Iredell Water Corp. v. City of Statesville
| Decision Date | 25 April 2022 |
| Docket Number | Civil Action 5:21-CV-00132-KDB-DSC |
| Parties | IREDELL WATER CORPORATION, Plaintiffs, v. CITY OF STATESVILLE, Defendants. |
| Court | U.S. District Court — Western District of North Carolina |
THIS MATTER is before the Court on Plaintiff's Motion for Partial Summary Judgment (Doc. No. 23), which Defendant opposes. (Doc. No. 27). The Court has carefully reviewed the motion and considered the parties' briefs and exhibits. For the reasons discussed below, the Court will GRANT in part and DENY in part the motion.
This case involves a territorial dispute over water utility service in the City of Statesville between the Defendant City and Plaintiff Iredell Water Corporation (“IWC”) a North Carolina corporation formed in 1966 as a Chapter 55A nonprofit corporation to construct and operate a water distribution system. IWC has borrowed funds from the United States Department of Agriculture since 1967. IWC asserts that since 1985 the City has been annexing property and providing water to persons in those annexed areas in violation of IWC's exclusive monopoly to provide water under 7 U.S.C. § 1926(b).
IWC brings its claims under 42 U.S.C. § 1983 and is seeking 1) damages for the alleged encroachment, 2) a declaratory judgment that the City's actions violate § 1926(b), 3) an injunction restraining the City from selling water in competition with IWC, and 4) a declaration that the City's equipment used to serve water customers that are allegedly within IWC's service area be held in constructive trust for IWC. The City has counterclaimed, alleging violations of 15 U.S.C. § 2 (unlawful monopolization); the First Amendment of the United States Constitution; Article I, Section 34 of the North Carolina Constitution; and North Carolina General Statutes §§ 75-1.1, 752.1, 55A-3-04, and 55A-14-30. (Doc. No. 9). The City also asks for a declaratory judgment defining IWC's proper service area. Id.
Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Variety Stores, Inc. v. Wal-Mart Stores, Inc., 888 F.3d 651, 659 (4th Cir. 2018) (quoting Fed.R.Civ.P. 56(a)); see United States, f/u/b Mod. Mosaic, LTD v. Turner Constr. Co., et al., 946 F.3d 201, 206 (4th Cir. 2019).
A factual dispute is considered genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “A fact is material if it might affect the outcome of the suit under the governing law.” Vannoy v. Federal Rsrv. Bank of Richmond, 827 F.3d 296, 300 (4th Cir. 2016) (quoting Libertarian Party of Va. v. Judd, 718 F.3d 308, 313 (4th Cir. 2013)).
The party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact through citations to the pleadings, depositions, answers to interrogatories, admissions, or affidavits in the record. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003). “The burden on the moving party may be discharged by ‘showing' ... an absence of evidence to support the nonmoving party's case.” Celotex, 477 U.S. at 325. Once this initial burden is met, the burden shifts to the nonmoving party. The nonmoving party “must set forth specific facts showing that there is a genuine issue for trial, ” Id. at 322 n.3. The nonmoving party may not rely on mere allegations or denials of allegations in his pleadings to defeat a motion for summary judgment. Id. at 324.
In determining if summary judgment is appropriate, “courts must view the evidence in the light most favorable to the nonmoving party and refrain from weigh[ing] the evidence or mak[ing] credibility determinations.” Variety Stores, 888 F.3d at 659 (internal quotation marks omitted) (quoting Lee v. Town of Seaboard, 863 F.3d 323, 327 (4th Cir. 2017)); see Modern Mosaic at *2. “Summary judgment cannot be granted merely because the court believes that the movant will prevail if the action is tried on the merits.” Jacobs v. N.C. Admin. Off. of the Courts, 780 F.3d 562, 568-69 (4th Cir. 2015) (quoting 10A Charles Alan Wright & Arthur R. Miller et al., Federal Practice & Procedure § 2728 (3d ed.1998)).
However, “[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Ricci v. DeStefano, 557 U.S. 557, 586 (2009) (internal citations omitted). Anderson, 477 U.S. at 248. The mere argued existence of a factual dispute does not defeat an otherwise properly supported motion. Id. If the evidence is merely colorable, or is not significantly probative, summary judgment is appropriate. Id. at 249-50.
In the end, the question posed by a summary judgment motion is whether the evidence as applied to the governing legal rules “is so one-sided that one party must prevail as a matter of law.” Id. at 252.
IWC asked for leave to file a motion for partial summary judgment on February 16, 2022 to “narrow the scope of the case, and associated discovery.” (Doc. No. 19). The Court granted the motion the following day.
IWC has now moved for partial summary judgment seeking a ruling from the Court: (1) that for the purpose of IWC's § 1926(b) claims, (a) IWC is an “association” contemplated by § 1926(b), (b) is indebted on a qualifying federal loan under 7 U.S.C. §§ 1926(a) and 1926(b), and (c) has the legal right to provide water service to the water customers located within the “Encroachment Areas” under North Carolina law; (2) that IWC's § 1926(b) rights are enforceable under 42 U.S.C. § 1983; (3) that Statesville's Affirmative Defenses are unavailable as a matter of law; and (4) striking or dismissing Statesville's Counterclaims. (See Doc. No. 23-3).
To qualify for protection under § 1926(b), IWC must establish that (1) it is an “association” under the Consolidated Farm and Rural Development Act of 1961, (2) it has a qualifying federal loan outstanding, and (3) it has provided water service or made it available to the disputed area. Chesapeake Ranch Water Co. v. Bd. of Comm'rs of Calvert Cty., 401 F.3d 274, 278 (4th Cir. 2005) (citing Le-Ax Water Dist. v. City of Athens, Ohio, 346 F.3d 701, 705 (6th Cir. 2003)). To satisfy the third element, that an association has provided or made available service, IWC must prove that (1) it is physically capable of serving the area in dispute, (2) it has the legal right under state law to do so, and (3) the disputed area is within the geographic boundaries of the association's existing franchise area. Id. at 281.[1]
As noted above, IWC has moved for summary judgment on the first two elements and on part of the test for whether service has been made available. Specifically, IWC argues that: (a) IWC is an “association” contemplated by § 1926(b), (b) is indebted on a qualifying federal loan, and (c) has the legal right to provide water service to the water customers located within the “Encroachment Areas” under North Carolina law. (Doc. No. 23-3). The City admitted in its Response that IWC is an “association” under the CFRDA. (Doc. 27 at 5). Therefore, the Court will grant IWC summary judgment as to whether it is an “association” under § 1926(b) and find that it is an association as defined by the CFRDA.
However, as to all other arguments raised by IWC related to its § 1926(b) claims, the Court finds partial summary judgment would be inappropriate. Rule 56(a) permits the Court to “grant summary judgment ‘with respect to all claims in an action or only some claims in a multiple claim action.'” Parker v. Smithfield Packing Co., No. 7:07-CV-176-H, 2010 U.S. Dist. LEXIS 101185, at *16 (E.D. N.C. Aug. 31, 2010) (citing Evergreen Intern., S.A. v. Marinex Const. Co., Inc., 477 F.Supp.2d 697, 699 (D.S.C. 2007)). Thus, a party is not entitled to partial summary judgment unless such judgment would be dispositive of an entire claim. Evergreen, 477 F.Supp.2d at 699 (citing City of Wichita v. United States Gypsum Co., 828 F.Supp. 851, 868-69 (D. Kan. 1993)) ( that the “all or any part” language in Rule 56(a) permits the granting of summary judgment with respect to all claims in an action or only some claims in a multiple claim action). The “piecemealing” of chosen elements on a single claim is not permitted by Rule 56. Parker, 2010 U.S. Dist. LEXIS 101185, at *17. Consequently, the Court will deny IWC's motion as to all of its § 1926(b) arguments[2] except as to whether it is an association under § 1926(b).[3]
In its answer and counterclaim, (Doc. No. 9), the City asserted several affirmative defenses. IWC contends, among other things, that many of these “affirmative defenses” are not properly characterized as affirmative defenses and therefore fail as a matter of law.
An “affirmative defense” is made up of facts and argument that, if true, will defeat the plaintiff's claims even if the allegations in the complaint are true. See Emergency One, Inc. v. Am. Fire Eagle Engine Co., 332 F.3d 264, 271 (4th Cir. 2003) (). The Court will address each challenged affirmative defense in turn.[4]
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