Opinion ID: 2511845
Heading Depth: 2
Heading Rank: 3

Heading: holliday water may still be bound by a preexisting contract to comply with salt lake valley health department's regulation 33

Text: ¶ 33 Salt Lake County argues that notwithstanding the amendments to Utah Code section 19-4-111, Holliday Water may still be required to fluoridate its water supply under an express agreement it made with the County before section 19-4-111 was amended. Salt Lake County renews its argument that the new statute should not apply retroactively to invalidate contracts that were in force before the amendments were passed. [6] ¶ 34 In contrast, Holliday Water asserts that every Utah contract is entered into with the knowledge that the State Legislature can, in the exercise of its police powers, pass laws reasonably necessary to secure the health, safety, and general welfare of the community regardless of whether such laws or regulations affect contracts incidentally, directly or indirectly. Holliday Water argues that any agreement it may have entered into with the County is subject to current law, and thus, even if Holliday Water agreed to fluoridate its water supply by express contract or otherwise, to require Holliday Water to comply with that promise now would be to force it to commit an illegal act. ¶ 35 While it is true that when a legislative enactment renders preexisting contract terms illegal the contract may be deemed unenforceable; it is also true that preexisting contracts at odds with new legislation will not automatically be deemed invalid. Rather, we must conduct a balancing test to determine whether the interest in [enforcing the contract] is clearly outweighed ... by a public policy against the enforcement of such terms. Restatement (Second) of Contracts § 178 (1981); see also 15 Corbin on Contracts, § 89.16 (1993).
¶ 36 Despite the general rule that every contract in violation of [the] law is void, the fact that a contract serves a prohibited purpose does not necessarily make the contract unenforceable. Peterson v. Sunrider Corp., 2002 UT 43, ¶ 39, 48 P.3d 918 (internal quotation marks and citations omitted). [T]he court must then determine whether [the] statute or public policy demands that the contract be held unenforceable. Id. In doing so, a court should look at the over-all picture ... and determine upon the facts of the individual case whether the ends of justice demand that relief be granted. McCormick v. Life Ins. Corp. of Am., 6 Utah 2d 170, 308 P.2d 949, 952 (1957). This analysis includes both an identification of the purpose of enforcing the new legislation, as well as the public policy of preserving the freedom to contract. See 15 Corbin on Contracts, § 79.4 (1993) ([C]onclusions on enforceability are made by weighing the particular public policy at issue against the damage that the freedom of contract may suffer if the court does not enforce the contract.). ¶ 37 The 2009 amendments to section 19-4-111 are irrelevant to the protection of the health, safety, and welfare of the citizens in Salt Lake County. Instead, the purpose of the 2009 amendments is to shift the decision to add or discontinue the addition of fluoride to a water system from the citizens in the affected area to the shareholders who own the water system. See Utah Code Ann. § 19-4-111(7)(a). This shift in political power does not establish a legislative preference for fluoridation, but rather a policy of granting corporate public water systems the autonomy and power to make their own fluoridation decisions. ¶ 38 Unless Holliday Water lacked the power to enter into the alleged contract before these amendments were passed, its decision to enter an agreement with the County was also an exercise of its autonomy. To the extent that the enforcement of contracts does not clearly contravene public rights or the general welfare, it is the function of this court to enforce and maintain contracts rather than to enable parties to avoid their contractual obligations. See Baltimore & Ohio Sw. R. Co. v. Voigt, 176 U.S. 498, 505, 20 S.Ct. 385, 44 L.Ed. 560 (1900); DeVetter v. Principal Mut. Life Ins. Co., 516 N.W.2d 792, 794 (Iowa 1994) (For a court to strike down a contract on [public policy] grounds, it must conclude that the preservation of the general public welfare imperatively... demands invalidation so as to outweigh the weighty societal interest in the freedom of contract.). ¶ 39 Passing a law that allows shareholders to vote against the addition of fluoride to drinking water is irrelevant to public safety because it neither mandates nor prohibits the fluoridation of water. Therefore, freely entered contracts, legal when executed, that implement fluoride practices in a manner made illegal by the amended version of section 19-4-111 will not be displaced. ¶ 40 Because we have concluded that no overriding public policy interest prevents enforcement of an alleged preexisting contract, we now turn to the question of whether the 2009 amendments should apply retroactively to govern preexisting private contracts that may have been entered in this case. We are persuaded by Salt Lake County's argument that the 2009 amendments should not invalidate any preexisting contract between the parties.
¶ 41 As a general rule, we apply the version of the statute in effect at the time of the events giving rise to [the] suit. Taghipour v. Jerez, 2002 UT 74, ¶ 5 n. 1, 52 P.3d 1252. Indeed, the Utah Code expressly restricts retroactive application of legislative changes by stating [n]o part of these revised statutes is retroactive, unless expressly so declared. Utah Code Ann. § 68-3-3 (2008). When no such declaration of retroactive application is present in a legislative amendment, we must apply the statute in effect at the time of the controversy unless one of two exceptions apply: (1) the legislative change merely clarif[ies] the meaning of an earlier enactment, Utah Dep't of Soc. Servs. v. Higgs, 656 P.2d 998, 1001 (Utah 1982) or (2) the amendment changed the prior law in a purely procedural way that does not affect the substantive rights of the parties. See Harvey v. Cedar Hills City, 2010 UT 12, ¶ 14, 227 P.3d 256 (stating retroactive application is permissible if the amended version of the statute does not enlarge, eliminate, or destroy vested or contractual rights (alteration and internal quotation marks omitted)); Brown & Root Indus. Serv. v. Indus. Comm'n, 947 P.2d 671, 675 (Utah 1997) (same). ¶ 42 Utah Code section 19-4-111 (Supp. 2009) contains no language about retroactive application; therefore, to determine if the amendments will override a possible private contract, we must determine whether the 2009 amendments to the statute are merely procedural or for clarification, or if they affect the substantive rights of the parties. We conclude that the 2009 amendments were not procedural in nature, and that they possibly affected vested contractual rights that existed before the changes to the statute were made.
¶ 43 It is well established in our case law that when the purpose of an amendment is to clarify the meaning of an earlier [statute], the amendment may be applied retroactively in pending actions. Due South, Inc. v. Dep't of Alcoholic Beverage Control, 2008 UT 71, ¶ 14, 197 P.3d 82 (alteration in original) (quoting Kilpatrick v. Wiley, 2001 UT 107 ¶ 59, 37 P.3d 1130). An amendment serves as a clarification when it corrects a discrepancy or merely amplif[ies]... how the law should have been understood prior to [the amendment]. Richards Irr. Co. v. Karren, 880 P.2d 6, 8 (Utah Ct. App.1994) (internal quotation marks omitted). In cases of doubt or uncertainty as to the character of an amendment, the title or preamble to a statutory amendment may be examined to clarify the purpose of the change. See, e.g., Shelter Am. Corp. v. Ohio Cas. & Ins. Co., 745 P.2d 843, 845 (Utah Ct.App.1987) (noting the preamble to a statutory amendment stated that the purpose of the amendment was to clarify that a mobile home constituted a motor vehicle, under the statute). ¶ 44 When we examine the 2009 amendments to Utah Code section 19-4-111, nothing in their text appears to be an attempt to clarify preexisting language. Rather, the amendments add a new subsection to the statute providing an additional exemption to the fluoridation requirement that did not exist in any form before the amendments were made. Should there be any doubt as to the character of these amendments, the preamble to Senate Bill 29, amending section 19-4-111, is instructive. It states, [t]his bill defines terms; requires the majority of the voting shareholders of a corporate public water system to approve the addition or removal of fluori[d]e in the public water system; and makes technical changes. See Safe Drinking Water Act Amendments, ch. 371 § 1, 2009 Utah Laws 2029-30. This language makes clear that the amendment added a substantive requirement to the statute and was more than a mere clarification. We find the language in our case of Salt Lake Union Stock Yards v. Tax Comm'n , to be applicable to describe the situation: In this case we see no room for the argument that the Legislature intended to give a definition retroactively to words used in a previous enactment. There is no language used in the ... amendment from which this can be inferred. [The amendment] is clearly an attempt to extend [a new] exemption to [another class] of [individuals]. 93 Utah 166, 71 P.2d 538, 541 (1937). Senate Bill 29 was not a mere clarification of the law; it was an affirmative addition of a new exemption to the statute. We now turn to whether this addition was procedural in nature, or if it affected the substantive rights of the parties.
¶ 45 As we stated above, the substantive law to be applied throughout an action is the law in effect at the date the action was initiated. Higgs, 656 P.2d at 1000. An exception to this rule applies when a law is merely procedural rather than substantive in nature. See id. at 1000-01. A change to a law is procedural when it does not enlarge, eliminate, or destroy any vested or contractual rights of the parties. Due South, 2008 UT 71, ¶ 15, 197 P.3d 82 (internal quotation marks omitted). A change is substantive where the new statute establishes a primary right and duty which was not in existence at the time [the claim] arose. Ball v. Peterson, 912 P.2d 1006, 1009 (Utah Ct.App.1996) (internal quotation marks omitted). ¶ 46 We are persuaded that adding an exemption from the fluoridation requirement for corporate public water systems was not merely procedural in nature. Rather, we find that this change affected the structure, purpose, and key elements of Utah's fluoridation statutes. Utah law takes up the subject of fluoridation within the Safe Drinking Water Act in sections 19-4-101 to -112 of the Utah Code. Fluoridation of drinking water is mandated where the addition of fluoride is approved in a general election. Before the 2009 amendments added specific exemptions for corporate public water systems, these systems were required to comply with this fluoridation requirement. After the amendments, corporate public water systems were exempt from fluoridation. It is hard to envision a more substantive change than mandating an action under one statute and taking away that obligation in another. ¶ 47 Because the 2009 amendments to Utah Code section 19-4-111 vested corporate public water systems with a right they previously did not have, the amendments were substantive in nature, and we decline to apply them retroactively to displace any terms in enforceable preexisting contracts entered into by Salt Lake County and Holliday Water before the amendments were made. Whether or not Salt Lake County and Holliday Water have an enforceable contract is not squarely before us on this appeal and should be determined in the pending action before the district court.