrigan said.
“Did you ever have reason to think the town had a different view of the contract?” attorney Karen Tyler asked.
“No,” Corrigan replied.
Tyler sought to ask Corrigan whether he would have voted for an agreement granting the town an allotment it could then purchase over time. However, the town’s attorney Chad Bonanni objected to the question on the grounds it was leading.
Pearson sustained the objection.
Tyler noted that the question had been asked of several previous witnesses.
Pearson answered, “No objection was raised before.”
Another former alderman, Peter Chevalier, testified he would not have voted for such an agreement.
Asked about the terms of the agreement, Chevalier testified, “From what I can remember the town was going to purchase a certain allotment… I believe it was 100,000 gallons per day of water and wastewater.”
“I do remember that as being what they were looking for,” he said. “They could take that amount and do what they wanted with it.”
Despite being subpoenaed and sent a check for witness and travel fees, former city alderman Jeff Laroe did not show up to court yesterday.
In his absence his deposition was read into the court record, with a law clerk playing the role of Laroe.
Asked whom he had served with on the council, Laroe listed a number of aldermen and the mayor “Mitch Montagne.” Montagne is a former town selectboard chair and a lifelong town resident.
When asked what he remembered of the Feb. 23 meeting, Laroe said he did not remember much.
“I hated the city council. Couldn’t stand it. It took up too much time,” Laroe said. “I went to the meetings, but I wasn’t really paying attention.”
The agreement was to be implemented by July 1, 2010. Laroe said he believed that meant the two municipalities had until then to sign the contract.
The agreement required the two sides to take multiple actions prior to July 1, 2010, including aligning their ordinances.
Former town manager Christine Murphy testified there were two to three meetings between the city and town on the ordinances and other changes needed to implement the agreement.
At the last of those meetings city manager Dominic Cloud mentioned the $1.1 million payment for the allocation. “I said ‘Dominic there is no $1.1 million,'” Murphy testified.
Cloud testified this was the first time he had heard of the town not making a bulk purchase.
No further implementation meetings occurred. “We never got back to those discussions because Dominic Cloud didn’t want to have them,” Murphy said.
The two exchanged a number of e-mails and letters in the weeks leading up to the July 1, 2010 implementation date.
On June 29, 2010, the town sent the city a check for $5,000, the cost of one EU of water and wastewater, along with a letter written by Murphy and edited by then selectboard chair Bill Nihan. An EU is 450 gallons of water and wastewater per day, or enough for a single home. The agreement allowed the town to purchase up to 220 EUs, although the city maintains the town had to purchase at least 88.
Accompanying the check was a letter in which Murphy said the town would be going to voters to ask for $100,000 to purchase 20 EUs.
City attorney Eileen Elliott asked Murphy why, if the town believed it didn’t need to make a bulk purchase, they offered to purchase 20 EUs.
“We understood the city had a hole in the budget,” Murphy said, referring to the loss of income the city’s water and wastewater funds would experience when rates were equalized.
Murphy said she understood Cloud interpreted the agreement as requiring a $1.1 million purchase.
“We were trying to make a good faith effort … to buy some of the capacity,” Murphy said.
In addition, the 20 EUs would give the town “allocations that we would then have been in charge of,” said Murphy.
Under cross-examination, Murphy added, “The contract wasn’t a model of clarity. However, we wanted to remove any kind of question … if there was anything on the town’s part we needed to do.”
“Just to remove the question, we’ll pay for the one EU,” she said.
The city, however, rejected the town’s attempt to purchase one EU, and returned the check.
The city had already offered the town a one year extension of the contract and stated it was willing to help the town find other ways to pay for the allocation.
The town was saying it wanted access to water and wastewater services on the same terms as city residents, said Cloud. He thought the conversation could include other services as well. “I put police and fire on the table,” said Cloud, but that proposal was immediately rejected.
“We were being asked to reserve something with a value of a million dollars and at the same time pass on an increase of a quarter of a million dollars to city taxpayers,” Cloud said of the town’s interpretation of the agreement. Had the city removed the surcharge paid by town users of water and sewer, it would have had to increase rates for city residents.
However, had the town made a bulk purchase, the city would have removed the surcharge, Cloud testified.
It was Cloud who added the words “up to” to the agreement.
“Would you have added the words ‘up to’ to the agreement to change it to a reservation of capacity with a pay-as-you-go formal …. without consulting the city council?” Elliott, a city attorney, asked Cloud.
“No,” he answered.
“Would that have been beyond the scope of your authority?” she asked.
“Yes,” Cloud said.
Asked if he would have recommended a reservation of capacity without an upfront purchase to the city council, Cloud replied, “I wouldn’t have taken it to them.”
Such an arrangement would have required the city to grant the town access in perpetuity to allocations that are currently worth $1 million and whose value is escalating, while also increasing the water and wastewater bills of city residents, he explained.
“It’s just incomprehensible that is now being asserted that is something we agreed to,” Cloud said.
Judge Pearson must now determine a verdict in the case. He indicated he had a number of cases ahead of this matter. He is also presiding in Grand Isle and Newport courts.
Saturday’s Messenger will include a further summary of the trial and the potential outcomes of the possible verdicts in the case.