Platt v. Town of Torrey
| Citation | 949 P.2d 325 |
| Decision Date | 25 November 1997 |
| Docket Number | No. 950415,950415 |
| Parties | 331 Utah Adv. Rep. 3 Duane S. PLATT and Donna L. Sall, as individuals, as trustees of the Duane S. Platt Living Trust, and as trustees of the Donna L. Sall Living Trust, Plaintiffs and Appellants, v. TOWN OF TORREY, Utah, a municipal corporation, Defendant and Appellee. |
| Court | Supreme Court of Utah |
Marvin D. Bagley, Richfield, for Plaintiffs and Appellants.
Ken Chamberlain, Tex R. Olsen, Richfield, for Defendant and Appellee.
Plaintiffs appeal from the trial court's judgment that the rate schedule imposed by defendant Town of Torrey charging different rates to resident and nonresident water users is valid and enforceable and denying plaintiffs' request for an injunction and damages.
Plaintiffs are residents of Wayne County, Utah, who own property, either personally or in trust, and reside just outside the limits of the Town of Torrey. Torrey is a municipal corporation of Wayne County which operates a municipal water system that provides culinary water to residents and nonresidents of the town. Torrey imposes connection fees for new water hookups and then varying monthly user charges that depend on whether the hookup is commercial or residential and on the amount of water used. In June 1989, the town adopted a moratorium on nonresident commercial hookups. The town continued at all times to supply residential out-of-town hookups as well as commercial and residential hookups to residents of the town.
In October of that same year, plaintiff Donna Sall, who was not yet residing on real property she and Duane Platt had acquired just outside the town's limits, purchased a water connection from Torrey for $1000. She asserts that she informed the mayor at that time of her intentions to build an RV park on the property. She was given a "Water Connection Agreement" signed by Torrey's then-mayor and attested to by the town clerk.
In early 1990, plaintiffs began to develop the RV facility. They hired a contractor to install a water meter and requested permission from the town to install a commercial one-inch pipe instead of a residential three-quarter-inch pipe. The town denied their request because of the moratorium but placed them on the priority list for such a hookup. Consequently, plaintiffs were required to delay their plans to develop their property.
In the summer of 1994, plaintiffs moved onto their property and requested that the town activate their water connection to provide water for residential use. Plaintiffs also applied for a permit from the State of Utah to drill a well to provide water for their commercial venture. Torrey approved activation of plaintiffs' water connection, contingent on plaintiffs' extending the town's six-inch water main to their property. After plaintiffs made that extension at their own expense, the town installed and activated a residential three-quarter-inch connection.
In November 1994, the mayor informed plaintiffs that they could abandon their plans to drill a well because Torrey planned to obtain a loan from the State Board of Water Resources to improve the town's water system and to allow it to provide commercial service to nonresidents. Torrey's loan application was approved in the spring of 1995. Thereafter, Torrey executed a bond to the state in conjunction with this loan. Under the terms of the bond, the connection and user fees charged by Torrey are placed into an escrow account and are then used to make the annual payment on the bond.
In early 1995, plaintiffs completed construction of a residence and gift shop. They planned to open an RV park sufficient to accommodate 12 RVs in June of that year. Therefore, after learning of the approval of Torrey's loan application, plaintiffs again requested a commercial hookup. They were informed that they would have to file a formal application, but after they did so, the town council tabled the application.
In May, plaintiffs began operating their gift shop, which included an espresso bar, even though Torrey had not approved their commercial application. The gift shop used approximately five gallons of culinary water a day that was supplied through their residential connection.
In June, the town council approved a resolution providing for both residential and commercial out-of-town hookups. The resolution included a new rate schedule that imposed higher connection fees in most cases and higher user rates for nonresidents than residents. 1 Thereafter, Platt appeared before the town council and informed them of his plans to open the RV park without a commercial connection and inquired whether doing so would create any problem. The town council warned Platt that if the RV park were opened, plaintiffs' water would be shut off. The very next day, plaintiffs' water was turned off on the stated ground that the water supplied through their residential connection was being used for commercial purposes.
In response, plaintiffs filed a complaint, seeking a temporary restraining order and permanent injunction restoring plaintiffs' water service and enjoining Torrey from interfering with plaintiffs' water for residential and commercial purposes in the future. The complaint also sought a declaratory judgment requiring that Torrey charge residents and nonresidents the same rates. In this regard, plaintiffs contend that the residents' rate schedule for connection and user fees should be applied to them as well.
The court held a hearing on the motion for a temporary restraining order. Although the town council's June resolution established fees for commercial and residential out-of-town hookups, Torrey maintained at the hearing that its moratorium on commercial out-of-town hookups was still in effect, and therefore, that plaintiffs could not have their water service restored. Despite these contentions, at the close of the hearing the trial court issued an order restoring plaintiffs' residential water use.
Thereafter, a trial was held regarding the validity of the rate schedule. After a portion of the evidence was presented, the parties reached a stipulation which provided, in part, that Torrey would immediately call a special meeting of the town council to reconsider plaintiffs' application for a commercial connection. The town council, in an emergency meeting, lifted the moratorium on new commercial service outside of town and approved plaintiffs' application. After the remaining evidence was presented, the trial court ruled that the rate schedule contained in the June 8 resolution was valid and enforceable. The court therefore denied plaintiffs' claims that enacting the rates unlawfully discriminated and that the rate schedule breached a contract between Torrey and plaintiffs.
Plaintiffs appeal, contending that the trial court erred in ruling that (1) Torrey's rate schedule, which generally charges higher connection and user fees to nonresidents, does not discriminate illegally; (2) the town's use of resident and nonresident connection and user fees to pay its bonded indebtedness does not require it to charge both classes of consumers the same rate; and (3) Torrey did not breach the water connection agreement given to Sall when it charged plaintiffs higher
user and connection fees than it would have charged Torrey residents. 2 We review each of the trial court's rulings for correctness. See Bagford v. Ephraim City, 904 P.2d 1095, 1097 (Utah 1995); Saunders v. Sharp, 806 P.2d 198, 199-200 (Utah 1991) (per curiam); Provo City Corp. v. Willden, 768 P.2d 455, 456 (Utah 1989).
Plaintiffs first contend that Torrey's disparate rate schedule is unlawfully discriminatory. They acknowledge that Torrey is under no obligation to provide water to nonresidents but assert that having elected to provide that service, Torrey cannot discriminate and is therefore required to treat all users within its service area the same. 3 Whether a municipality must charge the same rate for water to residents and to nonresidents is an issue of first impression in this court. However, plaintiffs claim indirect support for this proposition from this court's rulings in County Water System, Inc. v. Salt Lake City, 3 Utah 2d 46, 278 P.2d 285 (1954), and Home Owners' Loan Corp. v. Logan City, 97 Utah 235, 92 P.2d 346 (1939). We find no such support in those cases, but as will later be seen, the cases are helpful to our analysis for a more limited proposition.
In County Water System, we addressed whether a water corporation owned and operated by Salt Lake City was subject to regulation by the Public Service Commission ("PSC") when it distributed water beyond its city limits. 4 We held that allowing "the PSC to exercise jurisdiction over municipal property and the management thereof would be an unconstitutional delegation of power to a special commission forbidden by article VI, section 29 [of the Utah Constitution]." 278 P.2d at 290. The primary justification for this conclusion was that
the authority of the city to sell its surplus water beyond the city limits is derived in the same manner and from the identical section of the statute which permits it to supply its own inhabitants. Such sale of surplus water, being authorized by law as a municipal function, is as much a municipal function as the supplying of water within the city limits, and disposing of the surplus outside its limits as permitted by statute does not change its character as a municipality....
Id. On the basis of this language, plaintiffs contend that County Water System stands for the proposition that "[b]ecause supplying water to nonresidents within the Town's service area is as much a municipal function as supplying water to its own residents, the Town is likewise required to treat nonresident users within its service area on the same equal basis." We disagree. Nothing in County Water System suggests that nonresidents are entitled to the same water rates as residents. As we later discuss, it only supports the...
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