If you’re a fan of amusement parks generally and roller coasters in particular, the place to go is Cedar Point, located on a Lake Erie peninsula in Sandusky, Ohio. Unlike any other venue of its kind in the world, Cedar Point features 16 roller coasters with five of them more than 200 feet in height.
On the subject of ups and downs . . . for much too long public officials in Erie County (where Cedar Point is located) and adjacent Huron County cycled in and out of headaches and frustration stemming from their mutual solid waste agreement before the situation eventually plunged into litigation.
The counties, in September, 2014, signed a five-year waste services contract. It succeeded a comparable agreement, in 2009, between them. The contract expressed Erie’s desire to receive Huron solid waste at the Erie landfill, a facility licensed by the Ohio EPA, and set forth a chronological, tonnage-based, services cost schedule, covering the term of the agreement as well as contractual billing procedures and payment deadlines.
In particular, the agreement stated that "Erie County agrees to provide transport trailers equipped with automatic tarp systems to transport the waste. All equipment used to transport waste during the duration of the agreement shall be maintained by Erie County's transport contractor." Further, the contract saddled Erie with responsibility for “any and all legal violations occurring in connection to the contractual services [and] any and all fines, civil penalties, and assessments leveled by the U.S. EPA, Ohio EPA, or any federal or state court for failure to * * * comply with any and all applicable federal, state, and local laws, ordinances, rules, and regulations relating to the contractual services and the Erie County landfill." Finally, the agreement provided for its early termination by either party with written notice to the other party of the intent to terminate.
Regrettably, the parties’ relationship soured as the program developed serious recurring operational issues. For one, Erie's subcontractor was failing to furnish a sufficient number of trucks and trailers at Huron's transfer station to handle the daily volume of solid waste. As a result, waste debris accumulated and remained on the transfer station floor for more than 12 hours each day, violating Ohio EPA regulations. For another, Huron found that many of the tarps on the transport vehicles were damaged or missing, which resulted in spillage from the vehicles onto public roadways, creating public nuisance conditions.
After being notified of these deficiencies, Erie never disputed or disavowed them. Indeed, at the beginning of the predecessor 2009 agreement, Erie’s operations director sent an email to the subcontractor stating, "How many drivers and tractors are you providing? * * * Are the trailers all equipped with automatic tarps? * * * As you are aware Huron County wants the transfer station floor cleaned at the end of each workday? Please commit to this task * * * Have [the] drivers trained in all appropriate safety issues."
Despite Huron’s repeated notifications to Erie of the service failures, with contractual and regulatory implications, the situation persisted. In a June 9, 2017, email Erie forewarned its subcontractor: "Huron County has reached the end of their patience [with the service deficiencies].” Still, Erie declined to discharge the company for poor performance. Only after the subcontractor, on its own initiative, cancelled the agreement did Erie seek a replacement for the duration of the contract term.
In March, 2018, Erie notified Huron that it had independently selected a new subcontractor. At the same time, Erie sought Huron’s consent to an extension of the original contract term and increased fees, which exceeded the cost schedule in the 2014 contract. Finding these developments unacceptable, Huron declined, conducted its own selection, and engaged Rumpke as substitute contractor. To boot, Huron terminated the agreement with a written notice to Erie.
Shortly thereafter, Erie filed suit against Huron, alleging both breach of contract and breach of the implied terms of good faith and fair dealing. In response, Huron filed a counterclaim, accusing Erie of breach of contract. The court proceedings dragged on for several years. With the parties unable to reach a settlement, the case proceeded to trial, in February, 2021, without a jury and segmented into two phases: liability and damages.
Conducted via videoconferencing due to Covid considerations, the liability trial lasted approximately three weeks. In April, 2021, the trial judge denied both of Erie's breach of contract claims against Huron and ruled that Erie “committed a material breach and thereby gave
Huron sufficient cause to terminate the contract when it did * * * circumstances exist[ed] that permit both termination and pursuit of . . . damages."
"Here the parties' conduct and performance during their two contracts provides additional details of contract requirements[,] supplementing the written agreements drafted by the parties,” said the trial judge. “Erie officials and their employees conduct demonstrated their knowledge of and respect for Huron's requirements." The judge further found that "The evidence showed that all through the [contract period] when problems arose with Erie's hauler, Huron officials continued to reinforce the specific requirements of sufficient, operable, and safe trailers, trash off
the floor, and tarps to avoid litter. Erie officials responded dutifully * * * [and never] suggested it was not Erie's obligation to do so."
In June, 2021, the damages portion of the trial was conducted. The trial judge found Erie liable to Huron in the amount of $169,013.67, reflecting all increased costs incurred by Huron in securing an alternative solid waste contractor to complete the contract term.
Erie filed a motion for a new trial alleging that the judgment was contrary to law based upon the trial judge having considered "oral understandings" and other matters outside the written agreement in reaching his decision. The judge denied the motion.
On appeal, Erie again argued that the trial court was wrong in basing its liability judgment upon "oral understandings,” and that such verbal exchanges should be deemed violations by Huron of Ohio's open meetings law. Unpersuaded, a three-judge appellate panel affirmed the lower court judgment.
Under Ohio law, contracts between government entities are interpreted the same as contracts between individuals. The objective is to determine the intention of the parties and give it effect if consistent with the terms of the agreement. The parties may modify an agreement by their actions – for example, a continued, different course of performance – and where a dispute arises relating to an agreement under which the parties have been operating for a considerable time period a court can and will examine the conduct of the parties to determine the interpretation that they themselves have given to the contract.
Erie insisted that all evidence reflecting its knowledge of, responsiveness to, and actions taken to address the issues raised by Huron were “unenforceable customer service efforts” and not contractual obligations. Thus, as Erie saw it, Huron’s notifications regarding service deficiencies – that is, Erie’s responsibility for: providing a sufficient number of trucks and trailers to timely transport and dispose of the solid waste received at the Huron transfer station; ensuring that functional tarping was present on the trucks and trailers used to avoid waste spillage during transport; and ensuring that loose solid waste did not remain overnight on the floor of the Huron transfer station – formed no basis for liability.
For its part, Huron maintained that the violations, which provoked its early termination of the contract and substitution of Rumpke as service provider, were “part of the contractual agreement, both explicitly and implicitly, such that Huron's termination and pursuit of damages against Erie was warranted and not unlawful.”
The appeals court initially addressed these competing positions by examining the words the parties chose to use in their agreement. “The plain language of the agreement clearly reflects that the contractual obligation of providing an adequate number of solid waste trucks and trailers, equipped with waste containing tarps for transport, is placed upon Erie, and the language further reflects that this obligation remains regardless of volume fluctuations,” the panel wrote. “[T]he agreement also establishes . . . an understanding of the parties that all burdens related to collateral legal issues connected to the subject solid waste operations falls upon Erie. Accordingly, we find that the plain meaning of the contract language runs counter to Erie's position that it bears no contractual duty or liability regarding the service deficiencies underlying this case.”
Apart from its determination that the plain language of the written agreement precluded Erie from avoiding liability for its contractual breaches, the appeals court cited evidence in the trial record showing Erie's conduct and performance during the course of both five-year agreements, consistently reflecting the mutual understanding and agreement that these obligations and duties fell upon Erie.
Postscript: According to the Sandusky Register, June 20, 2023, “Earlier this week, Huron County received a check for about $179,000 [sic] from Erie County for the landfill lawsuit that has embroiled both governments during the past few years.”