Copper Country Mobile Home Park v. City of Globe

Citations: 641 P.2d 243; 131 Ariz. 329; 1981 Ariz. App. LEXIS 635Docket: 2 CA-CIV 3929

Court: Court of Appeals of Arizona; December 7, 1981; Arizona; State Appellate Court

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Copper Country Mobile Home Park and Hancor Properties, Inc. filed a lawsuit against the City of Globe to enforce a contract obligating the city to provide sewer services at a rate equivalent to that charged to city residents. The trial court granted summary judgment in favor of the plaintiffs, affirming that the city was bound by the contract and that no material facts were disputed. The city had previously agreed to provide sewer service without any charge beyond a monthly fee equivalent to that charged within the city limits, which was $1.00 per month per home. In April 1980, the city adopted an ordinance increasing the fee to $10.00 per month for users outside its corporate limits, leading to the lawsuit. The court found that this increased charge violated the city's contractual obligation and issued a judgment preventing the city from charging the plaintiffs more than the established rate for city residents. The city acknowledged its authority under A.R.S. 9-522 to operate a sewer system outside its limits, but this did not exempt it from adhering to the contract terms.

A.R.S. 9-521(5)(a) classifies "utility undertaking" to encompass sewer systems. The Arizona Supreme Court has determined that A.R.S. 9-522, despite being titled "Power to issue bonds," allows for the acquisition and operation of sewer systems beyond municipal boundaries without the issuance of bonds. The appellant argues that the agreement with the appellees breached Article 13, Section 6 of the Arizona Constitution, which restricts the delegation of regulatory power over public services and prohibits exclusive franchises. However, this argument fails, as the constitutional provision pertains to public utilities regulated by the Corporation Commission, and the legislature has the authority to delegate such regulatory powers to municipalities. Since the case at hand does not involve a franchise and stems from the city's own initiative to provide sewer services, the constitutional language cited is irrelevant. The city further claims that a $10 monthly charge to users is necessary for operational expenses, implying that the agreement violates A.R.S. 9-530(A), which mandates that municipal utility undertakings remain self-supporting when bonds are issued. However, this statute only applies when bonds have been issued, making it inapplicable in this instance, as no bonds are involved.

The appellant argues that the activity in question is a governmental function of the city, asserting that prior mayors and councils cannot bind future councils. It acknowledges that if this were a proprietary function, the municipality would be bound by contracts related to proprietary activities, as established in *City of Tucson v. Sims*. The process of setting sewage disposal rates for city customers is identified as a governmental function, supported by case law, including *Johnson v. State*. The excerpt distinguishes between governmental functions and proprietary functions, noting that while operating a sewage system is typically governmental, the contract under review involves providing sewer service to non-residents, suggesting a proprietary nature. The core issue is that the city has no duty, aside from contractual obligations, to provide services to non-residents, thus classifying the operation as proprietary. This is supported by precedents like *Tronslin v. City of Sonora*, which upheld contracts for sewer services to areas outside city limits. The excerpt concludes that the city is bound by its contractual obligations to provide sewer services to non-residents, paralleling the principles outlined in *City of Phoenix v. Kasun*, which highlighted the lack of a governmental obligation to serve non-residents outside city boundaries.

The appellant's cited authorities pertain solely to services provided to residents within the city limits. The appellant contends that a factual dispute existed, arguing the trial court improperly granted summary judgment. However, the contract stipulates that the city must furnish sewage services to the appellees and their successors at a monthly fee equivalent to that charged for similar services within Globe. An affidavit from the Globe City Manager asserts that no equivalent services exist within the city. The affidavit's assertion is largely based on the size, costs, and financing of the systems, which the appellant claims support the conclusion. However, the court finds the contract's term "like or equivalent service" to be unambiguous, defining it as the provision of sewage removal from homes, applicable to both residents and non-residents. The court determines that this service was clearly understood by both parties at the time of contract formation. Additionally, there is no evidence indicating that the systems' size, costs, or financing has changed since 1974, rendering any dispute on this matter insubstantial. The trial court's decision is affirmed.