Town of Marana v. Pima Cnty.

• Decision Date: 14 June 2012
• Docket Number: No. 1 CA–CV 11–0381.,1 CA–CV 11–0381.
• Citation: Town of Marana v. Pima Cnty., 230 Ariz. 142, 281 P.3d 1010, 636 Ariz. Adv. Rep. 26 (Ariz. App. 2012)
• Parties: TOWN OF MARANA, a political subdivision and public body, Plaintiff/Appellant, v. PIMA COUNTY, a body politic and corporate of the State of Arizona, Defendant/Appellee. Town of Marana, a political subdivision and public body, Plaintiff/Appellee, v. Pima County, a body politic and Corporate of the State of Arizona, Defendant/Appellant.
• Court: Arizona Court of Appeals

230 Ariz. 142

281 P.3d 1010

636 Ariz. Adv. Rep. 26

TOWN OF MARANA, a political subdivision and public body, Plaintiff/Appellant,

v.PIMA COUNTY, a body politic and corporate of the State of Arizona, Defendant/Appellee.

Town of Marana, a political subdivision and public body, Plaintiff/Appellee,

v.Pima County, a body politic and Corporate of the State of Arizona, Defendant/Appellant.

No. 1 CA–CV 11–0381.

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

June 14, 2012.

Lewis and Roca, LLP by John N. Iurino, Sivan R. Korn, Tucson, Attorneys for Appellant Town of Marana.

Barbara Lawall, Pima County Attorney by Regina Nassen, Deputy County Attorney, Tucson, Attorneys for Appellee Pima County.

OPINION

HALL, Judge.

¶ 1Pima County(the County) appeals the superior court's partial summary judgment rulings in favor of the Town of Marana(the Town) holding that the Town has the right to provide sewer service to its residents, the County has no authority to provide sewer service within the Town's boundaries, and the Town has obtained voter authorization to acquire and operate a sewer system pursuant to Arizona Revised Statutes(A.R.S.)section 9–514(Supp. 2011).The Town, on the other hand, has appealed the superior court's rulings that certain sewer lines belong to the County, the scope of the parties' intergovernmental agreement (IGA) did not encompass the Marana Wastewater Reclamation Facility (MWRF), and the Town's annexation of the area surrounding and including the MWRF was unlawful and invalid.For the following reasons, we affirm the superior court's rulings that the Town has the paramount statutory authority to provide sewer service to its residents, the scope of the IGA did not encompass the MWRF, and the Town's annexation of the area including the MWRF was invalid.We reverse, however, the superior court's ruling that the Town's 1988 special ballot measure satisfied A.R.S. § 9–514.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 2 The Town incorporated in March 1977.In 1979, the Town and the County entered into the IGA for the purpose of constructing, operating and maintaining sewer facilities within the Town.

¶ 3 In its preamble, the IGA noted that “prior to and following incorporation the Town [ ] had its sewerage needs supplied and administered by the County's Sanitation Department.”The IGA further acknowledged that the County is authorized to operate sewer facilities pursuant to A.R.S. § 11–264(2012) and the Town is authorized to construct and maintain sewer facilities pursuant to A.R.S. § 9–240(B)(5)(a)(2008).The IGA then stated that the “County shall, through its Wastewater Management Department ... administer and manage, in accordance with sound engineering policy and with agreement of the official engineering consultant of Town, the present and future sewer facilities within the boundaries of Town.”“As consideration for its obligations,” the IGA permitted the County to collect connection fees and sewer user fees from the Town's residents.

¶ 4 Pursuant to its express terms, the IGA would remain in effect “until terminated by either party hereto at will upon the giving of six months' written notice.”Upon termination, “ownership of all property relating to flow-through sewer facilities” remained vested with the County and “the remainder of the sewer system within the corporate limits of Town that is not a flow-through system [became] the property of Town.”

¶ 5 In a special election the Town held on March 29, 1988, voters approved a ballot measure authorizing the Town to “construct, purchase, acquire, lease, own, and operate a municipal wastewater and sewer system.”Following the election, however, the Town did not pursue the construction or acquisition of a wastewater and sewer system and the County continued to provide all sewer service to the Town.

¶ 6 In a newspaper article published June 14, 2007, the Town's manager, Mike Reuwsaat, explained that the Town had attempted, unsuccessfully, to purchase the MWRF from the County as a means of providing the Town with additional water (effluent) resources.Reuwsaat further explained that, because the purchase negotiations failed, the Town was “exploring” the “possibilit[y]” of “seiz[ing] control” of the MWRF pursuant to a term in the IGA.In the same article, the Town Attorney, Frank Cassidy, stated that the Town was “considering annexing the plant to place it within town limits, then severing the agreement.”On July 11, 2007, the Town provided the County with the requisite six-month notice that it was terminating the IGA.

¶ 7 On July 24, 2007, the Pima County Board of Supervisors enacted a resolution designating an area including the MWRF as a public park, thereby prohibiting annexation of the MWRF by the Town without the County's permission pursuant to A.R.S. § 9–471(Q)(Supp.2011).On July 25, 2007, the Town filed a blank annexation petition in the office of the Pima County Recorder.

¶ 8 On October 17, 2007, the Town filed a complaint in Pima County Superior Court seeking declaratory judgment, injunction, and special action relief.Specifically, the Town requested declaratory and special action relief allowing the Town to “take possession of the Marana Sewer Facilities,” including the MWRF because all sewage treated at the MWRF “comes from customers located within Marana.”The Town also requested a preliminary injunction requiring the County “to continue to treat all sewage generated by Marana customers until such time as Marana can construct adequate treatment facilities.”

¶ 9 In its November 6, 2007 answer, the County asserted that the Town has no legal authority to construct or operate sewage treatment facilities.The County further alleged that the Town could not annex the area surrounding the MWRF because it is a County park and the County did not consent to the annexation.

¶ 10 On December 4, 2007, the Town adopted an ordinance annexing the MWRF.On December 20, 2007, the Pima County Board of Supervisors filed a verified complaint challenging the annexation.The Town filed a motion to consolidate the cases, which the superior court granted.The superior court also granted the Town's motion to transfer the venue from Pima County to Maricopa County.

¶ 11 On March 5, 2008, the Town filed a motion for partial summary judgment.First, the Town argued it was entitled to summary judgment declaring that the sewage conveyance system, “as well as any other sewer lines that are not flow-through sewers,” became the Town's property on January 11, 2008, the date the IGA terminated.Specifically, the Town asserted that, as a matter of law, the MWRF is the Town's property because it only treats sewage generated in the Town and does not transmit sewage from upstream property.Second, the Town argued that it was entitled to summary judgment declaring that it has the authority to operate a sewer system pursuant to A.R.S. § 9–240(B)(5)(a).As a corollary, the Town also contended it was entitled to summary judgment declaring that, under A.R.S. § 9–104(B)(2008), the County has no authority to provide sewer services to customers residing in the Town without the Town's consent.Third, the Town requested summary judgment declaring that, under A.R.S. § 9–522(2008), it was not required to satisfy the voting requirements of A.R.S. § 9–514(a) before operating a sewer system within the Town's boundaries.Even assuming that it was required to comply with A.R.S. § 9–514, however, the Town further asserted it was entitled to summary judgment declaring that the passage of its 1988 special election ballot measure satisfied the statutory requirements.Fourth, the Town requested summary judgment declaring that it properly annexed the MWRF into the Town.Indeed, the Town asserted that, as a matter of law, the County could not prevent the Town's annexation of the MWRF by designating the MWRF and surrounding area a County park and that its attempt to do so violated the covenant of good faith and fair dealing implied in the IGA.

¶ 12 In its opposition to the motion for summary judgment, the County primarily argued that the Town's interpretation of the IGA “is moot” because the MWRF is not located within the Town's limits and the County Board of Supervisors designated the MWRF and surrounding area a park, which prevented the Town from annexing the MWRF without the County's permission.Secondarily, the County also argued that the MWRF does not qualify as part of the Town's “sewer facilities” or “sewer system” as those terms are used within the IGA.On May 12, 2008, the County filed a supplement to its opposition to the motion for summary judgment arguing that the Town must “satisf[y] various statutory and regulatory requirements” before it may own and operate a sewer system that serves its residents.The County noted that, pursuant to Section 208 of the Clean Water Act,33 U.S.C. § 1288, it is one of two agencies authorized to operate a wastewater treatment facility in the area and asserted that the Town is not presently authorized to operate a wastewater treatment facility under federal law.Additionally, the County argued that, pursuant to A.R.S. § 9–514, the Town “must hold an election on the specific question of whether or not to acquire the Pima County sewage collection system” before taking over the sewer utility.Finally, in a footnote, the County also claimed that, as set forth in A.R.S. § 9–516(2008), the Town may not compete with the County's existing utility service.

¶ 13 After hearing oral argument on the motion and taking the matter under advisement, the Honorable Kristin Hoffman granted partial summary judgment in favor of the Town, stating in relevant part:

The Court finds that Marana has the right to operate a sewer system that serves its residents.To the extent that A.R.S. § 9–514 is applicable, Marana has held an election and was granted that authority.Upon termination of the IGA, [it is] entitled to ownership of the non flow-through sewer system in the...