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The following was e-mailed to all Sea Crest Board members on May 30 , 2006
following a request for me to assist in determining what Sea Crest owed H2O&S
made at the May 2006 board meeting.
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May 30, 2006 e-mail to Board:
Background of Sea Crests Sewer Service Agreement
Hunter Quistgard (HQ) acquired Otter Village as well as the water and sewer
treatment plants circa 1988. He re-platted Otter Village as Sea Crest.
HQ began selling lots to the public in 1990 and represented to buyers in the sales
agreement that " Sea Crest is serviced by a private water system and a private
sewer system wherein Sea Crest has made arrangements for services to be
provided to the individual lot owners" . He also charged buyers a $2500 "sewer lien".
I bought lot 13 in June 1990.
HQ sold the sewer plant to Susan Whaley without any provision guaranteeing Sea
Crest lots sewer service or a rate.
In 1992 The Inn at Otter Crest (IOC) sued HQ and all Sea Crest lot owners as joint
and several defendants for about $1,000,000 claiming essentially that the water
system wasnt big enough for the both of us and demanding we pay to improve it.
This litigation took four years of negotiation to reach an out of court settlement.
As president of the Sea Crest Homeowners Association at the time , I represented
Sea Crest at the negotiations. The Board and the members voted to accept the
agreement.
While the litigation went on , Susan Whaley sold the sewer plant to H2O&S, again
with without any provision that guaranteed sewer service or a rate for Sea Crest.
The IOC then negotiated its own separate sewer service contract with H2O&S
without including Sea Crest. This essentially locked in what H2O&S expected to
get from Sea Crest. The IOC considered themselves as a preferred customer of
H2O&S and were unsympathetic to Sea Crest having to pay more for than they
did for sewer service. Furthermore, the IOC threatened to abandon the mediated
settlement of the water plant issue and continue litigation against Sea Crest unless
we completed a contract with H2O&S by a deadline they set.
H20&S wanted hookup fees from anyone in Sea Crest that hadnt paid HQs sewer
lien and wanted ALL lots to pay the same monthly fixed fee.
Our position was that Sea Crest was H2O&Ss customer, not individual lots, and we
would pay for sewage treatment based on total volume of sewage treated as
indicated by Sea Crests total metered water use.
An agreement was reached in the nick of time which I felt accomplished this. The board and members voted to accept it.
My understanding of the term rate in the sewer service contract was dollars per
1000 gallons of metered water use , the customary and usual meaning in the context
of sewage treatment service.
From June 2000 to March 2001, Sea Crest overpaid H2O&S by $12,421 before the
mistake was discovered.
H2O&S not only refused to refund the money, but used the opportunity to claim the
contract called for ALL lots to start paying the same monthly fee based on the IOCs
fee. H2O&S then sued Sea Crest for breach of contract.
The Judge found that H2O&Ss claims were clearly contradicted by the evidence
and ruled in favor of Sea Crest.
"In the final analysis the evidence more than preponderates in favor of the position
taken by Sea Crest, establishing to the court's satisfaction that Sea Crest has
overpaid in the amount of $12,421.20, less the applicable monthly rates which
should otherwise be charged for the period June 15, 2001, through October 15,
2001, which rate is and will hereinafter be predicated upon only for those who use
sewer services within the Sea Crest Subdivision. Finally, attorneys fees, costs and
disbursements will be awarded Sea Crest as the prevailing party."
Even though the judge relied on my testimony for his decision in our favor
(see Judges full written decision), I was only asked to testify at the trial by Sea
Crests attorney at 8 PM the evening before the trial began.
Also, Sea Crests attorney argued in the trial that rate meant what the IOC was
paying per month divided by 150 instead of what the IOC was paying per 1000
gallons of metered water use. As a result, we are now probably stuck with the
former definition as well as the consequence of paying the same sewer fee for
vacant vacation homes and the clubhouse as for full time residences.
Monday morning critics who werent present at the negotiations or the trial have no
idea how difficult the circumstances were under which the sewer contract was
reached.
Nevertheless, this contract secured guaranteed sewer service for all Sea Crest
lots where there was none before and has saved Sea Crest approximately $275,000
to date from what H2O&S initially demanded.
I have attached an Excel spreadsheet that shows what I believe we currently owe
H2O&S.
George Fosmire
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