Court Opinion

ID: 5138007
Source: CourtListenerOpinion
Date Created: 2021-12-21 14:49:14.307364+00
Date Added: 2024-06-11T08:24:05.641831
License: Public Domain

2015 UT App 54
_________________________________________________________

              THE UTAH COURT OF APPEALS

                   SETTLERS LANDING, LLC,
                   Plaintiff and Appellant,
                               v.
             WEST HAVEN SPECIAL SERVICE DISTRICT,
                   Defendant and Appellee.

                             Opinion
                        No. 20130331-CA
                       Filed March 5, 2015

           Second District Court, Ogden Department
               The Honorable Mark R. DeCaria
                        No. 100904528

            Dennis K. Poole, Attorney for Appellant

          Kenneth D. Bradshaw and Jason M. Yancey,
                   Attorneys for Appellee

   JUDGE MICHELE M. CHRISTIANSEN authored this Opinion, in
    which JUDGE JAMES Z. DAVIS and SENIOR JUDGE PAMELA T.
                   GREENWOOD concurred.1

CHRISTIANSEN, Judge:

¶1     Settlers Landing, LLC (Settlers) appeals from the trial
court’s dismissal of Settlers’ complaint challenging the fee
structure implemented by the West Haven Special Service District
(the District) for sanitary-sewer collection services. We affirm.

1. The Honorable Pamela T. Greenwood, Senior Judge, sat by
special assignment as authorized by law. See generally Utah R. Jud.
Admin. 11-201(6).
    Settlers Landing, LLC v. West Haven Special Service District

                         BACKGROUND

¶2      The District is a political subdivision located in Weber
County. The District was established by the city council of West
Haven City to maintain a public utility system that “provide[s] for
and manage[s] the delivery of waste water and sewerage
services.”2 Under standards promulgated and required by the State
of Utah, the District designed and constructed a sanitary sewer
collection system. The District provides, for a fee, culinary-water
and sewer services to Settlers Landing Apartments, a 276-unit
apartment complex operated by Settlers.

¶3     The District has implemented a billing method (the ERU fee
structure) that assesses fees on the basis of an equivalent
residential user (ERU). The ERU fee structure is based on
“Addendum C,” a document that forms part of the District’s
sewer-use and charging policies contained in the District’s Sewer
Use Ordinance (the Ordinance). Pursuant to Addendum C, a
monthly user fee is calculated by taking the annual budget of the
District and dividing that amount by the number of ERUs and then
dividing the resulting figure by twelve. The ERU fee structure does
not take into account actual use for each customer, nor does it
make any distinction between residential dwelling type, the size of
a residential dwelling, or the number of individual occupants. As
a result, all residential users are assigned one ERU per household
in determining their monthly fee amount. Pursuant to the
Ordinance, the District considers each apartment as an individual
residential unit or a single-family dwelling. Thus, the District
charges Settlers one ERU for each apartment unit housed within
Settlers Landing Apartments.

¶4   In March 2010, Settlers filed a claim under the
Governmental Immunity Act with the District, arguing that its
ERU fee structure resulted in discriminatory billing between

2. A public utility “includes every . . . water corporation[ and]
sewerage corporation . . . where the service is performed for, or the
commodity delivered to, the public generally.” Utah Code Ann.
§ 54-2-1(16)(a) (LexisNexis 2010).

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    Settlers Landing, LLC v. West Haven Special Service District

apartment owners and other small residential owners and those
who maintain larger residential properties. When sixty days had
passed without a response from the District, Settlers’ claim was
deemed denied. See Utah Code Ann. § 63G-7-403(1)(b) (LexisNexis
2008). Settlers then filed a complaint in the trial court, alleging that
the District’s “practice and billing method based upon ERU[s] has
resulted in the arbitrary, capricious, and discriminatory assessment
of fees against [Settlers]” because individual apartment units
generate less wastewater than other users. Settlers also claimed
that the District failed to comply with the wastewater-
measurement requirements set forth in rule R317-5-1.14 of the Utah
Administrative Code. After holding a bench trial in November
2012, the trial court issued Findings of Fact and Conclusions of
Law and dismissed Settlers’ complaint with prejudice. Settlers
appeals.

             ISSUES AND STANDARDS OF REVIEW

¶5      Settlers argues that the trial court erred when it (1)
misinterpreted Addendum C in determining that the ERU fee
structure is not arbitrary and capricious; (2) failed to find that
Settlers is a nonresidential user; (3) failed to apply the language of
Addendum C to determine what is an “appropriate” assignment
of ERUs for apartments; (4) used the wrong standards when
examining advantages and disadvantages between rate payers of
the same residential class; (5) failed to find unreasonable
justifications in ERU assignments between residential and
nonresidential classes; and (6) failed to find that single-family
residential customers received an advantage over owners of
multifamily residential customers.3

3. On appeal, Settlers does not challenge the trial court’s dismissal
of its claim under rule R317-5-1.14 of the Utah Administrative
Code. However, we address rule R317-5-1.14 in our analysis of
whether the District acted reasonably in developing and
implementing the ERU fee structure. See infra ¶ 15.

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    Settlers Landing, LLC v. West Haven Special Service District

¶6      Settlers has framed issues (2),4 (5), and (6) as challenges to
the adequacy of the trial court’s findings, but Settlers failed to
preserve these challenges. “[T]o preserve a challenge to the
adequacy of a trial court’s findings, a party must first raise that
challenge in the trial court to give that court ‘an opportunity to
correct the alleged error.’” Smith v. Simas, 2014 UT App 78, ¶ 10
n.1, 324 P.3d 667 (quoting In re K.F., 2009 UT 4, ¶¶ 59–61, 201 P.3d
985). Settlers did not challenge the adequacy of the trial court’s
findings below by, for example, filing a rule 59 motion with the
trial court requesting that the court amend or supplement its
findings. See Utah R. Civ. P. 59(a). Settlers has therefore waived all
claims on appeal alleging that the trial court’s findings are
inadequate. See In re K.F., 2009 UT 4, ¶ 60.

¶7     The remaining issues raised by Settlers—(1), (3), and
(4)—essentially coalesce into a challenge to the trial court’s
determination that the District’s practice of assigning ERUs instead
of actual water usage measurements and assigning one ERU per

4. Settlers appears to challenge the adequacy of the trial court’s
finding that Settlers is a residential user, but Settlers has failed to
preserve this claim. Even if we were to consider whether the trial
court’s determination that Settlers is a residential user is correct, we
are unpersuaded by Settlers’ sole reliance on Pinetree Associates v.
Ephraim City, 2003 UT 6, 67 P.3d 462. In Pinetree, Ephraim City
assessed a monthly minimum rate for water usage for the first
7,000 gallons of water used per month, and incremental charges for
usage greater than 7,000 gallons, regardless of whether a user was
residential or nonresidential. Id. ¶ 5. The court determined that
Ephraim City’s ordinance provided that rates could be determined
only by actual water measured to the customer and that the City
could not assess separate minimum monthly charges to individual
condominium units in a building where the water to the building
was measured through a sole meter. Id. ¶¶ 5–6, 16–17. But here, the
District’s fee structure is not based on actual measurements or
usage. The fact that Pinetree also involved a multi-unit building is
irrelevant to our analysis. With no other legal analysis or support,
Settlers has failed to show that the trial court erred in finding that
Settlers is a residential user. See infra ¶ 12.

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    Settlers Landing, LLC v. West Haven Special Service District

residential user is reasonable, regardless of whether that user is a
single-family home or a single apartment unit within a multi-unit
apartment building. We review for correctness a trial court’s
ultimate determination as to whether a municipally owned utility
acted reasonably.5 Platt v. Town of Torrey, 949 P.2d 325, 327–28
(Utah 1997). In doing so, “we defer to the trial court’s factual
findings unless they are shown to be clearly erroneous.” Jensen v.
Jensen, 2007 UT App 377, ¶ 2, 173 P.3d 223 (citation and internal
quotation marks omitted).

¶8      Settlers also argues that it is entitled to attorney fees under
the private-attorney-general doctrine. Whether a party is entitled
to attorney fees is a question of law, which we review for
correctness. Valcarce v. Fitzgerald, 961 P.2d 305, 315 (Utah 1998).

                             ANALYSIS

¶9     The trial court analyzed the District’s ERU fee structure by
applying the “arbitrary and capricious” standard, as set forth in
Springville Citizens for a Better Community v. City of Springville, 1999
UT 25, ¶¶ 23–24, 979 P.2d 332. However, Springville Citizens is a
land-use case, and the appropriate standards for judicial review of
those decisions are prescribed by Utah Code section 10-9a-801(3).
Here, the relevant case law and statute direct an appellate court to
review for reasonableness a special service district’s decisions

5. We recognize that a special service district is legally separate and
distinct from the municipality or county that established it. See
Utah Code Ann. § 17D-1-103(1)(a) (LexisNexis 2009). While a
special service district is not a municipality, it is considered a quasi-
municipal corporation. See id. § 17D-1-103(1)(b). Accordingly, we
analyze the District’s actions by applying the analogous standards
governing municipally owned utilities. Cf. Tygesen v. Magna Water
Co., 226 P.2d 127, 132 (Utah 1950) (“The governmental acts of quasi-
municipalities are like those of true municipalities . . . .”); Home
Owners’ Loan Corp. v. Logan City, 92 P.2d 346, 349 (Utah 1939)
(“[W]e see no distinction between a public service corporation and
a municipality itself.”).

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    Settlers Landing, LLC v. West Haven Special Service District

regarding fees charged for providing public services to its
residents. See Utah Code Ann. § 54-3-1 (LexisNexis 2010) (“All
charges made, demanded or received by any public utility . . . for
any service rendered . . . shall be just and reasonable.”).

¶10 In Platt v. Town of Torrey, the Utah Supreme Court explained
that “a municipally owned utility must act reasonably when
serving its residents and that the courts will enforce reasonableness
when it does not.”6 949 P.2d 325, 329 (Utah 1997); see also Mantua
Town v. Carr, 584 P.2d 912, 914 (Utah 1978) (explaining that a court
“will not intervene [in the administration of municipal services]
unless the administrative action is capricious, arbitrary or
unreasonable”). The court further explained that because rate
setting “is an inexact science,” the determinations made by public
officials entrusted with setting the rates “should not be disturbed
if there is any reasonable basis” for their determinations. Platt, 949
P.2d at 334 (citation and internal quotation marks omitted). And
“[r]ate making is a legislative function to which courts owe a
degree of deference.” Id. Thus, because “[r]ates established by a
municipality for utility service to inhabitants are presumptively
reasonable,” the court instructed that “one who challenges such
rates as unreasonable has the burden of proof.” Id. at 332 (citation
and internal quotation marks omitted). In this case, that burden of
proof falls on Settlers. Therefore, in deciding whether the trial
court’s decision was correct, we review the District’s ERU fee
structure and evaluate whether Settlers has demonstrated that no

6. The supreme court observed that the “requirement that a
municipality supplying public services to its own residents must
act reasonably is stated more explicitly throughout Utah law.
Article XI, section 6 of the Utah Constitution mandates that a
municipal corporation supply water owned by it to its inhabitants
‘at reasonable charges.’ Utah Code [section] 10-8-38 authorizes
municipalities to construct and operate sewer systems and to ‘make
a reasonable charge for the use thereof.’” Platt v. Town of Torrey, 949
P.2d 325, 329 (Utah 1997); see also Patterson v. Alpine City, 663 P.2d
95, 96 (Utah 1983) (“Municipalities may make a reasonable charge
for the use of a sewer system in order that it be self-sustaining.”).

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    Settlers Landing, LLC v. West Haven Special Service District

reasonable basis supports the District’s implementation of the ERU
fee structure.

¶11 As an initial matter, and contrary to Settlers’ argument that
the trial court erred in interpreting the Ordinance setting forth the
sewer-use and charging policies, we conclude that the Ordinance
expressly authorizes the District to assign each residential
household, including individual apartment units, one ERU. “We
interpret municipal and county ordinances and resolutions
according to our well-settled rules of statutory interpretation and
construction.” Pinetree Assocs. v. Ephraim City, 2003 UT 6, ¶ 13, 67
P.3d 462. “When interpreting statutes, we determine the statute’s
meaning by first looking to the statute’s plain language, and give
effect to the plain language unless the language is ambiguous.” Id.
(citation and internal quotation marks omitted).

¶12 Addendum C to the Ordinance states “An Equivalent
Residential User (ERU) will equate to one (1) unit per residential
household.” Addendum C provides a list of users classified
according to water-usage estimates based on standards formulated
by the Utah Department of Environmental Quality. The list of
users in Addendum C assigns one ERU “per household” to each
“single family dwelling.” And section 2.7.1 of the District’s sewer-
use and charging policies states, “For purposes of the foregoing
rates, apartments . . . and other multiple unit developments shall
be charged as though the development were a group of single family
dwellings . . . .” (Emphasis added.) Thus, the plain language of the
Ordinance unambiguously permits the District to treat each
apartment unit as one single-family dwelling and, as a result,
assign each apartment unit one ERU.

¶13 We next turn to the question of whether such a classification
is reasonable. “Classification of customers must necessarily be
accomplished by reference to general characteristics having some
rational nexus with the criteria used for determining just and
reasonable rates.” Mountain States Legal Found. v. Utah Pub. Serv.
Comm’n, 636 P.2d 1047, 1052–53 (Utah 1981). “Whether cost of
service, value of service, or other criteria are used, either alone or
in conjunction with each other, classifications of persons must be

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    Settlers Landing, LLC v. West Haven Special Service District

on the basis of similar—but not identical–-characteristics.” Id. at
1053. Here, the trial court concluded that the District’s decision to
charge fees based on customers’ common characteristic as
“residential users” under the ERU fee structure and not on the
basis of actual water usage—as Settlers argues that the District was
required to do—was a reasonable means of classifying the
District’s customers and assigning a monthly fee. The trial court
supported its conclusion with thorough factual findings, and
Settlers has failed to challenge these findings. We therefore defer
to the court’s findings. See Jensen v. Jensen, 2007 UT App 377, ¶ 2,
173 P.3d 223.

¶14 The trial court’s factual findings repeatedly state that the
District’s ERU fee structure is not tied to the “actual use by any
individual or class of customer” of the District’s sanitary sewer
collection system, because actual usage, or the metered inflows and
outflows, has “little to no bearing on the District’s costs/expenses
of providing District services.” The District does not have the
ability to measure actual sanitary sewer outflows for any users in
its system, including Settlers.7 Accordingly, actual usage or impact
upon the sewer system is irrelevant in calculating residential-unit
fees. And although the District measures actual culinary water
inflows for Settlers and the “District has the ability to correlate
sanitary sewer flows from culinary inflows for Settlers,” it “does
not have that ability with any of its other users.” Consequently,
“sanitary sewer flow within the District is not measured.” Rather,
the trial court found that the ERU fee charged by the District “is a
flat fee intended to recover all sanitary sewer service costs incurred
by the District to provide such services, including debt service,
operations and maintenance, and treatment costs, and represents
the proportionate cost/burden borne by each ERU as beneficiaries

7. Sanitary sewer outflows are the effluent or outgoing flows of
sewage produced by users and directed to treatment facilities. As
found by the trial court, “the amount of effluent produced is only
a minor factor in the costs borne by the District” and any disparity
alleged by Settlers between the amount of sanitary sewer outflow
for each of its apartments and that of a single-family residence “is
largely irrelevant to the assigning of ERU[s].”

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    Settlers Landing, LLC v. West Haven Special Service District

of the system” because the District’s administrative and treatment
costs are driven by the number of users, not actual use. In other
words, the trial court described the ERU fee as “a minimum fee for
the necessary capacity and utilization of the District’s sanitary
sewer system.” The trial court found that “[a]bsent actual use data
for the entire system, the District’s practice of using a surrogate to
actual measures (i.e., the ERU) is a reasonable practice.” In making
these findings, the court observed that “Settlers offered no
evidence to tie actual use to the costs the District incurs to provide
sanitary sewer service.” Settlers thus failed to meet its burden of
proof. See Platt, 949 P.2d at 332. Therefore, because actual usage is
irrelevant, classifying customers according to their status as
equivalent residential users forms a “rational nexus” with the
criteria, as outlined above, used by the District for “just and
reasonable” rate making. See Mountain States, 636 P.2d at 1052–53.

¶15 The following factors further support the reasonableness of
the District’s ERU fee structure and assignment of one ERU to both
single-family homes and individual apartment units. First, the trial
court found that, as a matter of fact, “the District’s sanitary sewer
system was designed and constructed in compliance with and as
mandated by the State of Utah” and “the District’s user fee system
was reviewed and approved by various appropriate agencies of
the State of Utah,” including the Division of Water Quality.
Second, the version of the Utah Administrative Code in effect at
the time the District implemented its sewer collection system
provided that the “maximum daily wastewater flow to be disposed
of should be determined as accurately as possible, preferably by
actual measurement,” but “[w]here this is not possible, Table 5-2 may
be used to estimate the flow.” Utah Admin. Code R317-5-1.14
(2002) (emphasis added) (current version at Utah Admin. Code
R317-4-6.4). The trial court found that “[a]t the time of the design
and construction of the District’s sanitary sewer system, no actual
sanitary sewer flow information was available for the potential
users that may be located within the District.” It was thus not
possible for the District to measure actual sewer usage at the time
it developed its sewer collection system. As an alternative, the
District implemented the ERU fee structure. Nevertheless, it is
telling that if the District had used Table 5-2 to estimate sewer

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    Settlers Landing, LLC v. West Haven Special Service District

flows, Table 5-2 assigned the same numerical flow estimate to
condominiums, mobile homes, and single-family dwellings. Id. No
separate classification was provided for apartment buildings or
individual apartment units under Table 5-2. Therefore, treating
single-family dwellings and individual apartment units as
equivalent for the purpose of setting its rates was consistent with
the Utah Administrative Code. Finally, we recognize that setting
just and reasonable rates is often an “inexact science . . . function to
which courts owe a degree of deference.” Platt v. Town of Torrey,
949 P.2d 325, 334 (Utah 1997) (citation and internal quotation
marks omitted). We afford the District such deference here. We
therefore agree with the trial court that “while the District’s
decision to equate single-family homes and apartments in
assessing the [ERU] Fee may not be the best or optimal rate
policy[,] . . . [it] is not unreasonable.”

¶16 Finally, Settlers argues that it is entitled to attorney fees
under the private-attorney-general doctrine. However, attorney
fees may be awarded under the private-attorney-general doctrine
only when the “vindication of a strong or societally important
public policy takes place and the necessary costs in doing so
transcend the individual plaintiff’s pecuniary interest to an extent
requiring subsidization.” Utahns for Better Dental Health–Davis, Inc.
v. Davis County Clerk, 2007 UT 97, ¶ 5, 175 P.3d 1036 (citation and
internal quotation marks omitted). Because we affirm the trial
court’s dismissal of Settlers’ complaint, Settlers has not vindicated
a “strong or societally important public policy.” Settlers’ claim for
attorney fees accordingly fails.8

8. Settlers has not presented in its opening brief on appeal any
argument specifically addressing impact fees, though it did
passively refer to them in its background section. Settlers did
address impact fees in its reply brief, but it did so only in response
to a jurisdictional argument raised by the District. “It is well settled
that issues raised by an appellant in the reply brief that were not
presented in the opening brief are considered waived and will not
be considered by the appellate court.” Allen v. Friel, 2008 UT 56,
                                                        (continued...)

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    Settlers Landing, LLC v. West Haven Special Service District

                          CONCLUSION

¶17 The trial court correctly determined that the District’s ERU
fee structure is reasonable. Accordingly, we affirm the trial court’s
dismissal of Settlers’ complaint.

8. (...continued)
¶ 8, 194 P.3d 903 (citation and internal quotation marks omitted);
see also Utah R. App. P. 24(a)(9). We therefore decline to further
consider this issue.

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