McEnally v. Pioneer Woodlawn Utilities, Inc.

587 So. 2d 623, 1991 Fla. App. LEXIS 10020, 1991 WL 204594
CourtDistrict Court of Appeal of Florida
DecidedOctober 14, 1991
DocketNo. 90-2535
StatusPublished
Cited by2 cases

This text of 587 So. 2d 623 (McEnally v. Pioneer Woodlawn Utilities, Inc.) is published on Counsel Stack Legal Research, covering District Court of Appeal of Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McEnally v. Pioneer Woodlawn Utilities, Inc., 587 So. 2d 623, 1991 Fla. App. LEXIS 10020, 1991 WL 204594 (Fla. Ct. App. 1991).

Opinion

SHIVERS, Judge.

This appeal is from a final order awarding appellee Pioneer Woodlawn Utilities, Inc., the value of a water utility system and the costs of operating the utility for a period of time. This was based on appellant William McEnally’s not retiring the lien of Bay County causing Bay County to foreclose and Pioneer to lose the benefit of the bargain for purchase of the utility. Pioneer was also awarded attorney’s fees. We affirm the award of attorney’s fees and the costs of operating the utility; but we reverse the award of the value of the utility-

The issue as framed by the appellant is whether there is competent substantial evidence to support the conclusion that McEnally had a contractual duty to retire the lien of Bay County. We conclude that McEnally had no contractual duty to retire the lien.

Woodlawn is a subdivision in Bay County with approximately 900 residents. In 1981 McEnally bought a private water system which services 206 Woodlawn households. The system consists of underground pipes and meters which were installed in the 1950s. He operated the system in the name of Woodlawn Utility Company, which he dissolved prior to 1986. For reasons not apparent in the record, McEnally rarely billed the residents of Woodlawn for the water he provided to them. Sometime in 1984 McEnally began falling behind in his payments to Bay County, which was McEnally’s water supplier. By October 1987 Bay County claimed McEnally owed it $40,560.71.

The county devised a plan whereby the Woodlawn residents would begin paying for their water at an increased rate until McEnally’s debt to the county was paid. The increased rate was termed a ‘pass through’ rate. Although rates for a privately owned water system cannot be increased without approval from the Public Service Commission, an attorney for the Commission provided assurances that the rate increase would be approved.

Jay Myers is a resident of Woodlawn who owns and operates Woodlawn’s sewer system in the name of Pioneer Woodlawn Utilities, Inc. On November 10, 1987, based on the assurances that approval of the pass through rate was forthcoming, Myers, as buyer, entered into a contract [624]*624with McEnally, as seller, to purchase the water system. The contract states in part

11. PAST DUE WATER BILL TO BAY COUNTY. The parties recognize that there is a past due bill for water from Bay County in the amount of $40,560.71. The Buyer shall enter into a Water Purchase Contract with Bay County, and if the Buyer pays to Bay County $10,000.00 prior to January 20, 1988, and purchases 40,669,000 gallons of water at the rate of $1.39 per 1,000 gallons, Bay County will cancel the obligation. Buyer agrees to comply with the terms of the Water Contract with Bay County. Further, Buyer consents to the placement of mortgage lien by Seller on the Utility in the principal amount of $40,560.71 accruing interest at the rate of twelve percent (12%) ■ per annum payable to Bay County, and Buyer agrees to accept title subject to said lien.

(emphasis added). Also on November 10, 1987, McEnally executed a note and mortgage to the county placing a lien on the water system in the principal amount of $40,560.71; and McEnally quitclaimed his interest in the water system to Myers.

Another agreement was executed on November 17, 1987, between McEnally, Myers and the county. It states in part

2. The County agrees to cancel the past due water charges when Pioneer Wood-lawn Utilities, Inc., has paid, pursuant to its Water Service Contract with Bay County dated November 17, 1987, $10,000 on or before January 20, 1988, and has purchased a minimum of 81,000,000 gallons of water at a rate of $.98 per 1,000 gallons.
3. If Pioneer Woodlawn Utilities does not perform as specified in the above paragraph, McEnally agrees to pay $40,560.71 plus accrued interest at the rate of twelve percent (12%) per annum less the sum of (i) any portion of the $10,000 payment made by Pioneer Woodlawn Utilities, Inc., and (ii) $.43 per 1,000 gallons of water purchased at the rate of $.98 per 1,000 gallons.

On November 24, 1987, Myers entered into a water service contract with Bay County. It states in part

4.WATER RATES AND CHARGES....
A. For the period October 20, 1987, through January 20, 1988, $.55 per 1,000 gallons of water delivered to the Utility, plus and additional payment of $10,000 on or before January 19, 1988.
B. Commencing January 20, 1988, $.98 per 1,000 gallons of water delivered to the Utility.

It later became known that the Commission would not approve the pass through rate increase; and a group of Woodlawn residents protested the transfer of the water system’s operating certificate. It therefore became obvious that the sale of the water system would be delayed, if not thwarted. On February 4, 1988, McEnally and Myers entered into an “Operations Agreement” whereby Myers would operate the water system. The agreement, which was prepared by Myers’ lawyer, expressly supplemented and modified the purchase contract; and it states in part

3. The parties recognize, covenant and agree that the Purchase Contract is contingent upon Florida Public Service Commission approval of the transfer contemplated therein.
4. The parties recognize, covenant and agree that the past due water bill (“past due water bill to Bay County”, as contemplated in paragraph 11 of the Contract For Sale and Purchase, which contemplates that Buyer shall purchase 40 Million, Six Hundred and Sixty-nine Thousand (40,669,000) gallons of water at the rate of One Dollar and 39/100 ($1.39) per thousand gallons) is expressly conditioned upon, and subject to, approval by the Florida Public Service Commission of a petition to be filed by either Seller, or Buyer on Seller’s behalf, which requests that said rate of One Dollar and 39/100 ($1.39) per thousand gallons be “passed-through”, pursuant to Section 367.081(4)(b), Fla.Stat. The parties recognize that, in the absence of approval of such a “pass-through” by the Florida [625]*625Public Service Commission, it would be economically and financially unfeasible for Buyer to purchase said amount of water at said rate and therefore, in the absence of such Florida Public Service Commission approval, Buyer is released from any and all requirements of numbered paragraph (11) of the Purchase Contract.
5. The parties recognize, covenant and agree that during that period of time which falls between the date for the execution of the Purchase Contract, and final approval of the transfer (as contemplated herein) by the Florida Public Service Commission, Buyer shall operate the Utility as an agent of the Seller. To that end, during that same period of time, all risk of loss shall remain with the Seller, and Seller shall indemnify and hold Buyer harmless from and against any and all liabilities, claims, damages, costs or expenses (including reasonable attorney’s fees) to which Buyer may become subject by reason of or arising out of the performance of its duties or its operation of the utility system as contemplated herein.
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Bluebook (online)
587 So. 2d 623, 1991 Fla. App. LEXIS 10020, 1991 WL 204594, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcenally-v-pioneer-woodlawn-utilities-inc-fladistctapp-1991.