In his decision, Woodall agreed with Cadiz City Attorney Allen Wilson’s arguments and said that the contract between Freedom Waste and the City of Cadiz violated Section 164 of the Kentucky State Constitution.
Woodall said that in March 2007, an amendment was made to the contract, which dates back to 1998, amounts to a “private right to contract with the City through conversations and negotiations … rather than starting a new term by advertising and accepting bids,” adding that the bidding requirement is mandatory for each term.
Woodall also declared that the contract between Cadiz and Freedom Waste is void, as a lack of observance of the bidding requirement will render that contract void. He also said that a contractor enters into a contract with a government entity at its own risk and should seek legal advice regarding the legality of that contract beforehand.
Wilson said at the April 14 hearing that according to the Kentucky Constitution, a city, county, taxing district or other municipality cannot make a contract for franchise agreement a term of more than 20 years, and that bids must be received publicly after due advertisement.
Wilson also argued that merely having a government contract that has an automatic renewal provision goes Section 164 against the constitution, adding that without the 20-year provision, a contract could conceivably continue “in perpetuity.”
James Coltharp, who represented Freedom Waste at the Wednesday, April 14, hearing, said the city’s new contract with Madisonville Disposal has a similar provision.
The original contract, drafted in 1998, was renewed in 2001, 2004 and 2007, said Coltharp, who argued that the automatic renewal clause in the contract did not violate the state constitution since bids for the waste collection franchise were well-advertised.
Woodall said that contract isn’t the subject of the lawsuit, although he added that Madisonville Disposal and Cadiz might have to look at that contract again “to assure themselves and the public that it meets the constitutional requirements on which the city relies in this present case.”
J. Duncan Pitchford, also representing Freedom Waste, wrote in a legal response that the automatic renewal doesn’t violate the “due advertisement” requirement and “does not afford the Plaintiff the right of private contracting disapproved of by OAG 80-258.”
Wilson, who has been the city attorney for Cadiz since 2006, wasn’t employed by the city when the original contract was drafted in 1998, but he said he couldn’t say whether the City of Cadiz erred in allowing the automatic renewal provision in the first place.
A letter from Rogers dated Thursday, Dec. 17, of last year to Joe Buchanan of Freedom Waste stated that the city didn’t want to renew the contract and instead wanted to “consider other bids.” Rogers, in the letter, stated that the contract would have otherwise automatically renewed on Sunday, March 21.
Pitchford argued that the contract specified and end date of Tuesday, March 2, meant that the any non-renewal notice would have to have been sent no later than Thursday, Dec. 3. A copy of the contract confirms that end date.
Freedom Waste is seeking damages against the City of Cadiz for breach of contract and “an award of specific performance” to compel the city to honor its contract with Freedom Waste, Pitchford said in the suit.
In the original complaint dated Thursday, Feb. 18, Pitchford argued that the city’s contract with Freedom Waste states that their contract automatically renews for another three years unless either party declares in writing that they want to terminate the contract at least 90 days before the contract is supposed to end.
The copy of the contract states that the three-year contract automatically renews unless either party notifies the other in writing at least 90 days before the end date of the contract that they don’t want to renew the contract.
The attorneys for Freedom Waste, Douglas Willen of Hopkinsville and Pitchford of Paducah, couldn’t be reached for comment at press time.