Mountain States Tel. and Tel. Co. v. City and County of Denver

• Decision Date: 17 April 1986
• Docket Number: No. 85CA0006,85CA0006
• Parties: The MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY, a Colorado corporation, Plaintiff-Appellant, v. The CITY AND COUNTY OF DENVER; the Department of Public Works and Division of Wastewater Management Thereof, Defendants-Appellees. . II
• Court: Colorado Court of Appeals

Page 52

725 P.2d 52

The MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY, a Colorado corporation, Plaintiff-Appellant, v. The CITY AND COUNTY OF DENVER; the Department of Public Works and Division of Wastewater Management Thereof, Defendants-Appellees.

No. 85CA0006.

Colorado Court of Appeals Div. II.

April 17, 1986.

Rehearing Denied May 15, 1986.

Certiorari Granted (City) Sept. 29, 1986.

Bruce G. Smith, Denver, for plaintiff-appellant.

Stephen H. Kaplan, City Atty., George J. Cerrone, Jr., Andrew L. Weber, Asst. City Attys., Denver, for defendants-appellees.

STERNBERG, Judge.

Plaintiff, Mountain States Telephone and Telegraph Company (MSTTC), appeals from an order granting summary judgment in favor of defendant, City and County of Denver (Denver). We reverse.

MSTTC, a Colorado corporation, is in the business of providing telephone service across Colorado. It operates as a public utility regulated by the Public Utilities Commission. The Denver Department of Public Works (Department) was established by the City Charter and is vested with "supervision and control of all streets, alleys, highways, thoroughfares, sewers, bridges, viaducts, tunnels, and other light structures wherever located ..." in Denver. The Wastewater Management Division of the Department (Division) was established pursuant to authority granted the manager of public works to control the carriage, treatment, and disposal of wastewater within Denver. The Division is entirely self-sustaining in the sense that it has no access to general tax revenues, and its activities and obligations, including payment to investors of interest on revenue bonds issued to finance them, are funded primarily by fees and service charges paid by users of the facilities under its control.

In 1973 and 1976, MSTTC constructed telephone transmission facilities under and along East 56th Avenue between Chambers Road and Tower Road. Though not a state highway, this road is a public right-of-way that lies partly within Denver County and partly within Adams County. In 1973, Denver entered into an agreement with a private developer for annexation of a subdivision located in this general area.

Rules and regulations enacted pursuant to the Denver Subdivision Ordinance provided in pertinent part that:

"The developer is responsible for the costs of utility relocation for street improvement or modifications caused by or for the benefit of the development project.

.... "All mainline storm and sanitary sewer system construction shall be inspected and tested by the Waste Water Management Division.... The owner or developer shall agree to pay all costs incident to the inspection, material testing, and street and alley repair connected with work performed." (emphasis supplied)

"Rules and Regulations Governing Sewerage Charges and Fees and Management of Waste Waters" provided in pertinent part that:

"All costs and expenses incident to the installation and connection of any sewer or other works for which a permit has been issued shall be borne by the owner.

....

"Sewer service may be made available by the extension of the City sewerage system to provide a sewer adjacent to the property to be served.... If immediate service is desired, the costs of the extension of the City sewer shall be borne by the person or persons requesting the extension...." (emphasis supplied)

The annexation agreement in question, however, required Denver to extend sanitary sewer facilities to serve the subdivision at no cost to the developer.

In 1981, the Division began road excavation and sewer construction operations which required relocation of facilities previously installed by MSTTC. Relocation was requested by the director of the Division on the behalf of the Department. MSTTC took the position that it would resist relocation unless assured of reimbursement for its costs in doing so. The Department informed MSTTC that construction would proceed as planned. It was agreed that MSTTC would relocate in order to avoid damage to its facilities and interruptions in service, while the parties would preserve for judicial determination the issue of reimbursement.

Denver continued to refuse to reimburse MSTTC and this litigation ensued. MSTTC alleged relocation costs of $20,925.90. Some of this expense arose in connection with construction of new telephone lines along the Adams County portion of the right-of-way. As completed, the sewer line serves nearby areas of Adams County.

The case was presented to the court largely as stipulated facts and each party moved for summary judgment. The trial court granted Denver's motion and MSTTC appeals.

In asserting the correctness of the trial court's ruling, Denver relies on the common law rule that a utility forced to relocate from a public right-of-way as a consequence of reasonable acts of municipal regulation, must do so at its own expense. In support of this argument it cites Norfolk Redevelopment Housing Authority v. Chesapeake & Potomac Telephone Co., 464 U.S. 30, 104 S.Ct. 304, 78 L.Ed.2d 29 (1983); and E. McQuillen, Municipal Corporations, §§ 24.565, 24.588, 30.39, and 34.74(a) (3d ed. 1970).

MSTTC, however, urges us to adopt an exception to this common law rule which places the cost of relocation on the municipality "where the relocation of [a utility's] facilities has been necessitated by the municipality's exercise of a proprietary rather than a governmental function or purpose." 12 E. McQuillen, supra, § 34.74(a). It contends, and we agree, that Norfolk Redevelopment, supra, is inapposite here because the actions complained of therein were not proprietary in nature.

MSTTC relies on the principle, long recognized in Colorado, that a municipality possesses two classes of powers and functions: (1) those that are termed public and governmental because they relate primarily to matters of statewide concern; and (2) those that are termed private and proprietary because they relate primarily to matters of local advantage. See City of Denver v. Hubbard, 17 Colo.App. 346, 68 P. 993 (1902); 2 E. McQuillen, supra, §§ 4.78, 4.79.

MSTTC recognizes that municipalities generally may require relocation of utility facilities when necessitated by improvements directly related to the public interest in safe and convenient use of streets because such activities are governmental in nature. It contends, however, that the construction involved here was not of this variety because it was undertaken for the sole purpose of providing sewer service pursuant to the annexation agreement and because the sewer as constructed serves not only Denver, but also portions of Adams County. Citing City of Northglenn v. City of Thornton, 193 Colo. 536, 569 P.2d 319 (1977) and County of Larimer v. City of Fort Collins, 68 Colo. 364, 189 P. 929 (1920), MSTTC contends that it is well-established in Colorado that water and sewer facilities are proprietary in nature. Further, citing Colorado Open Space Council, Inc. v. City & County of Denver, 190 Colo. 122, 543 P.2d 1258 (1975) and City...