American Eagle Waste Indus., LLC v. St. Louis Cnty., SC92072

• Decision Date: 31 July 2012
• Docket Number: No. SC92072,SC92072
• Parties: AMERICAN EAGLE WASTE INDUSTRIES, LLC, et al., Respondents/Cross-Appellants, v. ST. LOUIS COUNTY, MISSOURI, Appellant/Cross-Respondent.
• Court: Missouri Supreme Court

AMERICAN EAGLE WASTEINDUSTRIES, LLC, et al., Respondents/Cross-Appellants,

v.ST. LOUIS COUNTY, MISSOURI, Appellant/Cross-Respondent.

No. SC92072

Supreme Court of Missouri en banc

Opinion issued July 31, 2012

APPEAL FROM THE CIRCUIT COURT OF ST. LOUIS COUNTY

The Honorable Barbara Wallace, Judge

PER CURIAM

I.Introduction

In 2008, St. Louis County("County") assumed control of solid waste collection activities in the County's unincorporated areas.Prior to that, waste collection services in those areas had been provided by private entities.Among them were American Eagle Waste Industries, LLC; Meridian Waste Services, LLC; and Waste Management of Missouri, Inc.(collectively, "Haulers").Following a 2007amendment to section 260.247, which extended hauler-protective business regulations to counties that wish to provide trash collection,Haulers sued County in 2008 for a declaratory judgment that County must comply with section 260.247.On appeal, the court of appeals ruled that section 260.247 applied to County, despite its claim that its status as a charter county made the statute inapplicable.

The case was remanded to the circuit court for further proceedings, and Haulers added the claims on appeal here, including a claim that they suffered money damages as a result of County's failure to comply with the statute.The circuit court found County liable to Haulers on the theory of implied in law contract.After determining damages and assuming a 5-percent profit, the circuit court awarded Haulers $1.2 million in damages.This Court reverses the circuit court's calculation of damages, affirms the judgment in all other respects, and remands the case to the circuit court.

II.Facts and Procedural History

Each group of Haulers, as private entities, had provided trash collection services to clients in parts of unincorporated St. Louis County prior to December 2006.On December 12, 2006, the St. Louis County council enacted OrdinanceNo. 23,023, which created significant changes to the charter county's regulation of waste collection in unincorporated areas.Among the changes was the addition of the following two sections:

607.1300 Designation of Collection Areas

1.The County Executive shall, by January 15, 2008, establish areas within the unincorporated County for the collection and transfer of waste and recovered materials.The boundaries of suchareas shall be determined after consideration of factors including size, compactness, road system and other relevant considerations.

607.1310 Grant of Contract

1.The County Executive is authorized to advertise for bids or proposals from private or public entities for the provision of services relating to collection and transfer of waste and recovered materials in those areas designated in accordance with Section 607.1300.Such bids or proposals may provide for such services in one or more areas.

2.Contracts shall be awarded by order of the County Council to persons that have submitted the most responsible bids or proposals.Such contracts shall require that the person awarded the contract shall comply with all duties imposed by this Waste Management Code; shall provide for exclusive services in the designated area or areas; shall provide for a term not to exceed three (3) years; and shall contain such other terms and conditions approved by the County Counselor.

(Emphasis added).Haulers admit they had actual notice of OrdinanceNo. 23,023's passage on the day it was enacted.Haulers also received letters from County about one month later notifying them of the changes to the waste management code.The letters, dated January 8, 2007, read in pertinent part:

Several of the changes made to the Code will have an immediate effect on all waste haulers that provide residential collection service in St. Louis County ....Some of the highlights of the new Code requirements are:

• Establishing basic level of service for [residences] ....

• Basic service level applies throughout St. Louis County.

• Basic service level requirements are to be implemented by January 15, 2007 unless there is a valid contract for service in effect by that date.If a valid contract is in effect, then the implementation date is the later of January 15, 2008 or the expiration of the contract.

• Trash collection districts for unincorporated St. Louis County are to be established and contracts in place by January 15, 2008.

We have scheduled a meeting for Wednesday, January 17, 2007 ....Please come with your ideas of how we can better implement these new provisions and any obstacles you foresee ....

Haulers' representatives appeared at several county council meetings in 2007 and 2008 to comment on OrdinanceNo. 23,023 and how it should be implemented.

On June 26, 2007, after County had begun implementing its trash collection program, but before trash collection districts for unincorporated St. Louis County had been established, the governor signed into law Senate BillNo. 54, titled:

An Act to repeal sections 260.200,260.211,260.212,20.240,260.247,260.249,260.250,260.330,260.335,260.360,260.470,260.800,386.887,414.420,444.772, and643.079, RSMo, and to enact in lieu thereof thirty-nine new sections relating to environmental regulation, with an effective date and penalty provisions.

Section 260.247 sets certain procedural rules for municipalities that expand their municipal waste collection activities into new territory.Prior to the enactment of S.B. 54, section 260.247 applied only to "cities."S.B. 54amendedsection 260.247 to apply to all "cities and political subdivisions."The revised version of section 260.247, which became effective January 1, 2008, provides:

1.Any city or political subdivision which annexes an area or enters into or expands solid waste collection services into an area where the collection of solid waste is presently being provided by one or more private entities, for commercial or residential services, shall notify the private entity or entities of its intent to provide solid waste collection services in the area by certified mail.

2.A city or political subdivisionshall not commence solid waste collection in such area for at least two years from the effective date of the annexation or at least two years from the effective date of the notice that the city or political subdivision intends to enter into the business of solid waste collection or toexpand existing solid waste collection services into the area, unless the city or political subdivision contracts with the private entity or entities to continue such services for that period.If for any reason the city or political subdivision does not exercise its option to provide for or contract for the provision of services within an affected area within three years from the effective date of the notice, then the city or political subdivision shall renotify under subsection 1 of this section.

3.If the services to be provided under a contract with the city or political subdivision pursuant to subsection 2 of this section are substantially the same as the services rendered in the area prior to the decision to annex the area or to enter into or expand its solid waste collection services into the area, the amount paid by the city shall be at least equal to the amount the private entity or entities would have received for providing such services during that period.

(Emphasis added).

In anticipation of the bidding process to award waste collection contracts for the newly created districts in unincorporated St. Louis County, County held pre-bid meetings on March 6, 2008, and April 21, 2008.Representatives of Haulers attended.Bids for new Trash District 3 opened on March 20, 2008; for new Trash Districts 1, 5 and 7 on May 14, 2008; and for new Trash Districts 2, 4, 6 and 8 on May 28, 2008.Each group of Haulers submitted at least one bid.

Haulers were not awarded any of the contracts.County awarded the contract for District 3 on April 8, 2008, and the remaining contracts were awarded on June 10 and 17, 2008.The winning bidders began providing waste collection services on July 1, 2008, for District 3, and on September 29, 2008, for the remaining districts.

Haulers filed this lawsuit May 29, 2008, before the contracts were awarded.Their first petition sought a writ of mandamus compelling County to comply with revised section 260.247's notice and two-year waiting period requirements.Alternatively, it sought a declaratory judgment that County's plan to contract with the companies submitting the winning bids violated section 260.247.County immediately filed a motion to dismiss for failure to state a claim on which relief could be granted.The circuit court denied the writ and sustained the motion to dismiss on the ground that section 260.247 could not be constitutionally applied to St. Louis County because its status as a charter county allows it to regulate municipal functions.The circuit court found trash collection to be a "municipal function" within the province of County's ability to regulate.

Haulers appealed, and the court of appeals reversed the dismissal and remanded the cause to the circuit court for further proceedings.State ex rel. Am. Eagle Waste Indus. v. St. Louis Cnty., 272 S.W.3d 336(Mo. App.2008).The court of appeals held that dismissal for failure to state a claim was inappropriate because Haulers had invoked principles of substantive law sufficient to entitle them to a declaration of their rights, if any, under section 260.247.

The Court went on to address the merits of Haulers' claim and noted that "[t]he fundamental purpose of section 260.247 is to provide an entity engaged in waste collecting with sufficient notice to make necessary business adjustments prior to having its services terminated in a given area."Id. at 342.The court ofappeals found section 260.247 has a general, state wide purpose with which County must comply.The court concluded:

The County is authorized to enter the business of trash collection, and even

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