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Southwest Power Pool, Inc. v. Kanis and Denny Roads Suburban Water Improvement District No. 349 of Pulaski County

Supreme Court of Arkansas

March 31, 2016

SOUTHWEST POWER POOL, INC., APPELLANT
v.
KANIS AND DENNY ROADS SUBURBAN WATER IMPROVEMENT DISTRICT NO. 349 OF PULASKI COUNTY, ARKANSAS, BY AND THROUGH ITS COMMISSIONERS BARRY HAAS, ROD NEAL, JAMES FONTENOY, SHIRLEY HERNDON, BILL ADAIR (DECEASED), AND MIKE REBICK, APPELLEE

          APPEAL FROM THE PULASKI COUNTY CIRCUIT COURT. NO. 60CV-13-1018. HONORABLE W. MICHAEL REIF, JUDGE.

         MARVIN SAMUEL JONES.

         JOSEPH R FALASCO.

         JOHN EARLE TULL.

          OPINION

         PAUL E. DANIELSON, Associate Justice.

         Appellant Southwest Power Pool, Inc. (" SPP" ), appeals an order of summary judgment entered in favor of appellee Kanis and Denny Roads Suburban Water Improvement District No. 349 of Pulaski County (" the District" ). On appeal, SPP argues that the Pulaski County Circuit Court erred in granting summary judgment on SPP's challenge to the reasonableness of an assessment of benefits and accompanying levy of taxes. We reverse and remand.

         The District was formed in 2000 for the primary purpose of constructing water lines and related improvements to serve real properties within the District. The District was financed by bond issues; in order to repay its debts and fund general operations, the District assessed the benefits accrued to each real property within the District resulting from the construction of the water lines, and levied taxes accordingly. The District completed construction of the water lines in 2006. At that time, the District conveyed and dedicated its easements and water lines to Central Arkansas Water (" CAW" ), which has owned, operated, and maintained the easements and water lines since that time.

         In 2010, SPP purchased 24.04 acres of unimproved real property lying within the District. SPP dedicated 3.2 acres to the City of Little Rock and constructed its commercial facility on the remaining 20.84 acres. This property had originally been part of an 80-acre tract, which was initially assessed in the amount of $138,078 in 2003. This assessment resulted in an annual levy of approximately $3,500, which was paid without protest from 2003 through 2012, and which SPP conceded was fair.[1] In 2013, the District reassessed SPP's property, determining that the assessed benefits to the 20.84 acres alone totaled $2,521,954. This assessment resulted in an annual levy of $60,653.

         SPP appealed the 2013 reassessment to the District's board of equalization, composed of its assessor and commissioners. The reassessment was confirmed. SPP then filed its complaint in circuit court, asserting that the reassessment was wrong as a matter of law and as a matter of fact.[2] Specifically, SPP argued that an assessment was supposed to represent the benefit to its property resulting from the District's construction of water lines, which had been completed in 2006, and that the subsequent construction of its facility on the property would not have changed that value. SPP also alleged that it had chosen not to use the District's water lines and instead connect to lines that had already been constructed by the owner of the original 80-acre tract and CAW. Thus, it contended, the presence of the District's water lines near its property was of no benefit to it, and the assessment should have been reduced to zero. For the same reason, SPP argued that it was exempt from assessment under Arkansas Code Annotated section 14-92-225(c)(2). SPP maintained that the reassessment violated procedural and substantive due process and equal protection and constituted a taking without just compensation. Finally, SPP alleged that the District had failed to follow statutory procedures for reassessment, including those having to do with notice.

         The District answered and filed its motion for summary judgment. The District disagreed with SPP's interpretation of section 14-92-225(c)(2), arguing that it did not exempt SPP from assessment and that it allowed the District to assess property in proportion to the benefit conferred. The District also argued that it had provided proper notice to SPP and that the reassessment was reasonable. In response to the motion for summary judgment, SPP submitted the affidavit of Ray Owen, Jr., a licensed attorney and registered professional engineer who had experience serving as an assessor for over thirty improvement districts over a period of more than four decades. Owen opined that the reassessment of SPP's property was improper because there was little to no benefit accruing to the property as a result of the District's earlier construction of water lines. Additionally, Owen questioned the assessor's calculations, which apparently valued SPP's land and the facility built upon it at $0.00 prior to the District's construction of its water lines. Owen also referenced minutes of the District's commissioners' meetings and emails between the District's assessor and commissioners, opining that the commissioners' input on the SPP reassessment was inappropriate and questioning whether the reassessment was independently made by the assessor as required by statute.

         Following further briefing and two hearings, the circuit court granted the District's motion for summary judgment on all issues except notice.[3] The court found that a material physical change in property after an original assessment is a basis for reassessment and that all assessments and reassessments are presumptively reasonable (citing Sugarloaf Dev. Co., Inc. v. Heber Springs Sewer Improvement Dist., 34 Ark.App. 28, 805 S.W.2d 88 (1991), and Kelley Trust Co. v. Paving Improvement Dist. No. 47 of Ft. Smith, 185 Ark. 397, 47 S.W.2d 569 (1932)). The court concluded that SPP's connection to a CAW line did not exempt it from assessment under section 14-92-225(c)(2); rather, SPP's " alternative water source is not supposed to be taken into consideration at all." In addition, the court determined that the reassessment was not void because of the communications between the District's commissioners and its assessor. SPP filed a motion for reconsideration, which was denied. Following a bench trial on the issue of the sufficiency of the 2013 notice of reassessment, the circuit court entered a final order granting judgment in favor of the District.[4] SPP filed a timely notice of appeal.

         SPP's appeal challenges the circuit court's entry of summary judgment in favor of the District. The law is well settled regarding the standard of review used by this court in reviewing a grant of summary judgment. See, e.g., Anderson's Taekwondo Ctr. Camp Positive, Inc. v. Landers Auto Group No.1, Inc., 2015 Ark. 268. A circuit court will grant summary judgment only when it is apparent that no genuine issues of material fact exist requiring litigation and that the moving party is entitled to judgment as a matter of law. See id. The burden of proof shifts to the opposing party once the moving party establishes a prima facie entitlement to summary judgment, and the opposing party must demonstrate the existence of a material issue of fact. See id. After reviewing the undisputed facts, the circuit court should deny summary judgment if, under the evidence, reasonable minds might reach different conclusions from the same undisputed facts. See id.

          On appeal, this court determines if summary judgment was appropriate based on whether the evidentiary items presented by the moving party leave a material question of fact unanswered. See 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. See id. This review is not limited to the pleadings but also includes the affidavits and other documents filed by the parties. See id.

         SPP raises four points on appeal: (1) that the circuit court erred in granting summary judgment in favor of the District; (2) that the District's commissioners improperly assumed the role of the assessor, which violated statutory guarantees and denied SPP due process; (3) that the amount of the reassessment and the erroneous way in which it was determined are very much in dispute and present issues for trial; and (4) that any ambiguity in section 14-92-225(c)(2) is required to be resolved in favor ...


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