Qwest Corp. v. City of Chandler

• Decision Date: 27 August 2009
• Docket Number: No. 1 CA-CV 07-0852.,1 CA-CV 07-0852.
• Citation: 222 Ariz. 474,217 P.3d 424
• Parties: QWEST CORPORATION, a Colorado corporation; Qwest Broadband Services, Inc., a Delaware corporation, Plaintiffs/Appellees, v. CITY OF CHANDLER, an Arizona municipal corporation, Defendant/Appellant.
• Court: Arizona Court of Appeals

217 P.3d 424

222 Ariz. 474

QWEST CORPORATION, a Colorado corporation; Qwest Broadband Services, Inc., a Delaware corporation, Plaintiffs/Appellees, v. CITY OF CHANDLER, an Arizona municipal corporation, Defendant/Appellant.

No. 1 CA-CV 07-0852.

Court of Appeals of Arizona, Division 1, Department E.

August 27, 2009.

Fennemore Craig PC By Andrew M. Federhar, Theresa Dwyer-Federhar, Scott J. Shelley, Phoenix, Attorneys for Plaintiffs/Appellees.

Chandler City Attorney's Office By James R. Cairns, III, Assistant City Attorney, Chandler, Attorney for Defendant/Appellant.

Andrew P. Thomas, Maricopa County Attorney By Stephen A. Wolf, Deputy County Attorney, Domingos R. Santos, Jr., Deputy County Attorney, Phoenix, Attorneys for Amicus Curiae Maricopa County.

Barbara LaWall, Pima County Attorney By Thomas A. Denker, Deputy County Attorney, Tucson, Attorneys for Amicus Curiae Pima County.

David R. Merkel, General Counsel, League of Arizona Cities and Towns, Tempe, Attorney for Amicus Curiae League of Arizona Cities and Towns.

OPINION

KESSLER, Judge.

¶ 1 In this appeal, we consider whether a pre-statehood franchise for electric telegraph service under Chapter 53, § 1 of the Compiled Laws of Arizona (1877) (the "1877 Law") exempts Qwest Corporation and Qwest Broadband Services, Inc. (collectively "Qwest") from having to pay the costs of relocating its telephone and cable lines from a public right of way when those lines interfere with a public purpose. We hold the franchise does not exempt Qwest from paying the relocation costs. Accordingly, we reverse the superior court and direct it to enter judgment for the City of Chandler ("City").

FACTUAL AND PROCEDURAL BACKGROUND

¶ 2 Qwest owns telephone and cable television lines within Site 7 in Chandler, an area bounded on the east and west by Colorado Street and Arizona Avenue and on the north and south by Chandler Boulevard and Buffalo Street. Qwest's telecommunications facilities lie above and below ground in a public right of way in Site 7.

¶ 3 In April 1984, the City adopted a resolution to designate a downtown redevelopment area and issued a request for proposal for development of Site 7. Approximately seventeen years later, the City hired a private developer for Site 7, and then acquired the Site 7 property. On April 6, 2004, the City informed Qwest that it would need to relocate its Site 7 facilities at its own expense.

¶ 4 While disputing the City's authority to require the company to pay for its relocation, Qwest proposed to proceed with the relocation without prejudice to mounting a reimbursement claim against the City. The City agreed and Qwest moved its Site 7 facilities. When the City subsequently rejected its written request for payment, Qwest filed a notice of claim pursuant to Arizona Revised Statutes ("A.R.S.") section 12-821.01 (2003).

¶ 5 Having received no response to its notice of claim, Qwest filed suit against the City in October 2005. Qwest's complaint asserts claims for inverse condemnation under the Arizona and United States Constitutions, as well as under 42 U.S.C. § 1983, and seeks declaratory relief and damages. It theorizes that, as a successor to telecommunications entities operating before Arizona became a state, Qwest holds a franchise under the 1877 Law to construct and maintain its facilities from point to point on public roadways in Arizona, and the City could not require Qwest to relocate its facilities from such locations without compensation. The 1877 Law provides:

That any person or persons, association or company, may be, and they are hereby authorized to construct and maintain lines of electric telegraph, together with all necessary fixtures appurtenant thereto, from point to point, upon and along any of the public roads or highways, and across any of the waters or bridges within the limits of this Territory, or upon the land of any individual, the owners of the land through which said telegraphic lines may pass having first given their consent; provided, that the same shall not in any instance be so constructed as to incommode the public in the use of said roads or highways and bridges, or endanger or injuriously interrupt the navigation of said rivers.

¶ 6 The parties filed cross-motions for summary judgment on whether a public utility operating under a pre-statehood franchise is obligated to relocate facilities at its own expense. The superior court accepted Qwest's argument that the pre-statehood franchise granted it a property right and that it was not required to pay its own relocation costs. The superior court did not determine the amount of compensation due to Qwest.

¶ 7 The court certified its ruling as final under Arizona Rule of Civil Procedure 54(b) and entered judgment. This appeal followed.

DISCUSSION

¶ 8 Summary judgment is appropriate "if the facts produced in support of the claim or defense have so little probative value, given the quantum of evidence required, that reasonable people could not agree with the conclusion advanced by the proponent of the claim or defense." Orme Sch. v. Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990). We independently review whether a genuine issue of material fact exists and whether the superior court correctly applied the substantive law. Aaron v. Fromkin, 196 Ariz. 224, 227, ¶ 10, 994 P.2d 1039, 1042 (App.2000) (citation omitted). In addition, we apply the de novo standard in reviewing questions of statutory interpretation. Phelps Dodge Corp. v. Ariz. Dep't of Water Res., 211 Ariz. 146, 148, ¶ 9, 118 P.3d 1110, 1112 (App.2005) (citations omitted). In this case, the facts are not in dispute, the parties only disagreeing on the law.

I. As a Matter of Law, the 1877 Law Does Not Overcome the Common-Law Rule Requiring Utilities to Pay to Remove or Relocate their Equipment.

¶ 9 For the following reasons, we hold that the implied common-law duty of utilities to pay to relocate their property from a public way applies to Qwest's franchise. We also reject Qwest's arguments that the 1877 Law abrogated or preceded the common-law rule or that other Arizona statutes are inconsistent with the common-law rule.

A. The Common-Law Rule.

¶ 10 The Arizona Supreme Court has recognized that "[i]t is well settled that a public utility accepts franchise rights in public streets subject to an implied obligation to relocate its facilities therein at its own expense when necessary to make street improvements." Paradise Valley Water Co. v. Hart, 96 Ariz. 361, 364, 395 P.2d 716, 718 (1964) (emphasis added) (citations omitted).¹ In so holding the court relied upon New Orleans Gaslight Co. v. Drainage Comm'n of New Orleans, 197 U.S. 453, 25 S.Ct. 471, 49 L.Ed. 831 (1905), and other authorities for what it stated was "an exhaustive list of authorities supporting this proposition." 96 Ariz, at 364, 395 P.2d at 718. Our court has consistently agreed with this conclusion. City of Bisbee v. Ariz. Water Co., 214 Ariz. 368, 378-79, ¶¶ 35-41, 153 P.3d 389, 399-400 (App.2007); El Paso Natural Gas Co. v. State, 135 Ariz. 482, 483, 662 P.2d 157, 158 (App.1983); cf. Contempo Constr. Co. v. Mountain States Tel. & Tel. Co., 153 Ariz. 279, 283, 736 P.2d 13, 17 (App.1987) (acknowledging the rule that utilities have "a legal duty to move their own equipment and should bear their own costs," but holding that obligation does not extend to the contractor hired by the city).

¶ 11 In New Orleans Gaslight, the United States Supreme Court cited authorities supporting this common-law rule going back as far as 1876. 197 U.S. at 461-62, 25 S.Ct. 471. The Court applied this principle in New Orleans Gaslight to a franchise granted in 1835. Id. at 453, 25 S.Ct. 471. In that case, after granting a gas company an exclusive franchise to place pipes in the streets of New Orleans, the state created a drainage plan that required the relocation of some of the pipes. Id. at 453-54, 25 S.Ct. 471. Like Qwest, the gas company contended that it had a vested property right in maintaining the pipes and the city was required to cover the relocation expenses. Id. at 453, 25 S.Ct. 471. The Court disagreed and explained:

The gas company did not acquire any specific location in the streets; it was content with the general right to use them; and when it located its pipes it was at the risk that they might be, at some future time, disturbed, when the state might require for a necessary public use that changes in location be made. . . . [W]hatever right the gas company acquired was subject, in so far as the location of its pipes was concerned, to such future regulations as might be required in the interest of the public health and welfare.

Id. at 461, 25 S.Ct. 471. To put it another way, by accepting the franchise the utility impliedly agreed to bear the expense of any subsequent relocation of the distribution system ordered pursuant to the government's police power. Nat'l City v. Cal. Water & Tel. Co., 204 Cal.App.2d 540, 22 Cal.Rptr. 560, 568 (1962). Thus, even though the gas company had the original franchise in New Orleans Gaslight, it was liable for its own relocation costs. New Orleans Gaslight, 197 U.S. at 460-62, 25 S.Ct. 471; see generally Norfolk Redevelopment & Hous. Auth. v. Chesapeake & Potomac Tel. Co., 464 U.S. 30, 35, 104 S.Ct. 304, 78 L.Ed.2d 29 (1983) ("Under the traditional common-law rule, utilities have been required to bear the entire cost of relocating from a public right-of-way whenever requested to do so by state or local authorities.").

¶ 12 This common-law rule of implied duty to pay for relocating property is the general rule in the United States. 12 E. McQuillin, The Law of Municipal Corporations § 34:92, at 324-25 (3d ed.2006) [hereinafter "McQuillin"] ("[I]t is generally held that the municipality may require a change in the location of pipes or other underground facilities of the grantee of a franchise, where public convenience or security require it at the grantee's own expense. . . .").² This...