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Vero: The Shores lacks standing to sue over reuse water rates

STORY BY LISA ZAHNER (Week of January 28, 2021)

Vero Beach has asked a court to rule in the city’s favor in a civil suit filed by the Town of Indian River Shores over utility rates, saying the town lacks standing to sue for damages.

Indian River Shores in September filed a breach of contract lawsuit that claims Vero violated the terms of an agreement to match Indian River County rates for reuse irrigation water.

But Vero counters that the city was well within its rights under a 2012 franchise agreement to not reduce rates when the county drastically cut its own rates at the close of 2018 from 67 cents per 1,000 gallons to 21 cents per 1,000 gallons.

Vero says its customer class in the Shores that buys “pressurized reuse” water does not exist as a customer class of Indian River County Utilities, so the price-match agreement does not apply. Vero claims it has broad rate-making powers and the right to set up “reasonable classifications” of customers.

The Shores wants the lower rates going forward, and retroactive to March 1, 2019 when the revised county rates took effect – along with interest should the court deem that appropriate.

Vero says the town is not a damaged party in the rate dispute, even though the town hall complex, community center and public safety department buildings are Vero utility customers.

“The Town lacks standing to assert a claim for damages against the City on behalf of ratepaying customers and this court lacks jurisdiction thereof,” Vero’s attorneys wrote. Should the court find that the Town has standing, Vero further argued that “any claim for damages against the City on behalf of third parties is barred by the doctrine of sovereign immunity.”

When the Shores challenged Vero over electric matters, the town added an individual ratepayer, former vice mayor Mike Ochsner, onto its complaints as a party; a similar strategy could be taken with this utility lawsuit.

Vero Beach attorney Paul Berg of Vocelle and Berg represents Indian River Shores, while City Attorney John Turner and Thomas Cloud of the Gray Robinson law firm are litigating Vero’s case. This lawsuit does not trigger the type of mandatory pre-trial mediation the Shores and Vero went through in the electric utility lawsuit, though the parties did attempt mediation after the lawsuit was filed and before it was served.

The Shores has asked for a declaratory judgment on the matter of the rates, and on whether Vero violated the 2012 utility franchise agreement. Should the proceedings go forward, Vero has asked for a trial by jury in Circuit Judge Janet Croom’s court. No hearings are scheduled in the case as of press time.

It’s unclear whether Croom will need to recuse herself from this case, as her husband, developer and luxury home builder David Croom, and the City of Vero Beach were involved in a nasty lawsuit from 2013 to 2016.

The dispute centered around a failed attempt by Croom and his business partner’s company, B-B Redevelopment Team LLC, to redevelop the city’s old diesel power plant, which now houses the American Icon Brewery.

Vero won the lawsuit and then spent another few years collecting the judgment, with documents related to garnishment of property in the case dating to as recently as 2018.