Zepp v. Mayor & Council of Athens

• Decision Date: 16 July 1986
• Docket Number: No. 71660,71660
• Citation: 348 S.E.2d 673,180 Ga.App. 72
• Court: Georgia Court of Appeals
• Parties: , 2 UCC Rep.Serv.2d 1179 ZEPP et al. v. MAYOR & COUNCIL OF ATHENS.

Page 673

348 S.E.2d 673

180 Ga.App. 72, 2 UCC Rep.Serv.2d 1179

ZEPP et al. v. MAYOR & COUNCIL OF ATHENS.

No. 71660.

Court of Appeals of Georgia.

Decided July 16, 1986.

Rehearing Denied July 31, 1986.

Certiorari Denied Sept. 11, 1986.

Sidney L. Moore, Jr., Decatur, for appellants.

Dennis Galis, Athens, Robert Langstaff, Albany, for appellee.

McMURRAY, Presiding Judge.

Plaintiffs Richard G. Zepp, Calvin C. Seaquist, William R. Walinow, Jr., and J. David Carter, brought this class action lawsuit in Clarke County Superior Court against the Mayor and Council of the City of Athens, Georgia. In their complaint, plaintiffs allege that they purchase water from the City of Athens "through meters located outside the City Limits of the City of Athens, but inside Clarke County, Georgia"; that the City of Athens is a municipal corporation which "operates its water system as a proprietary venture for economic gain"; and, that the water rates which the City of Athens charges the plaintiffs are "2.25 times the rates charged persons who purchase water inside the city limits of the City of Athens." Based upon the foregoing allegations, plaintiffs set forth three causes of action. First, plaintiffs contend that the rates which the City of Athens charges are "arbitrary and capricious" and deprive plaintiffs of their property without due process of law. Second, plaintiffs assert that the "contract between each of the Plaintiffs and the City of Athens is a contract with an open price term for the sale of goods" and that the rates which the City fixes for the "goods [are] unreasonable and in excess of that normally charged in the market place ..." Finally, plaintiffs allege that the rates are charged under a "contract of adhesion for which the Plaintiffs have no practical alternative" and that they are unconscionable. In their "wherefore" clause, plaintiffs seek, inter alia, "reimbursement for excessive charges imposed" by the city, "an injunction against the imposition of such rates," and an order requiring the city "to submit a new schedule of rates. ..."

The City of Athens answered the complaint and denied the material allegations set forth therein. Additionally, the city defended on the grounds, inter alia, that the complaint failed to state a claim upon which relief could be granted. See OCGA § 9-11-12(b)(6). The parties agreed to treat the OCGA § 9-11-12(b)(6) defense as a motion to dismiss and the trial court was so notified. Thereupon, the trial court informed counsel for the parties that it intended to handle the city's motion to dismiss as a motion for summary judgment.

Plaintiffs objected to the treatment of the motion to dismiss as a motion for summary judgment. They argued that it was improper to so treat the motion since neither party presented matters dehors the pleadings. Plaintiffs also contended they were not afforded sufficient time to submit material in opposition to a summary judgment motion. The trial court responded to plaintiffs' objection by granting plaintiffs additional time (from March 6, 1985, until April 24, 1985) to file documents opposing the summary judgment motion. Thereafter, plaintiffs filed documents in opposition to the motion "under protest." These included certified copies of the water rates charged by the cities of Savannah and Brunswick, the affidavit of John B. Gillett, a partner in an engineering firm, and the affidavit of plaintiffs' counsel.

The water rate table for the City of Savannah shows that non-residents are charged approximately 1.5 times the rates charged persons who purchase water inside the city limits. Likewise, the City of Brunswick water rate table shows that non-residents are charged approximately 1.5 times as much as residents for the purchase of water.

In his affidavit, Mr. Gillett averred that his firm was retained by the city in 1980 to evaluate two reports which provided the basis for the city's water rate structure; and that based on data from one of those reports and cost estimates from the city's 1980 budget, it was "estimated that the City's water revenues for 1980 were 47% higher than cost on a system-wide basis." Gillett further averred that his firm was retained by Clarke County in 1984 to conduct a cost of service study of the city's water and sewer system; that "that study will include our assessment of the cost of water service outside the City of Athens in Clarke County, Georgia"; that that study was to have been completed in the summer of 1984 but its completion was "delayed because the City has refused to provide a part of the needed data" in view of pending litigation; but that, nonetheless, the cost-of-service study was scheduled to be completed April 30, 1985.

The affidavit of plaintiffs' counsel was filed pursuant to OCGA § 9-11-56(f) on April 23, 1985. He averred, inter alia, that it was not possible to adequately present evidence in opposition to the summary judgment motion within the time allowed by the court. Specifically, plaintiffs' counsel averred that the cost-of-service study which is being prepared by Mr. Gillett's engineering firm had not been completed; that the cost-of-service study was "essential" to plaintiffs' case; and that in the absence of the cost-of-service study, expert testimony supporting plaintiffs' contentions could not be obtained.

By stipulation, various other documents were submitted in opposition to the city's summary judgment motion. These included a copy of the city's municipal water rate (showing that non-residents are charged about 2.25 times as much as residents for the purchase of water) ordinance, a summary of revenues and expenses for the city's water system for the ten-year period commencing in 1973 and ending in 1982, the city's financial statements for the year ending June 30, 1984, and the city's 1984 prospectus with respect to the sale of $18,941,755 in re-financing bonds.

A hearing was held upon the summary judgment motion on April 24, 1985. Thereafter, on July 26, 1985, the trial court awarded summary judgment to the city and plaintiffs appeal.

In Zepp v. Mayor, etc., of Athens, 255 Ga. 449, 339 S.E.2d 576 (1986), the Supreme Court ruled that jurisdiction of this case lies in the Court of Appeals since plaintiffs' attack upon the constitutionality of the water ordinance was "resolved adversely to the plaintiffs" in decisions rendered previously by the Supreme Court. Accordingly, the Supreme Court transferred the case to this court. Held:

1. Plaintiffs contend the trial court erred by treating the city's motion to dismiss as a motion for summary judgment. They argue that an OCGA § 9-11-12(b)(6) motion should only be converted into a summary judgment motion where matters beyond the pleadings are presented to the court by the parties. We disagree. So long as the parties are afforded sufficient time within which to file affidavits and other evidentiary materials, we see no reason why a trial court sua sponte cannot treat an OCGA § 9-11-12(b)(6) motion as one for summary judgment even though neither party introduced matter outside of the pleadings. See Scott v. Dollahite, 54 F.R.D. 430, 432 (ND Miss.1972).

2. Plaintiffs assert the trial court erred in awarding summary judgment to the city for three reasons. First, they argue that the water rate structure set forth by the city is unconstitutional. Second, they contend the contract between plaintiffs and the city for the purchase of water contains an open-price term which the city fixes unreasonably in violation of OCGA § 11-2-305. Third, they assert that the rates charged by the city are unconscionable in violation of OCGA § 11-2-302.

Plaintiffs' first argument must fail in light of the decision of the Supreme Court transferring the case here. In Division 1 of Zepp v. Mayor, etc., of Athens, 255 Ga. 449, 339 S.E.2d 576, supra, the Supreme Court made it clear that plaintiffs' contention of unconstitutionality was resolved adversely to plaintiffs in prior decisions of the Supreme Court. Thus, it cannot be said that the water-rate ordinance promulgated by the city is unconstitutional.

In the case sub judice, we find no express contract between the city and plaintiffs for the sale of water. Rather, there is a continuing offer by the city to sell water; and an acceptance by plaintiffs of the offer "by the act of drawing water through the water meter." Moody v. City of Galveston, 524 S.W.2d 583, 586 (Ct.Civ.App.Tex.1975). The city seemingly asserts that this implied contract for the sale of water cannot be reviewed because the city has an absolute right to charge different water rates to its resident and non-resident customers. We agree that the city has a right to impose different water rates for its resident and non-resident customers. Zepp v. Mayor, etc., of Athens, 255 Ga. 449, 339 S.E.2d 576, supra. But this is not to say that the actual rate imposed is not subject to review. Where a city sells water to a customer pursuant to a voluntary contract, that contract is subject to review by the courts in the same manner as any other private contract. Moultrie v. Burgess, 212 Ga. 22, 24(3), 90 S.E.2d 1 (1955). Thus, such contracts are governed by contract principles applicable generally to the contracts of private parties. See Jonesboro v. Clayton County Water Auth., 136 Ga.App. 768, 771, 222 S.E.2d 76 (1975).

Plaintiffs' second and third contentions, attacking the fixing of the water rate as unreasonable and unconscionable, are predicated upon the applicability of the Uniform Commercial Code ("UCC") to the water contracts. Thus, before directly addressing these contentions, we must first determine whether the sale of water by the city constitutes the sale of goods under Article 2 of the UCC.

Our analysis of this question begins with the pre-UCC case of Canavan v. Mechanicville, 229 N.Y. 473, 128 N.E. 882 (1920). In that case, the New York Court of Appeals examined the sale of water in light of the Uniform Sales Act. Under that Act, goods...