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Mediation Fails in Water Dispute

March 18, 2012

NEWPORT, VT - The lawsuit between the City of Newport and Derby Village trustees over billing for water that wasn't used is slowly grinding its way to a resolution. But the final decision will be up to a judge, and not an agreement between the parties.
Two mediation sessions have been held with no agreement between the parties and both sides have asked the judge to not schedule a third meeting, but instead to proceed to trial.
Newport City Manager John Ward observed this case was filed in 2009 over a dispute between the two parties. Regarding the original filing by the city, and the subsequent responses by Christopher Smart, attorney for the Derby Village trustees, Ward stated, “We want to settle it... and we will pay for every ounce of water we use.”
In 1999, the Newport City Council supported a proposal by a developer to create an industrial park on US RT 5, across from the former Elmwood Dairy, now the location of a John Deere/Harvest franchise and MSN, which manufactures helmets. The 47-acre parcel needed a sewer allocation, which would be provided by the City of Newport, and water. The City Council was concerned about how much water they could supply and whether their system had sufficient pressure to pump water up to the industrial park.
Derby Center's water department's usage was substantially less than their capacity to provide water to their users. The trustees entered into an agreement with the City of Newport to provide up to 10,000 gallons per day, which would flow downhill to the industrial park.
Ward estimates the city spent around $400,000 to rebuild the water pipes and increase capacity as a result of the agreement with the village.
From 1999 to 2006, the village water department issued quarterly invoices to the City of Newport for water used but did not bill for the unused allocation. But in 2006, water allocation and use became an issue for the trustees with potential plans for Walmart to locate a store in the Town of Derby. The village had most of its water allocation tied up either by the water users or developers who applied for and received water and sewer allocation for undeveloped properties.
That same year, village trustees passed an ordinance charging for water usage, including the unused allocation assigned to its customers.
The City of Newport paid the invoices under protest. In the court docket, the city included a copy of a quarterly payment made for the fall of 2008 in the amount of $1972.00, but split into separate lines. The city paid $1700 for actual usage and $272 for unused allocation, which prompted the lawsuit.
Ward contends the ordinance passed by the trustees in 2006 does not supersede the contract between the city and the village, signed in 1999. The issue could not be resolved between the parties, so on March 23, 2009, the city, through its attorney Philip White, filed a lawsuit with two basic charges.
White first charged that the ordinance is not part of the agreement between the city and village, and by billing for unused capacity starting in 2006, represents a breach of good faith and fair dealing. In addition, White stated the city relied on good faith and the terms of the Inter Local Agreement by investing in infrastructure to connect with and upgrade the water pipes to the village's system. White asked the judge for an injunction to not allow the trustees to charge the city for water that was not used.
Village attorney Christopher Smart responded to the suit by first asserting the city was using water outside the “service area,” referring to the industrial park, though the contract between the parties does not specify that the water would only be allocated for the 47-acre parcel.
In subsequent filings, Smart also said that a faulty meter maintained by the city led to under billing for usage. Smart claims, “(T)he trustees had the master meter replaced, but the problem got worse.” He goes on to state: “Either the meter valve has failed or it has been manipulated to allow water to bypass the master meter.”
Responding to Smart's latest contention, Ward says the city didn't mess with the meter. “The village replaced it and have secured it.” He goes on to state, “Recently the fire department responded to a call and, needing more water, they tried to open the meter but were unable to as it had been locked.”
Ward then wistfully said, “It shouldn't have to be like this, two municipalities fighting instead of cooperating. I want us to get the issue resolved and move on.” And regarding the faulty meter issue, Ward added, “Let the trustees calculate what they think we owe them... If they can demonstrate what our usage should have been during that time period, we'll pay for every ounce of water we used.”
“We're done with mediation. We have a mediation clause in the Inter Local Agreement and we've been there twice. It's time to move forward to settle the original issue - billing for unused allocation,” Ward concluded.
This may be the only issue the parties agree upon.
Smart filed a motion asking the presiding judge to modify his order for another mediation session in April. Smart notes, “The mediation clause is plain enough on its face that such oral argument is unlikely to add anything to its understanding.”
It is expected that after six years of negotiations and court filings, the case will go to trial to see if the city has to pay for unused water allocation.
A second case of billing for unused water allocation is also in superior court, with the Village of Derby Center trustees defending a suit by Doug Nelson and Rosemarie Lalime.

 

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