Low v. City of Monticello

Decision Date30 August 2002
Docket NumberNo. 20010191.,20010191.
Citation2002 UT 90,54 P.3d 1153
PartiesRobert LOW, Joel Palmer, Julia Redd, and Albert Steele, Plaintiffs and Appellants, v. CITY OF MONTICELLO, K. Dale Black, Douglas Allen, Julie Bronson, Kim Burtenshaw, Clyde Christensen, Evan Lowry, and C. Trent Schaffer, Defendants and Appellees.
CourtUtah Supreme Court

R. Brent Stephens, Heather S. White, Salt Lake City, for plaintiffs.

Randy T. Austin, Alexander Dushku, Matthew K. Richards, Salt Lake City, for defendants.

RUSSON, Justice:

¶ 1 Robert Low, Joel Palmer, Julia Redd, and Albert Steele appeal from the trial court's order granting in part the motion for summary judgment filed by the City of Monticello (individually, "the city"), certain members of the city council, and certain city government officials (collectively, "Monticello City") and from the trial court's concomitant denial of Low's cross-motion for summary judgment. We affirm in part, reverse in part, and remand.

BACKGROUND

¶ 2 In an April 24, 1979, special election, voters residing in the city authorized the city to sell its electrical power distribution system (the "system"). Thereafter, the Monticello city council enacted an ordinance on November 7, 1979, that sold the system to Empire Electric Association, Inc. ("Empire"), a private entity, and granted Empire the exclusive right to maintain and operate an electric distribution franchise. In the same ordinance, however, the city retained an option to repurchase the system, which provided:

This franchise shall be granted for a 20 year term from the date it is passed by the City Council and shall be automatically renewable at the end of said term for an additional 20 year term, unless the City exercises its right to repurchase the electrical system in accordance with the terms set forth in that certain agreement between the parties dated August 8 and September 9, 1979.

Empire and the city further agreed that if the city chose to exercise the repurchase option, the system repurchase price would be the system's fair market value at the time of repurchase.

¶ 3 Eighteen years later, on September 8, 1997, the city council passed resolution 1997-6 in which it resolved "that the City of Monticello shall pursue its option to repurchase the municipal electrical system" and to undertake a feasibility study regarding the possible repurchase. Thereafter, the city began discussing the fair market value with Empire.

¶ 4 In 1998, the city and Empire agreed to jointly retain a qualified firm to appraise the system, its real and personal property, customer base, capital investments, and other features influencing the fair market value. After the appraiser issued its report, the parties agreed that the fair market value of the system was $1,315,271. ¶ 5 After determining this base value, the city conducted a feasibility analysis to estimate the yearly costs and revenues associated with the system. The purpose of the feasibility analysis was to provide information to the city so that it could determine the benefits of repurchasing the system. According to the analysis, the city concluded that it could expect annual net revenues averaging between $200,000 and $300,000 through the year 2019 or, alternatively, that the city could reduce electric rates.

¶ 6 As the process continued, the city residents raised objections to the proposed repurchase. In particular, some of the objecting residents urged the city council to submit the decision of whether to repurchase the system to a public vote. The city council refused, explaining to the objecting residents that the decision of how the city fulfills its duty to supply utility services to its residents is an administrative decision not subject to referendum. On March 22, 2000, a petition for a referendum election on the issue, which was signed by 270 of the city residents, was presented to the city council. Nevertheless, that same day the city council again refused to hold a referendum and instead voted to adopt resolution 2000-2, which formally exercised the city's option.

¶ 7 On April 6, 2000, the city council adopted resolution 2000-3, which authorized the future issuance of bonds to finance the repurchase. Resolution 2000-3 specified that the aggregate principal amount of the bonds would be "not more than $3,000,000" and the maximum interest rate would be 6.75 percent per annum for a period of not more than twenty-six years. On April 12, 2000, the city notified the public of its intention to issue revenue bonds to finance the repurchase by publishing a notice of bonds to be issued in The San Juan Record, which is designated as the city's official newspaper. Consistent with resolution 2000-3, the notice stated that the principal amount would be just under three million dollars and the maximum interest rate would be 6.75 percent.

¶ 8 Then, on April 14, 2000, the San Juan County Clerk received eleven official packets petitioning city officials for a referendum on whether the city should purchase the system pursuant to resolution 2000-2. The clerk verified the signatures and certified that 355 of the 367 signatures were those of registered voters and that 349 of the signatures were those of registered voters who lived in the city. The city recorder concluded that the city had received sufficient signatures under Utah Code section 20A-7-601 to impel a referendum. Accordingly, the city attorney prepared a ballot title for the proposed referendum. Subsequently, however, on June 29, 2000, the city recorder withdrew the vote from the public, and the city informed the residents of the withdrawal, stating, "The decision to repurchase the utility is a purely administrative decision that is not the proper subject of a referendum within the meaning of Section 1, Article VI, of the Utah Constitution" and that a successful referendum would violate the contracts clauses of the United States and Utah Constitutions. Dissatisfied, certain city residents threatened a lawsuit.

¶ 9 During the pendency of the bond issue but before the city notified the residents that the referendum petition would be denied, the city attempted to attain interim sources of funding. At one point, the city negotiated an agreement with Zion's Bank in an attempt to finance the repurchase of the system on a short-term line of credit. On May 10, 2000, the city council approved entering into such a loan agreement.

¶ 10 Ultimately, Robert Low, Joel Palmer, Julia Redd, and Albert Steele (collectively, "Low") filed a verified complaint on May 12, 2000, initiating this lawsuit. In the verified complaint, Low alleged that (1) Monticello City contravened the Utah Municipal Bond and Notice of Debt Issuance Acts and (2) Monticello City violated the Open and Public Meetings Act. To redress these alleged statutory violations, Low prayed for injunctive relief to enjoin the repurchase of the system and declaratory relief that any final action taken to consummate the repurchase or to incur debt in connection therewith was void. The instigation of legal action led to the termination of the loan negotiations with Zion's Bank, and to date the city has not issued any bonds or otherwise incurred any debt to finance the repurchase. On July 12, 2000, the city filed an amended answer that included a counterclaim seeking a declaration that the city's exercise of the option was not the proper subject of a referendum.

¶ 11 Monticello City moved for summary judgment on all claims asserted in both the verified complaint and its counterclaim. Low filed a cross-motion for partial summary judgment. On January 16, 2001, the trial court granted Monticello City's motion with respect to Low's claim alleging violation of the Utah Municipal Bond and Notice of Debt Issuance Acts and with respect to Monticello City's counterclaim on the referendum issue. Further, the trial court certified this summary judgment order as a final order pursuant to rule 54 of the Utah Rules of Civil Procedure. The trial court reserved judgment on the Open and Public Meetings Act claim at that time, but ultimately resolved the claim in a sealed memorandum decision and a subsequent order on the memorandum decision.

¶ 12 Low appealed the trial court's order granting summary judgment to Monticello City. Low first argues that the trial court erred in granting summary judgment to Monticello City on the referendum issue because the trial court incorrectly concluded that the city's decision to purchase the system was administrative instead of legislative and the trial court erred in concluding that submitting resolution 2000-2 to the voters via a referendum would violate the contracts clauses of the United States and Utah Constitutions. In response, Monticello City contends that the city did not make a new law when it exercised the option to repurchase the system, but instead availed itself of an opportunity that previous legislative acts reserved. Monticello City also argues that holding a referendum after the city had already contracted to repurchase the system would contravene the contracts clauses of the United States and Utah Constitutions.

¶ 13 Further, Low contends on appeal that the trial court erred in concluding that Monticello City did not contravene the Utah Municipal Bond Act (the "Act") and that the trial court erred in concluding that the Utah Governmental Immunity Act, Utah Code Ann. §§ 63-30-1 to -38 (1997 & Supp.2001), the ripeness doctrine, and the standing doctrine preclude Low's claim that Monticello City violated the Act. Monticello City counters that the city did not violate the Act because (1) the city was not required to publish notice under the Act, (2) the terms stated in the notice do not control the terms of the bonds ultimately issued, (3) the notice fully complies with Utah law and reflects the good faith parameters set by the city, and (4) the ripeness and standing doctrines preclude Low's claim that Monticello City violated the Act. Neither Low nor Monticello City...

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  • Carter v. Lehi City, 20110482.
    • United States
    • Supreme Court of Utah
    • January 10, 2012
    ...of the petition as untimely. Petitioners note, however, that this approach is inconsistent with our decision in Low v. City of Monticello, 2002 UT 90, 54 P.3d 1153. Low asserted, without analysis, that rule 6(e) extended the ten-day period under [269 P.3d 147] section 20A–7–507(5)(a). Id. ¶......
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