Pinetop Lakes Ass'n v. Ponderosa Domestic Water Improvement Dist.
| Decision Date | 27 May 2010 |
| Docket Number | 1 CA-CV 09-0395 |
| Parties | PINETOP LAKES ASSOCIATION, an Arizona homeowner's association, P.O. Box 2830 Pinetop, AZ 85935, Plaintiff/Appellee, v. PONDEROSA DOMESTIC WATER IMPROVEMENT DISTRICT, 8706 Country Club Drive, Pinetop, AZ 85935, Defendant/Appellant. PONDEROSA DOMESTIC WATER IMPROVEMENT DISTRICT, a domestic water improvemen district organized and existing under the laws for the State of Arizona, Plaintiff/Appellant, v. MALRY CONSTRUCTION, LLC, an Arizona limited liability company; JAMES and NANCY RILEY; SHAWN MORRISON; FRANK SMITH; JAMES L. PARKINSON; EUN S. JEON; JOHN D. BLACKMORE and DONNA J. BLACKMORE; MARCELLA PATTON, Defendants/Appellees. |
| Court | Arizona Court of Appeals |
NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. See Ariz. R. Supreme Court 111(c); ARCAP 28(c); Ariz. R. Crim. P. 31.24
(Not for Publication-Rule 28, Arizona Rules of Civil Appellate Procedure)
Appeal from the Superior Court in Navajo CountyCause Nos. CV 2007-0615, CV 2007-0626 (consolidated)
Jennings Strouss & Salmon PLC
By Douglas G. Zimmerman
and Ronald D. Roach
Attorneys for Appellant
Phoenix
Beus Gilbert PLLC
By Timothy B. Shaffery
Franklyn D. Jeans
and Cory L. Broadbent
Attorneys for Appellees
Scottsdale
¶1 The Ponderosa Domestic Water Improvement District (the District) appeals the trial court's order dismissing its condemnation claims and granting an injunction to the Pinetop Lakes Association (the Association) preventing the District from pursuing well construction on a lot it had purchased in the Bent Oaks Subdivision (Bent Oaks). For the reasons that follow, we vacate the trial court's order and remand for further proceedings.
¶2 The Navajo County Board of Supervisors organized the District in September of 1984 as a water improvement district. The Board resolved to organize the District after a majority ofthe property owners within its boundaries signed a petition agreeing to its creation. The resolution creating the District found that its formation would promote the "public convenience, necessity or welfare of the District."
¶3 In recent years, the District identified a need for new water capacity within its boundaries after drought conditions led to loss of the use of three wells, and approximately 400 new lots were added within District boundaries. Accordingly, the District recognized the need for additional wells to supply its water users, including those in Bent Oaks.
¶4 In response to this supply gap, the District took preliminary actions to place a well in Bent Oaks. In 2003, the District purchased Lot 27 in the subdivision. The District chose the site because of its size, the availability of three-phase power, drainage, and its proximity to an unused 500,000 gallon storage tank and booster system. The District drilled a well on the site to test water quality.
¶5 The District's use of Lot 27 was limited by Bent Oaks' Declaration of Reservations, Restrictions, Covenants, and Conditions (CC&Rs). The Bent Oaks CC&Rs restrict the properties in the subdivision to "residential use only" and prohibit "business activities of any kind whatsoever." Pursuant toNavajo County's Special Development Zoning Ordinance, section 17, zoning is established by the conditions specified in CC&Rs after they are approved and adopted by the Navajo County Planning Commission and the Board of Supervisors. The Bent Oaks CC&Rs became part of the properties' zoning under the Special Development rules on May 1, 1989.1
¶6 In May 2004, the Association board refused the District's request for a variance from the zoning restrictions to allow well construction, asserting that it did not have authority to grant such a variance. On August 15, 2007, the District's Board of Directors authorized acquisition of any property rights that required the District to comply with Bent Oaks' CC&Rs. On December 17, 2007, in anticipation of a condemnation action, the Association filed a complaint claiming breach of the CC&Rs and seeking a preliminary injunction. On December 20, the District filed an action to condemn the CC&Rs in order to enable them to build a well on Lot 27, and the trial court consolidated the two cases.
¶7 The trial court began an evidentiary hearing on the consolidated case on May 8, 2008, on the District's application for an order of immediate possession. See Ariz. Rev. Stat. (A.R.S.) § 12-1116(H) (Supp. 2009) (). Testimony did not conclude by the end of the day. Rather than reschedule a new hearing date, the trial court, with the consent of the parties, decided to rule on the preliminary question whether the District could proceed with condemnation if doing so would violate the applicable zoning regulations.
¶8 After taking the matter under advisement, the court denied the District's condemnation action. The court reasoned that the District's eminent domain powers were limited by the county's zoning restrictions because the District was performing a proprietary function rather than a governmental one, relying on precedent defining a municipality's delivery of water to its inhabitants for a fee as a proprietary function.
¶9 The District filed a special action seeking relief from the order, and we declined jurisdiction on October 28, 2008. On May 27, 2009, the court issued a final order to which the parties had stipulated and from which the District now appeals. The District filed a timely notice of appeal. We have jurisdiction pursuant to A.R.S. § 12-2101(B) (2003).
¶10 The District argues on appeal that its condemnation of the CC&Rs was lawful because its eminent domain power is not limited by county zoning laws when exercised to discharge its sole purpose of providing water to the District. The Association contends that the superior court correctly held that Navajo County zoning ordinances limit the District's eminent domain power when it is used for water service, which the court found to be a proprietary function. We apply de novo review to "the superior court's interpretation and application of statutory and constitutional provisions." Egan v. Fridlund-Horne, 221 Ariz. 229, 232, ¶ 8, 211 P.3d 1213, 1216 (App. 2009). We are bound by the trial court's factual findings unless they are clearly erroneous, Flying Diamond Airpark, LLC v. Meienberg, 215 Ariz. 44, 47, ¶ 9, 156 P.3d 1149, 1152 (App. 2007), or if they combine law and fact "when there is an error as to the law," Egan, 221 Ariz. at 232, ¶ 8, 211 P.3d at 1216.
¶11 We begin our analysis by examining both the statutory and constitutional bases for the District's eminent domain power. The District is a county improvement district created pursuant to A.R.S. § 48-901 to-1088 (2000 & Supp. 2009). See A.R.S. § 48-903(A) (Supp. 2009) (); § 48-906(A) (Supp. 2009) (). Once established, an improvement district is a "body corporate with the powers of a municipal corporation for the purpose of carrying out [Article 1]," which includes the power to "[a]cquire by... condemnation... any real or personal property or interest in such property necessary or convenient for the construction, operation, and maintenance of any of the improvements provided for by this article." A.R.S. § 48-909(B)(1) (Supp. 2009).
¶12 The District was organized as a domestic water improvement district (DWID), which is a district formed with the purpose of constructing a new domestic water delivery system or improving or purchasing an existing system. A.R.S. § 48-1011(3) (Supp. 2009). A DWID's board of directors is "elected by the qualified electors of the district." A.R.S. § 48-1012(A) (Supp. 2009). The board has all the powers and duties of the board of directors of a county improvement district. A.R.S. § 48-1014(A) (Supp. 2009). These powers are described in A.R.S. §§ 48-909(B)and-910, and include the authority to order "[t]he acquisition, construction, reconstruction or repair of waterworks for the delivery of water for domestic purposes[.]"
¶13 In addition to its condemnation power granted by the statutory scheme, the District claims that it is entitled to "all the rights, privileges and benefits" granted municipalities and political subdivisions under Article 13, § 7, of the Arizona Constitution because it is a tax levying public improvement district. We agree.
¶14 Article 13, Section 7 provides that:
(Emphasis added.) As a county improvement district, the District has the authority to levy taxes. See A.R.S. § 48-952 (2000) (). Therefore, in addition to its statutory authority, the District also possesses "all the rights, privileges, and benefits" of other political subdivisions, including the sovereign power of eminent domain recognized by Article 2, Section 17, of the Arizona Constitution. See Hohokam Irrigation & Drainage Dist. v.Arizona Pub. Serv. Co., 204 Ariz. 394, 397, ¶ 9, 64 P.3d 836, 839 (2003) (...
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