KRISTI K. DuBOSE, CHIEF UNITED STATES DISTRICT JUDGE.
This action is before the Court on the Motion for Summary Judgment filed by Defendant the City of Mobile, Plaintiff WM Mobile Bay Environmental Center, Inc.'s response, and the City's reply (docs. 117, 118, 126, 136, 147). The motion was heard on February 18, 2020. Upon consideration, and for the reasons set forth herein, summary judgment is granted in favor of the City as to Counts III and IV.
Initially, the City of Mobile owned and operated the Chastang Landfill and Bates Field Landfill for disposal of municipal solid waste. The City disposed of construction and demolition waste and yard waste at the Bates Field Landfill. The City disposed of other municipal solid waste at the Chastang Landfill. In 1985, as provided by the Code of Alabama, and City of Mobile Resolution No. 60-194, the City created the City of Mobile Solid Waste Disposal Authority to address the City's long-range requirements for municipal solid waste disposal. (Doc. 61-1).
In January 1993, by Ordinance No. 65-002, the City transferred, conveyed and assigned all of the City's rights, title, and interest to the existing landfills, equipment, and the municipal solid waste stream to the Authority. (Doc. 116-32). Specifically, as to solid waste, the City transferred and assigned to the Authority "the city solid waste stream, which includes all solid waste currently generated in the City and disposed of at the City landfill sites, and all future solid waste of a similar nature." (Id.). The City did not
In the Ordinance, the City explained that the purpose of establishing the Authority was to address the "need for long range planning to ensure the adequacy of disposal sites to meet the future needs of the City to dispose of solid waste in a cost efficient manner". (Id.). The City also empowered the Authority "to enter long term agreements with private companies to operate landfills, issue bonds to secure financing for the development of landfills, and to undertake other actions necessary to ensure adequate facilities for the future solid waste disposal need of the city." (Id.).
In October 1993, the Authority entered into a Solid Waste Management Contract with TransAmerican Waste Industries, Inc. (TWI) (Doc. 1-1). The contract provided that TWI would manage and operate the solid waste disposal facility owned by the Authority and located at the Chastang Landfill.
On March 29, 1994, the City and the Authority entered into an agreement for disposal of solid waste. In the recitals, the parties acknowledged that the City had conveyed its right to the "existing City landfills [Chastang and Bates Field] ... and the Solid Waste stream now and in the future generated by the City and its citizens" to the Authority. (Doc. 61-2) (bracketed text added). The 1994 agreement also provides as follows: "The City hereby designates the Chastang Sanitary Landfill as the sole deposit point of all non-hazardous and non-infectious municipal solid waste collected by the City." (Doc. 61-2)
The stated beneficiaries of the 1994 agreement were the citizens of Mobile: "[T]he City has determined that it is in the best interest of the citizens of the City to contract with the Authority to ensure that the City meets its long term need for a landfill to dispose of its solid waste at a reasonable price" and that the "Legislature of the State of Alabama has authorized the City to enter into long term contracts with their Authorities[.]" (Id.).
Under the "Additional Terms in Contract...", the City was "advised that the Authority has entered a management contract with TransAmerica Waste Industries, Inc." which required a royalty payment to the Authority. (Id., p. 5). The Authority agreed to "pay over to the City all royalty payments received from" TWI. (Id.)
In July 1995, with knowledge that the airport would build new runways near the Bates Field Landfill, the City issued a Request for Proposals to provide a different facility for disposal of the City's "household yard waste and construction/demolition waste." (Doc. 117, p. 3, n.2). TWI submitted a proposal for providing a construction and demolition waste facility (Doc. 118-11). TWI proposed a different landfill from the Chastang Landfill, "TWI's Mobile C&D Landfill", for receipt of this wastes. (Id., p. 7). Ultimately, on December 1, 1997, the City entered into an agreement with Gulf Hauling and Construction, Inc. for receipt of this waste (Doc. 117, p. 9). At present, this waste is deposited at Dirt, Inc. landfill. (Doc. 136, p. 11).
In 1999, Chastang Landfill, Inc. was incorporated as a subsidiary of TWI. (Doc. 116-5). On December 17, 2002, TWI executed an Asset Contribution Agreement with Chastang Landfill Inc. (Doc. 118-2).
Chastang Landfill, Inc. changed its name to WM Mobile Bay Environmental Center, Inc. in 2008. (Doc. 120, p. 5). Since 2002, Chastang Landfill, Inc., and now WM Mobile, have operated and managed the Chastang Landfill pursuant to the terms of the 1993 operation and management contract with the Authority.
In 2013, WM Mobile filed suit against the Authority in this Court. Among many claims, but relevant to this motion, WM Mobile claimed that the Authority had breached the 1993 contract by diverting construction and demolition waste, yard waste, and other waste to a different facility. (Civil Action No. 13-00434-KD-N). In the 1993 contract, the Authority agreed to "have delivered all Mobile Solid Waste Stream only to the [Chastang Landfill] or the Transfer Station and to no other sites, for disposal by" TWI. (Doc. 116-4, p. 15). The Authority agreed "to dispose at the New Landfill [the Chastang Landfill] all the City of Mobile Solid Waste generated within the Service Area." (Id., p. 22). "Mobile Solid Waste" is defined in the 1993 contract as "[a]ll non-infectious industrial, commercial, residential or municipal or other Solid Waste that is generated within the Service Area" excluding hazardous waste or waste that could not by law be deposited. (Id., p. 3). "Solid Waste" is defined as "[a]ll Refuse and Demolition Waste." (Id., p. 2, 4). "Demolition Waste" is defined as "[a]ll debris and waste construction materials, including earth, rock, concrete, brick, plaster, plasterboard, glass, asphaltic concrete, plastics, wire, and other ferrous materials derived from the construction of or the partial or total demolition of buildings, roads, or other structures ..." (Id., p. 2-3). "Refuse" is defined as "cuttings from trees, lawns, and gardens" (Id., p. 4). WM Mobile obtained a judgment in its favor against the Authority as to this claim and the judgment was affirmed on appeal.
In 2017, the City and WM Mobile entered into a Settlement Agreement and Release. (Doc. 61-6). The parties settled "any and all claims that could be brought by WM Mobile Bay against the City as a result of the City's deposit of Municipal Solid Waste at disposal facilities other than the Chastang Landfill after the Effective Date." (Doc. 61-6, p. 2). The parties recognized that the City and the Authority were parties to the 1994 agreement wherein the "City designated the Chastang Landfill as the sole deposit point for all Municipal Solid Waste (including Diverted Waste) collected by the City." (Id.) The City denied "any wrongdoing, breach, or liability" for diverting wastes to another landfill. (Id., p. 2, 5).
The Settlement Agreement defined "Diverted Waste" as "Yard Waste, Construction and Demolition Waste, and White Goods collected by the City" and defined "Municipal Solid Waste" as "all non-infectious, industrial, commercial, diverted waste, residential and municipal or other solid waste that is collected within the city limits[.]" (Id., p. 3). The City agreed to pay WM Mobile a set sum for lost profits for the "Diverted Waste" sent to a different landfill between October 1, 2016 and July 31, 2017, and to pay a set sum for "reimbursement of capital improvement" at the Chastang Landfill. (Id.) The City also agreed to pay a monthly payment to WM Mobile for each "cubic yard of Diverted Waste deposited at disposal facilities other
"Summary judgment is appropriate where `there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'"
The district courts are "required to view the evidence and all factual inferences therefrom in the light most favorable to the non-moving party and resolve all reasonable doubts about the facts in favor of the non-movant."
WM Mobile alleges that it is an intended direct third-party beneficiary to the 1994 agreement because the agreement "designates the Chastang Sanitary Landfill as the sole deposit point of all non-hazardous and non-infectious municipal solid waste collected by the City." (Doc. 61, p. 8). WM Mobile claims that the City breached the 1994 agreement by directing yard wastes or construction and demolition waste to a separate facility, and deprived WM Mobile of the profits from disposal of this waste at the Chastang Landfill.
"Under Alabama law,
In
"To determine the contracting parties' intent to confer a direct benefit on a third party, the court must first look to the contract itself, because, while the intention of the parties controls in construing a written contract, the intention of the parties is to be derived from the contract itself, where the language is plain and unambiguous."
The City argues that WM Mobile is not the successor-in-interest to any purported third-party beneficiary rights of TWI because there was not a valid assignment of any contractual rights. The City points out that the Asset Contribution Agreement indicates only the sale of an asset, the "Chastang Landfill further described as Business Unit 1143" and does not reference any contractual rights, which is required under Alabama law.
As a matter of contract interpretation, the Court first looks to the face of the document to determine any transfer of third-party benefit rights.
(Doc. 118-2, p. 1). Exhibit A listed "Chastang Landfill further described as Business Unit 1143" (Id., p. 3).
TWI sold, transferred, conveyed and assigned to Chastang Landfill, Inc.
The City cites to
The City argues that the 1994 agreement is unambiguous and there is no evidence therein that the parties intended to confer a direct benefit upon TWI. The City concludes that since TWI was not an intended third-party beneficiary to the 1994 agreement, no third-party rights could have been assigned or conveyed to WM Mobile.
WM Mobile responds that, as the successor of TWI, it is a direct, intended third party beneficiary because the 1994 agreement anticipates a specific necessary third party — the landfill operator. WM Mobile points out that the 1994 agreement refers to TWI by name and acknowledges the 1993 contract for operation and management of the Chastang Landfill.
There is no dispute that the City knew when it entered into the 1994 Agreement with the Authority that depositing all of the municipal solid waste at the Chastang landfill might benefit TWI since TWI's compensation for operating the landfill was tied to the amount of waste it received. But, "`[f]oreseeability [alone], however, does not confer [third-party] beneficiary status.'"
Prior to the March 1994 agreement between the City and the Authority, the City passed a January 26, 1993 Ordinance which authorized the transfer of the City's interest in the landfill sites, personal property and solid waste to the Authority. (Doc. 116-32). As to solid waste, Ordinance No. 65-002 provided that the "City hereby transfers and assigns to the Authority the City solid waste stream, which includes all solid waste currently generated in the City and disposed of at the City landfill sites, and all future solid waste of a similar nature." (Doc. 116-32, p. 2)
The October 6, 1993 contract, between the Authority and WM Mobile's predecessor (TWI) regarding the disposal of solid waste, provided that "the Authority agrees to have delivered all Mobile Solid Waste Stream only to the Landfill [defined as the Chastang Landfill] or the Transfer Station and to no other sites, for disposal by contractor." (Doc. 116-4, p. 15). As explained supra, when the Authority entered into the October 6, 1993 contract, the City had already given the Authority control and title to the City's solid waste stream (that the City currently delivered to city landfills and future waste of a similar nature). The October 6, 1993 contract also required the Authority to pay certain fees to TWI to compensate for the operation of the Chastang Landfill.
The stated purpose of the 1994 agreement between the Authority and the City was to benefit the citizens of Mobile by providing a long-range plan for meeting the City's "needs for a landfill to dispose of its solid waste at a reasonable price." (Doc. 116-18 p. 2) The 1994 agreement: 1) designated the Chastang Landfill as the sole deposit point of all non-hazardous and non-infectious municipal solid waste collected by the City; 2) acknowledged that the Authority was obligated to receive all of said solid waste, 3) set the rates and fees the city would pay to the Authority for acceptance of the solid waste, and (4) obligated the Authority to remit to the City all royalty payments received from TWI. (Id.) Thus, the purpose of the 1994 Agreement was to designate
Upon review of the 1994 agreement and the surrounding circumstances, and with the benefit of oral argument, it is clear
Moreover, the 1994 agreement provides that it is effective for at least 20 years. Thus, any third-party benefits would be for at least 20 years. As the City points out, it is prohibited by law from entering into a contract for services that exceeds three years.
WM Mobile relies heavily on
The facts of
Upon consideration the Court finds that WM Mobile has no cause of action against the City pursuant to the 1994 agreement.
Even if WM Mobile was an intended direct third-party beneficiary under the
The City points to two facts that support its waiver argument. First, the City highlights that TWI submitted a proposal in 1995 to receive construction and demolition waste and yard waste at a different landfill from the Chastang Landfill. From this the City argues that TWI acted inconsistently with the alleged right to receive such waste under the 1994 agreement. Second, the City asserts waiver because WM Mobile, with knowledge that these wastes were not deposited at Chastang Landfill, waited more than 20 years after the 1994 agreement to enforce its purported third-party beneficiary rights to have the City deliver such waste to the Chastang Landfill.
WM Mobile asserts that this Court previously "dispensed with the suggestion" that the 1995 proposal undermined WM Mobile's right to have construction and demolition waste and yard waste delivered to the Chastang Landfill. (Doc. 136, pp. 3, 12). This assertion is incorrect as the Court has never considered the issue of waiver as it relates to either the 1993 contract or the 1994 agreement.
Previously, when addressing WM Mobile's claim for breach of contract relating to exclusive disposal rights, the Authority argued that the course of dealing, specifically the submission of the 1995 proposal, indicated that the parties did not intend for WM Mobile to have exclusive disposal rights (Doc. 116-1, p. 30, Order on Summary Judgment, Civil Action No. 13-00434-KD). The Court determined that it need only consider the parties' intentions or the course of dealing when the terms are ambiguous. Since the 1993 contract is not ambiguous as to delivery of "all Mobile Solid Waste Stream only to the [Chastang] Landfill", the Court did not consider the parties' course of dealing in determining the meaning of the term solid waste. (Id., p. 30-31). The issue of whether WM Mobile
As explained by a sister court,
WM Mobile argues that it has not waived the right to have yard waste and construction and demolition waste delivered exclusively to Chastang Landfill. (Doc. 136, p. 20, n. 5). WM Mobile relies on the fact that it began to assert
From the asserted uncontested facts, it appears that between 1993-1997, yard waste and construction and demolition waste was processed at Bates Field Landfill. And during this time, TWI submitted three proposals in 1995 to have the waste delivered to a new landfill TWI had acquired in 1994. (Doc. 117, p. 8). The proposals were submitted in response to the City's request for a proposal to provide a Construction and Demolition landfill. Thus, rather than assert its asserted right to have the said waste delivered by the City to the Chastang Landfill, WM Mobile (TWI) proposed a new facility to receive said waste. In 1997 the City entered into an agreement with another entity to receive the yard waste and construction and demolition waste and thereafter the said waste was delivered to this entity. TWI did nothing in response to assert its alleged rights against the City. In the meantime, the party asserting waiver, the City, "incurred trouble and expense" in its quest to find a disposal site for the yard waste and construction and demolition waste. It was not until 2013 that any formal action was taken. And even then, no formal action was taken against the City until 2018 by WM Mobile as the purported third party beneficiary of the 1994 Agreement between the City and the Authority. Accordingly, as to the City, the Court finds that WM Mobile has waived any alleged third party beneficiary rights under the 1994 Agreement between the City and the Authority.
Because WM Mobile is not an intended direct beneficiary under the 1994 agreement, and even if it was, it has waived such rights, summary judgment is GRANTED to the City on the claim that the City breached the 1994 agreement.
WM Mobile states that in 2017, it entered into a settlement agreement with the City wherein the City acknowledged that the 1994 agreement designated the Chastang Landfill as the "`sole deposit point' of all non-hazardous and non-infectious Municipal Solid Waste collected by the City" and agreed to pay WM Mobile $2.40 per cubic yard each month for "Municipal Solid Waste diverted to any disposal facilities other than the Chastang Landfill." (Doc. 61, p. 9). WM Mobile alleges that the City "breached its contractual obligations by continuing to divert certain Municipal Solid Waste to disposal facilities other than the Chastang Landfill without paying the monthly payments as required by the Settlement Agreement." (Id.)
The City argues that it is entitled to summary judgment because the 2017 settlement agreement is null, void and unenforceable pursuant to Ala. Code § 11-44C-67 and Mobile Municipal Code Section 2-66(j).
Ala. Code § 11-44C-67. And in 2017 the Mobile Municipal Code Section 2-66(j) provided that "[a]ll contracts requiring budget amendments for funding must come before
WM Mobile does not contest that in order for the monthly payments to be funded a budget amendment is required. Moreover, WM Mobile has not rebutted the evidence that the payments required by the settlement agreement are in excess of the amounts appropriated for that general classification of expenditure. (Doc. 118-14). Also, WM Mobile cites to no authority that the City's interpretation of Ala. Code § 11-44C-67 is incorrect. Rather WM Mobile makes a fairness argument that the statute unfairly gives the City "cart blanche" to disregard the settlement agreement and asserts that the City should be bound by the Mayor's signature. WM Mobile may be correct, but this Court has no authority to overrule the Alabama legislature's policy determination on this point. Accordingly, the Court finds that pursuant to Ala. Code § 11-44C-67, the 2017 settlement agreement is unenforceable.
Viewing the evidence and all factual inferences therefrom in the light most favorable to the non-moving party, WM Mobile, and for the reasons set forth herein, summary judgment is granted in favor of the City as to Counts III and IV.
DONE and ORDERED this 21st day of February 2020.