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Clark Floyd Landfill, LLC v. County of Clark

United States District Court, S.D. Indiana, New Albany Division

March 20, 2019

CLARK FLOYD LANDFILL, LLC, Plaintiff,
v.
COUNTY OF CLARK, INDIANA; COUNTY OF FLOYD, INDIANA; BOARD OF COMMISSIONERS FOR FLOYD COUNTY, INDIANA, in their official capacities; and BOARD OF COMMISSIONERS OF CLARK COUNTY, INDIANA, in their official capacities, Defendants. BOARD OF COMMISSIONERS FOR FLOYD COUNTY, INDIANA, in their official capacities; COUNTY OF FLOYD, INDIANA; COUNTY OF CLARK, INDIANA; and BOARD OF COMMISSIONERS OF CLARK COUNTY, INDIANA, in their official capacities, Counter Claimants,
v.
CLARK FLOYD LANDFILL, LLC, Counter Defendant.

          ENTRY ON PLAINTIFF'S MOTION TO DISMISS

          RICHARD L. YOUNG JUDGE.

         Co-Defendants, Clark County and Floyd County, have owned the Clark County Landfill since 1971. In December 2003, the Board of Commissioners for Clark County and Floyd County entered into a Franchise and License Agreement[1] (“Contract”) with Plaintiff, Clark Floyd Landfill, LLC (“CFL”), to operate and maintain the Landfill. Regulatory, environmental, and financial problems arose when Clark County realized the Landfill needed to expand to remain viable. In short, after it was learned that horizontal expansion of the Landfill would require wetlands mitigation, County engineers filed an application with the Indiana Department of Environmental Management (“IDEM”) for vertical expansion of the Landfill. CFL alleges it has performed work on Phase I and Phase II of the expansion, but the Defendants have not held up their end of the bargain. CFL alleges, among other things, that it is unable to properly operate the Landfill and that its operating permit is now in jeopardy. In its Complaint, CFL seeks declaratory relief and damages for breach of contract and unjust enrichment.

         Defendants filed an Answer and Counterclaim. They allege one of CFL's responsibilities was to charge haulers and others who use the Landfill and to remit payment to the Defendants based on certain metrics of usage. However, they allege CFL, which owns other waste hauling companies, was less than forthright in their accounting to the Defendants. Their counterclaim consists of four counts: fraud, breach of contract, unjust enrichment, and constructive fraud.

         CFL now moves to dismiss Counts I (fraud), III (unjust enrichment), and IV (constructive fraud) of Defendants' Counterclaim pursuant to Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure because the subject matter of the claims is governed by the parties' Contract and Plaintiff's fraud claims are not pled with particularity.

         I. Discussion

         A. Subject Matter of the Claims

         A plaintiff may not bring both a fraud claim and a breach of contract claim unless “(1) the breaching party committed the separate and independent tort of fraud; and (2) the fraud resulted in injury distinct from the resulting breach.” Sheaff Brock Inv. Advisors, LLC v. Morton, 7 N.E.3d 278, 288 (Ind.Ct.App. 2014). Unjust enrichment is an equitable doctrine “which permits recovery where the circumstances are such that under the law of natural and immutable justice there should be recovery as though there has been a promise.” Eagle Aircraft, Inc. v. Trojnar, 963 N.E.2d 648, 660 (Ind.Ct.App. 2013) (internal quotation marks and citations omitted). Where a contract provides a remedy at law, a plaintiff may not pursue an equitable claim for unjust enrichment. Id.

         Pursuant to the parties' Contract, CFL was required to pay Defendants an annual “Host Fee” which is “determined by the annual income (in dollars) resulting from the tonnage delivered to the Landfill and accepted for disposal” multiplied by certain percentages depending on the year. (Filing No. 1-2, Supplemental Agreement No. 1, Section IIA; Filing No. 1-4, Supplemental Agreement No. 3, Section IIA, entitled “Host Fee.”). Defendants allege CFL has refused “to provide the [Defendants] with data on the usage of the Landfill to corroborate the accuracy of its payments, and to allow the [Defendants] to confirm the accuracy of its payments.” (Counterclaim ¶ 2). In addition, they allege CFL (i) has refused to provide quarterly tonnage reports despite its contractual obligation to do so; (ii) has refused to provide the basis on which its fees are calculated; (iii) charges its related waste hauling companies a subsidized rate; and (iv) allows trucks from its related companies to bypass the gate scale of the Landfill or otherwise evade making payments for use of the Landfill. (Id. ¶¶ 3-6).

         The allegations set forth in Counts I, III, and IV each consist of two paragraphs. The first provides that Defendants incorporate the prior allegations of the Counterclaim, set forth above. (Counterclaim I, ¶ 6; Counterclaim III, ¶ 14; Counterclaim IV, ¶ 16). The second paragraph of each count alleges that CFL is charging a “subsidized rates” and thus allegedly not paying the Defendants that which they believe they are entitled to:

Plaintiff's conduct in secretly subsidizing its private related businesses at the expense of the Counties and their taxpayers collectively amounts to a scheme to defraud the Counties and their taxpayers.
(Counterclaim I, ¶ 7).
Plaintiff's conduct in unlawfully subsidizing its other businesses at the expense of the Counties and their taxpayers constitutes unjust enrichment of the Plaintiff.
(Counterclaim III, ¶ 14).
Plaintiff's conduct in unlawfully subsidizing its other businesses at the expense of the Counties and their taxpayers ...

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