The Santa Barbara County Board of Supervisors approved on Tuesday a new 10-year contract with MarBorg Industries to operate the Tajiguas Landfill ReSource Center, a move that comes as the county faces a legal challenge from the former operator.
MSB Investors, also known as Mustang, and MSBG Partners have sued the county for terminating the contract to operate the ReSource Center. On June 13, a federal judge denied the county’s motion to dismiss the lawsuit.
MSB Investors claims that the county breached its $140 million contract when it ended the contract in November 2023. MSB was chosen to run the landfill’s material recovery facility, anaerobic digestion facility and compost management unit in 2011.
“This is not, however, a mere contract dispute; the county used its ‘power of the state’ to irrationally, vindictively and maliciously destroy Mustang, thereby violating the Equal Protection Clause of the United States Constitution,” the lawsuit claims.
MSB Investors’ lawsuit claims that the termination comes as a response to the company’s refusal to take on additional costs of running the ReSource Center. Additionally, the company alleges that the county is retaliating after the company alerted county officials that staff mismanagement was costing taxpayers money.
“This was a huge state-of-the-art facility that our clients designed and built,” Barry Cappello of Cappello & Noël LLP, one of the attorneys representing MSB, said in a statement. “When MSB realized the county was trying to take over the ReSource Center and make MSB eat the $30-plus million it had invested in the project, they were forced to file the lawsuit.”
The lawsuit also claimed that Leslie Wells, the deputy director of the county’s Resource Recovery & Waste Management, had a personal vendetta against MSB Investors and its CEO, John Dewey.
The plaintiffs allege that the county’s termination cost the company more than $60 million in damages.
Santa Barbara County officials declined to comment on the lawsuit.
However, a previous letter to the county Board of Supervisors cited mismanagement by MSB Investors as a reason for the contract termination.
In December 2023, the county Public Works Department stated that MSB Investors failed to complete the project by the agreed date and failed multiple acceptance tests.
The failed tests led to violations being issued by multiple agencies, including the Santa Barbara County Air Pollution Control District and the Central Coast Regional Water Quality Control Board, according to the county at the time.
County staff also claimed that MSB Investors did not pay about $5.9 million owed to subcontractors or the fees that came from the violations. Public Works also claimed that the outstanding fees interfered with its ability to secure permits for other projects.
The county also accused MSB Investors of not following safety standards and creating an unsafe environment for workers. One of the incidents staff linked to MSB’s conduct was a 2022 compost fire.
“MSB has shown a consistent pattern of disregarding health and safety protocols, posing an ongoing risk to the well-being of employees and visitors at the project,” according to a letter from Resource Recovery & Waste Management to MSB in 2023.
MSB Investors claimed it made multiple attempts to communicate with the county to solve those issues before the termination, but many of its messages were ignored.
“You just don’t simply take somebody’s business and toss them out on the street and not even discuss resolving the problems that you had. That’s what this case is all about,” Cappello told Noozhawk.
The Board of Supervisors approved the contract termination during a December 2023 meeting.
Since a judge has denied the county’s request to dismiss the lawsuit, the case will move forward. MSG is seeking damages, attorney’s fees and any other costs that the judge decides are appropriate.
