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Lawsuit In Water Dispute Dismissed

By Amit R. Paley
Washington Post Staff Writer
Thursday, February 17, 2005; Page SM01

A Baltimore judge has dismissed a lawsuit by Chesapeake Ranch Water Co. that sought to block Calvert County's effort to supply water to the Lusby town center.

Joseph H.H. Kaplan, chief judge for Baltimore Circuit Court, ruled Monday that the county commissioners did not violate state law when they decided that the county, rather than the Chesapeake Ranch utility, would provide water to Lusby.

In its lawsuit, the Chesapeake Ranch Water Co. had sought to block Calvert County from supplying water to Lusby's town center. (Mark Gail -- The Washington Post)

The utility's board of directors will meet today to decide whether to appeal the decision, said Stephen D. Ball, an attorney for the Chesapeake Ranch Water Co. Ball declined to comment further on the ruling.

The decision marks the latest legal setback for the water company, which serves 10,000 customers in the Chesapeake Ranch Estates.

In January 2003, the water company lost a similar lawsuit filed in federal court. Chesapeake appealed the decision to the U.S. Court of Appeals for the 4th Circuit in Richmond, which heard the case in November. The two sides expect a decision in the coming months.

The state and federal lawsuits have cost the county more than $300,000 in legal fees, and George O. Hanson, the utility's manager, said recently that his company has spent at least that much.

The dispute began in February 2003 when the county decided to supply water to the growing town center in Lusby and a nearby office park instead of using Chesapeake. The water company said that it could provide service to the area at a lower cost and more effectively than the county could.

In his decision, Kaplan wrote that the water company "has no legal entitlement to provide water outside of its existing franchise area."

The lawsuit made 14 claims against the county and the Maryland Department of the Environment. Emanuel Demedis, the county's attorney, said it is unusual that Kaplan found none of the utility's legal arguments persuasive enough to prevent him from granting summary judgment in favor of the county and the state environmental agency.

"It's like winning the World Series and the playoffs without losing a game," he said.

In its suit, Chesapeake said the county's water service plans for Lusby are a waste of taxpayer money and a threat to the existence of the company. Chesapeake noted a Maryland law that prohibits local governments from creating a public works project "that in any way duplicates or competes with an existing public or private utility that serves the same purposes."

But Kaplan said the law did not apply in this case. "The County neither duplicates nor competes with Chesapeake when it extends service to a previously unserved area, outside of Chesapeake's existing franchise, merely because Chesapeake would like to serve that area too," he wrote.

Kaplan said in the opinion that the county could even extend its services to Chesapeake's current customers because the county has determined that the water company is "unfit" to be part of the municipal water system.

"It raised my eyebrows when I saw that remark," Demedis said. "But to me it's a non-issue since we don't have any plans to" expand into Chesapeake's service area.

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