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WEISS SEROTA HELFMAN PASTORIZA CoLE

MITCHELL BIERMAN, P.A. NINA L. BONISKE, P.A. MITCHELL .J. BURNSTEIN, P.A. .JAMIE ALAN COLE, P.A. STEPHEN .J, HELFMAN, P,A.

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BoNISKE,

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ADRIAN J, ALVAREZ LILLIAN M. ARANGO

ATTORNEYS AT LAW
A PROFESSIONAL LIMITED LIABILITY COMPANY INCLUDING PROFESSIONAL ASSOCIATIONS BROWARD OFFICE. 200 EAST BROWARD BOULEVARD

SARA E. AULISIO SONJA C, DARBY


ROBE:RT BROOKE RAQUEL CHAD S. H. DE FLESCO P. DOLARA ELEJABARRIETA FRIEDMAN

GILBERTO PASTORIZA, P.A. MICHAELS. POPOK, P.A. JOSEPH H, SEROTA, P.A. SUSAN L. TREVARTHEN, P.A.
RICHARD JAY WEISS, P.A.

SUITE 1900 FORT LAUDERDALE, FLORIDA 33301

ERIC P. HOCKMAN HARLENE SILVERN KENNEDY*


KAREN LIEBERMAN* JOHANNA M. LUNDGREN MIA R. MARTIN

DAVID M. WOLPIN, P.A.


TELEPHONE 954-763-4242 FACSIMILE 954-764-7770 WWW.WSH-LAW.COM MIAMI-DADE. OFFICE 2525 PONCE DE LEON BOULEVARD SUITE 700 CORAL GABLES, FLORIDA 33134 TELEPHONE. 305-854-0800 FACSIMILE 305-854-2323

DANIELL, ABBOTT GARY L, BROWN ,JONATHAN M. COHEN IGNACIO G. DEL VALLE .JEFFREY 0. DECARLO ALAN L. GABRIEL DOUGLAS R. GONZALES EDWARD G. GUEDES .JOSEPH HE:RNANDEZ .JOSHUA D. KRUT MATTHEW H. MANDEL ANTHONY L. RECIO BRETT ,J. SCHNEIDER CLIFFORD A. SCHULMAN ABIGAIL WATTS"FITZGERALD LAURA K, WENDELL .JAMES E. WHITE

ALE IDA MARTfNEZ MOLINA* KATHRYN M. MEHAFFEY


ROBERT A. MEYERS* MATTHEW PEARL

JOHN J, QUICK* TIMOTHY M. RAVICH* AMY J, SANTIAGO


GAIL D. SEROTA* JONATHAN C. SHAM RES ESTRELLITA S, SIB ILA ALISON F, SMITH ANTHONY C. SOROKA EDUARDO M. SOTO .JOANNA G. THOMSON PETER 0. WALDMAN" SAMUEL I. ZESKIND

*oF COUNSEL

June 13, 2013

Louie Chapman, Jr. City Manager City of Delray Beach lOONW 1st Avenue Delray Beach, Florida 33444 RE: Legal Analysis of Requirement of Competitive Process Prior To Extension of Solid Waste Hauling Contract

Dear Mr. Chapman: You have asked this Firm to provide the City of Delray Beach (the "City") with a legal analysis concerning the City's September 2012 extension of the Solid Waste, Vegetative Waste and Recycling Collection Franchise Agreement between the City and Waste Management Inc. of Florida ("WM"), dated September 20, 2001 (the "Franchise Agreement"). This analysis addresses whether the extension of the Franchise Agreement violated the competitive procurement requirements set forth in Chapter 36 of the City's Code of Ordinances (the "Purchasing Ordinance"), and the City's potential remedies if such a violation exists. SUMMARY The City's Purchasing Ordinance governs the City's acquisition of contractual services and requires the City to use a competitive process 1 for the acquisition of contractual services "of $15,000 and up," unless a sole source or emergency exception applies. The Franchise Agreement contractually binds the City to pay WM for Collection Service charges that are far in excess of $15,000. There was no competitive procurement process used in connection with the September
The Purchasing Ordinance provides for the following types of competitive procurements for the acquisition of contractual services of $15,000 and up: solicitation of bids, solicitation of quotes, the utilization of another governmental agency's contract or a cooperative purchasing group contract.
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Mr. Louie Chapman, Jr. June 13, 2013 Page 2 of9

2012 approval of Amendment No. 5, which provided for an 8 year extension of the Franchise Agreement. There were no more remaining renewal options available under the competitively procured Franchise Agreement. The sole source and emergency exemptions did not apply. The former City Manager stated at the time that he did not believe the Franchise Agreement extension needed to comply with the City's competitive procurement requirement because the payment relationship of the parties presents a "pass through." However, the City's Purchasing Ordinance does not exempt "pass through" expenditures from the City's competitive procurement requirements. The view that Amendment No. 5 is a "pass through" rather than an expenditure of City funds, and therefore does not require competition, conflicts with the language of the Franchise Agreement, the Purchasing Ordinance, and Florida law on the proper interpretation of city ordinances and competitive bidding laws. The Florida Supreme Court has held that competitive bidding laws should be construed in a manner that avoids their circumvention and in a manner most favorable to the public. Moreover, even if there was an exemption for "pass through" expenditures, in this case the City is required to pay WM regardless of whether the City collects from its residents, and thus it is not a "pass through." Accordingly, it is our opinion that the City's Purchasing Ordinance required Amendment No. 5 to be competitively procured in a manner authorized by the Purchasing Ordinance. The Florida Supreme Court has long held that contracts entered into by local govermnents in violation of competitive bidding laws are void and no rights can be acquired under them by the contracting party. If the validity of Amendment No.5 comes before the court for a determination, there is a significant chance, based on existing case law, that the court will declare Amendment No. 5 void.
History and Background lnformation 2

In 2001, the City issued Bid No. 2001-021 for Solid Waste, Vegetative Waste and Recycling Collection Services. BPI Waste Systems of North America, Inc. ("BPI") was awarded a 5 year contract to provide solid waste, vegetative waste and recycling collection services ("Collection Services") to the City. The Franchise Agreement provided that it was "renewable for a five year term upon approval of both parties." In 2003, the City and WM entered into Amendment No. 1, dated September 29, 2003, which provided for the City's consent to WM's purchase of certain assets of BPI, including the
We have reviewed the following materials in connection with this analysis: (1) the Franchise Agreement; (2) Amendment Nos. I, 2, 3, 4 and 5 to the Franchise Agreement; (3) Chapter 36 of the Code of Ordinances of the City of Delray Beach (the "Purchasing Ordinance"); (4) the City's Purchasing Manual, dated December 20, 1991 (the "Purchasing Manual"); (5) the January 3, 2012 Commission Meeting Minutes concerning the Waste Management Proposal Presentation [Agenda Item 7.C]; (5) the September 20, 2012 City Commission Meeting Minutes concerning the City Commission's approval of Amendment No.5; (6) City Attorney R. Brian Shutt's legal opinion, dated May 16, 2013; and (7) Contract Oversight Notification 2012-N-002, issued by the Palm Beach County of Inspector General. The undersigned did not review the bid documents from the 200 I Bid (Bid No. 200 1-021) that resulted in the Franchise Agreement. The City could not locate such records. The State record retention schedule (GS 1-SL) provides that bid records for non-capital projects are only required to be maintained for five years after
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Mr. Louie Chapman, Jr. June 13, 2013 Page 3 of9 assignment of the Franchise Agreement to WM. Amendment No. 1 also amended the Term of the Franchise Agreement to "begin on October 1, 2003 and expire on September 30, 2008" and provide for one five year renewal option upon approval of both parties. Thus, Amendment No. 1 provided WM with a five year contract with one five year renewal option. The parties then entered into Amendment No. 2, which amended the frequency of certain collection services and provided for the collection of waste from public transportation shelter receptacles. In 2008, the City and WM executed Amendment No. 3 to the Franchise Agreement, which extended the Term of the Franchise Agreement for five years through September 30, 2013, thereby exercising the one renewal option provided for in Amendment No. 1. Thereafter, the parties executed Amendment No.4, which clarified some of the terms and conditions in the Franchise Agreement and addressed certain administrative functions. At the City's January 3, 2012, Commission Meeting, WM made a presentation that included a proposal to extend the Franchise Agreement for five years with mutually agreed upon five year renewal options thereafter. The City Commission discussed WM' s proposal and directed staff to work with WM on modifications to their proposal. After City staff met with WM to negotiate proposal modifications, City staff sent a Memorandum to the City Connnission that outlined a revised proposal ("Amendment No. 5") to extend the Franchise Agreement for an additional eight years through September 20, 2021, with an unspecified number of five year renewal options thereafter, exercisable upon approval of both parties. Amendment No. 5 was then placed on a City Commission agenda. On February 21, 2012, the Palm Beach County Office of Inspector General (the "OIG") submitted a Draft Contract Oversight Notification to the City Manager recommending that the City procure a solid waste franchise agreement through full and open competition "since it has not been competitively bid for over 10 years." The former City Manager provided a response to the OIG, dated February 27, 2012, which provided in part: In the case of the solid waste collection franchise agreement, the money collected by the City for garbage service is passed through to the City garbage hauler .... Therefore, as the funds that were paid to WM, in accordance with the franchise agreement were a pass-through from the residents of the City, the City was not expending funds that would trigger the requirements of Section 36.02. Following the City Manager's response, the OIG issued Contract Oversight Notification 2012-N-002, dated March 1, 2012 (the "OIG Contract Oversight Notification"). The OIG Contract Oversight Notification states that the "the distinction the City is maldng to exempt this procurement from the competitive requirements of the Procurement Ordinance does not appear to have a sound basis." The OIG renewed its recommendation to open the contract up to competition and maintained that the Purchasing Ordinance and Policy Manual required the solid waste collection services to be competitively procured. Thereafter, at the City's September 20, 2012 Commission Meeting, the City Commission approved Amendment No. 5 by a 3-2 vote. The City and WM then executed Amendment No.5, dated September 27, 2012, which extended the Term for eight (8) years with an expiration date of September 30, 2021 and provided for 5 year renewal options available upon approval by the parties.

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Mr. Louie Chapman, Jr. June 13,2013 Page 4 of9

ANALYSIS I. The extension of the Franchise Agreement violated the Purchasing Ordinance.

The City's acquisition of goods and services is governed by state law, the Purchasing Ordinance and the administrative procedures set forth in the City's Purchasing Manual. There is no specific state law that requires the City to competitively procure a Collection Services Contract3 . Therefore, the provisions in the City's Purchasing Ordinance control the City's procurement of such collection services. Section 36.02 of the Purchasing Ordinance states: Whenever the City shall seek to acquire personal property, supplies, or contractual services, the following procedures shall be implemented: (D) [Acquisitions of $15,000.00 and up.] For acquisitions of fifteen thousand dollars ($15,000.00) and up, purchases shall be made by the Purchasing Supervisor after the Commission has reviewed and awarded the bid/quote. Bids/quotes shall be secured in the manner prescribed in subsection (E) of this Section. (E) Conditions for Securing Formal Bids/Quotes. The Purchasing Supervisor shall either: (1) Solicit competitive bids/quotes in a formal written manner from at least three (3) different sources of supply when available; or (2) Utilize a purchasing contract established by a local, state or federal governmental agency or cooperative purchasing group. (Emphasis supplied) Section 10.05 of the City Code defines "shall" to mean that the act referred to is mandatory. Thus, the use of the word "shall" in the first sentence of City Code Section 36.02 above should be interpreted as imposing a mandatory obligation to implement a competitive procurement "whenever the City shall seek to acquire ... contractual services ... of $15,000 and up." There was no competitive process used in connection with the 8 year term extension and renewals of the Collection Services provided for in Amendment No. 5. Although there was a competitive process for the Collection Services back in 2001 for the original Franchise Agreement, there were no remaining renewals under the terms of the Franchise Agreement for the parties to exercise. Amendment No. 5 is clearly not another governmental agencies' or cooperative purchasing group's contract so the piggyback process of Section 36.02(E)(2) was not utilized. Therefore, the City did not utilize a competitive process for procuring the services provided for in Amendment No. 5. Section 36.01 of the City Code requires that the "details of all City purchasing shall be performed in accordance with the latest current revision of a standard practice instruction as issued by the City Manager." Section V of the Purchasing Manual provides in pertinent part:
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However, the Florida Legislature has expressed clear intent that public procurement be fair and open to competition. See Section 287.001, Fla. Stat.

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Mr. Louie Chapman, Jr. June 13, 2013 Page 5 of9 With the exceptions of emergency and sole source purchases, purchase orders should not be issued without sufficient competition being solicited from vendors. The reasons for this requirement are threefold: 1. It assures the City of the best of several competitive prices and products. 2. It promotes competition for the City's business and increases the City's sources of supply. 3. It negates criticism of preferential treatment for favored vendors. Consistent with City Code Section 36.02 and 36.08 (Emergency Purchases), the City's Purchasing Manual re~uires a competitive process for City purchases, except for emergency and sole source purchases. There are multiple industry participants that provide collection services similar to those provided by WM under the Franchise Agreement. Thus, the purchase does not qualify for a sole source exception under the City Code. Moreover, none of the agenda documents or public meeting minutes indicates that the City viewed Amendment No 5 as a sole source purchase. Likewise, there is no information in the public record that suggests the City viewed the 8 year contract extension as an emergency purchase, or that the City complied with the requirements to effectuate an emergency purchase. Therefore, the Purchasing Ordinance exceptions did not apply to Amendment No. 5. In his response to the OIG's Contract Recommendation, the former City Manager stated that because the "funds that were paid to WM ... were a pass-through from the residents of the City, the City was not expending funds that would trigger the requirements of Section 36.02" The suggestion is that the City does not expend City funds because the City does not pay Waste Management monies other than what was billed to the customer by the City. There is no language in the Purchasing Ordinance or Purchasing Manual addressing this "pass through" concept. There is some legal support for the concept that where there is no expenditure of city funds, competitive bidding requirements do not apply, but the scope of that authority is limited to the lease of city owned property where no city funds are expended for improvements on the property 5 . There is no judicial decision or Attorney General Opinions that support expanding the scope of this exception to the acquisition of services. Further, under the Franchise Agreement, the City, rather than the residents, is obligated to pay the Collection Service charges to WM. The City's contractual obligation is not contingent upon the City billing and collecting service fees from its residents. The City bears the financial risk if a residential customer fails to pay the garbage collection fee charged by the City. Thus, the Franchise Agreement, as amended, requires the City to expend City funds. Further, Florida law on the proper interpretation of city ordinances and competitive procurement laws does not support this interpretation.

Note: Some municipalities have adopted a best interest exception to their procurement ordinances, which permits a goveming body to waive competitive bidding requirements (except when required by state law) upon a supermajority or unanimous vote, and a specific finding that the competition waiver is in the best interest of the city. The City does not have a best interest exception. 5 See Mahoney v. Givens 64 So. 2d 926 (Fla. 1953).

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Mr. Louie Chapman, Jr. June 13,2013 Page 6 of9 The Florida Supreme Court in City of Miami v. Kayfeti outlined the standard of review for city ordinances, stating as follows: In construing the validity of the ordinance in question we must: (1) assume that a valid ordinance was intended ... (2) construe the ordinance to be legal, if possible to do so, and strive to so construe it as to give reasonable effect to its provisions. (Emphasis supplied). The Florida Supreme Court has also held that competitive bidding laws are enacted for the protection of the public7, and should be construed in a manner to avoid their circumvention. 8 Statutes enacted for the public's benefit should be interpreted in a manner most favorable to the public. 9 The term extension set forth in Amendment No. 5 is a multimillion dollar commitment over a minimum 8 year term. If the validity of Amendment No.5 is upheld, Amendment No.5 may be the City's single largest dollar value contract for services. If the former City Manager's interpretation is accepted, then the City could presumably circumvent the competitive procurement requirement for every purchase the City makes, unless the purchase is prohibited by state law. After all, nearly all of the City's revenues come from taxes or user fees collected from City residents, which are then used by the City to provide various services to its residents. Further, the unspecified number of 5 year renewal terms provided for in Amendment No. 5 would permit the parties to repeatedly renew the Agreement every five years, without ever having to go through another competitive process for Collection Services. Accordingly, it is our opinion, based on a reasonable interpretation of Purchasing Ordinance Section 36.02 construed in a manner most favorable to the public and giving reasonable effect to its provisions, that the City's Purchasing Ordinance required the Collection Services to be competitively procured and that Amendment No. 5 violated the City's Purchasing Ordinance. 10

See City of Miami v. Kayfetz, 92 So.2d 798 (Fla.l957) See Hotel China & Glassware Co. v. Board of Public Instruction ofAlachua County, 130 So.2d 78 (Fla. 1st DCA 1961), cited in Marriott Corporation v. Metropolitan Dade County, 383 So.2d 662 (Fla. 3d DCA 1980), 8 See Wester v. Belote I 03 Fla. 976, 138 So. 721 (Fia.l931 ); Miami Marinas Association, Inc. v. The City of Miami 408 So. 2d 615 (Fla. 3d DCA 1981). 9 See Board ofPublic Instruction ofBroward County v. Doran, 224 So.2d 693 (Fla.1969). 10 Recognizing that the "pass through" interpretation could be challenged, the City Attorney protected the City by negotiating an indemnification clause in Amendment No. 5 that requires WM to indemnify, defend and hold hannless the City regarding any "claim, lawsuit or other cause of action that may be filed against the City as a result of the City extending the term of the Franchise Agreement", with a cap of one million dollars. The indemnification clause also recognizes that a court may detennine that the extension of the Franchise Agreement violates a statute or law, by providing that WM shall voluntarily amend any portion of the Franchise Agreement, as necessary to comply with the Court order.
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Mr. Louie Chapman, Jr. June 13,2013 Page 7 of9


II. City Contracts Entered Into In Violation Of Competitive Procurement Laws are Void.

The Florida Supreme Court has long held that contracts entered into by local governments in violation of competitive procurement laws are void, and no rights can be acquired under them by the contracting party.ll The Florida Supreme Court has also held that a governmental contract made in violation of a charter requirement that the contract be awarded to the lowest responsible bidder is void. 12 Florida's Fourth District Court of Appeals, which has jurisdiction over Palm Beach County, has consistently held that a contract must comply with City ordinances in order for it to be valid. 13 Where competitive bidding statutes exist, public officers charged with the responsibility of letting contracts ... are without power to reserve ... the right to make exceptions, releases, and modifications in the contract after it is let, which will afford opportunity for favoritism, whether any favoritism is actually intended . d or not. 14 or practtce In order to be valid, Amendment No. 5 needed to comply with the competitive procurement requirements in the City's Purchasing Ordinance. Amendment No. 5 violated Section 36.02 of the City's Purchasing Ordinance. Therefore, the City's public officials and staff did not have the power to enter into Amendment No. 5. Proponents of the validity and enforceability of Amendment No. 5 may argue that the City is estopped (prevented) from using the failure to comply with the City's competitive bidding requirements to deny the enforceability of a contract. For example, WM may claim the City is estopped because it relied on the City's actions in entering into Amendment No. 5, and partial performance has already occurred. However, the Florida Supreme Court has long held that "persons contracting with a municipality must at their peril inquire into the power of a municipality, and of its officers, to make the contract contemplated." 15 The Florida Supreme Court has also held that, "estoppel cannot be applied against a governmental entity to accomplish an illegal result. 16 In Ramsey v. City ofKissimmee, an engineer purported to enter into a contract with the city to perform engineering services. The contract was not entered into in the manner prescribed by the city's charter and ordinances, and therefore the Court determined that the contract was unenforceable. Though the engineer presented several arguments in favor of
See Wester at 724; See also Harris v. School Bd. of Duval County, 921 So. 2d 725 (Fla. I" DCA 2006); Mayes Printing Co. v. Flowers, !54 So. 2d 859 (Fla.!" DCA 1963); Armco Drainage & Metal Products, Inc. v. Pinellas County, 137 So. 2d 234 (Fla. 2"' DCA 1962). 12 See Robert G. Lassiter & Co. v. Taylor 128 So. 14 (1930) 13 See Hollywoodv. Witt 789 So. 2d 1130 (Fla. 4'DCA 2001); Palm Beach County Health Care Dist. v. Everglades Mem'l Hasp., Inc., 658 So.2d 577 (Fla. 4th DCA 1995) (agreements entered into by public bodies which fail to comply with statutory requirements are void); Town of Indian River Shores v. Coli, 378 So.2d 53 (Fla. 4th DCA 1979)(refusing to enforce an alleged employment contract offered by the mayor of a municipality, where an ordinance required that contracts had to be authorized by the entire town council). 14 See Wester at 724. 15 See Ramsey v. City of Kissimmee, 139 Fla. 107 (Fla. 1939). 16 See Branca v, City ofMiramar 634 So. 2d 604 (Fla. 1994)
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Mr. Louie Chapman, Jr. June 13, 2013 Page 8 of9 enforcing the contract, including that the city had ratified the contract by making a partial payment, the Court concluded that the engineer could not recover under the contract. In Accela, Inc. v. Sarasota Count/ 7, software vendors filed suit challenging the county's award of a software contract to a competitor without seeking competitive bids. After the County entered into the contract, the plaintiffs filed suit seeking a declaratory judgment that the agreements were void and an injunction to prevent the county and the competitor from performing the agreements. On appeal, the Second DCA ruled that the county "acted arbitrarily when it violated the terms of the piggyback provision of its code in entering into the three agreements. The agreements must therefore be void and of no effectY The Second DCA granted declaratory and injunctive relief to the plaintiffs notwithstanding the fact that the county executed a contract with the plaintiffs competitor. The Alabama Supreme Court has ruled specifically on local government solid waste service contract cases under facts very similar to the City's circumstances. Although Alabama law is not controlling in Florida, the similarity of the circumstances presented in those cases may render the Alabama Supreme Court's reasoning and rulings persuasive. For example, in Maintenance, Inc. v. Houston County 19 , a local government solicited a contract for the collection and disposal of solid wastes. Maintenance Inc. ("Maintenance") was the low bidder and Maintenance and Houston County entered into a contract for the disposal of solid waste. The contract expired four years from the date of award, with the County's option to cancel the contract at the end of any 12-month period with 90 days' notice. Prior to the expiration of the 4 year contract, Maintenance duly notified the County of its desire to renegotiate an extension of the contract, and both parties subsequently entered into negotiations. Thereafter, the parties executed a second contract for garbage collection services. Unlike the 4 year contract between the parties, the second contract was not procured on a competitive bid basis and the original contract did not contain a renegotiation clause. Maintenance received payment for its performance under the second contract until the County terminated the contract without any allegations of inadequate performance on the part of Maintenance. At the time of cancellation, Maintenance was ready, willing, and able to perform its remaining services under the contract. Maintenance sued the County, alleging breach of contract. In defense, the County asserted that the contract was void because it did not comply with the competitive bid law, and Maintenance made an estoppel argument. The Alabama Supreme Court found the Contract void for violating the applicable competitive bidding law, and held that where the contract between the solid waste disposal corporation and county was void for noncompliance with the bid law, the principal of estoppel could not be utilized to create the contract anew? 0

See Accela, Inc. v. Sarasota County, 993 So. 2d !035(Fla. 2nd DCA 2008) !d. at I 044 19 See Maintenance, Inc. v. Houston County, 438 So.2d 741 (Ala.l983) 20 Similarly, in Ex Parte Ballew, Ballew Sanitation filed an action to recover damages against the Town of Princeville for a breach of contract. The sole issue before the Alabama Supreme Court was whether Princeville could be equitably stopped from using the competitive bid law as a defense to the enforcement of a contract that was not submitted for competitive bids. The Alabama Supreme Comt held that doctrine of estoppel did not preclude the City's defense of noncompliance with the competitive bid law in an action for breach of contract, and that the
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Mr. Louie Chapman, Jr. June 13, 2013 Page 9 of9

In this case, WM does not have a viable claim for estoppel because such an estoppel claim would require the court to affirm the validity of an act that violated the Purchasing Ordinance. Further, the law impresses upon WM the knowledge of the extent of the powers of the City's officials. WM was responsible to determine the authority of a municipality, and of its officers, to enter into the contemplated contract. Moreover, at the time the City and WM executed Amendment No. 5, WM was well aware of the OIG Contract Oversight Notification, which stated that "the City's own Purchasing Ordinance and Policy Manual requires this service to be competitively procured." The indemnification provision that the City and WM negotiated also recognized that a court might determine that the extension of the Franchise Agreement violated a statue or law. Thus, WM was on notice that the City did not have the power to enter into Amendment No. 5. Amendment No. 5 is void for failure to comply with the City's procurement requirements. Applicable Florida case law and persuasive out-of state case law strongly suggest that there is a significant chance that a court would declare Amendment No. 5 void. POTENTIAL REMEDIES The City has two primary options for addressing the Purchasing Ordinance violation: (1) file a declaratory judgment action to ask a court to determine whether Amendment No. 5 is void, or (2) send a notice to WM stating that Amendment No. 5 is void (likely resulting in a lawsuit by WM). If the City files a declaratory judgment action, WM could be permitted to continue performance of Collection Services while the City seeks a judicial determination as to the validity of Amendment No. 5. This option minimizes the risk of damages that could be sought against the City. In the alternative, the City can send a letter to WM declaring Amendment No. 5 to be void. Most likely, WM would then file a lawsuit seeking damages resulting from the termination. The City would defend by asserting that Amendment No. 5 is void. 21 Please let me know if you have any additional questions or concerns.

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estoppel argument could be made only against city officials who merely failed to follow formalities of contract execution. 21 Under paragraph 5 of Amendment No. 2 to the Franchise Agreement, the terms of which were incorporated into Amendment No. 5, WM is required to notify the City within 30 days of an action WM believes gives rise to a claim or lawsuit it may file based upon a breach or default by the City. WM shall then have 90 days to file a legal action in court against the City or it shall forever be barred fiom doing so. However, note that the Franchise Agreement21 provides that "WM shall not attempt to sue and shall not sue, for any claim or cause of action if the City Solid Waste Collection franchise agreement is not renewed or otherwise extended." This language may provide the City with an additional defense to such a lawsuit from WM.

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