Foster Poultry Farms, Inc. v. Water Works & Sewer Bd. of Demopolis, CIVIL ACTION 17-0483-WS-M

• Decision Date: 25 February 2019
• Docket Number: CIVIL ACTION 17-0483-WS-M
• Parties: FOSTER POULTRY FARMS, INC., Plaintiff, v. The WATER WORKS & SEWER BOARD OF THE CITY OF DEMOPOLIS, Defendant.
• Court: U.S. District Court — Southern District of Alabama

370 F.Supp.3d 1341

FOSTER POULTRY FARMS, INC., Plaintiff,

v.The WATER WORKS & SEWER BOARD OF THE CITY OF DEMOPOLIS, Defendant.

CIVIL ACTION 17-0483-WS-M

United States District Court, S.D. Alabama, Northern Division.

Signed February 25, 2019

Charles J. Potts, Mack B. Binion, Briskman & Binion, P.C., Robert E. Clute, Jr., Clute & Clute, P.C., Mobile, AL, for Plaintiff.

Rick A. Howard, Higgins Hitson & Howard, PC, Montgomery, AL, Woodford W. Dinning, Jr., Lloyd & Dinning, L.L.C., Demopolis, AL, for Defendant.

ORDER

WILLIAM H. STEELE, UNITED STATES DISTRICT JUDGE

This matter comes before the Court on defendant's Motion for Summary Judgment (doc. 45) and plaintiff's Motion for Partial Summary Judgment (doc. 47). Both Motions have been briefed and are now ripe.

I. Nature of the Case.

This dispute arises from a food processing facility's contentions that a municipal water board's inadequate and unreliable water service caused it to suffer lost production, business interruption, and ensuing damages. More specifically, plaintiff, Foster Poultry Farms, Inc., alleges that defendant, The Water Works and Sewer Board of the City of Demopolis, has provided inadequate water service to Foster Farms' plant in Demopolis, Alabama, and has retaliated against Foster Farms for complaining by imposing an arbitrary wastewater discharge restriction. On the strength of these allegations, Foster Farms asserts state-law causes of action against the Water Board sounding in negligence (Count One), wantonness (Count Two), breach of contract (Count Three), breach of contract third-party beneficiary (Count Four), injunctive relief (Count Five) and declaratory relief (Count Six).¹

Now the parties have filed cross-motions for summary judgment. The Water Board seeks dismissal of all claims and causes of action on a variety of grounds, while Foster Farms moves for summary judgment on the limited issue of whether an express and/or implied contract existed between the parties at all material times.

II. Factual Background.²

For more than two decades, Foster Farms has operated a food processing facility in Demopolis, Alabama. The plant employs roughly 450 people, and is the largest corn dog producer by product count in the United States. (Miller Dep. (doc. 54, Exh. 1), at 9.) The facility requires adequate flow and pressure of water for numerous aspects of the production and cleanup processes, as well as for safety (fire suppression). (Id. at 20-21, 24-27.) For example, the facility's fire suppression system requires water volume of approximately 1,000 gallons/minute and pressure of approximately 40 psi to function properly. (Id. at 24.) Foster Farms' day-to-day operations depend on it receiving reliable volumes and pressures of water. (Miller Aff. (doc. 54, Exh. 3), ¶ 10.)

A. Water Service Disruptions Beginning in March 2014.

Both sides agree that the Water Board provided consistent, adequate, reliable water service to the Foster Farms plant until March 2014. (Miller Aff., ¶ 2; Miller Dep., at 77.) Indeed, Foster Farms' evidence confirms that water flow and pressure readings at the facility were consistently adequate during that time frame. (Smith Dep. (doc. 54, Exh. 7), at 77-80.) Prior to March 2014, the Water Board supplied water to the facility via a line north of the plant on Highway 80, tied in to the Industrial Park Water Tower ("IP Tower"). (Miller Aff., ¶ 2; McCants Aff. (doc. 46, Exh. 1), at 1.) A two-mile line ran from Highway 80 to Foster Farms' plant. (Id. ) In 2014, however, the 12-inch cast iron pipe comprising that water line (which had been installed in the 1970s) experienced repeated breaks, holes and cracks caused by corrosion of the metal surfaces. (McCants Aff., at 1.) At the same time, the Water Board adopted a separate plan to refurbish the IP Tower by painting it inside and out, which would require taking that tower out of service for some time. (McCants Dep. (doc. 46, Exh. 9), at 121-22; McCants Aff., at 2.)

As a direct consequence, Foster Farms' Demopolis plant began experiencing periodic, chronic interruptions in water service (as to both flow and pressure). (Miller Aff., ¶ 3.) Foster Farms characterizes these interruptions as becoming "systemic" starting in March 2014. (Miller Dep., at 64.)³ The Water Board acknowledges that the numerous breaks in the water main caused interruptions in service, which in turn caused production shutdowns at the Foster Farms plant, all resulting from what was quintessentially "a water board problem to fix." (McCants Dep., at 110; Miller Aff., ¶ 3.) All told, Foster Farms documented approximately three dozen interruptions in water service (leading to production shutdowns ranging in duration from 7 minutes to 7+ hours) between 2014 and 2017. (Doc. 46, Exh. 4.)⁴ In repairing breaks and leaks to that water line, the Water Board "had to dig out large portions of Foster Farm's concrete lot," which it never subsequently repaired. (Miller Aff., ¶ 3.)

Foster Farms repeatedly expressed concerns to the Water Board about these interruptions in service. (Miller Aff., ¶ 3.) In July 2014, Foster Farms representatives visited the Water Board to complain about the disruption to their business caused by these ongoing unplanned water outages. (Miller Dep., at 65.) On November 17, 2014, Paul Miller, the General Plant Manager, followed up with a letter to the Water Board in which he stated that "Foster Farms has recorded no less than 8 disruptions to service since the water tower was taken offline in March of 2014." (Doc. 46, Exh. 3.) In that correspondence, Miller expressed concern about "the potential for a public food safety health hazard" resulting from these service interruptions, as well as "significant financial losses to both the company and its employees," estimated at $ 195,000 in additional costs and lost wages to date. (Id. ) The November 2014 letter concluded with a veiled threat of litigation, as Foster Farms wrote, "It is our hope that by working together ... this issue will be resolved amicably and without the need for further action. " (Id. (emphasis added).)

Given the deterioration of the 12-inch cast iron pipe, the Water Board determined that the entire two-mile water line from Highway 80 to the Foster Farms plant must be replaced. (McCants Dep., at 110.) On November 17, 2014, based on Foster Farms' concerns, the Water Board declared an emergency to expedite that project, which is sometimes referred to in the record as "the Rangeline Road water line project." (Doc. 46, Exh. 11.) The Water Board began constructing the new two-mile water line from Highway 80 to the Foster Farms plant in early 2015, utilizing an average of four to five employees on the project. (McCants Aff., at 3.) The project consisted of replacing the old, corroded 12-inch pipe with new 12-inch pipe. (Id. )

B. The Tosco Road Temporary Solution.

As the Water Board's crews worked on the Rangeline Road water line project (again, replacing the 12-inch pipe connecting the facility with the IP Tower to the north), the Foster Farms plant required an emergency supply of water to enable it to carry on with plant operations in the interim. (McCants Aff., at 3.) The solution devised by the Water Board was to connect the Foster Farms plant temporarily to the Tosco Road Water Tower (the "Tosco Tower"), located six miles to the south. (Id. ) To do so, the Water Board utilized a preexisting water line owned by non-party Myrtlewood Water System. That line consisted of a 6-inch pipe running for 4.9 miles from the Tosco Tower to the "Y" intersection of Highway 21 and Highway 19, with an 8-inch pipe running from that intersection for an additional 0.9 miles in the direction of Foster Farms, stopping at railroad tracks 0.7 miles from the plant. (Id. ) Thus, the Water Board's short-term, emergency solution was to connect the Foster Farms plant to the Myrtlewood line at the railroad tracks. (Id. ) The Water Board understood that Foster Farms' water service from Tosco Tower to the south would not be as good as its regular IP Tower water service from the north, and always contemplated this to be a temporary, emergency solution to supply water to the Foster Farms plant until work was completed to replace the line to the north. (Id. at 3-4.)

The Tosco Tower tie-in did not occur until approximately May 2015. (Miller Aff., ¶ 4.) Thus, there was a roughly six-month period between November 2014 and May 2015 when the Foster Farms plant continued to experience unplanned, disruptive water service interruptions. (Id. ) Even after the Tosco Tower connection was completed, Foster Farms encountered ongoing water problems. Water service to the Foster Farms plant pursuant to this temporary fix was "high pressure / low flow," with high water pressure causing plaintiff's internal plumbing fixtures to "blow off the walls" until such time as Foster Farms installed pressure-reducing valves at substantial expense. (Id. , ¶ 5.) And the low flow of water from the Tosco Tower had negative impacts on plant operations, especially as to the refrigeration evaporative cooling towers and sanitation processes. (Id. )

C. Delays, Negotiations and the Statement of Intent.

The Rangeline Road water line project proceeded slowly. It was hampered by various circumstances, including weather-related delays and the separation of a Water Board employee due to disability. (McCants Aff., at 3.) By spring 2016, Foster Farms, having grown weary of ongoing problems and delays, retained counsel to engage in dialogue with the Water Board. (Miller Aff., ¶ 6.) Pursuant to those discussions, Foster Farms requested that the Water Board make a firm written commitment to complete the project by a date certain. (Id. ) Foster Farms communicated to the Water Board that failure to do so would result in litigation. (Id. )⁵ On or about June 15, 2016, the Water Board signed a Statement of Intent, through which it committed to completing the project by September 15, 2016, barring an Act of God. (Id. , ¶ 7.) In reliance on that...