Tri-City Serv. Dist. v. Or. City, A160203
| Decision Date | 14 February 2018 |
| Docket Number | A160203 |
| Citation | 415 P.3d 1133,290 Or.App. 232 |
| Parties | TRI-CITY SERVICE DISTRICT, BY AND THROUGH its governing body, The BOARD OF COUNTY COMMISSIONERS OF CLACKAMAS COUNTY, Oregon, Plaintiff-Appellant, v. OREGON CITY, a municipality and public body within the State of Oregon, Defendant-Respondent. |
| Court | Oregon Court of Appeals |
Alexander Gordon argued the cause for appellant. With him on the briefs was Stephen Madkour.
Nancy L. Werner, Portland, argued the cause for respondent. With her on the brief was Beery, Elsner & Hammond, LLP.
Before Ortega, Presiding Judge, and Lagesen, Judge, and Wilson, Senior Judge.
Plaintiff Tri-City Service District is a special service district formed under ORS chapter 451. It provides wholesale wastewater treatment services to defendant Oregon City (the city), as well as the cities of West Linn and Gladstone. Approximately 20,000 feet of plaintiff's sewage transmission lines are located within public rights of way belonging to the city. As a result, plaintiff is subject to the city's right-of-way usage fee under Oregon City Code chapter 13.34 and Oregon City Resolution 13-26. Those provisions, taken together, require utilities using public rights of way in Oregon City to pay a maximum of six percent of their annual revenues that is derived from the operation of utility facilities in Oregon City to the city in exchange for using the rights of way.
Plaintiff disputes the city's authority to subject it to the fee and initiated this action for declaratory relief under the Uniform Declaratory Judgments Act, ORS 28.010 to 28.160, to address the issue. Plaintiff sought declarations that (1) ORS 221.420 precludes the imposition of a usage fee on a municipal corporation such as plaintiff; (2) the usage fee was not a valid licensing fee and was "void" as a licensing fee; (3) the usage fee was, instead, a tax; (4) the tax was a tax on real property; and (5) plaintiff was exempt from paying that tax by operation of ORS 307.090(1), which exempts certain governmental entities from paying property taxes. On cross-motions for summary judgment, the trial court concluded as a matter of law that plaintiff was not entitled to the declarations requested and entered a general judgment so declaring. Thereafter, the court entered a supplemental judgment awarding attorney fees to the city under ORS 20.105(1), which, among other things, authorizes an award of attorney fees to a party who prevails against a claim or defense if the trial court finds "that there was no objectively reasonable basis for asserting" the claim or defense.
Plaintiff appeals both judgments, contending that the trial court erred in declining to grant summary judgment in its favor, rejecting the requested declarations, and in concluding that plaintiff's claim was not objectively reasonable and awarding attorney fees on that basis. For the reasons that follow, we affirm the general judgment but conclude that the trial court erred in awarding attorney fees and, therefore, reverse the supplemental judgment.
The appeal of the general judgment comes to us after the trial court granted the city's motion for summary judgment. On appeal, plaintiff contends that the court erred by granting the city's motion for summary judgment and denying plaintiff's motion for summary judgment. We review the trial court's rulings to determine, on the summary judgment record as a whole, whether there are disputes of material fact and whether either party is entitled to judgment as a matter of law. Hicks v. Central Point School Dist. , 270 Or.App. 532, 540, 348 P.3d 307 (2015) ; Citibank South Dakota v. Santoro , 210 Or.App. 344, 347, 150 P.3d 429 (2006), rev den , 342 Or. 473, 155 P.3d 51 (2007). Here, the relevant facts are not disputed; the issue is whether the trial court erred in concluding that the city was entitled to judgment as a matter of law and that plaintiff was not.
As to the appeal of the supplemental judgment awarding attorney fees, we review for legal error the trial court's determination that there was no objectively reasonable basis for asserting a claim, so as to authorize an award of attorney fees under ORS 20.105. Williams v. Salem Women's Clinic , 245 Or.App. 476, 483-85, 263 P.3d 1072 (2011).
As noted, this case centers on the fee imposed on utilities by Oregon City Code (OCC) chapter 13.34, and Oregon City Resolution (OCR) 13-26, for using the city's rights of way. OCC 13.34.130 generally sets forth the fee requirement. In particular, OCC 13.34.130(A) states:
"Except as set forth in subsection B of this section, every person that owns utility facilities in the city and every person that uses utility facilities in the city to provide utility service, whether or not the person owns the utility facilities used to provide the utility services, shall pay the right-of-way usage fee for every utility service provided using the rights-of-way in the amount determined by resolution of the city commission."
A utility's failure to comply with the obligation to pay the fee can result in civil penalties. OCC 13.34.180.
OCR 13-26, in turn, establishes the fee schedule. Under it, a utility using the city's rights of way must pay either (1) a fixed minimum amount based on the number of linear feet of utilities occupying the rights of way; or (2) a fixed percentage of the utility's gross revenues derived from the operation of utility facilities. Under that scheme, plaintiff must pay six percent of its gross revenue as a usage fee. For 2014, that amount was approximately $190,000.
Plaintiff disputes the city's authority to require it to pay a right-of-way usage fee. To resolve that dispute, plaintiff initiated this proceeding, ultimately seeking declarations that the usage fee is unenforceable against it. Plaintiff had two primary theories as to why it was entitled to relief: (1) that ORS 221.420,1 which authorizes the imposition of right-of-way usage fees on public utilities, operated to preclude the city from imposing a usage fee on a municipal corporation such as plaintiff, because a municipal corporation is not a public utility within the terms of that statute; and (2) that the city's usage fee was not a valid licensing or regulatory fee but, instead, was a tax on plaintiff's real property, from which plaintiff was exempt by operation of ORS 307.090(1). See 290 Or.App. at 237–38, 415 P.3d at 1136–37. Plaintiff requested that the court enter a number of subsidiary declarations:
The parties filed cross-motions for summary judgment. Apart from its theory that ORS 221.420 precluded the city from imposing a right-of-way usage fee on a municipal corporation, which plaintiff acknowledged was in conflict—or, at least, in tension with—this court's decision in Rogue Valley Sewer Services v. City of Phoenix , 262 Or.App. 183, 329 P.3d 1 (2014), aff'd , 357 Or. 437, 353 P.3d 581 (2015), plaintiff primarily argued that the fee bore the hall-marks of a tax because, in plaintiff's view, the fee was not reasonably calibrated to the city's costs of maintaining the rights of way and was placed into the city's general fund, rather than into a fund dedicated to the maintenance of the rights-of-way. Further, plaintiff contended that that tax was a tax on plaintiff's real property from which plaintiff was exempt under ORS 307.090(1), which exempts governmental entities, including plaintiff, from property taxes:
"Except as provided by law, all property of the state and all public or corporate property used or intended for corporate purposes of the several counties, cities, towns, school districts, irrigation districts, drainage districts, ports, water districts, housing authorities, public universities listed in ORS 352.002 and all other public or municipal corporations in this state, is exempt from taxation."
In response, the city contended, among other things, that plaintiff failed to produce evidence sufficient to create a factual dispute as to whether the fee was reasonably related to the city's costs in connection with the rights of way or otherwise showing that the fee constituted a tax rather than a fee. The city further argued that, even if the usage fee constituted a tax, plaintiff had not demonstrated that the tax was unlawful or that plaintiff was exempt from paying it. In particular, the city asserted that ORS 307.090(1) only exempts municipal corporations and other governmental entities from paying property taxes, and does not exempt them from other types of taxes. The city asserted that its right-of-way usage fee, if a tax, was not a tax on plaintiff's property because all users of the city's rights of way, regard-less of whether they owned the utilities in those rights of way, had to pay the usage fee. According to the city, the usage fee was not linked to plaintiff's ownership of property but, instead, plaintiff's use of the rights of way.
Following a hearing, the trial court issued a letter opinion in which it concluded that the city was entitled to summary judgment. The court concluded that our decision in Rogue Valley Sewer Services , 262 Or.App. 183, 329 P.3d 1 —which, at the time, was pending in...
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