A federal appeals court has requested more information from the Alabama Supreme Court before ruling on whether land owned by Mobile’s Solid Waste Disposal Authority (SWDA) can be seized by Waste Management (WM) as payment for a $6 million breach of contract judgement.
At issue in the case is whether more than 100 acres near the Chastang Landfill owned by SWDA can be taken over by WM over slow payment of a breach of contract judgement against the quasi-governmental agency. An attorney for SWDA has argued under Alabama law any land owned by a municipality or used for municipal purposes cannot be seized. An attorney for WM has argued the circumstances of this case means the special exemption can’t be used.
In recorded oral arguments to a three-judge panel of the Eleventh Circuit of Appeals, John Neiman, an attorney for Waste Management Mobile Bay Environmental Center, said SWDA has paid only about $1 million of the $6 million judgement entered against it more than four years ago, and WM, just this year, received another almost $3 million judgement against the entity for ongoing breaches.
“The authority has refused to pay or take any steps toward paying the judgement,” Neiman said to the panel, adding the land seizure would go toward paying the $5 million. “If the land is off limits, the authority would be judgement proof.”
While Neiman said he understands state law in regard to the exemption granted on municipal property, he argued the exemption does not apply in this case because the authority, not the city, owns the property.
“The city’s name has never been on the deed for the property,” he said. “Only the authority, which is a separate entity, is named on the deed.”
As for the exception remaining for land serving a municipal purpose, Neiman said the property in question, purchased in 1994, is being held for future expansion of the landfill, which isn’t planned for another 50 years.
Chuck Miller, an attorney for SWDA, told the judges in the recording the authority has paid the 4-year-old judgement through royalties WM usually pays SWDA through the use of the landfill. Royalties, Miller said, are undervalued because only about 25 percent of the waste taken in by Chastang Landfill belongs to the city.
“Waste Management is offsetting royalties in this case,” Miller said. “Those royalties are substantial and Waste Management is collecting on the judgement in that regard.”
Miller argued since the property is owned by SWDA as a solid waste facility, it can only be used for the purposes of collecting solid waste. This means, he said, the property will always have a public purpose.
“The authority does not have the power to sell property it holds for a solid waste landfill,” Miller said.
In a ruling released Friday, Aug. 26, the panel wrote it had questions for the Alabama Supreme Court about the state law. Among the questions “certified” to the Supreme Court are whether property owned by SWDA can belong to a municipality and whether the state still recognizes a common-law exemption that might be pertinent to the case.
Until those and other questions are answered, the panel has deferred the case.
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