Commissioner of Human Services v. Waldoboro Water Co.
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MAINE SUPREME JUDICIAL COURT  				       	 Reporter of Decisions
Decision:	1999 ME 36
Docket:	Ken-98-215
Argued:	February 4, 1999	
Decided:	February 19, 1999	

Panel:		WATHEN, C.J., and CLIFFORD, RUDMAN, and SAUFLEY, JJ.

COMMISSIONER OF HUMAN SERVICES

v.

WALDOBORO WATER CO., et al.

RUDMAN, J.

	[¶1]  Waldoboro Water Co. and Paul Ring appeal from the judgment
entered in the Superior Court (Kennebec County, Marden, J.) ordering the
sale of Waldoboro Water's assets to the Town of Waldoboro.  Waldoboro Water
and Ring argue that the trial court erred by granting a summary judgment
enforcing their agreement with the Commissioner of Human Services to sell
the company in exchange for the Commissioner's dismissal of proceedings
alleging violations of the Safe Drinking Water Act, 22 M.R.S.A. §§ 2611-2617
(1992 & Supp. 1998).  We affirm.
	[¶2]  In September 1995, the Commissioner of Human Services filed a
complaint and motion for preliminary injunction against Waldoboro Water,
Hartland Water Co., and Paul Ring (the owner of the capital stock of both
companies), alleging that the defendants were violating the Safe Drinking
Water Act and thereby creating a serious public health risk.  After the
Superior Court (Alexander, J.) granted a preliminary injunction, the parties
proceeded through a then-mandatory Alternative Dispute Resolution pilot
project in Kennebec County.  M.R. Civ. P. 16C(c)(1).   
	[¶3]  As a result of the sessions with a Volunteer Neutral, the parties
agreed to the following, by way of settlement:

The defendant water companies will be sold by their owner. 
After the sale, the case will be dismissed by the plaintiff.  The
preliminary injunction will remain in effect until the case is
dismissed.  This case may be continued generally until this
case is dismissed or further action is requested by either
party.

	[¶4]  Pursuant to the settlement agreement, Hartland Water sold its
assets to Consumers Maine Water Co. ("Consumers Maine") in September
1996, and the Commissioner moved to dismiss Hartland Water as a
defendant.  Meanwhile, Waldoboro Water attempted to sell its assets to
Waldoboro Community Water System ("WCWS"), a newly-formed entity with
unusual corporate purposes (such as fostering "international amateur sports
competition") that Ring formed in part.  However, the Public Utilities
Commission denied WCWS's application to operate a water company.
	[¶5]  Other than WCWS, only two entities expressed interest in buying
Waldoboro Water-the Town of Waldoboro and Consumers Maine.  After the
Town and Waldoboro Water orally agreed to a sale price of $387,200, the
Town secured voter approval for the purchase, and obtained financing. 
	[¶6]  During this time, difficulties at Waldoboro Water continued.  On
many occasions, customers reported being without any water at all.   A
Waldoboro Water employee described how Ring had risked contamination by
jury-rigging plumbing joints and telling him to discontinue testing when
water drawn from its quarry failed a chlorine test.  After a pump failed and
created another risk of contamination, the Department of Human Services
("DHS") required Ring to issue a boil order, but he refused to do it, and DHS
had to issue the order itself.  When customers called Waldoboro Water to ask
about the order, Ring assured them the water was safe to drink without
boiling.  In addition to these immediate health risks, Waldoboro Water
stopped billing customers, thus threatening the company's financial ability
to comply with the Safe Drinking Water Act. 
	[¶7]  The Commissioner moved to supplement his complaint with this
information and requested that the court appoint a receiver to operate
Waldoboro Water in compliance with the Safe Drinking Water Act.  After a
hearing, the Superior Court (Atwood, J.) granted the motion to supplement
and appointed Consumers Maine to act as receiver and operate the company
safely.  The court specifically noted, however, that Consumers Maine was not
responsible for bringing Waldoboro Water into compliance with applicable
laws and regulations.
	[¶8]  The Commissioner then filed a motion for a summary judgment
seeking to enforce the terms of the settlement agreement. In support of the
motion, the Commissioner relied upon a request for admissions (to which
neither the company nor Ring responded), which stated that: (1) the terms
of the settlement agreement required that the company be sold; and (2)
neither Waldoboro Water nor Ring were making any effort to meet that
obligation.  Neither Waldoboro Water nor Ring filed a responsive pleading to
the motion for a summary judgment, and neither appeared at either
scheduled hearing on the issue.  The Superior Court (Marden, J.) entered a
summary judgment in favor of the Commissioner, ordered an independent
appraisal of Waldoboro Water, and suggested that a trustee be appointed to
represent the company's interests in negotiating a sale.  Shortly thereafter,
the court appointed R. Steven Thing to serve as trustee.  
	[¶9]  Thing concluded that the Town's offer of $387,200 was the best
offer available to Waldoboro Water, and entered into a purchase and sale
agreement with the Town.  At a hearing on the trustee's motion to approve
the sale, the court gave Ring wide latitude to cross-examine and present
witnesses, but, once again, neither he nor Waldoboro Water challenged the
enforcement of the settlement agreement.  The court subsequently
approved the sale.  Although the specified closing date passed during the
pendency of this appeal, the trustee and the Town have amended the
contract to extend that date accordingly.
	[¶10]  When reviewing a summary judgment, we examine the evidence
in the light most favorable to the nonprevailing party to determine whether
the trial court committed an error of law.  Gagnon's Hardware & Furn., Inc.
v. Michaud, 1998 ME 265, ¶ 5, 721 A.2d 193, 194.  The trial court properly
enters a summary judgment when there is no genuine issue of material fact
and the moving party is entitled to a judgment as a matter of law.  Id.  When
a trial court rules on a motion for a summary judgment, it is to consider
only: (1) the portions of the record that the Rule 7(d) statements referred
to; and (2) the material facts contained in those statements.  Id.
	[¶11]  Waldoboro Water and Ring contend that the trial court erred by
granting a summary judgment for specific performance of the settlement
agreement because the agreement was not a binding contract.  In Waldoboro
Water's view, the settlement agreement was merely an expression of intent
to enter another agreement at a later date.  However, Waldoboro Water and
Ring failed to preserve that argument.  They did not raise it before the trial
court.  Scott v. Lipman & Katz, P.A., 648 A.2d 969, 974 (Me. 1994). 
Therefore, we review only for error that works a substantial injustice. 
Aseptic Packaging Council v. State, 637 A.2d 457, 463 n.4 (Me. 1994).
	[¶12]  Neither Waldoboro Water nor Ring responded to either the
request for admissions or the motion for a summary judgment.  In each
pleading, the Commissioner asserted facts sufficient to establish that the
settlement agreement was binding upon Waldoboro Water and Ring and that
neither was making any effort to negotiate a sale.  Due to the failure of either
Waldoboro Water or Ring to respond, the court deemed these facts admitted
from both the request for admissions, pursuant to M.R. Civ. P. 36, Diversified
Communications, Inc. v. Godard, 549 A.2d 362, 363 (Me. 1988), and the
statement of material facts accompanying the motion for a summary
judgment, pursuant to M.R. Civ. P. 7(d)(2).  Gagnon's Hardware & Furn.,
1998 ME 265, ¶ 5, 721 A.2d at 194.  Under these circumstances, the trial
court did not err by finding that the settlement agreement constituted a
binding contract, and appropriately granted a summary judgment.  
	The entry is:
Judgment affirmed.  Remanded to the Superior
Court for further proceedings consistent with this
opinion.
Attorney for plaintiff:

Andrew Ketterer, Attorney General
Gerald D. Reid, Asst. Atty. Gen., (orally)
Peter Brann, State Solicitor 
6 State House Station
Augusta, ME 04333-0006

Attorney for defendants:

Adrian P. Kendall, Esq., (orally)
Norman, Hanson & DeTroy, LLC
P O Box 4600
Portland, ME 04112-4600
(on appeal, Paul D. Ring appeared pro se below)

Attorneys for parties-in-interest:

Jerrol A. Crouter, Esq.
Drummond, Woodsum & MacMahon
P O Box 9781
Portland, ME 04104-5081
(Consumers Maine Water Co.)

Paul L. Gibbons, Esq.
Gibbons & Calderwood, LLP
P O Box 616
Camden, ME 04843
	and 
Alan G. Stone, Esq.
Clifford, Stone & Herman
P O Box 590
Lewiston, ME 04243-0590
(for Town of Waldoboro)

Peter W. Greenleaf, Esq.
Maine Legal Associates, P.A.
One Monument Way, Suite 200
Portlan, ME 04043
(for R. Steven Thing, Trustee)

Carol MacLennan, Esq.
Public Utilities Commission
18 State House Station
Augusta, ME 04333-0018