Court Opinion

ID: 2774552
Source: CourtListenerOpinion
Date Created: 2015-01-29 18:03:27.056203+00
Date Added: 2024-06-11T12:19:05.307073
License: Public Domain

Cite as 2015 Ark. 29

                SUPREME COURT OF ARKANSAS
                                       No.   CV-14-581

BRYAN SULLINS, KERRI SULLINS,                      Opinion Delivered January 29, 2015
AND CHARLES E. WILLIAMS, ON
BEHALF OF THEMSELVES AND                           APPEAL FROM THE PULASKI
OTHERS SIMILARLY SITUATED                          COUNTY CIRCUIT COURT
                    APPELLANTS                     [NO. 60CV-13-755]

V.                                                 HONORABLE TIMOTHY DAVIS
                                                   FOX, JUDGE

CENTRAL ARKANSAS WATER,                            AFFIRMED.
BUDDY VILLINES, PULASKI
COUNTY JUDGE, AND PULASKI
COUNTY, ARKANSAS
                      APPELLEES

                   COURTNEY HUDSON GOODSON, Associate Justice

       This case is an appeal of the Pulaski County Circuit Court’s grant of summary

judgment in favor of appellees Central Arkansas Water, Buddy Villines, and Pulaski County

against appellants, Bryan Sullins, Kerri Sullins and Charles Williams. Before the circuit court,

appellants brought an illegal-exaction claim against appellees, arguing that Pulaski County and

Central Arkansas Water had entered into an improper agreement and that as a result, Central

Arkansas Water is improperly paying public funds to Pulaski County. We hold that the

agreement is a proper exercise of authority under the law and affirm the circuit court.

       Appellants Bryan Sullins, Kerri Sullins, and Charles Williams filed suit against appellees

Pulaski County, Central Arkansas Water, and Buddy Villines in his capacity as Pulaski

County Judge, claiming that appellees had entered into an agreement which necessitated
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Central Arkansas Water to expend public funds illegally. The facts underlying the illegal-

exaction claim are as follows. Central Arkansas Water owns and operates Lake Maumelle as

a public water supply. Lake Maumelle is located in Pulaski County. In 2007, Central

Arkansas Water adopted a Watershed Management Plan, which recommended certain

management options for the protection of the Lake Maumelle watershed. One of the

management options the plan suggested was the implementation through the county

governments of land-use controls for the watershed. Pulaski County supported the idea of

subdivision regulations that would implement development controls for the areas of the

watershed within Pulaski County.

       In February 2009, Central Arkansas Water authorized the collection of a “watershed

fee” imposed on wholesale customers, including appellants. In April 2009, Pulaski County

and Central Arkansas Water entered into the Watershed Protection Agreement at issue in this

case. The Central Arkansas Water Board of Directors approved the agreement and the

Pulaski County Quorum Court enacted Ordinance 09-OR-26, which authorized the county

judge to execute the agreement. At the same meeting, the quorum court adopted a

Subdivision Ordinance, including Chapter 8, which provides special provisions applicable

to the Pulaski County portion of the Lake Maumelle Watershed.

       In the complaint, appellants alleged that they and other similarly situated taxpayers had

paid the watershed fee imposed by Central Arkansas Water and that it constituted an illegal

exaction because the Watershed Protection Agreement between Central Arkansas Water and

Pulaski County was illegal. Specifically, appellants argued that the Watershed Protection

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Agreement was improper because it was a contract for the “joint exercise of governmental

powers, privileges and authority” pursuant to the Interlocal Cooperation Act, codified at

Arkansas Code Annotated section 25-20-104 (Repl. 2014), and because it failed to comply

with the applicable statutory terms. In response, appellees contended that the agreement was

proper under the Interlocal Agreement Act, codified at Arkansas Code Annotated section 14-

14-910 (Repl. 2013) because it was an agreement for administrative services. The parties filed

cross-motions for summary judgment, and the circuit court ruled that the agreement was a

proper contract for administrative services. Accordingly, the circuit court entered summary

judgment in favor of appellees, and appellants filed this appeal.

       Summary judgment is appropriate when there are no genuine issues of material fact,

and the moving party is entitled to judgment as a matter of law. Gentry v. Robinson, 2009
Ark. 634, 361 S.W.3d 788. On appeal, this court determines if summary judgment was

appropriate based on whether the evidentiary items presented by the moving party in support

of the motion leave a material fact unanswered. Id. This court views the evidence in the

light most favorable to the party against whom the motion was filed, resolving all doubts and

inferences against the moving party. Lipsey v. Giles, 2014 Ark. 309, 439 S.W.3d 13. The

burden is not on the moving party to demonstrate that every fact is undisputed, but to show

that reasonable minds could not differ as to the conclusion to be drawn from them. Early v.

Crockett, 2014 Ark. 278, 436 S.W.3d 141. Summary judgment is also appropriate when the

circuit court finds that the allegations, taken as true, fail to state a cause of action. Cottrell v.

Cottrell, 332 Ark. 352, 965 S.W.2d 129 (1998). When parties file cross-motions for summary

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judgment, as in this case, we determine on review whether the appellee was entitled to

judgment as a matter of law. Rylwell, LLC v. Men Holdings 2, LLC, 2014 Ark. 522, ___

S.W.3d ___.

       Illegal-exaction lawsuits in Arkansas are authorized under article 16, section 13, of the

Arkansas Constitution, which provides, “Any citizen of any county, city, or town may

institute suit in behalf of himself and all others interested, to protect the inhabitants thereof

against the enforcement of any illegal exactions whatever.” An illegal exaction is defined as

any exaction that either is not authorized by law or is contrary to law. Brewer v. Carter, 365
Ark. 531, 231 S.W.3d 707 (2006). Two types of illegal-exaction cases can arise under article

16, section 13: “public funds” cases, where the plaintiff contends that public funds generated

from tax dollars are being misapplied or illegally spent, and “illegal-tax” cases, where the

plaintiff asserts that the tax itself is illegal. McGhee v. Ark. State Bd. of Collection Agencies, 360
Ark. 363, 201 S.W.3d 375 (2005). This court has stated that citizens have standing to bring

a “public funds” case because they have a vested interest in ensuring that the tax money they

have contributed to a state or local government treasury is lawfully spent. Ghegan & Ghegan,

Inc. v. Weiss, 338 Ark. 9, 991 S.W.2d 536 (1999). Accordingly, “a misapplication by a public

official of funds arising from taxation constitutes an exaction from the taxpayers and empowers

any citizen to maintain a suit to prevent such misapplication of funds.” Farrell v. Oliver, 146
Ark. 599, 602, 226 S.W. 529, 530 (1921). First, and foremost, an illegal exaction is an

exaction that is either not authorized by law or is contrary to law. Stromwall v. Van Hoose,

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371 Ark. 267, 265 S.W.3d 93 (2007). Where the expenditure is authorized by statute, no

illegal exaction occurs. Id.

          Appellants’ first argument is that the circuit court erred in ruling that the Watershed

Protection Agreement was a proper contractual agreement between Pulaski County and

Central Arkansas Water. Appellants argue that, in entering into the agreement, the parties

were required to comply with the terms of the Interlocal Cooperation Act, codified at

Arkansas Code Annotated sections 25-20-101 et seq., which provides in relevant part,

                  Any governmental powers, privileges, or authority exercised or capable
          of exercise by a public agency of this state alone may be exercised and enjoyed
          jointly with any other public agency of this state which has the same powers,
          privileges, or authority under the law and jointly with any public agency of any
          other state of the United States which has the same powers, privileges, or
          authority, but only to the extent that laws of the other state or of the United
          States permit the joint exercise or enjoyment

Ark. Code Ann. § 25-20-104. Appellants assert that the Watershed Agreement Act is

governed by the Interlocal Cooperation Act because it is an agreement for “governmental

powers, privileges, or authority.” In support of their contention, appellants point to several

sections of the agreement. First, appellants point to section 2.02 of the agreement, which

states:

          Section 2.02 Staff. Pulaski County will hire adequate staff within the
          Planning Department to perform its obligations under this Agreement (the
          “Staff”). A preliminary list of the Staff contemplated by the Parties under this
          Agreement is attached hereto as Schedule I and incorporated herein by this
          reference. The Staff will be dedicated primarily to the implementation and
          enforcement of Chapter 8 and the Stormwater Management Ordinance within
          the Pulaski County Watershed. The Parties contemplate that Pulaski County
          will not need to immediately hire all of the Staff listed in Schedule I.
          Accordingly, CAW will initially fund that amount necessary to hire and
          provide equipment and administrative support for the Watershed Inspector.

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       Thereafter, as needed from time to time, in October of each year, Pulaski
       County will notify CAW of the county’s intent to fill any or all of the
       remaining positions set forth on Schedule I, including an estimate of when the
       funding for each position will be required. The Parties will work together to
       assure that the Staff remains adequate to perform its obligations relating to the
       protection of the Pulaski County Watershed.

Next, appellants rely on section 3.03 which provides:

       Section 3.03 Affirmative Covenant. Throughout the term of this
       Agreement, CAW covenants and agrees that it will take each and every action
       reasonably required of it to ensure that it fulfills its obligations to Pulaski
       County under this Agreement and to assist Pulaski County with the
       implementation and enforcement of Chapter 8 and the Stormwater
       Management Ordinance as contemplated hereby.

Additionally, appellants point to section 4.05, wherein Pulaski County designates Central

Arkansas Water as a Responsible Management Entity (“RME”) for certain purposes relating

to the wastewater system. Specifically, Section 4.05 provides,

       Section 4.05 Responsible Management Entity. CAW is not authorized by law
       to operate and/or maintain wastewater systems. Nevertheless, CAW does have
       adequate engineering experience and expertise to provide advice concerning the design
       and installation of wastewater systems. Accordingly, until such time as the Little Rock
       Wastewater Utility is designated by Pulaski County to serve as the Responsible
       Management Entity (“RME”), or such alternative entity acceptable to CAW is
       appointed as the RME, the Parties agree as follows:
              (i)     CAW is designated as an RME for the purpose of approving any Force
                      Line System or On Site System as contemplated by Section 8.2A1 of
                      Chapter 8;
              (ii)    CAW is designated as an RME for the purpose of approving any
                      Wastewater System Maintenance Plan as contemplated by Section
                      8.2A2 of Chapter 8; and
              (iii) CAW is designated as an RME for the proposed enforcing the
                      Wastewater System Maintenance Plan, if necessary, and charging the
                      Developer, POA, or Lot Owner as contemplated by Section 8.2C of
                      Chapter 8.

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Finally, appellants cite to section 4.06, wherein Pulaski County designates Central Arkansas

Water as its authorized representative and authorizes Central Arkansas Water to “take any and

all actions permitted by law it deems necessary to ensure continued compliance with any

covenants and conditions contained in any agreement.” Appellants insist that because Pulaski

County and Central Arkansas Water do not have “the same powers, privileges, or authority

under the law” they are prohibited by the Interlocal Cooperation Act from entering into this

agreement. Furthermore, appellants contend that through these sections of the contract,

Pulaski County improperly delegates its responsibility for implementation and enforcement

of land-use controls to Central Arkansas Water.

       Appellees do not dispute that Central Arkansas Water and Pulaski County do not have

the same powers but submit that the agreement is valid under the general contracting powers

granted to the counties under amendment 55 to the Arkansas Constitution, as well as the

Interlocal Agreement Act, codified at Arkansas Code Annotated section 14-14-910. The

Interlocal Agreement Act provides,

       The county court of each county may contract, cooperate, or join with any one
       (1) or more other governments or public agencies, including any other county,
       or with any political subdivisions of the state or any other states, or their
       political subdivisions, or with the United States to perform any administrative
       service, activity, or undertaking which any contracting party is authorized by
       law to perform.

Ark. Code Ann. § 14-14-910(a). Appellees argue that the Watershed Protection Agreement

is an agreement for administrative services, activities or undertakings pursuant to section 14-

14-910 and not an agreement for governmental powers, privileges, or authority under section

25-20-104.

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       Having considered the parties’ arguments, we hold that the circuit court correctly ruled

that the Watershed Protection Agreement was a valid agreement under Arkansas law. The

Interlocal Agreement Act expressly provides authority for a county to contract for “any

administrative service, activity, or undertaking.” Ark. Code Ann. § 14-14-910(a). This court

has distinguished between a county’s legislative and administrative authority and held that

enforcement of an already-established ordinance is an exercise of administrative authority. City

of Ft. Smith v. McCutchen, 372 Ark. 541, 279 S.W.3d 78 (2008). Accordingly, as the Arkansas

Court of Appeals has summarized, “the enactment and amendment of local zoning is

legislative and the sole, nondelegable duty of the local governing body. In contrast, the

execution and enforcement of the zoning laws are administrative tasks and hence, delegable.”

Bolen v. Washington Cnty. Zoning Bd. of Adjustments, 2011 Ark. App. 319, at 7, 384 S.W.3d
33, 38 (2011) (citing City of Ft. Smith v. McCutchen, supra).

       In this case, the agreement between Central Arkansas Water and Pulaski County

provides for the execution and enforcement of a previously enacted zoning ordinance and

thus covers only administrative tasks. For example, section 2.02 provides that the duties of

the staff will be “implementation and enforcement of Chapter 8 and the Stormwater

Management Ordinance within the Pulaski County Watershed.” Furthermore, the section

makes clear that the staff will be hired and employed by Pulaski County and not by Central

Arkansas Water. Instead, Central Arkansas Water reimburses Pulaski County only for the cost

of the staff. Similarly, section 3.03, which states that Central Arkansas Water will “assist

Pulaski County with the implementation and enforcement of Chapter 8 and the Stormwater

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Management Ordinance as contemplated hereby” does not enact new policy, but simply

provides for the enforcement of the existing ordinance.

       Moreover, section 4.05, designating Central Arkansas Water as a Responsible

Management Entity is also not an improper delegation of authority. Although appellants

argue this section grants broad powers to Central Arkansas Water over the wastewater

management system, the agreement actually limits Central Arkansas Water’s powers to (1)

approval of any Force Line System or On Site System, and (2) approval and enforcement of

any Wastewater System Maintenance Plan Section. Contrary to appellants’ assertions, the

agreement does not place the entire wastewater system under the control or authority of

Central Arkansas Water; rather, it allows Central Arkansas Water to advise Pulaski County

in its decisions. Thus, because the provisions of the contract do not delegate rulemaking or

policy-making powers to Central Arkansas Water but instead relate only to administrative

actions, such as implementation and enforcement of the ordinance previously passed by

Pulaski County, the circuit court did not err in ruling that the agreement was administrative.

       Additionally, we reject appellants’ argument that the Interlocal Agreement Act requires

Central Arkansas Water to possess the independent legal authority to perform the services

under the contract. Section 14-14-910 provides that counties may contract with public

agencies “to perform any administrative service, activity, or undertaking which any contracting

party is authorized by law to perform.” Ark. Code Ann. § 14-14-910(a) (emphasis added).

Clearly, the plain language of this section contemplates that counties may contract for any

administrative service as long as either the county or the public agency is legally authorized

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to perform it. In this case, appellants do not claim that there is any portion of the agreement

which neither Pulaski County nor Central Arkansas Water is authorized by law to perform.

Additionally, the statute expressly authorizes counties to “cooperate in the exercise of any

function, power, or responsibility; share the services of any officer, department, board,

employee, or facility; and transfer or delegate any function, power, responsibility, or duty.”

Ark. Code Ann. § 14-14-910(b)(2). The plain language of this section contemplates that

counties may delegate administrative powers to other public agencies under the provisions of

this section.

       Finally, appellants argue that section 14-14-910 is not applicable because Pulaski

County has not obligated its own financial resources in the agreement. However, section

2.02 expressly mandates that “Pulaski County will hire adequate staff within the Planning

Department to perform its obligations under this Agreement.” As appellants recognize in

their brief, this provision will require Pulaski County to pay for such expenses as the salaries

of the staff, employee benefits and payroll taxes, registration fees, and training. Appellants also

admit that these costs will initially be paid from the general-tax revenues of Pulaski County

before Central Arkansas Water reimburses the county for them. As the agreement requires

Pulaski County to expend money from its general tax revenues in executing the agreement,

the contract implicates the financial resources of the county. Additionally, it is undisputed

that the actual enforcement of the agreement will, at times, involve existing members of the

Pulaski County staff beyond those for which Central Arkansas Water is reimbursing Pulaski

County. Those additional staff members are already being paid through Pulaski County

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financial resources, so the use of those staff members will also implicate the financial resources

of Pulaski County.

       Because the agreement is for administrative activities that either Pulaski County or

Central Arkansas Water is legally authorized to perform and Pulaski County’s financial

resources are obligated in the agreement, the circuit court properly concluded that the

agreement was governed and authorized by Arkansas Code Annotated section 14-14-910.

Accordingly, because the contract between Pulaski County and Central Arkansas Water is

authorized by the Interlocal Agreement Act, the expenditure of funds under the contract is

not an illegal exaction, and the circuit court properly granted summary judgment against

appellants.

       Affirmed.

       Campbell Law Firm, by: H. Gregory Campbell, for appellants.

       Amanda Mankin-Mitchell and Chastity Scifres, Pulaski County Attorney’s Office,

for appellees.

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