Trafigura Trading, a major international fuel supplier that until recently supplied the V.I. Water and Power Authority with fuel oil, has filed for summary judgment in its multimillion dollar lawsuit against WAPA for past-due fuel bills.
Trafigura filed suit in April of this year for $26.6 million in payment for oil already delivered.
Trafigura began threatening legal action in 2015 and, at the time, WAPA’s then executive director Hugo Hodge Jr. acknowledged the debt but asked for more time to propose a payment plan, saying WAPA had “regrettably encountered difficult financial challenges, beyond its control.”
Much of WAPA’s financial difficulties stem from government agencies not paying their bills. As of July, WAPA was owed $26.6 million, WAPA officials told the V.I. Legislature.
Coincidentally, that is exactly what it owes Trafigura.
Of the government debt, the central government owed $14.5 million and the territory’s hospitals accounted for most of the rest. Financially struggling Gov. Juan F. Luis Hospital has not paid any utility bills in several years and WAPA has only received payments through special appropriations by the Legislature.
WAPA’s credit has been downgraded by all three major credit rating agencies this year, all of which cited slow payment of government debt as a major factor. (See Related Links below)
After its contract with WAPA expired, Trafigura said it would not sell to WAPA until its outstanding bill was paid. WAPA then started buying fuel from Glencore PLC instead.
In its complaint, Trafigura argued the governor could have used some of the $220 million windfall from the sale of the Hovensa refinery to pay WAPA’s bill. WAPA did receive a small amount but that was earmarked in legislation as partial payment for the government’s outstanding streetlight bills.
WAPA’s court filing in response to the suit acknowledges the debt but disputes the exact amount, saying the authority "has expressed its willingness to pay (Trafigura) … the accurate amount owed … within a period of 24 months or less but (Trafigura) has rejected the payment plan and has sought through political and regulatory means to force a more stringent payment regime."
WAPA said it was "entitled to a trial by jury and to be held liable only for the exact amount owed."
Trafigura responded Thursday with a request for summary judgment in its favor, saying the amount is easily calculated and that there is no real dispute that it is owed. It also said even when it "inevitably obtains judgment against WAPA, it is unlikely to reach WAPA’s assets for security" because V.I. law makes WAPA assets immune from attachment.
In asking for a trial and extended discovery, Trafigura contends, "WAPA apparently seeks to postpone realization of what may ultimately prove to be only a Pyrrhic victory for Trafigura."
Trafigura said WAPA has made eight payments from June 10, 2016, to Aug. 19, 2016, totaling $2,596,972.17, and that it was crediting WAPA’s account, reducing the debt to $23,002,764.88.
On Sep. 5, Trafigura filed to strike WAPA’s demand for a jury trial, saying, in part, that WAPA’s contract with Trafigura states in capital letters: "TO THE MAXIMUM EXTENT ALLOWED BY APPLICABLE LAW, EACH PARTY HEREBY WAIVES ITS RIGHT TO JURY TRIAL OF ANY DISPUTE OR ACTION ARISING OUT OF OR RELATED TO THIS CONTRACT."
It acknowledges case law saying courts are to favor jury trials and "indulge every reasonable presumption against a waiver," but argues WAPA was an equal, sophisticated partner in the contract negotiation and presumably understood what it was doing.
A court date has not been set yet and the court has not yet ruled on the motion for summary judgment or motion to strike the demand for a jury trial.