Glendale plant

Workers sort waste from recycling at a Glendale plant. (Glendale Star file photo)

A plan to turn trash into energy didn’t work out in Glendale, but it indirectly brought money to the city.

And a years-long, multimillion-dollar debate over what is and isn’t acceptable yard waste ended.

The city of Glendale will be reimbursed more than $4 million, after the Arizona Court of Appeals ruled in favor of the city of Glendale on all counts on an appeal brought by Vieste Energy.

In upholding a prior summary judgment, the appeals court also upheld the lower court’s judgment, awarding the city $280,000 in damages, $2.8 million in attorney’s fees and nearly $900,000 in “nontaxable costs.”

On top of that, Vieste must pay Glendale’s costs and attorney’s fees for the appeal.

The case centered on a failed waste-to-energy project built by Vieste in 2013, on part of the city’s landfill property. This led to a dispute over the waste supply contract between Vieste and Glendale.

The appeals court upheld a prior summary judgment ruling issued by Maricopa Superior Court Judge Dawn Bergin in November 2017. 

The lower court ruling, like the appeal, focused on whether an earlier arbitration between the parties prevented the city from filing its lawsuit. It also decided in favor of the city’s interpretation of  the meaning of and obligation to sort yard waste. 

The Appeals Court affirmed the city’s position on both issues.

According to court documents, in 2010, Vieste and the city began discussing a renewable-energy project involving the city supplying municipal solid waste (MSW)

The project was a “waste-energy initiative,” where Vieste would construct a facility at the city’s landfill to sort MSW into waste and recyclables. The recyclables still holding value would be sold and the remaining waste would be processed into energy at the facility. 

To execute the project, Vieste needed a power purchase agreement for the energy the facility would produce. When a delay arose in obtaining an agreement, the project was split into two phases.

In phase one, Vieste would construct a mixed waste materials recovery facility to recover and recycle approximately 50% of solid waste stream being landfilled, according to court documents. Phase 2 would “consist of power generation from remaining waste destined for landfilling and a co-located economic development project.” 

Glendale City Council approved the project In October 2012.

“The agreement stated certain yard waste could be delivered to Vieste only during Phase 2 of the project,” the court documents state.

But in 2014, Glendale and Vieste “ran into difficulties surrounding the meaning of yard waste, and specifically, what waste was allowed under the agreement during phase one.”

The city and Vieste went to arbitration, debating whether yard waste should be acceptable in phase one.

An arbitrator awarded attorneys’ fees to Vieste, but noted the dispute over the scope of the agreement was not resolved.

Glendale then filed a complaint in the Superior Court of Maricopa County. Vieste filed for dismissal,  arguing the arbitration award barred the city from filing the complaint.

The court denied the Vieste motion.

Glendale then amended its complaint, including claims for breach of contract, and negligent misrepresentation. 

The superior court granted the city’s motion yard waste typically found in the city’s MSW stream could be appropriately delivered to Vieste under the agreement. 

Arizona Court of Appeals Judge Michael J. Brown wrote the decision of the court, which Judges Jennifer B. Campbell and Lawrence F. Winthrop joined.

“Considering the entire Agreement and the surrounding circumstances, Vieste’s extrinsic evidence does not persuade us the agreement is reasonably susceptible to Vieste’s interpretation,” Brown wrote in the ruling.

“We agree with the superior court’s conclusion yard waste included with the city’s MSW (not bulk waste) is acceptable waste during the first phase of the agreement,” Brown wrote.

The appeal ruling concludes: 

“Vieste has not developed any meaningful arguments for reversal of the court’s ruling related to the rest of the parties’ competing claims. Accordingly, we affirm the court’s grant of summary judgment in favor of the city.”