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Groundworx, LLC v. Blanton

Supreme Court of Mississippi

July 27, 2017

GROUNDWORX, LLC
v.
THOMAS A. BLANTON AND CITY OF HATTIESBURG, MISSISSIPPI

          DATE OF JUDGMENT: 01/07/2015

         FORREST COUNTY CHANCERY COURT HON. M. RONALD DOLEAC TRIAL JUDGE

          ATTORNEYS FOR APPELLANT: R. ANDREW TAGGART, JR. MONA PATEL GRAHAM DAVID GLYN PORTER

          ATTORNEYS FOR APPELLEES: MICHAEL ADELMAN J. COLLINS WOHNER, JR. KEITH W. TURNER

          TRIAL COURT ATTORNEYS: JOSEPH ANTHONY SCLAFANI R. ANDREW TAGGART MONA PATEL GRAHAM DAVID GLYN PORTER LAWRENCE ELVIN ALLISON JOHN EDWARD MILNER CHARLES E. LAWRENCE, JR. MICHAEL ADELMAN ANNIE L. AMOS

          BEFORE RANDOLPH, P.J., COLEMAN AND MAXWELL, JJ.

          MAXWELL, JUSTICE.

         ¶1. Groundworx, LLC, appeals the judgment dismissing Groundworx's breach-of-contract action against the City of Hattiesburg. We review this judgment de novo, employing the same standard as the trial court. Taking Groundworx's allegations as true, we will affirm dismissal only if it appears beyond doubt that Groundworx will be unable to prove any set of facts to support its claim.

         ¶2. After reviewing the contract between Groundworx and the City, which Groundworx attached to its complaint, we are left with no doubt that Groundworx's complaint was properly dismissed for failure to state a claim. Even when we take all of Groundworx's allegations as true, Groundworx can cite no contractual provision the City allegedly breached. Even if Groundworx expended millions of dollars preparing to perform under the contract, it did so before securing the necessary financing to complete the project. And unfortunately for Groundworx, the contract was clear-if Groundworx did not secure financing by a certain date, the City had the right to terminate the contract. So Groundworx can prove no set of facts to show the City breached the contract.

         ¶3. Nor can Groundworx prove the City was liable under a theory of promissory estoppel. Groundworx claims to have reasonably relied on actions and assurances made by City officials. But under Mississippi law, the City can be liable only for actions entered on its minutes and approved by its mayor. So as a matter of law, Groundworx cannot recover based on unofficial City promises.

         ¶4. We therefore affirm the judgment dismissing Groundworx's complaint.

         Background Facts[1] and Procedural History

         I. City-Groundworx Contract

         ¶5. In 2010, the City's wastewater system was discovered to be noncompliant with federal pollution laws. Under order to remedy the problem, the City sought proposals for a land-application treatment system for sewage and wastewater. On November 11, 2013, Groundworx responded with a proposal to construct, operate, and maintain a land-application system.

         ¶6. After negotiations, the City and Groundworx executed a contract on January 21 and 27, 2014. Under the contract, Groundworx agreed to "design, build, construct, own, operate and maintain the System for the purpose of collecting, treating, storing, transporting, and disposal of the City's Wastewater . . . ." In exchange, the "City unconditionally and irrevocably covenant[ed] and agree[d] to pay to Groundworx . . . the interest portion of Groundworx's Debt Service payments"-along with other significant payments.[2]

         II. Groundworx's Attempted Financing

         ¶7. While the City agreed to make payments sufficient to service the debt, it was Groundworx that had to obtain the $147 million to finance the project. And the contract contained a termination provision. It expressly provided, "[i]n the event that Groundworx has not closed its financing for the acquisition and construction of the System by June 2, 2014, either party shall have the right to terminate this Agreement by written notice to the other delivered on or after June 2, 2014, and before the date such financing is closed."

         ¶8. Before the contract was entered, the City's mayor sent a letter to the Mississippi Business Finance Corporation (MBFC) in December 2013. This letter explained the City was negotiating with Groundworx "for this public/private project" and encouraged "MBFC to induce the bonds for Groundworx financing." City representatives also participated in a written presentation to potential bond insurance agencies in New York City. And the day after the contract was executed, City representatives ...


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