A lawsuit has been filed against the City of Shreveport related to the water rate billing error that cost the city about $1 million of ratepayer generated revenue over the past year.Sand Beach Properties LLC filed a lawsuit Friday in the 1st Judicial District Court for what the suit alleges are “intentional multiple violations” of nondisclosure agreements signed by three city employees. The principals behind Sand Beach Properties for the purposes of the litigation are Shreveport resident Scott Pernici and former Shreveport resident Michael Wainwright, according to the lawsuit.

The nondisclosure agreements had been signed before Manchac Consulting Group, a Baton Rouge-based civil and environmental engineering firm, shared “confidential information” about the origin of a water rate billing error with city employees earlier this year.

The billing error led to about 30 percent of the city’s more than 60,000 water customers being billed less than their correct rates for a span of almost 18 months.

The lawsuit seeks a judge’s order to stop the city from using the “confidential information,” which if granted may require the city to undo the billing corrections it implemented Aug. 1.

The lawsuit also asks that the city be ordered to pay the greater of two sums: 1) $10,000 per violation of the non-disclosure agreements – or, for an estimated 20,000 incorrectly billed water customers, as much as $200 million; or 2) 25 percent of the additional revenue the city will realize from fixing the bills, or perhaps $250,000 a year, perhaps forever.

City spokeswoman Africa Price said by email Monday that the mayor would not comment on pending litigation. The city has added the lawsuit as an agenda item to be discussed in executive session, closed to the public, at 5 p.m. Tuesday in the mayor’s conference room.

The lawsuit describes how Pernici, Wainwright and Manchac Consulting discovered the water billing error reportedly using friends’ and relatives’ water bills and concluded that fixing the error would mean millions of dollars in additional revenue to the city over 25 years.

According to the lawsuit, Manchac then took the findings to city officials but demanded a non-disclosure agreement before sharing details of the error. Three officials signed non-disclosure agreements: City Attorney William F. Bradford Jr., Chief Administrative Officer Brian Crawford and Water & Sewerage Director Barbara Featherston.

The lawsuit alleges that the three violated their non-disclosure agreements by sharing the information with other city employees and by acting to fix the errors before agreeing to compensate Pernici, Wainwright and the Manchac Group. It further alleges that the city again violated the agreement by sharing the information with a software vendor, Systems and Software.

Pernici and Wainwright informed city officials over the summer that they expected compensation amounting to 25 percent of additional revenues saved by the city over four years for receipt of the billing error information, a percentage that is average for several other contingency fee contracts the city currently has, the lawsuit alleges. That percentage would have amounted to an annual payout of about $250,000, if in fact the error cost the city about $1 million per year.

Tyler countered that the city would pay 10 percent of one year’s revenue, or approximately $100,000, as compensation to the group, according to the lawsuit. Pernici and Wainwright rejected that offer and demanded that the city stop using their “confidential information,” the lawsuit says.

Tyler said last week that she thought the city was being subjected to “blackmail.” She further said Pernici and Wainwright could not have determined the error without insider knowledge. She says the matter remains under investigation.

The lawsuit also alleges that William Bradford, the city attorney, told a lawyer acting for Pernici, Wainwright and Manchac that the billing mistake had been made by city employees, not by a vendor.