SKALLERUP v. City of Hot Springs
| Decision Date | 14 May 2009 |
| Docket Number | No. 08-611.,08-611. |
| Citation | 309 SW 3d 196 |
| Court | Arkansas Supreme Court |
| Parties | Russ SKALLERUP and Beauford E. Myers Individually and o/b/o a class of similarly situated persons, Burchwood Bay Sewer Improvement District and Carpenter Dam-Catherine Heights Sewer Improvement District, Appellants, v. CITY OF HOT SPRINGS, Arkansas and Honorable Mike Bush, Mayor of Hot Springs, Arkansas, in his official capacity, Appellees. |
Arnold, Batson, Turner & Turner, PA, by: Todd Turner; and McMillan, McCorkle, Curry & Bennington, LLP, by: Toney McMillan, Arkadelphia, for appellant.
Brian W. Albright, City Attorney, Hot Springs, for appellee.
Russ Skallerup and Beauford E. Myers, individually, and on behalf of a class of similarly situated persons; Burchwood Bay Sewer Improvement District; and Carpenter Dam-Catherine Heights Sewer District (collectively referred to as Skallerup) appeal from summary judgment entered in favor of the City of Hot Springs and Mike Bush in his official capacity as mayor (the City). Skallerup challenges the City's authority to charge nonresident City sewer customers a higher sewer rate and a higher debt-service charge than that charged to resident City customers.
This case comes before this court on a petition for review. See Skallerup v. City of Hot Springs, CA 07-1022, 2008 WL 1961473 . The court of appeals reversed the circuit court. This court granted a petition for review of the decision of the court of appeals, and our jurisdiction is pursuant to Arkansas Supreme Court Rule 1-2(e). When this court grants a petition for review of a court of appeals decision, we review the case as though it had originally been filed with this court. See Stehle v. Zimmerebner, 375 Ark. 446, 291 S.W.3d 573 (2009).
At issue is the propriety of the entry of summary judgment. Summary judgment is granted when it is clear that there are no genuine issues of material fact to be litigated, and the party is entitled to judgment as a matter of law. See Couch v. Farmers Ins. Co., 375 Ark. 255, 289 S.W.3d 909 (2008). Once the moving party has established a prima facie case showing that no genuine issue of material fact remains to be litigated, the opposing party must meet proof with proof and demonstrate the existence of a material issue of fact. Id. On appellate review, we determine if summary judgment was appropriate based on whether the evidentiary items presented by the moving party in support of the motion leave a material fact unanswered. Id. We view the evidence in a light most favorable to the party against whom the motion was filed, resolving all doubts and inferences against the moving party. Id. Our review focuses not only on the pleadings, but also on the affidavits and documents filed by the parties. Id.
On March 27, 1970, the Arkansas Pollution Commission (Commission)1 issued an order to the City of Hot Springs to cease polluting local waters, including Lake Hamilton and Lake Catherine. The City was further ordered to "take other remedial measures, including the construction of a comprehensive sewerage collection and treatment system ... adequate to serve the City of Hot Springs and its area of reasonable anticipated growth, and as may be necessary and appropriate to abate the pollution of said waters." Pursuant to a December 15, 1972 Commission order, "no additional private sewerage disposal systems" could be installed. As a consequence of these orders, all further development in the subject areas stopped. According to the parties to this suit, these orders effectively constituted a ban on all construction and halted development in the Hot Springs area.
An agreement was reached with the Commission. It provided that a new City sewage treatment plant would be built. It was in the interest of the City and the nonresidents to cooperate in establishing a sewer system over the affected areas inside and outside the City so that development could be restarted. The nonresidents chose to avail themselves of the City sewage treatment plant rather than build and operate their own sewage treatment.
A number of improvement districts were created in areas largely outside the City. These districts designed, built, and paid for systems necessary to transport nonresident sewage to a point where it could be introduced into the City system. The districts have ceased to exist, and their systems, as of 1997, were dedicated to the City. The City has maintained the nonresident sewage transport systems to the present date.
By 2004, there was a need for an additional sewage treatment plant. Further, according to the City, it was operating the existing treatment facility at a deficit and was losing money at a rate that threatened the viability of the system. The City also noted that customers outside the city limits were typically farther away and created an "operating cost differential." Part of the cost differential apparently arises from the "hilly terrain" around Lake Hamilton that requires 110 "major pump stations" and 3500 "grinder pump stations." The City passed ordinance 5274 in 2004, which imposed the new rates and debt-service charges. The increase in rates was 9% for City customers and 52% for non-City customers. Debt-service charges show a similar disparity.
Skallerup first argues that a 1994 consent order entered in Burchwood Bay v. Ellis, No. CV-93-1639 (Garland County Cir. Ct. Nov. 3, 1994), previously established Skallerup's right to enforce contracts between the improvement districts and the City, as well as rights to relief under estoppel. The only parties in the present case that were also parties in the Burchwood case are the Burchwood Bay Sewer Improvement District, the Carpenter Dam-Catherine Heights Sewer Improvement District, and the City of Hot Springs. The Burchwood case concerned Hot Springs City Resolution 2821 requiring that prior to any nonresident connecting to the City sewer system they had to be annexed to the city or agree to be annexed as soon as the subject land became contiguous to the City. The 1994 consent order concluded that the right to connect to the sewer system could not be made conditional on annexation. Sewer rates and debt-service charges were not at issue.
Skallerup argues that under the doctrine of res judicata, the issue of equal treatment of residential and nonresidential customers of the City sewer system was decided by the circuit court in the Burchwood case and may not be decided again. The purpose of res judicata is to put to an end litigation by preventing a party who has already had a fair trial on the matter from litigating it again. See Powell v. Lane, 375 Ark. 178, 289 S.W.3d 440 (2008). Res judicata is comprised of two facets, claim preclusion and issue preclusion. See Remmel Revocable Trust v. Regions Fin. Corp., 369 Ark. 392, 255 S.W.3d 453 (2007). Under claim preclusion, a valid and final judgment rendered on the merits by a court of competent jurisdiction bars another action. See id. Under issue preclusion, also referred to as collateral estoppel, only those issues that were actually adjudicated are precluded. See Powell, supra.
To prevail under claim preclusion, both suits must concern the same claim or cause of action. See Council v. Glyneu, 367 Ark. 397, 240 S.W.3d 600 (2006). The claim or cause of action in the Burchwood litigation was that annexation could not be used as a condition of connection to the City sewer system. The claim in the present case is that sewer rates and sewer debt-service charges may not be different for nonresidents than they are for residents. We also note that, contrary to Skallerup's assertion, the consent order does not conclude that nonresident customers must be treated just as resident customers in all situations. Thus, the claims or causes of action in the present case are not based on the same events or subject matter as the Burchwood litigation, and the present case is not barred by claim preclusion. Beebe v. Fountain Lake Sch. Dist., 365 Ark. 536, 545, 231 S.W.3d 628, 635 (2006). The questions of whether sewer rates or debt-service charges were improper were not matters that were or could have been ripe for adjudication in the Burchwood litigation regarding annexation. See id.
To prevail under issue preclusion, the issue sought to be precluded must be the same issue as previously litigated. See Powell, supra. The issue in the Burchwood litigation was annexation. The issues in the present case concern sewer rates and debt-service charges. Further, as already noted, and contrary to Skallerup's assertion, the consent order does not conclude that nonresident customers must be treated just as resident customers in all situations. Thus, the issues in the present case are not the same as in the Burchwood litigation, and the present case is not barred by issue preclusion.
Skallerup next argues that the City is estopped from enforcing ordinance 5274 imposing the new rates and debt-service charges. Skallerup argues that, in the course of the agreement reached with the Commission to end the building ban, the City promised nonresidents that they would "receive equal treatment as customers of the regional system." On the issue of estoppel, Skallerup cites us to City of Russellville v. Hodges, 330 Ark. 716, 719, 957 S.W.2d 690, 691-92 (1997), where this court set out the elements of estoppel:
They are: (1) the party to be estopped must know the facts; (2) the party to be estopped must intend that the conduct be acted on or must act so that the party asserting the estoppel had a right to believe it was so intended; (3) the party asserting the estoppel must be ignorant of the facts; and (4) the party asserting the estoppel must rely on the other's conduct and be injured by that reliance.
Skallerup argues that had the class known at the time the system was set up in the 1970s and 1980s that the City would not abide by its promise that nonresidents would pay the same fees as...
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