Chou-il Lee: Powerdyne contract 'unenforceable'

"Unenforceable": Councilman Todd Nation (right) speaks during Thursday night's City Council meeting. Nation's questioned the legality of a clause in the city's Powerdyne contract. The City Attorney said the language makes the contract "unenforceable." Tribune-Star Arthur Foulkes

Mayor Duke Bennett and other city officials are facing a potential lawsuit over Terre Haute’s sludge-to-diesel agreements.

Last week, Bennett and other officials received a “notice of claim” from Pat Goodwin, a former city engineer. Goodwin, who has publicly raised questions about the city’s sludge-to-diesel plans, said the goal of the possible legal action is to keep the city’s Powerdyne and related contracts from going into effect.

“There are so many ways the city’s taxpayers can be damaged by these contracts,” Goodwin told the Tribune-Star Monday. The contracts appear not to have been negotiated in good faith, he said.

The “notice of claim” issued last week to city officials, through attorney Noah Gambill, is a step required by law before a lawsuit can be filed, Goodwin said. No lawsuit has yet been filed, he noted.

Gambill said he hopes no lawsuit is necessary.

Mayor Bennett and City Attorney Chou-il Lee, who both received claim notices, said they could not comment on potential litigation. Lee said, however, while the city is often sued in “tort” cases, this is the first time he’s seen a potential suit involving a public policy initiative by the city. 

There have been similar cases filed in Indiana, Gambill said. Indiana law allows citizens to sue if government actions are “so fraudulent they will injure” the public interest, he said. 

“It has been done before,” Gambill said.

Last week, Lee said the city’s sludge-to-diesel contracts are “unenforceable” due to a clause effectively removing any role for the Terre Haute City Council, the city’s fiscal body. That clause was cited in the “notice of claim,” which was written before Lee’s comments, as one of the problems with the agreements.

The four-page notice also asserts: 

• The city failed to follow proper procedures approving a contract with Highland TH LLC, the Powerdyne-owned company that will be “de-watering” the city’s sludge. It also states Highland TH LLC entered into a contract with the city before the company was registered to operate in Indiana.

• The four-page notice also claims officials “deceived taxpayers” when the mayor said Powerdyne would pay the city $3 million in 2014 and $3 million in 2015 when no contract language spells out such payments and no payments have been received.

• The tort claim also asserts that a city contract with Renewable Transport Services for sludge hauling is void because it didn’t go through a competitive bid process.

Because of time limits on torts in Indiana, Gambill said, notice was served Jan. 12. That was just barely within the legal 180-day time limit to file a tort after the “harm” has been done. Gambill said he dated the “harm” as taking place on July 15, the date of the Powerdyne contract with Terre Haute. 

The “notice of claim” says Goodwin and “other similarly situated individuals” intend to take legal action, but the number of those other individuals remains uncertain. 

“Right now, that’s in flux,” Gambill said. Goodwin said he is essentially the spokesman for a “significant” number of people and notes many people follow his Thinq TH page on Facebook, which deals extensively with the sludge contracts. 

On Thursday afternoon, Gambill is hosting a meeting at his law office to explain what’s involved for anyone willing to join a potential class lawsuit, Goodwin said. The 4 p.m. meeting will not be open to the news media, Gambill said.

Reporter Arthur Foulkes can be reached at 812-231-4232 or arthur.foulkes@tribstar.com