HomeMy Public PortalAboutFFCL and JudgmentARCHIF N. BAN[3URY, CLEW
BY DEPUTY
I1.11_ 5 2011
Case No lost No
Piled
IN THE DISTRICT COURT OF THE FOURTH JUDICIAL DISTRICT OF THE
STATE OF IDAHO, IN AND FOR THE COUNTY OF VALLEY
IN THE MATTER OF.
CITY OF McCALL, an Idaho municipal
corporation, and PAYETTE LAKES
RECREATIONAL WATER & SEWER
DISTRICT, an Idaho political subdivision,
JOINT PETITIONERS
Case No. CV 2011-173C
FINDINGS OF FACT,
CONCLUSIONS OF LAW, AND
JUDGMENT
The Joint Petitioners, City of McCall (the "City"), by and through its counsel
TROUT e JONES ♦ GLEDIIILL ♦ FUHRMAN ♦ GOURLEY, P.A., and Payette Lakes
Recreational Water & Sewer District (the "District"), by and through its counsel Holland
& Hart, LLP (collectively, the "Petitioners"), hereby jointly submit the following
proposed Findings of Fact and Conclusions of Law
FINDINGS OF FACT
1. On May 3, 2011, Petitioners filed a Joint Petition for Judicial
Confirmation (the "Joint Petition") pursuant to Idaho Code § 7-1301 et seq., seeking
judicial examination and determination that: (1) the duties and obligations contained 'in
the Settlement Agreement dated October 20, 2010, entered into between the Petitioners
(the "Agreement"), are ordinary and necessary liabilities of the Petitioners; (2) by
incurring those liabilities the Petitioners are protecting the health, safety and welfare of
their respective constituents; and (3) those liabilities are within the "ordinary and
necessary expense" exception to the voter approval and sinking fund requirements of
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - l
Article VIII, Section 3 of the Idaho Constitution. The Agreement involved the resolution
of Valley County Case No. CV-2005-352-C (the "Lawsuit").
2. The Lawsuit involved a dispute between the City and the District
regarding their conflicting interpretations of the Cooperative Agreement between the
Petitioners dated December 15, 1977, and its seven amendments (collectively, the
"Cooperative Agreement").
3 The Cooperative Agreement established the Petitioners' rights and
responsibilities in relation to the facility which receives, treats, stores and disposes of the
City's and the District's wastewater (the "Facility").
4 The District deemed the City's prayer for relief in the Lawsuit to be an
effort to materially and adversely alter the District's rights in and to the Facility.
5. The City deemed the District's prayer for relief in the Lawsuit to be an
effort to materially and adversely alter the City's rights in and to the Facility
6. The outcome of the Lawsuit was uncertain. In the event the City
prevailed, the District may have lost the right to have its wastewater accepted, treated and
disposed in the Facility In the event the District prevailed, the City may have lost its
ability to unilaterally expand and/or improve the Facility to meet the needs of the City's
users.
7 In addition to the above -described risks to the Petitioners, both Petitioners
were also seeking monetary damages from each other.
8. On the eve of the trial set for the Lawsuit, October 20, 2010, and after
several days of mediation, the Petitioners agreed to the general teuus for a settlement of
the Lawsuit.
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 2
9. The Agreement was subsequently entered into with an effective date of
October 20, 2010.
10, The Judicial Confirmation sought by the Joint Petition is the remaining
element of the settlement between the Petitioners.
I1. The Petitioners are subject to the debt limitations contained in Article
VIII, § 3 of the Idaho Constitution.
12. Article VIII, § 3 of the Idaho Constitution provides that no county, city, or
other political subdivision shall incur any indebtedness or liability, in any manner or for
any purpose, exceeding in that year the income and revenue provided to it for such year
without the assent of two-thirds (or, in the case of certain revenue bonds, the assent of the
majority) of the qualified electors thereof voting at an election held for that purpose, but
contains the following exception: "provided, that this section shall not be construed to
apply to the ordinary and necessary expenses authorized by the general laws of the
state...."
13, The obligations contained in the Agreement are ordinary and necessary for
both Petitioners because they: (i) provide a detailed, long-term procedure for the use,
maintenance and improvement of the Facility by both the City and the District, which in
turn will promote the vital health, welfare and safety of the constituents of both the City
and the District by resolving the key environmental issue of the treatment, storage and
disposal of wastewater; (ii) avoid the continuance of costly litigation, and (iii) avoid the
uncertainty of the outcome of the Lawsuit, which would have materially and adversely
impacted the constituents of either the City or the District, or both,
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 3
14. The obligations contained in the Agreement are long-term obligations that
exceed one year. The obligations are contingent, and in some years may exceed the
budgets for either the District or the City, or both.
15. The Petitioners do not intend to hold an election because key decisions
about the future of the Facility need to be made by the Petitioners in the next four
months, and the process to reach those key decisions (set forth in the Agreement) needs
to be implemented immediately. More specifically, treated effluent from the Facility is
currently mixed with irrigation water and applied to agricultural lands lying south of the
City. The land upon which the effluent is applied is not owned by either the City or the
District; it is owned by others who have agreed in writing to permit the use of the effluent
enhanced irrigation water. These agreements expire in 2016 and some of the land owners
have already informed the City that they do not intend to renew the agreements and that
their land will not be available for disposal of the treated effluent. The lead time that is
necessary to determine the future of the Facility, and the method of disposal of treated
effluent, is such that decisions must be made before November in order for the City to be
able to lawfully dispose of the treated effluent after the current agreements expire.
Design of any new or modified facilities takes many months, and securing grants and
other financing for such improvements can take more than one year. Further, state and
federal regulations related to the federal Clean Water Act mandate involvement of other
agencies in these decisions, all of which require time. Although the current agreements
do not expire for a few years, the realities of wastewater facility planning, design,
financing, and construction make the current situation very urgent which demands
certainty now. Accordingly, the City and the District have commenced the
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 4
implementation of the decision -making procedures for the future of the Facility pursuant
to the guidelines set forth in the Agreement.
16. If the Petition is denied, all decisions and obligations made by the
Petitioners pursuant to the Agreement may be deemed unconstitutional and void because
they violate Article VIII, § 3 of the Idaho Constitution by creating long-term obligations
without a vote or judicial confirmation. Accordingly, if the Petition is denied, Petitioners
will not be able to make the key decisions regarding the Facility and future of the Facility
may be jeopardized.
17. The Agreement does not contain a non -appropriation clause.
18. The Petitioners set a hearing for April 5, 2011 for the purpose of
considering whether to adopt a joint resolution authorizing the filing of the Petition,
Notice of the hearing was published in the Star -News on March 17, 2011. The hearing
was held, and nobody appeared to object to the filing of the Petition.
19. On April 19, 2011, the City duly adopted Resolution No. 11-05,
authorizing the filing of the Joint Petition.
20. On April 19, 2011, the District duly adopted a resolution authorizing the
filing of the Joint Petition.
21. On May 6, 2011, the clerk of the court issued its Amended Notice of
Filing Petition (the "Notice") in this matter indicating that a petition had been filed for
judicial confirmation, and notifying all interested parties to inquire further and/or appear.
22. For a period of more than thirty (30) days, commencing on May 20, 2011,
the Notice was posted on the front doors of the respective primary place of business for
the City and the District. A conformed copy of said Notice was delivered by the City
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 5
Clerk to the Star -News for publication, which was published with three consecutive
weekly insertions on each of June 2, 2011, June 9, 2011 and on June 16, 2011. Such
public posting and publication of said Notice was conducted in compliance with Idaho
Code § 7-1306,
23. No papers or pleadings were filed in the action by anyone other than the
Petitioners.
24. On June 23, 2011, the Court held a hearing for the purpose of identifying
any interested parties who desired to appear in support of, or opposition to, the Joint
Petition. Ben Slaughter, of the firm Trout Jones Gledhill Fuhrman Gourley, P.A.,
appeared on behalf of the City. John Hucks appeared on behalf of the District. No other
appearances were made,
25. At the hearing, the Petitioners requested that the Court takejudicial notice
of all pleadings, orders and judgments in the Lawsuit.
CONCLUSIONS OF LAW
1 This Court has subject matter jurisdiction of this matter, and has
jurisdiction to adjudicate this matter and validate the proceedings taken by the Petitioners
pursuant to Idaho Code § 7-1301 et. seq.
2. In examining the constitutionality of any statute, the Legislature is
presumed to have acted within its constitutional power. Evans v. Andrus, 124 Idaho 6,
855 P.2d 467 (1993); Worthen v. State, 96 Idaho 175, 525 P.2d 957 (1974); Western
Beverage Inc. v. State, 96 Idaho 588, 532 P.2d 930 (1974). Every reasonable
presumption must be indulged in favor of the constitutionality of a statute. Olsen v J.A.
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 6
Freeman Co , 117 Idaho 706, 791 P.2d 1285 (1990); State v, Pontier, 95 Idaho 707, 518
P.2d 969 (1974); Caesar v. Williams, 84 Idaho 254, 371 P.2d 241 (1962).
3. The proceeding under the Judicial Confirmation statutes, Idaho Code § 7-
1301 et. seq., is a proceeding in rem and jurisdiction of the subject matter and of all
interested parties has been obtained through publication and posting as outlined herein.
Publication and posting as authorized by the Judicial Confirmation statutes is a valid
method of vesting jurisdiction in this Court over the parties and the subject matter. Smith
v. Progressive Irrigation Dist., 28 Idaho 812, 156 P 1133 (1916); Knowles v. New
Sweden Irrigation Dist., 16 Idaho 235, 101 P. 87 (1908). The Joint Petition is taken as
confessed by all persons who received actual or constructive notice thereof and who
failed to appear in objection thereto The Court is authorized to render the judgment and
decree as set forth herein.
4. As a matter of law, Petitioners complied with all procedural requirements,
which are conditions precedent to and necessary to authorize Petitioners to perform the
obligations set forth in the Agreement.
5. This court has made an examination of the statutes authorizing Petitioners
to take the action which is the subject matter of the Joint Petition, and the allegations of
the Joint Petition identifying potential constitutional issues raised by the action taken and
proposed to be taken by Petitioners. There being no opposition to the factual allegations
of the Joint Petition, the allegations are taken as true, and therefore the court concludes
that the statutes at issue were duly and regularly enacted by the Idaho State Legislature,
that the Petitioners properly acted in pursuance of their duly authorized power with
regard to the Agreement and have the power and authority to perform the obligations set
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 7
forth in the Agreement. There being no challenge to those statutes, or to the proposed
actions of the Petitioners to perform the obligations set forth in the Agreement, and since
there exists no facial constitutional infirmity which the Court is required to recognize, sua
sponte, the statutes and proposed actions of the Petitioners with regard to the Agreement
are deemed constitutional.
6. Petitioners are not required by the Constitution of the State of Idaho to
submit the obligations created by the Agreement to a vote of the electorate. The Court
concludes that: (l) the duties and obligations contained in the Agreement are ordinary
and necessary liabilities of the Petitioners; (2) by incurring those liabilities the Petitioners
are protecting the health, safety and welfare of their respective constituents; and (3) those
liabilities are within the "ordinary and necessary expense" exception to the voter approval
and sinking fund requirements of Article VIII, Section 3 of the Idaho Constitution.
Hickey v. City of Nampa, 22 Idaho 41, 124 P. 280 (1912); Asson v City of Burley, 105
Idaho 432, 670 P.2d 839 (1983); City of Pocatello v. Peterson, 33 Idaho 774, 473 P.2d
644 (1970); Lloyd v Bannock County, 53 Idaho 478, 25 P.2d 217 (1933); Butler v. City of
Lewiston, 11 Idaho 393, 83 P. 234 (1905); City of Boise v Frazier, 143 Idaho 1, 137 P.3d
388 (2006).
7. The Court hereby takes judicial notice of all of the pleadings, orders and
judgments in the Lawsuit.
8. The findings and conclusions made herein are intended to be and are
legally binding upon all persons interested in the outcome of this proceeding including
but not limited to all persons or entities who received actual or constructive notice of the
filing of the Joint Petition.
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 8
JUDGMENT
This matter having come regularly before this Court for hearing, and counsel for
Petitioners having submitted briefing, affidavits and exhibits; and it appearing that proper
notice and filing of Joint Petition for judicial confirmation has been given as provided for
in Idaho Code § 7-1301 et. seq., and the court having examined the allegations of the
Joint Petition and all other submissions of the Petitioners, and arguments for and against
the Joint Petition, and good cause appearing therefore, the court does ORDER,
ADJUDGE AND DECREE as follows.
The relief prayed for in the Joint Petition is granted and Petitioners are fully and
lawfully authorized to undertake all rights, duties, obligations and actions set forth in the
Agreement as ordinary and necessary to the Petitioners' respective duties.
Dated this i) day otr
, 2011.
MlCF1PF.i, Fl. lirlcl. l\0.-,1-tUN
HONORABLE MICHAEI MCLAUGHLIN
District Court Judge
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 9
CLERK'S CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this ';') day of .iit a - , 2011 a true and
correct copy of the foregoing document was mailed, postage ()repaid t?t
Kim J. Trout Hand Delivery
Trout Jones Gledhill Fuhrman, P.A. U.S. Mail
PO Box 1097 Facsimile
Boise, ID 83701 Overnight Mail
Fax: 331-1529
Scott Hess
Holland & Hart LLP I -land Delivery
PO Box 2527 U.S. Mail
Boise, ID 83701-2527 Facsimile
Fax: 343-8869 Overnight Mail
John C. Hucks Hanel Delivery
PO Box 737 U.S. Mail
New Meadows, ID 83654 Facsimile
Fax: (208) 347-4128 Overnight Mail
E
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 10