Long Legal Battle Between DUD and City of Smithville Finally Over

The legal battle between the City of Smithville and the DeKalb Utility District is finally over.
Chancellor Ronald Thurman has dismissed both a DUD complaint against the city and the city’s counter claim against the DUD. The order of dismissal was signed on Monday, May 22. Both sides agreed to the dismissal
The DeKalb Utility District took the City of Smithville to court in February, 2014 after the aldermen decided to raise the water rate it charged the DUD at the time from $2.67 to $5.00 per thousand gallons, the same rate that all other city water customers paid. DUD claimed the rate was excessive and would force the utility to pass along massive rate increases to its customers.
Following a two hour hearing later that month in Cookeville, Chancellor Thurman granted a DUD motion for a temporary injunction barring the city from continuing to impose its $5.00 rate until the city gave proper notice to DUD and justification for raising the rate above $2.67 per thousand gallons. The ruling was only on the motion for a temporary injunction. The lawsuit brought against the city by the DUD had yet to be litigated. The case has lingered in court since.
The city then filed a counter claim in Chancery Court in March, 2014 claiming the DUD had underpaid for water purchases from July 1, 2008 to December 31, 2013 and owed the city more than one million dollars. Even though the city had a water purchase contract with the DUD from March 15, 2004 through December 31, 2013 establishing the amount the DUD would pay for water each year, city attorneys claimed a 2013 water cost study found that the municipality had not charged the DUD enough to cover all of the actual costs of producing and distributing water to the DUD, and the City did not recover any of its capital costs from DUD during the period between July 1, 2008 and December 31, 2013. In the answer, DUD attorneys contended that the water purchase contract governed the rate to be charged over the ten year period. The counter claim was also never resolved by the court.
In the Order of Dismissal, Chancellor Thurman wrote that “It appearing to the Court from statements of counsel for the parties and a review of this matter that a dismissal of both the Complaint of the plaintiff (DUD) and Counterclaim of the defendant (City of Smithville) is warranted and proper, the Court finds that all causes of action pursued by both parties in this matter shall be dismissed with prejudice”.
“Therefore, the Complaint (by DUD) and the Counterclaim (by City), and all causes of action asserted in this cause by both parties, are hereby DISMISSED with prejudice and this case is closed. Concurrent with the dismissal of the Complaint and Counterclaim, the temporary injunction entered on May 12, 2014 is hereby dissolved and the injunction bond posted by the Plaintiff shall be released and returned to the plaintiff. Any unpaid court costs shall be assessed equally between the parties,” the order of dismissal concluded.
After DUD initiated plans to build its own water treatment plant, the City of Smithville hired a public relations firm in April 2012 to launch a grassroots campaign to try to stop the project. A petition drive was started and at least ten percent of DUD customers signed it, triggering a review by the state’s Utility Management Review Board (UMRB).
A year later, the UMRB held an all day hearing in Smithville and dismissed the petition filed by a group of DeKalb Utility District ratepayers and the city who were hoping to halt DUD plans to build the water plant. UMRB Board members said the petitioners had failed to meet their burden of proof that DUD rates or services provided were unreasonable.
The DUD petitioners and city then requested a judicial review asking Nashville Chancellor Ellen Hobbs Lyle to overturn the decision by the UMRB board. Instead, the Chancellor, in February 2014, ruled against the DUD petitioners and city and affirmed the UMRB’s action clearing the way for DUD to begin building the water plant.
The new DUD water treatment plant is now completed and operational.