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City of Tontitown v. First Security Bank

Court of Appeals of Arkansas, Division IV

May 24, 2017



          Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C., by: Robert K. Rhoads and M. Scott Hall, for appellant.

          Millar Jiles, LLP, by: Gary D. Jiles and Matthew K. Brown, for appellee.

          N. MARK KLAPPENBACH, Judge.

         The City of Tontitown appeals from an order of the Washington County Circuit Court finding that it had failed to take substantial steps to provide requested municipal services to property owned by appellee First Security Bank (the Bank). On appeal, Tontitown argues that the circuit court lacked subject-matter jurisdiction in this matter, that the circuit court erred in granting judgment to the Bank, and that the circuit court erred in refusing to rule on Tontitown's Rule 52(b) motion. We affirm.

         The Bank owned property in Tontitown that bordered Springdale on its eastern boundary and Highway 412 on its northern boundary. The northern 15.64 acres was zoned commercial and partially developed; the southern 22.9 acres was zoned residential and was undeveloped. The Bank sought to detach its property from Tontitown and seek annexation into Springdale under the detachment-annexation statutes, codified at Arkansas Code Annotated sections 14-40-2001 et seq. (Repl. 2013 & Supp. 2015), which provide the procedure for the annexation of land into an adjoining municipality in order to obtain municipal services.[1] Before annexation is allowed, the municipality in which the land is located shall have an opportunity to provide the additional services. Ark. Code Ann. § 14-40-2002(a)(2). Pursuant to this statute, the Bank sent a letter to the mayor of Tontitown in August 2014 requesting that Tontitown commit to providing the additional services of adequate fire protection, adequate police protection, adequate ambulance services, water and sewer services, and a public road.

         Arkansas Code Annotated section 14-40-2002(b)(1)(D) provides that within thirty days of the request, the municipality must make a commitment in writing to the landowner to take substantial steps, within 180 days, toward providing the additional services and, within each thirty-day period thereafter, to continue taking steps to demonstrate a consistent commitment to provide the service within a reasonable time, as determined by the kind of services requested. The landowner must take appropriate steps to make the land accessible to the service and comply with reasonable requests of the municipality that are necessary for the service to be provided. Ark. Code Ann. § 14-40-2002(b)(1)(D)(iii). The landowner may request the annexation of the land into the other municipality and thereby detach the land from the boundaries of the municipality in which the land is currently located if the municipality in which the land is located fails to execute a commitment to services within thirty days after the statement is filed or the municipality executes the commitment to services but fails to take the action required under subdivision (b)(1)(D) of this section. Ark. Code Ann. § 14-40-2002(b)(2).

         Tontitown responded within thirty days with a letter reciting its commitment to take substantial steps toward providing the additional services as required by the statute. The letter then stated that Tontitown "has already made all of the requested services available to the referenced property." The letter further stated in part that

[t]he City is fully committed to providing the requested services to the property. As such, it is requested that a more definite statement be filed with the City, specifically describing the nature and scope of each of the services mentioned in your statement, and which you are not currently receiving. Though all of the requested services are currently available to the property, the City requires more information to ensure that the services are properly provided and to correctly inform First Security Bank of the costs and duties associated with their provision, and for which it will be responsible. Lastly, if First Security Bank believes that any of the services provided are inadequate, please also include a more definite statement that specifically describes the nature and scope of each perceived inadequacy.

         The Bank did not respond to the letter. In December 2014, the Bank filed a petition for declaratory judgment against Tontitown. The Bank detailed its difficulties in selling the property due to Tontitown's allegedly inadequate municipal services and claimed that Springdale was willing to annex the property and provide the requested services. The Bank claimed that Tontitown's contradictory letter did not constitute a commitment as required by Arkansas Code Annotated section 14-40-2002(b)(1)(D). Alternatively, if Tontitown had made a commitment, the Bank alleged that Tontitown had failed to begin taking any steps within 180 days as required by the statute. The Bank requested a declaratory judgment that Tontitown had failed to comply with Arkansas Code Annotated section 14-40-2002(b)(1)(D) under either alternative and that the Bank was thus entitled to detach the property and seek annexation into Springdale.

         A bench trial was held in September 2015. Tonya Patrick, a vice president at the Bank, testified that the Bank obtained the property through a foreclosure action in 2011 and that responses from potential buyers indicated that it was a "dealbreaker" that the property was located in Tontitown. She said that some services were not provided by Tontitown and some were not up to the caliber of services provided by Springdale and that this detracted from the value of the property. Patrick said that Tontitown had not taken any steps to fulfill the commitment it had made. She testified that the Bank had obtained water and sewer services for the improved commercial portion of the property only after the Bank paid to have a sewer line installed along Highway 412 up to the property and then onto the property. She said that Tontitown had not been able to provide the sewer line up to the Bank's property.

         Jack Beckord, the mayor of Tontitown when the Bank's request was made, testified that he did not think there were any services not being provided. He did not contact the city's department heads to discuss the services when he received the Bank's request. Paul Colvin, Tontitown's mayor since January 2015, testified that specific requests had not been made for work on the property. James Clark, public works director for Tontitown, testified that he was not asked by either mayor to respond to the Bank's request and that there had been no new services provided to the property.

         The circuit court entered an order granting declaratory judgment to the Bank, finding that although Tontitown's letter constituted the required written commitment, Tontitown had thereafter failed to comply with section 14-40-2002 because it did not take any steps toward providing the services. The court specifically found that Tontitown's request for a more definite statement from the Bank was not a substantial step required by the statute and did not shift the onus regarding services back to the landowner.

         We first address Tontitown's argument that the circuit court lacked subject-matter jurisdiction. Subject-matter jurisdiction is the power of the court to hear and determine the subject matter in controversy between the parties. Perroni v. Sachar, 2017 Ark. 59, 513 S.W.3d 239. It is well settled that subject-matter jurisdiction is a court's authority to hear and decide a particular type of case. Id. A court obtains subject-matter jurisdiction under the Arkansas Constitution or by means of constitutionally authorized statutes or court rules. Id. An Arkansas court lacks subject-matter jurisdiction if it cannot hear a matter under any circumstances and is wholly incompetent to grant ...

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