Lawsuit filed against BCSD over failure of sewer plant

-A A +A
By Thomas Barr

 HILLVIEW  -- When the Hunters Hollow treatment plant exploded, a pair of companies were brought in by Bullitt Utilities to maintain sewer service to 700-plus customers.

When Bullitt Utilities told the state Public Service Commission that it could no longer provide service, Bullitt County Sanitation District was brought in as a receiver to the abandoned system.

Now, Bullitt County Sanitation is being sued by the bankruptcy estate of Bullitt Utilities for breach of contract.

This is the latest in a series of legal steps taken by Bullitt Utilities and its creditors to recoup over $3.4 million in costs incurred before the local sanitation utility began treating the sewage.

According to the lawsuit in Franklin Circuit Court, the treatment plant failed on March 29, 2014. There was an oral agreement in April to have Bullitt County Sanitation accept wastewater from Bullitt Utilities.

A payment of $14,000 was made to connect the two systems but the suit alleges that Bullitt Sanitation refused to accept the flow in May.

In June 2014, Bullitt Utilities contracted with Veolia to replace PECCO as the provider of treatment services.

The suit alleges that Bullitt Sanitation breached its oral agreement.

In November 2014, a written agreement was authorized between the sanitation company and Bullitt Utilities. That written agreement said Bullitt Sanitation would accept wastewater flow within 60 days.

A part of the agreement was that a new pump station was needed or money placed in escrow for $320,000.

On Feb. 13, 2015, the state Division of Water and Bullitt Sanitation signed an agreed order to accept wastewater within 60 days.

The flow wasn't accepted until May 27, 2015, according to the lawsuit.

The plaintiffs argue that there was no agreement to provide the pump station and there was a breach when service was not provided in April 2014.

In July 2014, Bullitt Utilities had started a request for a surcharge to pay off the debts incurred. At that time, it was also going to seek the construction of a new treatment plant.

By August 2015, Bullitt Utilities sought to abandon the plant and system. That request was granted on Aug. 27, 2015.

The next month, Bullitt Sanitation was appointed the receiver of the Hunters Hollow system.

The suit argues that Bullitt Sanitation is retaining all the revenue from Hunters Hollow customers while the agreement said that it could only retain 80 percent, plus collection fees for Louisville Water Company.

Bullitt Sanitation withdrew the request for a surcharge requested by Bullitt Utilities, which had abandoned its duties earlier in the year.

Veolia and PECCO filed an involuntary bankruptcy petition for Bullitt Utilities in December 2015. 

On April 14, 2016, the Public Service Commission overruled the bankruptcy trustee's motion to intervene in the case. The denial was based on the fact that Bullitt Utilities was no longer a party to the surcharge case and that case had already been dismissed. It was unsure whether the trustee or Bullitt Sanitation controlled Bullitt Utilities and it was worried about the 700 customers.

The lawsuit, filed by Holland McTyeire V of Bingham Greenebaum Doll LLP, continually states that the sanitation district has been acting due to motivation by self-interest and not in the best interest of Bullitt Utilities and its creditors.

The PSC refused to accept a new surcharge application from Bullitt Utilities on Nov. 30, 2016, which prompted an appeal to Franklin Circuit Court.

"If the BCSD had complied with its fiduciary duties to BU and its creditors the bankruptcy case and all work by the trustee and his special counsel could have been avoided," the suit states.

The suit is asking for damages to be paid to the Bullitt Utilities bankruptcy estate, as well as attorney fees.

Bullitt Sanitation district manager Jerry Kennedy said he would not comment due to the pending litigation.

Throughout the process, commissioners with the sanitation district have stated Bullitt Utilities or its bankruptcy trustee could take over running the Hunters Hollow system at any time. 

The district's financial reports have stated that repairs spent on the Hunters Hollow system have exceeded the revenue generated.

The customers on the Hunters Hollow system remain on a separate rate structure that is charged by the existing Bullitt Sanitation customers.

A lawsuit gives one side of the story.