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Chatt Walker Co Sewer
Chatt Walker Co Sewer
Chatt Walker Co Sewer
Plaintiff City of Chattanooga, Tennessee, by and through its undersigned counsel, files this
Complaint seeking breach of contract damages, a declaratory judgment, equitable and injunctive
relief against Defendant Walker County General Water & Sewerage Authority, Walker County,
PARTIES
municipal corporation located in Hamilton County, Tennessee, organized and existing under the
2. Defendant Walker County General Water & Sewerage Authority, Walker County,
Georgia (“Walker County” or the “County”) is a county organized and existing under the laws of
4. This Court has personal jurisdiction over the City because the City is a municipality
organized under the laws of the State of Tennessee and is a Party to the contract that gives rise to
this dispute, which is an agreement relating to the treatment and disposal of wastewater in
Hamilton County.
5. This Court has personal jurisdiction over Walker County because Walker County is
a Party to the contract to which the City is a Party, and which relates to treatment and disposal of
6. This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332 because
of the complete diversity of citizenship of the parties and because the City seeks damages for
breach of contract in an amount to be determined but in any event greater than $75,000, and further
seeks a declaratory judgment and injunctive relief and other equitable remedies, regarding a
County is a non-resident and the contract that gives rise to the dispute relates to the treatment and
disposal of wastewater in Hamilton County, Tennessee and a substantial part of the events,
commissions and property giving rise to the City’s claims occurred or are located in Hamilton
County, Tennessee.
8. Paragraph 23(h) of the contract between the Parties includes a forum selection
clause that states that the contract will be “enforced and interpreted according to the laws of the
State of Tennessee” and that “any action brought to enforce this agreement shall be brought in the
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FACTS
Chattanooga operates the Moccasin Bend Wastewater Treatment Plant (“WWTP”), a treatment
plant of sufficient size and capacity to serve as an area wide wastewater treatment works for
portions of Hamilton County, Tennessee, and portions of Northwest Georgia located in Dade,
10. Pursuant to the Chattanooga Area 208 Waste Treatment Management Plan,
Chattanooga constructed and operated its wastewater treatment works as a party of the 201 Area
11. Walker County is located in the drainage redefined by the 201 Area Wide Facilities
permit for the treatment works all wastewater and extraneous waters from all sources entering the
wastewater collection and transmission system (“WCTS”) from inside or outside its boundaries
13. Chattanooga entered into a consent decree with the United States and the State of
Tennessee, in the case styled United States of America et. al. v. City of Chattanooga, No. 1:12-cv-
agreement (“IJA”), which governed the treatment and disposal of wastewater by Chattanooga from
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15. Under the 2014 Agreement, Chattanooga billed Walker County for wastewater
based on “billable flow,” which is the quantity of water that Walker County actually sold to its
residents.
17. The Consent Decree, the expiration of the 2014 Agreement, and changes in state
and federal law required Chattanooga and Walker County to negotiate a new IJA.
18. The parties proceeded to negotiate a new IJA governing the treatment and disposal
19. During the negotiations over the new IJA, Chattanooga continued to bill Walker
County under the requirements of the 2014 Agreement, using the Billable Flow method to
20. On November 19, 2015, David Ashburn, General Manager for the Walker County
21. On April 4, 2016, Justin Holland, Administrator of the Department of Public Works,
22. The new IJA became effective on April 4, 2016 and remains in effect for fifteen
23. On November 28, 2016, the parties amended the 2016 Agreement to remove a
reference to a Chattanooga City Council resolution; otherwise, the 2016 Agreement remained
unchanged. A true and correct copy of the 2016 Agreement, as amended, is attached as Exhibit A
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Walker County’s Payment Obligations Under the 2016 Agreement
24. Chattanooga’s claims in this action against Walker County relate to the provisions
of the 2016 Agreement governing the billing rate for treatment and disposal of Walker County’s
wastewater.
25. Paragraph 14 of the 2016 Agreement provides that “[f]or all wastewater treated by
the WWTP, or through such other applicable regional WCTS and wastewater treatment plants as
may hereafter be constructed by Chattanooga, Walker County shall pay Chattanooga in the manner
hereafter set forth the lower of the applicable following rates (City Code Chapter 31, Article II,
26. In particular, Paragraph 14(c) provides that the amount due from Walker County
“shall be the dollar amount derived by applying the total flow charge to the quantity of water
measured by a flow meter installed and maintained at or near the point of inter-connection between
the system of the regional user and the Chattanooga system (City Code Chapter 31, Article II,
27. The 2016 Agreement requires Walker County to install the flow meters to measure
the wastewater flow at specific points of entry into the Chattanooga WCTS, known as “inter-
28. Paragraph 14(e) provides that “[p]ayment from Walker County to Chattanooga shall
be made monthly, with payment due within thirty (30) days following the billing date for the
preceding month.”
29. Under Paragraph 14(f), Walker County covenants “at all times to establish,
maintain, prescribe, and collect fees, tolls, and charges for wastewater facilities furnished its
customers, sufficient to provide funds for the payment of all obligations of Walker County under
[the] Agreement.”
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30. Paragraph 20 of the 2016 Agreement provides that “Walker County shall be liable
for stipulated penalties to Chattanooga for violations of this Agreement as specified herein. A
31. Paragraph 20 includes a schedule of stipulated penalties that accrue “per violation
32. Paragraph 20 provides that Walker County “shall be liable for interest on such
Pursuant to the 2016 Agreement, Chattanooga Begins Billing Walker County Based on the
Total Flow Rate
33. To date, Walker County bills its residential customers $3.50/1,000 gallons, which
34. At the time Chattanooga and Walker County executed the 2016 Agreement,
Chattanooga City Code 31-36 set forth a Wheelage and Treatment total charge of $1.5169/1000
35. Under Paragraph 16(b) of the 2016 Agreement, Chattanooga agreed “to review
36. Paragraph 18 of the 2016 Agreement requires Chattanooga “to acquire, equip,
operate, and maintain sufficient treatment facilities to comply with the NPDES Permit and in
37. Pursuant to the discretion granted in the 2016 Agreement, Chattanooga raised rates
for its regional users for fiscal years 2017 and 2018.
38. On July 1, 2016, Chattanooga raised the fiscal year 2017 Wheelage and Treatment
total charge for total flow-regional users to $1.8114, which included a “regional capital charge” of
$0.19.
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39. After Chattanooga and Walker County executed the 2016 Agreement, Chattanooga
provided Walker County with a grace period to pay the billable flow rate under the 2016
Agreement.
40. On March 2, 2017, Chattanooga agreed to extend that grace period to July 1, 2017,
at the request of Walker County, because of Walker County’s purported “financial issues.”
41. Up to July 1, 2017, Chattanooga billed Walker County based on billable flow,
42. After July 1, 2017, Chattanooga began to bill Walker County based on total flow,
43. On July 1, 2017, Chattanooga also raised the fiscal year 2018 Wheelage and
Treatment total charge for total flow-regional users to $2.188, which included an increased
44. From April 2016 to July 2017, Walker County was paying for a small fraction of
45. Walker County refused to honor the terms of the 2016 Agreement, which requires
46. Instead, Walker County has continued to pay the billable flow rate under the 2014
Agreement, and it has paid only the fiscal year 2017 rate.
47. On December 13, 2017, officials from Chattanooga met with Walker County
48. At that December 13, 2017 meeting, Chattanooga requested a plan from Walker
County to start paying the agreed rate as set forth in the 2016 Agreement.
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49. Since December 13, 2017, Walker County has failed to come up with a plan and
50. As of the filing of this Complaint, Walker County is $1,786,769.82 in arrears on its
sewer bill. That figure includes penalties imposed under Paragraph 20 of the 2016 Agreement.
51. The City realleges and incorporates all of the preceding paragraphs as if fully set
forth herein.
52. Walker County is required to pay the total flow rate as required under Paragraph
53. Walker County is required to pay the City’s current fiscal year 2018 rates.
54. Walker County’s failure to pay the agreed-upon rates is a material breach of the
2016 Agreement.
55. Walker County’s failure to pay the agreed-upon rates permits the City to charge
56. Walker County’s material breach has deprived the City of revenue that it is entitled
57. As a result, the City has been damaged in an amount of at least $1,786,769.82 which
continues to increase each month as Walker County fails to honor its payment obligations under
the 2016 Agreement. Walker County is liable for those damages, which were caused by Walker
58. The City realleges and incorporates all of the preceding paragraphs as if fully set
forth herein.
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59. The City seeks a declaration from the Court under the Tennessee Declaratory
a. Walker County is required to pay the total flow rate in accordance with Paragraph
b. Walker County is required to pay current fiscal year rates, pursuant to the City’s
c. This action is timely filed under the applicable statute of limitations, Tenn. Code §
28-3-109, because the City filed this complaint within six years of the date Walker County began
60. The City realleges and incorporates all of the preceding paragraphs as if fully set
forth herein and pleads Count III in the alternative in the event the Court finds there is no existing,
enforceable contract between the City and Walker County regarding the subject matter of this
lawsuit.
61. There is no existing, enforceable contract between the City and Walker County
providing for the payment of the fiscal year 2017 rate by Walker County to the City for receipt of
62. The City has provided valuable goods and services to Walker County in providing
sewer services.
63. Walker County received sewer services and related goods from the City.
64. Based on prior course of conduct and communications between the City and Walker
County for sewer services, Walker County should have reasonably understood that the City
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expected to be compensated by Walker County of its pro rata share of the costs to operate the sewer
system.
65. It would be unjust for Walker County to benefit from the provision of sewer services
by the City without paying its pro rata share of costs related to sewer system operation.
66. The City realleges and incorporates all of the preceding paragraphs as if fully set
forth herein and pleads Count IV in the alternative in the event the Court finds there is no existing,
enforceable contract between the City and Walker County regarding the subject matter of this
lawsuit.
67. The City conferred a benefit upon Walker County by providing sewer services to it
68. Walker County was aware of and appreciated the nature of the benefit conferred on
69. Walker County accepted the benefit of sewer services from the City under
circumstances that would make it unjust and inequitable for Walker County to retain the value of
70. The City realleges and incorporates all of the preceding paragraphs as if fully set
forth herein.
71. Because Walker County has refused to honor its payment obligations under the
2016 Agreement, and Walker County’s refusal to do so causes the City irreparable injury, the City
seeks an order from this Court requiring Walker County to terminate the inter-connections and
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PRAYER FOR RELIEF
a. Enter judgment in favor of the City on Count I and award it breach of contract
b. Enter judgment in favor of the City on Count II and declare (i) Walker County is
required to pay the total flow rate in accordance with Paragraph 14(c) of the 2016 Agreement; (ii)
Walker County is required to pay current fiscal year rates, pursuant to the City’s power to adjust
the rates under the 2016 Agreement; and (iii) the applicable statute of limitations has not run.
c. In the alternative, award the City damages equal to the reasonable value of the
d. In the alternative, award the City damages equal to the value of the benefits
conferred upon Walker County by the City and unjustly retained by Walker County without due
WCTS.
f. Award the City any fees, costs, expenses, and attorney’s fees incurred as a result of
g. Award the City pre- and post-judgment interest at the maximum legal rate.
The City respectfully requests any and all further relief both at law and in equity that the
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Date: June 14, 2019 Respectfully submitted,
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