Sullins v. Central Arkansas Water , 2015 Ark. LEXIS 40 ( 2015 )

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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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