Water Industry News

Judge rules against city in USFilter case

By Velda Hunter

Published June 15, 2004

ANGLETON — A district judge ruled Angleton isn’t immune to lawsuits as the city continues battling the company that once ran its wastewater plant and street maintenance.

But the city plans to appeal the ruling.

District Judge Robert May denied the plea to jurisdiction Monday. The plea, which was filed that morning by the firm representing the city, argued Angleton can’t be sued because it has governmental immunity. Based on rulings from other cases, attorneys claimed the city is presumed immune from suit unless immunity has been waived.

“One cannot sue the state, a county, city or other government entity without a wavier of immunity,” said attorney Bill Helfand, who is representing the city. “There has been no authorization to proceed in court over the dispute.”

But Michael Youtt, the attorney representing USFilter, disagreed.

He pointed to the state’s government code and the city ordinance, which he said allow the city to sue and be sued.

The judge agreed.

Angleton city officials, including Mayor Matt Sebesta, attended the hearing.

“It wasn’t unexpected,” Sebesta said of the ruling. “We anticipated we would be taking it up to the appeals court.”

USFilter spokeswoman Christie Kaluza said the company is pleased with the court’s decision. She maintained the company’s contract with the city was wrongfully terminated.

“From day one, we have defended our excellent performance record,” Kaluza said. “We feel it’s not a wise decision by the mayor and city manager to continue using taxpayer dollars to defend their decision to terminate our contract based on politics rather than performance.”

Sebesta said the city’s attorney in the case has been paid as part of Angleton’s membership in the Texas Municipal League.

Similar issues concerning the right of cities to sue and be sued have risen in cities, including Dallas, Fort Worth and Houston. In two of those cases, Helfand said judges held there is no waiver of immunity in the language of state law.

But Youtt referred to a case involving the city of Houston and Clear Channel, in which a ruling is pending by the Texas Supreme Court on the issue.

“Nobody knows the right answer right now,” Helfand said. That will be what the Supreme Court provides.

Monday’s hearing comes about five months after Angleton terminated its contract with USFilter, now called Veolia Water.

City officials claimed the company breached its contract by not hiring enough employees to run the plants and maintain streets, not submitting annual capital project reports and improperly charging expenses to the maintenance and repair budget.

USFilter filed suit against Angleton, saying the city’s decision was based on politics.

“We have $3 million in fees that have not been paid off,” Youtt said. He said the immunity issue was raised in the 11th hour, considering he was informed of the plea Saturday. “All we sued for was to get the equipment still on site.”

In turn, the city filed a counterclaim seeking $1 million for street maintenance, drainage and mowing services the city claims the company never provided. However, in a legal move, that lawsuit was dropped Friday by the city as it awaits the ruling on the plea of jurisdiction. It is unknown when that ruling will come. The city has at least four years to refile the lawsuit, Helfand said.

USFilter wants the dispute resolved through arbitration, not litigation. But mediation attempts already have failed.

Velda Hunter at (979) 849-8581