Court rules in favor of municipal utilities

The state’s eminent domain statute allows Indiana municipalities to acquire operations of privately owned water and sewer utilities that serve recently annexed portions of that community, the Indiana Supreme Court ruled today.

The split 3-2 decision came in Utility Center, Inc., d/b/a Aquasource v. City of Fort Wayne, Indiana, 02S04-0706-CV-248.

This case from Allen Circuit Judge Thomas Felts involves Fort Wayne’s initiation of condemnation proceedings against a company operating a competing public water utility in and around the city, which also owns its own water and sewer utility. The trial court granted the city’s motion for relief and denied Utility Center’s, though the Court of Appeals reversed and remanded in 2005.

However, the justices decided to grant transfer and have now affirmed the trial court’s judgment with respect to its decision in granting summary judgment in favor of the city.

In its opinion, the court dissects specific portions of Indiana’s eminent domain statute applying to utilities, weaving through history of the law and how it’s organized.

Justice Frank Sullivan authored the opinion, and Justices Ted Boehm and Brent Dickson dissented. Chief Justice Randall T. Shepard concurred with a separate, two-page opinion that shows the divided court almost could have gone the other way.

“The complicated order of events in this case and the way in which the litigants have positioned themselves makes the task of statutory interpretation more difficult than usual,” the chief justice wrote. “There are grounds on which I anticipated that Utility Center might prevail, but those grounds turn out not to have been part of how the situation or the litigation evolved.”

Justice Boehm wrote the dissent with Justice Dickson concurring. The two justices believed the lower appellate judges ruled correctly and would have denied transfer.

“Distressed utilities would seem to be the best candidates to be acquired by a governmental entity to assure stable service,” Justice Boehm wrote. “On its face, it is odd that the legislature would choose to prevent governmental acquisition of this perhaps imaginary class distressed utilities but permit it as to healthy ones.”

Ten water and utility companies were amici curiae parties on this case, including Indiana-American Water Co. and Indiana Association of Sewer Companies.