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Operations Management International, Inc. v. Clermont County

November 13, 2006

OPERATIONS MANAGEMENT INTERNATIONAL, INC., PLAINTIFF,
v.
CLERMONT COUNTY, OHIO, DEFENDANT.



The opinion of the court was delivered by: U.S. Magistrate Judge Timothy S. Black

MEMORANDUM OPINION AND ORDER

This civil action is before the Court on cross motions for summary judgment (Docs. 15, 16 and 17) and responsive memoranda. The Court heard oral argument on November 6, 2006, and the motions are ripe for decision. The parties have consented to disposition by the United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). (See Doc. 8.)

I. BACKGROUND

Plaintiff Operations Management International, Inc. ("OMI") is a Colorado corporation engaged in the business of providing and operating water treatment facilities and water distribution systems. (Doc. 1 at ¶ 1.) Defendant Clermont County ("the County") is a political subdivision of the State of Ohio. (Id. at ¶ 3.)

In August 1999, the County issued a Request for Bids ("RFB") for "Water Treatment, Wastewater Treatment, Water Distribution, Wastewater Collection and Customer Billing Services." (Doc. 15-3). In the RFB, the County provided a detailed Scope of Work describing the tasks to be performed annually by the successful bidder. Of special relevance to this case, the RFB reflected that the successful bidder would be required to install residential water meters at its expense. See Doc. 15-3, RFB, Art. III, Section D, at sub-sections 1 and 2(h), at pp. 22-23.*fn1

In consideration of the services to be provided by the successful bidder, the RFB stated with respect to compensation, as follows:

A. General. Contractors will receive an annual fee in compensation for the operation and maintenance of the Utilities. ... Contractors will receive no other compensation for the operation and maintenance of the Utilities except as approved by the County. Id. at Art. V, p. 36.

The RFB provided further that certain contingent adjustments to the annual fee would be built into the parties' agreement. Id., Art. V, Section G, at p. 38.

Ultimately, OMI was the successful bidder on the RFB, and on February 10, 2000, the County entered into a five year contractual agreement (the "Operating Agreement") with OMI for the operation and maintenance of the County's water distribution system, water treatment facilities, and water and sewer billing services. (Doc. 1-2, Ex. A to Complaint, the "Operating Agreement.")

The Operating Agreement, which incorporated the RFB, provided with respect to Compensation for the Water and Billing Services, as follows:

* * * * In exchange for the services to be provided by the Contractor hereunder, the County shall pay the Contractor an annual fee. The Annual Fee shall be the exclusive payment to the Contractor for performing the required services included in sections A, B and D of Article III of the RFB, except where explicitly noted otherwise. (Doc. 1-2, Ex. A to Complaint, the "Operating Agreement," § 4.01, p. 10).

As in the RFP, the Operating Agreement provided for adjustments to the Annual Fee. Specifically, and as at issue herein, Section 4.02(e) of the Operating Agreement provided in relevant part that:

If there is an increase of more than 10% in the total number of Water Customer Accounts due to the addition of newly constructed or acquired units, the Contractor shall be entitled to additional compensation in an amount equal to the actual, direct increase in costs to the Contractor associated with such an increase." (Doc. 1-2, Ex. A to Complaint, the "Operating Agreement," § 4.02(e), p. 12.)

Alas, life did not go well between the parties, and on February 4, 2004, the parties agreed to terminate the Operating Agreement prior to the expiration of the original five-year period and executed a Mutual Settlement Agreement (the "Settlement Agreement"). (See Doc. 17-3.) Pursuant to the Settlement Agreement, OMI, was required, inter alia, to complete a final inventory reconciliation associated with its work for the County. (Doc. 1 at ¶ 14.)

Notwithstanding the parties' purported 2004 settlement, on March 17, 2005, OMI filed the present lawsuit alleging breach of contract and unjust enrichment on the grounds that the County had failed to pay OMI the additional compensation contemplated under § 4.02(e) and had failed to pay amounts that OMI claims are due under the final inventory reconciliation. (See Doc. 1 at ¶¶ 16, 17, 21.) OMI seeks compensatory damages in excess of $1,200,000.00, plus interest. (Id. at ¶ A.)

On April 19, 2005, the County filed an answer, which included six counterclaims:

(1) breach of contract; (2) conversion; (3) negligent misrepresentation; (4) fraud; (5) the termination agreement is void; and (6) breach of the termination agreement. (Doc. 6.) In support of its counterclaims, the County alleges, inter alia, that OMI failed to provide services under the Operating Agreement and failed to replenish the inventory at the end of the parties' relationship as required by contract. The County seeks unspecified compensatory and punitive damages.

On November 10, 2005, OMI filed a motion for partial summary judgment as to liability with respect to its breach of contract claim under ยง 4.02(e) of the Operating Agreement (see Doc. 12), as the County had stipulated that an increase of more than 10% in the total number of water customer accounts had occurred as of February 26, 2003, and had further stipulated that OMI is entitled to some amount of money under the relevant contractual provisions. (See Docs. 12-2, 13.) Accordingly, on January 9, 2006, the ...


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