Waste Mgmt. of La., L.L.C. v. Parish of Jefferson

• Decision Date: 10 December 2014
• Docket Number: Civil Action No. 13–226.
• Citation: 66 F.Supp.3d 761
• Parties: WASTE MANAGEMENT OF LOUISIANA, L.L.C. v. The PARISH OF JEFFERSON through The JEFFERSON PARISH COUNCIL.
• Court: U.S. District Court — Eastern District of Louisiana

66 F.Supp.3d 761

WASTE MANAGEMENT OF LOUISIANA, L.L.C.

v.The PARISH OF JEFFERSON through The JEFFERSON PARISH COUNCIL.

Civil Action No. 13–226.

United States District Court, E.D. Louisiana.

Signed Dec. 10, 2014.

Miles Paul Clements, Benjamin Melvin Castoriano, Heather A. McArthur, Frilot L.L.C., New Orleans, LA, for Waste Management of Louisiana, L.L.C.

Thomas P. Anzelmo, Lou Anne Milliman, McCranie, Sistrunk, New Orleans, LA, Deborah Cunningham Foshee, Jefferson Parish Attorney's Office, Harahan, LA, for Parish of Jefferson through Jefferson Parish Council.

ORDER AND REASONS

MARTIN L.C. FELDMAN, District Judge.

Before the Court are Jefferson Parish's motion for summary judgment on liability and, in the alternative, its motion for partial summary judgment on damages. For the reasons that follow, the motion for summary judgment on liability is DENIED and the motion for partial summary judgment on damages is GRANTED in part and DENIED in part.

Background

This malicious prosecution lawsuit arises from earlier litigation in which Jefferson Parish sued Waste Management in an effort to early terminate the parties' Landfill Contract, so that Jefferson Parish could contract with another waste disposal services provider, River Birch. Waste Management now contends before this Court that Jefferson Parish pursued the prior lawsuit for years, even though it knew that its claims against Waste Management were factually and legally baseless. The record facts of this case, including prior litigation history, are necessarily presented here in detail.

Pursuant to a “Time Contract to Provide Services to Operate, Manage, and Maintain the Jefferson Parish Sanitary Landfill

Site” (the Landfill Contract), Waste Management of Louisiana, L.L.C.¹ was to receive and dispose of waste for Jefferson Parish and also manage a portion of the Jefferson Parish Sanitary Landfill Site defined as the Expansion Area. In exchange, Jefferson Parish paid Waste Management a per-ton “tipping fee”.² Additionally, Waste Management was also tasked with paying for the construction of all cells,³ as well as paying for placing a final cover on all the cells when they were filled and the contract had reached its term. Based on the Expansion Area's capacity, the term of the Landfill Contract was to expire when certain permitted areas of the landfill, known as Phase IIIA and IIIB, were filled with waste.

Continuation of the Landfill Contract was contingent upon annual appropriation of the requisite funds by the Parish, as set forth in the Annual Appropriation Dependency Clause (ADC), a key provision in the context of this lawsuit:

The continuation of this Agreement is contingent upon the appropriation of funds by the Jefferson Parish Council for the continued operation and maintenance of the Expansion Area. If the Council fails to appropriate sufficient monies to provide for the continuation of this Agreement, the Agreement shall terminate on the last day of the fiscal year for which funds were appropriated. Such termination shall be without penalty or expense to the Parish except for the payments which have been earned prior to the termination date.

Upon termination of this Agreement prior to the end of its term, the Parish shall be relieved of its obligations under this Agreement except for payment of Service/Work already performed and [Waste Management] shall be relieved of its obligations to maintain and operate the Landfill.

Termination of this Agreement by the Parish under the provisions of this section shall not constitute an event of default. However, the Parish hereby consents to submit to the Parish the necessary appropriation language to be adopted to allow payment by the Parish.

The Parish may effect such termination by giving [Waste Management] a written notice of termination.

It is Waste Management's position that the contours of this provision first became of interest to Parish officials in 2004 because Parish officials wished to divert the Parish's waste disposal business from Waste Management to its competitor, River Birch.

In early 2004, James “Dutch” Connick, who at the time was a consultant and lobbyist for Waste Management, says he was contacted by then-Jefferson Parish Chief Administrative Officer Tim Whitmer. According to Connick, Whitmer said that then-Parish President Aaron Broussard was unhappy with Waste Management,⁴ had met with representatives of River Birch, and that he wanted River Birch to operate the Parish landfill.⁵ According to Connick, Whitmer told him that Broussard wanted him (Connick) to know that River Birch would hire him (Connick) as its consultant and registered lobbyist.⁶

Months later, on October 11, 2004 then-Jefferson Parish Attorney Tom Wilkinson wrote a nine-page opinion letter to the Council⁷ regarding the use of the ADC. The Parish Attorney wrote:

[I]t is the reasoned opinion of this office that the Annual Appropriation Dependency clause gives the Parish Council the discretion not to fund the [Landfill] Contract for fiscal years following the current fiscal year, at no cost or penalty to the Parish, as long as the Parish Council has a “good faith” basis for exercising its right not to fund the [Landfill] Contract. Should the Parish Council decide not to appropriate funds to provide for the continuation of the [Landfill] Contract for the next fiscal year, the [Landfill] Contract terminates on the last day of the fiscal year for which funds were appropriated.

Interpreting the language of the ADC, Wilkinson wrote:

Clearly, the Agreement only requires the administration to submit the necessary appropriation language for consideration by the Council, which then decides whether to fund the contract. The Parish Council has the unfettered discretion to decide whether to fund the contract for the next fiscal year, or to not fund the contract and thereby evoke the [ADC]. [A]ny other interpretation of the [ADC] would create an illegal, unapproved future debt of the Parish, rendering the entire Agreement void and unenforceable ab initio.

In so opining, Wilkinson acknowledged that, absent an unqualified non-appropriations clause, multi-year service contracts such as the Landfill Contract constitute a debt that must be approved by the State Bond Commission.⁸ In support of his conclusion that a duty of good faith is imposed on a public entity choosing to exercise a non-appropriations clause, Wilkinson cited “the only reported Louisiana decision”, All American Assurance Co. v. State, 621 So.2d 1129 (La.App. 1 Cir.1993), summarizing the case as follows:

[T]he state entered into a five year lease for office space with RJV. The State terminated the lease early after notifying RJV that public funding was inadequate to meet the rental obligations of the lease. [Paragraph] 28 of the lease [provided]: “In the event that public funding by either federal or state governing is inadequate to meet the rental obligations of this lease, lessee may terminate the lease upon 60 days written notice.”

The State asserted that funds were unavailable due to the financial crisis experienced in 1988 and that in terminating the lease it acted in good faith. RJV argued that the State failed to make a good faith effort to appropriate funds for the lease. Testimony established that in late 1997 the governor in an attempt to put the State on sound financial footing began to identify and recommend budget cuts. One of the proposals presented as a cost-saving measure was to identify unused or under utilized state-owned space for agencies currently leasing space. The decision was made to move the Dept. of Civil Service to state-owned property to eliminate costs of the RJV lease. The testimony established that the legislature was faced with a fiscal crisis and that massive budget cuts were viewed as part of the solution. Reduction of costs by consolidating offices and agencies and by utilizing state-owned property were believed to be appropriate and necessary. The court ruled that the state acted in good faith when, after recognizing a financial crisis and adopting cost-saving measures, it terminated the lease with RJV.

Notably, applying this good faith requirement, Wilkinson opined:

If a change in the financial condition of the Garbage District occurs, such a change in financial status may justify exercise of the non-appropriations clause. On the other hand, attempting to exercise the non-appropriations clause under circumstances which simply result in a change in the identify of the contractor providing services, with no savings to the Parish, could open the Parish to legal challenges on the grounds no good faith basis existed for exercising the non-appropriations clause.

(emphasis added). Wilkinson also mentions in his opinion letter a non-binding writ opinion in which the Louisiana Fifth Circuit Court of Appeals, enforcing an identical ADC in a Parish contract, rendered judgment in favor of the Parish.⁹ Wilkinson emphasizes, in that case, “budgetary concerns were indisputably at the forefront of the Council's decision not to fund the contract.” Summing up:

While we cannot predict how a court might rule if budgetary concerns are not the motivating factor for the exercise of the right not to appropriate funds to continue a multi-year service contract, it is our reasoned opinion that the Council must have the unfettered discretion as long as it acts in good faith, not to fund the next fiscal year of the contract for any reason.

(emphasis in original).

At the Council's meeting two days later on October 13, 2004, a resolution to advertise a Request for Proposals for the Parish's waste disposal business was placed on the Council's agenda for the meeting, and Wilkinson made a presentation as to how the Waste Management contract could be terminated under the ADC. At the meeting, Council Chairman John Young expressed his skepticism at the use of the ADC under the circumstances; he was concerned that using the ADC would subject the Parish to a breach of contract lawsuit by Waste Management....