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Sand Beach Properties, LLC v. City of Shreveport

Court of Appeals of Louisiana, Second Circuit

January 16, 2019

CITY OF SHREVEPORT Defendant-Appellee

          Appealed from the First Judicial District Court for the Parish of Caddo, Louisiana Trial Court No. 596181 Honorable Ramon Lafitte, Judge

          HARPER LAW FIRM By: Jerald R. Harper Anne E. Wilkes Counsel for Appellant

          PETTIETTE, ARMAND, DUNKELMAN, WOODLEY, BYRD & CROMWELL, LLP By: Edwin H. Byrd, III ABRAMS & LAFARGUE, L.L.C. By: Julie M. Lafargue Counsel for Appellee

          Before WILLIAMS, MOORE and STEPHENS, JJ.

          WILLIAMS, C.J.

         The plaintiff, Sand Beach Properties, LLC, appeals a judgment granting summary judgment in favor of the defendants, City of Shreveport, William Bradford, Brian Crawford and Barbara Featherston, and denying the plaintiff's motions for partial summary judgment on the issues of breach of contract and misappropriation of trade secrets. For the following reasons, we affirm.


         In January 2015, the Shreveport City Council adopted an ordinance establishing new rates for residential water use based on a tiered structure. Under the ordinance, tier 1 included 0-3, 000 gallons of water usage billed at $1.32 per 1, 000 gallons; tier 2 was 4, 000-7, 000 gallons of water billed at $2.63 per 1, 000 gallons; tier 3 was 8, 000-14, 000 gallons of water billed at $3.95 per 1, 000 gallons; and tier 4 included water use above 14, 000 gallons billed at $4.47 per 1, 000 gallons. However, an error in the implementation of the new system caused the tier 2 rate to be incorrectly applied to usage from 4, 000 through 10, 000 gallons; the tier 3 rate was applied to usage from 11, 000 through 24, 000 gallons; and the tier 4 rate applied to use above 24, 000 gallons. As a result, some customers were charged a lower rate than required by the ordinance.

         Sharon Pilkinton, the Superintendent of Customer Service for the Shreveport Department of Water and Sewerage, was responsible for implementing the changes in the water billing system in conformity with the ordinance. She was assisted by Bill Farmer, an employee of Systems and Software, the company hired by the City of Shreveport ("City") to install the new tiered rates into the billing software.

         In March 2015, the City issued the first water bills under the ordinance. That same month, Pilkinton was informed by a residential water customer that the bill had not been calculated correctly. After reviewing the bill with the customer, Pilkinton determined that the new billing rates had been calculated incorrectly. On March 30, 2015, she sent an email to Bill Farmer advising him that there was an error in the billing rate and pointing out what the amount should have been under the correct calculation. Although Pilkinton was aware that the calculation of the rates charged for water consumption was incorrect, the City continued to issue water bills reflecting the same error throughout 2015 and into 2016.

         After receiving his water bill in March 2015 and comparing it to the new tier rates issued by the City, Scott Pernici noticed there seemed to be an error in his bill and that of his neighbor. Pernici did not contact the City at that time, but spent the next several months gathering and reviewing the water bills sent to a number of other customers. Pernici determined that some of the bills were incorrect and as a result, residential customers using 8, 000 gallons of water or more were billed at a lower rate than required under the ordinance. Pernici discussed this billing error with his friend, attorney Michael Wainwright. In August 2015, they hired Manchac Consulting Group, Inc. ("Manchac"), a company with experience in municipal water systems, to review Pernici's findings. Pernici and Wainwright required the CEO of Manchac, Justin Haydel, to sign a confidentiality agreement before giving him the water billing information, which they believed could be of value. Haydel confirmed that the water bills that he was shown had been calculated incorrectly. Believing that they could obtain payment from the City for this information, Pernici and Wainwright hired attorney Charles Grubb to negotiate with the City.

         In March 2016, attorney Grubb contacted City Attorney William Bradford. Grubb represented that his client possessed "confidential information" which could provide the City with increased revenue without enacting new taxes or fees. City Attorney Bradford advised Grubb that the City would need some disclosure regarding the nature of the information. Attorneys Wainwright and Grubb then drafted a nondisclosure agreement ("NDA"), which provides that Manchac (the "company") would provide confidential information to the City ("recipient") for the purpose of considering contracting with the company to identify areas for realizing additional revenue. Manchac requested that any of its confidential proprietary or trade secret information ("confidential information") provided be "treated and maintained as confidential to the extent permitted by Louisiana law." The term "confidential information" is defined as all "data and information contained in any tangible or intangible form . . . provided by company to recipient relating to operational, technical, financial or other affairs of recipient's business activities previously unknown" to the City.

         On April 21, 2016, City Attorney William Bradford signed the NDA. Haydel then gave a PowerPoint presentation to Bradford showing that the City's billing for water usage was incorrect and stating what the billing should be under the ordinance. Haydel gave Bradford a paper copy of the PowerPoint and a proposed "revenue enhancement agreement," whereby the City would pay a percentage of any additional revenue received by implementing Manchac's recommendations. On June 8, 2016, Haydel and attorney Grubb met with Bradford, Shreveport Chief Administrative Officer Brian Crawford and Barbara Featherston, director of the City's Water and Sewerage Department. After Crawford and Featherston signed an acknowledgment of the NDA, Haydel again made the PowerPoint presentation. The next day, Featherston sent an email regarding the billing error to Pilkinton and instructed her to research the situation and respond. In July 2016, Featherston informed Haydel that the City had corrected the billing error so that future water bills would be accurate. The City later offered to pay attorney Grubb's client 10% of the amount of the revenue that was uncollected because of the City's billing error.

         At some point, Manchac assigned any rights it held under the NDA to Pernici and Wainwright, who are principals of Sand Beach Properties, LLC ("Sand Beach"). Pernici and Wainwright then assigned their rights acquired from Manchac to Sand Beach. In October 2016, the plaintiff, Sand Beach, filed a petition for breach of contract against the City. The plaintiff later amended the petition to add William Bradford, Brian Crawford and Barbara Featherston as defendants. The City filed an exception of no cause of action ...

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