Developers claim fraud

Developers of a local subdivision are claiming that the Bedford County Utility District (BCUD) and an engineering firm conspired to commit fraud in order to require them to upgrade a water line.

Mark and Mike Clanton filed a lawsuit in Bedford County Circuit Court last week against BCUD, the utility's general manager, Martin Davis, the engineering firm Highers, Koonce & Associates, Inc. and engineer Gene Koonce, also known as "Buddy Koonce," accusing them of requiring the water line upgrade to save the utility from incurring the expense.

Davis said Wednesday it was too soon for him to comment on the suit and that they have turned the litigation over to their attorneys, who are in the process of examining it.

Upgrade debated

The suit, which gives only one side of a legal argument, states that the Clantons bought 56 acres of land in April 2007, with the intention of developing it as a subdivision.

On the date of the auction, the suit claims that Davis approached Mark Clanton and asked about his intentions for the property.

Clanton said he would likely develop a subdivision and Davis allegedly responded that some sort of upgrade in the water lines on Dixon Road might be required and would have to be done at the Clantons' expense before water to the subdivision would be provided.

The suit claims that the Clantons met about a month later with Davis to see if an upgrade would be needed. Davis allegedly said that the board of directors of BCUD would require it, but the Clantons questioned how the decision was arrived at and also about conducting a hydraulic analysis, or flow tests, to see if the water line upgrade would be necessary.

Davis allegedly refused to agree to the testing, the suit says, but told the Clantons he would consider doing it at some point "if the Board of Directors instructed him."

The BCUD board approved the water sketch plat on June 14, 2007 and said an upgrade to the water lines would be required, but when Mark asked how this determination was made and about the hydraulic analysis, "the Board both refused to answer his inquiries" and insisted that the upgrade would have to be done to get water to the subdivision.

When Mark paid the developer's fee to BCUD in October 2007, he asked Davis again why the flow test could not be performed and asked if BCUD had the authority to require the upgrade as a condition to provide water.

Davis allegedly became agitated over the questions and insisted that the flow test was not necessary "because the Board had made the upgrade mandatory," the suit claims.

Test questions

Clanton returned to the BCUD offices in November 2007 to insist a flow test be done before beginning the upgrades, with Davis allegedly saying he did not see the need for the test. Davis eventually agreed to the test, but insisted that they be performed by Highers, Koonce & Associates, Inc. at Clanton's expense.

Later that month, work had begun on the upgrades and the results of the flow test had not been received yet, but several employees of BCUD who visited the construction site allegedly told the Clantons that they "did not understand why any upgrade had been required" and that the existing water pressure was "exceptional," the suit claims.

The Clantons completed the water line upgrades and incurred an additional $10,000 in expenses "because BCUD would not even accommodate Plaintiffs (the Clantons) with securing easements that would have more easily facilitated making the upgrade," the suit claims.

After the line was upgraded, the Clantons began developing the subdivision, but continued to asked Davis for a copy of the flow test from December 2007 to February 2008, finally resulting in a confrontation at the BCUD offices.

The suit states that Mark Clanton demanded a copy of the test since he paid for it, but Davis refused to hand it over to him. But Clanton said that he would not leave the BCUD offices until he received a copy.

Davis "became quite agitated," the suit says, but he gave Clanton a copy of the hydraulic analysis, which was faxed to Davis by Koonce on Nov. 19, 2007, before the upgrade work was finished.

According to the suit, Koonce told Davis that he recommended a six-inch water line to replace the existing two-inch line to "provide acceptable flows and residual pressures to the existing and new customers."

But the notation also mentioned that "by applying the estimated water demand" to the location of the Clanton subdivision "as well as existing water demand, the distribution system will not support these demands."

After receiving the test results, the Clantons hired another engineer to review the hydraulic analysis and their engineer said the data was "inaccurate and inadequate" on which to base the upgrade requirement.

But the engineering firm employed by the Clantons also "strongly suggested" that the water line did not need to be upgraded and that the information provided by Highers, Koonce & Associates, Inc. "showed a need for upgrades in other areas adjacent to the Dixon Road line, but not on the Dixon Road line itself."

Claims fraud

The Clantons say they have tried to meet with the BCUD Board of Directors about the matter and have attended their meetings, but they have been "refused permission of discuss or even raise their concerns regarding what had occurred."

The Clantons allege that BCUD, Davis and Koonce "all conspired together to create knowingly false documentation which would support BCUD's requirement that the Dixon Road water line be upgraded."

They also allege that BCUD insisted on the upgrade to avoid incurring the expense "all in order to reach its other areas upon which a demonstrable need for upgrade existed."

The suit also notes a section of Tennessee state law that a public utility is invested with the privilege of extending water lines that they are to be placed "by and at the expense of the corporation."

The required upgrade cost the Clantons an additional $121,460 in expenses to develop the subdivision and they claim that has increased the per lot cost increase prevented them from marketing the lots to developers, costing them an additional $169,187 loss in profits on the anticipated sale of their remaining lots.

The Clantons, who are represented in the suit by Shelbyville attorney John Norton, state that they are entitled to an award of three times the actual damages they have allegedly suffered and are requesting a jury trial.