Pima v. Tucson

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

PIMA COUNTY, Plaintiff/Appellant,

v.

CITY OF TUCSON, Defendant/Appellee.

No. 1 CA-CV 24-0057

FILED 10-10-2024

Appeal from the Superior Court in Maricopa County
No. CV2022-001141
The Honorable Randall H. Warner, Judge

AFFIRMED IN PART AND REVERSED IN PART

COUNSEL

Snell & Wilmer L.L.P., Phoenix
By Brett W. Johnson, Colin P. Ahler, Ian R. Joyce
Counsel for Plaintiff/Appellant

Gust Rosenfeld, P.L.C., Phoenix
By Charles W. Wirken
Co-Counsel for Defendant/Appellee

Office of the Tucson City Attorney, Tucson
By Michael Rankin, Christopher Avery
Co-Counsel for Defendant/Appellee
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MEMORANDUM DECISION

Judge Daniel J. Kiley delivered the decision of the Court, in which Presiding
Judge Michael J. Brown and Judge D. Steven Williams joined.

K I L E Y, Judge:

¶1 In this unusual appeal, the party that successfully moved for
summary judgment challenges the resulting judgment entered in its favor.
Pima County (the “County”) challenges, as unduly narrow, the scope of the
relief granted by the judgment, and further challenges the court’s decision
to award attorney fees in an amount substantially less than what the
County sought. For the following reasons, we affirm in part and reverse in
part.

FACTS AND PROCEDURAL HISTORY

¶2 The City of Tucson (the “City”) operates Tucson Water
(“TW”), a water utility that services not only municipal residents, but those
living in unincorporated areas outside city limits.

¶3 In June 2021, the Tucson City Council (the “Council”) enacted
Ordinance No. 11881 (the “2021 Ordinance”), which imposed higher water
rate charges on TW customers living outside city limits than on those
within. Although the new rates were “different for different classes of
users,” the new rates were “generally 10% higher than rates for similar
customers within city limits.” The 2021 Ordinance made certain exceptions;
according to the City, “Native American tribes and the Tucson Unified
School District” were exempted “from the rate increase.” When it enacted
the 2021 Ordinance, the Council directed staff to “complete a broad cost of
service analysis based on rates adopted.” The City then retained Raftelis
Financial Consultants, Inc. (“Raftelis”) to conduct the cost-of-service
analysis.

¶4 The County challenged the 2021 Ordinance, asserting, inter
alia, that it violated an Arizona statute that requires water utilities to charge
only “just and reasonable” rates and to publicize written data supporting
any rate increase before the increase goes into effect. See A.R.S.
§ 9-511.01(A)(1), (E). The commissioning of Raftelis to complete a study did
not satisfy statutory requirements, the County argued, because the

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differential rates were adopted before the study was commissioned.
Indeed, as the subsequent Raftelis report itself acknowledged, the purpose
of the study “was to provide support for already-determined rates.”

¶5 The County‘s complaint (the “Complaint”) sought
declaratory and injunctive relief on a variety of grounds. As relevant here,
Count One of the Complaint sought a declaration that the 2021 Ordinance
“violates A.R.S. § 9-511.01” and an injunction barring the City “from
enforcing [the 2021 Ordinance’s] discriminatory rates.” Counts Three and
Four asserted that the 2021 Ordinance improperly “discriminate[s] between
similarly situated [TW] customers,” including “Native Americans and non-
Native Americans,” in violation of constitutional equal protection
guarantees.

¶6 The City moved to dismiss the equal protection claims set
forth in Counts Three and Four, citing case law for the proposition that, as
a political subdivision of a state, the County cannot assert such claims
because it is not a “person” within the meaning of applicable constitutional
provisions. In response, the County maintained that the jus tertii doctrine
entitled it to “assert equal protection claims on behalf of [its] citizens.” 1
Finding the jus tertii doctrine inapplicable because aggrieved Pima County
residents were able to assert discrimination claims “on their own behalf,”
the superior court dismissed Counts Three and Four.

¶7 In March 2023, the Council adopted Ordinance No. 11993 (the
“2023 Ordinance”) providing that “Governmental Customers,” including
the County, “shall not be charged the differential rate.” Less than two
weeks later, the City filed a motion for summary judgment on all of the
County’s claims, asserting that because the 2023 Ordinance expressly
exempted the County “from the differential rate,” the County’s challenge
to the differential rate was now moot. Acknowledging that a defendant
“[u]sually . . . cannot by its own voluntary conduct ‘moot’ a case,” the City
argued that this principle does not apply here because the City is a
governmental entity. “[V]oluntary cessation of [the] challenged conduct”
by a “private” defendant, the City maintained, will not moot a case because
the defendant “would be free to resume the conduct” after securing the

1 The jus tertii doctrine permits a litigant to assert a violation of a third

party’s constitutional rights if the litigant has “a substantial relationship to
the third party,” the third party is “unable to assert the constitutional rights
on [his or her] own behalf,” and the failure to grant standing to the litigant
would “dilute the rights of the third party.” Arcadia Osborn Neighborhood v.
Clear Channel Outdoor, LLC, 256 Ariz. 88, ¶ 20 (App. 2023).

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case’s dismissal. The concern that a defendant would act in bad faith by
temporarily ceasing wrongful conduct only long enough to secure a
dismissal on mootness grounds before resuming the conduct is not present
here, the City insisted, because “governmental defendants” are
“presume[d]” to be “acting in good faith.”

¶8 In response, the County argued that the City’s “newfound
mootness defense” should be rejected because the 2023 Ordinance
constitutes “mere litigation posturing” since it “was specifically” adopted
“to end this case.”

¶9 The superior court denied the City’s motion, finding no basis
to depart from “the usual rule” that a defendant cannot moot a plaintiff’s
claim by its “own voluntary conduct.” The court further noted that the 2023
Ordinance “affects only Pima County” while “the differential rates remain
in place for residents and businesses outside Tucson city limits.” “Although
Pima County lacks standing to represent its residents’ interests,” the court
held, “there is overlap between the legality of differential rates as to Pima
County and as to others.” Accordingly, the court concluded, “[d]eciding
this case” on the merits rather than dismissing the County’s claims on
mootness grounds “would . . . promote judicial efficiency.”

¶10 Meanwhile, the County moved for summary judgment on
Count One of the Complaint, arguing, inter alia, that the City failed to
comply with A.R.S. § 9-511.01’s mandate that rates be set at an amount “just
and reasonable” because it adopted the differential rates set forth in the
2021 Ordinance without a cost-of-service study. As a matter of law, the
County asserted, “differential rates must be cost-based,” and “the City’s
failure to consider cost-of-service” before enacting the 2021 Ordinance
“renders [its] rates unjust and unreasonable.”

¶11 In response, the City contended that whether the differential
rates set forth in the 2021 Ordinance are “just and reasonable” as required
by A.R.S. § 9-511.01 was a question of fact that could not be resolved on
summary judgment.

¶12 Determining that “A.R.S. § 9-511.01 requires water rates to be
grounded in cost,” the superior court held that the 2021 Ordinance violated
the statute because the City did not use “cost data” when setting the
“challenged rates.” The court therefore granted summary judgment in
favor of the County on Count One and dismissed the remaining counts of
the Complaint as moot.

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¶13 The County lodged a proposed form of judgment containing,
as relevant here, the following language:

The Court enters Judgment in favor of [the County] and against
all Defendants on [the County’s] claim asserting a violation of
A.R.S. § 9-511.01 (Count 1). In connection with and as part of
this Judgment:

a. Pursuant to A.R.S. § 12-1831, the Court hereby adjudges and
declares that the provisions in Ordinance No. 11881
establishing differential water rates for customers in
unincorporated Pima County are illegal and unenforceable;

b. The Court permanently enjoins Defendants from enforcing
the provisions in Ordinance No. 11881 establishing differential
water rates for customers in unincorporated Pima County;

c. As Ordinance No. 11881 was illegal and unenforceable when
implemented, the Court orders the individual Defendants, in
their official capacities, to cause [the City] to refund, reimburse,
or credit any differential rate payments that Tucson Water customers
have made pursuant to Ordinance No. 11881

(emphasis added).

¶14 The City objected to the proposed form of judgment lodged
by the County, asserting that the judgment cannot properly “provide relief
to [TW] customers who are not parties to this action” because the court had
already ruled that the County “does not have standing to represent the
interests of its residents.” Accordingly, the City asserted, the judgment
“must be limited to provide relief only to [the County].” The court
sustained the City’s objection and accepted the City’s proposed revisions to
the form of judgment lodged by the County.

¶15 Meanwhile, the County filed an application for attorney fees
and costs, seeking a fee award of $648,424.35. Although the superior court
found “counsel’s billing rates to be reasonable and justified” in light of
“counsel’s skill and experience” and the nature of the case, the court
nonetheless sustained the City’s objection to the reasonableness of the
claimed amount. Finding that the billing records reflected both “excessive
lawyer time . . . devoted to this case” and non-compensable time spent on
unsuccessful claims, the court determined that “a reasonable amount” of
fees was “45% of the [amount] request[ed].”

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¶16 After resolving the parties’ dispute over the County’s fee
application, the court entered final judgment (the “Judgment”) providing
in part as follows:

The Court enters Judgment in favor of [the County] and against
all Defendants on [the County’s] claim asserting a violation of
A.R.S. § 9-511.01 (Count 1). In connection with and as part of
this Judgment:

a. Pursuant to A.R.S. § 12-1831, the Court hereby adjudges and
declares that the provisions in Ordinance No. 11881
establishing a differential water rate for [the County] are illegal
and unenforceable;

b. The Court permanently enjoins Defendants from enforcing
the provisions in Ordinance No. 11881 that establish a
differential water rate for [the County];

c. The Court orders the individual Defendants, in their official
capacities, to cause [the City] to refund, reimburse, or credit any
differential rate payments that [the County] has made pursuant to
Ordinance No. 11881

(emphasis added).

¶17 The Judgment also awarded attorney fees and costs to the
County. The Judgment’s fee award contains a minor typographical or
transpositional error; although the court determined that a reasonable fee
award was 45% of the amount the County requested, the Judgment
awarded fees of $291,179 even though 45% of $648,424 is $291,791.

¶18 The County timely appealed.2 We have jurisdiction under
A.R.S. § 12-2101(A)(1).

DISCUSSION

I. Scope of Relief Granted by the Judgment

¶19 The County asserts that the superior court abused its
discretion in entering a judgment that grants relief to the County but no
other TW customers.

2 The City filed a notice of cross-appeal, but later withdrew it.

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¶20 Whether a court’s judgment awarded the successful party all
of the relief to which it was entitled is a question of law reviewed de novo.
See Ariz. St. Univ. Bd. of Regents v. Ariz. St. Retirement Sys., 242 Ariz. 387, 389,
¶ 7 (App. 2017) (applying de novo standard of review when resolving
challenge to prejudgment interest rate set forth in the judgment); see also
Minority Earth Movers, Inc. v. Walter Toebe Constr. Co., 649 N.W.2d 397, 399
(Mich. App. 2002) (holding that whether “trial court erred in entering two
[separate] judgments” on plaintiff’s claim and defendant’s counterclaim
“instead of one judgment for the net difference” is a question of law
reviewed de novo).

¶21 The County asserts, first, that the superior court abused its
discretion in limiting the scope of the declaratory and injunctive relief
granted by the Judgment to the County itself. Because the court determined
that the 2021 Ordinance violated A.R.S. § 9-511.01, the County argues, the
ordinance is void for all purposes and, therefore, for all TW customers. By
“declar[ing] the differential rates invalid [only] as to [the] County,” and
“limit[ing] injunctive relief to the County only,” the County maintains, the
judgment “wrongly indicates that the City’s differential rates are only
partially void.” In effect, the County asserts, the Judgment allows the City
to continue to apply the differential rates to other TW customers, thereby
“continuing to benefit from” an invalid ordinance.

¶22 In response, the City argues that the court properly omitted
non-parties from the scope of the injunctive and declaratory relief granted
by the Judgment to the County because the County “cannot represent the
interests of others.”

¶23 “[I]t is a settled principle of law that as subdivisions of the
state, . . . municipalities have only such legislative powers as have been
expressly, or by necessary implication, delegated to them by constitution or
by the legislature.” Vangilder v. Ariz. Dep’t of Revenue, 252 Ariz. 481, 488,
¶ 24 (2022) (citation omitted). Any attempt by a municipality to exercise
authority “without compliance with the statutory conditions precedent is
. . . of no effect.” Hart v. Bayless Inv. & Trading Co., 86 Ariz. 379, 384 (1959);
see also Scenic Ariz. v. City of Phoenix Bd. of Adjustment, 228 Ariz. 419, 436,
¶ 54 (App. 2011) (holding that use permit issued in violation of state statute
was invalid).

¶24 A declaratory judgment holding that a municipal ordinance
was adopted in violation of state law renders the ordinance void. See Levitz
v. State, 126 Ariz. 203, 205 (1980) (holding that “an ordinance enacted
without substantial compliance with [applicable] statutory requirements is

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void”). To hold that an ordinance is void only as to the parties to the
litigation is a contradiction in terms; if void, an ordinance is necessarily void
for all purposes. Hart, 86 Ariz. at 392 (holding that ordinances adopted
without compliance with state statute were “void and of no effect”); see also
Blankenship v. City of Richmond, 49 S.E.2d 321, 325-26 (Va. 1948) (after gas
station was established in residential neighborhood pursuant to rezoning
ordinance, neighbors sued to have ordinance declared void as to any future
commercial development; rejecting neighbors’ argument that the rezoning
ordinance was “valid as to” the gas station “but void as to all other property
in the block,” the court held that the ordinance was “either valid in its
entirety or it is wholly void”). Likewise, an injunction barring a government
entity from enforcing an ordinance on grounds that it is void cannot
properly be limited in application only to the plaintiff, leaving the
government entity free to enforce the void ordinance against non-parties.
See City of Chicago v. Sessions, 264 F. Supp. 3d 933, 951 (N.D. Ill. 2017) (issuing
preliminary injunction against enforcement of certain conditions on
eligibility for federal aid to local law enforcement, and giving injunction
nationwide scope since “there [is] no reason to think that the legal issues
present in this case are restricted to [the plaintiff] or that the [government’s]
statutory authority” to enforce the challenged conditions “would differ in
another jurisdiction”); cf. County of Santa Clara v. Trump, 250 F. Supp. 3d 497,
539 (N.D. Cal. 2017) (rejecting defendant’s argument that injunction against
enforcement of unconstitutional executive order “should be issued only
with regards to the plaintiffs” since the order was “unconstitutional on its
face, and not simply in its application to certain plaintiffs”).

¶25 To be sure, a court has broad discretion in fashioning
declaratory and injunctive relief, and may, under proper circumstances,
narrow the scope of such relief to a particular litigant or class of persons.
See Loiselle v. Cosas Mgmt. Group, LLC, 224 Ariz. 207, 210, ¶ 8 (App. 2010)
(“Fashioning an equitable remedy is within the trial court’s discretion.”).
But here, neither Count One of the Complaint nor the ruling granting
summary judgment on that count purported to apply only to the County.
On the contrary, Count One sought a declaration that the 2021 Ordinance
“violates A.R.S. 9-511.01” and “injunctive relief enjoining [the city] from
enforcing” it. The effect of the court’s determination that the 2021
Ordinance was adopted in violation of state law is to void the ordinance,
which necessarily bars the City from enforcing it against anyone. The
Judgment should therefore be amended to declare the provisions in
Ordinance No. 11881 establishing differential water rates to be void as to all
TW customers, and to enjoin the City from enforcing those differential rates
against any TW customer.

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¶26 The County next argues that the Judgment improperly
required the City to refund to the County, but not to anyone else, the excess
payments received as a result of its prior enforcement of the invalid
differential rates. According to the County, the City has no “moral or
equitable justification for retaining the millions in fees it unlawfully
collected” from TW customers in unincorporated areas of Pima County
“under its differential rate ordinance.” In response, the City argues that the
court correctly declined to order a refund of excess payments to TW
customers living in unincorporated areas of Pima County, asserting that the
County never asserted a claim for a refund of overpayments until it lodged
its proposed form of judgment.

¶27 On this point, we agree with the City. The County’s
Complaint sought only forward-looking injunctive and declaratory relief;
it made no request for a refund of overpayments, an award of restitution,
an order of disgorgement, or any other monetary relief. The court’s grant of
injunctive and declaratory relief did not, by itself, encompass monetary
relief as well. See Owner-Operator Indep. Drivers Ass’n, Inc. v. Swift Transp.
Co., 632 F.3d 1111, 1121 (9th Cir. 2011) (“Injunctive relief constitutes a
distinct type of equitable relief; it is not an umbrella term that encompasses
restitution or disgorgement.”) (cleaned up). Because neither Count One nor
the County’s successful motion for summary judgment requested
restitution, disgorgement, or any other monetary relief, the court properly
declined to include a provision in the Judgment requiring the City to refund
overpayments received from TW customers living in unincorporated areas
of Pima County.3

II. Award of Attorney Fees

¶28 The County submitted an application for a fee award of
$648,424 under A.R.S. § 12-348.01, which provides that the court “shall
award reasonable attorney fees to the successful party” in a suit between
government entities such as a city and a county. The County’s application
was supported by an affidavit of counsel and billing records containing
over 1,400 separate time entries reflecting work performed by attorneys and
paraprofessionals. Finding that “excessive lawyer time was devoted to this
case,” the court disallowed 40% of the County’s overall fee request “to

3 Indeed, because the Complaint did not request any refund of
overpayments, the grant of summary judgment on Count One did not
entitle the County itself to such relief. However, no party has challenged
the provision of the Judgment ordering the City to refund the County’s
overpayment, so we will not disturb that portion of the Judgment.

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reflect excessive work.” The court also found that, “while [the County]
prevailed on the main issue,” the County “did not prevail entirely,” noting
that it was unsuccessful “on both [its] equal protection [claim] and its ability
to represent the interests of other ratepayers.” “A reasonable deduction for
the result obtained,” the court determined, “is 15%.” The court therefore
awarded the County $291,179, or roughly 45% of the requested amount.

¶29 The County challenges the sufficiency of the amount of fees
awarded, arguing that the court “abused its discretion in reducing the
County’s requested fees [sic] award by approximately 55%.” The County
maintains that its counsel provided the services that “would have been
undertaken by a reasonable and prudent lawyer” and that the City’s
“generalized” objections to its fee request were “legally deficient.”
Moreover, the County contends, the court’s refusal to award fees for time
its counsel spent on unsuccessful claims was contrary to the principle that
when “a party has accomplished the result sought in the litigation, fees
should be awarded for time spent even on unsuccessful legal theories.”
Schweiger v. China Doll Restaurant, Inc., 138 Ariz. 183, 189 (App. 1983). The
County asks that the fee award be set aside, and the matter remanded for a
new determination of an appropriate fee award.

¶30 As the City correctly argues in response, however, the
superior court has broad discretion in determining a fee award because that
court is “in the best position to assess the value of the legal work performed
and the reasonableness of the fees.” Parker v. McNeill, 214 Ariz. 495, 499,
¶ 24 (App. 2007); see also China Doll, 138 Ariz. at 189 (“[A]n appellate court
is somewhat unsuited for the fact-finding inquiry which is frequently
necessary to properly determine reasonable fees for legal services
rendered.”). The court’s discretion is certainly broad enough to determine
whether fees for unsuccessful claims or theories are properly compensable.
See Berry v. 352 E. Virginia, L.L.C., 228 Ariz. 9, 14, ¶ 23 (App. 2011) (“When
a case involves several claims based upon different facts or legal theories
. . . the court may decline to award fees for those unsuccessful separate and
distinct claims.”) (citation omitted). As long as there is a “reasonable basis
for the award,” the court does not abuse its discretion in determining a fee
request. Hawk v. PC Village Ass’n, Inc., 233 Ariz. 94, 100, ¶ 19 (App. 2013).

¶31 Here, the court’s thoughtful explanation for its decision to
reduce the amount of fees requested by the County makes clear that it
considered all relevant factors. While we may have reached a different
decision in the first instance, we cannot conclude that the court’s decision
was without a reasonable basis. See id. at 100, ¶ 21 (“Though reasonable

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minds may have balanced the factors differently, we cannot say that the
superior court’s decision was an abuse of discretion.”).

¶32 The County next asserts that the court “miscalculated” the fee
award by “double-counting” some of the fee reductions. The County
explains that the court calculated the fee award by first applying the 40%
reduction for “excessive” lawyer time to the original $648,424 fee request,
disallowing fees of $259,370 ($648,424 x .40 = $259,370) and leaving a
remainder of $389,054.40 ($648,424 - $259,369.60 = $389,054.40). Next, the
court applied the 15% reduction for the County’s lack of success on certain
claims. But the court applied the 15% reduction to the original $648,424 fee
request even though the court already disallowed 40% of those same fees.
By applying the 15% reduction to the $648,424 original fee request, the court
reduced the County’s fees by an additional $97,264 ($648,424 x .15 =
$97,264). Had the court applied the 15% reduction only to the $389,054.40
remaining after the initial 40% reduction, it would have only reduced the
County’s fee award by an additional $58,358.16 ($389,054.40 x .15 =
$58,358.16). Applying the 15% reduction to the $389,054.40 remaining after
the initial 40% reduction would have resulted in a fee award of $330,696.24
($648,424 - $259,369.60 - $58,358.16 = $330,696.24), or almost $40,000 more
than the amount the court awarded.

¶33 In response, the City contends that the court’s determination
that the original $648,424 fee request should be reduced by 40% to account
for excessive work and by another 15% to account for fees incurred on
unsuccessful claims evinces an intent to disallow a total of 55% of the
claimed fees. As a result, the City concludes, the County was entitled to a
fee award of only $291,791 ($648,424 - 55% = $291,791).

¶34 We see merit in the County’s assertion that applying both the
40% reduction and the 15% reduction to the original $648,424 fee request
created the risk, if not the likelihood, of double-counting fee reductions. The
superior court made no finding that excessive lawyer time was devoted
only to the County’s successful claim, nor does the record suggest a basis
for such a finding. Presumably, therefore, some of what the court found to
be “excessive lawyer time” was spent litigating the County’s unsuccessful
claims. If fees resulting from excessive lawyer time incurred in litigating
unsuccessful claims were encompassed in both the 40% “excessive time”
reduction and the 15% “unsuccessful claims” reduction, then, as the County
argues, those fees were disallowed twice.

¶35 Nonetheless, as the City correctly points out, the court did not
state whether its finding of excessive lawyer time applied to both the

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County’s successful and unsuccessful claims, and we cannot discern the
court’s intent in that regard. If the court’s intent was to disallow 40% of the
County’s claimed fees due to excessive work on all claims and then disallow
15% of the remainder to eliminate fees which, though reasonable in amount,
were nonetheless non-compensable because they were incurred in
connection with the unsuccessful claims, then the Judgment’s fee award
should be increased to $330,696 ($648,424 - 40% = $389,054 - 15% =
$330,696). By contrast, if, as the City contends, the court intended to
disallow 55% of the County’s claimed fees, the Judgment’s $291,179 fee
award should be modified to $291,791 ($648,424 - 55% = $291,791) to correct
the minor typographical or transpositional error. Because the court’s intent
is not apparent from the record, we cannot determine which of these two
modifications would give effect to the court’s intent. We will, therefore,
remand with directions to the court to clarify its intent by modifying the
$291,179 fee award to either $291,791 or $330,696.

¶36 Finally, both parties request an award of attorney fees on
appeal under A.R.S. § 12-348.01. Because each party has prevailed on some
of its arguments, we conclude that there is no “successful party” within the
meaning of A.R.S. § 12-348.01, and therefore each side shall bear its own
fees and costs. State ex rel. Brnovich v. Ariz. Bd. of Regents, 250 Ariz. 127, 134,
¶ 30 (2020) (denying fees under A.R.S. § 12-348.01 in “a split decision” in
which each party prevailed on some claims).

CONCLUSION

¶37 For the foregoing reasons, we affirm in part and reverse in
part and remand with instructions for the superior court to amend the
Judgment to extend the scope of its injunctive and declaratory relief to
include TW customers in unincorporated Pima County, and to clarify its
intent with respect to the deductions it found appropriate and modify the
Judgment’s $291,179 fee award accordingly.

AMY M. WOOD • Clerk of the Court
FILED: AGFV

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