Town of Alexandria Files Lawsuit to have Contract Declared Null and Void

February 12, 2014
Dwayne Page

The Town of Alexandria has taken legal action in Chancery Court against a Georgia Limited Liability group who allegedly reneged on an agreement to find a new water source for the municipality.

The lawsuit, filed December 30, 2013 against Amnisos Group, LLC, Ross Everett and Kay Nichols Everett, seeks to have the court declare a purported agreement between the defendants and the Town of Alexandria to be null, void, and of no effect.

The town is also asking the court to find the defendants to be liable to the city pursuant to the Tennessee False Claims Act for three times the amount of damages the town has sustained and that they further be held liable to the town for a civil penalty for each false claim made. The town is seeking any other further and general relief to which it may be entitled.

According to the lawsuit, "On or about March 22, 2011, the Town of Alexandria and Ross Everett, purporting to act on behalf of Amnisos Group, LLC, executed a document which purports to be a "Water Supply Contract" between the town and Amnisos. The contract states in part that "The Alexandria Water District seeks and desires to obtain a new water supply to meet the present and future needs of its customers within its serviced area."

The city currently has a water contract with the Smith County Utility District.

Among other obligations, Amnisos was required to provide the town a "Water Availability Report" which was to include, among other things, a description of the availability of water sufficient to furnish water to all the citizens, residents, and businesses within the Town of Alexandria. The "Water Availability Report" was required to be furnished by Amnisos Group within twelve months following the execution of the agreement.

On February 2, 2012, Ross Everett prepared a letter purporting to bear the name of Amnisos Group LLC but, according to the lawsuit, the correspondence was insufficient to satisfy the requirement of a "Water Availability Report". The letter stated in part that "Working with hydro-geologists, civil engineers and other water industry professionals, we find there to be ample water available so as to allow a water source to be developed to amply supply the water required to meet the terms and conditions. It is our intent to continue our efforts to have the necessary source, treatment facility, connections, and operations in place by the initial delivery as called for in the ordinance (granting the contract)."

On June 26, 2012, the town determined that, to the extent an enforceable agreement existed, Amnisos Group LLC was in breach of the agreement and voted to give Amnisos the right to cure the breach, and set a deadline of December 31, 2012 for the defendant, Amnisos "to show that you have an adequate amount of water available to provide the Town of Alexandria" A letter was sent to Amnisos dated July 17, 2012, notifying the group accordingly.

According to the lawsuit, none of the defendants provided any further "Water Availability Report" to the town prior to December 31, 2012. As a result, on January 17, 2013, the town wrote to the Amnisos Group notifying them that their failure to comply terminated the agreement.

On January 28, 2012, the Georgia Secretary of State notified Amnisos Group LLC that their limited liability company was facing dissolution and on September 11, 2012, Amnisos was administratively dissolved and has remained so since, according to the lawsuit.

The town claims that the letter dated February 2, 2012 from Ross Everett was false and untrue in which he claimed that Amnisos had been working with hydro-geologists, civil engineers, and other water industry professionals with respect to ample water available within the Town of Alexandria.

The city contends that February 2, 2012 letter was mailed shortly after Amnisos Group was notified the company was facing administrative dissolution and that the letter was little more than an attempt to perpetrate a fraud on the Town of Alexandria.

According to the city's complaint, neither of the defendants, Amnisos Group LLC nor Ross Everett had drilled any test wells in the town; acquired any real property in DeKalb County; caused any pump test to be conducted in the county; nor requested any site evaluation from the Tennessee Division of Water Supply as of February 2, 2012, March 22, 2012, nor as of December 31, 2012 and that Amnisos failed to produce a "Water Availability Report" as contemplated by the purported agreement.

At a mediation conducted on October 28, 2013, Ross Everett furnished for the first time a letter from the State of Tennessee Department of Environment and Conservation Division of Water Supply relating to water in Alexandria bearing the signature of Johnny Walker, TDEC Division of Water Resources. This letter states that a site visit was made on February 12, 2013, over a year after the original letter from Amnisos Group LLC and after the December 31, 2012 extended deadline had expired. No site visit was made by TDEC prior to December 31, 2012 for or on behalf of Amnisos Group LLC, according to the lawsuit.

Also at the mediation on October 28, 2013, Everett furnished for the first time a document entitled "Tennessee Division of Water Supply New Water Source and Site Evaluation form" dated February 12, 2013. No such evaluation was prepared within one year of the original agreement date nor by the December 31, 2012 extended deadline, the lawsuit continued.

In its request for a declaratory judgment from the court, the Town of Alexandria asks that the purported contract with Amnisos be ruled null, void, and without effect and the Chancellor find that the purported contract was procured by fraud in that the defendants made false and misleading statements to the officials of the Town of Alexandria both with respect to their capacity to develop a water supply to serve the citizens of the town, their intent to make any efforts to do the same, and perpetrated the fraud by false and misleading statements in the February 2, 2012 letter with respect to the efforts supposedly employed.

Amnisos was dissolved on September 11, 2012. Notwithstanding the dissolution, Ross Everett individually appeared on October 28, 2013 at a mediation and attempted to demand money from the Town of Alexandria, according to the town's complaint. "The defendants, Ross and Kay Everett have failed to follow the corporate formalities with respect to applicable limited liability company law and these persons are individually liable for the conduct of the limited liability company," the city contends.

"The defendant, Amnisos Group LLC is nothing but an alter ego of the defendants, Ross and Kay Nichols Everett and these two persons are individually liable for all of the conduct of this limited liability company," the town concludes.

The Town of Alexandria is being represented in the case by Cookeville attorney Daniel H. Rader IV.

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