Douglas Disposal, Inc. v. Wee Haul, LLC

• Decision Date: 08 November 2007
• Docket Number: No. 44862.,44862.
• Citation: 170 P.3d 508
• Parties: DOUGLAS DISPOSAL, INC., Appellant, v. WEE HAUL, LLC; Robert Haight; Scott Hoyle; Mitchell B. Crockett; NJ Enterprises, Inc.; John Innes; and Nancy Innes, Respondents.
• Court: Nevada Supreme Court

170 P.3d 508

DOUGLAS DISPOSAL, INC., Appellant, v. WEE HAUL, LLC; Robert Haight; Scott Hoyle; Mitchell B. Crockett; NJ Enterprises, Inc.; John Innes; and Nancy Innes, Respondents.

No. 44862.

Supreme Court of Nevada.

November 8, 2007.

Jeffrey K. Rahbeck, Zephyr Cove, for Appellant.

Hager & Hearne and Treva J. Hearne and Robert R. Hager, Reno, for Respondents.

Mark Jackson, District Attorney, and Cynthea A. Gregory, Deputy District Attorney, Douglas County, for Amicus Curiae Douglas County.

BEFORE THE COURT EN BANC.¹

OPINION

By the Court, SAITTA, J.:

In this appeal, we examine whether a county is authorized, under its governmental police powers, to regulate construction waste, and particularly whether Douglas County properly enacted an ordinance granting an exclusive franchise to appellant Douglas Disposal, Inc. (Disposal), for construction waste collection and disposal within the county. Since we conclude that construction waste regulation falls within the County's police powers, we next examine whether an exclusive franchise agreement for construction waste collection and disposal violates the dormant Commerce Clause of the United States Constitution.² Because we conclude that such an agreement comports with the dormant Commerce Clause, we reverse the district court's order denying the franchisee injunctive relief, and remand the matter for the district court to grant an injunction precluding respondents from collecting and hauling construction waste within the franchise area.

BACKGROUND FACTS

In 1996, Douglas County enacted an ordinance, under which it entered into an amended franchise agreement with Disposal providing an exclusive privilege to collect and dispose of all solid waste within the East Fork Township of the county. Thereafter, respondents Wee Haul, LLC, and NJ Enterprises, Inc., independent contractors that haul away non-putrescible construction waste,³ also began operating their respective businesses within the exclusive franchise area. Wee Haul and NJ Enterprises provided boxes at construction sites for their customers to fill with construction waste, which Wee Haul and NJ Enterprises then hauled to local landfills, as well as to landfills in California. The County, however, had not authorized Wee Haul and NJ Enterprises to haul construction waste within its boundaries.

Seeking to prevent Wee Haul and NJ Enterprises from collecting and disposing of construction waste, Disposal brought an action requesting injunctive relief and damages, based on its exclusive franchise agreement. Thereafter, Disposal filed a "Motion for Judgment on the Pleadings and/or for Partial Summary Judgment." In their opposition to the motion, Wee Haul and NJ Enterprises argued that the exclusive franchise agreement's language was ambiguous and that the agreement did not include construction waste. Thus, Wee Haul and NJ Enterprises argued, Disposal did not have an exclusive franchise to pick up and haul construction waste within the township. In addition, Wee Haul and NJ Enterprises further argued in their pretrial statement that even if the court determined that the agreement included construction waste, the agreement was unenforceable because it violated the dormant Commerce Clause and because the County exceeded its police powers in authorizing the exclusive franchise.⁴ Disposal countered, arguing the merits of the dormant Commerce Clause violation.

The district court found that non-putrescible "construction debris is not injurious to the public health, and therefore falls outside [of] the County's police power." It further concluded that an exclusive franchise agreement to collect and dispose of construction waste places an excessive burden on interstate commerce in violation of the dormant Commerce Clause. For those reasons, the district court denied Disposal's request for an injunction and damages.⁵ Disposal appeals.

DISCUSSION

In this opinion, we consider whether construction waste poses public health and safety concerns such that the County may, under its police powers, enter into an exclusive franchise agreement for the collection and disposal of construction waste. We also determine whether such an agreement violates the dormant Commerce Clause.

Disposal raises four arguments: (1) that Wee Haul and NJ Enterprises waived their constitutionally based defenses by failing to assert them in their answers as affirmative defenses; (2) that the County has the authority to grant an exclusive franchise for collection and disposal of waste, including construction waste; (3) that the agreement explicitly grants Disposal an exclusive franchise to collect and dispose of construction waste;⁶ and (4) that the agreement does not violate the dormant Commerce Clause. With the exception of the waiver argument, we agree.

Standard of review

This court reviews a district court order denying injunctive relief for abuse of discretion.⁷ However, to the extent that the review involves the construction of a contract, the standard of review is de novo.⁸ Likewise, this court reviews the constitutionality of statutes de novo.⁹ We have previously recognized that "`[s]tatutes are presumed to be valid, and the burden is on the challenger to make a clear showing of their unconstitutionality.'"¹⁰

Alleged waiver pursuant to NRCP 8(c)

Disposal asserts that Wee Haul and NJ's constitutional defenses, that the exclusive franchise agreement violated the dormant Commerce Clause and that the County exceeded its police power, are affirmative defenses that the district court should not have considered because Wee Haul and NJ Enterprises did not affirmatively plead these as defenses.¹¹

An affirmative defense is an argument or assertion of fact that, if true, will defeat the plaintiff's claim even if all allegations in the complaint are true.¹² Generally, NRCP 8(c) provides that an affirmative defense must be pleaded in the answer or it is waived. However, even if not properly pleaded, an affirmative defense may be tried by consent or when fairness warrants consideration of the affirmative defense and the plaintiff will not be prejudiced by the district court's consideration of it.¹³

Here, although Wee Haul and NJ Enterprises did not assert any affirmative defenses in their answers, they raised the constitutional issues in their opposition to Disposal's "Motion for Judgment on the Pleadings and/or for Partial Summary Judgment." Although Disposal objected that Wee Haul and NJ Enterprises had not raised the constitutional arguments in their answer, Disposal addressed the merits of the constitutional issues in its reply. We conclude that Disposal had notice of the constitutional arguments and was thereafter able to fully argue the merits of them.¹⁴ Accordingly, the district court properly considered the constitutional arguments in rendering its decision.

Construction waste poses public health and safety concerns

The district court determined that non-putrescible construction waste was not injurious to the public health and that its regulation therefore fell outside of the County's police powers. We disagree.

We reject the district court's determination that construction waste does not pose public health and safety concerns.¹⁵ To the contrary, in addition to the possibility that such waste could contain materials adverse to human health, including asbestos exposure, construction waste poses other safety hazards by potentially creating conditions that may cause fire, or may cause the collapse of the debris and materials, may create animal habitats, or may create other safety hazards. Certainly, excessive quantities of construction debris can create a public nuisance, subjecting it to county regulation.¹⁶ Accordingly, as set forth below, regulation of construction waste falls within the County's police power.

The County has the authority to grant an exclusive franchise over waste collection and disposal

Police power confers upon the states the ability to enact laws in order to protect the safety, health, morals, and general welfare of society.¹⁷ Municipalities have the right to exercise their police powers and enact ordinances related to the protection of the public health, even if their ordinances interfere with private property rights.¹⁸ The Nevada Legislature enacted NRS Chapter 444 to protect the public health and welfare, to prevent water and air pollution, the spread of disease, and the creation of nuisances, to conserve natural resources, and to enhance the beauty and quality of the environment.¹⁹ To that end, NRS 444.510(1) imposes on local governments²⁰ the obligation to "develop a plan to provide for a solid waste management system" that adequately provides for the management and disposal of solid waste within counties, cities, and towns, including "construction waste."²¹ Additionally, NRS 244.187(3)²² and NRS 244.188(1)(b)²³ authorize counties to grant exclusive franchises to any person or entity to provide services for the "[c]ollection and disposal of garbage and other waste."²⁴ Further, we conclude that the term "other waste" is broad and properly encompasses solid waste, including construction waste. Therefore, counties may include construction waste in exclusive franchise agreements.

Here, the County, in accordance with NRS 444.510, developed a plan for its solid waste management by granting Disposal an exclusive franchise agreement to collect and dispose of all solid waste, including industry construction waste, within the franchise area. The County's plan included an exclusive franchise agreement as authorized under NRS 244.187(3) and NRS 244.188(1)(b). Accordingly, the County was authorized to enact an ordinance granting an exclusive franchise agreement to Disposal for the collection and disposal of waste, including construction waste.

The County's exclusive franchise agreement does not violate the dormant Commerce Cause

Disposal argues that the district court erred when it found that the exclusive franchise...