Lewes settles Peter lawsuit for $100K

The City of Lewes will pay a New Road property owner $100,000 as part of a negotiated settlement to dismiss a lawsuit.

The city filed a lawsuit against Jerry Peter Jr. in Delaware Court of Chancery in May 2020, seeking to stop Peter from obtaining sewer service from the Lewes Board of Public Works unless he signed a pre-annexation agreement.

The suit was dismissed Oct. 5, a year-and-a-half later, after the two sides negotiated a payment to Peter.

Peter had been in the middle of a long-standing feud between the BPW and the City of Lewes; his initial request for a waiver from the pre-annexation agreement in May 2019 was the impetus for the entire kerfuffle.

The BPW considered and tabled Peter’s waiver request at its May 2019 meeting, mayor and city council passed a resolution the next month requiring the BPW to obtain a pre-annexation agreement prior to providing utility services to a property outside the city limits.

After disagreeing over the city’s authority to mandate such action, the BPW sued the city in Superior Court in July 2019.

Initially agreeing to table Peter’s waiver request until after the court ruled on the issues of authority and whether a pre-annexation agreement is legal and enforceable, the BPW defied the city’s resolution and granted Peter’s waiver request in September 2019.

Peter’s 1.87-acre property fronts New Road. Although it is surrounded on three sides by Lewes boundaries and cannot be accessed without driving through the city, it remains in Sussex County jurisdiction.

Superior Court Judge E. Scott Bradley dismissed the BPW’s lawsuit against the city in January 2020, saying the BPW did not have the legal right to sue or be sued. He did not render an opinion on the legality and enforceability of a pre-annexation agreement, leaving Peter’s situation still unresolved.

In May 2020, the city filed the lawsuit against Peter, seeking an injunction to stop him from obtaining sewer service from the BPW unless he signed a pre-annexation agreement. After the lawsuit was filed, Peter also agreed to hook into the BPW’s water system.

In February 2021, with the lawsuit still unresolved and connection to Peter’s property imminent, Lewes City Solicitor Glenn Mandalas filed a motion for a temporary restraining order to stop Peter from hooking up. Court of Chancery Vice Chancellor Sam Glasscock denied the motion March 3, and Peter connected to the system a few days later.

The city and BPW resolved their feud in June 2021. In a memorandum of understanding, the BPW agreed to get permission from the city before extending utilities beyond the city’s borders. In return, the BPW receives the power to sue and be sued, with the caveat that it cannot sue or be sued by the city for at least five years.

Peter’s attorney Tim Willard said the city was forced to settle its lawsuit with Peter because there was no path forward.

“Simply put, we argued the city overstepped its bounds and did not have that authority to require annexations attached to BPW services,” Willard said. “BPW agreed and proceeded to connect those services. Then the court ordered an amicus [neutral third-party] attorney to weigh in for the public. That lawyer’s brief concluded that the city’s suit was misplaced in Chancery Court because the city was not seeking equitable relief but a general request for declaratory judgement to interpret the city code, which must be heard in Superior Court. The amicus brief also directly questioned the city’s legal authority to enforce such a code section.”

Mayor Ted Becker issued the following statement regarding the end of the city’s lawsuit against Peter.

“The city code provides that owners of property outside the city limits must agree to annex their property into the city if they wish to be served by city utilities. Mr. Peter disputed the legitimacy of such code provision. Consequently, the litigation with Mr. Peter was necessary to ensure the city could exercise discretion over the extension of the city’s utilities to areas outside of the city, and in so doing, help direct growth in areas conducive to a more livable Lewes. However, partly as a result of the litigation, the city and its Board of Public Works entered into a memorandum of understanding earlier this year which led to the General Assembly’s adoption of an amendment to the city’s charter providing the city with direct oversight of the expansion of the city’s utilities. Having secured the charter amendment, it was no longer necessary to prove the validity and enforceability of the code provision at issue in the Peter litigation. With that outcome obtained for the benefit of the city’s residents, it was in the best interest of all the parties to settle the litigation and focus on other important initiatives that will continue to enhance Lewes.”

Not including the $100,000 to Peter, the city spent $101,500 in legal fees related to the Peter lawsuit. Becker said Peter had originally requested several hundred thousand dollars in compensation.

Peter did not agree to annexation as part of the dismissal agreement, and he says he will not consider it in the future. He now receives water, sewer and electricity from BPW, with a well to supply geothermal and irrigation water.

Peter says the entire issue was caused by a lack of communication when he bought the property. He says disclosures simply stated utilities from the Lewes BPW were available, but not that they came with strings that included annexation into the city. Peter says that if he had known annexation was a requirement, he would not have purchased the property.

He maintains that the city has no authority to force a property owner to annex into the city in exchange for utilities.

“The city doesn’t understand that it’s an entity of the state,” Peter said. “It thinks it’s autonomous, and it’s not.”

He said he talked to the Department of Justice, Department of Natural Resources and Environmental Control, and Delaware Public Service Commission about his situation, and each agreed that chartered entities such as Lewes need to comply with state regulations.

“From the very beginning, Tim [Willard] and I said this is a matter that can only be resolved at the General Assembly because it’s a charter issue,” he said.

He says the state needs an ombudsman to look at issues like his instead of letting them drag out in the courts, costing people a lot of money.

“I’ve done what was right. I followed all the laws to a T, and the settlement is a fraction of what it cost me,” he said. “No good has come out of this.”

He says the Lewes government needs to be held more accountable by its citizens. He believes the last two city council election results show residents are in favor of accountability and openness.

“My background teaches me to read the laws, read the regulations, see what the common practice is and then ask why aren’t you following the laws?” Peter said. “You can’t pick and choose what laws you enforce and which laws you ignore.”