Failed suit may jeopardize $2.15 million water project
After losing a court suit alleging a breach of contract by Edwardsville Water Corp. in an effort to save Lanesville up to several hundred thousand dollars, a $2.15 million water project is now in jeopardy, Lanesville town attorney Gordon Ingle said.
The suit filed in Harrison County Circuit Court said Edwardsville Water wrongly changed a capital improvement charge to a utility charge, subjecting it to rate increases.
The 1995 contract obligates Lanesville to pay $2,965 per month to compensate Edwardsville for monies borrowed to finance the construction of a water line used to pipe drinking water to Lanesville. The rate has since increased to about $3,600 monthly.
Attorney Mike Gillenwater of Jeffersonville was hired to represent Lanesville in the suit after Ingle recommended hiring outside counsel due to his involvement in initial contract negotiations with Edwardsville.
Judge H. Lloyd (Tad) Whitis dismissed the suit without allowing testimony and ordered Lanesville to pay $20,000 in attorney’s fees to the Indianapolis firm of Bose McKinney & Evans, which represented Edwardsville.
Whitis determined that the dispute should have been brought before the Indiana Utilities Regulatory Commission, of which Edwardsville is a member and Lanesville is not.
Edwardsville Water, a private non-profit corporation, is subject to review by that state agency. The corporation attorney, Chris Janak, said the utility’s fees are IURC-approved.
‘I wrote a bunch of letters telling them (Lanesville) that their lawsuit was frivolous, groundless and unreasonable, and they refused to dismiss,’ Janak said, adding, ‘The court agreed.’
‘The court said this is IURC material,’ he said.
‘We believe it was totally wrong,’ Ingle said.
‘If Edwardsville felt that Lanesville had breached a contract, where would we go then?’ Ingle said. ‘The IURC has no jurisdiction over Lanesville. My opinion is that we would be in state court.’
Regardless of where the dispute goes, Janak said he believes Edwardsville’s increased rate will be upheld.
‘Each bill is made of two different components, and, as with any customer, you have a fixed bill that covers the cost associated with debt service ‘ paying your loans for infrastructure necessary to service each customer ‘ and the next rate is a flow charge to cover other costs. Lanesville’s fair share required them to pay a little more,’ Janak said.
The Lanesville Town Council plans to appeal the attorney’s fees and is considering bringing the contract issue before the IURC, Ingle said.
In the meantime, the town is attempting to secure $2.15 million in funding for a project to replace a heavily-patched tank, out-of-code hydrants, and 43,250 linear feet of water lines, some of which have been in the ground for 100 years.
All of that money has been approved providing Lanesville meets certain provisions. In particular, Lanesville’s contract with Edwardsville must be equal to or greater in length than that of a 40-year Rural Development loan for $959,000. That means an extension of Lanesville’s current 20-year contract is necessary.
Lanesville requested the extension but ‘Edwardsville refused,’ Ingle said. He said the town’s lost suit against the water company was a factor.
Janak said that wasn’t entirely accurate.
‘To date, they’ve refused to pay the attorney’s fees,’ he said.
‘Edwardsville’s position is they will talk to them about extending the water agreement provided they obey the court order and pay the attorney’s fees,’ Janak said.
Janak claims that Lanesville’s rate with Edwardsville is one of the cheapest in the area.
‘That’s one of the reasons they want an extension from us is because the rate is dang good,’ he said.