Legal Lode: Sorry, Wrong Number

Local government, hauler clash over fees based on number of residences served.

In the 17th Century, explorer Robert Cavalier de LaSalle claimed for France territory comprising what is now all or part of 14 states, which he named “La Louisiane” to honor King Louis XIV. Influenced by France’s Catholic monarchy, local government in the area became rooted in the smallest ecclesiastical division — the parish. After the United States purchased France’s claim to Louisiana in 1803, the Territory of Orleans (most of what became the state) was divided into 12 counties. Later, the territorial legislature, heeding tradition, reconfigured the soon-to-be state into 19 parishes, which, under the 1845 state constitution, became the official term for the state’s primary civil divisions.

Some 165 years later, Caldwell Parish, situated in northeast Louisiana, invited bids for residential waste collection. In 2004, it signed a multi-year contract with the lowest bidder, IESI LA Corp. What IESI earned was based on a simple formula: dollars per unit multiplied by estimated residential units. IESI could request an adjustment based on an increase in residential units in the parish.

The parish’s residential service unit estimate (4,321 to be exact) became the basis for IESI’s initial compensation. In July 2006, IESI asked for a modification because it believed the number of residential units in the parish exceeded 4,321, and it suggested that the parish use its 911 records as a reference point. After examining the 911 record addresses, the parish changed the residential unit number to 6,650 and correspondingly increased the payments to IESI. In February 2009, IESI received another fee hike after the parish, again relying on the 911 record addresses, upped the number to 6,840.

All of a sudden, things began to change. Skeptical about the 911 addresses, the parish asked IESI to actually count the residences requiring pickup of solid waste. The results were startling: 4,560 residential units. As it turned out, the 911 addresses included vacant lots, abandoned structures, cemeteries, irrigation wells, cell towers and many other locations that did not require garbage pickup. IESI credited the parish $25,217 for August 2009 and agreed to bill based on 4,560 units beginning the following month.

Using the corrected number, the parish calculated that it had overpaid by $696,500 from 2006 to 2009. When it pressed IESI for a credit offsetting these overcharges, the company refused.

The parish filed suit in federal district court seeking a judgment against IESI for the amount it mistakenly paid. For its part, IESI insisted that the parish truly owed the increased compensation and that the parish was actually trying to undo the contract provision for increased charges. As IESI saw it, the contract language was confusing and vague on determining the number of residential units. In any event, IESI argued, even if the unit count was wrong and, as a result, it earned extra money, the parish was guilty of “inexcusable neglect” and unilateral error.

The court ruled that the parish was entitled to recover for the amounts it overpaid based on the 911 record addresses. Paying only for “residential unit[s] … serviced by IESI … is the only reasonable interpretation of the contract,” said the district judge. “If, as IESI argues, residential units could encompass any structure … whether or not IESI collected and disposed of waste from those units, then IESI would be entitled to compensation for servicing properties that did not produce waste, an absurd result … .” The court deferred a ruling on the exact amount due until after the parties present additional evidence.

[Caldwell Parish Police Jury v. IESI LA Corp., No. 10-0398, W.D.La., Jan. 31, 2011]

Barry Shanoff is a Rockville, Md., attorney and general counsel of the Solid Waste Association of North America.

The legal editor welcomes comments from readers. Contact Barry Shanoff via e-mail: [email protected].

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