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City of Harrington v. The Delaware State Fair, Inc.

Superior Court of Delaware, Kent

June 22, 2015

CITY OF HARRINGTON, Plaintiff,
v.
THE DELAWARE STATE FAIR, INC., Defendant.

Submitted: March 27, 2015

Upon Plaintiff's Rule 12(c) Motion for Judgment on the Pleadings

Denied Max B. Walton, Esquire of Connolly Gallagher LLP, Newark, Delaware; attorney for Plaintiff.

Craig A. Karsnitz, Esquire of Young Conaway Stargatt & Taylor, LLP, Georgetown, Delaware; attorney for Defendant.

ORDER

William L. Witham, Jr. Resident Judge

Upon consideration of the City of Harrington's (hereinafter "Plaintiff" or "the City") Rule 12(c) Motion for Judgment on the Pleadings and the response of The Delaware State Fair (hereinafter "Defendant" or "the Fair"), and the record in this case, the Court finds that:

1. On October 28, 2014, the City filed its complaint against the Fair, alleging breach of contract and requesting Declaratory Judgment. The City argues that it provides wastewater services within and outside of its municipal limits, and one of the recipients of this service is the Fair. The City argues that the Fair is a contract user of the wastewater services because the Fair's property is outside the City limits.

2. The City asserts that three (3) wastewater contracts exist as to the Fair's use of the water. They are (a) "Final Agreement" dated May 13, 1996; (b) "Wastewater Agreement First Amendment" dated November 1, 1999; and (c) "Wastewater Agreement Second Amendment" dated June 28, 2006, also known as the "2006 Agreement" (collectively "wastewater agreements").

3. The 2006 Agreement reserved 30, 000 gallons per day of additional capacity to serve the Fair's 2006 expansion. This agreement allowed for the capacity to go from 60, 000 gpd (gallons per day) to 90, 000 gpd. The City argues that preserving this capacity foreclosed the opportunity for the City to seek other developers to connect to the City's wastewater since most was reserved for the Fair's use, although the Fair denies this statement. According to the City, the parties contracted for "Section 8 of the 2006 Agreement" to ensure the City received adequate revenue for the Fair's anticipated expansion. This included a Reconciliation Charge stating that, although the Fair is allocated a total of 90, 000 gpd, it must use a minimum of 80, 000 gpd in order for the contract to be fulfilled, or the Fair should pay for the usage based on the minimum or should reduce the flow reserved to the annual daily flow.

4. After the agreement was finalized, the Fair did not utilize 80, 000 gpd of capacity. For the years 2006-2011, the Fair paid the City the Reconciliation Charge required by the 2006 Agreement.

5. The City also states that it entered into an agreement with the Kent County Levy Court for the treatment and disposal of sewage discharge (the "Kent County Agreement") because there were many problems involving the upkeep of the treatment plant. The Agreement expanded the treatment capacity for the City's wastewater users, and let the City close its own treatment plant. As a result of the Agreement, now a portion of the fee that users pay goes to Kent County for the services provided by the Kent County Agreement. The City states that Kent County is now contractually responsible for the treatment of sewage from the City, but that the cost of maintenance of the system is the responsibility of the City.

6. The City further asserts that if a new user wants to use the wastewater service provided by the City, they are charged an impact fee for such service by the City and another impact fee by Kent County. The City argues that the Fair breached its contractual obligation when it failed to use the minimum of 80, 000 gpd of wastewater for years 2012-2014, and then failed to pay the Reconciliation Charges provided under Section 8 of the 2006 Agreement. The Fair does not dispute that it has not paid the Reconciliation Charges.

7. In response, the Fair argues that the Kent County Agreement has relieved the Fair of its Reconciliation Charge obligations from the 2006 Agreement. The City argues this constitutes a material breach of contract of the 2006 Agreement for nonpayment of the 2012-2014 Reconciliation Charges. The City argues that the Fair's obligation to pay Reconciliation Charges are not altered by the Kent County Agreement, while the Fair argues that their contractual obligation has fundamentally changed since the City is no longer treating the Fair's wastewater.

8. The City argues that the 2006 Agreement is still viable and enforceable, even though the City contracted with Kent County to perform treatment services. The Fair disagrees, arguing that the City failed to give notice to the Fair of its agreement with Kent County, and that since wastewater has been conveyed outside the City limits to Kent County, the 2006 Agreement has been fundamentally altered. The Fair claims that when the City closed its treatment plant, the issue ...


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