City of Huntsville v. Stove House 5, Inc.

• Citation: 3 So.3d 186
• Decision Date: 30 May 2008
• Docket Number: 1070353.
• Parties: CITY OF HUNTSVILLE v. STOVE HOUSE 5, INC.
• Court: Supreme Court of Alabama

3 So.3d 186

CITY OF HUNTSVILLE v. STOVE HOUSE 5, INC.

1070353.

Supreme Court of Alabama.

May 30, 2008.

Rehearing Denied August 15, 2008.

Michael L. Fees, C. Gregory Burgess, and Nori D. Horton of Fees & Burgess, P.C., Huntsville, fro appellant.

Gary P. Wolfe of Wolfe, Jones, Boswell, Wolfe, Hancock & Daniel, L.L.C., Huntsville, for appellee.

Kenneth Smith, gen. counsel, Alabama League of Municipalitites, Montgomery, amicus curiae Alabama League of Municipalities, in support of the appellant.

LYONS, Justice.

The City of Huntsville ("Huntsville"), the plaintiff in a declaratory-judgment action, appeals from a summary judgment in favor of Stove House 5, Inc. ("Stove House"). We affirm.

I. Facts and Procedural History

Huntsville experienced significant economic growth and geographic expansion in the 1950s. In 1956 the Alabama Legislature passed Act No. 86, the stated purpose of which was "[t]o alter, extend, re-arrange, and re-define the boundaries and corporate limits of the City of Huntsville, annexing certain territory to the city, and making provision for the assessment and collection of municipal taxes." Act No. 86, Ala. Acts 1956 (Second Special Session). This act annexed approximately 14,000 acres into Huntsville's corporate limits, but also expressly excluded six tracts of land where industries had originally located outside the corporate limits.

These six tracts of unincorporated land became known as "tax islands" because they are now surrounded by land that is within Huntsville's corporate limits. Although no tax revenue for Huntsville is generated from the tax islands because the land is situated outside Huntsville's corporate limits, Huntsville has provided fire and police protection and sanitary sewer service to the tax islands since 1956. Stove House asserts that in 1956 Huntsville and the owners of land situated on the tax islands agreed that the tax islands would receive city services in exchange for the owners not opposing the passage of Act No. 86.

From 1956 until 1991, the tax islands were outside the corporate limits of Huntsville, but within the police jurisdiction of Huntsville pursuant to § 11-40-10(a), Ala. Code 1975 ("The police jurisdiction in cities having 6,000 or more inhabitants shall cover all adjoining territory within three miles of the corporate limits ...."). In 1991 voters ratified Amendment No. 531 to the Alabama Constitution of 1901 (now included in Local Amendments, Madison County § 9 (Off.Recomp.)), which effectively excluded the tax islands from the police jurisdiction of Huntsville. Amendment No. 531 provides: "In Madison county, no police jurisdiction nor any planning or zoning regulation of a municipality located wholly or partially within Madison county shall extend beyond the corporate limits of the municipality."

On January 27, 2004, Huntsville sued the owners of land situated on the tax islands known as Martin Stove, Lincoln Mill, Lowe Mill, and Merrimack Mill ("the landowners"),¹ seeking a judgment declaring that Huntsville has no duty under Alabama law to continue providing city services, namely fire and police protection and sanitary sewer services, to these landowners. Huntsville further sought a declaration that because, it says, it has no duty to provide such city services to the landowners, it could lawfully cease providing such services to the landowners. Huntsville named the following individuals and entities as defendants: Reliance Agents, Inc.; John H. Ebaugh; Marguerite W. Ebaugh; Robin Ebaugh; Lowe Mill Properties, LLC; Storage Equities; PS Partners VI, Ltd.; and Stove House.

Huntsville voluntary dismissed the action as it related to Storage Equities and PS Partners VI, Ltd., after Huntsville annexed land on the tax island known as Merrimack Mill. Huntsville and the Ebaughs jointly moved in the trial court for the entry of a consent judgment evidencing their settlement, which provided, in part, that Huntsville would annex land on the tax island known as Lincoln Mill. The trial court granted the motion and entered the consent judgment. Huntsville and Lowe Mill Properties jointly stipulated to the dismissal of the action as it related to Lowe Mill Properties, and the trial court dismissed the action as to Lowe Mill Properties without prejudice. Reliance Agents, Inc., and Stove House were the remaining defendants.

Stove House and Huntsville each moved for a summary judgment. Stove House asserted two alternative bases for its summary-judgment motion. Stove House first contended that the doctrine of laches² bars Huntsville's declaratory-judgment action because, it argued, Huntsville's lengthy delay in filing the action has prejudiced it. Stove House specifically argued that because more than 50 years had passed since Huntsville agreed to provide city services to the landowners it was impossible to identify witnesses who had knowledge of the creation of the tax islands in 1956 and of any agreements between Huntsville and the landowners.

As an alternative basis for summary judgment, Stove House contended that Huntsville had agreed in 1956 to provide city services to the tax islands and that that agreement still exists. Stove House asserted that Huntsville had admitted the existence of an agreement between Huntsville and the landowners and that Huntsville's course of performance over the last 50 years evidences its intent to provide city services to the landowners. Stove House then stated, in its brief in support of its motion for a summary judgment:

"To further bolster this contract, the law of Alabama has established that `a municipal corporation may be held liable on an implied contract' whether implied from corporate acts or implied by law, especially `to prevent the municipality from enriching itself by accepting and retaining benefits without paying just compensation therefor.' Bethune v. City of Mountain Brook, 300 So.2d 350 (Ala.1974), also citing Greeson Mfg. Co. v. County Bd. of Ed., 117 So. 163 (Ala.1928)[.] [Huntsville] was greatly enriched by annexation of 21½ square miles without vote of those affected. The benefits to [Huntsville] continue to this day, as does [its] obligation under the Agreement."

(Emphasis added.)

In its brief in opposition to Stove House's summary-judgment motion, Huntsville contended that all Stove House's arguments "fall flat" because, it said, there is no formal contract between Huntsville and the landowners. Huntsville contended that controlling caselaw plainly states that a municipality has no duty to provide municipal services outside its corporate boundaries in the absence of a formal contract. See City of Attalla v. Dean Sausage, Inc., 889 So.2d 559 (Ala.Civ.App. 2003). Huntsville further noted that § 11-47-5, Ala.Code 1975, provides that "[c]ontracts entered into by a municipality shall be in writing" and that there is no evidence indicating that a written contract between Huntsville and the landowners exists. Similarly, in its summary-judgment motion Huntsville argued that it lacks any duty under Alabama law to continue providing city services to the tax islands and that, therefore, Huntsville can lawfully cease providing city services to the tax islands.

The trial court denied Huntsville's motion for a summary judgment, granted Stove House's motion for a summary judgment, and entered a summary judgment in favor of Stove House. The trial court in its order did not provide any rationale for its decision. Huntsville then filed a motion to amend, alter, or vacate the judgment pursuant to Rule 59(e), Ala. R. Civ. P., and a motion to strike certain evidentiary material submitted by Stove House in opposition to Huntsville's motion for a summary judgment. The trial court denied both motions.

Huntsville and Reliance Agents, Inc., then jointly stipulated to the dismissal of Huntsville's claims against Reliance Agents, Inc. The trial court dismissed the action as it related to Reliance Agents without prejudice. Huntsville then appealed to this Court. Stove House is the only remaining defendant and the only appellee.

II. Standard of Review

The standard by which this Court will review a ruling on a motion for summary judgment is well established:

"`The principles of law applicable to a motion for summary judgment are well settled. To grant such a motion, the trial court must determine that the evidence does not create a genuine issue of material fact and that the movant is entitled to a judgment as a matter of law. Rule 56(c)(3), Ala. R. Civ. P. When the movant makes a prima facie showing that those two conditions are satisfied, the burden shifts to the nonmovant to present "substantial evidence" creating a genuine issue of material fact. Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794, 797-98 (Ala.1989); § 12-21-12(d)[,] Ala.Code 1975. Evidence is "substantial" if it is of "such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assur. Co. of Florida, 547 So.2d 870, 871 (Ala.1989).

"`In our review of a summary judgment, we apply the same standard as the trial court. Ex parte Lumpkin, 702 So.2d 462, 465 (Ala.1997). Our review is subject to the caveat that we must review the record in a light most favorable to the nonmovant and must resolve all reasonable doubts against the movant. Hanners v. Balfour Guthrie, Inc., 564 So.2d 412 (Ala.1990).'"

Payton v. Monsanto Co., 801 So.2d 829, 832-33 (Ala.2001) (quoting Ex parte Alfa Mut. Gen. Ins. Co., 742 So.2d 182, 184 (Ala.1999)).

III. Analysis

Huntsville argues that the trial court improperly entered a summary judgment for Stove House because, it contends, settled Alabama law provides that when a municipality does not collect taxes from the owners of property outside the municipality's corporate limits, the municipality is not required to provide city services to these owners. Huntsville relies heavily on the Court of Civil...