Le-Ax Water District v. City of Athens, Ohio

• Decision Date: 28 November 2001
• Docket Number: No. 00CV1328.,00CV1328.
• Citation: Le-Ax Water District v. City of Athens, Ohio, 174 F.Supp.2d 696 (S.D. Ohio 2001)
• Parties: LE-AX WATER DISTRICT, Plaintiff, v. CITY OF ATHENS, OHIO, Defendant.
• Court: U.S. District Court — Southern District of Ohio

174 F.Supp.2d 696

LE-AX WATER DISTRICT, Plaintiff, v. CITY OF ATHENS, OHIO, Defendant.

No. 00CV1328.

United States District Court, S.D. Ohio, Eastern Division.

November 28, 2001.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Orla Ellis Collier, III, Benesch Friedlander Coplan & Aronoff, Columbus, OH, for plaintiff.

Mark L. Belleville, Calfee Halter & Griswold, Columbus, OH, for defendant.

OPINION AND ORDER

MARBLEY, District Judge.

I. INTRODUCTION

This matter is before the Court on the Plaintiff's Motion for Summary Judgment. The Defendant, the City of Athens, Ohio, filed a Cross Motion for Summary Judgment, and each party filed a Reply. Jurisdiction lies under 7 U.S.C. § 1926(b) of the Consolidated Farm and Rural Development Act of 1961.

For the following reasons, the Court GRANTS the Plaintiff's Motion for Summary Judgment.

II. FACTS AND PROCEDURAL HISTORY

The Plaintiff, Le-Ax Water District ("Le-Ax"), is a regional water district, as defined by Ohio Revised Code § 6119. Le-Ax owns and operates a water treatment and distribution system that operates in Athens, Hocking, Vinton, and Meigs Counties, Ohio. Before its creation, Le-Ax was organized as a rural water district. In 1980, Le-Ax was created pursuant to Ohio Rev.Code § 6119 after filing a Petition with the Athens County Court of Common Pleas. As a regional water district, the Plaintiff is an independent political subdivision of the State of Ohio, with all the rights, duties, and privileges that are provided by Ohio Rev.Code § 6119.

The Petition that brought about the creation of Le-Ax described its territory, and the Order granting Le-Ax's Petition specified that the Water District was to cover the area described in the Petition. The Plaintiff's water distribution system includes a main transmission along State Route 682, which borders the City of Athens on the northwest side. The main transmission, which is connected to numerous distribution lines, has made water service available along State Route 682 since the Plaintiff's creation in 1980, and prior to 1980 through its predecessor.

Because Le-Ax was organized as a rural water district, it was able to assume the indebtedness of its predecessor to the Department of Agriculture. As a result, Le-Ax has been indebted to the Department of Agriculture since its inception. Before it was to retire its previous debt, Le-Ax incurred its current indebtedness. Specifically, the current indebtedness arose from the Plaintiff's sale and assignment of water revenue bonds to the Rural Economic and Community Development Service ("RECDS"), formerly the Farmers Home Administration ("FmHA"), pursuant to a Trust Agreement dated February 26, 1997. The bonds were issued in the principal amount of $6,844,000, at 4.5% interest. The amortization period commenced on February 1, 1998, and will terminate on February 1, 2037. To secure the debt, Le-Ax pledged all of its water service revenues, present and future. According to the Defendant, the City of Athens, Ohio ("City of Athens"), Le-Ax is currently attempting to acquire additional funds that would keep it indebted beyond 2037. In addition to the bonds that created the indebtedness, Le-Ax has been issued grants totaling $4,206,000.

University Estates, Inc. ("UE"), owns and desires to develop approximately 825 acres of property, located just north of, and contiguous with, the City of Athens. The proposed development would be commercial and residential, and would include a golf course and approximately 800 houses. According to the Defendant, UE would like to have the water service for the Proposed Development provided by the City of Athens' system, and the City of Athens wishes to provide that service. On October 16, 2000, the City of Athens, by an ordinance adopted by its City Council, authorized a development agreement with UE, under which the City would annex the area where the proposed development was to be located, and would provide water services to the area. According to the Plaintiff, the proposed development is to be located in an area that lies along State Route 682, where Le-Ax currently has water service lines and nearby water storage facilities.

The Plaintiff asserts that it has sufficient capacity to serve the proposed development area. Le-Ax has an eight-inch main along State Route 682, which is immediately adjacent to the University Estates site. Le-Ax also has a two-inch water service line that connects the main and currently serves nearby customers. Furthermore, Le-Ax has ancillary facilities that currently exist to serve the immediate area, including one water storage tank with a capacity of 650,000 gallons and another with a capacity of 370,000 gallons. The Plaintiff's water treatment plant has a capacity to produce 2.8 million gallons per day (MGD) of treated water. Le-Ax has an immediate surplus capacity in the eight-inch main transmission line to provide between 430,000 and 561,000 gallons of water per day, well more than the 220,000 gallons per day (.22 MGD) that is expected will be needed to meet the development's full demand upon completion of the University Estates project.¹

Le-Ax does not currently serve the specific site of the UE project. Currently, no water provider serves that site because it remains undeveloped. The proposed development site also lies outside of the area described in the Petition that gave rise to Le-Ax's creation. Specifically, according to a surveyor hired by the Defendant, the proposed development is about 1400 feet from the nearest point that is within the water district's boundaries. Additionally, the proposed development area was not part of Le-Ax's service area when it applied for loans from the Department of Agriculture. Le-Ax has not taken any formal action to change its boundaries to include the Proposed Development area.

On November 11, 2000, the Plaintiff filed a Complaint with this Court, alleging that the proposed water supply by the Defendant City of Athens to the UE development will curtail or limit the supply of water by the Plaintiff to that area in violation of 7 U.S.C. § 1926(b). It claims that, because the expected demand of the UE development is .22 MGD, with a revenue of $350,000 annually, Le-Ax will lose that amount due to the alleged violation. In its Complaint, the Plaintiff seeks declaratory and injunctive relief. The parties have filed cross-motions for summary judgment.

III. STANDARD OF REVIEW

In evaluating cross-motions for summary judgment, courts should "`evaluate each motion on its own merits and view all facts and inferences in the light more favorable to the nonmoving party.'" Bakery & Confectionary Union & Indus. Int'l Health Benefits & Pension Funds v. New Bakery Co. of Ohio, 133 F.3d 955, 958 (6th Cir.1998) (quoting Wiley v. United States, 20 F.3d 222, 224 (6th Cir.1994)). Significantly, a case is not necessarily appropriate for resolution at summary judgment simply because both parties have moved for summary judgment. B.F. Goodrich Co. v. U.S. Filter Corp., 245 F.3d 587, 593 (6th Cir.2001). "The filing of cross-motions for summary judgment does not necessarily mean that the parties consent to resolution of the case on the existing record or that the district court is free to treat the case as if it was submitted for final resolution on a stipulated record." Taft Broad. Co. v. United States, 929 F.2d 240, 248 (6th Cir.1991) (citing John v. State of La. (Bd. of Trustees for State Colleges & Univs.), 757 F.2d 698, 705 (5th Cir.1985)).

The standard of review for cross-motions for summary judgment does not differ from the standard applied when a motion is filed only by one party to the litigation. Taft Broad., 929 F.2d at 248. Summary judgment is therefore appropriate "[i]f the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c). The movant has the burden of establishing that there are no genuine issues of material fact, which may be accomplished by demonstrating that the nonmoving party lacks evidence to support an essential element of its case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Barnhart v. Pickrel, Schaeffer & Ebeling Co., 12 F.3d 1382, 1388-89 (6th Cir.1993). In response, the nonmoving party must present "significant probative evidence" to show that "there is [more than] some metaphysical doubt as to the material facts." Moore v. Philip Morris Cos., 8 F.3d 335, 339-40 (6th Cir. 1993). "[S]ummary judgment will not lie if the dispute is about a material fact that is `genuine,' that is, if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (concluding that summary judgment is appropriate when the evidence could not lead the trier of fact to find for the non-moving party).

IV. ANALYSIS

A. Availability of Services Under § 1926(b)

Pursuant to the Consolidated Farm and Rural Development Act of 1961, 7 U.S.C. § 1926(a), the Secretary of Agriculture is authorized to make or insure loans or grants to rural water associations for the development, use, and control of water to rural areas. See 7 U.S.C. § 1926(a). Section 1926(b) provides, in relevant part:

The service provided or made available through any such association shall not be curtailed or limited by inclusion of the area served by such association within the boundaries of any municipal corporation or other public body, or by the granting of any private franchise for similar service within such area during the term of such loan....

7 U.S.C. § 1926(b) (emphasis added). The protection granted to rural water associations by...