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Home My WebLink AboutS-1844-E Court Case 081423August 9, 2023 Members of the Little Rock Planning Commission. The Commissioners of Suburban Sewer Improvement District #239 submit this formal objection to S-1844- E and request the application before the Commission be pended until sewer connection fees are paid. Under the findings of Judge Alice Gray, SSID #239 has the authority to set and collect connection fees. Given that SSID #239 has not been paid for the initial phases of Copper Run, and that Layman Lanes has appealed Judge Gray's finding, we ask that the City pend any further development from being allowed until the connection fee is paid. ($1750 per lot@ 129 lots= $225,750) BACKGROUND Spring Valley Manor (the Valley) is a neighborhood in West Little Rock established in 1962 with 126 parcels. Located off Cooper Orbit Road and Kanis Road; the Valley is a quiet, sliver of beauty , with wildlife in abundance and neighborhoods that clearly display the homeowner's love for the area. It is no surprise that when homeowners were faced with the loss of their sewer system, they came together and the created the Suburban Sewer Improvement District #239 (SSID#239)to repair, maintain and manage sewer lines, thus saving the neighborhood. The use of the model of an Improvement District allowed the Valley to continue, with the management of the sewer lines falling to the SSID. The Valley's sewer lines were repaired, a sewer main constructed, and the Valley's lines were tied -in to Little Rock's system in 2001 at a cost of over $2,000,000. A bond funded loan was used to pay the enormous cost incurred by this small neighborhood. In 2010, after the Valley had been annexed to the City, an agreement was made to convey title with necessary easements to the City of Little Rock. This agreement meant that Little Rock Water Reclamation authority would charge sewer fees to homeowners and maintain the lines. However, the bond for construction of the sewer main still had to be paid, and the SSID continued to collect assessments from homeowners in addition to connection fees from from new subdivisions that connected to the sewer main SSID #239 had constructed. In the Bill of Sale (2010) the SSID#239 specifically maintained the lawful rights to continue levying and collecting assessments and sewer lines connection fees. In September of 2018 the Copper Run subdivision construction plans were approved. At that time it was noted that the developer had an obligation to make an independent determination of any fees they may owe to third parties. The developer, Layman Lane, Inc. initially engaged with SSID#239 Commissioners regarding fees due to connect to the sewer lines, but developer ceased communications and connected 175 residential lots to SSID#239 without payment. SSID#239 brought legal action again Layman Lane,LLC . Judge Alice Gray, Circuit Court, 12th Division on December 21, 2022, found that Layman Lanes owed SSID #239 for unjust enrichment (attached.) Layman Lane has filed an appeal. At issue before the planning commission is a request for approval of additional phases that will depend upon the same sewer line for Copper Run which has an unlawful connection and for which SSID #239 has not been paid. Respectfully, Commissioners #239 Mark Lyons Cathi Watkins Cindy Alberding ELECTRONICALLY FILED Pulaski County Circuit Court Terri Hollingsworth. Lircuit/Gounty Clerk 2022-DeC-21 14:34:35 60CV-20-2804 C06D12 : 7 Pages IN THE CIRCUIT COURT OF PULASKI COUNTY, ARKANSAS 12t' DIVISION SUBURBAN SEWER IMPROVEMENT PLAINTIFF DISTRICT #239 V. CASE NO.60CV-20-2804 LAYMAN LANE, LLC DEFENDANT JUDGMENT On September 8, 2022, tried to the Court was the Complaint filed by Plaintiff Suburban Sewer Improvement District #239 ("District 239") against Defendant Layman Lane, LLC ("Layman Lane") alleging a single count of Unjust Enrichment. District 239 appeared with its attorney David Gershner of the Davidson Law Firm. Layman Lane appeared with its attorney Don Eilbott. The trial was conducted in a single day and the parties, through their counsel, submitted written closing arguments to the Court. District 239's complaint alleges: a. That it has, over the years, constructed and maintained sewer lines within and without its district boundaries at substantial cost; b. That, in 2010, that it transferred ownership of the last of its sewer lines to Little Rock Water Reclamation Authority while retaining the right to levy and collect assessments and sewer line connection fees; c. That Layman Lane connected to the sewer lines once owned by District 239 and which remained subject to District 239's retained rights for the purpose of development of a 175 lot residential subdivision; i d. That Layman Lane was advised by Little Rock Water Reclamation Authority of the requirement to obtain approval or pay necessary fees to applicable special improvement districts; e. That Layman Lane did not pay any fee or obtain approval for its connection from District 239; f. Asa result of its connection to the sewer lines without making payment or obtaining approval, Layman lane has been unjustly enriched; and g. The reasonable value of the benefit received by Layman Lane is $306,250.00. Upon hearing the testimony of witnesses presented and reviewing the evidence introduced at trial, the Court, being sufficiently informed, makes the following factual findings and legal conclusions: JURISDICTION AND VENUE 1. District 239 is a suburban improvement district located in Pulaski County. 2. Layman Lane is an Arkansas limited liability company with its principal place of business in Pulaski County. 3. The events of this dispute occurred in Pulaski County. 4. Jurisdiction and Venue are proper in this Court. FINDINGS OF FACT 5. District 239 was formed in 1977 under Act 41 of 1941. 6. Throughout the years of its existence, District 239 has constructed and maintained sewer infrastructure at substantial expense. 7. Plaintiff previously owned the sewer lines located in the Capitol Lakes improvement district boundaries as well as the lines within District 239's boundaries. 8. District 239 transferred ownership of its sewer lines to Little Rock Water Reclamation Authority on May 24, 2010 pursuant to a Bill of Sale which reserved to District 239 the right to continue levying and collecting assessments and sewer line connection fees. 9. Layman Lane is the developer of the Copper Run subdivision which has been approved for a total of 175 residential lots, some of which have already been sold and had residences built. 10. Layman Lane was advised by Little Rock Water Reclamation Authority via letter dated September 27, 2017 from Vincent Hotho containing the following language: [Defendant] agrees to obtain all necessary permits and approvals from all other governing agencies including any applicable Improvement District prior to the start of construction. APPLICANT SHOULD MAKE AN INDEPENDENT DETERMINATION of the existence, status or amount of any fees which may be due to third parties (such as Improvement Districts)" 11. Layman Lane entered into negotiations with District 239 with respect to the amount of a connection fee to be paid and terminated negotiations without coming to an agreement. 12.A sewer connection was necessary for the development of the Copper Run subdivision. 13. Between September 2018 and March 2019, Layman Lane made a connection to the sewer lines previously owned by District 239 and which were subject to their reservation of rights. 14. Layman Lane did not make any payment to District 239 in exchange for the connection to the sewer lines. 3 15. The average annual assessment of residents of District 239 which are connected to the sewer lines is between $700-800. 16. District 239 has charged other developers for connection to the sewer lines in amounts ranging from one-time fees of $250,000 to annual fees of $63,205 as well as an agreement with a connecting owner for the per lot charge of $2,000 per lot above and beyond the number initially contemplated. 17. As of the time of this judgment, Layman Lane has been connected to the sewer lines for over three and a half years. CONCLUSIONS OF LAVA 18. District 239 has authority under Ark. Code Ann. § 14-92-210 to, among other things, establish rules and regulations for the transaction of the district's business and for the services, use, and right to use of its facilities or services, or both. 19. District 239 has authority under Ark. Code Ann. § 14-92-220 to sell or lease its improvements to any other corporation, organization, or person. 20. Under the authority the above referenced statute, District 239 had a right to charge connection fees to others in exchange for allowing the connection to and use of its sewer lines. 21. District 239's rights to charge connection fees were validly reserved in the Bill of Sale which otherwise transferred the lines to Little Rock Water Reclamation Authority. 22. By virtue of District 239's construction of the sewer lines and Layman Lane's connection to the lines, District 239 provided something of value to Layman Lane, the thing of value being a functioning sewer connection for the Copper Run subdivision. 4 23. Based on its statutory rights with respect to the connection fees and explicit reservation of those rights, District 239 had a valid and reasonable expectation to be paid for Layman Lane's connection to the sewer lines. 24. Based on the September 27, 2017 letter from Vincent Hotho to Layman Lane and the testimony of both parties as to the negotiations on the amount of a connection fee, it is clear that Layman Lane was aware of District 239's expectation of payment. 25.As Layman Lane received a valuable and necessary sewer connection for its subdivision for which it did not pay in spite its awareness of District 239's valid and reasonable expectation for payment, the Court finds that Layman Lane has been unjustly enriched. 26. District 239's evidence and testimony establishes that the sought amount of $306,250 is representative of an average assessment of benefits of 175 lots for slightly less than two and a half years. The Court finds this to be a reasonable approximation of Layman Lane's gain. 27. Layman Lane has expressly waived the following affirmative defenses, which are hereby denied. a. Lack of personal jurisdiction; b. Lack of subject matter jurisdiction; c. Improper venue; d. Insufficiency of service of process; e. Insufficiency of process; f. Estoppel; g. Laches; 5 h. Unclean hands; i. Accord and satisfaction; j. Fraud; k. Illegality; I. Payment; m. Release; n. res judicata; o. Set off; p. Waiver; and q. Failure to mitigate damages. 28. Layman Lane has failed to present sufficient evidence to meet its burden with respect to the following affirmative defenses which are hereby denied; a. Statute of limitations; b. Statute of frauds; c. Failure of consideration; and d. Failure to name a necessary party. THEREFORE IT IS CONSIDERED, ORDERED, AND ADJUDGED that: Plaintiff Suburban Sewer Improvement District #239 is awarded a judgment in the amount of $306,250.00 against Defendant Layman Lane, LLC plus post judgment interest of $61.58 per day from the entry of judgment until paid. All affirmative defenses referenced in paragraphs 28 and 29 above, as well as any other not specifically referenced are denied and dismissed. Each party is directed to pay its own attomeys' fees. 6 Withing 45 days from the entry of this judgment, Layman Lane, LLC is ordered to file with this Court a schedule of its assets and exemptions. IT IS SO ORDERED cc: David L. Gershner Attorney for Plaintiff Via electronic filing Don A. Eilbott Attorney for Defendant Via electronic filing Hon. Alice Gray, Circuit Judge Date DEC 2 1 2022 mdp G^Y z OM %�� vw JUMT mwm:h T,W .Tr#st 7 From: "Carpenter, Tom" < > Date: 8/2/23 5:20 PM (GMT-06:00) To: Director Wyrick < > Subject: PAUL ROSS help please Dear Director Wyrick, I received a call from Mr. Ross today about the subdivision issue. I sent the below to you a few moments ago. Mr. Ross gave me his email address, but I evidently laid it down with the Litigation Audit Letter materials that I was completing, and right now I cannot find it. If you know it, would it be possible to forward this email to him? Tom Dear Jamie, This email is a follow up to our earlier discussion about this matter. The first four phases of the proposed subdivision have been built. There has been a dispute as to whether certain sewer fees must be paid. The dispute landed in the Pulaski Circuit Court, and the developer was ordered to pay the fees. That case is now on appeal, and this subdivision approval is now coming forward. The City's issue is whether the subdivision is in proper form, and to some extent the City is limited as to what issues it can consider. On the other hand, to open up such a second concern about who pays certain fees to an improvement district does not make sense. As I understand it, there is an agreed upon escrow amount that has been created for the current outstanding judgment being appealed. If the developer will also place in escrow an amount that will cover the future fees, if the appeal is unsuccessful, then I do not see how anyone is harmed if the Planning Commission grants its approval. That said, if such an agreement cannot be reached between the parties to the litigation, then I wonder how the City can approve a proposal when such a critical ssue is up in the air. Tom Thomas M. Carpenter, City Attorney DFFICE OF THE CITY ATTORNEY :500West MarkhamStreet, Ste. 310 _ittle Rock, Arkansas 72201-1430 ;T) (Direct dial) ,M)