Elizabeth City win over Pasquotank County in water dispute likely Pyrrhic victory
County Attorney describes confusing case as ‘High Stakes Poker’
ELIZABETH CITY — The lawsuit between the City and County ended on Tuesday when Judge Quentin Sumner ruled that the ‘bulk water purchase contract’ lacked the proper pre-audit certification as required by state law, and, stated that ambiguities existed in the contract, which rendered it void, meaning that it never existed.
This was a major setback for Pasquotank County — likened by County Attorney John Morrison, to the analogy of a dog chasing a car and actually catching it! The dog then realizes he’s got a much bigger problem!
The dog in this case is Elizabeth City, though at first blush, city officials likely felt that they had a significant victory on their hands!
After the decision was rendered, City Councilors and County Commissioners entered separate ‘emergency meetings’ to discuss the case and their respective positions going forward.
Much like that dog, the City now must figure out what to do to supply water to businesses and residents along the Halsted Boulevard extension. Immediately after the hearing, City Manager Rich Olson commented that he had contingency plans to supply water to this area in the event that the County decided to turn off water.
Details of this contingency later leaked — the City was contemplating bringing water in by tanker trucks, but this suggestion does not seem to have much merit.
The County, if it chooses to play hardball, apparently has the option of cutting off water supply due to lack of a contract. The original agreement was void, which means in legal terms that it never existed, therefore, with no contract, the County can choose not to supply water to the City,
The City may have won a legal battle but lost the war! Pasquotank County has been advised several times (during the course of this legal dispute) to sever water supplies to the City, but county officials were reluctant to do so – until now.
Pasquotank County has given Elizabeth City 48 hours to agree to a new contract under the same terms and conditions as before, and failing that, the County will turn off water to the Halsted Boulevard extension, which lies west of Forest Park Road.
Such an eventuality would be devastating residents and businesses on that stretch
Attorney John Morrison represented Pasquotank County in the lawsuit, while attorney Greg Crumpler represented Elizabeth City. Both lawyers made capable arguments on a variety of issues, but the bottom line of the case boiled down to the pre-audit certification and the ambiguity in the contract for not specifying the terms of the asset allocation upon which the City would be paying for a portion of the construction cost of the ‘reverse osmosis’ water treatment plant, constructed by the County.
Those familiar with the case say that a pre-audit certification is a typical requirement of contracts such as this, and when the executed contract came to the County from the City, it was lacking this certification by the City Chief Finance Officer Sarah Blanchard.
County Attorney Mike Cox realized that the agreement was lacking the certification so he went to the City Manager and pointed this out. Cox and the City Manager approached Blanchard, whereupon the certification was added to the contract and all was thought to be fine at that point.
However, in this case, it was argued that the certification was required to be affixed to the contract, before it was signed, thus in the absence thereof, the contract would be void.
Many people, including Morrison (representing Pasquotank County) suggested that the City had deliberately mishandled the certification in order to set up an opportunity such as this.
However, authorities say the law is perfectly clear — that a certification of this sort must be affixed before a contract is signed and that therefore the contract did not meet the statutory requirements created by the legislature.
Crumpler, representing Elizabeth City, argued that the contract was ambiguous because the City was only paying for a portion of the debt for construction cost of the treatment plant and that the City’s acceptance of the contract was with this understanding and that the County was supposed to explain its rate methodology in order to ascertain the amount of money the City would contribute.
This methodology was not supplied until 2014 at which time the City immediately complained to the County that they were paying disproportionately for the water they were using. The City argued that they were paying amounts that were above that which was required based upon a formula that had been agreed to previously.
Therefore, in light of the foregoing, the City countersued for $182,000 that had been paid by the city in excess above what they owed for the previous two years.
This matter was not decided at the hearing this week as this is a separate legal matter which has yet to find its way into the courts.
But, with legal expenses on both sides, this now appears to have become a matter where both sides have spent considerable sums of money and getting very little in return. It has been suggested that the County’s legal expenses will be in the neighborhood of $140,000, with a comparable tab for that of the City.
When the countersuit is decided, the County may face the prospect of reimbursing $182,000 for overcharges to the City. On the other hand, the City won its case, but now they face the prospect of the water being turned off with no realistic alternative, to supply water to a vitally important part of the City.
So alert taxpayers may ask: Who actually won? The answer, as usual: THE ATTORNEYS!
This reporter spoke to Morrison (attorney representing Pasquotank County) on Monday who said that he had urged a settlement on several occasions.
Prior to the hearing, there were at least two attempts by the County to meet with the City to discuss this situation before it got to a hearing, but the City declined – a hint that city officials may have believed that they possessed an advantage in the case.
As this newspaper goes to press, look for additional High Stakes Poker to be played over the next two days! of days. We will see whether the dog chases car analogy fits this situation and to what extent the final negotiations resolve the issues. Either way, both parties are going to have to answer to the citizens of the County and City for how they allowed this situation to go so far and end up with such a terrible outcome. It appears that this was a case of two Governments trying to “one up” the other while the citizens were not considered.
Was the handling of the required pre-audit certification sleight of hand, by the City? Was the lack of a valid cost analysis a case of the County dropping the ball? Did the County unduly rely on a provision of the contract that the Commissioners set the rate that the City was to pay? Did this cloud their judgment?
These are all valid questions. Hopefully, the answers will soon be evident.