Court of Appeals Throws Cold Water on Builder of Treatment Plant's Argument for a Perpetual Easement by Estoppel

In a dispute between Forsyth County and the builder of a water treatment plant, the Court of Appeals reversed the Lumpkin Superior Court's ruling that the builder could terminate its contract with the county after it had already built the treatment plant, and continue to operate said plant pursuant to a perpetual easement by estoppel and an injunction against interfering with its use of the easement. 

The parties executed a contract for Waterscape Services to design a build a water treatment plant.  The contract called for Waterscape to build the plant and to convey the plant to the county after three months of successful operation.  After the plant was constructed and became operational Waterscape notifed the county that it was terminating the contract due to a dispute over the county's refusal to pay all sums billed under a change order. After this notice the county sued Waterscape seeking specific performance of the conveyance obligation.  Waterscape counterclaimed seeking a declaratory judgment that it had validly terminated the agreement; a declaratory judgment that it was entitled to a perpetual easement by estoppel to use the county's permits and wastewater infrastructure; and an injunction to prevent the county from interfering with its use of the permits and infreastructure. 

The trial court denied the county's motion for summary judgment and granted summary judgment to Waterscape.  The Court of Appeals reversed.  First, the court held that, as a matter of law, Waterscape had not validly terminated the contract.  Second, the court held that the trial court had committed error in granting Waterscape summary judgment that it had a perpetual easement to utilize the county's permits and wastewater disposal infrastructure and an injunction preventing the county from interfering with its use of the permits and infrastructure.  The court held that the evidence showed that Waterscape had a revocable license to operate the plant, not a perpetual easement.  The court noted that a license is "defined as authority to do a particular act or series of acts on land of another without possessing any estate or interest therein."  The court held that the contract language demonstrated that the county had only granted a license that was intended to be revoked upon termination of the agreement, failure of Waterscape to perfom its duties, or conveyance of the facility, whichever came first.  The court pointed to three provisions of the contract in making its holding.  First, the contract provided that upon termination of the agreement, Waterscape would no longer have "any further rights, obligations, or responsibilities hereunder."  Second it noted that the contract provided that if Waterscape failed to perform its contractual duties, the county would be entitled to take over the facility and Waterscape would be required to "promptly donate and deed to the County the entire project, including but not limited to all neccesary appurtenant easements and infrastructure for the facility and its associate collection and distribution systems."  Finally, the provision regarding conveyance of the facility stated tht Waterscape would donate to the county the entire facility, "including ... all necessary appurtenant easements...."

Having found that Waterscape had not validly terminated the contract, and did not have an easement to operate the plant, the court granted summary judgment on the county's claims for specific performance, holding that Waterscape must convey the facility to the county.  The court found that money damages would not be an adequate remedy for the county because the contract sought to be enforced involved the sale of unique real property.