Cove At Little Valley Homeowners Ass'n v. Traverse Ridge Special Serv. Dist.
| Citation | 513 P.3d 658 |
| Decision Date | 16 June 2022 |
| Docket Number | 20200781 |
| Parties | The COVE AT LITTLE VALLEY HOMEOWNERS ASSOCIATION, a Utah Non-Profit Corporation, Appellant, v. TRAVERSE RIDGE SPECIAL SERVICE DISTRICT, a special service district of Draper City, Utah, Appellee. |
| Court | Supreme Court of Utah |
Matthew C. Barneck, Salt Lake City, for appellant
P. Bruce Badger, Tanner J. Bean, Salt Lake City, for appellee
Having recused himself, Associate Chief Justice Lee does not participate herein; Court of Appeals Judge Michele M. Christiansen Forster sat.
Due to his retirement, Justice Himonas did not participate herein; Court of Appeals Judge Jill M. Pohlman sat.
Justice Diana Hagen became a member of the Court on May 18, 2022 after oral argument in the matter and accordingly did not participate.
INTRODUCTION
¶1 Members of The Cove at Little Valley Homeowners Association (at times "the Cove" or "the Homeowners Association") pay an assessment to the Traverse Ridge Special Service District (the Service District). The Service District exists to provide certain services to the residents of the district. The Service District, for example, removes snow from some streets in the district. But the Service District does not plow the roads in front of the homes in the Cove because they are private roads. And the Service District takes the position that it is not required to clear snow from private roads. The Cove filed suit claiming that the Service District needed to either stop charging members of the Cove for services it has never provided or start plowing roads (among other things). The Cove also sought a refund of amounts that its members had paid to fund the Service District.
¶2 The Service District moved to dismiss for failure to state a claim. The Service District argued that Draper City Code did not require it to service private roads. The Service District also contended that it is funded by a tax, and because it is funded by a tax, the Homeowners Association needed to bring its challenge in the manner the Utah Tax Code dictates. The district court agreed with the Service District on both counts and dismissed the case.
¶3 On appeal, the Homeowners Association argues that the district court should have found that the Service District needed to maintain the Cove's roads because the Draper City Code requiring private streets to be privately maintained conflicts with state law. It additionally asserts that the agreement the Homeowners Association signed with Draper City, which provides that the Homeowners Association's streets must be privately maintained, cannot be enforced by the Service District because the district was not a party to the contract. We do not address either issue, however, because the Cove did not raise them before the district court and our preservation rules counsel against addressing unpreserved issues.
¶4 The Homeowners Association also contends that the district court erred when it concluded that the assessment its members paid to the Service District is a tax as a matter of law. The Association argues that the district court erred because it relied on dicta in Mawhinney v. City of Draper to conclude that this court had already determined that monies paid to the Service District are a tax. 2014 UT 54, 342 P.3d 262. We agree. We accordingly affirm in part, reverse in part, and remand.
¶5 The Cove at Little Valley is a Utah non-profit corporation which represents the interests of homeowners in the eponymous Draper housing community.1
¶6 The Traverse Ridge Special Service District is a service district the Draper City Council created "for the purpose of providing transportation, including snow removal, street lighting services, repairing and maintaining roads, sweeping and disposal services." Draper City Counc. Res. 99-82, 1999 Sess. (Utah 1999). Its purpose and boundaries are defined by a set of Draper City Resolutions. See id. (creating the Service District); Draper City Counc. Res. 03-05, 2003 Sess. (Utah 2003) ().
¶7 The Cove's residents live within the Service District's boundaries. The Cove's homeowners pay into the Service District's fund. Despite that, the Service District has never provided services to the Cove. Indeed, since the Cove was annexed into the Service District's area, the Cove's homeowners have paid more than $175,000 to the Service District without receiving any benefit.
¶8 The Cove filed suit against the Service District and asserted two causes of action. In the first, the Cove sought an order requiring the Service District provide services to all areas of the district, including the Cove. The Cove alleged that "[t]here [were] no conditions, exceptions or other language in [the Resolutions creating or modifying the Service District] that exempt[ed] The Cove at Little Valley homeowners from receiving full services provided by the [Service District]."
¶9 The second cause of action sought a refund of the payments the Cove's residents had made to the Service District. The Cove alleged that, under Utah law, a service fee must bear a reasonable relationship to the services provided. The Cove asserted that because the Service District provides its members no services, requiring the Cove's residents to pay any amount is unreasonable.
¶10 The Service District moved to dismiss under Utah Rule of Civil Procedure 12(b)(6). With respect to the Cove's first cause of action, the Service District asserted that it was not required to provide services to the Cove. It explained that because the Cove's streets are private, they must be privately maintained. "[T]he reason is obvious," it explained.
"Draper City Code § 17-1-040 requires all private streets in the City to be maintained by the subdivider or other private entity." The Service District argued that because nothing in its organizational resolution "requires [it] to snowplow or maintain private streets," the district court should not compel it to provide those services to the Cove.
¶11 The Service District also took issue with the Cove calling the amounts it received service fees. The Service District argued the monies the Cove residents paid were an ad valorem property tax. And it argued that the Utah Property Tax Act sets forth the process to obtain a tax refund. The Service District contended that because the Cove did not bring a refund claim under the Property Tax Act, it had failed to state a claim upon which relief could be granted.
¶12 The Cove opposed the motion by asserting, in part, that the monies paid to the Service District must be categorized as a service fee and not a tax. The Cove argued that the Service District's motion to dismiss the Cove's first cause of action, which requested a declaratory judgment that the Service District must provide the Cove services, should be denied because the motion "mischaracterize[d] the service fees paid to the [Service] District as a ‘tax’ when the monies paid are properly characterized as ‘service fees’ under controlling Utah law." "[A]t the very least," the Cove continued, "the legal question of whether the monies paid [to the Service District] are service fees or taxes involves a factual inquiry into the purpose of the levy, which precludes a 12(b)(6) motion to dismiss at this point in the proceedings."
¶13 The Cove then advanced essentially the same argument in regard to its second cause of action, which sought a refund of the money the Cove homeowners paid the Service District. The Cove pressed the district court to deny the motion to dismiss the Cove's second cause of action because the Service District predicated its argument "entirely on the ‘tax’ mischaracterization." The Cove concluded that
¶14 The district court granted the Service District's motion to dismiss. The court explained that it would dismiss the Cove's first cause of action because the Draper City resolution annexing the Cove into the Service District could not "be read to require the provision of services that are otherwise prohibited by Draper City Code." The court interpreted Draper City Code to require private roads to be privately maintained. Thus, although the Cove had been annexed into the Service District by Draper City Council's Resolution 03-05, it needed to privately maintain its streets because the streets were private. The court rejected the Cove's contention that the City meant to endow the Cove with a right to services when it annexed the neighborhood. The court also noted that the Cove's developer, in the Development Agreement it signed with the City, elected to privatize the development's streets after the annexation had occurred. Based on this analysis, the court concluded that it could not require the Service District to provide services on the Cove's private streets.
¶15 The court dismissed the Cove's second cause of action because it concluded that in another case involving the Service District, the Utah Supreme Court had held that monies paid to the Service District are a tax. See Mawhinney v. City of Draper , 2014 UT 54, 342 P.3d 262.
¶16 The Cove argues that the district court erred when it granted the Service District's motion to dismiss. "[W]e review the district court's [grant] of [a] motion to dismiss for correctness, granting no deference to the district court's ruling." St. Jeor v. Kerr Corp. , 2015 UT 49, ¶ 6, 353 P.3d 137 () (citation omitted).
¶17 The Cove's first cause of action asked the court to...
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K.S. v. State (State ex rel. S.T.)
...applies in civil cases. See, e.g. , Cove at Little Valley Homeowners Ass'n v. Traverse Ridge Special Service Dist. , 2022 UT 23, ¶¶ 36–44, 513 P.3d 658 ; Kelly v. Timber Lakes Prop. Owners Ass'n , 2022 UT App 23, ¶¶ 28–44, 507 P.3d 357. In Kelly , this court concluded that "unless expressly......
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K.S. v. State
...applies in civil cases. See, e.g., Cove at Little Valley Homeowners Ass'n v. Traverse Ridge Special Service Dist., 2022 UT 23, ¶¶ 36-44, 513 P.3d 658; Kelly v. Lakes Prop. Owners Ass'n, 2022 UT App 23, ¶¶ 28-44, 507 P.3d 357. In Kelly, this court concluded that "unless expressly authorized ......