20190227Notice of Filing in Related Judicial Proceeding.pdf

B. Newal Squyres (ISB #1621)
Murray D Feldman (ISB # 4097)
Holland &Hartrrp
800 W. Main Street, Suite 1750
P.O.Box2527
Boise, ID 83702-2527
Telephone: [phone]
Facsimile: [phone]
Email : [e-mail]
mfeldman@hollandhart. com
Attorneys for Intervenor City of Eagle
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NOS. SUZ-W-18-02
EAG-W-18-01
.-',---'
IN THE MATTER OF THE JOINT
APPLICATION OF SUEZ WATER
IDAHO AND EAGLE WATER
COMPANY FOR THE ACQUISITION
OF EAGLE WATER COMPANY
INTERVENOR CITY OF EAGLE'S
NOTICE OF FILING IN RELATED
JUDICIAL PROCEEDING
)
)
)
)
)
)
)
Intervenor City of Eagle ("City") provides this Notice of the City's frling of a judicial
action, Case No. CVOl-19-03534, in the District Court for the Fourth Judicial District of the
State of Idaho, Ada County. A copy of the Complaint commencing this civil action by the City
versus Eagle Water Company, Inc., is attached to this Notice. This Notice is provided to inform
the parties of this civil action prior to the March 4,2019, prehearing meeting.
DATED this 27 th of February, 2019.
City of Eagle
By:
D
HOLLAND & HART rr-p
Attorneys for Intervenor City of Eagle
/.
CITY OF EAGLE'S NOTICE OF F'ILING IN RELATED JUDICIAL PROCEEDING. I
Certificate of Service
I hereby certi$/ that on this 27th day of February,20l9,I caused to be served a true and
correct copy of the foregoing by the method indicated below, and addressed to the following:
Diane M. Hanian
Commission Secretary
Idaho Public Utilities Commission
472 W . Washington Street
Boise, ID 83702
Email : secretary@puc. idaho. gov
diane. hanian@puc. idaho. gov
Commission
Sean Costello
Deputy Attorneys General
Idaho Public Utilities Commission
472W. Washington Street (83702)
P.O. Box 83720
Boise, ID 83720-0074
Email: [e-mail]
Attorneys for Commission Staff
Michael C. Creamer
Preston N. Carter
Givens Pursley LLP
601 W. Bannock Street
P.O.Box2720
Boise, lD 83701-2720
E-mail : mcc@givenspursley. com
prestoncarter@givenspursley. com
Attorneys for Petitioner SUEZ Water ldaho
Inc.
Marshall Thompson
SUEZ Water Idaho, Inc.
8248 W. Victory Road
Boise,ID 83709
Email : marshall.thompson@suez. com
Petitioner
trtr U.S. Mail
Hand Delivery
Overnight Mail
Telecopy (Fax)
Electronic Mail
U.S. Mail
Hand Delivery
Overnight Mail
Telecopy (Fax)
Electronic Mail
U.S. Mail
Hand Delivery
Overnight Mail
Telecopy (Fax)
Electronic Mail
U.S. Mail
Hand Delivery
Ovemight Mail
Telecopy (Fax)
Electronic Mail
rtrtrtrX
trtrtrx
CITY OF EAGLE'S NOTICE OF FILING IN RELATED JUDICIAL PROCEEDING.2
Molly O'Leary
BizCounselor at Law
1775W. State St. #150
Boise, lD 83702
E-mail : molly @bizcounseloratlaw. com
Attorney for Petitioner Eagle Water Co.
Robert DeShazo, Jr.
President
Eagle Water Company, Inc.
188 W. State Street
P.O. Box 455
Eagle, ID 83616-0455
Email : [e-mail]
Petitioner
N.L. Bangle
H2O Eagle Acquisition, LLC
188 W. State Street
Eagle,ID 83616
Email : [e-mail]
Petitioner
James M. Piotrowski
Piotrowski Durand, PLLC
1020 W. Main Street, Suite 440
P.O. Box 2864
Boise, ID 83701
Email : j ames@idunionlaw. com
Attorney for Intervenor CAIA
Brad M. Purdy
Attorney at Law
2019 N. 17th Street
Boise, lD 83702
Email : [e-mail]
Attorney for Intervenor CAPAI
Abigail R. Germaine
Boise City Attorney's Office
150 N. Capitol Blvd.
P.O. Box 500
Boise,ID 83701-0500
Email : agermaine@cityofboise. org
Attorney for Intervenor City of Boise
trx
Itrtrtrx
U.S. Mail
Hand Delivery
Overnight Mail
Telecopy (Fax)
Electronic Mail
U.S. Mail
Hand Delivery
Overnight Mail
Telecopy (Fax)
Electronic Mail
U.S. Mail
Hand Delivery
Overnight Mail
Telecopy (Fax)
Electronic Mail
U.S. Mail
Hand Delivery
Overnight Mail
Telecopy (Fax)
Electronic Mail
U.S. Mail
Hand Delivery
Overnight Mail
Telecopy (Fax)
Electronic Mail
U.S. Mail
Hand Delivery
Ovemight Mail
Telecopy (Fax)
Electronic Mail
trtrtrtrx
trItrtrx
Ttrtrtrx
CITY OF EAGLE'S NOTICE OF FILING IN RELATED JUDICIAL PROCEEDING.3
Norman M. Semanko
Parsons Behle & Latimer
800 W. Main Street, Suite 1300
Boise, ID 83702
Email : nsemanko@parsonsbehle. com
[e-mail]
Attorney for Intervenor EWCG
U.S. Mail
Hand Delivery
Overnight Mail
Telecopy (Fax)
Electronic Mail
Holland LLP
I 2095070_1
Ix
CITY OF'EAGLE'S NOTICE OF FILING IN RELATED JUDICIAL PROCEEDING.4
Electronically Filed
212612019 3:52 PM
Fourth Judicial District, Ada County
Phil McGrane, Clerk of the Court
By: Katee Hysell, Deputy Clerk
B. Newal Squyres (ISB #1621)
Murray D. Feldman (lSB #4097)
Sara M. Berry USB #7723)
Hollauo & HART.I.
800 W. Main Street
Suite 1750
Boise, lD 83702-5974
Telephone: [phone]
Facsimile: [phone]
Emails: [e-mail]
m fe I dm an @ ho I I andh art. com
smberry @ ho I landhart. com
Attorneys for Plaintiff
IN THE DISTRICT COURT OF THE FOURTH JUDICIAL DISTRICT OF THE
STATE OF IDAHO, IN AND FOR THE COUNTY OF ADA
CITY OF EAGLE, an ldaho municipal
corporation,
Plaintiff,
Case No. CVO1-19-03534
COMPLAINT FOR
DECLARATORY AND OTHER
RELIEF
VS
EAGLE WATER COMPANY, INC., an Idaho
corporation,
Defendant.
CITY OF EAGLE (the "City"), by and through its attorneys of record, Holland &Hart
LLl, alleges as its Complaint against EAGLE WATER COMPANY,INC. ("Eagle Water"), as
follows:
INTRODUCTION
l. By June 2008, Eagle Water was in trouble. It was struggling economically; it was
struggling with regulatory and environmental issues.
COMPLAINT FOR DECLARATORY AND OTHER RELIEF - 1
2. The Idaho Department of Environmental Quality ("DEQ")-which regulates
public drinking water systems-had imposed a moratorium on new connections to Eagle Water's
system. Eagle Water was subject to a consent order and enforcement by DEQ and a show cause
hearing before the Idaho Public Utilities Commission ("PUC"). Eagle Water needed alarge
supply of standby water for firefighting and other purposes and could not continue to operate
without it. Eagle Water had failed to connect residents within its approved service area due to
the DEQ-imposed connection moratorium.
3. Faced with these circumstances, Eagle Water approached the City for the help it
needed. The City had recently completed a large water storage tank close to Eagle Water's
system. Eagle Water could connect-through an intertie-to the City's storage tank for the
standby water. The City and Eagle Water approved an Intertie Agreement in July 2008-a
contract between Eagle Water and the City. As consideration for the City's commitments, Eagle
Water granted the City a very valuable right-a permanent Right of First Refusal-providing the
City with notice and the opportunity to match any bona fide offer Eagle Water received for the
purchase of any part or all of its water system.
4. To comply with the Right of First Refusal, Eagle Water's notice must disclose the
amount and terms of the offer in detail.
5. The Agreement then provides the City with "the exclusive right for 30 days after
receiving such notice . . . to provide Notice of Intent to Purchase [by the city] the Water System
or portion thereof to which such . . . offer refers at the amount of said offer."
6. In May 2018 Eagle Water decided to sell its system to H2O Eagle Acquisition
LLC ("H2O"). But having received the benefit of the Agreement and being saved from its
regulatory dilemma, Eagle Water reneged on it promises to the City. Eagle Water did not give
COMPLAINT FOR DECLARATORY AND OTHER RELIEF - 2
the required notice to the City with the terms of the offer. It never provided the City a chance to
purchase Eagle Water on those terms. Eagle Water did not honor the City's "permanent" Right
of First Refusal and later claimed it never existed.
7 . In fact, the sale to H2O was part of a larger plan to sell some or all of Eagle
Water's assets to others. H2O inked a deal with SUEZ Water Idaho, Inc. ("SUEZ") on
September 20,2018. That deal attempted to assign to SUEZ allof H2O's rights----obtained in
violation of the Right of First Refusal-to acquire Eagle Water. The transactions with H2O and
SUEZ have not closed. Yet Eagle Water has not given the City the notice required by the
Agreement, or the crucial contracted-for opportunity for the City to exercise the Right of First
Refusal.
8. The City files this suit to vindicate its contractual rights, to hold Eagle Water to its
bargained for duties, and to have the opportunity to purchase any or all of the Eagle Water
system on the terms of the initial bona fide third-party offer that Eagle Water received.
PARTIES
9. Plaintiff City of Eagle is a city located within Ada County, Idaho, a political
subdivision of the State of Idaho.
10. Defendant Eagle Water Company, Inc. is an Idaho corporation with its principal
place of business in Eagle, Idaho.
I l. Eagle Water owns and conducts a water utility supply and distribution business
("System") in and around Eagle, Idaho.
12. Eagle Water is a utility regulated by the PUC pursuant to the terms and conditions
of PUC Certificate of Public Convenience and Necessity No. 278, as amended, and pursuant to
other PUC authorities.
COMPLAINT FOR DECLARATORY AND OTHER RELIEF - 3
13. Eagle Water currently serves approximately 4,200 customers within its
certifi cation service area.
14. Eagle Water's service area is adjacent to the area served by the City's Municipal
Water Department.
JURISDICTION AND VENUE
15. This Court has jurisdiction over the claims and parties to this action under Idaho
Code $ 5-5la(a) and (c).
16. This action involves the transaction of business within the State of Idaho.
17. Venue is proper in Ada County under Idaho Code $ 5-404.
18. The Defendant Eagle Water resides in Ada County; and the events, acts, and
omissions giving rise to the City's causes of action alleged below occurred in Ada County.
GENERAL ALLEGATIONS
19. On July 12,2008, the City and Eagle Water entered into the Intertie Agreement
("Agreement").
20. Among the purposes of the Agreement was to allow Eagle Water to connect its
distribution lines and the City's one-million-gallon water tank so that Eagle Water could satisfy
certain regulatory requirements for fire protection and other services to its customers.
21. The Agreement is attached hereto as Exhibit 1.
22. The Agreement was signed by Robert V. DeShazo, Jr., President of Eagle Water,
and Phil Bandy, Mayor of City of Eagle.
23. The Agreement was accepted by the City at the City Council meeting held on July
10, 2008.
COMPLAINT FOR DECLARATORY AND OTHER RELIEF - 4
24. Over the next decade, the City had discussions with Eagle Water and others about
the City acquiring some or all of Eagle Water's System. These discussions did not result in an
agreement for the City to acquire any part of the System.
Tue Cny's PeRuaNrxr Rrcsr oF FrRST Rnrusu
25. The Agreement provides, in part:
6. Right of First Refusal. If E[agle Water] determines to sell or
convey all or any part of its Water System, which shall be deemed
to include, but not be limited to, water rights, wells and other
infrastructure, and receives a bona fide offer for this Water System,
E[agle Water] shall give notice to City [of Eagle] stating E[agle
Water's] desire to sell and the amount and terms of such offer in
detail. City [of Eagle] shall have the exclusive right for 30 days
after receiving such notice to provide Notice of Intent to Purchase
the Water System or portion thereof to which such bona fide offer
refers at the amount of said offer . . . . [T]his Right of First Refusal
applies solely to an "E[agle Water] Change of Control
Transaction", which means one or a series of transactions in which
(i) all or substantially all of E[agle Water]'s Water System is sold
to a third party, or (ii) there is a stock sale, merger, consolidation
or similar transaction as a result of which said third party owns a
majority of the outstanding voting and outstanding capital stock of
E[agle Water] or any successor owner of E[agle Water]. This
Right of First Refusal shall be permanent . . . .
Agreement,fl6(Ex. 1).
26. Eagle Water determined to sell all of its System to H2O, a third party, in May
201 8.
27. Eagle Water received a bona fide offer to purchase all of Eagle Water's System
from H2O in May 2018.
28. H2O's offer was an "Eagle Water Change of Control Transaction" under the
Agreement.
COMPLAINT FOR DECLARATORY AND OTHER RELIEF - 5
29. Eagle Water was obligated under the Agreement to provide notice to the City
stating the amount and terms of the offer in detail from H2O before it could enter into an
agreement with H2O to sell its System.
30. The City's Right of First Refusal was triggered when Eagle Water received the
offer to purchase all of the System from a third party-H2O.
31 . Eagle Water did not notify the City when it received the third-party offer to sell
its System.
32. The City had no obligation or duty to provide Eagle Water with a Notice of Intent
to Purchase the System because it did not receive notice from Eagle Water containing the
amount and terms of the offer from H2O.
33. Eagle Water and SUEZ filed a Joint Application and Request for Modified
Procedure before the PUC to approve this sale on November 15, 2018.
34. At that time, the City learned that Eagle Water had entered into an agreement to
sell its System to H2O and that H2O has entered into an agreement with SUEZ purporting to sell
or assign its rights to Eagle Water's System to SUEZ.
Eacr,B WlrrR's FatluRB To MAKE RcqurRno MoNrur,y Payunxrs
35. The Agreement also provides, in part:
3.2 Cash Payment. In addition, [Eagle Water] shall pay City [of
Eaglel a fee for the connection to the Storage Tank of $10,000.00
per month commencing on the date the interconnection is
completed and approved by the Idaho Department of
Environmental Quality (DEQ).
36. The Agreement further provides, in part:
4. Duration. . . . If the Intertie continues past l8 months from the
Commencement date, the Intertie Lease Cash Payment shall
increase five percent (5%) and every I 8 months thereafter.
COMPLAINT FOR DECLARATORY AND OTHER RELIEF - 6
37. The interconnection construction was completed on July 22,2008. As of the date
of filing of this Complaint, Eagle Water's System remains connected to the City's storage tank.
38. The interconnect was approved by DEQ on July 25,2008.
39. Eagle Water began making the required monthly payments in August 2008.
40. Eagle Water made nine monthly payments. Eagle Water missed its first monthly
payment for May 2009 and has not made a required monthly payment since that date.
4l . The required monthly payments increased to $ 10,500.00 beginning in February
201 0.
42. The required monthly payments increased to $l1,025.00 beginning in August
2011.
43. The required monthly payments increased to $l I ,576.25 beginning in February
2013.
44. The required monthly payments increased to $12,155.06 beginning in August
2014.
45. The required monthly payments increased to $12,762.81 beginning in February
2016.
46. The required monthly payments increased to $13,400.95 beginning in August
2017.
47 . The required monthly payments increased to $ 14,071 .00 beginning in February
2019.
48. Eagle Water has not terminated the Agreement in accordance with paragraph 7 of
the Agreement which requires 3O-days prior written notice to terminate. AgreemenLnnT, 12
(Ex. l).
COMPLAINT FOR DECLARATORY AND OTHER RELIEF - 7
E,rclr WarnR rs rN DBraulr UNorR rnn AcnrnMENT
49. The Agreement further provides, in part:
10.1 . Default. Each of the following events shall constitute an
event of default:
10.1 .1 . [Eagle Water] fails to make, on or before the date
which it is due, any payment to be made to the City [of Eagle]
pursuant to the provisions of this Agreement; or
10.1.2. Either party materially breaches this Agreement.
10.2. Remedies. If any default shalloccur, the non-defaulting
party shall give the defaulting party notice of default. Such
default must be cured within fifteen (15) days of the Notice of
Default. . . .
Agreement fl 10 (Ex. l).
50. Eagle Water's failure to comply with Section 6 of the Agreement and to provide
the City with its Right of First Refusal was a material breach of the Agreement and therefore a
default under the Agreement.
5 1 . Eagle Water failed to make $1,389,632.26 in payments to the City. This failure is
a default under the Agreement.
52. On January 14,2019, the City, through counsel, sent Eagle Water a Notice of
Default regarding: (i) Eagle Water's failure to comply with the Right of First Refusal; and (ii)
Eagle Water's failure to continue to make the monthly payment to the City for the intertie
connection.
53. Eagle Water responded, through counsel, on January 29,2019, and refused to
honor the City's Right of First Refusal.
54. Eagle Water also specifically denied "that any such enforceable right [of first
refusal] currently exists or existed in the past."
COMPLAINT FOR DECLARATORY AND OTHER RELIEF - 8
55. Eagle Water did not address the outstanding monthly payments owed to the City
or cure its default.
56. The Agreement also provides, in part:
1 1. Attorneys Fees. In the event an arbitration, suit or action is
brought by any party under this Agreement to enforce any of its
terms, or in any appeal therefrom, it is agreed that the prevailing
party shall be entitled to reasonable attorney fees to be fixed by the
arbitrator, or court of applicable jurisdiction.
Agreementfll I (Ex. 1).
COUNT I
BREACH OF CONTRACT . RIGHT OF FIRST REFUSAL
57. The City hereby realleges and incorporates by reference all factual allegations
contained in the preceding Paragraphs as if fully set forth herein.
58. The City and Eagle Water entered into the Agreement.
59. The City agreed to allow Eagle Water to connect its System to the City's storage
tank.
60. As partial consideration in return, Eagle Water granted the City a perrnanent right
of first refusal triggered by Eagle Water receiving a bona fide offer from a third party to
purchase "all or any portion of the Water System."
61. The Agreement is a binding contract.
62. Eagle Water relied upon and used the fact of its physical interconnection to meet
its regulatory obligations and stay in business.
63. Eagle Water determined to sell all of its System and received a bona fide offer
from a third party-H2O-in May 2018.
COMPLAINT FOR DECLARATORY AND OTHER RELIEF - 9
64. Eagle Water was contractually obligated to provide notice to the City containing
the amount and detailed terms of the offer.
65. Eagle Water breached the Agreement by failing to notify the City when it
received an offer to purchase the System.
66. The breach of contract by Eagle Water proximately caused damage to the City.
67 . The City has been damaged due to the breach of contract by Eagle Water in an
amount as will be established at trial.
COUNT II
BREACH OF CONTRACT - PAYMENT UNDER THE AGREEMENT
68. The City hereby realleges and incorporates by reference all factual allegations
contained in the preceding Paragraphs as if fully set forth herein.
69. The City and Eagle Water entered into the Agreement whereby the City agreed to
allow Eagle Water to connect its System to the City's storage tank and Eagle Water agreed to
pay the City $10,000.00 per month (or more as specified in the Agreement and noted above)
following the date of connection and approval by the DEQ "so long as the Intertie connection is
needed by Efagle Water] in its sole discretion."
70. Eagle Water agreed to increase the amount of the monthly payments by 5Yo every
l8 months.
71. The Agreement is a binding contract.
72. The City allowed Eagle Water to connect its System to the storage tank.
73. Eagle Water breached the Agreement by failing to pay the required monthly
payments after April 2009.
74. The breach of contract by Eagle Water proximately caused damage to the City.
COMPLAINT FOR DECLARATORY AND OTHER RELIEF - 10
75. The City has been damaged due to the breach of contract by Eagle Water in the
amount of $1,389,632.26, or such other and additional amount as will be established at trial.
COUNT III
BREACH OF IMPLIED COVENANT OF
GOOD FAITH AND FAIR DEALING
76. The City hereby realleges and incorporates by reference all factual allegations
contained in the preceding Paragraphs as if fully set forth herein.
77. Implied in the Agreement between the City and Eagle Water is the covenant of
good faith and fair dealing.
78. By its conduct set forth above, including, but not limited to, the failure to notifu
the City that Eagle Water had received a bona fide offer from a third party and the failure to pay
the City the required monthly payments, Eagle Water violated, nullified, and significantly
impaired the benefit of the Agreement, thus breaching the covenant of good faith and fair
dealing.
79. The breach of the covenant of good faith and fair dealing by Eagle Water
proximately resulted in damage to the City in an amount as will be established at trial.
COUNT IV
DECLARATORY JUDGMENT
80. The City hereby realleges and incorporates by reference all factual allegations
contained in the preceding Paragraphs as if fully set forth herein.
81 . The rights and obligations of the City and Eagle Water under the Agreement are
governed by the laws of the State of ldaho.
COMPLAINT FOR DECLARATORY AND OTHER RELIEF - 11
82. There is an existing controversy between the City and Eagle Water concerning
Eagle Water's obligation and duty to provide the City with notice under the permanent Right of
First Refusal.
83. There is an existing controversy between the City and Eagle Water concerning
Eagle Water's obligation and duty to pay the required monthly payments.
84. Without resolution by this Court, the City is subject to uncertainty and insecurity
regarding its permanent Right of First Refusal and right to collect the required monthly payments
under the Agreement.
85. Under Idaho Code $$ 10-1201 and 10-1202,the City is entitled to a declaratory
judgment declaring that: (a) the City's permanent Right of First Refusal is valid and enforceable;
(b) Eagle Water received a bona fide offer from H2O in 2018; (c) Eagle Water is contractually-
obligated to provide the City with Notice of the amount and terms of H2O's bona fide offer
before making any agreement to sell its System; (d) Eagle Water did not provide the City with
the contractually-required Notice of the amount and terms of H2O's bona fide offer; and (e)
Eagle Water's agreements to sell its System breach the Agreement.
86. Under Idaho Code $$ l0-1201 and l0-1202,the City is entitled to a declaratory
judgment declaring that: (a) the City's right to collect monthly payments from Eagle Water is
valid and enforceable; (b) Eagle Water did not terminate the Agreement; (c) Eagle Water is
contractually obligated to pay the City the missed payments continuing into the future until the
Agreement is terminated in accordance with the Agreement; (d) Eagle Water's failure to pay the
contractually-required monthly payments beginning after April 2009 constitutes a default under
the Agreement; and (e) Eagle Water's failure to pay the contractually required monthly payments
beginning after April 2009 breaches the Agreement.
COMPLAINT FOR DECLARATORY AND OTHER RELIEF - 12
ATTORNEY FEES
The City has been required to retain counsel, Holland & Hart LLP, to bring this Complaint
and the City is entitled to recover its costs and reasonable attorney fees incurred in bringing this
suit, pursuant to the provisions of Idaho Code $$ 12-120(3) and 12-121 and pursuant to Idaho
Rule of Civil Procedure 54, together with such additional rules andlor statutes as may be
applicable, and also pursuant to the Agreement. In the event that a default is entered on this
Complaint, the City requests attorney fees and costs in the amount of $10,000.
RELIEF REQUESTED
The City respectfully requests that relief be entered against Eagle Water as follows:
I . That judgment be entered against Eagle Water for breach of contract concerning
the Right of First Refusal in an amount to be proved at the time of trial;
2. That judgment be entered against Eagle Water for breach of contract concerning
the required monthly payments under the Agreement in the amount of $1,389,632.26;
3. That judgment be entered against Eagle Water for breach of the implied covenant
of good faith and fair dealing in an amount to be proven at the time of trial;
4. Adjudge and declare that the Right of First Refusal is valid and enforceable by
the City of Eagle;
5. Adjudge and declare that there was made to Eagle Water a bona fide offer for a
purchase of any part or all of the Eagle Water System;
6. Adjudge and declare that Eagle Water was therefore required to provide notice of
this bona fide offer to the City before making an agreement to sell in response to the bona fide
offer;
COMPLAINT FOR DECLARATORY AND OTHER RELIEF - 13
7. Adjudge and declare that Eagle Water did not provide the contractually required
notice to the City;
8. Adjudge and declare that therefore Eagle Water's agreement(s) to sell any or all
of its System to a third party other than the City is/are in breach of the Agreement.
9. Adjudge and declare that the City's right to collect the monthly amount due from
Eagle Water is valid and enforceable;
10. Adjudge and declare that Eagle Water did not terminate the Agreement;
I l. Adjudge and declare that Eagle Water is contractually obligated to pay the City
the missed payments continuing into the future until the Agreement is terminated;
12. Adjudge and declare that Eagle Water's failure to pay the contractually-required
monthly payments from May 2009 to the present constitutes a default under the Agreement;
13. Adjudge and declare that therefore Eagle Water's failure to pay the contractually-
required monthly payments from May 2009 to the present is in breach of the Agreement;
14. That the Court award to the City its costs and expenses, together with its
reasonable attorney fees in pursuing these claims, pursuant to Idaho Code $$ 12-120(3) and 12-
121 and Idaho Rule of Civil Procedure 54, together with any other applicable rule or statute, and
pursuant to the Agreement; and
15. That the Court award such other and additional relief as the Court may deem just
and appropriate under the circumstances.
COMPLAINT FOR DECLARATORY AND OTHER RELIEF - 14
DATED February 26,2019
HOLLAND & HART rrp
By /s/ B. Newal Sqq)res
B. Newal Squyres
Murray D. Feldman
Sara M. Berry
Attorneys for Plaintiff
12039969 7
COMPLAINT FOR DECLARATORY AND OTHER RELIEF - 15
INTERTIE AGREEMENT
This Intertie Agreement ("Agreement"), dated as of July 12, 2008, is between Eagle
Water Company, Inc., an Idaho corporation ("EWC") and the City of Eagle, Idaho, an Idaho
municipal corporation ("City").
Recitals
City recently constructed and owns an approximate one million gallon water
storage tank (the "Storage Tank").
EWC owns and conducts a water utility supply and distribution business ("Water
System") in and around Eagle, Idaho. EWC has water distribution lines in the
vicinity of the Storage Tank and desires to temporarily connect such distribution
lines to the Storage Tank in order to satisfy certain regulatory requirements for
fire protection service to its customers.
C.EWC intends to use the Intertie as a temporary measure until it completes a new
well and DEQ determines the Intertie is no longer needed to meet regulatory
requirements.
The parties agree as follows:
Agreement
1. Water Storage Connection. City hereby agrees that immediately upon the execution of
this Agreement, City will allow EWC to construct, at EWC's sole expense, a connection and two
manually-controlled gate valves with a meter spool for a future meter ("Intertie") between
EWC's existing main distribution lines and the Storage Tank based upon engineering plans
previously submitted by the City to and approved by the Idaho Department of Environmental
Quality ("DEQ"). City shall have the right to approve the location and manner of constructing
such Intertie and shall do so no later than 24 hours after EWC identifies its preferred location for
the intertie. EWC shall ensure that all work is performed in a workmanlike manner and in
compliance with all applicable codes and regulations. City makes no representations or
warranties, express or implied, concerning the [ntertie or any benefits to be derived by EWC
therefrom. The City shall own the Intertie infrastructure save and except for the l2-inch Intertie
tee and the attached l2-inch gate valve.
2. Limitations On Use. The parties agree that the sole purpose of the Intertie is to provide
redundant fire flow protection capacity to EWC and is not intended to be a source of water for
EWC's normal operating requirements.
3. Payment. In consideration of the City entering into this Agreement and allowing EWC
to connect to the Storage Tank, EWC agrees to compensate the City as follows:
CITY OF EAGLE - EAGLE WATER COMPANY
INTERTIE AGREEMENT - I
A.
B.
EXHIBIT {
3.1. Lease of Water Rights. EWC agrees to grant the City the permanent Right of First
Refusal to lease up to ten (10) cubic feet of water per second of certain municipal water
rights currently owned by EWC, provided such water rights are not necessary to
maintain the integrity of EWC's Water System, including compliance with all regulatory
requirements and EWC engineering plans. This Right of First Refusal shall be permanent
and shall survive any termination or other modification of this Agreement, save and
except for a termination by the City other than for a non-cured default by EWC per
Section 7, below.
3.2. Cash Payment. In addition, EWC shall pay City a fee for the connection to the
Storage Tank of $10,000.00 per month commencing on the date the interconnection is
completed and approved by the Idaho Department of Environmental Qualify (DEQ),
4. Duration. This Agreement shall commence upon acceptance by the City of Eagle and
completion of the Intertie that is the subject of this Agreement ("Commencement"), and the
Intertie Lease shall continue month-to-month so long as the Intertie connection is needed by
EWC in its sole discretion. If the Intertie continues past 18 months from the Commencement
date, the Intertie Lease Cash Payment shall increase five percent (5%) and every 18 months
thereafter. The parties may mutually agree, in writing, to extend or modifu this Agreement.
5. Moratorium. At EWC's reasonable request, City agrees to cooperate with EWC to
assist EWC in its efforts to satisff the conditions set forth in the current DEQ Consent Order
establishing a moratorium on new connections in EWC's service territory and to cause the
moratorium to be terminated. This Section 5 shall not require City to expend any funds or take
any actions that it is not lawfully permitted to take. EWC shall reimburse the City for any costs
incurred by the City related to this Section 5, provided the same have been pre-approved by
EWC in writing.
6. Right of First Refusal. If EWC determines to sell or convey all or any part of its Water
System, which shall be deemed to include, but not be limited to, water rights, wells and other
infrastructure, and receives a bona fide offer for this Water System, before making any
agreement to sell all or any portion of the Water System, EWC shall give notice to City stating
EWC's desire to sell and the amount and terms of such offer in detail. City shall have the
exclusive right for 30 days after receiving such notice to provide Notice of Intent to Purchase the
Water System or portion thereof to which such bona fide offer refers at the amount of said offer;
provided, that if the third parfy offer is for a consideration other than cash, the City shall have the
right to pay the fair market value of such consideration in cash. Upon delivery of the Notice of
Intent to Purchase, the City shall hold a revenue bond election for the purpose of securing voter
approval of the purchase at the next available election date and/or utilize City funds directly
available in a capital account, enterprise fund, general fund, or other readily available City fund
or account to complete the purchase. For the purpose of this Section 6, "Next Available Election
Date" shall mean the earliest possible election date based on the time required by law for legal
notice of such an election and for the conduct of any required public hearings. If the bond is
approved at said election, the City shall proceed in good faith to secure bonds to pay the
purchase price ("Finance") as expeditiously as possible. Closing of the transaction between the
City and EWC that is the subject of this Section 6 shall not extend more than 180 days from the
date of the revenue bond election, or if the election is challenged in a legal proceeding, the
CITY OF EAGLE_ EAGLE WATER COMPANY
INTERTIE AGREEMENT.2
EXHIBIT 1
Closing shall occur no more than 90 days after final resolution of any such legal challenge. In
the event that a revenue bond election is not required because the City has the necessary funds
directly available in a capital account, enterprise fund, general fund, or other readily available
City fund or account to finance the transaction in lieu of holding a revenue bond election, then
the Closing of the transaction between the City and EWC that is the subject of this Section 6
shall occur no later than 60 days after the City provides EWC with its Notice of Intent to
Purchase. For purposes of this Section 6, this Right of First Refusal applies solely to an "EWC
Change of Control Transaction", which means one or a series of transactions in which (i) all or
substantially all of EWC's Water System is sold to a third pdy, or (ii) there is a stock sale,
merger, consolidation or similar transaction as a result of which said third party owns a majority
of the outstanding voting and outstanding capital stock of EWC or any successor owner of EWC.
This Right of First Refusal shall be permanent and shall survive any termination or other
modification of this Agreement, save and except for a termination by the City other than for a
non-cured default by EWC per Section 7, below.
7. Termination. EWC or the City shall have the right to terminate the Intertie connection
upon 30 days prior written notice to the other party. In the event the City terminates the Intertie
connection for any reason other than a non-cured default by EWC under Section l0 of this
Agreement, then the Rights of First Refusal in Sections 3 and 6 of this Agreement shall likewise
terminate.
8. Authority. Each individual executing this Agreement below on behalf of a party
represents and warrants to the other party that the execution, delivery and performance of this
Agreement has been duly authorized by all necessary corporate or municipal action by such
party, that such individual is duly authorized to execute and deliver this Agreement on behalf of
such party, and that this Agreement is a legal and valid obligation of such party, enforceable
against such party in accordance with its terms.
9. Force Majeure. Except for obligations to make payment, nonperformance of either
party shall be excused to the extent that performance is rendered impossible by strike, fire, flood,
governmental acts, orders or restrictions, or any other reason where failure to perform is beyond
the control and not caused by the negligence of the non-performing party.
10. Default and Remedies.
l0.l . Default. Each of the following events shall constitute an event of default:
10.1.1. EWC fails to make, on or before the date which it is due, any payment to
be made to the City pursuant to the provisions of this Agreement; or
10.1.2. Either party materially breaches this Agreement.
10.2. Re medies. If any default shall occur, the non-defaulting party shall give the
defaulting party notice of default. Such default must be cured within fifteen (15) days of the
Notice of Default unless such default is curable but cannot be reasonably cured within ten (10)
days after giving the Notice of Default and the defaulting party commences within such ten (10)
day period to cure such default and prosecutes the same to conclusion with reasonable diligence.
CITY OF EAGLE _ EAGLE WATER COMPANY
TNTERTIE AGREEMENT - 3
EXHIBIT 1
The foregoing remedy shall be in addition to and shall not exclude any other remedy available to
the parties under applicable law.
I l. Attorneys Fees. In the event an arbitration, suit or action is brought by any party under
this Agreement to enforce any of its terms, or in any appeal therefrom, it is agreed that the
prevailing party shall be entitled to reasonable attomey fees to be fixed by the arbitrator, or court
of applicable jurisdiction.
12. Notices. All notices or other communications required or permitted hereunder, including
notices to Mortgagees, shall, unless otherwise provided herein, be in writing, shall be personally
delivered, delivered by reputable overnight courier, or sent by registered or certified mail, return
receipt requested, and postage prepaid, addressed to the parties at the following addresses:
if to the City: Ciry of Eagle
Office of the City Clerk
660 East Civic Lane
Eagle,ID 83616
With a copy to: Molly O'Leary
Richardson & O'Leary, PLLC
P.O. Box 7218
Boise, Idaho 83707
Notices personally delivered shall be deemed given the day so delivered. Notices given by
ovemight courier shall be deemed given on the first business day following the mailing date.
Notices mailed as provided herein shall be deemed given on the third business day following the
mailing date. Notice of change of address shall be given by written notice in a manner detailed
in this Section 12.
13. Governing Law. The parties intend that this contract shall be governed by and construed
in accordance with the laws of the State of Idaho, without regard to choice of law rules.
14. Counterparts. This Agreement may be signed in counterparts, each of which shall
constitute part of the original document.
CITY OF EAGLE _ EAGLE WATER COMPANY
TNTERTIE AGREEMENT.4
If to Eagle Water: Eagle Water Company, Inc.
172 West State Street
Eagle,ID 83616
EXHIBIT 1
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
EWC:EAGLE WATER COMPANY,
an Idaho
Robert V. DeShazo, Jr,,
City CITY OF EAGLE,IDAHO
municipal corporation
By
Bandy,
+
o,i ATTEST:
By
K. Bergmann, City
CITY OF EAGLE - EAGLE WATER COMPANY
INTERTIE AGREEMENT.5
+
s,lt
EXHIBIT {