Seypar, Inc. v. Water and Sewer Dist. No. 363

• Decision Date: 11 June 1998
• Docket Number: No. 97-153,97-153
• Citation: 960 P.2d 311,1998 MT 149
• Parties: SEYPAR, INC., a Florida corporation, Plaintiff and Appellant, v. WATER AND SEWER DISTRICT NO. 363, Defendant and Respondent.
• Court: Montana Supreme Court

Page 311

960 P.2d 311

1998 MT 149

SEYPAR, INC., a Florida corporation, Plaintiff and Appellant, v. WATER AND SEWER DISTRICT NO. 363, Defendant and Respondent.

No. 97-153.

Supreme Court of Montana.

Submitted on Briefs July 17, 1997.

Decided June 11, 1998.

Michael J. Lilly, Berg, Lilly, Andriolo & Tollefsen, Bozeman, for Appellant.

Michael E. Wheat, Julieann McGarry, Cok, Wheat & Brown, Bozeman, for Respondent.

NELSON, Justice.

¶1 Plaintiff Seypar, Inc. (Seypar), appeals from a May 9, 1995 Summary Judgment Order issued by the Fifth Judicial District Court, Madison County, holding that Defendant Water and Sewer District No. 363 (the District) had legal authority to assess a $500 sewer hook-up inspection fee for each of Seypar's 70 condominium units as well as the court's January 6, 1997 Findings of Fact and Conclusions of Law and January 30, 1997 Judgment holding that the amount of the fee was reasonable. We affirm.

¶2 Seypar raises the following issues on appeal:

¶3 1. Did the District Court err when it concluded, as a matter of law, that the District had legal authority to assess and collect sewer hook-up inspection fees as a condition precedent to the hook-up of Seypar's condominium units to the District's sewer system?

¶4 2. Is the District Court's finding that the District's $500 sewer hook-up inspection fee charged for each of Seypar's 70 condominium units was reasonable clearly erroneous?

FACTUAL AND PROCEDURAL BACKGROUND

¶5 On October 29, 1993, Seypar, Inc. (Seypar), a Florida corporation with its principal place of business in Big Sky, Montana, filed a three count complaint in the Fifth Judicial District Court, Madison County, against Water and Sewer District No. 363, Rural Improvement District No. 305, and the Montana Department of Health and Environmental Sciences (DHES). However, Seypar settled all issues regarding its Second and Third Claims against DHES; therefore, DHES was dismissed as a party to this action. Furthermore, Rural Improvement District No. 305 (RID 305) was dismissed as a party to this action when Water and Sewer District No. 363 (the District) was substituted in its place after the District acquired all assets and assumed all liabilities of RID 305. Consequently, the District remained the sole defendant and Seypar's First Claim remained the final issue to be resolved.

¶6 On September 16, 1994, Seypar and the District filed an agreed statement of facts, which is summarized as follows:

¶7 By resolution of the Gallatin County Commissioners dated August 23, 1971, RID 305 was created pursuant to Title 16, Chapter 16, RCM (1947) (as amended), for the purpose of constructing, maintaining, repairing, operating and expanding a sanitary sewage treatment facility in the Big Sky Recreational Area. RID 305 remained in existence until the District acquired all assets and assumed all liabilities of RID 305 in February, 1994. While in existence, RID 305 was governed by a three member Board of Trustees who in 1985 adopted and began charging a $300 sewer hook-up inspection fee, and, subsequently, raised this fee to $500 in 1989. The sewer hook-up inspection was conducted by the District Engineer to ensure that a private connection to the public sewer system was done correctly and complied with required specifications.

¶8 Seypar purchased certain real property in Madison County from The Association of Unit Owners of Deer Lodge Condominium, Inc., under the supervision and approval of the Fifth Judicial District Court, Madison County, Cause No. 7457. For approximately twenty years, the real property had been the site of Deer Lodge Condominiums, a 126 unit condominium complex that discharged its sewage waste into RID 305's sewer system and paid monthly sewage assessments fees. However, the Deer Lodge Condominiums were condemned and razed prior to Seypar's purchase of the real property. On February 24, 1989, the court, in Cause No. 7457, issued a supplemental supervisory order related to the purchase of the real property which provided, in part, that The Association of Unit Owners of Deer Lodge Condominium, Inc.'s utility hook-up service rights for the demolished Deer Lodge Condominiums would remain vested and an asset for redevelopment and/or resale of the property.

¶9 On December 11, 1991, Seypar submitted a preliminary site plan to the Big Sky Architectural Committee for the design and construction of 70 condominium units on the real property, commonly known as the Big Horn Condominiums. The Big Sky Architectural Committee reviewed the site plan and issued a permit for Phase I, Units 1-13 only; Seypar commenced and completed construction of these units in 1992. Subsequently, the Big Sky Architectural Committee issued permits for Phase 2, the next 18 units, and Phase 3, the next 17 units; Seypar commenced and completed construction of these units in 1993 and 1994, respectively. From the record, it is apparent that Seypar completed construction of the remaining 22 units in 1995.

¶10 Rather than using the existing Deer Lodge Condominiums sewer lines which ran from each individual condominium to the District's collection system, Seypar constructed its own sewer feeder lines to connect to the District's collection system. As a condition precedent to the sewer hook-ups for each phase of construction, Seypar was required to pay a $500 sewer hook-up inspection fee per unit, which it paid under protest, first to RID 305 and then to the District after the District acquired all assets and assumed all liabilities of RID 305 in 1994 (hereinafter, both RID 305 and the District are collectively referred to as "the District").

¶11 On October 17, 1994, the parties, relying on their agreed statement of facts, filed cross-motions for summary judgment concerning Seypar's remaining first claim for relief which requested that the District Court declare the District's assessment of the sewer hook-up fees illegal, order the District to refund those fees Seypar paid under protest, and prohibit the District from assessing Seypar any future sewer hook-up fees associated with Seypar's reconstruction of the Big Horn Condominium units. On May 9, 1995, the District Court issued an order denying Seypar's motion and granting the District's motion. While the District Court addressed several related issues raised by the parties, Seypar only appeals that part of the court's summary judgment order wherein the court held that, as expressly set forth in § 7-12-2120(1), MCA, as well as by analogy to § 7-12-4133, MCA, and § 7-13-4304(3), MCA, the District acted within its legal authority when assessing an inspection fee for Seypar's initial hook-ups to the District's sewer line and that the District would not be prohibited ¶12 Because the District Court found a genuine issue of material fact as to whether the District's $500 sewer hook-up inspection fee assessed against each condominium unit was reasonable, the court denied both parties' motions for summary judgment on this issue and set a date for a non-jury hearing. Subsequent to the hearing on this issue, wherein testimony was heard and exhibits were received, the court entered findings of fact and conclusions of law on January 6, 1997, concluding that the $500 sewer hook-up inspection fee was reasonable because Seypar failed to rebut a presumption of reasonableness concerning the fee. On January 30, 1997, the court entered judgment in favor of the District, dismissing Seypar's complaint with prejudice; releasing from protest all of Seypar's sewer hook-up inspection fees paid to the District to be applied and used by the District as it deemed appropriate; and assessing costs of $135. Seypar appeals from both the District Court's order granting the District summary judgment and the court's subsequent judgment in the District's favor.

from assessing future inspection fees for future sewer hook-ups.

DISCUSSION

¶13 1. Did the District Court err when it concluded, as a matter of law, that the District had legal authority to assess and collect sewer hook-up inspection fees as a condition precedent to the hook-up of Seypar's condominium units to the District's sewer system?

¶14 Seypar argues that the District, a multi-county rural improvement district including areas within both Madison and Gallatin Counties, is administered by three trustees who have the same powers to administer as do county commissioners in single county districts. See § 7-12-2123, MCA. Seypar notes that nothing in §§ 7-12-2101, et seq., MCA, specifically authorizes the District to charge sewer hook-up inspection fees, and, therefore, is without power to do so. Rather, Seypar asserts that just as in RAE Subdivision v. Frank J. Trunk & Son (1991), 251 Mont. 22, 823 P.2d 845, the District here is only authorized to raise revenue by strictly following the statutes which govern its operation and conduct. Relying on Miller v. Yellowstone County (1988), 234 Mont. 193, 761 P.2d 829, Seypar maintains that the District only had two options for raising revenue and under either option the statutory procedure providing for notice, hearing, and objection must be followed. Seypar contends that the whole cost of maintaining, preserving or repairing improvements should have been assessed to the entire District and paid by the property owners through taxes, under § 7-12-2120, MCA, or, alternatively, paid by an improvement district maintenance fund under § 7-12-2162, MCA.

¶15 Seypar requests that we reverse the District Court's Order granting the District summary judgment. Seypar asserts that the District Court erred, as a matter of law, in concluding that the District had legal authority to assess and collect sewer hook-up inspection fees against Seypar for three reasons. First, the fees charged to Seypar and paid under protest, are not levied in accordance with either § 7-12-2120, MCA, or § 7-12-2162, MCA.

¶16 Second, Seypar argues that under § 7-12-2120(2), MCA, the District is specifically prohibited from...