Gallop Power Greenville, LLC v. Moosehead Sanitary Dist.
| Decision Date | 28 September 2016 |
| Docket Number | 1:15-cv-00032-JAW |
| Parties | GALLOP POWER GREENVILLE, LLC, Plaintiff, v. MOOSEHEAD SANITARY DISTRICT, Defendant. |
| Court | U.S. District Court — District of Maine |
In this federal diversity action, Gallop Power Greenville, LLC (Greenville) claims that Moosehead Sanitary District (the District) breached an agreement between the parties and violated 38 M.R.S. § 1202 by charging non-uniform rates for sewage services. In view of the record and caselaw, the Court concludes that there exist genuine issues of material fact and it denies Gallop's motion for partial summary judgment.
On January 23, 2015, Gallop brought suit against the District claiming violations of their contract and applicable Maine statutory law. Compl. (ECF No. 2). The Complaint consists of four counts: Count I - Breach of Contract, Count II - Violation of 38 M.R.S. § 1202, Count III - Declaratory Judgment, and Count IV - Unjust Enrichment. Id. On March 10, 2015, the District filed its answer, which includes a counterclaim consisting of three counts: Count I - Breach of Contract,
Count II - Quantum Meruit, and Count III - Unjust Enrichment. Def.'s Answer to the Compl. and Countercl. (ECF No. 10).
On January 15, 2016, Gallop moved for partial summary judgment as to liability on all causes of action it asserted against the District, and summary judgment as to liability and damages on all counts asserted by the District against Gallop in the counterclaim. Pl.'s Mot. for Partial Summ. J. (ECF No. 26) (Pl.'s Mot.). On the same day, Gallop filed a supporting statement of material facts. Statement of Material Facts in Supp. of Pl.'s Mot. for Partial Summ. J. (ECF No. 27) (PSMF). On February 26, 2016, the District opposed Gallop's motion. Def.'s Mem. of Law in Opp'n to Pl.'s Mot. for Partial Summ. J. (ECF No. 33) (Def.'s Opp'n). The District also filed a response to Gallop's statement of material facts, Def.'s Resps. to Pl.'s Statement of Material Facts & Def.'s Statement of Additional Material Facts at 1-9 (ECF No. 34) (DRPSMF), as well as a statement of additional material facts. Id. at 10-25 (DSAMF). Gallop replied to the District's opposition on March 25, 2016. Pl.'s Reply Mem. in Supp. of Mot. for Partial Summ. J. (ECF No. 40) (Pl.'s Reply). It also filed a reply tothe District's statement of additional material facts. Pl.'s Reply Statement of Material Facts (ECF No. 41) (PRDSAMF).
For coherence, the Court begins with the parties' stipulated facts as submitted. Next, it pieces together the facts submitted by the parties in support of their motions for summary judgment.
Gallop is a limited liability company organized under the laws of the state of Delaware with its principal place of business located in Dallas, Texas. Stipulated Facts ¶ 1 (ECF No. 23) (Stip.).
The District is a quasi-municipal corporation organized under the laws of the state of Maine with its principal place of business in Greenville, Maine. Id. ¶ 2.
The District was created pursuant to 38 M.R.S. § 1061 et seq. to, among other things, build, operate, and maintain a waste water disposal system in and around Greenville, Maine (the System). Id. ¶ 3. Pursuant to, inter alia, 38 M.R.S. § 1157, the District has contracted with various persons and corporations within its service territory to provide for the disposal of sewage and commercial, industrial waste and storm and surface water through the System. Id. ¶ 4. At all relevant times, the District has been the only entity that provides public wastewater and effluenttreatment to customers in Greenville, Maine. Id. ¶ 5. The design capacity of the System is 170,000 gallons per day (GPD) of wastewater and other effluent. Id. ¶ 6. The System's capacity has not been increased since the late 1970s. Id. ¶ 7.
Sometime before December of 1986, Greenville Steam Company (Greenville Steam), a Maine limited partnership that had constructed a wood-fired renewable energy power plant located in Greenville, Maine (the Plant), filed an application for approval to connect the Plant to the System. Id. ¶ 10. The District had sole authority to approve Greenville Steam's application. Id. ¶ 11.
In the subsequent negotiations on Greenville Steam's application, the District expressed concern about both the volume and quality of the wastewater to be discharged by the Plant into the System if Greenville Steam's application was approved. Id. ¶ 12. A letter dated August 14, 1986 from the District to Greenville Steam states that if the Plant's "daily discharge is 20,000 gal/day, [the District] will be operating at 89% capacity which obviously leaves little room for future expansion in other areas." Id. ¶ 15.
On or about December 4, 1986, the District entered into an agreement with Greenville Steam (the Agreement) memorializing the terms and conditions under which the Plant could discharge wastewater into the System. Id. ¶ 16. The Agreement included two exhibits: (a) Exhibit A: the Rate Schedule for Greenville Steam effective as of December 4, 1986 (the Plant Rate Schedule); and (b) Exhibit B:the Sewer Use Ordinance (the Ordinance). Id. ¶ 18. The Agreement states, in part, that the District will:
accept the discharge from [the Plant] up to a maximum of twenty thousand (20,000) gallons per day and a maximum flow rate of seventy-five (75) gallons per minute at the prevailing rate of [the District] as measured by the flow recorder referred to below in Paragraph III. The present [Plant] Rate Schedule is attached hereto (EXHIBIT A) and is a part of this Agreement. Said [Plant] Rate Schedule will be amended from time to time by [the District] and shall be binding upon [Greenville Steam] subject to the terms of 38 M.R.S.A. Sec. 1202.
At all times relevant to this case, the District has billed customers, other than Gallop, using a flat-rate structure whereby the District assigns each customer one or more User Units, and then charges a fee per User Unit as set forth in certain Sewer Use Rate Schedules adopted periodically by the District (collectively, the General Rate Schedules). Id. ¶ 8. Four General Rate Schedules have been in effect at different times since October of 1986. Id. ¶ 9. The Plant does not fit into any of the property categories, such as "single family home," set forth in the General Rate Schedules. Id. ¶ 14.
The Agreement required Greenville Steam to install a flow recorder in a District manhole to record the volume of wastewater discharged into the System for the purposes of levying penalties for flows in excess of 12,000 GPD. Id. ¶ 20. If the $30,000 per year Basic Rate in the Plant Schedule is divided by the then applicable charge per user unit ($142.80), the result is 210 User Units. Id. ¶ 21. At the time the Agreement was executed (the 4th quarter of 1986), the District had 888.19 User Units in total among all of its customers, not including Greenville Steam. Id. ¶ 22.
The amounts charged to Greenville Steam and then Gallop have increased as the District has increased its charge per User Unit to all customers. Id. ¶ 23. In the opinion of the District's expert, the median water usage in Greenville is 82 GPD for single-family residences. Id. ¶ 24. In the opinion of Gallop's expert, the average single-family residence in Greenville discharges 300 GPD into the System. Id. ¶ 25.
All of the parties' knowledge regarding the negotiation and execution in 1986 of the Agreement (including the Plant Rate Schedule) comes from documents produced by the parties; no witnesses are available who have actual, contemporaneous knowledge of the negotiation and execution of the Agreement. Id. ¶ 13. No persons have any current recollection or knowledge as to how the parties reached the Agreement's Basic Rate or the additional penalty rates. Id. ¶ 19.
In November of 2009, Gallop purchased the Plant from Greenville Steam, including Greenville Steam's title and interest in and to the Agreement. Id. ¶ 26. Following the Gallop purchase, the Plant continued to discharge wastewater into the System at various times. Id. ¶ 27. The District issued various invoices to Gallop, and Gallop paid some of these invoices. Id. ¶ 28. The Plant last operated on April 1, 2011. Id. ¶ 29. At the time the Plant ceased operations (2nd quarter of 2011), the District had 1188.45 User Units in total. Id. ¶ 30.
On December 20, 2013, Gallop, through counsel, sent a letter to the District (the Notice of Termination), stating, inter alia, that Gallop "hereby elects to terminate the Agreement, effective immediately" because the Plant was not operating andtherefore was not discharging wastewater into the System. Id. ¶ 32. At the time of the Notice of Termination (4th quarter of 2013), the District had 1183.95 User Units in total. Id. ¶ 33.
The District has taken the position that the Agreement is not, and cannot be, unilaterally terminated by Gallop. Id. ¶ 34. After receipt of the Notice of Termination and the cessation of Plant operations, the District continued to bill Gallop and has asserted statutory liens and filed certificates of lien (collectively, the Certificates) against the Plant in the Piscataquis County Registry of Deeds pursuant to 38 M.R.S. § 1208. Id. ¶ 35. Since sending the Notice of Termination, Gallop has paid $51,815.28 in sewer charges that Gallop disputes in order to prevent statutory foreclosure on the Plant from occurring pursuant to 38 M.R.S. § 1208 and the filing of the Certificates. Id. ¶ 36. At the time this instant lawsuit was initiated (1st quarter of 2015), the District had 1182.00 User Units in total. Id. ¶ 37.
For some of the years following installation of the manhole flow meter required by the Agreement, the District recorded on an intermittent basis the volumes of Plant wastewater discharged into the System; the...
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