The Post Online - Sewage treament company Canaan Systems named defendant in another lawsuit

Aug. 2, 2010

Canaan Systems named defendant in another lawsuit

By Scott Wright

CENTRE — A privately-owned sewage treatment company doing business in Cherokee County that has already run afoul of the Alabama Department of Public Health and fought one legal battle has been named a defendant in another suit.

Canaan Systems, Inc. (CSI) first made news in early 2010, when a persistent leak at a decentralized treatment system it owns and operates near the Alabama Belle resort off County Road 22 became the focus of a front-page story in The Post.

Two months after the story appeared, the state Health Department fined CSI $1,000, citing a decentralized sewage treatment system that “has been in failure for an extended period,” according to a document issued by the Alabama Board of Health on April 15.

Last month, CSI spokesman Roger D. Rader told The Post that he suspected some of the damage at the site was caused by vandalism. Rader was contrite about the reprimand from state officials, but insisted continual wet weather prevented work crews from repairing the problems any sooner.

“Someone drove across the drip field while it was wet and we had to wait for the field to dry out before we could check for damage,” Rader said. “The Health Department was right to shut down the system until we could get it fixed.”

Another legal action, filed May 26 in Cherokee County Circuit Court by Lawrence Landing, LLC, charges that Canaan Systems proposed to construct a sewage system known as a “deep well injection system” that had never before been allowed by the Alabama Department of Environmental Management (ADEM).

Rader said Canaan Systems never entered into a contract with the Lawrence Landing developers. He said he expects CSI to be dropped from the suit after filing its answer to the charges.

“CSI was never involved contractually or otherwise with the Lawrence Landing project,” Rader said last week.

CSI, based in Birmingham and owned by Bob R. Guthrie and Rader, was also involved in a lawsuit with the property owners of the Alabama Belle site earlier this year over payment of the long-term lease at the facility.

According to Rader, the lawsuit also named the previous owners, Cherokee Environmental Systems, and although CSI was not specifically named in the lawsuit, contractually it fell in part to them to make payment.

That suit was settled out of court. Terms are confidential, but Rader subsequently told The Post that CSI hopes to shut down the site and redirect the sewage to a yet-to-be-approved system a few miles away.

“We hope the Spring Creek project will replace this site in 12-18 months,” Rader said in May. “Then we can abandon this system and pump to the new location. We are applying for the permits now.”

Last week, state Health Department Area Director Jim Hollins told The Post that CSI's legal difficulties will not have any effect on the permitting process for the Spring Creek proposal.

“Every permit will stand on its own merits,” Hollins said.

However, he added, in the years that have passed since decentralized systems were introduced in Alabama, the Health Department has learned a lot that may be considered before issuing future permits.

“It was trial-and-error for everybody early on,” Hollins said. “Past problems will definitely affect new system permits going forward.”

Other charges Lawrence Landing suit include that Guthrie and Rader, in their capacity as engineers working through a second company, Guthrie-Rader & Associates, Inc. committed “fraud, reckless fraud, and misrepresentation” by proposing a system they should have been fully aware would not be approved.

Last week, Rader said that Guthrie-Rader – also named as defendant in the lawsuit – did its homework before proposing a sewage removal process that is widely accepted nationwide.

“Alabama is the only state that does not allow deep well injection systems for water,” Rader said.

Rader said he and other engineers working for Guthrie-Rader stayed in constant touch with ADEM officials throughout the permitting process, and were shocked when the permit was denied.

“We received encouragement from everyone we spoke to,” Rader said. “And we proceeded with the belief that our permit would be approved.”

Still, in May 2009, ADEM denied the application to build the underground system on the grounds that it posed “an unacceptable risk of noncompliance” with ADEM administrative codes.

The plaintiffs also charge that a second permit – for a different type of system – was filed by Guthrie-Rader despite an earlier in-house determination that such a configuration was not viable at the site.

“The second application contained patently false information concerning the ability of the property to absorb sewage through the drip disposal process,” the suit charges.

Rader said the only limitation to making a drip disposal system work was that the developers wanted to keep as many of the subdivision's 42 lots as possible on the market.

“Every developer wants to maintain 'maximum density' in order to sell more lots, and we try to accommodate that in our planning,” Rader said.

Regarding the charge that Guthrie-Rader submitted false information, Rader was emphatic: “We do not have anything to hide.”

After ADEM denied both permits, the suit claims, Guthrie-Rader then promised to purchase additional land adjacent to the Lawrence Landing site and install an alternative system that would meet specifications.

Rader said that never happened.

“We deny that,” Rader said. “That's not something we have ever done or would ever do.”

The suit declares that because of the actions of Guthrie-Rader the Lawrence Landing project has become “economically moribund.” So far, the plaintiffs – Donald Kirby Rowland, James Marvin Givens, and Joel Casey Holcombe – have spent in excess of $600,000 to develop Lawrence Landing, the suit claims.

E. Allen Dodd, Jr., of Fort Payne-based Scruggs, Dodd & Dodd, said his clients look forward to presenting the case.

“The defendants advised my clients that they could install a viable sewage system at the site, otherwise they would never have bought that property,” Dodd told The Post. “We are confident the outcome in Cherokee County Circuit Court will be fair and just.”

Rader said in at least five other instances, Guthrie-Rader submitted plans for deep well systems and then brought each project to a successful conclusion.

“One client even received a draft ADEM permit,” Rader said. “We consequently worked with each client, and offered to work with Lawrence Landing. We successfully obtained permits for all the others.”

Rader said he is confident of a positive outcome when the case goes to trial.

“Although we make a practice not to discuss specifics of ongoing litigation,” he said, “we are confident when the facts are truthfully presented that Guthrie-Rader will be exonerated.”