Highlands at Jordanelle, LLC v. Wasatch Cnty.

• Decision Date: 09 July 2015
• Docket Number: No. 20130445–CA.,20130445–CA.
• Parties: HIGHLANDS AT JORDANELLE, LLC, Plaintiff, Appellee, and Cross-appellant, v. WASATCH COUNTY and Wasatch County Fire Protection Special Service District, Defendants, Appellants, and Cross-appellees. Mustang Development, LLC, et al., Plaintiffs, Appellees, and Cross-appellants, v. Wasatch County Fire Protection Special Service District, Defendant, Appellant, and Cross-appellee.
• Court: Utah Court of Appeals

355 P.3d 1047

2015 UT App 173

HIGHLANDS AT JORDANELLE, LLC, Plaintiff, Appellee, and Cross-appellant

v.WASATCH COUNTY and Wasatch County Fire Protection Special Service District, Defendants, Appellants, and Cross-appellees.

Mustang Development, LLC, et al., Plaintiffs, Appellees, and Cross-appellants

v.Wasatch County Fire Protection Special Service District, Defendant, Appellant, and Cross-appellee.

No. 20130445–CA.

Court of Appeals of Utah.

July 9, 2015.

Rehearing Denied Sept. 8, 2015.

Barton H. Kunz II, Tyler V. Snow, Joseph A. Gatton, Salt Lake City and Scott H. Sweat, Attorneys for Appellant Wasatch County.

Joseph E. Tesch and Stephanie K. Matsumura, Park City, Attorneys for Appellant Wasatch County Fire Protection Special Service District.

Matthew C. Barneck and Chad E. Funk, Salt Lake City, Attorneys for Appellees Highlands at Jordanelle, LLC, Mustang Development, LLC, et al.

Gavin J. Anderson, Kelly W. Wright, Salt Lake City, and Bradley C. Johnson, Attorneys for Amicus Curiae Utah Association of Counties.

Judge GREGORY K. ORME authored this Opinion, in which Judges JAMES Z. DAVIS and J. FREDERIC VOROS JR. concurred.

Opinion

ORME, Judge:

¶ 1 Wasatch County (the County) and the Wasatch County Fire Protection Special Service District (the Fire District) appeal the trial court's determination that, among other things, the County and the Fire District must refund fire-protection service fees to certain landowners. Because we determine that at least some of the service fees were reasonable, we affirm in part, reverse in part, and remand to the trial court for further proceedings consistent with this opinion.

BACKGROUND¹

¶ 2 The Jordanelle Reservoir, located in rural Wasatch County, was completed in 1995. Landowners wanted to take advantage of their newly created lakefront property but were stymied by dated zoning regulations that permitted only one farmhouse per 160 acres. In response, the Wasatch County Commission passed a resolution that allowed developers to seek a higher building density by applying for a “density determination.” Once the County made a density determination, it would grant the landowners the right to build multiple equivalent residential units (ERUs) on their property. But because the Jordanelle Reservoir was far from any existing fire stations, the County also determined that the developers should pay additional fire-protection service fees to build an adequate fire station in the area.²

¶ 3 The Wasatch County Commissioners,³ acting as the board of the Fire District, then passed Resolution 99–3, which authorized the Fire District to charge a monthly fee of $14.81 per ERU. Once landowners had their ERU determination, they were required to pay the monthly fee whether they started construction on the property or not. For example, Highlands at Jordanelle, LLC, the original plaintiff in this case, received a density determination of 376 ERUs. It was therefore required to pay $14.81 per ERU, a total of $5,568.56 per month, from that point forward.

¶ 4 To pay down the construction bond for the new fire station in the Jordanelle area, the Fire District charged additional fees, which it characterized as “lump-sum fees” or “bond buy-in fees.” The County originally paid for the new fire station and related equipment, and the Fire District subleased it from the County. In 2002, the Fire District refinanced the sublease through a twenty-year bond.

¶ 5 In 2008, Highlands brought suit against the County and the Fire District, challenging, among other things, the reasonableness of the fire-protection service fees. Other landowners filed similar lawsuits, and the lawsuits were eventually consolidated.

¶ 6 Late in 2010, the landowners moved for partial summary judgment, asking the court to order a refund of the lump-sum fees and the monthly fees. The trial court entered an order ruling that the lump-sum fees were never authorized by Resolution 99–3 and must be refunded to the landowners. It further determined that while the monthly fees were authorized by Resolution 99–3, the fees did not bear a “reasonable relationship to the actual costs of providing the services.” Accordingly, the trial court ordered a refund of the monthly fees as well.

¶ 7 In 2011, after the trial court ordered that all of the fees be refunded but before the fees were actually refunded, the Fire District used $1,450,000 to pay off the fire station bond completely, eleven years ahead of schedule. The County then conveyed title to the fire station to the Fire District.

¶ 8 Over the next two years, the trial court determined, among other things, that the County was jointly liable with the Fire District and that the two entities must refund all the fees in full. It also determined that several of the landowners had paid both monthly and lump-sum fees more than four years before filing their lawsuits and were therefore barred from recovering those amounts by the applicable statute of limitations.

ISSUES AND STANDARDS OF REVIEW

¶ 9 On appeal, the County and the Fire District assert that the trial court erred by granting the landowners' motion for partial summary judgment and ordering a refund of the monthly fees.⁴ We review a trial court's legal conclusions and ultimate grant or denial of summary judgment for correctness. Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600.

¶ 10 The County asserts that the trial court incorrectly determined that the County was jointly liable with the Fire District for the lump-sum fees and the monthly fees. A trial court's interpretation of “precedent, statutes, and the common law are questions of law that we review for correctness.” Ellis v. Estate of Ellis, 2007 UT 77, ¶ 6, 169 P.3d 441.

¶ 11 Both the County and the Fire District challenge the trial court's grants of summary judgment in favor of the landowners, the court's awards of attorney fees and expert-witness fees, and the addition of prejudgment interest on the lump-sum fee and monthly fee refunds. As just mentioned, we review a trial court's legal conclusions and ultimate grant or denial of summary judgment for correctness. Orvis, 2008 UT 2, ¶ 6, 177 P.3d 600.

¶ 12 The landowners filed a cross-appeal, arguing that the trial court erred in concluding that the discovery rule did not toll the statute of limitations for some of the landowners' claims. The applicability of a statute of limitations and the applicability of the discovery rule raise questions of law that we review for correctness. Colosimo v. Roman Catholic Bishop of Salt Lake City, 2007 UT 25, ¶ 11, 156 P.3d 806.

¶ 13 The landowners also appeal the trial court's determination that, under rule 15(c) of the Utah Rules of Civil Procedure, one of the landowners' refund claims did not relate back to the original complaint and was therefore untimely. We review a trial court's rule 15(c) analysis for correctness.⁵

Gary Porter Constr. v. Fox Constr., Inc., 2004 UT App 354, ¶ 31, 101 P.3d 371.

ANALYSIS

A. Reasonableness of the Monthly and Lump-sum Fees

¶ 14 The County and the Fire District challenge the trial court's determination that the monthly fees were not reasonably related to the cost of the services provided and that therefore they must be refunded.

¶ 15 Utah law permits special service districts, like the Fire District, to impose “fees or charges for any commodities, services, or facilities provided by the service district.” Utah Code Ann. § 17A–2–1320(1)(a) (Lexis 1999).⁶ To impose a fee, a district must first give proper notice of the proposed fee, hold a public hearing, and then pass a resolution authorizing the fee. See id. § 17A–1–203(1). Even with a valid authorizing resolution, however, the fee must still be reasonable. “To be a legitimate fee for service, the amount charged must bear a reasonable relationship to the services provided, the benefits received, or a need created by those who must actually pay the fee.” V–1 Oil Co. v. Utah State Tax Comm'n, 942 P.2d 906, 911 (Utah 1996), vacated in part on other grounds, 942 P.2d 906 (Utah 1997). The Utah Supreme Court has also recognized that the benefits and costs of some municipal services are hard to quantify:

The nature of the service or benefit provided may also make it difficult or impossible to distribute the services or benefits equally to all who pay the fee. For such a fee to be reasonable, we have directed that it should be fixed so as to be equitable in light of the relative benefits conferred as well as the relative burdens imposed.

Id. at 911–12 (internal citation omitted). Additionally, our Supreme Court determined that “fixing the amount of a fee is a legislative act to which we grant great deference.” Id. at 917.

¶ 16 Considering the difficulty of fairly assessing fire-protection and related emergency-service fees and the great deference owed to the Fire District in adopting the legislation in question, we cannot agree that the monthly fees were unreasonable. The trial court determined that the monthly fees were unreasonable because the density determination alone did not authorize construction and therefore did not immediately create any additional costs. But the rule of V–1 Oil is that the fee must be related to the cost of providing the service or to the benefit conferred or to the need created by those who pay the fee. See id. at 911. The trial court may be correct that the cost of providing fire-protection services to the undeveloped land did not immediately increase. But the benefit conferred on the landowners and the need created by the landowners did increase following the density determinations.

¶ 17 The benefit conferred upon the landowners was significant. Once the landowners received their density determinations, they had a vested right to increased building density—in the case of Highlands, increasing its ability to develop the land to 376 ERUs. The density determination made the landowners' property instantly more marketable, more amenable to development, and much more valuable. The fact that the area was well provisioned with a...