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In re Chambers Development Co.

May 22, 1998

IN RE: CHAMBERS DEVELOPMENT COMPANY, INC., PETITIONER


Before: Stapleton and McKEE, Circuit Judges, and Rosenn, Senior Circuit Judge

The opinion of the court was delivered by: McKEE, Circuit Judge.

On Petition for a Writ of Mandamus from the United States District Court for the Western District of Pennsylvania

(Civil No. 92-509J)

Argued: June 13, 1997

OPINION OF THE COURT

Chambers Development Company, Inc., petitions for a writ of mandamus following our remand in Chambers Development Co., Inc., v. Passaic County Utilities Authority, 62 F.3d 582 (3d Cir. 1995) ("Chambers I"). Chambers argues that mandamus is necessary because the district court ignored that mandate. We agree, and will therefore grant a writ of mandamus and remand this matter once again for proceedings consistent with this opinion.

I.

When this matter was initially before us we observed that "[t]he parties and the court . . . plunged into a procedural miasma which is virtually impenetrable." 621 F.3d at 583. The case is now more confused than ever. It has evolved from miasma to a jurisprudential Rubik's cube, becoming more jumbled at each turn. The dispute arises from a breach of contract action between Chambers and Passaic County Utilities Authority ("PCUA"). We detailed the intricacies leading up to the dispute in Chambers I. We will now summarize the background only insofar as is necessary to resolve the issues raised by the mandamus petition before us.

In 1987, Chambers and PCUA entered into a contract for Passaic County's waste disposal. The contract was divided into three parts: an Agreement for the Grant and Acquisition of a License ("Initial Agreement"); a Long-Term Agreement for the Grant and Acquisition of a License for Ash Residue Waste Disposal ("Long-Term Agreement"); and an Easement and License Agreement. The Initial Agreement governed the rights and duties of the parties from December 1, 1987, until December 1, 1992. The Long-Term Agreement governs the rights and duties of the parties from December 1, 1992 until December 1, 2002.

The Initial Agreement required PCUA to deposit all of its municipal solid waste ("MSW") in Chambers' landfills in Pennsylvania and required Chambers to reserve airspace for up to a maximum of 2.25 million tons of MSW in the first five year period. PCUA paid Chambers $51,225,000 in advance for its first period disposal rights. Performance of the Initial Agreement is not in dispute.

The Long-Term Agreement covered ash residue waste and non-processible and bypass solid waste generated by a mass burn incinerator or "resource recovery facility" ("RRF") that PCUA originally intended to have in place by 1992. However, construction of the RRF was not a condition precedent to either party's obligations under the Long Term Agreement. The Long-Term Agreement also provided that Chambers' landfills would serve as the primary disposal site for all solid waste for any period in which the RRF was not in operation. As it happened, the New Jersey Department of Environmental Protection and Energy ("NJDEPE") disapproved PCUA's proposed construction of an RRF and PCUA has no plans to construct one in the foreseeable future. However, the only significance of the cancellation of the RRF was that Chambers would be receiving ordinary MSW rather than receiving ash and by-pass waste.

New Jersey's environmental law required that NJDEPE approve the contract with Chambers. Accordingly, on June 24, 1987, Passaic County adopted Plan Amendment 4-1987 which sought approval of the County's Plan to:

include the Chambers Development Company, Inc., landfill system in Pennsylvania and other states, to be utilized as primary landfills for the disposal of Passaic County solid waste from 1987 to 1992. In addition, this landfill system is designated under the plan as the primary landfill system for the disposal of ash, bypass and non-processible waste associated with the operation of the resource recovery facility in the City of Passaic from the time the facility is operational until the year 2002.

On September 1, 1987, the Commissioner of NJDEPE, Richard T. Dewling, certified Passaic County's Plan Amendment 4-1987 in part (hereinafter "Dewling Certification"). Dewling approved the use of Chambers' landfills from 1987 through 1992. However, he rejected PCUA's plan to rely on Chambers' landfills as the primary site for waste disposal between 1992 and 2002 because the Plan's dependence on an out-of-state landfill for long-term solid waste disposal was contrary to Passaic County's obligation to develop in-county facilities for waste disposal.

Commissioner Dewling explained:

N.J.S.A. 13:1E-21(b)3 places a legal obligation on each district to plan for sufficient available suitable in-county disposal sites. . . . [T]he only solution to the long-term disposal needs of Passaic County is the development of in-county facilities or to secure interdistrict agreement with other New Jersey counties. In light of these factors, and [to] the extent that Passaic County has failed to meet its planning obligations pursuant to N.J.S.A. 13:1E-21(b)3, the Department cannot approve primary dependence upon out-of-state residual disposal capacity for the period 1993 to 2002.

******************************

Amendment 4-1987 is hereby modified and approved to include within the district plan the designation of the Chambers Development Company, Inc., landfill system to Pennsylvania and other states as a component of Passaic County's contingency plan for the disposal of ash, by-pass and non-processible waste associated with the operation of the Passaic County resource recovery facility from the time the facility is operational until the year 2002. Further, within forty-five days of the date of this certification, Passaic County is directed to submit the remainder of its solid waste contingency plan in plan amendment form for state level review in consideration of the Department's comments of May 7, 1987 concerning the county's draft submission. More specifically, the remainder of the plan should address in-county residual landfill development, the development of interdistrict agreements on an interim/emergency basis, and the identification of alternate land filling options.

From 1987 through 1992, PCUA utilized Chambers' landfills as Passaic County's primary solid waste disposal site in accordance with the fully approved Initial Agreement. Apparently, during most of the period of the Initial Agreement, Passaic County never proposed any subsequent plan amendment or attempted to remedy the deficiency identified by Commissioner Dewling. Consequently, PCUA had no in-state primary plan to present to NJDEPE despite the approach of the end of the Initial Term of the agreement with Chambers.

In early 1992, PCUA began soliciting interest from disposal companies including Chambers, for a new 15-year disposal agreement which would handle the county's municipal waste. In addition, PCUA asked Chambers to renegotiate the disposal rates set forth in the Long-Term Agreement. Although renegotiations did begin, they proved fruitless.

On August 15, 1992, PCUA entered into a Memorandum of Understanding ("MOU") with Empire Sanitary Landfill, Inc. Under the MOU, PCUA agreed to deliver all Passaic County solid waste to Empire's landfill in Eastern Pennsylvania for a period of 15 years. The Empire MOU, like the prior agreement with Chambers, was subject to the review, amendment and approval of NJDEPE.

While the Passaic County Freeholders and PCUA were preparing to submit the Empire MOU to NJDEPE, Chambers learned of the Empire MOU and filed a complaint in the district court for the Western District of Pennsylvania seeking to enjoin the PCUA from proceeding with Empire. Chambers alleged that the MOU amounted to an anticipatory breach by PCUA of the Long Term Agreement it had with Chambers. Chambers also alleged that PCUA was equitably estopped from entering into a contract with Empire.

Chambers and PCUA filed cross-motions for summary judgment. The PCUA's motion was based on its argument that the Dewling Certification was a rejection of the Long-Term Agreement and that PCUA was free to explore alternative landfill options pursuant to the directive contained in Commissioner Dewling's certification.

On November 20, 1992, the district court granted summary judgment in favor of Chambers on its anticipatory breach of contract claim. The district court held that the Long-Term Agreement's validity did not depend upon whether the RRF was ever built. It then held:

Because use of Chambers' landfills is approved as a contingency, and because NJDEPE has approved no other plan for disposal of solid waste in the 1992-2002 period, PCUA is obligated both under its Long-Term Agreement and under New Jersey state law to continue to use Chambers' landfills.

(November 11, 1992 Dist. Ct. Opn. at 9). The district court noted that no damages for breach had occurred because the Long-Term Agreement was not to take effect until December 1, 1992, and it granted a permanent injunction, with the following caveat:

This Court cannot and is not attempting, by issuance of a permanent injunction, to bind NJDEPE, which has the statutory duty to regulate the disposal of solid waste in New Jersey. NJDEPE approved the use of Chambers' landfill as a contingency for the period 1992-2002 and there is nothing of record to indicate that until November 6, 1992*fn1, PCUA has attempted to obtain approval for any other method of disposal. Absent a contrary direction from NJDEPE, Passaic County is bound to honor its contract with Chambers. *fn2 Accordingly, the court worded its injunctive order as follows:

[A] permanent injunction is granted to Plaintiff, Chambers Development Corporation and against Defendant, Passaic County Utilities Authority. Unless and until directed to the contrary by a valid certification of the [NJDEPE], PCUA shall continue operating under the terms and conditions of the Long-Term Agreement for the grant and acquisition of a license of ash residue waste disposal. Provided, however, that nothing in this order shall be construed as restricting any proceeding by any party before NJDEPE seeking approval or disapproval of any primary long-term plan for the disposal of municipal solid waste by PCUA.

The district court entered summary judgment in favor of PCUA on Chambers' equitable estoppel claim because Chambers could not demonstrate reasonable reliance.

[A]ny reliance by Chambers on the Long-Term Agreement being the primary solid waste disposal plan for the entire 1992-2002 period is unreasonable. Chambers, as a sophisticated corporation involved in negotiations with two governmental entities, could not rely on the contingent approval of the Long-Term Agreement as the equivalent of primary approval.

Neither party appealed any portion of the district court's November 20, 1992 decision.

Before the district court issued its injunction, NJDEPE notified PCUA that it had not yet come forward with an in-state, primary disposal solution. Commissioner Scott Weiner wrote:

Passaic County currently has no disposal plan in place and the long-term use of out-of-state disposal was authorized only within the context of contingency plan backup use as stated within the Department's September 1, 1987 certification. Therefore, the Passaic County Plan is deficient with respect to N.J.S.A. 13:1E-21(b)3.

Despite this reminder that it was not in compliance with the requirement for an in-state disposal facility, PCUA submitted the Empire MOU to NJDEPE for review and approval on November 6, 1992. On December 7, 1992, the Commissioner of NJDEPE formally ordered PCUA to:

Submit to the Department all supporting documents with respect to its proposed plan certification including the Memorandum of Understanding and contract with Empire as well as the long-term disposal strategy previously required by the Department's September 11, 1992 Plan Certification and any other justifications to support this contract by January 9, 1992.

On the same day, the Commissioner extended the Chambers arrangement for one year until the regulatory process was completed, and PCUA executed a contract with Empire.

On or about December 4, 1992, Chambers filed an application for post judgment relief with the district court seeking a temporary restraining order against PCUA's approval of a contract with Empire. In an Order, dated February 1, 1993, the district court denied the restraining order, but indicated that it would entertain a motion seeking the revocation of PCUA's action or another remedy. While Chambers was proceeding on its "post-judgment" actions, PCUA was proceeding with the approval process with NJDEPE for the Empire Contract. On December 17, 1992, Passaic County submitted a Verified Petition to NJDEPE seeking approval of Empire as Passaic County's primary disposal plan. In seeking that approval, PCUA took the position that Commissioner's Dewling Certification approved Chambers "only as a contingency plan in the absence of any other disposal strategy approved by the DEP."

On April 8, 1993, NJDEPE agreed to review the Empire arrangement, contingent upon PCUA also submitting a long-term, in-state disposal plan. On August 20, 1993, PCUA participated in a status conference with the then Acting Commissioner of NJDEPE, Jeanne M. Fox. At that conference, PCUA stated that "[t]here is no existing out-of-state contract [with ...


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