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Mr. Kleen, LLC v. New Castle County Department of Special Services

Superior Court of Delaware, New Castle

August 19, 2014

CENTER>MR. KLEEN, LLC, a Delaware limited liability company, doing business as MR. KLEEN, and BRACKENVILLE ENTERPRISES, L.P., a Delaware limited partnership, doing business as NEWPORT LAUNDRY, Plaintiffs,
v.
NEW CASTLE COUNTY DEPARTMENT OF SPECIAL SERVICES and NEW CASTLE COUNTY, a political subdivision of the State of Delaware, Defendants.

Date Submitted: June 11, 2014

William J. Rhodunda, Jr., Esquire, RHODUNDA & WILLIAMS, Wilmington, Delaware. Attorney for Plaintiffs.

Aleine M. Porterfield, Esquire, NEW CASTLE COUNTY OFFICE OF LAW, New Castle, Delaware. Attorney for Defendants.

MEMORANDUM OPINION

Charles E. Butler Charles E. Butler, Judge.

INTRODUCTION

Mr. Kleen, LLC and Brackenville Enterprises, doing business as Newport Laundry ("Plaintiffs") have filed suit against New Castle County and the New Castle County Department of Special Services ("County") for overbilling for sewer services. The County has responded with a Motion to Dismiss for Failure to State a Claim on each count of Plaintiffs' complaint. For the following reasons, the County's Motion to Dismiss is GRANTED.

FACTUAL AND PROCEDURAL BACKGROUND

The County charges all landowners for the use and maintenance of the County sewer system. These expenses are recovered via sewer fees levied against the landowners.

Just how these fees are calculated is tied to historical facts not easily discernable in this record. The relevant section of the County Code is the less than clear in Section 38.02.503. This section is important enough to our discussion that some dissection is worthwhile. Section A states that sewer service charges are to be "based upon the consumption of water and the measured or estimated constituents and characteristics of the sewage." So far, so good: sewer service fees should be correlated to sewer service usage. Section B states that user fees "shall be classified by a user classification category according to the principal activity conducted on the user's premises." Again, we can at least surmise that these user classification categories will relate to certain assumptions about what the typical user in a particular classification will consume in sewer services.

Section B goes on to provide that "[f]or general industrial and commercial users, the standard industrial classifications (SIC) as established by the Standard Industrial Classification Manual, 1972 . . . shall be used."[1] Here our problems begin: exactly how is the SIC to be "used?" And then there is the fact that the SIC manual of 1972 has not only been revised several times since then, it has been superseded by the North American Industry Classification System ("NAICS"). As far as we can see, the County Code has not been updated to reflect these changes.

We then come to section C: "categories enumerated." This section breaks down "general industrial/commercial" users into subclasses. While the exact formula for computing sewer fees need not concern us here, suffice it to say the lower one's "subclass, " the lower one's sewer bill. The fee for a subclass "B1" is substantially less than the fee for a subclass "B14." If we dig through the Code, we can learn that the "BOD" is an acronym for "biochemical oxygen demand."[2]And it is interesting even to those of us less mathematically inclined to understand that only the "BOD" is directly related to the subclassification. The higher one's BOD, the higher one's subclass, and therefore the higher one's sewer bills.

We then consider the SIC classification, a topic that concerns us greatly here. The discerning reader of the Code will notice that "major group" 72 ("personal services" according to the SIC) appears in both subclass B5 and subclass B14. A footnote in the county code tells us that we are to consult the "SIC land use correlation list" for further clarification. The "SIC land use correlation list" is an attempt to cross reference the county "Land Use Code" and the SIC manual in order to arrive at a subclass designation for purposes of assessing sewer fees.[3] When we consult the County's "SIC land use correlation list" we can see that most of the original SIC "personal service" classifications were transferred from the SIC manual to the land use correlation list. So barber shops, beauty parlors, undertakers, wearing apparel repair and maintenance shops, health clubs and consumer goods repair shops are all SIC "personal service" categories and are on the SIC land use correlation list, classified at subclass B14, and paying the higher rates. All other SIC "personal service" classifications in the 1972 SIC manual – including virtually all types of laundry services – were grouped together as "undifferentiated consumer services" on the county's land use correlation list, classified at the cheaper subclass B5.

One would think the plot would end there, with laundromats – which are not specifically enumerated on the "land use correlation list" (but are specifically enumerated in the SIC) – therefore receiving the "undifferentiated" designation and thus the less expensive subclass B5, but that would be too easy. Instead, a 1976 internal County memorandum regarding "User Class Descriptions" describes that "the following list identifies the new user class for the most common type of land use."[4] There follows the subclass B14 with all of the entities previously identified in the SIC Land Use Correlation List – barber shops, beauty shops, funeral homes, tailor shops – and then, handwritten, by someone, at some point, is the word "Laundry." The record as developed thus far fails to provide any explanation for how the word "Laundry" came to be handwritten beneath the groups to be classified in subclass B14. Neither party offers any explanation – devious or otherwise – as to how this word came to be on this internal document. It may have been that the County realized that while most or all SIC "personal service" businesses had been covered in subclass B14, none of the nine laundry sub-classifications in the SIC manual had been correlated to a county sewer subclass and simply added "Laundry" for consistency. Or, it may have come by way of the assiduous study of the "BOD" of laundromats generally. Plaintiffs have not alleged, and we do not presume, that "Laundry" was added merely to harass or "tax" plaintiffs out of some spite or ill motive.

But that notation is apparently how plaintiff laundromats came to be classified at subclass B14. There are obviously significant ramifications for any business to be labeled "Laundry" as it requires such businesses, at least initially, to pay about twice as much in sewer service fees as some other "undifferentiated" ...


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