STEPHENS CITY LAWSUIT AND RATE INFORMATION

STEPHENS CITY RATES AND BILLINGS

FY2019 Stephens City Rate Letter

03-07-2018 Frederick Water’s Expert Report Regarding Billing Practices

03-07-2018 Frederick Water’s Supplemental Answers to 3d Set of Interrogatories and Expert Designation

03-07-2018 Frederick Water Supplemental Answers Regarding Interrogatories 6, 7, and 8

Rate Calculation Procedures and supporting documents

FY18 Stephens City Rate Letter

Town of Stephens City FY2018 Rates Calculations

 

STEPHENS CITY LAWSUIT

In March of 2015, the Town of Stephens City stopped paying Frederick Water for water or wastewater services that Frederick Water provides to the Town’s residents. On August 28, 2015, the Town then sued Frederick Water over its water and wastewater contracts in the Circuit Court of Frederick County.

The Town’s complaint requested money from Frederick Water for allegedly erroneous billing and alleged excess pumping from the Town’s quarries, as well as seeking a court order holding that Frederick Water no longer was authorized to pump water from the quarries in accordance with Frederick Water’s easement. On Frederick Water’s motion, the Town’s initial complaint was largely dismissed in the fall of 2015, including the Town’s claim that Frederick Water’s right to pump water from the quarries had expired.

However, in January of 2016, the Town filed an amended complaint. This filing reasserted the rejected theory that the right to take water had expired and added the allegation that numerous agreements the Town had entered into with Frederick Water were invalid because allegedly adopted without the requisite approvals by the Town Council and notice to the public. Frederick Water filed responsive pleadings, seeking dismissal of the Town’s amended complaint.

On July 27, 2017, the Circuit Court of Frederick County sustained Frederick Water’s demurrer and dismissed most of the claims made in the Town’s amended complaint. Among the rejected claims was the Town’s argument that the agreements were invalid because allegedly adopted without observance of the requirements that generally apply to sales of certain property rights held by towns. The Court agreed with Frederick Water that these requirements did not apply to the transfers between the Town and Frederick Water, another political subdivision of the Commonwealth. As before, the Town’s claim that Frederick Water’s right to pump water from the quarries had expired was rejected by the court and the Town’s claim dismissed.

Per the court’s scheduling order, the parties briefed Frederick Water’s second responsive pleading, a plea in bar, which seeks dismissal, based on the statute of limitations, of most of the remaining claims in the Town’s amended complaint.

While that briefing was in process, the Town brought three (3) motions against Frederick Water. On October 27, 2017, the Circuit Court heard and denied all three (3) of the Town of Stephens City’s Motions:

  1. The Town’s Motion to Compel and Motion for Entry of Second Supplemental Scheduling Order;
  2. The Town’s Motion for a Preliminary Injunction Barring Use of the Bartonsville Well; and
  3. The Town’s Motion for a Preliminary Injunction Relating to Wastewater.

A hearing on the entry of Orders denying the foregoing motions of the Town was held on December 6, 2017. Also at that December 6, 2017 hearing, the Circuit Court heard and decided several additional motions. These were:

  1. the Town’s Motion for Leave to Increase Ad Damnum, which was granted;
  2. the Town’s Jury Demand on Frederick Water’s Plea in Bar, which was denied;
  3. the Town’s Motion to Transfer Venire, asking that any jury be drawn from another County, which was denied; and
  4. Frederick Water’s Motion for Discovery Sanctions and to Compel a Proper Response to Discovery by the Town to Frederick Water’s Interrogatories 6, 8, and 23, which was granted.

The Town was ordered to provide a sufficient response to Frederick Water’s Interrogatories 6, 8, and 23 by January 5, 2018. At the same time, the Court scheduled a January 17, 2018, hearing for entry of orders on the foregoing motions and to take up two additional motions filed by the Town.

At the January 17, 2018, hearing, the Circuit Court ruled on both of the Town’s Motions:

  1. The Town’s Motion to Overrule Objections, which was denied; and
  2. The Town’s Motion for Leave to File Second Amended Complaint to Allege Actual Fraud and Constructive Fraud, which was denied.

A hearing was then set for February 14, 2018, for entry of the Orders denying the Town’s Motions and to decide Frederick Water’s Motion for Dismissal of Certain Claims, to Compel a Proper Response, and for Other Discovery Sanctions. Frederick Water’s Motion was directed to the Town’s court-ordered response to Frederick Water’s Interrogatories 6, 8, and 23, which was made on January 5, 2018.

On February 14, 2018, the Circuit Court heard and granted two discovery motions—the Town’s Motion to Compel a further response to Interrogatory 6, 7, and 8, and Frederick Water’s Motion for Dismissal of Certain Claims, to Compel a Proper Response, and for Other Discovery Sanctions. In granting these Motions, the Circuit Court

  1. Struck many of the expert opinions the Town had proposed to offer in the case,
  2. Dismissed all of the Town’s billing errors claims, except its claim regarding billings of the Parkins Mill Wastewater Treatment Facility’s debt service,
  3. Ordered the Town to fully and fairly respond to Frederick Water’s Interrogatory 23 by March 7, 2018, and
  4. Ordered Frederick Water to provide a supplemental narrative responses to the Town’s Interrogatory 6, 7, and 8.

These rulings are memorialized in the Court’s April 18, 2018 Order. Also at the hearing, the Court set another hearing, on Frederick Water’s plea in bar, for April 25, 2018, and directed the parties to provide statements of expected witnesses and exhibits.

On February 15, 2018, Frederick Water filed counterclaims against the Town, seeking, among other things, over $5.7 million in unpaid invoices and penalties for water and wastewater services provided after the Town quit paying in March 2015.

On February 23, 2018, the Town filed a Motion to Quash Frederick Water’s third-party subpoena duces tecum to Capon Valley Bank for records showing the Town’s use of monies derived from its water and wastewater utility. Then, on March 6, 2018, the Town filed a Supplemental Opposition to Frederick Water’s plea in bar, seeking to inject claims of fraud into the hearing scheduled for April 25, 2018. On March 7, 2018, the Town moved to reconsider the Court’s February 14, 2018, rulings dismissing the Town’s billing error claims and striking many of its experts’ opinions, and for leave to file another amended complaint to allege fraudulent billing, request injunctive relief, and the like. And on March 8, the Town filed a Demurrer and Motion to Dismiss Counts V and VII of Frederick Water’s Counterclaims and a Motion for Bill of Particulars and Craving Oyer. In due course, Frederick Water opposed these various filings.

Later, on March 29, 2018, the Town filed a Motion to Strike Witness Disclosures and to Exclude Certain Testimony and Expert Opinions, directed to Frederick Water’s disclosure of witnesses for the Plea in Bar hearing, and made a request for a jury trial on the plea in bar. Frederick Water opposed these too, and filed a Motion to Strike the Town’s Supplemental Opposition to Frederick Water’s Plea in Bar on Statute of Limitations.

At the hearing on April 18, 2018, the Court:

  1. Denied the Town’s Motion to Quash Frederick Water’s Subpoena Duces Tecum to Capon Valley Bank and ordered records promptly produced;
  2. Denied the Town’s Motion to Reconsider and the Town’s Motion for Leave to File Revised Second Amended Complaint;
  3. Denied the Town’s Request for Jury Trial on Plea in Bar;
  4. Deferred its decision on the Town’s Motion to Strike Witness Disclosures and to Exclude Certain Testimony and Expert Opinions [Motion in Limine], until the April 25, 2018, Plea in Bar Hearing; and
  5. Deferred Frederick Water’s Motion to Strike the Town’s Supplemental Opposition to Frederick Water’s Plea in Bar on Statute of Limitations, until the April 25, 2018, Plea in Bar Hearing.

These rulings are memorialized in the Court’s Order of April 25, 2018. Also at the April 18 hearing, the Court scheduled the Town’s Demurrer and Motion to Dismiss Counts V and VII of Frederick Water’s Counterclaim and the Town’s Motion for a Bill of Particulars and Motion Craving to be heard on May 30, 2018.

At the April 25, 2018 hearing on Frederick Water’s Plea in Bar and Motion to Strike, the Court:

  1. Granted Frederick Water’s Motion to Strike the Town’s Supplemental Opposition to Frederick Water’s Plea in Bar on Statute of Limitations, precluding further hearings on the statute of limitations and taking any evidence regarding additional allegations set forth in the Town’s Supplemental Opposition;
  2. Dismissed all of the Town’s trespass claims and contract claims regarding the removal of water and any exceedance of the 3-million-gallon-a-day limit on extraction from the quarries for the period prior to August 28, 2010;
  3. Dismissed the Town’s wastewater debt service claims for the period prior to August 28, 2010;
  4. Dismissed all claims as to the Bartonsville Well, including the claim of breach of contract for the use of the water supply line and the claim of the tort of trespass and the taking of the water and pumping from the Bartonsville Well; and
  5. Limited the Town’s quantum claims, if any, to those accruing on or after August 28, 2012.

These rulings are memorialized in the Court’s Order of May 30, 2018.

At the May 30, 2018, hearing on the Town’s Demurrer & Motion to Dismiss Counts V and VII of Frederick Water’s Counterclaim and on the Town’s Motion for Bill of Particulars and Motion Craving Oyer, the Court:

  1. Denied both the Town’s Bill of Particulars and its Motion Craving Oyer;
  2. Overruled the Town’s Demurrer as to Count VII of the Counterclaim;
  3. Sustained the Town’s Demurrer as to Count V of the Counterclaim regarding appointment of a special receiver, dismissing the same without prejudice; and
  4. Ordered Frederick Water to file its Answer to the Amended Complaint by June 11, 2018, and the Town to file its Answer to the Counterclaim by June 20, 2018.

At the May 30, 2018, hearing, the Court directed the parties to appear on June 6 for a pretrial scheduling conference. These rulings are memorialized in the Court’s Order of June 6, 2018.

On June 1, 2018, the Town filed a Motion for Leave to Amend Prayer for Relief in Amended Complaint and Motion to Refer the Case to Mediation, and sought to notice those motions for the June 6, 2018 hearing. Frederick Water objected to setting argument on these motions on June 6, 2018.

At a June 6, 2018, hearing, the Court set the trial date for March 18, 2019, through March 22, 2019, and the pretrial conference for February 13, 2019. A pretrial scheduling order is expected to be entered in the coming weeks.

At the same hearing, the Court deferred argument and decision of the (1) Town’s Motion for Leave to Amend Prayer for Relief in Amended Complaint and the (2) Town’s Motion to Refer the Case to Mediation.

On June 11, 2018, Frederick Water filed an Answer to the Amended Complaint. On June 20, 2018, the Town filed an Answer, Defenses and Plea of Recoupment to Frederick Water’s Counterclaim and a Motion to Strike Frederick Water’s Answer to the Amended Complaint and Motion for Other Sanctions.

Frederick Water and the Town voluntarily entered Mediation, with session held August 31, 2018, and again in October.

Both Frederick Water and the Town governing bodies adopted resolutions accepting a Term Sheet which aims to settle the suit and countersuit. A Joint Press Release was issued October 23, 2018, reflecting the agreed upon Term Sheet.  Efforts are underway to settle the suits by the end of 2018.

The filings and orders referenced above can be found in the links below.

 

PRESS RELEASES

10-23-2018 Joint Press Release

02-16-2018 Press Release

06-30-2017 Press Release

06-28-2017 Press Release

 

ORDERS

05-30-2018 Order on Frederick Water’s Plea in Bar & Motion to Strike

04-25-2018 Order Entered Re 4-18 Hrg

04-18-2018 Order Granting Frederick Water’s Motion for Dismissal of Certain Claims and Compelling a Proper Response to Discovery, Granting the Town’s Motion to Compel and Scheduling a Trial of Frederick Water’s Plea in Bar

02-14 2018 Order Denying Mot to Am

02-14-2018 Order Denying Mot Overrule Objections

01-02-2018 Order Denying Transfer of Venire

01-02-2018 Order Granting Ad Damnum

01-02-2018 Order RE Discovery

01-02-2018 Order RE Jury on PIB

12-06-2017 Order Denying Plaintiff Bartonsville Well

12-06-2017 Order Denying Plaintiff RE Wastewater

12-06-2017 Order MTC, 2d Sch Order

07-27-2017 Order on Demurrer

05-08-2017 Virginia Supreme Court Designation of Judge

01-11-2017 Recusal Order

12-31-2015 Court Order amending Nov. 25, 2015, Order Sustaining Demurrer to Town’s Complaint

11-25-2015 Order Sustaining Demurrer to Town’s Complaint

 

FILINGS

06-20-2018 Town’s Answer to Counterclaims

06-20-2018 Town’s Motion to Strike Frederick Water’s Answer to Amended Complaint

06-11-2018 Frederick Water’s Answer to Amended Complaint

06-05-2018 Frederick Water’s Objections to Untimely Notice of Motions

06-01-2018 Town’s Motion to Refer Case to Mediation

06-01-2018 Town’s Motion to Amend Prayer for Relief

05-24-2018 Town’s Reply to Frederick Water’s Brief in Opposition

05-17-2018 Frederick Water’s Opposition to Motions for Particulars, Demurrer, Dismiss of Counterclaims

05-03-2018 Town’s Motion in Support Demurrer and Motion to Dismiss

05-03-2018 Town Demurrer and Motion to Dismiss Counterclaims

04-12-2018 Town’s Reply to Frederick Water’s Oppositon to Mot to Quash Subpoena Duces Tecum

04-11-2018 Town’s Response to Frederick Water Mot to Strike and Resp to Town’s Suupl Oppn to PIB Based on SOL

04-11-2018 Town’s Reply to Frederick Water Opp’n to Town’s Mot for Reconsideration, to Renewed, Suppl Mot to File Rev. 2d Am Compl

04-11-2018 Town’s Reply In Support of Motion to Strike Witness Disclosures and to Exclude Certain Testimony and Expert Opinions

04-11-2018 Town’s Reply In Support of Jury Trial on Plea in Bar

04-10-2018 Frederick Water’s Opposition to Town Motion to Quash Request for Capon Valley Bank Records

Exhibit 1 – Expert Report #2 Financial Condition of the Town

04-03-2018 Frederick Water Opposition to Jury Trial on Plea in Bar

04-03-2018 Frederick Water Oppn to Mot to Strike Witn Disc, Exclude

04-03-2018 Frederick Water Opp to Reconsider, 2d Am Compl w Exhibits

04-02-2018 Frederick Water Motion to Strike with Exs A-E

03-29-2018 Town’s Request for Jury Trial on Plea in Bar

03-29-2018 Town Motion to Strike Witness Disclosures

03-08-2018 Town’s Motion for Bill of Particulars and Motion Craving Oyer

03-08-2018 Town’s Demurrer and Motion to Dismiss Counts V and VII of Counterclaim

03-08-2018 Pl’s Mot for Reconsideration, Renewed,Suppl Mot to File Revised 2d Am Compl

03-07-2018 Frederick Water Suppl Answers to 3d Set Rogs_Expert Designation

03-07-2018 Frederick Water Responses to ROGS 6_7_8

03-06-2018 Town’s Supplemental Opposition to Plea in Bar Based on the Statute of Limitations

02-28-2018 Town Motion to Quash Subpoena Duces Tecum and Motion for Protective Order

02-15-2018 Frederick Water’s Counterclaims and Petition for Appointment of Special Receiver

Counterclaims and Petition Exhibits 1-20

Counterclaims and Petition Exhibits 21A-38

02-09-2018 Town Reply Memo in Support of Mot to Compel a Proper Response and Discovery Sanctions

02-06-2018 Frederick Water Opp’n to Town’s MTC, Exs 1-5

01-30-2018 Town Motion to Compel a Proper Response and for Other Discovery Sanctions

01-15-2018 Town’s Rebuttal to Frederick Water’s Various Pleadings, with Exs

01-15-2018 Rebuttal to Frederick Water’s Various Pleadings

01-11-2018 Frederick Water’s Mot for Dismissal of Certain Claims, to Compel Proper Resp., for Other Disc Sanctions

11-28-2017 Frederick Water’s Opposition to Motion for Leave to Increase Ad Damnum and to File Second Amended Complaint

11-28-2017 Frederick Water’s Opposition to Town’s Motion to Transfer Venire

11-22-2017 Town’s Memorandum in Support of Motion for Leave to Increase Ad Damnum

11-21-2017 Frederick Water’s Motion for Discovery Sanctions and to Compel a Property Response to Discovery

11-21-2017 Frederick Water’s Motion for Entry of Proposed Orders from October 27 Hearing

08-25-2017 Town’s Demand for a Jury Trial

07-20-2017 Town’s Motion to Transfer Venire

07-20-2017 Town’s Motion to Increase Ad Damnum and File Second Amended Complaint

01-10-2017 Frederick Water Reply Brief in Support of Frederick Water’s Plea in Bar to Town’s Amended Complaint

12-28-2016 Town’s Brief in Opposition to Frederick Water’s Plea in Bar to Town’s Amended Complaint

12-07-2016 Frederick Water’s Memorandum in Support of Plea in Bar to Town’s Amended Complaint (with Exhibits)

11-18-2016 Frederick Water’s Reply in Support of Demurrer and Motion to Dismiss Town’s Amended Complaint

11-09-2016 Town’s Brief in Opposition to Frederick Water’s Demurrer and Motion to Dismiss Town’s Amended Complaint

09-16-2016 Frederick Water’s Brief in Support of Demurrer and Motion to Dismiss Amended Complaint

06-24-2016 Frederick Water’s Plea in Bar Founded on Statute of Limitations to Town’s Amended Complaint

06-24-2016 Frederick Water’s Demurrer and Motion to Dismiss Town’s Amended Complaint

01-19-2016 Town’s Amended Complaint and Exhibits Part 2

01-19-2016 Town’s Amended Complaint and Exhibits Part 1

12-10-2015 Frederick Water’s Objection and Motion to Amend Nov. 25, 2015, Order Sustaining Demurrer to Town’s Complaint

12-07-2015 Town’s Objections to Nov. 25, 2015, Order Sustaining Demurrer to Town’s Complaint

10-31-2015 Frederick Water’s Reply to Town’s Opposition to Frederick Water’s Demurrer and Motion to Dismiss Town’s Complaint

10-26-2015 Town’s Opposition to Frederick Water’s Demurrer and Motion to Dismiss Town’s Complaint

10-16-2015 Frederick Water’s Brief in Support of Demurrer and Motion to Dismiss Town’s Complaint

09-21-2015 Frederick Water’s Demurrer and Motion to Dismiss Town’s Complaint

08-28-2015 Town’s Complaint and Exhibits