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Breach of Contract for Leachate Disposal Leads to Lawsuit

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Running from Springfield to Shawneetown, Illinois, the Springfield and Illinois South Eastern Railway was formed in 1870 out of two existing railroads.  The village of Ridgway, named for the S&ISE's president, Thomas S. Ridgway, was established as a construction camp along the route.  The community is located in an area of southern Illinois known as “Little Egypt,” which culturally resonates more with the Upper South than the Midwest.    

John Gordon is a registered engineer doing business as Village of Ridgway Wastewater Treatment.  Landfill, LLC (Landfill) owns and operates the West End Disposal Facility (West End) under an Illinois EPA permit. West End periodically needs to transport its leachate to a treatment plant for disposal. Under an agreement with the village, Gordon was given permission to install and maintain a storage tank near the village’s sewage treatment plant to facilitate the transfer of leachate to the plant.

Gordon filed suit against Landfill alleging that the company breached a contract with him by failing to make payments for services rendered in the disposal of leachate. With no essential facts in dispute, both parties filed motions seeking judgment in their favor.  Williamson County Circuit Judge Jeffrey A. Goffinet sided with Landfill.  An appeals court later affirmed his ruling.

          Twenty years ago, Gordon and Landfill signed a contract known as the “Leachate Disposal Agreement.”  In 2016, the parties renewed and updated the agreement, which, in part, states:           

                 "WHEREAS, [Gordon] operates a Wastewater Disposal Facility (WDF); 1.

                 LANDFILL may, at its own expense, deliver leachate via truck to WDF. 2.

                 Leachate shall be discharged directly from tank truck to a provided and installed

                 leachate storage tank, including a controlled discharge device to allow the leachate

                 to flow to the adjacent influent sewer at the rate not to exceed 30 gallons per minute."

Thus, Landfill could deposit leachate into Gordon’s storage tank.  Gordon was then obligated to accept the leachate and control its discharge into the treatment plant.

          The 2016 contract required Landfill to pay Gordon a fee based upon the amount of leachate transferred into the storage tank, plus a $500 per month fee for its ongoing use. The contract also provided for an additional fee if the toxicity level of the leachate reached a certain threshold:

                 "6. [Gordon] shall bill monthly for leachate discharged at the following rate: A.

                 Combined BOD and COD, [1] less than 3,000 mg/l - $.02 Per Gallon. B. Landfill

                 shall pay, in addition to the normal disposal fees, an addition Five Hundred Dollars

                 ($500.00) Per Month, for the ongoing use of the WDF. C. A charge shall be added to

                 the above charges when the combined total of BOD and COD exceeds 3,000 mg/l.

                 This shall be Ten Dollars ($10.00) per 1,000 Gallons for each additional incremental

                 1,000 mg/l over 3,000 mg/l."         

          According to Gordon's deposition testimony, sometime in 2001, shortly after the original contract was executed, the village told Gordon that the storage tank was unnecessary.  The leachate could be transported directly to the treatment plant.  What follows is an excerpt from Gordon’s deposition:

                 "Q.  [M]y question was what the storage equipment was. And that was, part of it was

                      the tank, correct?

                  A. Well, originally, yes, [the Village of Ridgway] proposed a tank there.

                  Q. Well, there is a tank there, correct?

                  A. Uh, I don't know if it's still there or not.

                  Q. Okay. You never used the tank?

                  A. No.

                  Q. Okay. You have never monitored the tank?

                  A. No.

                  Q. Okay. Now, when was it that you placed the above-ground storage tank at the

                     village treatment plant?

                  A. I don't ever recall placing the storage tank there. The landfill may have put the

                     storage tank there as part of the original plan when before they started discharging

                     to it, but it may have been used temporarily. *  *  *  [T]he village and particularly

                     the operator of the plant decided it would be much better and economical and

                     beneficial to the village to discharge it directly to a manhole at the . . . plant.

                  Q. Okay. So were you involved in those discussions?

                  A. Yes.

In June 2019, the treatment plant refused to accept any further leachate from Landfill.  At the same time, Landfill, upon learning that the storage tank was not being used, canceled the 2016 contract and rejected Gordon’s invoices for leachate transported to the treatment plant for the months of March, April, and May 2019.         

Gordon sued Landfill, in August 2019, alleging that Landfill breached its obligations under the 2016 contract by not paying the outstanding charges. His motion for summary judgment sought $127,577.79 in damages for the breach.  For its part, Landfill filed a cross-motion seeking a favorable ruling.         

After conducting a hearing on the parties' motions, Judge Goffinet granted judgment for Landfill.  In particular, he found that the 2016 contract allowed Landfill to place leachate in the storage tank but it was obliged to pay Gordon only if it did so.  His decision stated, in part, as follows:

                 "At oral argument, counsel for the Plaintiff suggested that the contract was in the

                 nature of a broker agreement, and Landfill was required to pay a disposal fee for every

                 gallon of leachate it placed in the village wastewater system to Gordon, even if it did

                 not use the tank, as he brokered the deal. Simply, the contract language in no way

                 supports that interpretation. If the parties intended to pay a fee for brokering the deal,

                 they easily could have provided for the same in the contract. It is clear that Gordon

                 was aware his tank was never used, yet he billed for leachate each month. The Court

                 will not interpret the contract as requiring payment for leachate that never reached

                 Gordon's tank. The same analysis applies to the $500 per month payment. The duty to

                 pay, per the contract language, was triggered by 'on-going use.' There was no ongoing

                 use here. Nothing in the contract prohibited Landfill from bypassing Gordon. Gordon

                 is asking the Court to award him payment for leachate he never became responsible

                 for pumping. Gordon's actions took advantage of the taxpayer paid wastewater lagoon

                 to collect a substantial fee for services he never performed."

On appeal, a three-judge panel analyzed the circuit court ruling under classic breach-of-contract standards.  A plaintiff has the burden of proving (1) a binding and enforceable contract, (2) the performance of the contract by the plaintiff, (3) a breach of the contract by the defendant, and (4) damages to the plaintiff resulting from breach.          

Neither party claimed that the 2016 contract was not enforceable.  However, the parties disagreed on whether Gordon performed his obligations under the 2016 contract. Gordon conceded that leachate from Landfill was never processed through the storage tank but argued that it made no difference.  As Gordon saw it, providing the storage tank protected the treatment plant from being inundated with leachate, and the purpose of the contract was to provide Landfill with a location, if and when needed, for disposal of the leachate. Therefore, its lack of use did not defeat the purpose of the contract.  Furthermore, he asserted, Landfill suffered no damages from its nonuse.                                                         

Landfill argued that actual use of the storage tank use was a pre-condition before the remaining contractual obligations, including the payment of fees, became binding.  Its attorneys insisted that Gordon was not entitled to any payments because no leachate from Landfill was ever discharged into the storage tank.  His one and only contractual duty was to control the discharge of leachate from the storage tank to the treatment plant.   

(A condition precedent is an act that must be performed or something that must occur before one or both parties to a contract are entitled to a certain benefit or must perform their obligations.  A classic example is a performance bonus in business or sports – additional compensation paid to an employee or player as a reward for achieving specific goals or hitting predetermined targets.  In another setting, a real estate developer might agree to purchase a tract of land but only if the zoning is changed from agricultural to single-family residential use.) 

“The circuit court found that the terms of the 2016 contract permitted Landfill to place leachate in the storage tank and that the placement of the leachate in the storage tank then triggered Landfill's obligation to pay Gordon,” noted the appellate panel. “As such, the circuit court determined that the placement of the leachate in the storage tank was a condition precedent to Landfill's obligation to pay Gordon, and we agree.”       

When the parties executed the 2016 contract, Landfill believed that the leachate was being delivered to the storage tank.  “Gordon knowingly executed the 2016 contract which contained terms related solely to leachate delivered by Landfill to the storage tank,” the opinion concluded.  “[W]e find that Gordon, by his own admission that the storage tank was never used, failed to meet the condition precedent within the 2016 contract and, as such, Landfill's obligation regarding the contractual fees ended when the condition precedent was not satisfied.”        

Gordon v. Landfill, LLC, No. 5-20-0383, Ill. App. Ct., Aug. 3, 2021.

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