City of Eudora v. Rural Water Dist. No. 4, Douglas Cnty.
| Decision Date | 29 September 2016 |
| Docket Number | Case No. 14-2399-JAR-KGS |
| Parties | CITY OF EUDORA, KANSAS Plaintiff, v. RURAL WATER DISTRICT NO. 4, DOUGLAS COUNTY, KANSAS, Defendant. |
| Court | U.S. District Court — District of Kansas |
This declaratory judgment action stems from prior litigation between the parties dating back to 2007, involving multiple orders of this Court, a jury trial, and two decisions from the Tenth Circuit Court of Appeals. The Court resumes the Sisyphean task of sorting out who may provide water service to the citizens of Eudora, Kansas, as Plaintiff the City of Eudora, Kansas ("Eudora" or "the City") now seeks declaratory relief regarding its exercise of the right to provide water service within certain disputed areas and whether Defendant Rural Water District No. 4, Douglas County, Kansas ("Douglas-4" or "the District") lacks protection under 7 U.S.C. § 1926(b). This matter is before the Court on the parties' Cross-Motions for Summary Judgment (Docs. 25, 28). The Court held oral argument on the motions and directed the parties to submit supplemental briefs addressing whether this Court has Article III jurisdiction (Doc. 39). After considering the arguments and submissions of the parties, and for the reasons explained in detail below, the Court grants Eudora's motion in part and denies Douglas-4's motion on the issue of whether Douglas-4 has protection under § 1926(b) .
Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to a judgment as a matter of law."1 In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party.2 "There is no genuine issue of material fact unless the evidence, construed in the light most favorable to the nonmoving party, is such that a reasonable jury could return a verdict for the nonmoving party."3 A fact is "material" if, under the applicable substantive law, it is "essential to the proper disposition of the claim."4 An issue of fact is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the non-moving party."5
The moving party bears the initial burden of providing the court with the basis for the motion and identifying those portions of the record that show the absence of a genuine issue of material fact.6 Where, as here, the movant bears the burden of proof on a claim or defense, it must show that the undisputed facts establish every element of the claim entitling it to judgmentas a matter of law.7 If the moving party properly supports its motion, the burden shifts to the non-moving party, "who may not rest upon the mere allegation or denials of his pleadings, but must set forth specific facts showing that there is a genuine issue for trial."8 In setting forward these specific facts, the nonmovant must identify the facts "by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein."9 If the evidence offered in opposition to summary judgment is merely colorable or is not significantly probative, summary judgment may be granted.10 A party opposing summary judgment "cannot rely on ignorance of the facts, on speculation, or on suspicion, and may not escape summary judgment in the mere hope that something will turn up at trial."11 Put simply, the nonmoving party must "do more than simply show there is some metaphysical doubt as to the material facts."12 "Where, as here, the parties file cross-motions for summary judgment, we are entitled to assume that no evidence needs to be considered other than that filed by the parties, but summary judgment is nevertheless inappropriate if disputes remain as to material facts."13
Finally, summary judgment is not a "disfavored procedural shortcut"; on the contrary, it is an important procedure "designed to secure the just, speedy and inexpensive determination ofevery action."14 In responding to a motion for summary judgment, "a party cannot rest on ignorance of facts, on speculation, or on suspicion and may not escape summary judgment in the mere hope that something will turn up at trial."
The procedural history of this case is mostly undisputed and the Court assumes the reader is familiar with the Tenth Circuit opinions that precipitate the matters before the Court. The Court will not restate the underlying facts in detail, but will provide excerpts from the proceedings and opinions as needed to frame its discussion of the matters presently before it. Moreover, the parties have helpfully stipulated to many facts and exhibits set forth in the Pretrial Order.15 Nevertheless, Douglas-4 asserts additional facts replete with argument and conclusory statements, particularly with respect to its spin on prior proceedings and submissions. These matters are well-documented and/or the best evidence thereof, and Douglas-4's overkill approach to the factual record has required the Court to expend excessive time and effort identifying and disregarding facts that are repetitive, duplicative, material, conclusory, or argumentative.
With these observations in mind, the Court determines the following material facts are uncontroverted, stipulated to, or viewed in the light most favorable to the nonmoving party for purposes of summary judgment.
In 2007, Douglas-4 sued Eudora under 42 U.S.C. § 1983, claiming Eudora violatedDouglas-4's federal statutory rights (the "Prior Litigation").16 Highly summarized, the parties disputed whether Douglas-4 was entitled to protection under 7 U.S.C. § 1926(b), which prohibits municipalities from poaching rural water district's customers under K.S.A. 12-527 while a USDA-guaranteed loan is in repayment. As the Tenth Circuit explained, rural water districts "do not enjoy § 1926(b) protection unless state law authorizes the water district to incur federal obligations," and "[m]uch of the litigation between Douglas-4 and Eudora therefore revolved around whether Kansas law permits rural water districts to take out federal loans, or guarantees, or both."17 Eudora filed counterclaims for tortious interference with business advantage, fraud, abuse of process and declaratory relief with respect to Douglas-4's right to protection under § 1926(b), Eudora's right to invoke state law without violating the federal statute, and whether Douglas-4 had waived its right to compensation under K.S.A. 12-527.18 Eudora's tort counterclaims were dismissed without prejudice.19 The case went to trial resulting in a jury verdict in favor of Douglas-4 on all issues and damages for Douglas-4. The Court then enjoined Eudora from serving or limiting Douglas-4's service to the annexed areas.20
On appeal, the Tenth Circuit agreed with Eudora that this Court erred by not separatingthe necessity of the loan from the guarantee, holding that the necessity of the guarantee, not the loan was the salient question.21 The court rejected Douglas-4's cross-appeal argument that the "accept financial or other aid" clause in K.S.A. 82a-619(g) (1997 & Supp. 2002), which contains no "necessary" requirement, gave Douglas-4 authority to obtain a USDA guarantee and its attendant § 1926(b) protection without making a necessity showing.22 The Tenth Circuit vacated the verdict, holding that this Court improperly instructed the jury on the meaning of "necessary," and remanded "for a new trial for the limited purpose of determining whether Douglas-4's cooperation to secure the federal guarantee was necessary for the purposes of its organization."23
Relevant to the present proceedings, the court went on to review the legal grounds upon which this Court based its conclusion that Eudora curtailed or limited Douglas-4's water service.24 The court first noted that K.S.A. 12-527, the statute cited by the parties and in effect in 2007, was repealed in March 2010 and replaced by K.S.A. 12-540 et seq., and thus applied the law in existence at the time of the appeal.25 K.S.A. 12-540 and 541(a) describe the process by which a city may designate itself or some other water supplier for annexed property. The court stated that as a matter of Kansas law, "an annexing municipality is not compelled to engage in some post-annexation conduct that would necessarily curtail or limit a water district's ability to serve the annexed area," because the statutes provide that "[f]ollowing annexation, the waterdistrict shall remain the water service provider to the annexed area unless the city gives written notice designating a different supplier."26 Thus, annexation alone does not cause curtailment.27 Instead, there must be some further action that limits the protected water district's ability to serve its customers, in this case, Eudora's threat to either de-annex a customer's protected area or force an appraisal process by filing suit against Douglas-4.28
The court went on to describe actions by a city that would not curtail or limit water services by a protected district:
This might occur where, after annexation, a city allows the water district to continue as before. Or it may initiate negotiations with the district for purchase of the district's assets. When a city first notifies a water district of its intent, there is nothing impeding a customer from obtaining—or the water district from providing—water services. Under Kansas law, for instance, the parties still must agree on the assets' value. If they cannot agree, then no change in water service provider shall occur until at least 120 days pass and the parties complete mandatory mediation. See K.S.A. § 12-541(a). If mediation is unsuccessful, only then is a third-party appraiser appointed. Throughout this entire period, the water district may continue to provide or make available water service, and ultimately the city may decide to either assert or waive its appraisal rights as the situation develops....
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