Highland Properties v. Lee County Utilities Authority , 173 F. App'x 806 ( 2006 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
FILED
No. 05-15802 U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
Non-Argument Calendar March 29, 2006
________________________ THOMAS K. KAHN
CLERK
D. C. Docket No. 00-00198-CV-WLS-1
HIGHLAND PROPERTIES,
a Georgia Joint Venture,
HOME BUILDERS ASSOCIATION OF ALBANY &
SOUTHWEST GA., INC.,
Plaintiffs-Appellants,
versus
LEE COUNTY UTILITIES AUTHORITY,
Defendants-Appellee.
________________________
Appeal from the United States District Court
for the Middle District of Georgia
_________________________
(March 29, 2006)
Before ANDERSON, BIRCH and BLACK, Circuit Judges.
PER CURIAM:
Highland Properties and Homebuilders Association of Albany and
Southwest Georgia (Highland Properties) appeal the district court’s judgment in
favor of Lee County Utilities Authority (the Authority) after a bench trial.
Highland Properties asserts the district court erred in holding: (1) Highland
Properties is not similarly situated to the Water Plentiful subdivisions, and
(2) Highland Properties failed to prove the Authority had no rational basis for
treating Highland Properties differently than the Water Plentiful subdivisions. We
conclude the district court did not err, and affirm.
I. BACKGROUND
A. Water Plentiful Subdivisions
Water Plentiful contracted with the owners and developers of four separate
subdivisions to provide water and sewer services between 1992 and 1995. Each
subdivision had a separate provision for the amount charged for water tap and
water meter fees. On June 4, 1997, the Authority purchased the water and sewer
systems of Water Plentiful, Inc., that serviced the four subdivisions. The
Authority agreed to comply and carry out the existing provisions of the
subdivision contracts. On October 16, 1997, the Authority promulgated “A
Resolution Establishing Rates and For Other Purposes” expressly adopting the
water tap fees, water meter fees, and rates as provided under the subdivision
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contracts as the rate structure for the respective subdivisions. In August of 1999,
the Authority promulgated a resolution revising the water and sewer tap fees for
all other subdivisions in Lee County and expressly incorporated the rate structure
under the Authority/Water Plentiful contract for the subdivisions. For all four
subdivisions, the water tap and water meter fees remained the same as they were
before acquisition by the Authority. The Authority has consistently abided by the
Authority/Water Plentiful contract.
B. Highland Properties/Agunac
In November 1997, Highland Properties, acting in a joint venture with
Jowers Construction Company, began development of approximately 160
residential units located off of U.S. 19 in Lee County, Georgia, known as North
Highland Crossing subdivision. Highland Properties entered into a contract with
Agunac, Inc., a private water and sewer provider, whereby Agunac agreed to
provide a water and sewer system to North Highland Crossing. The contract
provided, in part that “[i]n the event water and sewer are obtained for North
Highland Crossing Subdivision from Agunac or its successor, then there shall be
no tap fees charged for North Highland Crossing[’]s subdivision lots to hook up to
the Agunac water and sewer system.” Additionally, the contract provided Agunac
an option to terminate the agreement at any time. There was no provision in the
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agreement that required written or verbal notice of termination to Highland
Properties.
On March 25, 1998, the Authority condemned the Agunac private water and
sewage system servicing North Highland Crossing subject to the contract. On
June 5, 1998, an “Award of Special Master” was entered in the condemnation
action awarding $6,994,798 to the condemnees, $6,950,000 of which was awarded
to Agunac. There was no appeal filed in the condemnation action.
After the condemnation, Jowers began constructing residential units in
North Highland Crossing. Jowers met with Kenneth Christopher Boswell, General
Manager of the Authority, to discuss the Highland Properties/Agunac agreement
that stated Highland Properties was not supposed to pay any water tap fees or
sewer tap fees for North Highland Crossing. Boswell told Jowers the Authority
now owned the water and sewer system and that Jowers would have to pay the
water and sewer tap fees for North Highland Crossing until the Authority told him
otherwise.
On December 22, 2000, the Authority voted to terminate the Highland
Properties/Agunac agreement. That same day, an attorney for the Authority wrote
a letter to the attorney for Highland Properties stating it was the Authority’s
position the Highland Properties/Agunac agreement was unenforceable under
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Georgia law. In the event the agreement was enforceable, the Authority was
exercising its option to terminate the agreement at will.
Highland Properties filed a complaint in the district court asserting the
Authority was violating: (1) the Equal Protection Clause of the Fourteenth
Amendment because there was no rational basis for treating Highland Properties
differently than the Water Plentiful subdivisions, (2) the Contracts Clause of the
United States Constitution, (3) the Takings Clause of the United States
Constitution, and (4) Georgia statutory condemnation procedures. The parties
mutually agreed to drop all claims except the Equal Protection claim. The district
court held a bench trial and entered an order in favor of the Authority. The district
court concluded Highland Properties did not show they were similarly situated to
the Water Plentiful subdivisions or that the Authority had no rational basis for
treating them differently than the Water Plentiful subdivisions.
II. DISCUSSION
“On appeal of a district court order from a bench trial, we review the court’s
conclusions of law de novo and its findings of fact for clear error.” HGI Assocs.,
Inc. v. Wetmore Printing Co., 427 F.3d 867, 873 (11th Cir. 2005). “The Equal
Protection Clause of the Fourteenth Amendment, § 1, commands that no State
shall deny to any person within its jurisdiction the equal protection of the laws.”
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Nordlinger v. Hahn, 112 S. Ct. 2326, 2331 (1992) (quotations omitted). The
Clause prevents the government “from treating differently persons who are in all
relevant respects alike.” Id. When state economic activity is challenged and there
is no claim of discrimination based on some suspect class, then the state activity is
presumed valid unless it is not rationally related to a legitimate state interest. Foto
USA, Inc. v. Bd. of Regents of the Univ. Sys., 141 F.3d 1032, 1037-38 (11th Cir.
1998).
A. Similarly Situated
The district court did not err in finding Highland Properties is not similarly
situated to Water Plentiful. The Highland Properties contract provided for a
termination of the contract at will, while the Water Plentiful contracts did not.
Highland Properties’ contract with Agunac contained a provision permitting
Agunac to terminate the contract without notice to Highland Properties, while the
Water Plentiful contracts required its pre-existing contracts be honored by the
Authority. As Agunac’s legal successor, the Authority was permitted to terminate
the contract at will. Thus, Highland Properties and Water Plentiful are not in all
relevant aspects alike, and are not similarly situated. See Nordlinger, 112 S. Ct. at
2331.
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B. Rational Basis
The district court also did not err in finding the Authority had a rational
basis for treating Highland Properties and the Water Plentiful subdivisions
differently. The Authority had a legitimate interest in not breaching the Water
Plentiful subdivisions contracts, and thus had to adhere to the pre-existing Water
Plentiful fees and rates. Conversely, the Authority was not bound by the Highland
Properties/Agunac agreement, and had a legitimate economic interest in raising
the rates to match those of the rest of the county. Thus, the Authority had a
rational basis for its actions. See Foto USA, 141 F.3d at 1037-38.
III. CONCLUSION
The district court did not err in finding Highland Properties and Water
Plentiful were not similarly situated. Additionally, the district court did not err in
finding the Authority had a rational basis for the disparate treatment of the
properties.
AFFIRMED.
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