WATER / SEWER LAWSUIT: Judge shreds agreement between City and Town

Ruling: No one wins in current climate

Michelle Monroe

By Michelle Monroe

Staff Writer

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The Facts

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There is mutual disagreement (and years of mistrust and suspicion) over which is the host organism.

- Judge Dennis Pearson on town-city relationship

ST. ALBANS — A Superior Court judge on Wednesday found that the 2009 agreement regarding the city’s delivery of water and sewer services to the town is not legally binding.

The decision leaves the municipalities no better off in their long-running dispute that since April 2011 has seen the city deny new service hookups in the town. The judge’s ruling also chided city and town officials for viewing their relationship as  “essentially parasitic, not symbiotic.”

As to the contract itself, Judge Dennis Pearson, who presided over a three-day trial in the case last July, wrote: “The court finds that a key component, if not the most critical piece of the Feb. 13, 2009 agreement – what were the controlling terms under this agreement for the town’s initial purchase of water and sewer allocations from the city – was hopelessly and fatally ambiguous.”

“This crucial ambiguity was so fundamental to the agreement that there never was the required meeting of the minds of the Town and City, and therefore no enforceable agreement was ever consummated at all,” Pearson ruled.

The two municipalities in legal arguments and public comments had offered differing interpretations of the agreement, which was, itself, part of the settlement of a 2006 lawsuit filed by the town against the city over water and sewer services.

As part of his decision, Pearson laid out the history of the agreement.

As initially conceived, the agreement said the town would purchase from the city an allocation of 100,000 per gallons of a day of water and sewer capacity which the town could re-sell to developers in the town. An allocation is access to a given amount of water per day or sewer processing per day.

Once the agreement was implemented via an allocation purchase by the town, the city was to create “reasonable, uniform and fair” rates, which officials on both sides generally interpreted to mean the city would equalize rates for city and town users.

Town users currently pay about 12 percent more than town users, generating $225,000 annually for the city’s water and sewer funds.

St. Albans Town officials, however, maintained that the last-minute addition of the words “up to” meant they could make small, incremental purchases until 100,000 gallons was reached. Their interpretation was that an initial purchase of enough water and sewer for a single home would be sufficient to implement the agreement.

The city maintained that the addition of the words “up to” was simply meant to acknowledge concerns in the town that it might not need a 100,000-gallon allocation, or might not be able to raise the $1.1 million needed to buy it. City manager Dominic Cloud, who suggested the change, said it was meant to allow the town some flexibility in the size of the allocation, but still required a single large purchase.

To support its argument that the town must make a single large purchase of allocations to implement the agreement, the city pointed to a clause requiring the two sides to reopen negotiations once the town had 40,000 gallons of the allocation.

Signatories to the agreement from both sides testified in court regarding their interpretations of the agreement at the time of the signing. Former town selectboard members Kathy Middlemiss, James Gallagher, and Ron Allard all said they believed the addition of the words “up to” had allowed the town to purchase allocations incrementally.

Members of the city council, including former Mayor Martin Manahan, testified they would not have signed the agreement if it meant the town was not required to make a single large purchase.

‘Parasitic’

“The town and city officials who drafted and/or voted on the agreement on Feb. 23, 2009 had wildly divergent beliefs and understandings of what it meant and what it required,” Pearson found. “Indeed, it is difficult to find any common denominator among the various representatives who voted in favor of approving the agreement, on most, if not all of the key provisions of the agreement.”

“Most critical, however, and ultimately determinative, is the complete and utter absence of any specific terms in the agreement spelling out exactly what the town’s minimum purchase requirement was, and how much of the 100,000 gallons per day each of water and sewer capacity had to be initially purchased up-front,” wrote Pearson. “This was perhaps the most fundamental and essential term of the proposed long-term supply agreement… and it is entirely missing from the agreement.”

The city argued that a minimum purchase size requirement was in effect because the town had agreed to reopen negotiations once 40,000 gallons per day of allocation remained. The judge, however, found that “preposterous.”

The town argued that the addition of the words “up to” should be viewed as a unilateral mistake by the city and enforced against the city. Pearson did not agree.

“While that approach may have some superficial appeal, there are simply too many other undefined or missing terms and unanswered questions arising out of this agreement for it to be specifically enforced by the court,” Pearson wrote.

“Here, suppose the town is correct in invoking its right to buy just one EU (enough water and sewer capacity for a single home) each upfront of wastewater treatment and sewer capacity. What then?” Pearson asked. “The remainder of the agreement does not support the town’s position that it would thereafter be entitled to make multiple, incremental purchases of sewer and water allocations ‘forever’ until the 100,000 gallons per day of initial allocations were exhausted.”

The agreement is also deficient in spelling out when and how the agreement is to be implemented and what rates were to be for town users now and in the future, Pearson found.

Because of the incomplete nature of the agreement and its lack of clarity, “the court would essentially be left to fashion a decree… which basically makes a contract for the parties, rather than simply enforcing one which already exists and is sufficiently clear as to all material terms. The court cannot do that, and of course declines to do so,” Pearson concluded.

In his decision, Pearson also spoke to the history of acrimony between the city and town.

“After years and years of wrangling as well as litigation, and intermittent efforts at settlement, the parties are unfortunately back to ‘square one.’ They are no further ahead toward achieving the necessary working arrangement(s), on this and other issues which have long soured relations between the town and city and which any reasonably dispassionate outside observer can readily see must, and actually could be resolved if all of the emotional and historical baggage was only checked at the door,” Pearson wrote.

“For better or worse, like it or not, the town and city are now functionally a single economic zone of interlocking and symbiotic interests; the sooner that reality becomes the working credo for both political entities (and their respective citizens), the sooner this disputes, and other which have also resulted in acrimonious litigation, can be mutually resolved by the participants themselves and not by court dictate,” he added.

In a footnote, Pearson noted that both the city and town “seem to view the relationship as essentially parasitic, not symbiotic, but there is mutual disagreement (and years of mistrust and suspicion) over which is the host organism.”

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Editor’s Note: The Messenger in Saturday’s edition will take an in-depth look at the ramifications of the judge’s ruling.