~ 05-CV CIRCUIT COURT OF BALDWIN COUNTY, ALABAMA JODY WISE CAMPBELL, CLERK IN THE CIRCUIT COURT OF BALDWIN COUNTY, ALABAMA

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1 e " ELECTRONICALLY ((If!].n 1 FILED 9123/ :04 AM ~ 05-CV CIRCUIT COURT OF BALDWIN COUNTY, ALABAMA JODY WISE CAMPBELL, CLERK IN THE CIRCUIT COURT OF BALDWIN COUNTY, ALABAMA THE GARDENS AT GLENLAKES PROP.) OWNER'S ASSN, me., LAVE VIEW VILLAS ASSOCIAnON,) INe., LAKE VIEW ESTATES PROPERTY) OWNER'S ASSN, me., GLENLAKES Ul\JIT 1 PROP. OWNERS') ASS., me. ET AL, Plaintiffs, ) v. ) ) Case No.: CV ) BALDwm COUNTY SEWER SERVICE,) L.L.e., Defendant. ) ORDER THIS CAUSE COMES before the Court upon the Motions for Summary Judgment filed by the Plaintiffs and the Defendant as to the issues raised in their respective requests for Declaratory Judgment and the Motions filed for Summary Judgment. The crux of this litigation centers around the enforceability of a Sewer Agreement executed in November, 1991 by South Alabama Sewer Service, Inc. ("SASS") and Lakeview Realty Company ("Lakeview") which purports to set out their agreement under which SASS would furnish sewer service to owners of lots in Lakeview Estates. Prior to such agreement, SASS was providing sewer service to property owners in Lakeview Estates pursuant to a 1987 Sewer Agreement with the then developers, Lakeview Developers, Ltd. The 1987 agreement required SASS to "charge regular monthly service rates to all users within Lakeview Estates that it charges to similar customers." Lakeview Estates went into foreclosure, was then held by Resolution Trust Corporation ("RTC") and was later sold to Lakeview Realty Company in Subsequent to its purchase, Lakeview entered into what purported to be a new agreement with SASS to cover the then

2 DOCUMENT J78 unsold lots. The '91 Sewer Agreement recites the new developer as being under contract to purchase from RTC the Lakeview Estates subdivision which is only described in the '91 Sewer Agreement as Aa golf course, approximately 180 developed lots, and vacant land for future development ("Lakeview Estates"). There is no other legal description of the property or lots covered by the '91 Sewer Agreement. These basic facts giving rise to the '91 Sewer Agreement are recited in both motions and are not in dispute. There are no disputed issues of fact as to those issues raised in the Declaratory Judgment petitions. The Plaintiffs, comprised of various homeowners' associations, the commercial owner of the Glenlakes Golf Club and the City of Foley as a third party intervenor, take the position in their Motion For Summary Judgment this '91 Sewer Agreement is clear and unambiguous and requires the Defendant, Baldwin County Sewer Service, LLC ("BCSS"), as successor in interest to SASS, to provide sewer service to all lots in Glenlakes, without exception, and the '91 Sewer Agreement should be applied to all property owners equally. The Plaintiffs offer no evidence or argument as to the meaning of the terms of the '91 Sewer Agreement with respect to the provision of sewer service, or the charges for such service, if intended to be different than the rates charged by BCSS to other similarly situated customers on its system. On the other hand, BCSS filed a Cross Motion for Summary Judgment on the Declaratory Judgment claims asserted both in its Answer and Counter-Claim and the Plaintiffs' original Complaint. The parties agree resolution of the Declaratory Judgment issues related to the enforceability of the '91 Sewer Agreement may be determinative of all issues raised in the Plaintiffs' Complaint. Indeed, the damage claims asserted in the Third Amended Complaint hinge on the enforceability of the '91 Sewer Agreement. In its Cross-Motion for Summary Judgment, BCSS raises several issues with regard to the Plaintiffs' standing to assert these claims on behalf of individual property owners, and argue the '91 Sewer Agreement is unenforceable because it is ambiguous on its face. In support of this argument, BCSS points out the '91 Sewer Agreement is unenforceable because the property to which it purportedly applies is not only unidentified in the document, but incapable of being identified. It also argues the provisions in the '91 Sewer Agreement with regard to sewer tap fees and monthly service fees chargeable by it to property owners in the subdivision are vague and incapable of being determined by the very language of the '91 Sewer Agreement. It is the ultimate position of BCSS that it should be allowed to charge sewer customers within the

3 Glenlakes subdivision the same sewer tap fees and monthly sewer service rates it charges to all other similarly situated customers on its system. BCSS points out there is no language In the '91 Sewer Agreement which could be utilized by the Court to establish preferential rates for Glenlakes customers over all other customers similarly situated and cites to testimony given by Phillip Bass, the Chairman of SASS when the '91 Sewer Agreement was executed and a signatory thereto. Mr. Bass testified, uncontradicted, all of SASS's customers were to be treated the same and pay the same rates and rate increases, including its customers in Glenlakes subdivision. This is the only ev idence offered by the parties as to the intent of the '91 Sewer Agreement with respect to sewer rates to be charged property owners in what is now Glenlakes subdivision. The Court finds the positions and argument advanced by the Defendant in its Cross Motion for Summary Judgment on Declaratory Judgment to be persuasive and agrees with its contention the relevant provisions of the '91 Sewer Agreement are vague, ambiguous and unenforceable. The Defendant also makes a well-supported argument the Plaintiffs have no standing to enforce the '91 Sewer Agreement as they are not the owners of any interest in the property made the subject of the ' 91 Sewer Agreement. The homeowners' associations do not have standing to assert property damage claims on behalf of individual owners, nor is there any proof in the record which homeowners would have standing or which owners the homeowners associations represent, or which of those property owners would have standing to seek enforcement of the ' 91 Sewer Agreement. However, it is not necessary to decide this case on the issue of standing, alone, since the Court is of the opinion the '91 Sewer Agreement is too vague and ambiguous to be enforced even if proper claims for enforcement were asserted by those individual owners who may have standing. The '91 Sewer Agreement is unenforceable because it is patently ambiguous on its face. The property subject to the '91 Sewer Agreement is not sufficiently described as there is no legal description stated therein. There is no way to determine which developed lots were in existence at the time of the '91 Sewer Agreement, nor is there a legal description of the vacant land for future development to which the '91 Sewer Agreement is supposed to apply. The Court has no evidence with which to make such a determination, nor can the patent ambiguity be made clear by examining the document.

4 Additionally, those property owners who may have standing cannot be determined by the language of the '91 Sewer Agreement. It is unknown who owned the 180 developed lots in existence and to which the '91 Sewer Agreement did not apply, nor their successors in interest. Without a specific legal description of the property, it is impossible to determine which lot owners may be a successor or assign of Lakeview under the '91 Sewer Agreement. The recitals of the '91 Sewer Agreement simply do not give any guidance as to what property, or property owners could possibly be subject to its terms. Although not directly addressed by the Plaintiffs in their Motion for Summary Judgment, it would appear the main issue in dispute between the parties is what rates can be charged by the subsequent owner, BCSS, for sewer tap fees or monthly service fees based upon the language of the '91 Sewer Agreement. The Plaintiffs seem to contend there was an intention to create a special class of customers under the '91 Sewer Agreement who were entitled to "special" rates, different than those charged to other similarly situated customers in the BCSS system. Paragraph 5 of the Agreement is cited by the Plaintiffs as setting forth some method of computing rates for G1enlakes which are "competitive with charges made by others for similar services in the South Baldwin County vicinity." However, there is no way to determine from the face of the '91 Sewer Agreement who these other providers might be, or exactly the geographic boundaries for the ASouth Baldwin County vicinity. These terms are ambiguous and incapable of being determined by the language of the '91 Sewer Agreement. The Court is certainly not inclined to be involved in setting and then monitoring sewer rates for Glenlakes subdivision, nor could it determine any basis for setting and then monitoring such rates by reading the '91 Sewer Agreement. Evidence offered by BCSS by way of deposition testimony of Phillip Bass provides the Court with the most logical explanation as to the intent of this language. Mr. Bass testified his rates at the time of the '91 Sewer Agreement were competitive based solely upon a reasonable return on investment in the infrastructure and overhead, as opposed to being related to those charged by neighboring municipalities or other providers. It was his and SASS's intent to always charge all customers on the system the same rates, including those in Lakeview Estates. There was no intent to make an exception or carve out a special rate strllcture for any Lakeview Estates customers. It is the understanding of the COllli that all public utilities follow the same philosophy and charge all of their cllstomers the same rate for the same type of service.

5 The Court finds this interpretation of the '91 Sewer Agreement to be logical and reasonable. The '91 Sewer Agreement is certainly vague and ambiguous with respect to the property to which it applies and calculating any special rate structure for these unidentified future purchasers of lots in the subdivision. Therefore, it is unenforceable by the Court with respect to these terms. Since the Court cannot ascertain the proper parties entitled to enforce the '91 Sewer Agreement, nor the essential terms of the '91 Sewer Agreement with respect to the provision of sewer service to particular residents in the Glenlakes subdivision, it cannot enter an Order enforcing those provisions. Accordingly, based upon the argument and authority cited by BCSS in its motion and brief, and the fact there is no genuine issue as to any material fact, it is the opinion of the Court the Motion for Summary Judgment on Declaratory Judgment filed by the Defendant, Baldwin County Sewer Service, LLC, is due to be and hereby is granted. The Motion for Summary Judgment on Declaratory Judgment filed by the Plaintiffs and Intervenor is due to be and hereby is denied. The Court finds the '91 Sewer Agreement to be unenforceable as a matter of law for the reasons stated herein and orders the Plaintiffs and Intervenor to show cause within ten days why the remaining claims in their Third Amended Complaint should not be dismissed in light of the Court's Ruling on the Complaint for Declaratory Judgment. DONE this 23 rd day of September, lsi C. JOSEPH NORTON CIRCUIT JUDGE