City of Casa Grande v. Arizona Water Co.

• Decision Date: 13 March 2001
• Docket Number: No. 2 CA-CV 00-0028, No. 2 CA-CV 00-0128.
• Citation: 199 Ariz. 547,20 P.3d 590
• Parties: CITY OF CASA GRANDE, a municipal corporation of the State of Arizona, Plaintiff/Appellant/Appellee, v. ARIZONA WATER COMPANY, an Arizona corporation, Defendant/Appellee/Appellant.
• Court: Arizona Court of Appeals

20 P.3d 590

199 Ariz. 547

CITY OF CASA GRANDE, a municipal corporation of the State of Arizona, Plaintiff/Appellant/Appellee, v. ARIZONA WATER COMPANY, an Arizona corporation, Defendant/Appellee/Appellant.

Nos. -0028, -0128.

Court of Appeals of Arizona, Division 2, Department A.

March 13, 2001.

Irvine Van Riper, P.A., by Thomas K. Irvine and Ellen M. Van Riper, Phoenix, and Ulrich & Anger, P.C., by Paul G. Ulrich and William H. Anger, Phoenix, Attorneys for City of Casa Grande.

Bryan Cave LLP, by Steven A. Hirsch, Rodney W. Ott, and Jill Harrison, Phoenix, Attorneys for Arizona Water Company.

OPINION

BRAMMER, Presiding Judge.

¶ 1 Plaintiff City of Casa Grande appeals from the trial court's order dismissing its condemnation action by which it sought to acquire a portion of defendant Arizona Water Company's (AWC) public utility property in Pinal County. AWC appeals from the trial court's subsequent order denying its motion for attorney's fees. We have consolidated the two appeals. We affirm the trial court's order dismissing the City's condemnation action. We also affirm the order denying AWC attorney's fees.

Facts and Procedural History

¶ 2 The facts in this case are undisputed. In May 1999, the City filed a condemnation action to acquire a portion of AWC's public utility facility, service area, and real and personal property. Earlier that month, the City had adopted an ordinance it contended authorized it to condemn the property, the first section of which read:

That the City Manager and the City Attorney are hereby authorized and directed to procure professional services and to acquire and condemn said real property, [if] any; personal property, if any; system, if any; lines, if any; wells, if any; plants, [if] any; equipment, if any; franchises, if any; certificates of convenience and necessity, if any; contracts, if any; rights, if any; and other property whatsoever, if any; of Arizona Water Company located within that certain described area of Pinal County, Arizona as described in the attached Attachment "A" needed to provide water service to that area as well as any other area as determined by the City, including all rights, title and interest, if any it may have, in said certificate or certificates of convenience and necessity as above described, and to consummate the acquisition of such property under the power of eminent domain and to do all things necessary to accomplish this purpose.

Attachment A, which was entitled "Assets to be Condemned," described in detail a substantial land area and stated that these assets included "any and all personal and real property necessary to provide water service to the area to be condemned" as well as "[a]ny and all tangible and intangible rights, privileges, and obligations of [AWC] attributable to [the] Subcontract ... between the United States Bureau of Reclamation, the Central Arizona Water Conservation District," and AWC to deliver Central Arizona Project (CAP) water to the area described.¹

¶ 3 Arguing that the City had not first held an election pursuant to A.R.S. § 9-514, AWC contested the City's right to condemn the plant and property. Because the City had not first obtained voter approval of the acquisition, AWC claimed that the City lacked authority to proceed with the condemnation action.

¶ 4 Although AWC did not file a formal motion to dismiss the City's complaint, the trial court entered an order dismissing it, stating that "[a]n election under § 9-514 is a prerequisite to a condemnation of this property under the City Charter." The court considered the statutory scheme as a whole, interpreted the language of § 9-514 to require "voter approval of a particular project," and concluded that general authority, such as that granted by the City's charter, was insufficient to satisfy the statute.

¶ 5 AWC subsequently sought an award of its attorney's fees and costs, pursuant to A.R.S. § 11-972, which mandates awarding fees under certain circumstances if a governmental body has failed in its attempt to condemn real property. AWC also argued that it was entitled to an award of fees pursuant to both the Arizona common law theory that fees are recoverable from a governmental body that does not initiate a condemnation action in good faith and A.R.S. § 12-349(A), which requires a court to assess reasonable attorney's fees against a party if that party has brought or defended a claim "without substantial justification." In the alternative, AWC requested a hearing for additional discovery on these issues. The trial court awarded AWC $86.00 in costs, but denied its request for attorney's fees, finding that it had failed to meet the statutory requirements of § 11-972 and that there was no evidence the City had acted in "bad faith." Condemnation Action

A. Does the City's charter supersede A.R.S. § 9-514?

¶ 6 We review de novo the interpretation of a statute. City of Tucson v. Pima County, 190 Ariz. 385, 949 P.2d 38 (App.1997). In doing so, we attempt to determine and give effect to the legislature's intent by first applying the plain and unambiguous language of the statute. Oaks v. McQuiller, 191 Ariz. 333, 955 P.2d 971 (App.1998). However, we must also consider the statute "in the context of the entire statutory scheme of which it is a part." Id. at 334, 955 P.2d at 972; see also Grant v. Board of Regents, 133 Ariz. 527, 652 P.2d 1374 (1982). And, we strive to achieve consistency among related statutes. Goulder v. Arizona Dep't of Transp., 177 Ariz. 414, 868 P.2d 997 (App.1993).

¶ 7 As it did below, the City offers three alternative bases for its action. First, it argues that, because its charter, adopted in 1975, grants it general authority to engage in the public utility business, it was not required to hold a public election pursuant to § 9-514 on whether it could acquire the portions of AWC's assets it sought. Article XII, § 2, of the charter provides that the City "shall have the power to own and operate any public utility ... and to lease or purchase any existing utility properties used or useful to public service." It further provides that the City Council "may provide by ordinance for the establishment of such utility." Article I, § 3, of the charter generally provides that the City may acquire property by condemnation.

¶ 8 At the time the City filed the condemnation action, § 9-514 stated:

Before construction, purchase, acquisition or lease by a municipal corporation, as authorized in §§ 9-511 to 9-513, inclusive, of any plant or property or portion thereof devoted to the business of or services rendered by a public utility shall be undertaken, the construction, purchase, acquisition or lease shall be authorized by the affirmative vote of a majority of the qualified electors who are taxpayers of the municipal corporation voting at a general or special municipal election duly called and held for the purpose of voting upon the question.

Relying on A.R.S. § 9-284(A), the City argues that, because its charter "expressly empowers the City to engage in the water utility business," and because it had enacted an ordinance to do so by exercising its power of eminent domain, the charter's authority "prevails over conflicting state law" requiring an election.

¶ 9 Section 9-284(A) provides that, when charter provisions conflict with applicable state law, "the provisions of the charter shall prevail notwithstanding the conflict, and shall operate as a repeal or suspension of the law to the extent of conflict, and the law shall not thereafter be operative as to such conflict." However, § 9-284(B) states that the charter "shall be consistent with and subject to the state constitution, and not in conflict with ... general laws of the state not relating to cities." Article 13, § 2, of the Arizona Constitution clarifies the relationship between charter cities and the state by declaring that a city charter must be "consistent with, and subject to, the Constitution and the laws of the State." See City of Tucson v. State, 191 Ariz. 436, 438, 957 P.2d 341, 343 (App.1998)

("Our courts have historically held that general state laws pertaining to matters of statewide concern override conflicting city charters."). A charter city's ordinance on a matter not solely of local concern is invalid if it conflicts with a valid state statute on the matter, even if the ordinance is more restrictive than the state law. City of Tucson v. Consumers for Retail Choice Sponsored by Wal Mart, 197 Ariz. 600, 5 P.3d 934 (App.2000). If the local and statewide laws do not conflict, that is, if they can peacefully coexist, the local ordinance "may nevertheless be invalid if the state has appropriated the field." Id. at ¶ 7, 5 P.3d at ¶ 7; see also Union Transportes de Nogales v. City of Nogales, 195 Ariz. 166, 985 P.2d 1025 (1999).

¶ 10 The City argues that, because "the decision to provide water service is strictly a local matter," its ordinance is valid. AWC argues that, because the City was exercising its power of eminent domain—which, AWC argues, is a matter of statewide concern²—to acquire its property, the ordinance is invalid. Neither position adequately identifies the true issue before us, the acquisition by a municipality of a portion of the assets of an existing public service corporation. Our first inquiry, which we answer on a case-by-case basis, is whether such an acquisition is a matter solely of local concern. See Strode v. Sullivan, 72 Ariz. 360, 236 P.2d 48 (1951)

. A subject matter may be of statewide concern if uniform regulation is appropriate. See Consumers for Retail Choice; see also U.S. West Communications, Inc., v. City of Longmont, 948 P.2d 509 (Colo.1997).

¶ 11 The portion of AWC the City seeks, once acquired, would no longer be subject to the jurisdiction of the Arizona Corporation Commission (ACC), and the customers in this former portion of AWC's service area could thereby lose several statutory protections.³ See Ariz. Const. art. 15, §§ 2, 3 (...