Rural Water System # 1 v. City of Sioux Center, No. C 95-4112-MWB.

CourtUnited States District Courts. 8th Circuit. Northern District of Iowa
Writing for the CourtBennett
Citation967 F.Supp. 1483
PartiesRURAL WATER SYSTEM # 1, an Iowa non-profit corporation, Plaintiff, v. CITY OF SIOUX CENTER, IOWA, Defendant.
Docket NumberNo. C 95-4112-MWB.
Decision Date27 May 1997
967 F.Supp. 1483
RURAL WATER SYSTEM # 1, an Iowa non-profit corporation, Plaintiff,
v.
CITY OF SIOUX CENTER, IOWA, Defendant.
No. C 95-4112-MWB.
United States District Court, N.D. Iowa.
May 27, 1997.

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Louis T. Rosenberg, Louis T. Rosenberg, P.C., San Antonio, TX, Randall G. Sease of Sease Law Firm, Hartley, IA, for plaintiff.

Ivan T. Webber, Paul Burns, Ahlers, Cooney, Dorweiler, Haynie, Smith & Allbee, P.C., Des Moines, IA, for defendant.

J.W. Dyer of Dyer & Associates Law Firm, McAllen, TX, amicus curiae Iowa Rural Water Association.

MEMORANDUM OPINION AND ORDER REGARDING CROSS-MOTIONS FOR SUMMARY JUDGMENT

BENNETT, District Judge.


 TABLE OF CONTENTS
                I. INTRODUCTION ........................................................................... 1497
                II. STANDARDS FOR SUMMARY JUDGMENT ......................................................... 1499
                III. FACTUAL BACKGROUND ..................................................................... 1501
                 A. Undisputed Facts ................................................................... 1501
                 B. Disputed Facts ..................................................................... 1502
                IV. LEGAL ANALYSIS .......................................................................... 1503
                 A. The Nature Of RWS # 1's Claims ..................................................... 1503
                 1. A cause of action for a "violation" of § 1983 ............................. 1503
                 2. Other ways to enforce § 1926(b) ........................................... 1505
                 B. The Timeliness Of RWS # 1's Claims ................................................. 1507
                 1. The timeliness of the § 1983 action ....................................... 1507
                 a. The applicable statute of limitations ...................................... 1507
                 b. "Accrual" and "Continuing violations" ...................................... 1508
                 2. The timeliness of a declaratory judgment action ................................ 1509
                 C. The Merits Of The Claims ........................................................... 1510
                 1. Is RWS # 1 entitled to the protections of § 1926(b)? ...................... 1511
                 a. The applicable statutes .................................................... 1511
                 b. Judicial interpretations ................................................... 1512
                 i. Scioto Water ........................................................... 1512
                 ii. Grand Junction ........................................................ 1514
                 c. Plain meaning .............................................................. 1516
                 i. Rules for "plain meaning" construction ............................... 1516
                 ii. Plain meaning of subsection (f) ..................................... 1517
                 iii. Ambiguity of subsection (g) ........................................ 1518
                 d. Legislative history ........................................................ 1521
                 e. RWS # 1's entitlement to § 1926(b) protection ......................... 1523
                 2. Has the City violated or threatened to violate § 1926(b)? ................ 1524
                 a. Elements of a claim for violation of § 1926(b) ....................... 1524
                 b. "Made service available" .................................................. 1525
                 i. Tests ................................................................. 1525
                 ii. Interplay of legal right and physical ability to serve ............... 1525
                 iii. Preemption of state-law determinations of service area .............. 1528
                 iv. Interplay of state and federal law ................................... 1529
                 c. Where did RWS # 1 make service available? ................................. 1530
                 i. Legal authority to serve .............................................. 1530
                 ii. Physical ability to serve ............................................ 1533
                V. CONCLUSION ............................................................................... 1534
                

This "turf war" is not between rival gangs over control of the distribution of some illegal substance in a disputed territory, but between such staid entities as a municipality and a non-profit corporation over distribution of a legal, commonplace, substance: water.

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Furthermore, the disputed "turf" is not some section of urban jungle; rather, it is an area bordering the city limits of a quiet rural Iowa town. Finally, the weapons in this "turf war" are not guns or knives, but legal arguments. For example, the parties assert that to determine who has the right to supply water in the disputed area, the court must examine issues as diverse and complex as the nature of the cause or causes of action the plaintiff asserts; the statute of limitations applicable to that action or those actions; the proper interpretation and the constitutionality of an obscure federal statute that provides certain protections to rural water associations from encroachment on their service areas by adjacent municipalities; preemption of state law by federal law; and the applicability here of Iowa statutes defining service areas for various kinds of entities providing rural water services. Yet, however civilized the weapons of the combatants and unremarkable the substance each of the disputants wishes to supply, this "turf war" is as hard-fought as any other.

I. INTRODUCTION

Plaintiff Rural Water System # 1 (RWS # 1), a non-profit corporation, filed the original complaint in this lawsuit on November 2, 1995, against defendant City of Sioux Center, Iowa (the City), alleging generally violations of 7 U.S.C. § 1926(b), which protects rural water associations indebted to the United States from encroachment on their service areas by adjacent municipalities. RWS # 1 filed an amended complaint on October 22, 1996, in which its claims are clarified somewhat. In the amended complaint, RWS # 1's claims are alleged to arise pursuant to the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, the Civil Rights Act, 42 U.S.C. § 1983, the Attorney's Fees Act, 42 U.S.C. § 1988, and state law. RWS # 1's federal claims are premised on alleged violations of 7 U.S.C. § 1926(b) and "willful blindness resulting in bad faith" violation of § 1926(b). Its state-law claims assert tortious interference with customers, tortious interference with prospective business advantage, and conversion of property.

Rather more specifically, the statute RWS # 1 contends the City has violated or is threatening to violate, 7 U.S.C. § 1926(b), prohibits "curtailment" or "limitation" of the service area of a rural water service association that is indebted to the United States by inclusion of any portion of that service area within the boundaries of a municipal corporation. 7 U.S.C. § 1926(b). RWS # 1's federal claims, as well as its state-law claims, allegedly arise from the City's annexation of portions of RWS # 1's asserted service area, the City's demands that it, not RWS # 1, supply the water needs of customers in the annexed areas and within two miles of the City's new boundaries, and the City's actual service to some of the customers in the disputed area, allegedly resulting in "curtailment" or "limitation" of RWS # 1's service area.

As relief, RWS # 1 requests preliminary and permanent injunctions prohibiting the City's alleged curtailment of RWS # 1's service area in violation of 7 U.S.C. § 1926(b); declaratory judgment concerning the rights of the parties to serve the disputed area and alleged violations of state and federal law; equitable relief; damages, both compensatory and punitive; and attorney's fees and costs.

The City answered the original complaint on January 2, 1996, and the amended complaint on November 4, 1996. While the cross-motions for summary judgment now before the court were pending, the City moved and was granted leave to amend its answer to assert affirmative defenses that RWS # 1's claims were barred by the running of the applicable statute of limitations and the doctrines of laches and waiver. The City's amended answer was filed on February 12, 1997.

The first of the cross-motions for summary judgment now before the court was filed by the City on January 10, 1997.1 In that motion, the City asserts that RWS # 1 can no longer assert the protections of 7

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U.S.C. § 1926(b), because it was not indebted to the United States at the time of the annexation of disputed areas by the City. It contends, citing a recent decision of the Sixth Circuit Court of Appeals, that RWS # 1's pay-off of its loans from the Farm Home Administration (FmHA) caused its protection under § 1926(b) to lapse.2 The City contends further that the annexed area is not part of RWS # 1's service area, nor is any area within two miles of the City's current city limits, by operation of Iowa law, which the City contends is not preempted by federal law. Finally, the City argues that RWS # 1's interpretation of § 1926(b) as revivifying protection of its service area into the area

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properly annexed by the City and into the two-mile zone beyond those city limits violates the Tenth Amendment to the United States Constitution and expropriates public property for a private purpose in further violation of the Tenth Amendment. In further briefing, the City has also asserted that RWS # 1's only claim is one brought pursuant to 42 U.S.C. § 1983, as 7 U.S.C. § 1926(b) authorizes no separate cause of action, and that any § 1983 claim is barred by the applicable statute of limitations, Iowa's two-year statute of limitations for personal injuries. Iowa Code § 614.1(2).

The same day the City filed its...

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