City of Chandler v. Arizona Dot

• Decision Date: 18 September 2007
• Docket Number: No. 1 CA-CV 05-0631.,1 CA-CV 05-0631.
• Citation: 216 Ariz. 435,167 P.3d 122
• Parties: CITY OF CHANDLER, an Arizona Municipal Corporation, Plaintiff/Appellee, v. ARIZONA DEPARTMENT OF TRANSPORTATION, an agency of the State of Arizona, Defendant/Appellant.
• Court: Arizona Court of Appeals

167 P.3d 122

216 Ariz. 435

CITY OF CHANDLER, an Arizona Municipal Corporation, Plaintiff/Appellee, v. ARIZONA DEPARTMENT OF TRANSPORTATION, an agency of the State of Arizona, Defendant/Appellant.

No. 1 CA-CV 05-0631.

Court of Appeals of Arizona, Division 1, Department D.

September 18, 2007.

Chandler City Attorney's Office by James R. Cairns, III, Chandler, Attorneys for Plaintiff/Appellee.

Arizona Attorney General's Office by James R. Redpath, Assistant Attorney General, Ron J. Aschenbach, Assistant Attorney General, Phoenix, Attorneys for Defendant/Appellant.

OPINION

SNOW, Judge.

¶ 1 The Arizona Department of Transportation ("ADOT") appeals the summary judgment requiring it to reimburse the City of Chandler for the relocation of utility lines necessitated by the construction of a state highway. Because the trial court erred in interpreting Arizona Revised Statutes ("A.R.S.") section 28-7156 (2004) to mandate such reimbursement, we vacate the summary judgment and remand for further proceedings consistent with this opinion.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 2 Chandler owns several water and sewer utility lines that had to be moved to construct the Santan Freeway. Chandler and ADOT disputed which of the two parties was required to pay for the relocation. Chandler initially claimed "prior rights" to the use of the land in which the utility lines were located. Under the common law doctrine of prior rights, if Chandler first placed its utility lines on the property before any public road was located on it, Chandler's rights would be deemed superior and ADOT would be obliged to pay for the relocation of the utility lines. State ex rel. Herman v. Elec. Dist. No. 2 of Pinal County, 106 Ariz. 242, 244, 474 P.2d 833, 835 (1970). ADOT, however, contested Chandler's claim, arguing that because Chandler had not placed the utility lines under the road until sixty years after it had been established by Maricopa County and had not obtained a right-of-way permit when it did so, Chandler had no prior rights. To avoid construction difficulties caused by the dispute, Chandler and ADOT agreed that Chandler would pay for the relocation and ADOT would reimburse Chandler if the city prevailed on its prior rights claim.

¶ 3 Chandler subsequently paid for the relocation and filed a declaratory action asserting the prior rights claim. It later amended its complaint to add a separate statutory reimbursement claim against ADOT pursuant to A.R.S. § 28-7156.

¶ 4 Both parties filed motions for summary judgment. The trial court initially granted ADOT's cross-motion for summary judgment finding that Chandler did not have prior rights and that A.R.S. § 28-7156 did not require ADOT to pay for the relocation of the utility lines. The court, however, granted Chandler's motion for reconsideration and thereafter found that there were material issues of fact regarding common law prior rights, but entered summary judgment in Chandler's favor based on A.R.S. § 28-7156. ADOT timely appealed. We have jurisdiction pursuant to A.R.S. § 12-2101 (2003).

ANALYSIS

A. A.R.S. § 28-7156

¶ 5 The primary issue on appeal is whether A.R.S. § 28-7156 requires ADOT to reimburse Chandler for relocating its utility lines or grants ADOT discretion to determine whether it will authorize reimbursement. A.R.S. § 28-7156 provides in relevant part:

A. The director may authorize the reimbursement to a city, town or county for the cost of labor, equipment, materials, preliminary engineering and right-of-way purchase required to adjust or relocate a utility facility if all of the following apply:

1. An existing city, town or county public highway or street is established as a state highway.

2. At the time the highway or street is established as a state highway, a utility facility belonging to a city, town or county exists within the right-of-way of the highway or street.

3. It becomes necessary to adjust or relocate the utility facility due to modification or improvement of the state highway.

B. The director shall determine the payment for labor, equipment and materials. The cost of relocation shall not exceed the value of the substitute utility facility. The director shall base the determination of the value of a substitute utility facility on the costs for replacement of a like facility. Costs of relocation shall exclude any betterments or increases in the size or capacity beyond those of the existing utility facility.

(Emphasis added.)

¶ 6 We review questions of statutory interpretation de novo. Phelps Dodge Corp. v. Arizona Dep't of Water Resources, 211 Ariz. 146, 148, ¶ 9, 118 P.3d 110, 112 (App.2006). Our goal in statutory interpretation is to determine the legislative intent in adopting the provision. In re Estate of Winn, 214 Ariz. 149, 151, ¶ 8, 150 P.3d 236, 238 (2007); Haas v. Colosi, 202 Ariz. 56, 58, ¶ 6, 40 P.3d 1249, 1251 (App.2002). In doing so, we review the language of the statute, and when the plain language is unambiguous and conveys a clear and definite meaning, its plain and obvious meaning must be followed without resort to the rules of statutory construction. Automatic Registering Mach. Co. v. Pima County, 36 Ariz. 367, 370, 285 P. 1034, 1035 (1930); see HCZ Constr., Inc. v. First Franklin Fin. Corp., 199 Ariz. 361, 364, ¶ 10, 18 P.3d 155, 158 (App.2001) (holding that words are given their ordinary meaning unless the context of the statute requires otherwise).

¶ 7 On appeal, ADOT argues that "shall" and "may" have distinct meanings, "shall" denoting a mandatory obligation and "may" granting discretion to act. Thus, ADOT asserts that the plain meaning of section 28-7156 "is that the Director [of ADOT] has the discretion to decide whether to reimburse under subsection (A), but that the amount of any discretionary reimbursement `shall' comply with subsection (B)." This interpretation, it contends, is further supported by the legislative history of the statute.

¶ 8 Conversely, Chandler argues that, because section 28-7156 was enacted specifically for the benefit of cities like Chandler and its residents, the exercise of the power granted under subsection (A) should be construed as mandatory "even if ... the statute utilizes the word `may' rather than . . . `shall.'" See e.g., Brooke v. Moore, 60 Ariz. 551, 142 P.2d 211 (1943) ("Powers conferred on public officers are generally construed as mandatory although the language may be permissive, where they are for the benefit of the public or of individuals.") (quoting 63C Am.Jur.2d Public Off § 259 (1997)). It further argues that subsection (D) of the statute demonstrates that, when construed in context, the "may" in subsection (A) should be interpreted as a mandatory duty as opposed to a discretionary choice.

¶ 9 We conclude that subsection (A) grants the Director of ADOT discretion to reimburse Chandler for the utility relocation but does not require the Director to do so. When "the language of a statute is plain or unambiguous and the meaning does not lead to an impossibility or an absurdity, courts must observe the natural import of the language used and are not free to extend the meaning though the result may be harsh, unjust or mistaken policy." Members of Bd. of Educ. of Pearce Union High Sch. Dist. v. Leslie, 112 Ariz. 463, 465, 543 P.2d 775, 777 (1975).

¶ 10 "[The] use of the word `may' generally indicates permissive intent ... while `shall' generally indicates a mandatory provision.... If a statute employs both mandatory and discretionary terms, we may infer that the legislature intended each term to carry its ordinary meaning." Walter v. Wilkinson, 198 Ariz. 431, 432, ¶ 7, 10 P.3d 1218, 1219 (App.2000) (citations omitted). We thus presume that the Legislature was aware of the difference between the two words and meant each to carry its ordinary meaning. HCZ Constr., Inc., 199 Ariz. at 365, ¶ 15, 18 P.3d at 159 (citations omitted).

¶ 11 To the extent that the court in Brooke held that, in certain contexts, "may" should be interpreted to mean "shall," it is distinguishable. In Brooke, the Arizona Supreme Court construed a statute that set forth the requirements for obtaining permits to hold horse and dog-racing meets. 60 Ariz. at 552-53, 142 P.2d at 211-12. The statute provided that, if the Arizona Tax Commission investigated and found that the applicant had a reputation for honesty and fair dealing and the plan was not objectionable, the Commission "may" issue a permit. Id. at 553, 142 P.2d at 211-12. Having made these two findings, the Commission claimed it could nevertheless deny the application. Id. at 552, 142 P.2d at 212. The court, however, interpreted "may" as mandatory, concluding that the Legislature had not granted the Commission any discretion to deny a racing permit in cases in which the Commission found that the prerequisites to granting the license had been satisfied. Id. at 554, 142 P.2d at 212. The court reasoned that authorizing dog racing would create revenue and would thus benefit both the public and the petitioners, and, because it could not identify any conflicting public interests, it would be arbitrary and capricious to interpret the statute as providing the Commission discretion to deny an application under such circumstances. Id. at 554-55, 142 P.2d at 212.

¶ 12 In the present case, we cannot conclude, as did the court in Brooke, that allowing ADOT the discretion to deny reimbursement would be arbitrary and capricious. Although interpreting "may" as mandatory would no doubt benefit Chandler and its residents, allowing ADOT discretion to decide whether it will expend its budgeted funds for relocation purposes, or to expend them for other ADOT functions, which may benefit other Arizona taxpayers, is neither arbitrary nor capricious. ADOT is subject to certain budgetary constraints and thus funds expended by ADOT to reimburse Chandler for the cost of relocating its utility lines are unavailable to ADOT for other agency purposes. In his deposition, ...