KRISTI K. DuBOSE, District Judge.
This action is before the Court on the Plaintiff WM Mobile Bay Environmental Center, Inc.'s motion for summary judgment, memorandum and exhibits (WM Mobile) (doc. 74, 80), defendant The City of Mobile Solid Waste Authority's (SWA) response in opposition and exhibits (doc. 96-98) and WM Mobile's reply and exhibits (doc. 99). Upon consideration and for the reasons set forth herein, the motion is denied in part and granted in part. This action is also before the Court on the Defendant The City of Mobile Solid Waste Authority's (SWA) motion for summary judgment as to Counts I through VII (docs. 75-79), WM Mobile's response and exhibits (doc. 95), and SWA's reply (doc. 101). Upon consideration and for the reasons set forth herein, the motion is denied in part and granted in part.
In October 1993, SWA and Transamerican Waste Industries, Inc., a predecessor to WM Mobile, entered into a Solid Waste Management Contract for landfill operations and other solid waste management operations (the Contract). (Doc. 29-1) WM Mobile now alleges that SWA breached the terms of the Contract. WM Mobile filed its second amended complaint alleging the following causes of action:
(Doc. 29)
WM Mobile seeks declaratory judgment to establish the current rates for waste disposal at the Landfill and hauling waste from the transfer station to the Landfill. WM Mobile also seeks declaratory judgment as to SWA's contract obligation to work with WM Mobile to expand the service area for the Landfill.
SWA filed an amended counterclaim for breach of contract against WM Mobile alleging that the royalties had been underpaid for 2012 and 2013. (Doc. 9) SWA also answered the second amended complaint and set forth its affirmative defenses. (Doc. 70)
"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Rule 56(c) governs procedures and provides as follows:
Fed. R. Civ. P. 56(c).
A party seeking summary judgment bears the initial responsibility of informing the district court of the basis for its motion and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)).
The mere existence of a factual dispute will not automatically necessitate denial; rather, only factual disputes that are material preclude entry of summary judgment. Lofton v. Secretary of Dep't of Children & Family Services, 358 F.3d 804, 809 (11th Cir. 2004). "An issue of fact is material if it is a legal element of the claim under the applicable substantive law which might affect the outcome of the case. It is genuine if the record taken as a whole could lead a rational trier of fact to find for the nonmoving party." Reeves v. C.H. Robinson Worldwide, Inc., 594 F.3d 798, 807 (11th Cir. 2010) (en banc) (citation omitted).
If a non-moving party fails to make a sufficient showing on an essential element of its case with respect to which it has the burden of proof, the moving party is entitled to summary judgment. Celotex, 477 U.S. at 323. In reviewing whether a non-moving party has met its burden, the Court must stop short of weighing the evidence and making credibility determinations of the truth of the matter. Instead, the evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in its favor. Tipton v. Bergrohr GMBH-Siegen, 965 F.2d 994, 998-99 (11th Cir. 1992) (internal citations and quotations omitted).
Moreover, the applicable Rule 56 standard is not affected by the filing of cross-motions for summary judgment. See, e.g., Am. Bankers Ins. Group v. United States, 408 F.3d 1328, 1331 (11th Cir.2005); Gerling Global Reins. Corp. of Am. v. Gallagher, 267 F.3d 1228, 1233 (11th Cir.2001). "Cross-motions for summary judgment will not, in themselves, warrant the court in granting summary judgment unless one of the parties is entitled to judgment as a matter of law on facts that are not genuinely disputed." United States v. Oakley, 744 F.2d 1553, 1555 (11th Cir.1984) (citation omitted). The Court is mindful that "`[w]hen both parties move for summary judgment, the court must evaluate each motion on its own merits, resolving all reasonable inferences against the party whose motion is under consideration.'" Muzzy Products Corp. v. Sullivan Industries, Inc., 194 F.Supp.2d 1360, 1378 (N.D. Ga. 2002).
The parties do not dispute the existence and formation of the 1993 Contract between SWA and Transamerican, a predecessor to WM Mobile,
The parties also do not dispute that in 2003, SWA entered into a Lease Agreement with Waste Away Group, Inc. (Waste Away) another Waste Management affiliate whereby Waste Away leased the Landfill from SWA for a term ending October 2038. (Doc. 77-5) The Lease was part of a bond issue by SWA in which tax-exempt bonds were issued and the proceeds were used by Waste Away to obtain new disposal cells and liner systems, improve the leachate and methane gas collection systems, and acquire equipment for the landfill. (Doc. 77-5, Exhibit 5, Lease; Doc. 76, p. 4).
In response to WM Mobile's motion for summary judgment as to Counts I, II, III, and IV, and in its own motion, SWA argues that the 2003 Lease Agreement between Waste Away, WM Mobile's parent company, and SWA is dispositive of all the claims relating to the financial relationship between the parties, because the Lease restructured the financial obligations and other terms of the 1993 Contract. (Doc. 76, p. 4; Doc. 96, p.1) In support, SWA argues that in 2003, SWA issued tax-exempt revenue bonds in the amount of $4,175,000 for the benefit of WM Mobile and were "issued for the purpose of financing the cost of improving and equipping certain existing solid waste disposal facilities located in Mobile County (the "Bond Financed Facilities") for the benefit of" Waste Away Group and to purchase a cell construction and liner system, install and operate a methane gas system, and purchase equipment. (Doc. 76, p. 4; Doc. 77-7, Tax Certificate and Agreement § 1.2(a); Doc. 96, p. 12, 20). The bonded "Project" was the landfill and the improvements to be constructed thereon and the Lease was entered into when the revenue bonds were issued. SWA argues that the following Lease provisions require WM Mobile to manage and operate the landfill and make improvements at its own expense:
(Doc. 77-5, Lease Agreement).
SWA also argues that the Lease also contains a broad indemnification and release provision as follows:
(Doc. 77-5, Lease Agreement).
Based upon these provisions, SWA argues that WM Mobile Bay has assumed the costs of maintaining and operating the landfill, including all costs for betterments and improvements, (doc. 77-5, § 6.2 and 6.3) and that the Lease does not provide for WM Mobile to recover these costs by a price adjustment for disposal of waste (Counts I and II). SWA also argues that WM Mobile Bay's claims for price adjustments and reimbursements for capital expenses and increased operating costs
(Doc. 77-5, p. 7) (Bracketed text added).
WM Mobile argues that the Lease has no bearing on this litigation. WM Mobile points out that it is not a party to the Lease. WM Mobile also argues that the Contract provides that it "may be modified, amended, discharged or waived only by an agreement in writing signed by each party" (doc. 29-1, § 7.3), but there is no such agreement and no clear expression in the Lease that it was intended to modify or amend the Contract. (Doc. 95, p. 3)
WM Mobile points to Section 1.5 of the Lease to argue that it specifically provides that the Contract shall remain in full force and effect and governs conflicts between the two documents. WM Mobile argues that the language "with respect to the operation of the Existing Facility", which SWA argues limits the original Contract, is not a clear statement of intent to modify or amend the compensation provision and without clear intent in writing, there can be no modification.
WM Mobile argues that the fundamental determination is the intent of the parties, and that the Court must, if possible ascertain and give effect to the common intention of the parties, and to do so, the Court may accept parol evidence to determine the intention if the contract provision is ambiguous. WM Mobile argues that none of SWA's witnesses have testified to this interpretation and that the parties' conduct and course of dealings subsequent to the execution of the Lease in 2003 demonstrates the parties intent for financial provision of the original Contract to remain in full force and effect.
WM Mobile also points out that in 2004, the parties negotiated and agreed to a temporary rate increase pursuant to Section 6.6, captioned "Price Adjustments", to the Contract, and that SWA never made any suggestion that this Section had been superseded by the 2003 Lease. (Doc. 95, p. 6) WM Mobile also points out that it continued to invoice the City for disposal and transfer fees as provided in the 1993 Contract and the City paid the invoices without argument that the Lease superseded the Contract. WM Mobile also continued to make royalty payment to SWA, which SWA accepted without argument that the 2003 Lease superseded the 1993 Contract.
Under Alabama law, "the circumstances surrounding the contract are considered only where the terms are ambiguous" and the Court need "not consider evidence of the parties' intentions or course of dealing" unless there is an ambiguity. Reeves Cedarhurst Development Corp. v. First Amfed Corp. 607 So.2d 184, 187 (Ala. 1992). Therefore, the Court looks to whether Section 1.5 of the Lease is ambiguous. In that regard, "[w]hether a contract is ambiguous is a question of law for the trial court to determine. In interpreting a contract, the words of the agreement will be given their ordinary meaning. An instrument is unambiguous if only one reasonable meaning clearly emerges. If the terms within a contract are plain and unambiguous, the construction of the contract and its legal effect become questions of law for the court and, when appropriate, may be decided by a summary judgment. However, if the terms within the contract are ambiguous in any respect, the determination of the true meaning of the contract is a question of fact to be resolved by a jury." McLemore v. Hyundai Motor Mfg. Alabama LLC, 7 So.3d 318, 327 (Ala. 2008) (quoting Reeves Cedarhurst Development Corp., 607 So.2d at 186-187)(internal citations and quotation marks omitted).
The Court finds that Section 1.5 of the 2003 Lease clearly indicates that the Lease agreement does not supplant the Operating Agreement. Moreover, the phrase "with respect to the operation of the Existing Facility" on which SWA relies to argue that the financial obligations were supplanted by the Lease, is not ambiguous. This phrase can not be reasonably construed as a limitation on the supremacy of the 1993 Operating agreement. Giving the word "operation" its common meaning in the business context, it include financial obligations; to operate a business includes earning revenue and paying expenses. And were it ambiguous, the parties' conduct of negotiating a temporary price increase in 2004 after the Lease was entered into in 2003, continuing to assess a disposal and hauling fee, and making and receiving royalty payments is sufficient parol evidence of the parties' intent that the 1993 Contract continued in full force and effect even to the financial obligations even after the 2003 Lease was executed. Additionally, under Alabama law, an inequity "would result if a party were allowed to simultaneously claim the benefits of a contract while repudiating its burdens and conditions" MTA, Inc. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 114 So.3d 27, 31 (Ala. 2012) (recognizing an equitable estoppel exception). Accordingly, the Court finds that the Lease provisions do not supplant the 1993 Contract provisions. Therefore, to the extent that SWA's motion for summary judgment is based upon this argument, the motion is denied.
In Count I, WM Mobile alleges that SWA breached its contractual duty to negotiate in good faith in response to WM Mobile's requests for price adjustments for landfill deposits in 2010, 2011, 2012, 2013. In Count II, WM Mobile alleges that SWA breached its contractual duty to negotiate in good faith in response to WM Mobile's requests for price adjustments for transferring and hauling waste from the transfer station to the landfill. In Count III, WM Mobile alleges that SWA breached its contractual duty to negotiate in good faith in response to WM Mobile's requests for reimbursements for capital expenditures. In Count IV, WM Mobile alleges that SWA breached its contractual duty to reimburse WM Mobile for increased costs due to changes in laws and regulation.
Except as otherwise provided herein, the per ton fees payable to Contractor shall not be adjusted during the first two Contract Years. Each Contract Year thereafter, such fees shall, at the request of Contractor, be adjusted to reflect the change in the cost of Contractor doing business hereunder in an amount to be mutually agreed upon by Contractor and the Authority, not to exceed the change in the Consumer Price Index, or the Competitive Price Index, whichever is the lowest.
(Doc. 29-1, p. 25-26).
Under Alabama law, "`[t]he elements of a breach-of-contract claim ... are (1) a valid contract binding the parties; (2) the plaintiff's performance under the contract; (3) the defendant's nonperformance; and (4) resulting damages.'" Smith v. Cotton States Mut. Ins. Co., ___ So. 3d ___, 2014 WL 1407301, *4 (Ala. Civ. App. Apr, 11, 2014) (quoting Shaffer v. Regions Fin. Corp., 29 So.3d 872, 880 (Ala.2009) (quoting Reynolds Metals Co. v. Hill, 825 So.2d 100, 105 (Ala.2002)). The parties do not dispute the validity of the Contract or of this Contract provision.
On motion for summary judgment, WM Mobile alleges that it made specific requests for price adjustments and reimbursements and attended meeting in an effort to provide information to support the requests, during the Contract years in September 2010, October 2010, November 2011, December 2011, September 2012, November 2012, and August 2013. (Doc. 80, p. 13-16; Doc. 95, p. 12-15) And that as to each request, SWA either did not respond, or took no action, or asked for additional information and then took no action on the additional information provided. (Id.) WM Mobile acknowledges that the Contract contains a provision that the rate adjustment must be "mutually agreed upon" by the parties and documented to SWA's "reasonable satisfaction", but argues that "it is impossible for parties to mutually agree upon anything when one side refuses to negotiate in good faith as required by the Contract" and that SWA has demonstrated through it conduct and testimony that it does not intend to abide by this contractual obligation. (Doc. 99, p. 13).
In response, SWA alleges that WM Mobile failed to provide appropriate "supporting documentation" for its requests, which documentation was "repeatedly and consistently requested by members" of SWA, and therefore, WM Mobile failed to follow the requirements of the Contract. (Doc. 96, p. 7) SWA also alleges that the documentation submitted on motion for summary judgment in support of WM Mobile's claim to entitlement for rate adjustments "are nothing more than arithmetic"
Upon consideration of the factual allegations regarding the requests for price adjustments and reimbursements from September 2010 through August 2013 and the documentation provided with the requests, the Court finds that there is a genuine issue of material fact on the claims of breach of contract. Specifically, there is a factual issue as to whether SWA failed to negotiate the price adjustments and reimbursements claimed in Counts I through IV and whether WM Mobile provided sufficient documentation from which SWA could find to its reasonable satisfaction that an adjustment or reimbursement was due. Accordingly, summary judgment is denied as to Counts I through IV.
Count V — Breach of Contract Relating to Requests for Service Area Expansion and Count XI seeking Declaratory Judgment as to Section 1.4
In Count V, WM Mobile alleges that SWA has breached the Contract because it has failed to work with WM Mobile to expand the service area for the landfill, even though it has demonstrated the benefits of expansion. In Count XI, WM Mobile seeks a declaratory judgment that SWA is contractually obligated to work with WM Mobile to expand the Service Area. (Doc. 29)
In the Contract, Section 1.4 defines the service area as the City of Mobile and the unincorporated areas of Mobile County, Alabama, "including all municipalities therein, who elect to use the Landfill". (Doc. 29-1, p. 4, Definitions) Section 1.4 also contains the following provision:
(Id.)
At SWA's request in December 2011, WM Mobile provided information to SWA that demonstrated that the expansion was beneficial to the citizens of Mobile by increasing revenues to SWA without increasing any cost and that expansion would have no detrimental effect on the long-term viability of the landfill. (Doc. 80, p. 15-16) SWA did not take any official action or respond to this request. (Id. p. 18)
In September 2012, WM Mobile again requested expansion for the above reasons and because the Turkey Trot landfill in Washington County was competing with WM Mobile in Mobile County. (Doc. 80, p. 19) According to WM, SWA did not take any official action or respond, nor did SWA respond to WM Mobile's follow-up letter in November 2012 and after further communication in July and August 2013, SWA did not take any action on the request for Service Area expansion. (Doc. 80, p. 22)
Under Alabama law, the "host community", the Mobile County Commission, must develop a solid waste management plan and approve any expansion of service area to allow solid waste from outside of the County for disposal at the Landfill. (Doc. 79, p. 11; Ala. Code § 22-27-47 and 48) WM Mobile and SWA were both aware of this requirement. Waste Management employee Rene Feucheux acknowledged that the host community would have to approve the expansion (Doc. 78-8, p. 35). John Bell, an employee of the City of Mobile who acted as an advisor to the SWA, testified that he advised SWA that expansion would benefit the citizens of Mobile and that SWA deemed the expansion would be beneficial. (Doc. 80-4, p. 32-34).
SWA Board member Timothy Morris provided an affidavit and copies of minutes of meetings where he states that SWA "has always supported such an expansion and has always made this known to Waste Management" but "[u]nless and until the County Commission granted Host Community approval, any action of the Authority would be meaningless." (Doc. 78-1, p. 5) Morris references the minutes of meetings in July 2003, October 2005, December 2006, February 2008, August 2008, November 2011, which reflect discussions of expansion, the need for Host Community approval, and the lack of approval by Mobile County. (Id., p. 12-13) Morris also stated that Waste Management had not applied to the Mobile County Commission or had any discussion with the City Council since 2003. (Id., p. 14) (citing Faucheux's Deposition, Doc. 78-8, p. 36-37).
SWA argues that it has always supported an expansion, and will continue to do so in the future, but under Alabama law, the Host Community, the Mobile County Commission, must approve the expansion by amending it solid waste management plan and that the Alabama Department of Environmental Management must issue a permit modification for such an expansion, but only after Host Community approval. SWA argues that in view of these facts, it cannot be held in breach of its contractual obligation to "work with" WM Mobile. (Doc. 76, p. 30-31; Doc. 101, p. 10).
WM Mobile argues that SWA's motion should be denied because the Contract places an obligation on SWA to assist with efforts to expand, and despite repeated requests, SWA has never demonstrated through official action that it approves of the expansion (doc. 95, p. 21). WM Mobile also argues that summary judgment should be entered in its favor "declaring that SWA must officially approve Service Area expansion into the following counties in Alabama: Baldwin, Washington, Clarke, Choctaw, Monroe, Escambia, Conecuh, Covington and Butler, which is consistent with WM Mobile Bay's requests." WM Mobile argues that an actual controversy exists between the parties as to SWA's obligation to work with WM Mobile Bay to expand the service areas and that SWA has "never demonstrated through official action that it approves of WM Mobile Bay's requests." (Doc. 80, p. 45-46)
In addition to the 28 U.S.C. § 2201, which provides that in a "case of actual controversy", the Court "may declare the rights and other legal relations of any interested party", WM Mobile's allegation seeking declaratory judgment is also based on Ala. Code § 6-6-223, captioned, "Construction or validity of instruments, statutes, ordinances, contracts, or franchises", which sets forth as follows:
Ala. Code § 6-6-223.
As previously stated, under Alabama law, "`[t]he elements of a breach-of-contract claim... are (1) a valid contract binding the parties; (2) the plaintiff's performance under the contract; (3) the defendant's nonperformance; and (4) resulting damages.'" Smith v. Cotton States Mut. Ins. Co., ___ So. 3d ___, 2014 WL 1407301, *4 (Ala. Civ. App. Apr, 11, 2014) (quoting Shaffer v. Regions Fin. Corp., 29 So.3d 872, 880 (Ala.2009) (quoting Reynolds Metals Co. v. Hill, 825 So.2d 100, 105 (Ala.2002)). The parties do not dispute the validity of the Contract or of this Contract provision. SWA does not argue that WM Mobile has failed to perform as to this specific Contract Provision.
Thus the Court looks to whether there is evidence from which a reasonable jury could determine that that SWA has not performed under the Contract provision to "work with" WM Mobile. However, WM Mobile has not presented any evidence as to what sort of "official action" would demonstrate approval and has not provided the Court with any guidance in the law as to that issue. But WM Mobile has submitted a copy of a letter written to the SWA Board explaining that it had requested the SWA to cooperate in good faith to expand the service area but the SWA had provided no relief on this request. (Doc. 95-6, p. 21, Letter of September 27, 2012). WM Mobile also provides a copy of a letter wherein WM Mobile reiterates that at the October 2012 meeting, SWA had questions regarding the previous requests for service area expansion and tabled other issues until these questions were resolved. (Doc. 95-6, p. 25) WM Mobile reminded SWA that it had not received a reply and that the anniversary date of the amended request for service area expansion was approaching. WM Mobile also provided a summary of the history of the service area expansion requests, including delays of up to three years to respond on the part of SWA. (Doc. 95-6, p. 25-26).
SWA presented evidence that at the Board meetings when the issue of expansion has been addressed, the Board of SWA has approved the expansion. The minutes from the August 2008 Board Meeting reflect as follows:
(Doc. 78-1, p. 52). The minutes also reflect that Donna Davis of Waste Management introduced the regional manager, manager of local hauling, local manager at Chastang, and the attorney for Waste Management, who were present at the meeting. (Id. p. 51).
At the next meeting on November 10, 2011, the minutes reflect that the SWA Board had not met since August 2008 and that:
It was discussed that the board approved the service area expansion and that no other decisions were made by the City Council or the County Commission for the expansion so that the authority could move forward with the plan.
(Doc. 78-1, p. 55). Thus, the evidence establish that SWA officially approved the expansion on two occasions, but that the expansion efforts were thwarted by the City's and County's inaction. The terms of the Operating agreement cannot be reasonably construed to hold SWA liable for the City's or County's inaction on expansion efforts. Accordingly, SWA's motion for summary judgment as to Count V is GRANTED, and WM Mobile's motion for summary judgment seeking declaratory judgment regarding the expansion is DENIED.
In Count VI, WM Mobile alleges that SWA breach its contractual duty to perform its obligations consistent with standards of good faith and fair dealing because it failed to negotiate price adjustments resulting from increased costs of managing the landfill (Count I), failed to negotiate price adjustments resulting from increased costs of operating the transfer station and hauling waste from the station to the landfill (Count II), failed to negotiate reimbursements for capital expenditures (Count III), refusing to reimburse WM Mobile for increased costs resulting from changes in laws and regulations (Count IV), and for refusing to work with WM Mobile for expansion of its service area (Count V).
The Contract contains the following provision:
(Doc. 29-1, p. 16)
In response to WM Mobile's motion and in its own motion, SWA argues that Alabama law does not recognize a cause of action for breach of the duty of good faith and fair dealing and therefore, Count VI should be dismissed. SWA points out that WM Mobile failed to cite any Alabama case law to support this cause of action but instead cites to out of state authority.
This Court sits in diversity and must apply the substantive laws of the forum state, Alabama. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 823 (1938). To do so, this court "must decide the case the way it appears the state's highest court would." Ernie Haire Ford, Inc. v. Ford Motor Co., 260 F.3d 1285, 1290 (11th Cir.2001) (internal quotation marks omitted). In Tanner v. Church's Fried Chicken, Inc., 582 So.2d 449, 452 (Ala. 1991), the Alabama Supreme Court held that
Tanner, 582 So.2d at 451-452 (citation omitted)
The Court found that Tanner could not maintain an action for breach of duty of good faith based upon an express contract provision to that effect in a purchase agreement. Accordingly, WM Mobile cannot maintain an action based upon the express provision in the 1993 Contract. Therefore, SWA is entitled to summary judgment in its favor as to Count VI and that Count is dismissed.
Id., at 453.
WM Mobile has alleged that SWA "expressly breached some other specific term" of the Contract, i.e., Counts I through V, as identified in Count VI. Therefore, the Court will separately address the parties' respective arguments as to these Counts.
In Count VII, WM Mobile alleges that SWA has breached its contractual obligation to indemnify and hold harmless WM Mobile from liability, loss, costs, and expenses arising from conditions that existed at the landfill before the commencement date of the Contract, October 9, 1993. WM Mobile alleges that certain contamination at the landfill relates to periods before the commencement date and that it is entitled to reimbursement for all expenses incurred in connection with the contamination in the amount of $23,064.50. Specifically, WM Mobile argues that it is contractually entitled to reimbursement for installation of groundwater monitoring wells in 2008 and 2013, for semi-annual costs for sampling and analysis of the groundwater at the unlined old portion of the landfill and for costs incurred for an Alternate Source Determination and a Nature and Extent Determination. (Doc. 80, p. 23-24, 38-39; Doc. 95, p. 19-20) In support, WM Mobile provides the affidavit of Mark Noel, an Environmental Manager with Waste Management. (Doc. 80-10) Noel states that "[a]s a result of the fact that the old landfill is unlined, a condition that existed prior to the Commencement Date of the . ..Contract", WM Mobile installed the wells and incurred these expenses. (Id.)
SWA argues that WM Mobile never made a pre-suit demand or claim for reimbursement or indemnification. SWA asserts that despite its request for production of "[a]ll documents provided" to SWA to support this claim or production of "any claim or demand" for indemnification, WM Mobile never produced any documents during discovery, but instead stated that it was "currently researching this issue and will produce responsive documents as they are located." (Doc. 76, p. 29) SWA points out that after discovery closed and in support of its summary judgment motion, WM Mobile provided Noel's affidavit and copies of invoices. (Doc. 76, p. 28-29; Doc. 96, p. 20-22)
SWA also argues that the record evidence shows that no contamination existed at the landfill before the commencement date of the 1993 Contract. For this position, SWA relies on WM Mobile's Area Engineer and 30(b)(6) designee Brian Dohilite who testified that "only `minor things' like grass cutting and routine maintenance have been undertaken with regard to the [old landfill] that existed prior to the commencement date" of the Contract in 1993. (Doc. 76, p. 29)
The Contract includes the following relevant provision concerning SWA's indemnification obligations:
(Doc. 29-1, p. 9, Section 1.12.)
Thus, pursuant to the terms of the Contract, SWA has a duty to indemnify WM Mobile for costs arising from "conditions that existed" prior to the commencement date. In that regard, WM Mobile's Environmental Manager Noel states that "[a]s a result of the fact that the old landfill is unlined, a condition that existed prior to the Commencement Date of the . ..Contract", WM Mobile incurred the expenses. (Id.)
There is no dispute of fact that the old landfill was unlined before 1993. SWA points to Dohilite's testimony that only grass cutting and routine maintenance were undertaken with regard to the old landfill "that existed prior to" the commencement date as evidence that there was no groundwater contamination resulting from the unlined landfill. However, Dohilite testified that between 1998-1999, when the old landfill area was closed, and 2005, the grass was cut and erosion and drainage issues were fixed. (Doc. 78-11, p. 23-24)
However, SWA argues that WM Mobile never made a demand or claim for payment prior to filing suit. In support, SWA points out that WM Mobile did not disclose in discovery any documents that it had "provided to" SWA in support of its claim, but instead, relies on Noel's post-litigation affidavit and copies of invoices. Thus, it appears that SWA argues that it was never given a chance to perform under the Contract because WM Mobile never made a claim for reimbursement. However, SWA does not argue that the groundwater contamination was not the result of the unlined landfill, the pre-existing condition, nor does it point the Court to any provision in the Contract that requires notice or demand before litigation.
Under Alabama law "a promisor is held strictly to the literal terms of his promise." Alpine Const. Co. v. Water Works Bd. of City of Birmingham, 377 So.2d 954, 956 (Ala. 1979). Also, under Alabama law, "[t]he law can properly excuse a promisor from performing whenever justice requires it if the failure of performance was caused by the fault, actions, or inactions of the other party." Rapaco, Inc. v. Agee, 453 So.2d 1048, 1050 (Ala.Civ.App. 1984). Arguably, had WM Mobile made a pre-litigation demand, then SWA would have had an opportunity to perform under the Contract. However, as previously stated, there is no provision in the Contract that requires notice or demand to be given before filing suit for reimbursement and indemnification. Further, SWA does not dispute that the expenses were incurred. (Doc. 96, p. 20-22; Doc. 76, p. 28-29) Accordingly, summary judgment is due to be GRANTED in favor of WM Mobile as to Count VII for reimbursement and indemnification in the amount of $23,064.50.
In Count VIII, WM Mobile alleges that in August 2013, SWA declared WM Mobile in breach as to Section 6.2 of the Contract for allegedly under-reporting the volume of waste deposited and under-paying royalties. WM Mobile alleges that there is a justiciable controversy over the interpretation of the section and that the Court may determine the construction and the parties' legal rights and obligations. (Doc. 29, p. 16)
In Count IX, WM Mobile alleges that when SWA declared the breach it also threatened to terminate the Contract unless the royalties were paid. WM Mobile alleges that this threat constitutes economic duress and business compulsion, and for the sole purpose of preserving its contractual rights, it involuntarily paid the disputed royalties and is due to be reimbursed. (Doc. 29, p. 17)
In its counterclaim, SWA claims that WM Mobile had underpaid the royalties for the year of 2012 through the third quarter of 2013. SWA alleges that WM Mobile reported a larger amount of waste to the Alabama Department of Environmental Management than it reported to SWA, that the intentional underreporting constitutes a material breach of the contract, and demands judgment for the amount of royalty that was underreported and underpaid. (Doc. 9)
On motion for summary judgment, WM Mobile argues Section 6.2 does not require payments of royalties to SWA for waste deposited by it or its hauling affiliates and that it mistakenly paid this royalty in the past, but then corrected its mistake. However, after accepting the royalty payments for approximately a year and a half, SWA declared WM Mobile in default, and threatened to terminate the Contract. Thus, WM Mobile paid the royalties under economic duress and business compulsion and now seeks reimbursement and declaratory judgment as to the proper calculation of royalty payments. As to SWA's counterclaim, WM Mobile argues that summary judgment should be entered in its favor because the counterclaim is based on an incorrect interpretation of Section 6.2.
In support, WM Mobile relies upon the express language of Section 6.2 that requires a royalty on waste deposited "by the City or by third parties" and argues that Waste Management and its hauling affiliates are not "third parties" under the Section. WM Mobile also argues that there were no "proceeds actually received" because it excluded "internal volume", waste that comes from a Waste Management truck or subcontractor, i.e., a hauling affiliate, from the calculation, and that although there is an "internal cost" billed to the hauling affiliate, no money changes hands, and the cost is used to separately track profitability.
In response, SWA argues that in the historical context, "by third parties" meant companies in the solid waste business other than Transamerican, WM Mobile's predecessor. SWA argues that it was to receive a royalty on the "entire waste stream" deposited at the landfill and that the parties'" course of dealing" for over twenty years binds WM Mobile to that interpretation of the Contract. SWA also argues that WM Mobile is the signatory to the Contract and that it has no garbage trucks or collection stream to deposit at the landfill but instead separate corporate entities within the Waste Management corporate group or third parties with which they contract do so. SWA argues that under Alabama law, which recognizes that corporations are separate and distinct entities, the Waste Management affiliates, are third parties to the Contract despite the presence of a parent corporation.
Section V., captioned "New Landfill Facility", provides, in relevant part, as follows:
(Doc. 29, p. 23) (bracketed text added).
Section VI, captioned "Compensation", provides, in relevant part, as follows:
(Doc. 29, p. 24) (bracketed text added).
In addition to the 28 U.S.C. § 2201, which provides that in a "case of actual controversy", the Court "may declare the rights and other legal relations of any interested party", WM Mobile's allegation seeking declaratory judgment is also based on Ala. Code § 6-6-223, captioned, "Construction or validity of instruments, statutes, ordinances, contracts, or franchises", which sets forth as follows:
Ala. Code § 6-6-223.
Under Alabama law, the "course of dealing is `relevant not only to the interpretation of express contract terms, but may [itself] constitute contract terms.' . . . [I]it "may not only supplement or qualify express terms, but in appropriate circumstances, may even override express terms." Marshall Durbin Farms, Inc. v. Fuller, 794 So.2d 320, 325 (Ala. 2000) (citations omitted); see also City of Huntsville v. Stove House 5, Inc., 3 So.3d 186, 193 (Ala. 2008) ("This Court recognizes that `[a]n implied contract arises where there are circumstances which, according to the ordinary course of dealing and common understanding, show a mutual intent to contract ....'") However, under Alabama law, "the circumstances surrounding the contract are considered only where the terms are ambiguous" and the Court need "not consider evidence of the parties' intentions or course of dealing" unless there is an ambiguity. Reeves Cedarhurst Development Corp. v. First Amfed Corp. 607 So.2d 184, 187 (Ala. 1992).
Therefore, the Court looks to whether Section 6.2 is ambiguous. In that regard, "[w]hether a contract is ambiguous is a question of law for the trial court to determine. In interpreting a contract, the words of the agreement will be given their ordinary meaning. An instrument is unambiguous if only one reasonable meaning clearly emerges. If the terms within a contract are plain and unambiguous, the construction of the contract and its legal effect become questions of law for the court and, when appropriate, may be decided by a summary judgment. However, if the terms within the contract are ambiguous in any respect, the determination of the true meaning of the contract is a question of fact to be resolved by a jury." McLemore v. Hyundai Motor Mfg. Alabama LLC, 7 So.3d 318, 327 (Ala. 2008) (quoting Reeves Cedarhurst Development Corp., 607 So.2d at 186-187)(internal citations and quotation marks omitted).
The Court finds that the phrase "deposited . . . by third parties" is not ambiguous. Giving the term its ordinary meaning, "third parties" means "third parties" to the Contract. The Contract specifically states WM Mobile has the "right to dispose ... Solid Waste generated within the Service Area from any other parties in addition to" SWA. Since WM Mobile and SWA are the only parties to the Contract, Waste Management and its subsidiary corporations are third parties as contemplated in the Contract. Once the Court has determined that there is no ambiguity, "it must determine the force and effect of the terms of the contract as a matter of law." Mclemore, 7 So. 3d at 327. Accordingly, the force and effect of Section 6.2 is that WM Mobile owes royalties on the solid waste deposited by Waste Management and its affiliates, and therefore, WM Mobile is not entitled to summary judgment in its favor as to Count VIII or Count IX.
In Count X, WM Mobile alleges that SWA breached the Contract because it directed certain solid wastes to a separate disposal facility and deprived WM Mobile of the revenue had the waste been disposed at the landfill. Specifically, WM Mobile alleges that 579,053 tons of trash were diverted to Dirt, Inc., between January 2005 and April 2013 and applying the contract disposal rate "yields lost revenues of $12,139,841, after subtracting the 5% royalty" due on the revenue. (Doc. 80, p. 28, 39-40) WM Mobile argues that SWA has admitted that it has not fulfilled this contractual obligation. (Id. p. 40)
In response, SWA argues that at the time of the Contract, the City of Mobile had its own trashfill for household yard waste and construction and demolition waste, thus the 1993 Contract did not apply to this type of trash, but instead to household garbage. In support, SWA argues that two years after the Contract, Transamerican submitted a written proposal to receive this type of waste at a different landfill in Semmes, Alabama, and that had it been Tranamerican's "intent to capture this waste stream as a matter of right", it would have no reason to separately negotiate or submit a separate proposal. SWA argues that the course of dealing supports the conclusion that the parties did not intend for WM Mobile to have exclusive disposal rights to all solid waste collected by the City.
WM Mobile replies that the proposal to receive the City's household yard waste and construction and demolition waste at the landfill in Semmes, was in response to John Bell's request for a proposal to have the waste delivered there in lieu of the Chastang landfill, at a savings to the City. WM Mobile asserts that no agreement was reached and the City remained obligated to dispose at the Chastang landfill under the 1993 Contract.
The Contract contains the following provision:
(Doc. 29-1, Section 5.2.)
(Id., Section 1.32)
(Id., p. 4).
(Doc. 29-1, p. 5).
(Doc. 29-1, p. 3-4)
As previously stated, under Alabama law, "the circumstances surrounding the contract are considered only where the terms are ambiguous" and the Court need "not consider evidence of the parties' intentions or course of dealing" unless there is an ambiguity. Reeves Cedarhurst Development Corp., 607 So.2d at 187.
Reading the Contract provisions together, the Court finds that there is no ambiguity and that the Contract requires that all Mobile Solid Waste be disposed of at the landfill and that Solid Waste is defined in such a manner as to include the type of waste allegedly delivered to Dirt, Inc. Once the Court has determined that there is no ambiguity, "it must determine the force and effect of the terms of the contract as a matter of law." Mclemore, 7 So. 3d at 327. Accordingly, the force and effect of Section 5.2 and Section 1.32 is that SWA has breached the Contract by delivering certain City of Mobile waste to the Dirt, Inc. landfill. Accordingly, WM Mobile is entitled to summary judgment in its favor as to Count X. However, WM Mobile's argument is unclear as to whether the amount of damages it seeks was based upon the disposal rates in effect at the time of the misdirection of waste or upon rates based upon the requested price adjustments for the years 2010-2013. Accordingly, the issue of damages is reserved for trial.
In accordance with the foregoing, parties' respective motions for summary judgment are denied in part and granted in part as set forth herein.
DONE and ORDERED.
