Opinion
CIVIL ACTION NO. 2:04CV41-P-B.
September 28, 2007
MEMORANDUM OPINION
This cause is before the Court on the plaintiff's Motion for Partial Summary Judgment [54] and the defendant's Motions to Dismiss and for Summary Judgment [56]. The Court, having reviewed the motions, the responses, the briefs of the parties, the authorities cited and being otherwise fully advised in the premises, finds as follows, to-wit:
FACTUAL BACKGROUND
The City of Clarksdale (hereafter the "City") filed this action against BellSouth Telecommunications, Inc. (hereafter "BellSouth") in the Coahoma County Chancery Court on December 3, 2003. Defendant timely removed the case on January 28, 2004. The Complaint seeks declaratory and injunctive relief as well as compensatory and punitive damages stemming from a dispute over the validity of a 1954 joint pole use agreement between the parties and BellSouth's continued use of Clarksdale's utility poles subsequent to notification of termination by the City. The defendant filed an answer to the Complaint denying the City's right to any of the requested relief. Discovery has been stayed pending the filing and disposition of summary judgment motions. The motions have been fully briefed and are ripe for decision.
The City is a municipal corporation organized and existing under the laws of the State of Mississippi. Clarksdale Public Utilities Commission (hereafter "CPUC") is the commission established by the City pursuant to Mississippi Code Annotated § 21-2-713 to control, manage and operate the utilities system owned by the City, including its facilities for the distribution of electric power. Among these facilities are electric distribution poles which maintain conductors of electric power and energy at safe heights above the ground.
BellSouth has been granted the right to own and operate facilities to provide telecommunications services within the State of Mississippi, including all areas within the City and the surrounding vicinity of the City in which areas CPUC also provides electric power and energy. BellSouth's facilities likewise include utility poles and certain transmission cables, lines, and related equipment that have been placed above ground.
On April 27, 1954, CPUC's predecessor commission authorized the execution of a General Agreement for Joint Use of Wood Poles (hereafter "Agreement") with Southern Bell Telephone and Telegraph Company, BellSouth's predecessor in interest. The Agreement purported to grant the parties mutual rights and obligations with respect to the placing of the parties' respective facilities on the utility poles of the other. Among the terms and conditions contained in the Agreement was the price to be paid each year by a party for each pole of the other party on which the paying party had placed and/or maintained its attachments. Article XIII of the Agreement further provided that pole rental rates would be subject to periodic "joint review and revision" by the parties; pursuant to that provision, the parties agreed to an increase in the pole rental rates only once, in 1984.
The charge provided by the Agreement is $2.00.
At that time, the pole use charge was increased to $5.00 per pole per year.
The 1954 Agreement further provided that it was to continue in full force and effect until January 1, 1960, and that it was to continue thereafter until terminated insofar as the making ofadditional attachments was concerned by either party giving the other one (1) year's notice in writing of intention to terminate the right to make future attachments. By contrast, and important to the issues framed by the parties' motions for summary judgment, the Agreement further provided:
any such termination of the right to make additional attachments shall not, however, abrogate or terminate the right of either party to maintain the attachments theretofore made on the poles of the other, and all such prior attachments shall continue thereafter to be maintained, pursuant to and in accordance with the terms of this agreement, which agreement shall, so long as said attachments are continued, remain in full force and effect. . . .
Exhibit A to Complaint, Article XVIII.
By letter dated October 26, 2000, CPUC notified BellSouth of its desire to terminate the Agreement due to increased costs, but advised that it was interested in negotiating a new pole use agreement. Despite extensive discussions, the parties' efforts to negotiate a new pole use agreement have failed, in large part due to BellSouth's insistence that any new joint use agreement contain a provision granting it the right to maintain its existing attachments on the City's poles.
Pursuant to Article XVIII, the Agreement terminated on October 25, 2001, at least as to additional attachments.
By way of correspondence dated June 26, 2003, from Melville C. Tillis, Chairman of CPUC, to L.G. Ford, CPUC notified BellSouth that if BellSouth failed to execute a proposed joint use agreement (which did not contain a right to maintain existing attachments) providing for an increased pole rental rate at CPUC's cost or prevailing fair market value by July 30, 2003, CPUC would seek injunctive relief to obtain the removal of BellSouth's attachments. BellSouth did not comply with CPUC's request.
Thereafter, on October 14, 2003, CPUC adopted policies and procedures providing detailed terms and conditions upon which entities could obtain a license or right to occupy CPUC property, including utility poles. The policy adopted by CPUC terminated all existing licenses at the earliest of 1) six months from the date of the policy's adoption; or 2) the date of termination of such license as stated in any written notice of termination "heretofore or hereafter delivered to the licensee . . ." Exhibit G to Complaint (emphasis added). In addition, the General Standards provided that compensation for a license shall not be "for less than a fair and reasonable market value for use and occupancy of such properties." Id. The Regulations and Procedures established a formula for determining fair market value for pole use. Finally, the Regulations and Procedures also provided for a licensee's removal of all attachments from the City's poles within sixty (60) days following written notification of termination.
CPUC adopted general standards applicable to all CPUC property, as well as property specific policies with regard to certain properties. The former policy was entitled "General Standards, Conditions and Procedures for Granting Licenses for Use and Occupancy of Properties of the Utilities Systems of the City of Clarksdale, Mississippi (hereafter "General Standards"). The specific use policy pertaining to utility poles is entitled "Regulations and Procedures for Granting Licenses for Use of Electric Distribution and Transmission Poles of Clarksdale Public Utilities" (hereafter "Regulations and Procedures"
CPUC attorney David R. Hunt notified BellSouth's counsel, Thomas B. Alexander, of the newly adopted policies via letter dated November 20, 2003. At that time, Hunt requested assurance of BellSouth's willingness to comply with the applicable pole use policy or, in the alternative, BellSouth's removal of its attachments from the City's poles. BellSouth refused to accede the applicability of CPUC's newly adopted policies or to remove its attachments from CPUC poles.
As noted supra, the parties have filed cross-motions for summary judgment. The City seeks summary judgment only with regard to the declaratory relief requested in Count I of the Complaint. BellSouth's motion, by contrast, seeks dismissal under Rule 12(b)(6) and/or summary judgment as to every count of the Complaint. The Court will address each of the parties' arguments in turn.
STANDARD OF REVIEW
BellSouth also moved to dismiss pursuant to F.R.C.P. 12(b)(6); however, inasmuch as the parties have submitted materials outside the pleadings, the Court will merely address the motion as one for summary judgment.
Rule 56(c) of the Federal Rules of Civil Procedure authorizes summary judgment where "the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Celotex Corporation v. Catrett, 477 U.S. 317, 322, 91 L.Ed.2d 265, 106 S. Ct. 2548 (1986). The existence of a material question of fact is itself a question of law that the district court is bound to consider before granting summary judgment. John v. State of La. (Bd. Of T. for State C. U., 757 F.2d 698, 712 (5th Cir. 1985).
A judge's function at the summary judgment stage is not himself to weigh the evidence and determine the truth of the matter, but to determine whether there is a genuine issue for trial. There is no issue for trial unless there is sufficient evidence favoring the non-moving party for a jury to return a verdict for that party. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L.Ed.2d 202, 106 S. Ct. 2505 (1986).
Although Rule 56 is peculiarly adapted to the disposition of legal questions, it is not limited to that role. Professional Managers, Inc. v. Fawer, Brian, Hardy Zatzkis, 799 F.2d 218, 222 (5th Cir. 1986). "The mere existence of a disputed factual issue, therefore, does not foreclose summary judgment. The dispute must be genuine, and the facts must be material." Id. "With regard to `materiality', only those disputes over facts that might affect the outcome of the lawsuit under the governing substantive law will preclude summary judgment. Phillips Oil Company, v. OKC Corporation, 812 F.2d 265, 272 95th Cir. 1987). Where "the summary judgment evidence establishes that one of the essential elements of the plaintiff's cause of action does not exist as a matter of law, . . . all other contested issues of fact are rendered immaterial. See Celotex, 477 U.S. at 323, 106 S. Ct. at 2552. Topalian v. Ehrman, 954 F.2d 1125, 1138 (5th Cir. 1992).
In making its determinations of fact on a motion for summary judgment, the Court must view the evidence submitted by the parties in a light most favorable to the non-moving party.McPherson v. Rankin, 736 F.2d 175, 178 (5th Cir. 1984).
The moving party has the duty to demonstrate the lack of a genuine issue of material fact and the appropriateness of judgment as a matter of law to prevail on his motion. Union Planters Nat. Leasing v. Woods, 687 F.2d 117 (5th Cir. 1982). The movant accomplishes this by informing the court of the basis of its motion, and by identifying portions of the record which highlight the absence of genuine factual issues. Topalian, 954 F.2d at 1131.
"Rule 56 contemplates a shifting burden: the nonmovant is under no obligation to respond unless the movant discharges [its] initial burden of demonstrating [entitlement to summary judgment]." John, 757 F.2d at 708. "Summary judgment cannot be supported solely on the ground that [plaintiff] failed to respond to defendants' motion for summary judgment," even in light of a Local Rule of the court mandating such for failure to respond to an opposed motion. Id. at 709.
However, once a properly supported motion for summary judgment is presented, the nonmoving party must rebut with "significant probative" evidence. Ferguson v. National Broadcasting Co., Inc., 584 F.2d 111, 114 (5th Cir. 1978). In other words, "the nonmoving litigant is required to bring forward `significant probative evidence' demonstrating the existence of a triable issue of fact." In Re Municipal Bond Reporting Antitrust Lit., 672 F.2d 436, 440 (5th Cir. 1982). To defend against a proper summary judgment motion, one may not rely on mere denial of material facts nor on unsworn allegations in the pleadings or arguments and assertions in briefs or legal memoranda. The nonmoving party's response, by affidavit or otherwise, must set forth specific facts showing that there is a genuine issue for trial. Rule 56(e), Fed.R.Civ.P. See also Union Planters Nat. Leasing v. Woods, 687 F.2d at 119.
While generally "[t]he burden to discover a genuine issue of fact is not on [the] court, (Topalian, 954 F.2d at 1137), "Rule 56 does not distinguish between documents merely filed and those singled out by counsel for special attention-the court must consider both before granting a summary judgment." John, 757 F.2d at 712, quoting Keiser v. Coliseum Properties, Inc., 614 F.2d 406, 410 (5th Cir. 1980).
LEGAL ANALYSIS
I. Plaintiff's Motion for Summary Judgment as to Declaratory Relief
The City's motion requests declaratory judgment with regard to whether:
1) any provision in the 1954 Agreement purporting to entitle BellSouth to the perpetual use and occupancy of CPUC's poles is null and void because, as a matter of law, a governing board may not, by contract, bind a successor board unless authorized by statute. In the alternative, CPUC argues that the Agreement is voidable at the election of the City;
2) BellSouth's rental rate of $5.00 per pole per year for use of CPUC's poles amounts to a donation in violation of Mississippi law as it represents a cost much less than the actual cost to CPUC for BellSouth's use of CPUC's poles;
3) the Pole Use Policy adopted by CPUC is a fair and reasonable exercise of CPUC's powers to set terms and conditions of pole attachments under Mississippi law.
Analysis of the issues is set out seriatim below.
A. The Agreement Is Not Void, but Voidable
The first issue before the Court is the main point of contention between the parties; that is, whether the City was entitled to terminate the Agreement in its entirety as void or voidable or whether, as claimed by BellSouth, Article XVIII of the Agreement continued to be of force and effect subsequent to October 25, 2001. The City premises its argument on the proposition that a governing board may not, in the absence of express statutory authority, bind a successor board to carry out contracts which would take away rights and powers conferred upon the successor board by law. Smith v. Mitchell, 1 So.2d 765 (Miss. 1941); Tullos v. Town of Magee, 179 So. 557 (Miss. 1938); Edwards Hotel City R. Co. v. City of Jackson, 51 So. 802 (Miss. 1910).
As expressed by the Mississippi Supreme Court in Edwards Hotel City R. Co. v. City of Jackson:
Section 2947 authorizes the mayor and board of aldermen "to exercise full jurisdiction in the matter of streets, sidewalks. . . ." These powers delegated to the city, to be exercised through the mayor and board of aldermen, were given for the benefit of the city, and are to be exercised in the discretion of the mayor and board of aldermen in power at the time their judgment dictates the necessity. These provisions of the municipal charter write themselves into all grants made by it to any corporation or association beyond the power of any mayor and board of aldermen to obliterate. The statute gives each mayor and board of aldermen the power to exercise full jurisdiction in the matter of streets, etc. Full jurisdiction comprehends the doing of everything necessary. . . . Each mayor and board of aldermen cannot exercise full jurisdiction if predecessors may tie their hands in the matter of requiring to be done any matter which is comprehended in the exercise of full jurisdiction.Edwards, 51 So. at 804-05.
The Edwards decision invalidated an ordinance purporting to grant a street railway company a ten year exemption from paving requirements on grounds that the governing mayor and board of aldermen lacked authority to enter into such an agreement. Likewise, in Tullos, the appellate court declared an employment contract extending throughout Tullos' lifetime unenforceable because it encroached on the powers of successor governing authorities. Tullos, 179 So. at 558-59. Finally, in Smith, Mississippi's high court embraced the same legal principle enunciated in Edwards and Tullos when it held that the former mayor and board of aldermen of the City of Louisville could not bind a subsequent administration to the terms of an employment contract authorizing Smith, an accountant and auditor, to represent the municipality in collecting any money due and owing the city in return for half the money collected on behalf of the city. Smith, 1 So.2d at 766-67.
In addition to the foregoing cases, the City cites several Mississippi Attorney General opinions as persuasive authority on the issue before the Court. As recently as 2000, the Attorney General issued an opinion letter to the Senatobia Municipal School District stating that the proposed construction of an athletic facility on city property with a provision for the school district to exercise full control thereof for a period of twenty-five (25) years exceeded the authority of current governing municipal authorities:
Although attorney general opinions are wholly advisory and not binding on the Court, such opinions are entitled to due consideration when the opinions indicate sound reasoning, as in the instant case. Freelance Entertainment, L.L.C. v. Sanders, 280 F. Supp.2d 553, 546 (N.D. Miss. 2003).
The general rule regarding the length of contracts entered into by a public entity is that the governing authorities may not bind their successors in office to contracts which take away rights and powers conferred by law in the absence of express statutory authority to do so.
We find no express statutory authority which would allow the current municipal governing authorities and the trustees of a municipal school district to bind their successors to the proposed agreement. Any such agreement would be voidable at the discretion of a successor board.
Miss. Atty. Gen. Op. 2000-0032, 2000 WL 297610 (citations omitted). Again, in an opinion issued pursuant to the request of the Greenwood Utilities Commission regarding that body's authority to enter into a ten (10) year contract with a private third party for the placement of antennas on the municipality's water towers, the Attorney General responded:
[W]e find no specific statutory provision which would preempt the municipality, by and through its utility commission, from entering into contracts with parties for use of city property for antennaes. . . .
However, no such contract would be binding on a successor commission. A contract which extends beyond the term of the present commission or a majority of the members thereof would be voidable at the option of the new commission.
Miss. Atty. Gen. Op. 2000-0164, 2000 WL 638810 (citations omitted). And, finally, in a 1998 opinion letter the Attorney General counseled:
[M]unicipalities are expressly authorized to own and operate wastewater treatment systems on their own or via commissions established for such purpose. This office has previously opined that there appears to be no prohibition to the concept of contracting with a private firm to provide the professional services associated with the operation and management of a municipal wastewater treatment system.
With respect to the term of such a management contract, this office has repeatedly opined, based on relevant case law, that municipal governing authorities cannot bind their successors in office to contracts which take away rights and powers conferred by law. This principle against binding successors assumes, of course, that the governing authorities are without specific authority to enter into a contract for a certain term of years. In your situation, we find no specific authority for entering into a contract for wastewater management beyond the terms of office of the current governing authorities, thereby limiting the authority of the governing authorities to contract for a period not exceeding their term of office. Based on the above considerations, it is the opinion of this office that should the governing authorities enter into the proposed five year wastewater management contract, such contract would be voidable at the option of the next administration.
Miss. Atty. Gen. Op. 1998-0069, 1998 WL 156062 (citations omitted).
Based on each of the foregoing authorities, the City contends that the Agreement was void ab initio as an unlawful exercise on the part of then governing authorities, or at the very least, voidable at the election of any successor government.
The authorities cited by plaintiff do not speak to the issue of whether such contracts are void, or merely voidable. However, this Court's study of the case law and review of the pertinent attorney general opinions leads it to conclude that, where the attack on a governing authority's power pertains solely to the duration of the contract, the contract is not void, but merely voidable at the election of a successor government.
BellSouth's response in opposition to the City's motion attacks the merits of the City's position. The defendant's principal argument urges the Court to conclude that the cases recognizing that municipal governing authorities lack the power to bind successors are only applicable where the power wielded is governmental, rather than proprietary, in nature. In support of its position, BellSouth quotes a leading treatise on municipal law:
The terms "governmental" and "proprietary" are well established under Mississippi law. Governmental activities are "activities or services which a municipality is required by state law to engage in and to perform." Anderson v. Jackson Municipal Airport Authority, 419 So.2d 1010, 1014 (Miss. 1982). "On the other hand, there are activities in which a municipal corporation engages, not required or imposed upon it by law, about which it is free to perform or not. Such activities the courts call `proprietary or corporate.'" Id.
Respecting the binding effect of contracts extending beyond the terms of officers acting for the municipality, there exists a clear distinction in the judicial decisions between governmental and business or proprietary powers. With respect to the former, their exercise is so limited that no action taken by the governmental body is binding upon its successors, whereas the latter is not subject to such limitation, and may be exercised in a way that will be binding upon the municipality after the board exercising the power shall have ceased to exist.
10 McQuillin Municipal Corporations § 29.101 (3d ed. Oct. 2006).
BellSouth then points to established case law for the proposition that the provision of electric service to citizens is an exercise of proprietary power. Yazoo City v. Birchett, 42 So. 569 (Miss. 1906). See also Sartin v. City of Columbus Utilities Commission, 421 F. Supp. 393, 400 (N.D. Miss. 1976), aff'd, 573 F.2d 34 (5th Cir. 1978). Defendant then quotes an isolated portion of Yazoo City v. Birchett as support for its position, e.g., "[w]hen a city embarks in the management of any utility for profit, it is liable, or not liable, by precisely the same rules applicable to private corporations or individuals conducting such enterprises."Yazoo City, 42 So. at 569.
As further support for its argument, the defendant provides a detailed discussion of the Mississippi Supreme Court's opinion inCity of Starkville v. 4-County Electric Power Association, 819 So.2d 1216 (2002). In Starkville, the appellate court upheld the continued validity of a contract between the City of Starkville and 4-County Electric Power Association which provided that upon the City's annexation of property within 4-County's service area, the City would either purchase 4-County's service rights and distribution facilities or grant the utility a franchise. In doing so, the Court found the duration of the contract (more than thirty-one (31) years) no impediment to the City's right to enforcement.
BellSouth also relies heavily on Duke Power Company v. United Telephone-Southeast, No. 2001-MO-024 (April 24, 2001), a decision rendered by the South Carolina Supreme Court. In Duke, the court upheld a perpetual joint pole use agreement between Duke Power and United Telephone-Southeast. While recognizing that perpetual contracts are not favored in South Carolina, the Court held that where the contract at issue clearly expressed the parties' intent to be so bound, such a contract is enforceable.
The clause specifying when joint use would terminate was nearly identical to the contract provision at issue in the instant case.
Plaintiff's rebuttal brief attacks the reasoning employed by BellSouth on numerous grounds. With regard to the governmental/proprietary function distinction urged by defendant, the City notes that, as least as to Edwards and Tullos, the unauthorized action arguably pertained to the municipality's exercise of proprietary powers. Edwards dealt with the paving and maintenance of streets. 51 So. at 803. Numerous Mississippi cases have held that such activities are undertaken in a corporate capacity. Bishop v. City of Meridian, 79 So.2d 221, 223 (Miss. 1955) ("[I]t is settled by a long line of decisions of this Court that in the construction and maintenance of its streets and sidewalks a municipality is acting in its corporate or proprietary capacity"). See also Tucker v. City of Okolona, 227 So.2d 275 (Miss. 1969) (recognizing that maintenance of streets and traffic lights is a proprietary function). Likewise,Tullos involved a municipality's exercise of authority pertaining to its waterworks system. Controlling Mississippi Supreme Court precedent recognizes that the operation of a waterworks system is an exercise of proprietary powers. Westbrook v. City of Jackson, 665 So.2d 833, 837 (Miss. 1995); City of Columbus v. McIlwain, 38 So.2d 921, 922 (Miss. 1949).
As a further matter, none of the cases even remotely suggested that a governing authority's lack of power to bind its successors depended on the nature of the power being exercised.
As to BellSouth's assertion that Yazoo City supports the proposition that when a municipality undertakes the operation of an electric utility for profit, it is governed by the same rules as private corporations conducting such an enterprise, the City notes that in Yazoo City and every other Mississippi case addressing the distinction between governmental and proprietary functions, the underlying issue before the Court always concerned the governing authority's potential liability in tort-only possible when the municipality is engaged in a proprietary function. Nowhere in theYazoo City case did the Mississippi Supreme Court discuss the length of a contract entered into by a municipality while engaged in proprietary services nor did it discuss to what extent a municipality, while engaged in proprietary services, can bind successor boards. Thus, the Yazoo City case is not controlling.
Parker v. City of Philadelphia, 725 So.2d 782, 784 (Miss. 1998); Morgan v. City of Ruleville, 627 So.2d 275, 279 (Miss. 1993).
Insofar as concerns the Starkville and Duke Power cases, plaintiff's rebuttal points out several important distinguishing factors. First, as to the Starkville case, the critical distinction is that 4-County, a private non-profit corporation, sought to avoid its obligations under the contract, not the municipality. The Court specifically noted this difference in reaching its conclusion that there was no statutory or other legal impediment to the City's right to enforce the contract. The same distinction applies to the Duke Power case, inasmuch as it involved two private companies entering into a perpetual contract. As a final counter argument against the import ofStarkville and Duke Power, plaintiff asserts that Hoskins v. City of Orlando, 51 F.2d 901 (5th Cir. 1931), forecloses any argument that a municipality's governing authorities can bind successor boards to a perpetual contract. In Hoskins, the Fifth Circuit affirmed the lower court's judgment avoiding a long-term lease entered into by the municipality, stating in pertinent part:
The identity of the party seeking to avoid the obligations of contract is important only in cases where the contract is not void, but voidable. Black's Law Dictionary defines a voidable contract as "[o]ne which can be avoided (cancelled) by one party because right of rescission exists as a result of some defect or illegality." Black's Law Dictionary 1574 (6th ed. 1990).
If we suppose that the city is thus contracting on annual payments for house space for some proper municipal need, the contract is for too long a time. In the absence of express statutory permission, municipalities, even in their proprietary functions may contract only for a reasonable time. A contract for a water supply for thirty-one years where a waterworks system was to be installed on the faith of the contract is the longest one to be sustained that we have found. To bind the city to the rental of a house for ninety-eight years at a fixed rate . . . is on its face unreasonable.Id. at 904-905.
Furthermore, insofar as any portion of defendant's brief can be construed as an argument in estoppel, that too is foreclosed. The Mississippi Supreme Court recognized in Tullos that an ultra vires contract
does not estop the municipality, since all persons dealing with it are charged with knowledge of the laws by which is it governed, which limit the power of its officers. Only such powers are possessed by a municipality as are expressly conferred by statute, together with those granted in necessary implication by what is expressed in terms, and such powers as are either express or implied are the powers of the municipalities, and not of the officers who represent them.179 So. at 558.
The positions advanced by counsel on both sides of this litigation have been advocated in an admirable manner, all the more so inasmuch as the legal question before the Court has not been fully addressed in any opinion by the Mississippi Supreme Court. However, having dedicated much time and attention to the case law and persuasive authorities on both sides, and fully cognizant of its duty under Erie, this Court is firmly convinced that if faced with the issue, the Mississippi Supreme Court would adopt the position embraced by plaintiffs. Accordingly, this Court finds that the Article XVIII of the 1954 Agreement is voidable on the ground that the City's governing authorities acted in contravention of their authority by entering into a contract which incorporated a provision granting BellSouth a perpetual right to occupy CPUC's utility poles, thereby attempting to limit successor commissions to an exercise of less than the full authority granted under the law of the State of Mississippi.
See n. 7, supra.
B. Rental Rate of $5 Annually Per Pole Not Violative of Mississippi Law
The City also seeks a declaration that BellSouth's payment of a rental rate of $5.00 per pole per year for use of its poles amounts to a donation in violation of Mississippi law. In support thereof, the City notes that the applicable pole rental rate has not been adjusted since 1984 and that the $5.00 rate does not reflect the current fair market value of BellSouth's usage of the City's poles.
As authority for its proposition, plaintiff cites to a provision in the Mississippi Constitution proscribing such conduct: "No law granting a donation or gratuity in favor of any person or object shall be enacted except by the concurrence of two-thirds of the members elect of each branch of the legislature. . . ." Miss. Const. art. 4, § 66. Mississippi's Constitution further provides: "Lands belonging to, or under the control of the state, shall never be donated directly or indirectly to private corporations. . . ." Miss. Const. art. 4, § 96. As interpreted and applied by the Mississippi Supreme Court in Nichols v. Patterson, these two sections prohibit a municipality from making a donation. 678 So.2d 673, 682 (Miss. 1996).
Upon review of the above case and other authorities cited by plaintiff and defendant, the Court is of the opinion that the $5.00 annual rental per pole cannot fairly be construed as an illegal donation under Mississippi law. Plaintiff makes no argument that the initial rate of $2.00 per pole per year amounted to inadequate consideration under the contract; nor do they argue that the adjusted rate of $5.00 per pole per year was less than fair market value at the time the parties agreed to the adjusted rate in 1984. A fair reading of the applicable case law suggests that in every case wherein the Mississippi Supreme Court set aside a lease agreement, the consideration was inadequate from the inception of the agreement-not at some indeterminate time subsequent thereto. For this reason, the Court finds that plaintiff is not entitled to the relief requested.
C. CPUC's Pole Use Policy Is Enforceable
The final declaratory relief requested by the City pertains to the policies adopted by CPUC in October 2003. The City asks the Court to declare its policy to be a fair and reasonable exercise of CPUC's powers to set terms and conditions of pole attachments under Mississippi law.
Plaintiff asserts that the policy in question is a lawful exercise of CPUC's authority inasmuch as Mississippi Code Annotated § 21-17-1 grants municipalities the power to purchase and hold real estate for all proper municipal purposes, including electric lights, and other proper municipal purposes. Miss. Code Ann. § 21-17-1. Pursuant to said statute, the City maintains electric distribution poles which maintain conductors of electric power and energy at safe heights above the ground.
In addition, § 21-27-13, Mississippi Code Annotated, grants municipalities the right to elect a commission to control, manage and operate a municipality's utility system. Miss. Code Ann. § 21-27-13. Pursuant thereto, the City has entrusted that right to CPUC. Title 21, chapter 27, section 17 of the Code delineates the authority vested in such a commission. Miss. Code Ann. § 21-27-17. That statute extends CPUC the authority to adopt "regulations as it may deem necessary for the safe, economic and efficient management and protection of the system or systems, and such bylaws and regulations shall have the same validity as an ordinance duly passed by the governing authorities of any municipality." Id. In addition, the same statute provides: "It shall have the power to make and collect rates for services and facilities. . . ." Id.
BellSouth's opposition to the City's summary judgment motion mounts a multi-pronged assault on the City's claim. First, the defendant contends that this Court lacks authority to entertain the issue pressed by plaintiff, e.g. it urges that were it do so, the Court's ruling would amount to an impermissible advisory opinion. BellSouth's assertion that there is no justiciable controversy between the City and BellSouth is inapposite. The City notified BellSouth of the newly adopted policy in November 2003; at that time, the City asked that BellSouth either signify its willingness to comply with its Regulations and Procedures concerning to pole use or remove its attachments from the City's poles. BellSouth patently ignored both requests; it maintained its existing attachments to the City's poles and continued to pay only the $5.00 per pole rental rate under a contract provision which has now been declared voidable at the election of the City.See subsection I.A., infra. Clearly, there is an actual controversy regarding CPUC's pole use policy, especially as it pertains to BellSouth.
BellSouth's other arguments are also without merit. Mississippi Code Annotated, § 21-27-17 clearly grants utility commissions the authority to make and collect rates for use of its facilities; including the utility poles erected and maintained by the City. The fact that the City previously utilized other mechanisms, including contract, to set pole use rates does not foreclose other authorized methods for setting rates, especially when CPUC's good faith efforts to negotiate a new contract with BellSouth failed. Finally, inasmuch much as the contractual provision upon which BellSouth relies has been held unenforceable, BellSouth's argument that the City's Regulations and Procedures regarding pole use would impair the obligations of a contract in violation of the United States and Mississippi constitutions is rendered moot. Finally, the retroactivity argument posited by defendant is likewise without merit as the policy in question does not operate to deprive BellSouth of its vested contractual rights under the 1954 Agreement in light of this Court's ruling regarding the continued validity of that contract.
Having duly considered the arguments and authorities on both sides, the Court finds that the City is entitled to a declaratory judgment that the pole use policy adopted by CPUC is a fair and reasonable exercise of CPUC's powers to set terms and conditions of pole attachments under Mississippi law.
II. Defendant's Motion for Summary Judgment as to All Claims
A. Declaratory Relief
The Court's resolution of plaintiff's motion for partial summary judgment necessarily requires that defendant's similar motion be denied. Accordingly, defendant's motion for dismissal and/or summary judgment is not well-taken and should be denied with regard to the claims advanced in Count I of the Complaint.
B. Injunctive Relief
BellSouth's motion for judgment as a matter of law as to the injunctive relief sought by the City is predicated solely on its argument that Article XVIII of the Agreement grants it the right to maintain its existing attachments to shared poles. In light of the Court's ruling in section I. supra that the Agreement is invalid and unenforceable, defendant is not entitled to judgment as a matter of law as to Count II of the Complaint.
C. Compensatory and Punitive Damages
Having thoroughly reviewed the parties' submissions, the Court is firmly convinced that plaintiff has demonstrated a genuine issue of material fact with regard to its claims for compensatory and punitive damages. Accordingly, the Court finds that the defendant's motion is not well-taken and should be denied as it relates to plaintiff's claims as delineated in Counts III and IV of the Complaint.
CONCLUSION
Based on the foregoing facts and analysis, the Court finds that the plaintiff's motion should be granted in part and denied in part. Furthermore, defendant's motion is not well-taken and should be denied. An Order will issue accordingly.