Middle Creek Farm, LLC v. Portsmouth Water & Fire Dist.

• Decision Date: 16 June 2021
• Docket Number: No. 2019-95-Appeal.,NC 16-231,2019-95-Appeal.
• Parties: MIDDLE CREEK FARM, LLC, et al. v. PORTSMOUTH WATER & FIRE DISTRICT et al.
• Court: Rhode Island Supreme Court

252 A.3d 745

MIDDLE CREEK FARM, LLC, et al.

v.PORTSMOUTH WATER & FIRE DISTRICT et al.

No. 2019-95-Appeal.

NC 16-231

Supreme Court of Rhode Island.

June 16, 2021

Neil P. Galvin, Esq., Girard A. Galvin, Esq., Aivi Nguyen, Esq., For Plaintiffs

Adam M. Ramos, Esq., Christine E. Dieter, Esq., For Defendant.

Present: Suttell, C.J., Goldberg, Robinson, Lynch Prata, and Long, JJ.

Justice Lynch Prata, for the Court.

The defendant, Portsmouth Water & Fire District (PWFD or the district), appeals from a judgment entered in favor of the plaintiffs, Middle Creek Farm, LLC (Middle Creek Farm); Middlecreek, LLC; Douglas W. Politi; and Catherine M. Politi (plaintiffs).¹ PWFD contends that the hearing justice erred in partially granting Middle Creek Farm's motion for summary judgment in its declaratory-judgment action.

On appeal, PWFD contends that the hearing justice erred in deciding that the three lots at issue are part of PWFD's coverage area under its charter. PWFD asserts that the Superior Court should have given deference to PWFD's interpretation of its charter. PWFD additionally argues that the plaintiffs failed to exhaust their administrative remedies and failed to join indispensable parties. For the reasons set forth in this opinion, we affirm the judgment of the Superior Court.

Facts and Travel

This matter concerns an eleven-lot subdivision that straddles the border between Portsmouth and Middletown. Seven lots have homesites located in Portsmouth, and four lots have homesites located in Middletown. Three of the four lots that have homesites in Middletown (sub-lots 1, 2, and 4) contain a portion of land located in Portsmouth. One of the four lots has no land in Portsmouth and is entirely in Middletown (sub-lot 3).²

The subdivision was approved by the planning boards of both Middletown and Portsmouth. In May 2016, PWFD petitioned the Portsmouth Planning Board to reopen its final approval of the so-called "Middle Creek subdivision." At the reopened hearing, PWFD requested that Middle Creek Farm be required to extend a water main from an adjoining street in Portsmouth that would pass in front of all of the lots in the subdivision and connect to another water main on another street in Portsmouth to make a full loop, which would benefit PWFD by improving water flow for PWFD water mains.

Middle Creek Farm filed suit in Superior Court, originally intended to be a so-called "friendly suit," at the suggestion of PWFD, in order to stimulate the City of Newport's agreement to the water tie-in as described. The City of Newport provides water to the Town of Middletown. On July 19, 2016, PWFD held a meeting at which the water main extension was formally approved and accepted. Shortly thereafter, the City of Newport agreed to allow the tie-in for the lots located partially or wholly in the Town of Middletown. Subsequently, PWFD refused to permit Middle Creek Farm to connect the four sub-lots that have houses located in Middletown to the water main; and, as stated supra , three of those lots contain property in Portsmouth.

Middle Creek Farm's action requested declaratory and injunctive relief. It sought a declaration that PWFD was required to provide water services to the subdivision lots.³ Subsequently, the other party-plaintiffs were joined in the case. In due time, Middle Creek Farm filed a motion for summary judgment, to which PWFD objected.

At a hearing on the motion for summary judgment, Middle Creek Farm argued that sub-lots 1, 2, and 4 were entitled to water service from PWFD because each of those lots had a portion of its property in Portsmouth that was taxed by both the Town of Portsmouth and PWFD, and that the payment of taxes triggered the obligation to provide water to those lots. Middle Creek Farm also argued that neither the language of PWFD's charter nor that of G.L. 1956 § 46-15-2 prevented the lots that have a portion of property in Portsmouth from being entitled to connect to the PWFD water system.⁴ Middle Creek Farm further contended that, in accordance with § 46-15-2, PWFD may "extend its supply or distribution mains" and "supply water" outside its district because it had legally supplied water to a location in Middletown in the past pursuant to a stipulation entered in the Newport County Superior Court case of Brennan v. Esposito , NC-85-264.⁵

PWFD argued at the hearing that it was prohibited from providing water to the lots in question because those lots were not in its area of coverage as outlined in Section 5 of its charter. According to PWFD's interpretation of its charter, it was required to provide water only for any property that has a building located within its coverage area in the town of Portsmouth. PWFD also contended that its charter required that the actual residence be located within Portsmouth to be eligible for water service and that § 46-15-2 prohibited water service beyond the boundaries of PWFD, at least until various state agencies gave approval, which had not occurred. After further argument, the hearing justice continued the matter for two months for additional discovery and supplemental memoranda.

PWFD later filed a motion to dismiss plaintiffs’ action for the failure to join indispensable parties. PWFD asserted in its papers and at a subsequent hearing that owners of any lot that straddled the Middletown-Portsmouth line were indispensable parties in this case. Middle Creek Farm disagreed, arguing that the interests of those property owners were speculative.

When pressed at the continued hearing on the issue of Middle Creek Farm's motion for summary judgment, PWFD argued that paying real estate taxes to PWFD does not automatically qualify a property owner to connect to the water main and receive a water supply from PWFD. PWFD contended that, to the extent that there is any obligation, it was obligated only to provide water for inhabitants of its district. PWFD suggested that several factors could determine whether an owner qualified as an inhabitant of the district, including whether the property owner has a house within Portsmouth, whether the owner is eligible to vote in Portsmouth, whether the property has a Portsmouth address, and whether the children on the property are eligible to attend Portsmouth public schools. PWFD further contended that summary judgment was not appropriate because consideration of those factors involved factual determinations. PWFD also argued that great weight must be given to its interpretation of the term "inhabitants" in its charter.

Middle Creek Farm again argued, citing cases from other jurisdictions, that the payment of taxes to PWFD by the lot owners triggered PWFD's obligation to provide water to them. See Hatch v. Consumers’ Co., Ltd. , 17 Idaho 204, 104 P. 670, 676 (1909), aff'd , 224 U.S. 148, 32 S.Ct. 465, 56 L.Ed. 703 (1912) (concluding that with the power to tax comes the duty to provide water to the property owners). Middle Creek Farm disagreed with PWFD's assertion that water service was limited to a narrow interpretation of the term "inhabitants" under Section 5 of PWFD's charter. Middle Creek Farm noted that commercial properties and recreational properties receive water from PWFD despite not having inhabitants.

After taking the matter under advisement, the hearing justice issued a written decision on Middle Creek Farm's motion for summary judgment and PWFD's motion to dismiss for the failure to join indispensable parties. As to Middle Creek Farm's request for declaratory relief, the hearing justice indicated that the meaning of the term "inhabitants" under Section 5 of PWFD's charter was the central issue in the case. Section 5 provides that PWFD is authorized to distribute water "to the inhabitants of the district[.]" In reading other portions of Section 5, the hearing justice decided that the term "inhabitants" should be interpreted expansively. He noted that Section 5 also stated that "the owner of any house, building, tenement or estate shall be liable for the payment of the water rates and charges fixed by the district[.]" The hearing justice decided that this reference to an "estate" and other references to real estate in other sections of the charter indicated that PWFD was obligated to provide water service to owners of real estate in the district who pay taxes to the district. The hearing justice stated that a contrary interpretation, particularly in light of the district's broad power to tax contained in Section 10 of its charter, would lead to the absurd result of PWFD not being obligated to supply water to taxable businesses or farmland that do not have residences. Therefore, he decided that sub-lots 1, 2, and 4 were entitled to water from PWFD and granted summary judgment as to those lots.

The hearing justice also decided that § 46-15-2 did not prevent PWFD from distributing water to sub-lots 1, 2, and 4; he reasoned that those lots were within the district's coverage area because they contained taxable land located in Portsmouth. He stated that PWFD could pursue any administrative remedies it might have with the Rhode Island Water Resources Board (the board).

Finally, the hearing justice denied PWFD's motion to dismiss for failure to join indispensable parties. The hearing justice noted that PWFD had not demonstrated that the owners of fifty-three properties straddling the Middletown-Portsmouth border had an interest in the judgment of this case or would be negatively affected by the case. The hearing justice indicated that the interest of those property owners was speculative. He also stated that PWFD had not demonstrated that the interest of those property owners was inextricably tied to the case. The hearing justice further stated that joining those property owners to the case was not practicable, because some of the properties in question had multiple owners.

An order implementing the hearing justice's decision was entered on August 20, 2018. The order provided that Middle Creek Farm's motion for summary judgment was granted in part...